Document:

ex4_2.htm

EXHIBIT 4.2

 

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.  OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.  OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

  

  

  

 

FORM OF

AV HOMES, INC.

 

7.50% Senior Exchange Convertible Notes due 2016

 

	
No.  1

	
$37,500,000

	 	 
	
CUSIP No.  00234P AB8

	  

AV Homes, Inc., a Delaware corporation (herein called the “Company,” which term includes any successor corporation under the Indenture referred to on the reverse hereof), for value received hereby promises to pay to CEDE & CO., or registered assigns, the principal sum of Thirty-Seven Million Five Hundred Thousand Dollars ($37,500,000) or such other principal amount as shall be set forth on the Schedule I hereto on February 15, 2016, unless earlier converted, repurchased or redeemed.

 

This Note shall bear interest at the rate of 7.50% per year from July 25, 2012 or from the most recent date to which interest had been paid or provided.  Except as otherwise provided in the Indenture, interest is payable semi-annually in arrears on each February 15 and August 15, commencing February 15, 2013, to Holders of record at the Close of Business on the preceding February 1 and August 1, respectively.  Interest payable on each Interest Payment Date shall equal the amount of interest accrued from and including the immediately preceding Interest Payment Date (or from and including July 25, 2012, if no interest has been paid hereon) to but excluding such Interest Payment Date.  To the extent lawful, payments of principal or interest (including Additional Interest, if any) on the Notes that are not made when due will accrue interest at the annual rate of 1% above the then applicable interest rate borne by the Notes from the required payment date in accordance with the provisions of the Indenture.

 

Payment of the principal and interest on, or Repurchase Price or Redemption Price of, this Note will be made at the office or agency of the Company maintained for that purpose, which shall initially be the Corporate Trust Office, or elsewhere as provided in the Indenture, 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; provided, however, that the Company shall make payments of accrued and unpaid interest on (i) any Note in global form, in immediately available funds in accordance with the procedures required by the Depositary; (ii) any certificated Note having a principal amount of less than $2,000,000 by check mailed to the address of the Holder of such Note as such address shall appear in the Security Register; or (iii) any certificated Note having a principal amount of $2,000,000 or more, by wire transfer in immediately available funds at the written request of the Holder of such Note duly delivered in writing to the Trustee and the Paying Agent (if different from the Trustee) at least five Business Days prior to the relevant Interest Payment Date.s

 

Reference is made to the further provisions of this Note set forth on the reverse hereof, including, without limitation, provisions giving the Holder of this Note the right to convert this Note into Common Stock on the terms and subject to the limitations referred to on the reverse hereof and as more fully specified in the Indenture.  Such further provisions shall for all purposes have the same effect as though fully set forth at this place.

 

This Note shall be governed by and construed in accordance with the laws of the State of New York.

 

This Note shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been manually signed by the Trustee or a duly authorized authenticating agent under the Indenture.

 

[Remainder of page intentionally left blank]

 

  

  

  

 

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by the undersigned officer.

 

	  	
AV HOMES, INC.

	 	 
	  	By:	 
	 	 	 
	 	 	
Name:

	 	 	
Title:

  

  

  

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION:

 

This is one of the Notes of the series designated therein referred to in the within-mentioned Indenture.

 

WILMINGTON TRUST, NATIONAL ASSOCIATION,

as trustee

 

	
By:

	 	
 

	
 

	
Authorized Officer

  

  

  

 

REVERSE OF NOTE

 

AV Homes, Inc.

 

7.50% Senior Exchange Convertible Notes due 2016

 

This Note is one of a duly authorized issue of Securities of the Company, designated as its 7.50% Senior Exchange Convertible Notes due 2016 (herein called the “Notes”), issued under and pursuant to an Indenture dated as of February 4, 2011 (herein called the “Base Indenture”), as supplemented by the Second Supplemental Indenture, dated as of July 25, 2012 (herein called the “Supplemental Indenture” and collectively with the Base Indenture, the “Indenture”), between the Company and Wilmington Trust, National Association (herein called the “Trustee”), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company, and the Holders of the Notes.  Additional Notes may be issued in an unlimited aggregate principal amount, subject to certain conditions specified in the Indenture.  Capitalized terms used but not defined in this Note shall have the meanings ascribed to them in the Indenture.

