Exhibit 4.1
FIRST SUPPLEMENTAL
INDENTURE
FIRST SUPPLEMENTAL INDENTURE dated
as of September 30, 2008 (this “Supplemental
Indenture”) among Thornburg Mortgage, Inc., a Maryland
corporation (the “Company”), the Note Guarantors (as
defined in the Indenture) listed on the signature pages hereto and
Wilmington Trust Company, as trustee (the “Trustee”), a
Delaware banking corporation organized under the laws of the State
of Delaware which has its corporate trust office at Rodney Square
North, 1100 North Market Street, Wilmington, Delaware
19890.
WHEREAS, the Company, the Note
Guarantors and the Trustee have heretofore executed and delivered
an Indenture dated as of March 31, 2008 (the “Original
Indenture” and, as supplemented by this Supplemental
Indenture and as further amended, supplemented, waived or otherwise
modified, the “Indenture”), pursuant to which an
aggregate principal amount of $1,150,000,000 of Senior Subordinated
Secured Notes due 2015 (the “Notes”) of the Company
were issued and are outstanding;
WHEREAS, Section 10.02 of the
Indenture provides that the Company, the Note Guarantors and the
Trustee may amend or supplement the Indenture, subject to certain
exceptions, with the written consent of the Holders (as defined in
the Indenture) of at least a majority in principal amount of the
Notes then outstanding voting as a single class;
WHEREAS, Section 10.02 of the
Indenture further provides that the Holders of at least a majority
in principal amount of the Notes then outstanding may waive in
writing compliance in a particular instance with any provision of
the Indenture, the Notes or any Note Guarantee (as defined in the
Indenture) with respect to Notes held by such Holder;
WHEREAS, Additional Notes (as
defined in the Indenture) may be issued from time to time pursuant
to the Indenture as at the time supplemented and modified, except
as may be limited in the Indenture as at the time supplemented and
modified, and the definition of “Permitted
Indebtedness” of the Indenture provides that the payment of
interest on any Indebtedness in the form of additional Indebtedness
with the same terms will not be deemed to be an incurrence of
Indebtedness for purposes of the provisions set forth in Sections
4.10 and 4.11 of the Indenture;
WHEREAS, the Company proposes to
issue, on the date hereof, Additional Notes under the Indenture as
set forth in a resolution of the Board of Directors (as defined in
the Indenture) and an Officers’ Certificate (as defined in
the Indenture) pursuant to Section 2.01(b) of the
Indenture;
WHEREAS, the Company has obtained a
consent dated September 30, 2008 (the “Consent”),
relating to the proposed amendments to and waivers of the
Indenture, the Notes and the Note Guarantees described herein, of
at least a majority in principal amount of the Notes outstanding
voting as a single class;
WHEREAS, the Company will pay PIK
Interest in lieu of all or a portion of the Cash Interest otherwise
due on September 30, 2008 in respect of Notes for which the
Company has received a Consent; and
WHEREAS, this Supplemental Indenture
has been duly authorized by all necessary corporate action on the
part of the Company and the Note Guarantors;
NOW, THEREFORE, in consideration of
the foregoing and for other good and valuable consideration, the
receipt of which is hereby acknowledged, the Company, the Note
Guarantors and the Trustee mutually covenant and agree as follows
for the benefit of each other and for the equal and ratable benefit
of the Holders of the Notes:
ARTICLE I
DEFINITIONS
Section 1.01
Definitions. As used in
this Supplemental Indenture, terms defined in the Original
Indenture or in the preamble or recitals hereto are used herein as
therein defined.
Section 1.02 Additional
Definitions. The
following definitions shall be added in alphabetical order to
Section 1.01 of the Indenture:
“Cash
Interest” means any
interest on the Notes, including Additional Interest, if any, paid
in cash.
“Consent”
means the consent dated
September 30, 2008, relating to the proposed amendments to and
waivers of the Indenture, the Notes and the Note Guarantees
described herein, of at least a majority in principal amount of the
Notes outstanding voting as a single class.
“First Supplemental
Indenture” means
the First Supplemental Indenture dated as of September 30,
2008 among the Company, the Note Guarantors and the
Trustee.
“PIK
Interest” means
interest paid on the Notes in the form of (1) an increase in
the outstanding principal amount of the Notes (with respect to
Global Notes) or (2) the issuance of PIK Notes (with respect
to Global Notes or Certificated Notes).
“PIK
Notes” means
Additional Notes issued under this Indenture on the same terms and
conditions as the Notes issued on the Issue Date in connection with
a PIK Payment.
“PIK
Payment” means an
interest payment with respect to the Notes made by (1) an
increase in the outstanding principal amount of the Notes or
(2) the issuance of PIK Notes.
ARTICLE II
AMENDMENTS
Section 2.01 Amendment to
Section 2.02 of the Original Indenture.
(a) Section 2.02(b) of the
Original Indenture shall be amended by deleting the section in its
entirety and replacing it with the following section:
“The Notes will be issued in
fully registered form, without coupons, in denominations of $1,000
and any larger integral multiple of $1,000, except PIK Notes may be
issued in minimum denominations of $1.00 and any integral multiple
thereof, and any increase in the principal amount of Notes as a
result of a PIK Payment may be made in integral multiples of $1.00.
Each Note shall be dated the date of its authentication.
For all purposes of this Indenture,
(1) all references to “principal amount” of the
Notes shall include any increase in the principal amount of the
Notes as a result of a PIK Payment and (2) the Initial Notes,
the Investment Amount Increase Notes, the Exchange Notes and the
Additional Notes, including PIK Notes, if any, shall constitute a
single class of securities for all purposes of this
Indenture.”
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Section 2.02 Addition of Section 2.18
to the Original Indenture.
