EXHIBIT 10.17
WCI COMMUNITIES, INC.
$125,000,000
4.0% CONTINGENT CONVERTIBLE SENIOR SUBORDINATED NOTES DUE 2023
--------------------------------
SUPPLEMENTAL INDENTURE
Dated as of December 15, 2004
to
INDENTURE
Dated as of August 5, 2003
--------------------------------
THE BANK OF NEW YORK
Trustee
SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), datedas of
December 15, 2004 among WCI Communities, Inc., a Delaware corporation (the
"Company"), those subsidiaries of the Company listed in Schedule I hereto (the
"Guarantors") and The Bank of New York, as trustee under the indenture referred
to below (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company and the Guarantors have heretofore executed and
delivered to the Trustee an indenture (the "Indenture"), dated as of August 5,
2003 providing for the issuance of 4.0% Contingent Convertible Senior
Subordinated Notes due 2023 (the "Notes");
WHEREAS, pursuant to Section 9.01(d) of the Indenture, the Company,
the Guarantors and the Trustee may amend or supplement the Indenture, the Note
Guarantees or the Notes without the consent of any Holder of a Note or the
Guarantees to make any change that does not adversely affect the legal rights
thereunder of any Holders of the Notes;
WHEREAS, pursuant to Section 12.02 of the Indenture, the Company
may, at its option, in lieu of delivering shares of Common Stock to any Holder
of a Note desiring to convert such Note, elect to pay such Holder an amount of
cash equivalent to the value of the shares of Common Stock issuable upon
conversion of such Note;
WHEREAS, the Company and the Guarantors desire to enter into this
Supplemental Indenture to amend certain provisions of the Indenture without
requiring the consent of any Holder of a Note or the Guarantees pursuant to
Section 9.01(d); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Company, the
Guarantors and the Trustee mutually covenant and agree for the equal and ratable
benefit of the Holders of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
2. ARTICLE I.
(a) Section 1.01 shall be amended to:
(i) Delete the definition of "Cash Conversion Price" in its
entirety and to substitute in place thereof the following
definition:
""Cash Conversion Price" means, in respect of each
$1,000 of principal amount of Notes, an amount in cash
equal to the product of (i) the average of the Closing
Price of the Common Stock for each Trading Day in the
five consecutive Trading Day period immediately
following the Conversion Date multiplied by (ii) the
number of shares of Common Stock issuable upon
conversion of such Note on such date and appropriately
adjusted to take into account the occurrence, during
such five consecutive Trading Day period, of any event
requiring adjustment of the Conversion Price under this
Indenture."
(ii) Insert the following definition immediately following the
definition of "Person":
""Principal Shares" means the number of shares equal to
(1) the Principal Amount divided by (2) the average of
the Closing Price of the Common Stock for each Trading
Day in the five consecutive Trading Day period
immediately following the Conversion Date and
appropriately adjusted to take into account the
occurrence, during such five consecutive Trading Day
period, of any event requiring adjustment of the
Conversion Price under this Indenture."
(b) Section 1.02 shall be amended to:
(i) Insert the following definition immediately following the
definition of "Conversion Date":
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""Conversion Premium" ....................... 12.01"
(ii) Insert the following definition immediately following the
definition of "Expiration Time":
""Net Shares" ............................... 12.01"
(iii) Insert the following definition immediately following
the definition of "Pre-Dividend Sale Price":
""Principal Amount" ......................... 12.01"
3. ARTICLE III.
(a) Section 3.09(a) shall be amended to delete the following text
contained in the first line of clause (a): "Subject to Section 3.09(b) below,
if" and substitute in place thereof the word "If".
(b) Section 3.09(b) shall be amended to delete it in its entirety
and substitute in place thereof the word "Reserved."
4. ARTICLE XII.
(a) Section 12.01 shall be amended to delete in its entirety the
sixth paragraph of such Section and substitute in place thereof the following:
"In the event that a Holder elects to convert all or a portion of a
Note into shares of Common Stock, the Company shall pay to the
Holder an amount in cash equal to the lesser of the Cash Conversion
Price or the principal amount (the "Principal Amount") of the Note
that is being converted. In the event that the Cash Conversion Price
exceeds the Principal Amount (such excess referred to as the
"Conversion Premium"), the number of shares of Common Stock issuable
upon conversion of a Note (referred to as the "Net Shares") shall be
determined by the Company by (1) dividing the Principal Amount by
the Conversion Price in effect on the Conversion Date and (2)
subtracting from that amount the Principal Shares. The initial
Conversion Price is set forth in paragraph 8 of the Notes and is
subject to adjustment as provided in this Article 12. If any Notes
are properly presented for conversion, the Company, at its option,
instead of delivering the Net Shares issuable upon conversion of
such Notes, may pay the Holder the Cash Conversion Price minus the
Principal Amount."