 

In case an Event of Default, as defined in the Indenture, shall have occurred and be continuing, the principal of and interest (or the Repurchase Price, as applicable), on all Notes may be declared, and upon said declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture.

 

Subject to the terms and conditions of the Indenture, the Company will make all payments and deliveries in respect of the Covenant Breach Repurchase Price, Fundamental Change Repurchase Price, Redemption Price and the principal amount on the Maturity Date, as the case may be, to the Holder who surrenders a Note to a Paying Agent to collect such payments in respect of the Note.  The Company will pay cash amounts in money of the United States that at the time of payment is legal tender for payment of public and private debts.

 

The Indenture contains provisions permitting the Company and the Trustee in certain circumstances, without the consent of the Holders of the Notes, and in other circumstances, with the consent of the Holders of not less than a majority in principal amount of the Notes at the time Outstanding, evidenced as in the Indenture provided, to execute supplemental indentures adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or modifying in any manner the rights of the Holders of the Notes; provided, however, that no such supplemental indenture shall make any of the changes set forth in Section 6.02 of the Supplemental Indenture and Section 7.02 of the Base Indenture, without the consent of each Holder of an Outstanding Note affected thereby.  It is also provided in the Indenture that, prior to any declaration accelerating the maturity of the Notes, the Holders of a majority in principal amount of the Notes at the time Outstanding may on behalf of the Holders of all of the Notes waive any past default or Event of Default under the Indenture and its consequences except as provided in the Indenture.  Any such consent or waiver by the Holder of this Note (unless revoked as provided in the Indenture) shall be conclusive and binding upon such Holder and upon all future Holders and owners of this Note and any Notes which may be issued in exchange or substitution hereof, irrespective of whether or not any notation thereof is made upon this Note or such other Notes.

 

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and accrued and unpaid interest on or the Repurchase Price or Redemption Price of, as applicable, this Note at the place, at the respective times, at the rate and in the lawful money herein prescribed.

 

The Notes are issuable in registered form without coupons in denominations of $1,000 principal amount and integral multiples thereof.  At the office or agency of the Company referred to on the face hereof, and in the manner and subject to the limitations provided in the Indenture, without payment of any service charge but with payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Notes (except as otherwise provided in the Base Indenture), Notes may be exchanged for a like aggregate principal amount of Notes of other authorized denominations.

 

  

  

  

 

Subject to and upon compliance with the provisions of the Indenture, the Holder may surrender for conversion all or any portion of this Note that is in an integral multiple of $1,000.  Upon conversion, the Holder shall be entitled to receive the consideration specified in the Indenture.  If all or any portion of this Note is converted at the Holder’s election on or prior to February 15, 2015, the Holder will receive an additional payment in an amount equal to the aggregate amount of interest payments that would have been payable on this Note from the last day through which interest was paid as of the Conversion Date, or July 25, 2012, if no interest has been paid, to February 15, 2015 (it being understood that no interest shall accrue on February 15, 2015).  No fractional share of Common Stock shall be issued upon conversion of a Note.  Instead, the Company shall pay cash in lieu of such fractional share of Common Stock as provided in the Indenture.  The initial Conversion Rate shall be 55.5555 shares of Common Stock per $1,000 principal amount of Notes, subject to adjustment in accordance with the provisions of the Indenture.  If a Holder converts all or a part of this Note in connection with the occurrence of certain Fundamental Change transactions, the Conversion Rate shall be increased in the manner and to the extent described in the Indenture.

 

Subject to the provisions of the Indenture, the Company may elect to automatically convert the Notes in whole or in part at any time if the Last Reported Sale Price of the Common Stock has exceeded 130% of the Conversion Price then in effect for at least 20 Trading Days in any 30 Trading Day period, upon the terms and conditions set forth in Section 8.11 of the Supplemental Indenture.  If any date on which the Notes will be automatically converted occurs on or prior to February 15, 2015, each Holder whose Notes are automatically converted thereby will receive an additional payment with respect to the Notes automatically converted in an amount equal to the aggregate amount of interest payments that would have been payable on such Notes from the last day through which interest was paid on such Notes as of the Automatic Conversion Date, or July 25, 2012, if no interest has been paid, to February 15, 2015 (it being understood that no interest shall accrue on February 15, 2015).