(a) The following section shall be
added as Section 2.18 of the Indenture:
“(a) In respect of the
September 30, 2008 Interest Payment Date, the Company shall
deliver to the Trustee promptly thereafter, (i) if such PIK
Notes are Certificated Notes, the required amount of new
Certificated Notes (rounded up to the nearest whole dollar) and an
Authentication Order to authenticate and deliver such PIK Notes or
(ii) if such PIK Notes are Global Notes, an Authentication
Order to increase the outstanding principal amount of Notes by the
required amount (rounded up to the nearest whole dollar) (or, if
necessary, pursuant to the requirements of the DTC or otherwise to
authenticate and deliver such new Global Notes executed by the
Company with such increased principal amount in the forms of
Exhibits A, B, C, D and E hereto).
Any PIK Notes shall, after being
executed and authenticated, be (i) if such PIK Notes are
Certificated Notes, mailed to the person entitled thereto as shown
on the Note register for the Certificated Notes as of
September 15, 2008 or (ii) if such PIK Notes are Global
Notes, deposited into the account of the Holder or Holders thereof
as of September 15, 2008. Alternatively, in connection with
any PIK Payment, the Company may direct the Trustee to make
appropriate amendments to the schedule of principal amounts of the
relevant Global Notes outstanding for which PIK Notes will be
issued and arrange for deposit into the account of the Holder or
Holders thereof as of September 15, 2008.
Following an increase in the
principal amount of the outstanding Global Notes as a result of a
PIK Payment, the Global Notes will bear interest on such increased
principal amount from and after September 30, 2008. Any PIK
Notes issued in certificated form or as new Global Notes will be
dated as of September 30, 2008 and will bear interest from and
after such date. All Notes issued pursuant to a PIK Payment shall
be governed by, and subject to the terms, provisions and conditions
of, the Indenture and shall have the same rights and benefits as
the Notes issued on the Issue Date. Any PIK Notes issued in
certificated form will be issued with the description
“PIK” on the face of such PIK Note.
(b) Payment shall be made in such
form and terms as specified in this Section 2.18 and the
Company shall and the Trustee may take additional steps as is
necessary to effect such payment in accordance
herewith.”
Section 2.03 Amendment to
Section 4.01 of the Original Indenture.
(a) Section 4.01 of the
Original Indenture shall be amended by deleting the section in its
entirety and replacing it with the following section:
The Company shall pay or cause to be
paid the principal of, premium, if any, and interest and Additional
Interest, if any, on the Notes on the dates and in the manner
provided in the Notes. Principal, premium, if any, and Cash
Interest shall be considered paid on the date due if the Paying
Agent, if other than the Company or a Subsidiary, holds as of 10:00
a.m. Eastern Time on the due date money deposited by the Company in
immediately available funds and designated for and sufficient to
pay all principal, premium, if any, and interest then
due.
PIK Interest shall be paid in the
manner provided in Section 2.18 and the Notes. Any PIK Payment
shall be considered paid on the date it is due if on such date
(1) if PIK Notes (including PIK Notes that are Global Notes)
have been issued therefor, such PIK Notes have been authenticated
in
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accordance with the terms of this Indenture and
(2) if the PIK Payment is made by increasing the principal
amount of Global Notes then authenticated, the Trustee has
increased the principal amount of Global Notes then authenticated
by the required amount.
The Company shall pay interest
(including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal at the rate equal to the then
applicable interest rate on the Notes to the extent lawful; it
shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of
interest and Additional Interest (without regard to any applicable
grace period) at the same rate to the extent lawful.
Section 2.04 Amendment to
Paragraph 1 of Exhibits A, B, C, D and E of the Original
Indenture.
(a) The first paragraph of Paragraph
1 of the Back of Note of each of Exhibits A, B, C, D and E of the
Original Indenture shall be amended by deleting the section in its
entirety and replacing it with the following paragraph:
“ I
NTEREST . Thornburg Mortgage, Inc., a Maryland corporation
(the “Company”), promises to pay interest in cash on
the principal amount of this Note at 18.00% per annum until
maturity, except that upon the occurrence of the Triggering Event,
interest payable on this Note will decrease to 12.00% per
annum (the “Interest Rate Change”), provided that PIK
Interest may be paid in lieu of all or a portion of the Cash
Interest otherwise due on September 30, 2008 in respect of
Notes for which the Company has received a
Consent.”
Section 2.05 Amendment to
Paragraph 2 of Exhibits A, B, C, D and E of the Original
Indenture.
(a) Paragraph 2 of the Back of Note
of each of Exhibits A, B, C, D and E of the Original Indenture
shall be amended by deleting the section in its entirety and
replacing it with the following section:
“ M
ETHOD O F P AYMENT . The
Company will pay Cash Interest on the Notes (except defaulted
interest) to the Persons who are registered Holders of Notes at the
close of business on the March 15 or September 15 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 2.14 of the
Indenture with respect to defaulted interest. The Company will pay
any PIK Interest on the Notes in the manner provided in
Section 2.18 of the Indenture and Paragraph 1 of this
Note.
The Notes will be payable as to
principal, premium, if any, and interest 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
Cash Interest may be made by check mailed to the Holders at their
addresses set forth in the register of Holders, and provided that
if such Note is a Global Note, payment as to principal, premium, if
any, and interest shall be made by wire transfer of immediately
available funds to the account designated by the Depositary or its
nominee. 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. The Company reserves the
right to pay Cash Interest to Holders of Notes by check mailed to
such Holders at their registered addresses or by wire transfer to
Holders of at least $5 million aggregate principal amount of
Notes.
Any PIK Payment shall be considered
paid on the date it is due if on such date (1) if PIK Notes
(including PIK Notes that are Global Notes) have been issued
therefor, such PIK Notes have been authenticated in accordance with
the terms of the Indenture and (2) if the PIK Payment is made
by increasing the principal amount of Global Notes then
authenticated, the Trustee has increased the principal amount of
Global Notes then authenticated by the required
amount.”