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(b) Section 12.02 shall be amended to delete the third paragraph of
such Section in its entirety and substitute in place thereof the following:
"The Company may, at its option, in lieu of delivering the Net
Shares, elect to pay the Holder surrendering such Note an amount of
cash equal to the average of the Common Stock Price for the five
consecutive Trading Days immediately following the Conversion Date
multiplied by the number of Net Shares. The Company shall make its
election no later than the Conversion Date to deliver shares of
Common Stock representing the Net Shares or to pay cash in lieu of
the delivery of Net Shares, unless in either case it has already
informed Holders of its election in connection with its optional
redemption of the Notes as set forth in Section 3.12 hereof, and the
Trustee shall inform Holders of such election on the Conversion Date
(or as soon as may be practicable thereafter). The failure by the
Company to make such election on the Conversion Date shall be deemed
an election to deliver shares of Common Stock representing the Net
Shares. The Company's obligation to satisfy all or a portion of its
obligations to deliver shares upon conversion in cash and/or cash
and shares of Common Stock shall be made to Holders surrendering
Notes no later than the tenth Business Day following the applicable
Conversion Date. The Company shall notify the Trustee and the
Conversion Agent of the Cash Conversion Price, Principal Amount,
Conversion Premium, and Net Share amount and whether the Company has
elected to settle the Conversion Premium by delivery of only Net
Shares, the payment of only cash or a combination of a portion of
Net Shares and cash in accordance with Article XII of this Indenture
promptly after the determination of the amounts thereof."
(c) The following shall be added as Section 12.16 to ARTICLE XII:
"12.16 References to Settlement with Common Stock.
For the avoidance of doubt, any provision of this Indenture or the
form of any Note which references the delivery or issuance of shares
of Common Stock by the Company upon a conversion of the Notes shall
be applicable only to the extent that the Company does not elect to
settle the Conversion Premium in cash."
5. EXHIBIT A AND AMENDMENT OF NOTE.
(a) Exhibit A shall be amended to delete in its entirety the text
contained in Exhibit A and to replace such text with the text included in
Exhibit A hereto.
(b) Each of the Notes shall be deemed amended and restated to delete
in its entirety the text contained in such Notes and to replace such text with
the text included in Exhibit A hereto.
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6. NEW YORK LAW TO GOVERN. THIS SUPPLEMENTAL INDENTURE WILL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
7. COUNTERPARTS. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
8. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
9. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Company and the Guarantors.
10. CONTINUING EFFECT. Except as amended or supplemented by this
Supplemental Indenture, the provisions of the Indenture are in all respects
ratified and confirmed and shall remain in full force and effect.
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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed, all as of the date first above written.
WCI Communities, Inc.
By: ___________________________________
Name:
Title:
GUARANTORS:
Carpentry Management Associates, LLC
Dix Hills Home & Land Company LLC
Lake Grove Home & Land Co., LLC
Mansion Ridge Home & Land Company LLC
New Home & Land Company LLC
Southbury Home & Land Company LLC
Spectrum East Fishkill, LLC
Spectrum Eastport, LLC
Spectrum Kensington LLC
Spectrum Lake Grove LLC
Spectrum Long Beach, LLC
Spectrum Manhattan Woods, LLC
Spectrum North Bergen LLC
Spectrum Pocantico, LLC
Spectrum Wilson Park, LLC
Spectrum Westport, LLC
The Valimar Home & Land Co., LLC
By: ___________________________________
Name: James D. Cullen
Title: Authorized Representative
GC Assets of Nassau, Inc.
The Mansion Ridge Sewer Company, Inc.
Spectrum Bellefair Corp.
Spectrum Brae Burn Corp.
Spectrum Construction Corp.
Spectrum Design Studio, Inc.
Spectrum Glen Cove Corp.
Spectrum Half Moon, Corp.
Spectrum Holmdel Corp.
Spectrum-Irvington Corp.
Spectrum Valimar Corp.
Spectrum PDC Corp.
Spectrum Landing Corp.
Spectrum Monroe Corp.
Spectrum-Riverwoods Corp.
By: ___________________________________
Name: James D. Cullen
Title: Vice President
Bay Colony-Gateway, Inc.
Community Specialized Services, Inc.
Financial Resources Group, Inc.
First Fidelity Title, Inc.
Florida Design Communities, Inc.
Florida Lifestyle Management Company
Resort at Singer Island Properties, Inc.
Spectrum Homes, Inc.
Spectrum Real Estate Development, LLC
Sun City Center Golf Properties, Inc.
Sun City Center Realty, Inc.
