THIRD SUPPLEMENTAL INDENTURE
THIRD SUPPLEMENTAL INDENTURE (this "Third Supplemental Indenture"), dated
as of March 14, 2002, between NVR, INC., a Virginia corporation (the "Company"),
and U.S. Bank Trust National Association, a national banking association, as
successor to the Bank of New York (the "Trustee"), as Trustee under the Base
Indenture, the First Supplemental Indenture, and the Second Supplemental
Indenture (each as hereinafter defined) and this Third Supplemental Indenture.
Capitalized terms used and not otherwise defined herein shall have the meaning
set forth in the Base Indenture.
RECITALS
WHEREAS, the Company and the Trustee have heretofore executed and delivered
to the Trustee an Indenture, dated as of April 14, 1998 (the "Base Indenture"),
as amended and supplemented by the first supplemental indenture, dated as of
April 14, 1998 (the "First Supplemental Indenture"), and the second supplemental
indenture, dated as of February 27, 2001 (the "Second Supplemental Indenture"
and, together with the Base Indenture and the First Supplemental Indenture, the
"Indenture") pursuant to which the Company's 8% Senior Notes due 2005 were
issued;
WHEREAS, in accordance with Section 902 of the Base Indenture, the Company
and the Trustee are authorized and permitted to amend and supplement the
Indenture as set forth herein (the "Amendment"), with the consent of the Holders
of not less than a majority in principal amount of all Outstanding Securities,
and (1) the Holders of a majority in principal amount of all Outstanding
Securities have consented to the Amendment and (2) all other requirements set
forth in the Base Indenture to make this Third Supplemental Indenture effective
have been satisfied; and
WHEREAS, the Company and the Trustee deem it advisable to enter into this
Third Supplemental Indenture for the purpose of amending the Indenture in order
to provide the Company with greater flexibility to continue to repurchase shares
of its outstanding common stock as part of its strategy of maximizing
shareholder value.
NOW, THEREFORE, THIS THIRD SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the foregoing and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the Company and the
Trustee mutually covenant and agree for the equal and proportionate benefit of
all Holders of the Notes as follows:
SECTION 1.01 AMENDMENT. Section 5.01 of the First Supplemental Indenture is
amended and restated in its entirety as follows:
"Section 5.01 Limitations on Restricted Payments. Until the Notes are rated
Investment Grade by both Rating Agencies, after which time the following
covenant no longer shall be binding on the Company or any Restricted Subsidiary:
(a) neither the Company nor any of its Restricted Subsidiaries shall,
directly or indirectly, make any Restricted Payment, if, after giving effect
thereto on a pro forma basis:
(i) the Company could not Incur $1.00 of additional Indebtedness
pursuant to provisions described in paragraph (b) of Section 5.02 hereof;
(ii) a Default or an Event of Default would occur or be continuing;
or
(iii) the aggregate amount of all Restricted Payments, including such
proposed Restricted Payment, made by the Company and its Restricted
Subsidiaries, from and after the Issue Date and on or prior to the date of
such Restricted Payment, shall exceed the sum (the "Basket") of
(A) 50% of Consolidated Net Income of the Company for
the period (taken as one accounting period), commencing with
the first full fiscal quarter which includes the Issue Date,
to and including the fiscal quarter ended immediately prior to
the date of each calculation for which internal financial
statements are available (or, if Consolidated Net Income for
such period is negative, then minus 100% of such deficit);
plus
(B) 100% of the amount of any Indebtedness of the
Company or a Restricted Subsidiary Incurred after the Issue
Date that is converted into or exchanged for Qualified Capital
Stock of the Company after the Issue Date; plus
(C) to the extent that any Restricted Investment made
after the date of this First Supplemental Indenture is sold
for cash or otherwise reduced or liquidated or repaid for
cash, in whole or in part, the lesser of (1) the cash return
of capital with respect to such Restricted Investment (less
the cost of disposition, if any) and (2) the initial amount of
such Restricted Investment; plus
(D) unless accounted for pursuant to clause (B)
above, 100% of the aggregate net proceeds (after payment of
reasonable out-of pocket expenses, commissions and discounts
incurred in connection
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therewith) received by the Company from the sale or issuance
issuance (other than to a Subsidiary of the Company) of its
Qualified Capital Stock after the Issue Date and on or prior
to the date of such Restricted Payment; plus
(E) with respect to any Unrestricted Subsidiary that
is redesignated as a Restricted Subsidiary after the Issue
Date in accordance with the definition of Unrestricted
Subsidiary (so long as the designation of such Subsidiary as
an Unrestricted Subsidiary was treated as a Restricted Payment
made after the Issue Date and only to the extent not included
in the calculation of Consolidated Net Income), an amount
equal to the lesser of (x) the book value in accordance with
GAAP of the Company's or a Restricted Subsidiary's Investment
in such Subsidiary, and (y) the Designation Amount at the time
of such Subsidiary's designation as an Unrestricted
Subsidiary; plus
(F) 100% of tax benefits, if any, for the period
(taken as one accounting period), commencing with the first
full fiscal quarter which includes the Issue Date, realized by
the Company from stock option exercises and from the issuance
of the Company's Qualified Capital Stock pursuant to
equity-based employee benefit plans that are recorded as an
increase to shareholders' equity in accordance with GAAP; plus
(G) $50,000,000.