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ARTICLE III
MISCELLANEOUS
Section 3.01 Effectiveness
of this Supplemental Indenture. Notwithstanding anything in the Indenture or the
Notes, this Supplemental Indenture shall be effective and operative
upon the execution and delivery of Consents in respect of at least
98% of the aggregate principal amount of the Notes and the
Indenture shall be supplemented in accordance herewith, and this
Supplemental Indenture shall form a part of the Indenture for all
purposes, and every Holder of Notes heretofore or hereafter
authenticated and delivered under the Indenture shall be bound
hereby.
Except as expressly amended hereby,
the Indenture is in all respects ratified and confirmed, and all
the terms, conditions and provisions thereof shall remain in full
force and effect without offset, defense or
counterclaim.
The recitals herein and in the PIK
Notes shall be taken as the statements of the Company, and the
Trustee assumes no responsibility for the correctness thereof. The
Trustee makes no representations as to the validity or sufficiency
of this Supplemental Indenture or of the PIK Notes. The Trustee
shall not be accountable for the use or application by the company
of the PIK Notes or of the proceeds thereof.
Section 3.02 Trust Indenture
Act Controls. If any
provision of this Supplemental Indenture limits, qualifies or
conflicts with the duties imposed by TIA § 318(c), such
imposed duties shall control.
Section 3.03 Governing
Law. THE LAW OF THE STATE
OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL
INDENTURE AND THE NOTES.
Section 3.04 No Adverse
Interpretation of Other Agreements. This Supplemental Indenture may not be used to
interpret the Indenture or any other indenture, supplemental
indenture loan or debt agreement of the Company or its Subsidiaries
or of any other Person.
Section 3.05
Successors. All
agreements of the Company, the Note Guarantors and the Trustee in
this Supplemental Indenture shall bind their respective
successors.
Section 3.06
Severability. In case any
provision in this Supplemental Indenture shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired
thereby.
Section 3.07 Counterpart
Originals. 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.
Section 3.08 Table of
Contents, Headings, etc. The headings of the Articles and Sections of
this Supplemental Indenture have been inserted for convenience of
reference only, are not to be considered a part of this
Supplemental Indenture and shall in no way modify or restrict any
of the terms or provisions hereof.
[Signatures on following
page]
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THORNBURG
MORTGAGE, INC.
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By:
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Name:
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Larry A.
Goldstone
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Title:
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Chairman
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THORNBURG
MORTGAGE HOME LOANS, INC.
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By:
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Name:
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Larry A.
Goldstone
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Title:
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Chairman
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ADFITECH,
INC.
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By:
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Name:
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Tom
Apel
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Title:
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Chief Executive
Officer
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THORNBURG
MORTGAGE HEDGING STRATEGIES, INC.
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By:
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Name:
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Larry A.
Goldstone
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Title:
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Chairman
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THORNBURG
ACQUISITION SUBSIDIARY, INC.
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By:
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Name:
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Larry A.
Goldstone
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Title:
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Chairman
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[First Supplemental Indenture
– Senior Subordinated Secured Notes]
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WILMINGTON
TRUST COMPANY, as Trustee
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By:
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/s/ Michael G. Oller, Jr.
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Name:
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Michael G.
Oller, Jr.
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Title:
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Assistant Vice
President
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[First Supplemental Indenture
– Senior Subordinated Secured Notes]
EXHIBIT A
[Face of Note]
FORM OF RESTRICTED GLOBAL
NOTE
THIS SECURITY IS ISSUED WITH
ORIGINAL ISSUE DISCOUNT UNDER SECTION 1272 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED. THE ISSUE DATE OF THE SECURITY IS [
], 20[ ]. THE ISSUE PRICE OF THE
SECURITY PER $1,000 OF PRINCIPAL AMOUNT, THE YIELD TO MATURITY AND
THE AMOUNT OF THE ORIGINAL ISSUE DISCOUNT AND CAN BE OBTAINED BY
SENDING A WRITTEN REQUEST TO THE COMPANY AT 150 WASHINGTON AVENUE,
SUITE 302 SANTA FE, NEW MEXICO 87501.
THIS NOTE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS
SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THIS NOTE WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN MINIMUM
DENOMINATIONS OF $1,000 ($100,000 FOR INSTITUTIONAL ACCREDITED
INVESTORS) AND INTEGRAL MULTIPLES OF $1,000 IN EXCESS
THEREOF.
THE HOLDER OF THIS NOTE BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH
NOTE, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION
DATE”) WHICH IS ONE YEAR AFTER THE LATER OF THE ORIGINAL
ISSUE DATE OF THIS NOTE AND THE LAST DATE ON WHICH THE COMPANY OR
ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE (OR ANY
PREDECESSOR OF SUCH NOTE), ONLY (a) TO THE COMPANY OR THE
PURCHASERS OR BY, THROUGH OR IN A TRANSACTION APPROVED BY, THE
PURCHASERS, (b) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS
BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (c) FOR SO
LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A
“QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (d) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR (AS DEFINED IN
RULE 501(a)(1), (2), (3), OR (7) UNDER THE SECURITIES
ACT) ACQUIRING THE SECURITIES FOR ITS OWN ACCOUNT OR AS A FIDUCIARY
OR AGENT FOR OTHERS (WHICH OTHERS MUST ALSO BE INSTITUTIONAL
ACCREDITED INVESTORS UNLESS SUCH TRANSFEREE IS A BANK ACTING IN ITS
FIDUCIARY CAPACITY) FOR INVESTMENT PURPOSES AND NOT FOR
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (e) PURSUANT
TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES TO AN
INSTITUTION THAT IS NOT A U.S. PERSON (AND WAS NOT PURCHASING FOR
THE ACCOUNT OR BENEFIT OF A U.S. PERSON) WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, OR (f) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, SUBJECT IN EACH OF THE FOREGOING CASES, TO A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF
THIS
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NOTE BEING COMPLETED AND DELIVERED BY THE
TRANSFEROR AND, IF APPLICABLE, THE TRANSFEREE TO THE TRUSTEE. THIS
LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE.