Watermark Realty, Inc.
WCI Amenities, Inc.
WCI Architecture & Land Planning, Inc.
WCI Business Development, Inc.
WCI Capital Corporation
WCI Homebuilding, Inc.
WCI Homebuilding Northeast, U.S., Inc.
WCI Marketing, Inc.
WCI/Spectrum Communities, LLC
WCI Towers, Inc.
By: ___________________________________
Name: James D. Cullen
Title: Vice President
Bay Colony Realty Associates, Inc.
Bay Colony of Naples, Inc.
The Colony At Pelican Landing Golf Club, Inc.
Communities Amenities, Inc.
Communities Finance Company, LLC
Communities Home Builders, Inc.
Coral Ridge Communities, Inc.
Coral Ridge Properties, Inc.
Coral Ridge Realty, Inc.
Coral Ridge Realty Sales, Inc.
Florida National Properties, Inc.
Gateway Communications Services, Inc.
Gateway Communities, Inc.
Gateway Realty Sales, Inc.
Heron Bay, Inc.
Heron Bay Golf Course Properties, Inc.
JYC Holdings, Inc.
Marbella at Pelican Bay, Inc.
Pelican Bay Properties, Inc.
Pelican Landing Communities, Inc.
Pelican Landing Golf Resort Ventures, Inc.
Pelican Landing Properties, Inc.
Pelican Marsh Properties, Inc.
Sarasota Tower, Inc.
Tarpon Cove Realty, Inc.
Tarpon Cove Yacht & Racquet Club, Inc.
Tiburon Golf Ventures, Inc.
Watermark Realty Referral, Inc.
WCI Communities Property Management, Inc.
WCI Golf Group, Inc.
WCI Homes, Inc.
WCI Realty, Inc.
By: ___________________________________
Name: James D. Cullen
Title: Vice President
The Bank of New York,
as Trustee
By: ___________________________________
Name:
Title:
SCHEDULE I
SCHEDULE OF GUARANTORS
WCI/Spectrum Communities, LLC
Spectrum Homes, Inc.
Spectrum Real EstateDevelopment, LLC
Spectrum Lake Grove LLC
Spectrum Pocantico, LLC
Spectrum Wilson Park, LLC
Spectrum Manhattan Woods, LLC
Spectrum Long Beach, LLC
Spectrum Eastport, LLC
Spectrum East Fishkill, LLC
Spectrum Kensington LLC
Spectrum North Bergen LLC
Spectrum Brae Burn Corp.
Dix Hills Home & Land Company LLC
Spectrum Glen Cove Corp.
Spectrum Half Moon, Corp.
Mansion Ridge Home & Land Company LLC
Spectrum Monroe Corp.
Southbury Home & Land Company LLC
Spectrum Westport, LLC
Lake Grove Home & Land Co., LLC
WCI Amenities, Inc.
WCI Business Development, Inc.
WCI Homebuilding, Inc.
WCI Homebuilding Northeast, U.S., Inc.
WCI Marketing, Inc.
WCI Towers, Inc.
Bay Colony-Gateway, Inc.
Financial Resources Group, Inc.
First Fidelity Title, Inc.
Florida Lifestyle Management Company
Resort at Singer Island Properties, Inc.
Sun City Center Golf Properties, Inc.
Sun City Center Realty, Inc.
Watermark Realty, Inc.
The Colony at Pelican Landing Golf Club, Inc.
Communities Amenities, Inc.
Communities Home Builders, Inc.
Gateway Communications Services, Inc.
JYC Holdings, Inc.
Marbella at Pelican Bay, Inc.
Pelican Landing Golf Resort Ventures, Inc.
Sarasota Tower, Inc.
Tarpon Cove Yacht & Racquet Club, Inc.
Tiburon Golf Ventures, Inc.
Watermark Realty Referral, Inc.
WCI Communities Property Management, Inc.
WCI Golf Group, Inc.
WCI Realty, Inc.
Bay Colony Realty Associates, Inc.
Bay Colony of Naples, Inc.
Coral Ridge Communities, Inc.
Coral Ridge Properties, Inc.
Coral Ridge Realty, Inc.
Coral Ridge Realty Sales, Inc.
Florida National Properties, Inc.
Gateway Communities, Inc.
Gateway Realty Sales, Inc.
Heron Bay, Inc.
Heron Bay Golf Course Properties, Inc.
Pelican Bay Properties, Inc.
Pelican Landing Communities, Inc.
Pelican Landing Properties, Inc.
Pelican Marsh Properties, Inc.
Tarpon Cove Realty, Inc.
WCI Homes, Inc.
Communities Finance Company, LLC
WCI Capital Corporation
Communities Specialized Services, Inc.