 

The Company must comply with certain financial maintenance covenants as set forth in Section 4.04 of the Supplemental Indenture so long as Section 4.04 is in effect and not suspended in accordance with the terms thereof.

 

Upon a breach by the Company of any of the financial covenants set forth in Section 4.04 of the Supplemental Indenture (so long as Section 4.04 is in effect and not suspended in accordance with the terms thereof), the Holder has the right, at such Holder’s option, to require the Company to repurchase up to 50% in aggregate principal amount of such Holder’s Notes or any portion thereof (in principal amounts of $1,000 or integral multiples thereof) in accordance with the provisions of the Indenture on the Business Day following the Covenant Breach Repurchase Date at a price equal to 110% of the principal amount of the Notes such holder elects to require the Company to repurchase, together with accrued and unpaid interest (including Additional Interest, if any) to but excluding the Covenant Breach Repurchase Date, except as otherwise provided in the Indenture.  The Company shall mail to all Holders of record of the Notes a notice of the occurrence of a breach of a covenant and of the repurchase right arising as a result thereof on or before the 20th calendar day after such breach in accordance with the procedures set forth in the Indenture.

 

Upon the occurrence of a Fundamental Change, the Holder has the right, at such Holder’s option, to require the Company to repurchase all of such Holder’s Notes or any portion thereof (in principal amounts of $1,000 or integral multiples thereof) in accordance with the provisions of the Indenture on the Business Day following the Fundamental Change Repurchase Date at a price equal to 100% of the principal amount of the Notes such holder elects to require the Company to repurchase, together with accrued and unpaid interest (including Additional Interest, if any) to but excluding the Fundamental Change Repurchase Date, except as otherwise provided in the Indenture.  The Company shall mail to all Holders of record of the Notes a notice of the occurrence of a Fundamental Change and of the repurchase right arising as a result thereof at any time following the Company entering into a definitive agreement that, if consummated, would give rise to a Fundamental Change, but in any event not later than the fifth (5th) calendar day after the occurrence of a Fundamental Change.

 

The Company may, at any time on or after February 15, 2015, at its option, redeem for cash all or any portion of the Outstanding Notes.  Additionally, prior to February 15, 2015, the Notes shall be redeemable at the Company’s option, on one occasion only, in whole or in part, after the occurrence of (i) a Fundamental Change or (ii) any transaction or event described in clauses (a), (d) or (e) of the definition of Fundamental Change in which at least 90% of the consideration paid for Common Stock (excluding cash payments for fractional shares, cash payments made pursuant to dissenters’ appraisal rights and cash dividends) consists of shares of common stock (or depositary receipts in respect thereof) traded on any of the New York Stock Exchange, the Nasdaq Global Market or the Nasdaq Global Select Market (or any of their respective successors) (or will be so traded or quoted immediately following the completion of the merger or consolidation or such other transaction) and, as a result of such transaction, the Notes become convertible into Reference Property.  The Redemption Price will be payable in cash and will equal 100% of the principal amount of the Notes being redeemed, plus accrued and unpaid interest (including Additional Interest, if any) to, but excluding, the Redemption Date.

 

  

  

  

 

The Notes will not be entitled to the benefit of any sinking fund.

 

Upon due presentment for registration of transfer of this Note at the office or agency of the Company, which shall initially be the Corporate Trust Office, a new Note or Notes of authorized denominations for an equal aggregate principal amount will be issued to the transferee in exchange thereof, subject to the limitations provided in the Indenture, without charge except for any tax, assessments or other governmental charge imposed in connection with any registration of transfer or exchange of Notes (except as otherwise set forth in the Base Indenture).

 

The Company, the Trustee, any authenticating agent, any Paying Agent, any Conversion Agent and any Security Registrar may deem and treat the registered Holder hereof as the absolute owner of this Note (whether or not this Note shall be overdue and notwithstanding any notation of ownership or other writing hereon), for the purpose of receiving payment hereof, or on account hereof, for the conversion hereof and for all other purposes, and neither the Company nor the Trustee nor any other authenticating agent nor any Paying Agent nor any other Conversion Agent nor any Security Registrar shall be affected by any notice to the contrary.  All payments made to or upon the order of such registered Holder shall, to the extent of the sum or sums paid, satisfy and discharge liability for monies payable on this Note.