THE HOLDER OF THIS NOTE BY ITS
ACCEPTANCE HEREOF AGREES TO BE BOUND BY THE PROVISIONS OF THE
REGISTRATION RIGHTS AGREEMENT RELATING TO ALL NOTES OF THE
SERIES.
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.
UNLESS AND UNTIL THIS CERTIFICATE
IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM,
THIS CERTIFICATE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC TO
A NOMINEE THEREOF OR BY A NOMINEE THEREOF TO DTC OR ANOTHER NOMINEE
OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF DTC OR A
NOMINEE OF SUCH SUCCESSOR.
CUSIP [
]
ISIN [
]
Senior Subordinated Secured Notes
due 2015
[PIK]
THORNBURG MORTGAGE, INC.
promises to pay to
, or registered
assigns, the principal sum of
Dollars on March 31,
2015.
Interest Payment Dates:
March 31 and September 30
Record Dates: March 15 and
September 15
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THORNBURG
MORTGAGE, INC.
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By:
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Name:
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Title:
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By:
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Name:
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Title:
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This is one of
the Notes referred to in the within-mentioned Indenture:
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WILMINGTON TRUST COMPANY
as Trustee
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By:
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Authorized Signatory
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Date:
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A-3
[Back of Note]
Senior Subordinated Secured Notes due
2015
Capitalized terms used herein shall
have the meanings assigned to them in the Indenture referred to
below unless otherwise indicated.
1. I NTEREST . Thornburg Mortgage, Inc., a Maryland corporation
(the “Company”), promises to pay interest in cash on
the principal amount of this Note at 18.00% per annum until
maturity, except that upon the occurrence of the Triggering Event,
interest payable on this Note will decrease to 12.00% per
annum (the “Interest Rate Change”), provided that PIK
Interest may be paid in lieu of all or a portion of the Cash
Interest otherwise due on September 30, 2008 in respect of
Notes for which the Company has received a Consent.
The Company will pay interest
semi-annually in arrears on March 31 and September 30 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 [
], 20[ ]; 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 [
], 20[ ]; provided, further, that
upon the occurrence of the Interest Rate Change, all unpaid
interest accrued at a rate in excess of 12.00% per annum at
that time shall be cancelled. 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 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 (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.
2. M ETHOD O F P AYMENT . The
Company will pay Cash Interest on the Notes (except defaulted
interest) to the Persons who are registered Holders of Notes at the
close of business on the March 15 or September 15 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 2.14 of the
Indenture with respect to defaulted interest. The Company will pay
any PIK Interest on the Notes in the manner provided in
Section 2.18 of the Indenture and Paragraph 1 of this
Note.
The Notes will be payable as to
principal, premium, if any, and interest 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
Cash Interest may be made by check mailed to the Holders at their
addresses set forth in the register of Holders, and provided that
if such Note is a Global Note, payment as to principal, premium, if
any, and interest shall be made by wire transfer of immediately
available funds to the account designated by the Depositary or its
nominee. 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. The Company reserves the
right to pay Cash Interest to Holders of Notes by check mailed to
such Holders at their registered addresses or by wire transfer to
Holders of at least $5 million aggregate principal amount of
Notes.
Any PIK Payment shall be considered
paid on the date it is due if on such date (1) if PIK Notes
(including PIK Notes that are Global Notes) have been issued
therefor, such PIK Notes have been authenticated in accordance with
the terms of the Indenture and (2) if the PIK Payment is made
by increasing the principal amount of Global Notes then
authenticated, the Trustee has increased the principal amount of
Global Notes then authenticated by the required amount.
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3. P AYING A GENT A ND R EGISTRAR . Initially, Wilmington Trust Company, 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. I NDENTURE . The
Company issued the Notes under an Indenture dated as of
March 31, 2008 (the “Indenture”) among the
Company, the Note Guarantors named therein 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 §§ 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. The Notes are obligations of the
Company. The Company is issuing $1,150.0 million in aggregate
principal amount on the Issue Date and may issue up to $200.0
million in aggregate principal amount of Investment Amount Increase
Notes and further Additional Notes in accordance with the terms of
the Indenture. The Notes and the Investment Amount Increase Notes,
the Exchange Notes and the Additional Notes, if any, shall be
treated as a single class of securities for all purposes under the
Indenture.
5. O PTIONAL R EDEMPTION .
The Notes shall not be subject to
optional redemption by the Company prior to Maturity.
6. M ANDATORY R EDEMPTION .
Except as set forth in paragraph 7
below, the Company shall not be required to make mandatory
redemption payments with respect to the Notes.
7. R EPURCHASE A T
O PTION O F H OLDER . Upon
the occurrence of a Change of Control, the Company will be required
to offer to purchase all of the outstanding Notes at a purchase
price equal to 101% of the principal amount thereof, plus accrued
and unpaid interest, if any, thereon to the date of
repurchase.