WCI Architecture & Land Planning, Inc.
EXHIBIT A
EXHIBIT A
[Insert the Global Note Legend, if applicable pursuant to the provisions of the
Indenture]
[Insert the Private Placement Legend, if applicable pursuant to the provisions
of the Indenture]
[FACE OF NOTE]
================================================================================
CUSIP No.
ISIN No.
4.0% Contingent Convertible Senior Subordinated Notes due 2023
No. ___ $____________
WCI COMMUNITIES, INC.
promises to pay to______________________________________________________________
or registered assigns,
the principal sum of____________________________________________________________
Dollars on August 5, 2023.
Interest Payment Dates: August 5 and February 5
Record Dates: July 20 and January 20
WCI COMMUNITIES, INC.
By:________________________________
Name:
Title:
This is one of the Notes referred to
in the within-mentioned Indenture:
Dated: _______________, ____
THE BANK OF NEW YORK,
as Trustee
By: __________________________________
Authorized Signatory
================================================================================
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[BACK OF NOTE]
4.0% CONTINGENT CONVERTIBLE SENIOR SUBORDINATED NOTES DUE 2023
Capitalized terms used herein shall have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. WCI Communities, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at
4.0% per annum from August 5, 2003 until maturity and shall pay the Additional
Amounts payable pursuant to Section 3 of the Registration Rights Agreement
referred to below. The Company will pay interest and, if applicable, Contingent
Interest, if any, and Additional Amounts semi-annually in arrears on August 5
and February 5 of each year, or if any such day is not a Business Day, on the
next succeeding Business Day (each an "Interest Payment Date"). Interest on the
Notes will accrue from the most recent date to which interest has been paid or,
if no interest has been paid, from the date of issuance; provided that if there
is no existing Default in the payment of interest, and if this Note is
authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided, further, that the first Interest
Payment Date shall be February 5, 2004. The Company shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue principal and premium, if any, from time to time on demand at a rate
that is 1% per annum in excess of the rate then in effect; it shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest and, if applicable, Contingent Interest, if
any, and Additional Amounts (without regard to any applicable grace periods)
from time to time on demand at the same rate to the extent lawful. Interest will
be computed on the basis of a 360-day year of twelve 30-day months.
The Company shall pay additional interest ("Contingent Interest") to
the Holders during any six-month period (a "Contingent Interest Period") from
August 5 to, but excluding, February 5 and from February 5 to, but excluding,
August 5, with the initial six-month period commencing August 5, 2006, if the
average of the Trading Price for the five Trading Days ending on the third
Trading Day immediately preceding the first day of the applicable Contingent
Interest Period (the "Contingent Interest Average Trading Price") equals $1,200
or more. The amount of Contingent Interest payable per $1,000 principal amount
of Notes in respect of any Contingent Interest Period shall equal 0.50% per
annum on the Contingent Interest Average Trading Price. The Company will pay
Contingent Interest, if any, in the same manner as it will pay interest as
described above. Upon determination that Contingent Interest on the Notes will
accrue during any relevant six month period, on or prior to the start of such
six month period, the Company shall issue a press release announcing the payment
of such Contingent Interest and shall notify the Trustee in writing.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(including Contingent Interest, if any) (except defaulted interest) and
Additional Amounts to the Persons who are registered Holders of Notes at the
close of business on the July 20 or January 20 next preceding the Interest
Payment Date, even if such Notes are canceled after such record date and on or
before such Interest Payment Date, except as provided in Section 2.12 of the
Indenture
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with respect to defaulted interest. The Notes will be payable as to principal,
premium and Additional Amounts, if any, and interest (including Contingent
Interest, if any) at the office or agency of the Company maintained for such
purpose within or without The City and State of New York, or, at the option of
the Company, payment of interest and Additional Amounts may be made by check
mailed to the Holders at their addresses set forth in the register of Holders,
and provided that payment by wire transfer of immediately available funds will
be required with respect to principal of and interest, premium and Additional
Amounts on, all Global Notes and all other Notes the Holders of which shall have
provided wire transfer instructions to the Company or the Paying Agent at least
fifteen (15) Business Days prior to the applicable payment date. Such payment
shall be in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts.
3. AGENT AND REGISTRAR. Initially, The Bank of New York, the Trustee
under the Indenture, will act as Paying Agent and Registrar. The Company may
change any Paying Agent or Registrar without notice to any Holder. The Company
or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated
as of August 5, 2003 ("Indenture") between the Company, the Guarantors listed on
the signature page therein (the "Guarantors") and the Trustee. The terms of the
Notes include those stated in the Indenture and those made part of the Indenture
by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code ss.ss.