(b) The foregoing clause (a) does not prohibit:
(i) the payment of any dividend within 60 days after
the date of its declaration if such dividend could have been
made on the date of its declaration in compliance with the
foregoing provisions;
(ii) the payment of cash dividends or other
distributions to any Equity Investor or joint venture
participant of a Restricted Subsidiary with respect to a class
of Capital Stock of such Restricted Subsidiary or joint
venture owned by such Equity Investor or joint venture
participant so long as the Company or its Restricted
Subsidiaries simultaneously receive a dividend or distribution
with respect to their Investment in such Restricted Subsidiary
or joint venture either in U.S. Legal Tender or the same form
as the dividend or distribution received by such Equity
Investor or joint venture participant and in proportion to
their proportionate interest in the same class of Capital
Stock of such Restricted Subsidiary (or in the case of a joint
venture that is a partnership or a limited liability
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company, as provided for in the documentation governing such
joint venture), as the case may be;
(iii) repurchases or redemptions of Capital Stock of
the Company from any former directors, officers and employees
of the Company in the aggregate up to $3,000,000 during any
calendar year (provided, however, that any amounts not used in
any calendar year may be used in any subsequent year);
(iv) the retirement of Capital Stock of the Company
or the retirement in Indebtedness of the Company, in exchange
for or out of the proceeds of a substantially concurrent sale
(other than a sale to a Subsidiary of the Company) of, other
shares of its Qualified Capital Stock and the retirement of
Capital Stock or Indebtedness of a Restricted Subsidiary in
exchange for or out of the proceeds of a substantially
concurrent sale of its Qualified Capital Stock, provided that,
in each case, the amount of any such proceeds is excluded for
purposes of clause (a)(iii)(D) above;
(v) repurchases by the Company of Capital Stock of
the Company (from Persons other than officers or directors of
the Company) in one or more open market and/or privately
negotiated transactions of up to $85,000,000 in the aggregate
at any time or from time to time on or before March 31, 2002;
provided that any such repurchases not made pursuant to this
clause (v) on or before March 31, 2002 may not be made at any
subsequent time; or
(vi) repurchases by the Company of Capital Stock of
the Company (from Persons other than executive officers or
directors of the Company) in one or more open market and/or
privately negotiated transactions of up to $100,000,000 in the
aggregate at any time or from time to time from March 15, 2002
until June 1, 2003; provided, that any such repurchases not
made pursuant to this clause (vi) on or before June 1, 2003
may not be made at any subsequent time.
Any Restricted Payment made in accordance with clauses (i) and
(iii) of this paragraph shall reduce the Basket. In calculating the Basket, any
Restricted Payment not made in cash and any non-cash amounts received for
purposes of clause (D) shall be valued at fair market value as determined in
good faith by the Board of Directors, whose determination shall be conclusive
and whose resolution with respect thereto shall be delivered to the Trustee
promptly after the adoption thereof."
SECTION 1.02 NEW YORK LAW TO GOVERN. THIS THIRD SUPPLEMENTAL
INDENTURE SHALL BE GOVERNED BY AND CONSTRUED
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IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS THIRD SUPPLEMENTAL INDENTURE.
SECTION 1.03 EFFECTIVE DATE. This Third Supplemental Indenture
shall be effective as of the date first above written and upon the execution and
delivery hereof by each of the parties hereto.
SECTION 1.04 COUNTERPARTS. This Third Supplemental Indenture
may be executed in any number of counterparts, each of which so executed shall
be deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Third
Supplemental Indenture to be duly executed by their respective officers hereunto
duly authorized, all as of the date first above written.
Dated: March 14, 2002
NVR, INC.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chairman of the Board, Chief
Chief Executive Officer and
President
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President,
Chief Financial Officer and
Treasurer
Attest:
----------------------
Dated: March 14, 2002
U.S. BANK TRUST NATIONAL
ASSOCIATION, as Trustee
By: /s/ Xxxxxxx Xxxxxxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxxxxxxx
Title: Assistant Vice President
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