8. D ENOMINATIONS , T RANSFER , E XCHANGE . 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 and
the Trustee may require a Holder to pay any taxes and fees required
by law or permitted by the Indenture. If, this Note is exchanged in
an Exchange Offer prior to the Record Date for the first Interest
Payment Date following such exchange, accrued and unpaid interest,
if any, on this Note, up to but not including the date of issuance
of the Note(s) issued in exchange (the “Exchange Note”)
for this Note, shall be paid on the first Interest Payment Date for
such Exchange Note(s) to the Holder or Holders of such Exchange
Note(s) on the first Record Date with respect to such Exchange
Note(s). If this Note is exchanged in an Exchange Offer subsequent
to the Record Date for the first Interest Payment Date following
such exchange but on or prior to the Interest Payment Date, then
any such accrued and unpaid interest with respect to this Note and
any accrued and unpaid interest on the Exchange Note(s) issued in
exchange for this Note, through the day before such Interest
Payment Date, shall be paid on such Interest Payment Date to the
Holder of this Note on the Record Date.
The Holder of this Note is entitled
to the benefits of the Registration Rights Agreement dated
March 31, 2008 (the “Registration Rights
Agreement”) among the Company, the Note Guarantors and the
Purchasers, including provisions relating to payment of Additional
Interest.
A-5
9. N OTICE OF THE O CCURRENCE OF THE T RIGGERING E VENT .
The Company shall provide prompt written notice to the Trustee,
upon the occurrence of the Triggering Event, of the effective date
of such event for purposes of the Interest Rate Change.
10. P ERSONS D EEMED O WNERS . The
registered Holder of a Note may be treated as its owner for all
purposes.
11. A MENDMENT , S UPPLEMENT A ND W AIVER . Subject to certain exceptions, the Indenture,
the Notes or the Note Guarantees may be amended or supplemented
with the written consent of the Holders of at least a majority in
principal amount of the then outstanding Notes voting as a single
class, and any existing default or compliance with any provision of
the Indenture, the Notes or the Note Guarantees may be waived with
the written consent of the Holders of a majority in principal
amount of the then outstanding Notes voting as a single class.
Without the consent of any Holder of a Note, the Indenture, the
Notes and the Note Guarantees 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 any
Note 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 in any material respects the rights
under the Indenture of any such Holder, to release a Note Guarantor
from its obligations under its Note Guarantee, the Notes
or the Indenture in accordance with the applicable provisions
of the Indenture or to add Note Guarantees with respect to the
Notes, to provide additional Note Lien Collateral as security for
the Notes or to release Note Liens in favor of the Note Lien
Collateral Agent in accordance with the applicable provisions of
the Indenture, to issue Additional Notes as permitted in the
Indenture, to comply with the requirements of the Commission in
order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act or to evidence and provide for the
acceptance of appointment under the Indenture of a successor
Trustee.
12. D EFAULTS A ND R EMEDIES . Events of Default are set forth in the
Indenture. 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 writing 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 written 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, or the principal of, the Notes. The Company
and the Note Guarantors are required to deliver to the Trustee
annually a statement regarding compliance with the Indenture, and
the Company and the Guarantors are 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. N OTE G UARANTORS . After the Issue Date, the Company shall cause
each additional Note Guarantor to execute and deliver to the
Trustee a Note Guarantee pursuant to which such Note Guarantor
shall unconditionally Guarantee, on a joint and several basis, the
full and prompt payment of the principal of, premium, if any and
interest on the Notes on a senior subordinated basis, as set forth
in the Indenture.
A-6
14. T RUSTEE D EALINGS W ITH C OMPANY . 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.
15. N O R ECOURSE A GAINST O THERS . A
director, officer, employee, incorporator or stockholder, of the
Company, as such, shall not have any liability for any obligations
of the Company under the Notes 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.
16. A UTHENTICATION . This
Note shall not be valid until authenticated by facsimile or manual
signature of the Trustee or an authenticating agent.
17. A BBREVIATIONS . 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).
18. C USIP N UMBERS . 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. Requests may be made to:
Thornburg Mortgage, Inc.
150 Washington Avenue, Suite 302
Santa Fe, New Mexico 87501
Attention: Investor Relations
A-7
NOTATION OF
GUARANTEE
For value received, each Note
Guarantor (which term includes any successor Person under the
Indenture) has fully, unconditionally and irrevocably guaranteed,
as primary obligor and not merely as surety, jointly and severally
with each other Note Guarantor, to each Holder of the Notes, the
Trustee and the Note Lien Collateral Agent the full and punctual
payment when due, whether at maturity, by acceleration, by
redemption or otherwise, of the principal of, premium, if any, and
interest and Additional Interest, if any, on the Notes and all
other monetary obligations of the Company under the Indenture (all
the foregoing being hereinafter collectively called the
“Company Obligations”). Each Note Guarantor has further
agreed (to the extent permitted by law) that the Company
Obligations may be extended or renewed, in whole or in part,
without notice or further assent from it, and that it shall remain
bound under Article XI of the Indenture notwithstanding any
extension or renewal of any Company Obligation. Each Note Guarantor
further agrees that its Note Guarantee herein constitutes a
Guarantee of payment when due (and not a Guarantee of collection)
and waives any right to require that any resort be had by any
Holder to any security held for payment of the Company Obligations.
The obligations of the Note Guarantors to the Holders of Notes,
Trustee and the Note Lien Collateral Agent pursuant to the
Indenture are set forth primarily in Article XI of the Indenture,
and are subject to all other applicable provisions of the
Indenture, including without limitation the Subordination of Note
Guarantee described in Section 12.10 of the Indenture. Each
Holder of a Note, by accepting the same agrees to and shall be
bound by such provisions.
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THORNBURG MORTGAGE HOME LOANS, INC.
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By:
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Name:
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Title:
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ADFITECH,
INC.
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By:
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Name:
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Title:
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THORNBURG
MORTGAGE HEDGING STRATEGIES, INC.
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By:
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Name:
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Title:
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THORNBURG ACQUISITION SUBSIDIARY, INC.