77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred
to the Indenture and such Act for a statement of such terms. To the extent any
provision of this Note conflicts with the express provisions of the Indenture,
the provisions of the Indenture shall govern and be controlling.
5. OPTIONAL REDEMPTION.
No sinking fund is provided for in the Notes. Beginning on August
11, 2008 and during the periods thereafter to maturity, the Notes are redeemable
for cash as a whole, or from time to time in part, in any integral multiple of
$1,000, at any time at the option of the Company at a redemption price (the
"Redemption Price") equal to 100% of the principal amount, together with accrued
but unpaid interest, thereon (including Contingent Interest and Additional
Amounts, if any), up to but not including the Redemption Date.
In addition, on or after August 11, 2006, the Company may redeem the
Notes, in whole or in part, for cash at a price equal to 100% of the principal
amount of the Notes plus accrued but unpaid interest (including Contingent
Interest and Additional Amounts, if any) up to but not including the Redemption
Date, in the event that the Common Stock Price for at least 20 Trading Days in
the period of 30 consecutive Trading Days ending on the last Trading Day of the
calendar month preceding the calendar month in which the Notice of Redemption is
properly mailed to holders is more than 135% of the then applicable Conversion
Price on that 30th Trading Day.
The Company will pay interest to a Person other than the Holder of
record on the Record Date if we redeem the Notes on a date that is after the
Record Date and prior to the corresponding interest payment date. In this
instance, the Company will pay interest accrued and
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unpaid on the Notes being redeemed, to but not including the Redemption Date to
the same person to whom we will pay the principal of such Notes.
6. PURCHASE BY THE COMPANY AT THE OPTION OF THE HOLDER; PURCHASE AT
THE OPTION OF THE HOLDER UPON A CHANGE OF CONTROL.
Subject to the terms and conditions of the Indenture, the Company
shall become obligated to purchase for cash, at the option of the Holder, all or
any portion of the Notes held by such Holder, in any integral multiple of
$1,000, on August 5, 2008, August 5, 2013 and August 5, 2018 (each, a "Purchase
Date") at a purchase price per Note equal to 100% of the aggregate principal
amount of the Note on the date of purchase (the "Purchase Price"), together with
accrued but unpaid interest (including Contingent Interest and Additional
Amounts, if any), thereon, up to but not including the Purchase Date upon
delivery of a Purchase Notice containing the information set forth in the
Indenture, together with the Notes subject thereto, at any time from the opening
of business on the date that is 30 Business Days prior to such Purchase Date
until the close of business on the Business Day prior to such Purchase Date, and
upon delivery of the Notes to the Paying Agent by the Holder as set forth in the
Indenture.
At the option of the Holder and subject to the terms and conditions
of the Indenture, the Company shall become obligated to purchase the Notes held
by such Holder after the occurrence of a Change of Control of the Company for a
Change of Control Purchase Price equal to 100% of the principal amount thereof
plus accrued but unpaid interest (including Contingent Interest and Additional
Amounts, if any), thereon, up to but not including the Change of Control
Purchase Date which Change of Control Purchase Price (provided that, if the
Change of Control Purchase Date is on or after an interest record date but on or
prior to the related interest payment date, accrued but unpaid interest will be
payable to the Holders in whose names the Notes are registered at the close of
business on the relevant record date). Holders have the right to withdraw any
Purchase Notice or Change of Control Purchase Notice, as the case may be, by
delivering to the Paying Agent a written notice of withdrawal in accordance with
the provisions of the Indenture.
If cash sufficient to pay the Purchase Price or Change of Control
Purchase Price, as the case may be, and accrued but unpaid interest (including
Contingent Interest and Additional Amounts, if any), on all Notes or portions
thereof to be purchased as of the Purchase Date or the Change of Control
Purchase Date, as the case may be, is deposited with the Paying Agent on the
Business Day prior to the Purchase Date or the Change of Control Purchase Date,
interest (including Contingent Interest and Additional Amounts, if any), shall
cease to accrue on such Notes (or portions thereof) as of such Purchase Date or
Change of Control Purchase Date, and the Holder thereof shall have no other
rights as such other than the right to receive the Purchase Price or Change of
Control Purchase Price, as the case may be, and interest (including Contingent
Interest and Additional Amounts, if any), upon surrender of such Note.
7. NOTICE OF REDEMPTION.
Notice of redemption pursuant to paragraph 5 of this Note will be
mailed at least 30 days but not more than 60 days before the redemption date to
each Holder of Notes to be redeemed at the Holder's registered address. If money
sufficient to pay the Redemption Price of
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all Notes (or portions thereof) to be redeemed on the redemption date is
deposited with the Paying Agent prior to or on the redemption date, immediately
after such redemption date, interest (including Contingent Interest and
Additional Amounts, if any) cease to accrue on such Notes or portions thereof.