 

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 Gift to Minors Act).

 

  

  

  

 

Schedule I

 

AV Homes, Inc.

 

7.50% Senior Exchange Convertible Notes due 2016

 

No.  1

 

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 for a Definitive Note or in connection with a Conversion, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:

 

	
Date of Exchange 

or Conversion

	 	

Amount of 

decrease in 

Principal Amount 

of this Global Note

	 	

Amount of 

increase in 

Principal Amount 

of this Global Note

	 	

Principal Amount 

of this Global Note following such 

decrease (or

increase)

	 	

Signature of 

authorized officer 

of Trustee or 

Custodianex10_1.htm

EXHIBIT 10.1

 

FORM

OF

EXCHANGE AGREEMENT

 

___________________ (the “Undersigned”), for itself and on behalf of the beneficial owners listed on Exhibit A hereto (“Accounts”) for whom the Undersigned  holds contractual and investment authority (each Account, as well as the Undersigned if it is exchanging Existing Notes (as defined below) hereunder, a “Holder”), enters into this Exchange Agreement (the “Agreement”) with AV Homes, Inc., a Delaware corporation (the “Company”) on July _______, 2012 whereby the Holders will exchange (the “Exchange”) the Company’s 7.50% Senior Convertible Notes due 2016 (the “Existing Notes”) for the Company’s new 7.50% Senior Exchange Convertible Notes due 2016 (the “New Notes”) that will be issued pursuant to the provisions of an Indenture dated as of February 4, 2011 (the “Base Indenture”) between the Company and Wilmington Trust, National Association (successor by merger to Wilmington Trust FSB), as Trustee (the “Trustee”), as supplemented by the Second Supplemental Indenture thereto, to be dated as of July _____, 2012 (the “Supplement,” and, together with the Base Indenture and all other supplements thereto, the “Indenture”) between the Company and the Trustee.

 

On and subject to the terms hereof, the parties hereto agree as follows:

 

Article I:  Exchange of the Existing Notes for New Notes

 

Subject to the terms set forth in this Agreement, at the Closing (as defined herein), the Undersigned hereby agrees to cause the Holders to exchange and deliver to the Company the following Existing Notes, and in exchange therefor the Company hereby agrees to issue to the Holders the principal amount of New Notes described below and to pay in cash the following accrued but unpaid interest on such Existing Notes:

	
Principal Amount of Existing Notes to be Exchanged:

	
$

	 
	 	(the “Exchanged Notes”).
	 	 	 
	
Principal Amount of New Notes to be Issued in the Exchange:

	
$

	 
	 	(the “Holders’ New Notes”).
	 	 	 
	
Cash Payment of Accrued but Unpaid Interest on Exchanged Notes: 

	$	 
	 	(the “Cash Payment”).

 

The closing of the Exchange (the “Closing”) shall occur on a date (the “Closing Date”) no later than three business days after the date of this Agreement.  At the Closing, (a) each Holder shall deliver or cause to be delivered to the Company all right, title and interest in and to its Exchanged Notes (and no other consideration) free and clear of any mortgage, lien, pledge, charge, security interest, encumbrance, title retention agreement, option, equity or other adverse claim thereto (collectively, “Liens”), together with any documents of conveyance or transfer that the Company may deem necessary or desirable to transfer to and confirm in the Company all right, title and interest in and to the Exchanged Notes free and clear of any Liens, and (b) the Company shall deliver to each Holder the principal amount of Holders’ New Notes and the portion of the Cash Payment specified on Exhibit A hereto (or, if there are no Accounts, the Company shall deliver to the Undersigned, as the sole Holder, the Holders’ New Notes and the Cash Payment specified above); provided, however, that the parties acknowledge that the delivery of the Holders’ New Notes to the Holder may be delayed due to procedures and mechanics within the system of the Depository Trust Company and that such delay will not be a default under this Agreement so long as (i) the Company is using its best efforts to effect the issuance of one or more global notes representing the New Notes, (ii) such delay is no longer than three business days, and (iii) interest shall accrue on such New Notes from the Closing Date.  Simultaneously with or after the Closing, the Company may issue New Notes to one or more other holders of outstanding Existing Notes or to other investors, subject to the terms of the Indenture.