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By:
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Name:
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Title:
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A-8
ASSIGNMENT FORM
To assign this Note, fill in the
form below:
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(I) or (we) assign and transfer this Note to:
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(Insert
assignee’s legal name)
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(Insert assignee’s soc. sec.
or tax I.D. no.)
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(Print or type assignee’s
name, address and zip code)
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and irrevocably appoint
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to transfer
this Note on the books of the Company. The agent may substitute
another to act for him.
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Date:
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Your Signature:
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(Sign exactly
as your name appears on the face of this Note)
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Signature Guarantee*:
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*
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Participant in
a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
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A-1
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this
Note purchased by the Company pursuant to Section 4.15 of the
Indenture, check the following box: ¨
If you want to elect to have only
part of the Note purchased by the Company pursuant to
Section 4.15 of the Indenture, state the amount you elect to
have purchased:
$
Date:
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Your Signature:
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(Sign exactly
as your name appears on the face of this Note)
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Signature Guarantee*:
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*
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Participant in
a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
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A-2
ASSIGNMENT & TRANSFER
CERTIFICATE
TO BE COMPLETED AND DELIVERED
WITH THIS NOTE TO THE TRUSTEE IF THE UNDERSIGNED REGISTERED HOLDER
WISHES TO SELL, ASSIGN AND TRANSFER NOTE:
In connection with the resale or
other transfer of this Note occurring prior to the time the legend
originally set forth on the face of this Note (or one or more
predecessor Notes) restricting resales and other transfers thereof
has been removed in accordance with the procedures set forth in the
Indenture (other than a resale or other transfer made to the
Company or to, by, through, or in a transaction approved by the
Purchasers), the undersigned registered holder certifies that
without utilizing any general solicitation or general
advertising:
[CHECK ONE]
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¨
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(a)
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Such Note is
being transferred by the undersigned registered holder to a
“qualified institutional buyer,” as defined in
Rule 144A under the Securities Act of 1933, as amended,
pursuant to the exemption from registration under the Securities
Act of 1933, as amended, provided by Rule 144A
thereunder.
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or
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¨
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(b)
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Such Note is
being transferred by the undersigned registered holder to an
institutional investor which is an “accredited
investor,” as defined in Rule 501(a)(1), (2),
(3) or (7) under the Securities Act of 1933, as amended,
and that the undersigned has been advised by the prospective
transferee that such transferee shall hold such Note for its own
account, or as a fiduciary or agent for others (which others are
also institutional accredited investors, unless such transferee is
a bank acting in its fiduciary capacity), for investment purposes
and not for distribution, subject to any requirement of law that
the disposition of such transferee’s property shall at all
times be and remain within its control.
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or
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¨
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(c)
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Such Note is
being transferred by the undersigned registered holder to an
institutional investor which is a person that is not a “U.S.
person” (or acquiring such Note for the account or benefit of
a U.S. person) in an “offshore transaction,” as such
terms are defined in Regulation S under the Securities Act of
1933, as amended, pursuant to the exemption from registration under
the Securities Act of 1933, as amended, provided by
Regulation S thereunder.
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A-3
If none of the foregoing boxes are
checked, then, so long as this Note shall bear a legend on the face
thereof restricting resales and other transfers thereof (except in
the case of a resale or other transfer made to the Company or to,
by, through, or in a transaction approved by, the Purchasers), the
Trustee shall not be obligated to register such Note in the name of
any Person other than the registered holder thereof and until the
conditions to any such registration of transfer set forth in this
Note and in the Indenture shall have been satisfied.
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Dated:
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[Type or print
name of registered holder]
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By:
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The signature
of the registered holder must correspond with the name as written
upon the face of this Note in every particular, without alteration
or enlargement or any change whatsoever.
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TO BE COMPLETED BY
TRANSFEREE
IF (a) ABOVE IS CHECKED:
The undersigned transferee
represents and warrants that (i) it is a “qualified
institutional buyer,” as defined in Rule 144A under the
Securities Act of 1933, as amended, and acknowledges that the
undersigned either has received such information regarding the
Company as the undersigned transferee has requested pursuant to
Rule 144A or has determined not to request such information,
(ii) this instrument has been executed on behalf of the
undersigned transferee by one of its executive officers and
(iii) it is aware that the registered holder of this Note is
relying upon the undersigned transferee’s foregoing
representations in order to claim the exemption from registration
provided by Rule 144A. The undersigned transferee acknowledges
and agrees that this Note has not been registered under the
Securities Act of 1933, as amended, and may not be transferred
except in accordance with the resale and other transfer
restrictions set forth in the legend on the face
thereof.
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Dated:
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[Type or print
name of transferee]
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By:
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Executive Officer
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TO BE COMPLETED BY
TRANSFEREE
IF (b) ABOVE IS CHECKED:
The undersigned transferee
represents and warrants that it is an institutional investor and an
“accredited investor,” as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities
Act of 1933, as amended, and that this instrument has been executed
on behalf of the undersigned transferee by one of its executive
officers. The undersigned transferee undertakes to hold this Note
acquired from the registered holder thereof for its own account, or
as a fiduciary or agent for others (which others are also
institutional accredited investors, unless such transferee is a
bank acting in its fiduciary capacity), for investment purposes and
not for distribution, subject to any requirement of law that the
disposition of the undersigned transferee’s property shall at
all times be and remain within its control. The undersigned
acknowledges
A-4
and agrees that this Note has not been
registered under the Securities Act of 1933, as amended, and may
not be transferred except in accordance with the resale and other
transfer restrictions set forth in the legend on the face
thereof.