Notes in denominations larger than $1,000 of principal amount may be redeemed in
part but only in integral multiples of $1,000 of principal amount.
8. CONVERSION
Subject to the provisions of Article 12 of the Indenture, a Holder
of a Note may convert such Note into shares of Common Stock of the Company if
any of the conditions specified in paragraphs (a) through (g) of Section 12.01
of the Indenture is satisfied; provided, however, that if such Note is called
for redemption, the conversion right will terminate at the close of business on
the second Business Day immediately preceding the Redemption Date of such Note
(unless the Company shall default in making the redemption payment when due, in
which case the conversion right shall terminate at the close of business on the
date such Default is cured and such Note is redeemed). The initial conversion
price is $27.57 per share, subject to adjustment under certain circumstances as
described in the Indenture (the "Conversion Price"). In the event that a Holder
elects to convert all or a portion of a Note into shares of Common Stock, the
Company shall pay to the Holder an amount in cash equal to the lesser of the
Cash Conversion Price or the principal amount (the "Principal Amount") of the
Note that is being converted. In the event that the Cash Conversion Price
exceeds the Principal Amount (such excess referred to as the "Conversion
Premium"), the number of shares issuable upon conversion of a Note (referred to
as the "Net Shares"), is determined by (1) dividing the Principal Amount by the
Conversion Price in effect on the conversion date, and (2) subtracting from that
amount the Principal Shares. In the event of a conversion of a Note, the Company
has the option to deliver an amount equal to the Cash Conversion Price minus the
Principal Amount to the Holder of the Note surrendered for such conversion as
provided in Section 12.02 of the Indenture in lieu of delivering the Net Shares.
Upon conversion, no adjustment for interest (including Contingent Interest and
Additional Amounts, if any), or dividends will be made. No fractional shares
will be issued upon conversion; in lieu thereof, an amount will be paid in cash
based upon the current market price (as defined in the Indenture) of the Common
Stock on the last Trading Day prior to the date of conversion.
To convert a Note, a Holder must (a) complete and sign the
conversion notice set forth below and deliver such notice to the Conversion
Agent, (b) surrender the Note to the Conversion Agent, (c) furnish appropriate
endorsements and transfer documents if required by the Registrar or the
Conversion Agent, (d) pay any transfer or similar tax, if required and (e) if
the Note is held in book-entry form, complete and deliver to the Depositary
appropriate instructions pursuant to the Depositary's book-entry conversion
programs. If a Holder surrenders a Note for conversion between the record date
for the payment of an installment of interest and the related interest payment
date, the Note must be accompanied by payment of an amount equal to the interest
(including Contingent Interest and Additional Amounts, if any), payable on such
interest payment date on the principal amount of the Note or portion thereof
then converted; provided, however, that no such payment shall be required if
such Note has been called for redemption on a redemption date within the period
between and including such record date and such interest payment date, or if
such Note is surrendered for conversion on the interest
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payment date. A Holder may convert a portion of a Note equal to $1,000 or any
integral multiple thereof.
A Note in respect of which a Holder has delivered a Purchase Notice
or a Change of Control Purchase Notice exercising the option of such Holder to
require the Company to repurchase such Note as provided in Section 3.08 or
Section 3.09, respectively, of the Indenture may be converted only if such
notice of exercise is withdrawn in accordance with the terms of the Indenture.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the succeeding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture, the Note Guarantees or the Notes may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the then outstanding Notes and Additional Notes, if any, voting as a single
class, and any existing default or compliance with any provision of the
Indenture, the Note Guarantees or the Notes may be waived with the consent of
the Holders of a majority in principal amount of the then outstanding Notes and
Additional Notes, if any, voting as a single class. Without the consent of any
Holder of a Note, the Indenture, the Note Guarantees or the Notes may be amended
or supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's or Guarantor's obligations to
Holders of the Notes in case of a merger or consolidation, to make any change
that would provide any additional rights or benefits to the Holders of the Notes
or that does not adversely affect the legal rights under the Indenture of any
such Holder, to comply with the requirements of the Securities and Exchange
Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act, to provide for the Issuance of Additional Notes
in accordance with the limitations set forth in the Indenture, or to allow any
Guarantor to execute a supplemental indenture to the Indenture and/or a Note
Guarantee with respect to the Notes.