 

  

  

  

 

Article II:  Covenants, Representations and Warranties of the Holders

 

Each Holder (and, where specified below, the Undersigned) hereby covenants (solely as to itself), as follows, and makes the following representations and warranties (solely as to itself), each of which is and shall be true and correct on the date hereof and at the Closing, to the Company, Lazard Frères & Co. LLC and Lazard Capital Markets LLC, and all such covenants, representations and warranties shall survive the Closing.

 

Section 2.1            Power and Authorization.  The Holder is duly organized, validly existing and in good standing, and has the power, authority and capacity to execute and deliver this Agreement, to perform its obligations hereunder, and to consummate the Exchange contemplated hereby.  If the Undersigned is executing this Agreement on behalf of Accounts, (a) the Undersigned has all requisite discretionary and contractual authority to enter into this Agreement on behalf of, and bind, each Account, and (b) Exhibit A hereto is a true, correct and complete list of (i) the name of each Account, (ii) the principal amount of such Account’s Exchanged Notes, (iii) the principal amount of Holders’ New Notes to be issued to such Account in respect of its Exchanged Notes, and (iv) the portion of the Cash Payment to be made to such Account in respect of the accrued interest on its Exchanged Notes.

 

Section 2.2            Valid and Enforceable Agreement; No Violations.  This Agreement has been duly executed and delivered by the Undersigned and the Holder and constitutes a legal, valid and binding obligation of the Undersigned and the Holder, enforceable against the Undersigned and the Holder in accordance with its terms, except that such enforcement may be subject to (a) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors’ rights generally, and (b) general principles of equity, whether such enforceability is considered in a proceeding at law or in equity (the “Enforceability Exceptions”).  This Agreement and consummation of the Exchange will not violate, conflict with or result in a breach of or default under (i) the Undersigned’s or the Holder’s organizational documents, (ii) any agreement or instrument to which the Undersigned or the Holder is a party or by which the Undersigned or the Holder or any of their respective assets are bound, or (iii) any laws, regulations or governmental or judicial decrees, injunctions or orders applicable to the Undersigned or the Holder.

 

Section 2.3            Title to the Exchanged Notes.  The Holder is the sole legal and beneficial owner of the Exchanged Notes set forth opposite its name on Exhibit A hereto (or, if there are no Accounts, the Undersigned is the sole legal and beneficial owner of all of the Exchanged Notes).  The Holder has good, valid and marketable title to its Exchanged Notes, free and clear of any Liens (other than pledges or security interests that the Holder may have created in favor of a prime broker under and in accordance with its prime brokerage agreement with such broker).  The Holder has not, in whole or in part, except as described in the preceding sentence, (a) assigned, transferred, hypothecated, pledged, exchanged or otherwise disposed of any of its Exchanged Notes or its rights in its Exchanged Notes, or (b) given any person or entity any transfer order, power of attorney or other authority of any nature whatsoever with respect to its Exchanged Notes.  Upon the Holder’s delivery of its Exchanged Notes to the Company pursuant to the Exchange, such Exchanged Notes shall be free and clear of all Liens created by the Holder.

 

Section 2.4            Accredited Investor & Qualified Institutional Buyer.  The Holder is: (i) an “accredited investor” within the meaning of Rule 501 of Regulation D (“Regulation D”) promulgated under the Securities Act of 1933, as amended (the “Securities Act”) and (ii) a “qualified institutional buyer” within the meaning of Rule 144A promulgated under the Securities Act.

 

Section 2.5            No Affiliate Status.  The Holder is not, and has not been during the consecutive three month period preceding the date hereof, a director, officer or “affiliate” within the meaning of Rule 144 promulgated under the Securities Act (an “Affiliate”) of the Company.  To its knowledge, the Holder did not acquire any of the Exchanged Notes, directly or indirectly, from an Affiliate of the Company.