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Dated:
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[Type or print
name of transferee]
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By:
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Executive Officer
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TO BE COMPLETED BY
TRANSFEREE
IF (c) ABOVE IS CHECKED:
The undersigned transferee
represents and warrants that it is an institutional investor and
that it is not a U.S. person (as defined in Regulation S under
the Securities Act of 1933, as amended) and it is acquiring this
Note from the registered holder thereof in an “offshore
transaction” (as defined in Regulation S) pursuant to
the exemption from registration under the Securities Act of 1933,
as amended, provided by Regulation S thereunder. The
undersigned transferee acknowledges and agrees that this Note has
not been registered under the Securities Act of 1933, as amended,
and may not be transferred except in accordance with the resale and
other transfer restrictions set forth in the legend on the face
thereof.
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Dated:
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[Type or print
name of transferee]
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By:
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Executive Officer
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A-5
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL
NOTE*
The initial outstanding principal
amount of this Global Note is $
. The following exchanges of a part of this Global Note for an
interest in another Global Note or for a Certificated Note, or
exchanges of a part of another Global or Certificated Note for an
interest in this Global Note, have been made:
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Amount of
decrease
in Principal
Amount of this
Global Note
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Amount of increase
in Principal
Amount of this
Global Note
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Principal
Amount of
this Global Note
following such
decrease or
increase
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Signature of
authorized officer
of Trustee or
Custodian
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*
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This schedule
should be included only if the Note is issued in global
form.
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A-6
EXHIBIT B
[Face of Note]
FORM OF REGULATION S GLOBAL
NOTE
THIS SECURITY IS ISSUED WITH
ORIGINAL ISSUE DISCOUNT UNDER SECTION 1272 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED. THE ISSUE DATE OF THE SECURITY IS [
], 20[ ]. THE ISSUE PRICE OF THE
SECURITY PER $1,000 OF PRINCIPAL AMOUNT, THE YIELD TO MATURITY AND
THE AMOUNT OF THE ORIGINAL ISSUE DISCOUNT AND CAN BE OBTAINED BY
SENDING A WRITTEN REQUEST TO THE COMPANY AT 150 WASHINGTON AVENUE,
SUITE 302 SANTA FE, NEW MEXICO 87501.
THIS NOTE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION, NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS
SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION,
THIS NOTE WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN MINIMUM
DENOMINATIONS OF $1,000 ($100,000 FOR INSTITUTIONAL ACCREDITED
INVESTORS) AND INTEGRAL MULTIPLES OF $1,000 IN EXCESS
THEREOF.
THE HOLDER OF THIS NOTE BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH
NOTE, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION
DATE”) WHICH IS 40 DAYS AFTER THE LATER OF THE ORIGINAL ISSUE
DATE OF THIS NOTE AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE (OR ANY
PREDECESSOR OF SUCH NOTE), ONLY (a) TO THE COMPANY OR THE
PURCHASERS OR BY, THROUGH OR IN A TRANSACTION APPROVED BY, THE
PURCHASERS, (b) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS
BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (c) FOR SO
LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A
“QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (d) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR (AS DEFINED IN
RULE 501(a)(1), (2), (3), OR (7) UNDER THE SECURITIES
ACT) ACQUIRING THE SECURITIES FOR ITS OWN ACCOUNT OR AS A FIDUCIARY
OR AGENT FOR OTHERS (WHICH OTHERS MUST ALSO BE INSTITUTIONAL
ACCREDITED INVESTORS UNLESS SUCH TRANSFEREE IS A BANK ACTING IN ITS
FIDUCIARY CAPACITY) FOR INVESTMENT PURPOSES AND NOT FOR
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (e) PURSUANT
TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES TO AN
INSTITUTION THAT IS NOT A U.S. PERSON (AND WAS NOT PURCHASING FOR
THE ACCOUNT OR BENEFIT OF A U.S. PERSON) WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, OR (f) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, SUBJECT IN EACH OF THE FOREGOING CASES, TO A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF
THIS
B-1
NOTE BEING COMPLETED AND DELIVERED BY THE
TRANSFEROR AND, IF APPLICABLE, THE TRANSFEREE TO THE TRUSTEE. THIS
LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE.
BY ITS ACQUISITION HEREOF, THE
HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT
PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND IS ACQUIRING THIS
SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH
REGULATION S UNDER THE SECURITIES ACT .
THE HOLDER OF THIS NOTE BY ITS
ACCEPTANCE HEREOF AGREES TO BE BOUND BY THE PROVISIONS OF THE
REGISTRATION RIGHTS AGREEMENT RELATING TO ALL NOTES OF THE
SERIES.
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.
UNLESS AND UNTIL THIS CERTIFICATE
IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM,
THIS CERTIFICATE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC TO
A NOMINEE THEREOF OR BY A NOMINEE THEREOF TO DTC OR ANOTHER NOMINEE
OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF DTC OR A
NOMINEE OF SUCH SUCCESSOR.
CUSIP [
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ISIN [
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Senior Subordinated Secured Notes
due 2015
[PIK]
THORNBURG MORTGAGE, INC.
promises to pay to
, or registered assigns, the principal sum of
Dollars on March 31,
2015.
Interest Payment Dates:
March 31 and September 30
Record Dates: March 15 and
September 15
B-2
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THORNBURG MORTGAGE, INC.
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By:
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Name:
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Title:
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By:
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Name:
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Title:
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This is one of
the Notes referred to in the within-mentioned Indenture:
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WILMINGTON TRUST COMPANY
as Trustee
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By:
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Authorized Signatory
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Date:
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B-3
[Back of Note]
Senior Subordinated Secured Notes due
2015
Capitalized terms used herein shall
have the meanings assigned to them in the Indenture referred to
below unless otherwise indicated.
1. I NTEREST . Thornburg Mortgage, Inc., a Maryland corporation
(the “Company”), promises to pay interest in cash on
the principal amount of this Note at 18.00% per annum until
maturity, except that upon the occurrence of the Triggering Event,
interest payable on this Note will decrease to 12.00% per
annum (the “Interest Rate Change”), provided that PIK
Interest may be paid in lieu of all or a portion of the Cash
Interest otherwise due on September 30, 2008 in respect of
Notes for which the Company has received a Consent.