12. DEFAULTS AND REMEDIES. An "Event of Default" occurs if (i) the
Company defaults for 30 days in the payment when due of interest (including
Contingent Interest, if any) on, or Additional Amounts, if any, with respect to,
the Notes (whether or not prohibited by the subordination provisions of the
Indenture or any other reason); (ii) the Company fails to pay the principal on
any Notes, when it becomes due and payable, at maturity, upon acceleration, upon
redemption or otherwise (including the failure to make a Change of
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Control Offer or make a payment to purchase Notes tendered pursuant to a Change
of Control Offer or the failure to repurchase Notes pursuant to paragraph 5
hereof), whether or not such failure shall be due to the subordination
provisions of the Indenture or agreements with respect to any other Indebtedness
or any other reason; (iii) the Company or any of the Guarantors fail to comply
with any covenant, representation, warranty or other agreement in the Indenture
or this Note for 30 days after written notice specifying the default (and
demanding that such default be remedied) to the Company by the Trustee or the
Holders of at least 25% in aggregate principal amount of Notes (including
Additional Notes, if any) then outstanding voting as a single class (except in
the case of a default under Section 5.01 of the Indenture, which will constitute
an Event of Default with such notice requirement but without such passage of
time requirement); (iv) there is a default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of the
Guarantors (or the payment of which is guaranteed by the Company or any of the
Guarantors) (other than Indebtedness owed to the Company or any of the
Guarantors or Non-Recourse Financing to the extent such default is not due to
the default by the Company under any other Indebtedness) whether such
Indebtedness or guarantee now exists, or is created after the date of the
Indenture, if that default: (I) is caused by a failure to pay such Indebtedness
at its Stated Maturity and such Indebtedness together with other Indebtedness in
default for failure to pay principal at Stated Maturity (or the maturity of
which as then accelerated) exceeds $10.0 million in the aggregate (a "Payment
Default"); or (II) results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $10.0 million or more; (v) there is failure by the
Company or any of the Guarantors to pay final judgments aggregating in excess of
$10.0 million (except to the extent the judgment or judgments are in respect of
Non-Recourse Financing), which judgments are not paid, discharged or stayed for
a period of 60 days (vi) certain events of bankruptcy or insolvency with respect
to the Company or any of Guarantors; and (vii) except as permitted by the
Indenture, any Note Guarantee shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect or any Guarantor or any Person acting on its behalf shall deny or
disaffirm its obligations under such Guarantor's Note Guarantee. If any Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable. Notwithstanding the foregoing, in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, all outstanding
Notes will become due and payable without further action or notice. Holders may
not enforce the Indenture or the Notes except as provided in the Indenture.
Subject to certain limitations, Holders of a majority in principal amount of the
then outstanding Notes may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest. The Holders of a majority in aggregate
principal amount of the Notes then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Notes waive any existing Default or Event of
Default and its consequences under the Indenture except a continuing Default or
Event of Default in the payment of interest on, premium and Additional Amounts,
if any, or the principal of, the Notes. The Company is required to deliver to
the Trustee annually a statement regarding compliance
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with the Indenture, and the Company is required upon becoming aware of any
Default or Event of Default, to deliver to the Trustee a statement specifying
such Default or Event of Default.
13. TAX TREATMENT OF NOTES. The Company agrees and the Holders, by
purchasing the Notes, will be deemed to agree that (i) the Notes are contingent
payment debt instruments as defined in Treasury Regulations Section 1.1275-4(b),
(ii) each Holder shall be bound by the Company's application of the Treasury
Regulations to the Notes, including the Company's determination that the rate at
which interest will be deemed to accrue on the Notes for United States federal
income tax purposes will be 8.9% compounded semi-annually, which is the rate
comparable to the rate at which the Company would borrow on a noncontingent,
nonconvertible basis with terms and conditions otherwise comparable to the
Notes, (iii) each Holder shall use the projected payment schedule with respect
to the Notes determined by the Company, as required by Treasury Regulations
Section 1.1275-4(b)(4)(iv), to determine its interest accruals and adjustments
as provided in Treasury Regulations Section 1.1275-4(b), and (iv) the Company
and each Holder will not take any position on a tax return inconsistent with
(i), (ii), or (iii), unless required by applicable law. A Holder of Notes may
obtain the issue price, amount of original issue discount, issue date, yield to
maturity, comparable yield and projected payment schedule for the Notes by
submitting a written request for such information to the Company at the
following address: WCI Communities, Inc.; 24301 Walden Center Drive; Bonita
Springs, FL 34134; (239) 947-2600; Attention: James D. Cullen, Esq.
14. SUBORDINATION. The Indebtedness evidenced by this Note is, to
the extent and in the manner provided in the Indenture, subordinated and subject
in right of payment to the prior payment in full of all amounts then due on all
Senior Debt (whether outstanding on the date hereof or hereafter created,
incurred, assumed or guaranteed) of the Company, and this Note is issued subject
to such provisions of the Indenture with respect thereto. Each Holder of this
Note, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on such Holder's behalf to
take such action as may be necessary or appropriate to effectuate the
subordination so provided and (c) appoints the Trustee such Holder's
attorney-in-fact for any and all such purposes.
15. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
16. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company or any Guarantor, as such, shall not
have any liability for any obligations of the Company or any Guarantor under the
Notes, the Note Guarantees or the Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for the issuance of the Notes.
17. AUTHENTICATION. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
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18. ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
19. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Resale Registration
Rights Agreement dated as of August 5, 2003, between the Company and the parties
named on the signature pages thereof (the "Registration Rights Agreement").
20. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
WCI Communities, Inc.
24301 Walden Center Drive
Suite 300
Bonita Springs, Florida 34134
Attention: Vivien N. Hastings, Esq.
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ASSIGNMENT FORM
To assign this Note, fill in the form below and have your signature
guaranteed:
(I) or (we) assign and transfer this Note to:___________________________________
(Insert assignee's legal name)
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date: ______________________
Your Name :____________________________________________________________
(Print your name exactly as your name appears on the face of this Note)
Your Signature:________________________________________________________
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee*: ________________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
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CONVERSION NOTICE
TO: WCI COMMUNITIES, INC.
24301 Walden Center Drive
Suite 300
Bonita Springs, Florida 34134
Attn: Vivien Hastings, Esq.
Telecopier No. (239) 498-8277
COPY TO: THE BANK OF NEW YORK
101 Barclay Street, Floor 8 West
New York, New York 10286
Attn: Corporate Trust Administration (WCI Communities, Inc. 4.0%
Contingent Convertible Senior Subordinated Notes due 2023)
Telecopier No. (212) 815-5707
The undersigned registered owner of this Note hereby irrevocably
exercises the option to convert this Note, or the portion hereof (the principal
amount of which is an integral multiple of $1,000) below designated, into shares
of Common Stock in accordance with the terms of the Indenture referred to in
this Note, and directs that the shares issuable and deliverable upon such
conversion, together with any check in payment for fractional shares and any
Notes representing any unconverted principal amount hereof, be issued and
delivered to the registered holder hereof unless a different name has been
indicated below. If shares or any portion of this Note not converted are to be
issued in the name of a person other than the undersigned, the undersigned will
pay all transfer taxes payable with respect thereto. Any amount required to be
paid to the undersigned on account of interest (including Contingent Interest,
if any) and Additional Amounts, if any, accompanies this Note.
Dated:______ Your Name:______________________________________________________
(Print your name exactly as it appears on the face of this Note)
Your Signature:________________________________________________
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee*:__________________________________________
Social Security or other Taxpayer
Identification Number:_________________________________________
DTC Participant Number:________________________________________
Principal amount to be converted (if less than all): $
- -----------------
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
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Fill in for registration of shares (if to be issued) and Notes (if to be
delivered) other than to and in the name of the registered holder:
______________________________________________
(Name)
_______________________________________________
(Street Address)
_______________________________________________
(City, State and Zip Code)
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NOTICE OF EXERCISE OF REPURCHASE RIGHT UPON A CHANGE OF CONTROL
TO: WCI COMMUNITIES, INC.
24301 Walden Center Drive
Suite 300
Bonita Springs, Florida 34134
Attn: Vivien Hastings, Esq.
Telecopier No. (239) 498-8277
The undersigned registered owner of this Note hereby irrevocably
acknowledges receipt of a notice from WCI Communities, Inc. (the "Company") as
to the occurrence of a Change of Control with respect to the Company and
requests and instructs the Company to repay the entire principal amount of this
Note, or the portion thereof (the principal amount of which is an integral
multiple of $1,000) below designated, in accordance with the terms of the
Indenture referred to in this Note, together with accrued but unpaid interest
(including Contingent Interest and Additional Amounts, if any) to, but
excluding, such date, to the registered holder hereof.
Dated:________ Your Name:_____________________________________________________
(Print your name exactly as it appears on the face of this Note)
Your Signature:________________________________________________
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee*:__________________________________________
Social Security or other Taxpayer
Identification Number:_________________________________________
DTC Participant Number:________________________________________
- --------------------
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
Principal amount to be repaid (if less than all): $
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SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*
The following exchanges of a part of this Global Note for an
interest in another Global Note or for a Definitive Note, or exchanges of a part
of another Global Note or Definitive Note for an interest in this Global Note,
have been made:
Amount of Amount of Principal Amount Signature of
decrease in increase in of this Global authorized
Principal Amount Principal Amount Note following officer of
of this Global of this Global such decrease (or Trustee or Note
Date Note Note increase) Custodian
- ----- ---------------- ---------------- ----------------- ---------------
* This schedule should be included only if the Note is issued in global form.
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