 

  

2

  

 

Section 2.6            No Illegal Transactions.  Each of the Undersigned and the Holder has not, directly or indirectly, and no person acting on behalf of or pursuant to any understanding with it has, engaged in any transactions in the securities of the Company (including, without limitation, any Short Sales (as defined below) involving any of the Company’s securities) since the time that the Undersigned was first contacted by either the Company, Lazard Frères & Co. LLC or Lazard Capital Markets LLC or any other person regarding the Exchange, this Agreement or an investment in the New Notes or the Company.  Each of the Undersigned and the Holder covenants that neither it nor any person acting on its behalf or pursuant to any understanding with it will engage, directly or indirectly, in any transactions in the securities of the Company (including Short Sales) prior to the time the transactions contemplated by this Agreement are publicly disclosed.  “Short Sales” include, without limitation, all “short sales” as defined in Rule 200 of Regulation SHO promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and all types of direct and indirect stock pledges, forward sale contracts, options, puts, calls, short sales, swaps, derivatives and similar arrangements (including on a total return basis), and sales and other transactions through non-U.S. broker-dealers or foreign regulated brokers.  Solely for purposes of this Section 2.6, subject to the Undersigned’s and the Holder’s compliance with their respective obligations under the U.S. federal securities laws and the Undersigned’s and the Holder’s respective internal policies, (a) “Undersigned” and “Holder” shall not be deemed to include any employees, subsidiaries or affiliates of the Undersigned or the Holder that are effectively walled off by appropriate “Chinese Wall” information barriers approved by the Undersigned’s or the Holder's respective legal or compliance department (and thus have not been privy to any information concerning the Exchange), and (b) the foregoing representations of this Section 2.6 shall not apply to any transaction by or on behalf of an Account that was effected without the advice or participation of, or such Account’s receipt of information regarding the Exchange provided by, the Undersigned.

 

Section 2.7            Adequate Information; No Reliance. The Holder acknowledges and agrees that (a) the Holder has been furnished with all materials it considers relevant to making an investment decision to enter into the Exchange and has had the opportunity to review the Company’s filings and submissions with the Securities and Exchange Commission (the “SEC”), including, without limitation, all information filed or furnished pursuant to the Exchange Act, (b) the Holder has had a full opportunity to ask questions of the Company concerning the Company, its business, operations, financial performance, financial condition and prospects, and the terms and conditions of the Exchange, (c) the Holder has had the opportunity to consult with its accounting, tax, financial and legal advisors to be able to evaluate the risks involved in the Exchange and to make an informed investment decision with respect to such Exchange and (d) the Holder is not relying, and has not relied, upon any statement, advice (whether accounting, tax, financial, legal or other), representation or warranty made by the Company or any of its affiliates or representatives including, without limitation, Lazard Frères & Co. LLC and Lazard Capital Markets LLC, except for (A) the publicly available filings and submissions made by the Company with the SEC under the Exchange Act, and (B) the representations and warranties made by the Company in this Agreement.

 

Section 2.8            No Public Market. The Holder understands that no public market exists for the New Notes, and that there is no assurance that a public market will ever develop for the New Notes.

 

Article III:  Covenants, Representations and Warranties of the Company

 

The Company hereby covenants as follows, and makes the following representations and warranties, each of which is and shall be true and correct on the date hereof and at the Closing, to the Holders, Lazard Frères & Co. LLC and Lazard Capital Markets LLC, and all such covenants, representations and warranties shall survive the Closing.

 

Section 3.1            Power and Authorization.  The Company is duly incorporated, validly existing and in good standing under the laws of its state of incorporation, and has the power, authority and capacity to execute and deliver this Agreement and the Supplement, to perform its obligations hereunder and thereunder, and to consummate the Exchange contemplated hereby.

 

  

3

  

 

Section 3.2            Valid and Enforceable Agreements; No Violations.  This Agreement has been duly executed and delivered by the Company and constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except that such enforcement may be subject to the Enforceability Exceptions.  At the Closing, the Supplement, substantially in the form of Exhibit B hereto, will have been duly executed and delivered by the Company and will govern the terms of the New Notes, and the Indenture will constitute a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except that such enforcement may be subject to the Enforceability Exceptions.  This Agreement, the Indenture and consummation of the Exchange will not violate, conflict with or result in a breach of or default under (i) the charter, bylaws or other organizational documents of the Company, (ii) any agreement or instrument to which the Company is a party or by which the Company or any of its assets are bound, or (iii) any laws, regulations or governmental or judicial decrees, injunctions or orders applicable to the Company.