The Company will pay interest
semi-annually in arrears on March 31 and September 30 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 [
], 20[ ]; 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 [
], 20[ ]; provided, further, that
upon the occurrence of the Interest Rate Change, all unpaid
interest accrued at a rate in excess of 12.00% per annum at
that time shall be cancelled. 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 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 (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.
2. M ETHOD O F P AYMENT . The
Company will pay Cash Interest on the Notes (except defaulted
interest) to the Persons who are registered Holders of Notes at the
close of business on the March 15 or September 15 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 2.14 of the
Indenture with respect to defaulted interest. The Company will pay
any PIK Interest on the Notes in the manner provided in
Section 2.18 of the Indenture and Paragraph 1 of this
Note.
The Notes will be payable as to
principal, premium, if any, and interest 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
Cash Interest may be made by check mailed to the Holders at their
addresses set forth in the register of Holders, and provided that
if such Note is a Global Note, payment as to principal, premium, if
any, and interest shall be made by wire transfer of immediately
available funds to the account designated by the Depositary or its
nominee. 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. The Company reserves the
right to pay Cash Interest to Holders of Notes by check mailed to
such Holders at their registered addresses or by wire transfer to
Holders of at least $5 million aggregate principal amount of
Notes.
Any PIK Payment shall be considered
paid on the date it is due if on such date (1) if PIK Notes
(including PIK Notes that are Global Notes) have been issued
therefor, such PIK Notes have been authenticated in accordance with
the terms of the Indenture and (2) if the PIK Payment is made
by increasing the principal amount of Global Notes then
authenticated, the Trustee has increased the principal amount of
Global Notes then authenticated by the required amount.
B-4
3. P AYING A GENT A ND R EGISTRAR . Initially, Wilmington Trust Company, 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. I NDENTURE . The
Company issued the Notes under an Indenture dated as of
March 31, 2008 (the “Indenture”) among the
Company, the Note Guarantors named therein 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 §§ 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. The Notes are obligations of the
Company. The Company is issuing $1,150.0 million in aggregate
principal amount on the Issue Date and may issue up to $200.0
million in aggregate principal amount of Investment Amount Increase
Notes and further Additional Notes in accordance with the terms of
the Indenture. The Notes and the Investment Amount Increase Notes,
the Exchange Notes and the Additional Notes, if any, shall be
treated as a single class of securities for all purposes under the
Indenture.
5. O PTIONAL R EDEMPTION .
The Notes shall not be subject to
optional redemption by the Company prior to Maturity.
6. M ANDATORY R EDEMPTION .
Except as set forth in paragraph 7
below, the Company shall not be required to make mandatory
redemption payments with respect to the Notes.
7. R EPURCHASE A T
O PTION O F H OLDER . Upon
the occurrence of a Change of Control, the Company will be required
to offer to purchase all of the outstanding Notes at a purchase
price equal to 101% of the principal amount thereof, plus accrued
and unpaid interest, if any, thereon to the date of
repurchase.
8. D ENOMINATIONS , T RANSFER , E XCHANGE . 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 and
the Trustee may require a Holder to pay any taxes and fees required
by law or permitted by the Indenture. If, this Note is exchanged in
an Exchange Offer prior to the Record Date for the first Interest
Payment Date following such exchange, accrued and unpaid interest,
if any, on this Note, up to but not including the date of issuance
of the Note(s) issued in exchange (the “Exchange Note”)
for this Note, shall be paid on the first Interest Payment Date for
such Exchange Note(s) to the Holder or Holders of such Exchange
Note(s) on the first Record Date with respect to such Exchange
Note(s). If this Note is exchanged in an Exchange Offer subsequent
to the Record Date for the first Interest Payment Date following
such exchange but on or prior to the Interest Payment Date, then
any such accrued and unpaid interest with respect to this Note and
any accrued and unpaid interest on the Exchange Note(s) issued in
exchange for this Note, through the day before such Interest
Payment Date, shall be paid on such Interest Payment Date to the
Holder of this Note on the Record Date.
The Holder of this Note is entitled
to the benefits of the Registration Rights Agreement dated
March 31, 2008 (the “Registration Rights
Agreement”) among the Company, the Note Guarantors and the
Purchasers, including provisions relating to payment of Additional
Interest.
B-5
9. N OTICE OF THE O CCURRENCE OF THE T RIGGERING E VENT . The
Company shall provide prompt written notice to the Trustee, upon
the occurrence of the Triggering Event, of the effective date of
such event for purposes of the Interest Rate Change.
10. P ERSONS D EEMED O WNERS . The
registered Holder of a Note may be treated as its owner for all
purposes.
11. A MENDMENT , S UPPLEMENT A ND W AIVER . Subject to certain exceptions, the Indenture,
the Notes or the Note Guarantees may be amended or supplemented
with the written consent of the Holders of at least a majority in
principal amount of the then outstanding Notes voting as a single
class, and any existing default or compliance with any provision of
the Indenture, the Notes or the Note Guarantees may be waived with
the written consent of the Holders of a majority in principal
amount of the then outstanding Notes voting as a single class.
Without the consent of any Holder of a Note, the Indenture, the
Notes and the Note Guarantees 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 any
Note 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 in any material respects the rights
under the Indenture of any such Holder, to release a Note Guarantor
from its obligations under its Note Guarantee, the Notes
or the Indenture in accordance with the applicable provisions
of the Indenture or to add Note Guarantees with respect to the
Notes, to provide additional Note Lien Collateral as security for
the Notes or to release Note Liens in favor of the Note Lien
Collatera