 

Section 3.3            Validity of the Holders’ New Notes.  The Holders’ New Notes have been duly authorized by the Company and, when executed and authenticated in accordance with the provisions of the Indenture and delivered to the Holder pursuant to the Exchange against delivery of the Exchanged Notes in accordance with the terms of this Agreement, the Holders’ New Notes will be valid and binding obligations of the Company, enforceable in accordance with their terms, except that such enforcement may be subject to the Enforceability Exceptions, and the Holders’ New Notes will not be subject to any preemptive, participation, rights of first refusal or other similar rights.  Assuming the accuracy of each Holder’s representations and warranties hereunder, the Holders’ New Notes (a) will be issued in the Exchange exempt from the registration requirements of the Securities Act pursuant to Section 4(2) of the Securities Act and Rule 506 of Regulation D, (b) will, at the Closing, be free of any restrictions on resale by such Holder pursuant to Rule 144 promulgated under the Securities Act, and (c) will be issued in compliance with all applicable state and federal laws concerning the issuance of the Holders’ New Notes.

 

Section 3.4            Validity of Underlying Common Stock.  The Holders’ New Notes will at the Closing be convertible into shares of Common Stock, par value $1.00 per share, of the Company (the “Conversion Shares”) in accordance with the terms of the Supplement.  The Conversion Shares have been duly authorized and reserved by the Company for issuance upon conversion of the Holders’ New Notes and, when issued upon conversion of the Holders’ New Notes in accordance with the terms of the Holders’ New Notes and the Indenture, will be validly issued, fully paid and non-assessable, and the issuance of the Conversion Shares will not be subject to any preemptive, participation, rights of first refusal or other similar rights.

 

Section 3.5            Listing Approval.  At the Closing, the Conversion Shares shall be eligible for trading on the NASDAQ Stock Market.

 

Section 3.6            Disclosure.  On or before the first business day following the date of this Agreement, the Company shall issue a publicly available press release or file with the SEC a Current Report on Form 8-K disclosing all material terms of the Exchange and certain other matters concerning the Company (to the extent not previously publicly disclosed).

 

Article IV:  Miscellaneous

 

Section 4.1            Entire Agreement.  This Agreement and any documents and agreements executed in connection with the Exchange embody the entire agreement and understanding of the parties hereto with respect to the subject matter hereof and supersede all prior and contemporaneous oral or written agreements, representations, warranties, contracts, correspondence, conversations, memoranda and understandings between or among the parties or any of their agents, representatives or affiliates relative to such subject matter, including, without limitation, any term sheets, emails or draft documents.

 

  

4

  

 

Section 4.2            Construction.  References in the singular shall include the plural, and vice versa, unless the context otherwise requires.  References in the masculine shall include the feminine and neuter, and vice versa, unless the context otherwise requires.  Headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meanings of the provisions hereof.  Neither party, nor its respective counsel, shall be deemed the drafter of this Agreement for purposes of construing the provisions of this Agreement, and all language in all parts of this Agreement shall be construed in accordance with its fair meaning, and not strictly for or against either party.

 

Section 4.3            Governing Law.  This Agreement shall in all respects be construed in accordance with and governed by the substantive laws of the State of New York, without reference to its choice of law rules.

 

Section 4.4            Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.  Any counterpart or other signature hereon delivered by facsimile shall be deemed for all purposes as constituting good and valid execution and delivery of this Agreement by such party.

 

[Signature Page Follows]

 

  

5

  

 

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed as of the date first above written.

 

	
“UNDERSIGNED”:

	  	
“COMPANY”:

	 	 	 
	  	  	
AV HOMES, INC.

	
(in its capacities described in the first paragraph hereof)

	  	  	  
	  	  	  	  	  
	
By:

	  	  	
By:

	  
	
Name

	  	  	
Name:

	  
	
Title:

	  	  	
Title:

	  

 

Signature Page to Exchange Agreement

AV Homes, Inc. 7.50% Senior Exchange Convertible Notes due 2016

 

  

  

  

 

EXHIBIT A

 

Exchanging Beneficial Owners

 

	
 

Name of

Beneficial Owner

	
 

Principal Amount of 

Exchanged Notes

	
 

Principal Amount of 

Holders’ New Notes

	
Cash Payment

	  	  	  	  
	  	  	  	  
	  	  	  	  
	  	  	  	  
	  	  	  	  
	  	  	  	  
	  	  	  	  
	  	  	  	  
	  	  	  	  
	  	  	  	  

 

  

  

  

 

EXHIBIT B

 

Form of Second Supplemental Indenture

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