NVR, INC.
and
NVR HOMES, INC. (AS SUBSIDIARY GUARANTOR)
AND
THE BANK OF NEW YORK
as Trustee
_____________________________________
First Supplemental Indenture
Dated as of April 14, 1998
_____________________________________
8% Senior Notes Due 2005
FIRST SUPPLEMENTAL INDENTURE
FIRST SUPPLEMENTAL INDENTURE, dated as of April 14, 1998, between NVR,
INC., a Virginia corporation (hereinafter called the "Company"), and NVR HOMES,
INC., a Virginia corporation ("Homes" ), as a Subsidiary Guarantor (as defined),
each having its principal office at 0000 Xxxxxxxxxxx Xxxx, Xxxxx 000, XxXxxx,
Xxxxxxxx, 00000 and THE BANK OF NEW YORK, a New York banking corporation (the
"Trustee"), having a Corporate Trust Office at 000 Xxxxxxx Xxxxxx, 00xx Xxxxx,
Xxx Xxxx, Xxx Xxxx, as Trustee under the Base Indenture and this First
Supplemental Indenture (each as hereinafter defined). Capitalized terms used
and not otherwise defined herein shall have the meaning set forth in the Base
Indenture (as defined).
RECITALS
WHEREAS, the Company, and the Trustee have as of April 14, 1998
entered into an Indenture (the "Base Indenture") providing for the issuance by
the Company from time to time of its senior debt securities evidencing its
unsecured and unsubordinated indebtedness, which, pursuant to Section 301(23) of
the Base Indenture may be guaranteed by one or more of the Company's
subsidiaries;
WHEREAS, no Securities have been issued under the Base Indenture;
WHEREAS, the Company desires under this First Supplemental Indenture
to issue the Notes (as defined in Article III hereof) to be guaranteed on a
senior unsecured basis by Homes (and under certain circumstances defined herein,
by other Subsidiary Guarantors (as defined in Article III hereof)), and has duly
authorized the creation of the Notes and the execution and delivery of this
First Supplemental Indenture to modify and supplement the Base Indenture and
provide certain additional provisions as hereinafter described;
WHEREAS, Homes desires to guarantee the Notes on a senior unsecured
basis and, in accordance with Section 301(23) of the Base Indenture and this
First Supplemental Indenture, Homes has duly authorized the issuance of its
Subsidiary Guarantee (as defined) and the execution and delivery of this First
Supplemental Indenture and the Subsidiary Guarantee;
WHEREAS, in accordance with Section 901(7) of the Base Indenture, the
Company and the Trustee are authorized and permitted to amend and supplement the
Base Indenture as set forth herein, without the consent of any Holder, and all
requirements set forth in Article Nine of the Base Indenture to make this First
Supplemental Indenture effective have been satisfied; and
WHEREAS, the Company, Homes and the Trustee deem it advisable to enter
into this First Supplemental Indenture for the purposes of establishing the
terms of the Notes and the Subsidiary Guarantees and for providing for the
rights, obligations and duties of the Trustee with respect to the Notes and
Subsidiary Guarantees;
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE
WITNESSETH:
For and in consideration of the mutual premises and agreements herein
contained, the Company, Homes and the Trustee covenant and agree, for the equal
and proportionate benefit of all Holders of the Notes, as follows:
ARTICLE I.
CREATION OF THE NOTES
SECTION 1.01. DESIGNATION OF SERIES. Pursuant to the terms hereof
and Sections 201 and 301 of the Base Indenture, the Company hereby creates a
series of its Notes known as the "8% Senior Notes due 2005," which shall be
guaranteed by Homes and such Notes (including the associated Subsidiary
Guarantees) shall be deemed "Securities" for all purposes under the Base
Indenture.
SECTION 1.02. FORM OF NOTES. The definitive form of the Notes shall
be substantially in the form set forth in Exhibit A attached hereto and the
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definitive form of the Subsidiary Guarantees to be attached to the Notes shall
be substantially in the form set forth in Exhibit B, each of which is
---------
incorporated herein and made part hereof. The Notes shall bear interest, be
payable and have such other terms as are stated in the form of definitive Note
or in the Base Indenture, as supplemented by this First Supplemental Indenture.
SECTION 1.03. LIMIT ON AMOUNT OF SERIES. The initial principal
amount of Notes issued under this First Supplemental Indenture shall be
$145,000,000 and the aggregate principal amount of Notes authorized to be issued
under this series shall not exceed $175,000,000. Additional Notes may, upon the
execution and delivery of this First Supplemental Indenture or from time to time
thereafter (subject to Section 5.02 hereof), be executed by the Company and
delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and deliver said Notes (which shall include the applicable
Subsidiary Guarantee) to or upon the written order of the Company, signed by its
Chairman of the Board, President or a Vice President and by its Chief Financial
Officer, Treasurer or an Assistant Treasurer or its Secretary or an Assistant
Secretary, without further action by the Company.
SECTION 1.04. CERTIFICATE OF AUTHENTICATION. The Trustee's
certificate of authentication to be borne on the Notes shall be substantially as
provided in the Base Indenture.
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SECTION 1.05. DESIGNATION OF RESTRICTED AND UNRESTRICTED
SUBSIDIARIES. As of the Issue Date, the Restricted Subsidiaries of the Company
shall be NVR Homes, Inc., NVR Financial Services, Inc., RVN, Inc. and Fox Ridge
Homes, Inc. As of the Issue Date, all other Subsidiaries of the Company shall
be Unrestricted Subsidiaries.
ARTICLE II.
APPOINTMENT OF THE TRUSTEE FOR THE NOTES
SECTION 2.01. APPOINTMENT OF TRUSTEE. Pursuant and subject to the
Base Indenture, the Company, Homes and the Trustee hereby constitute the Trustee
as trustee to act on behalf of the Holders of the Notes, and as the principal
Paying Agent and Security Registrar for the Notes, effective upon execution and
delivery of this First Supplemental Indenture. By execution, acknowledgment and
delivery of this First Supplemental Indenture, the Trustee hereby accepts
appointment as trustee, Paying Agent and Security Registrar with respect to the
Notes, and agrees to perform such trusts upon the terms and conditions in the
Base Indenture and in this First Supplemental Indenture set forth.
SECTION 2.02. RIGHTS, POWERS, DUTIES AND OBLIGATIONS OF THE TRUSTEE.
Any rights, powers, duties and obligations by any provisions of the Base
Indenture conferred or imposed upon the Trustee shall, insofar as permitted by
law, be conferred or imposed upon and exercised or performed by the Trustee with
respect to the Notes.
ARTICLE III.
DEFINITIONS
So long as any of the Notes are Outstanding, the following definitions
shall be applicable to the Notes, be included as defined terms for all purposes
under the Base Indenture with respect to the Notes and, to the extent
inconsistent with the definition of such term contained in Section 101 of the
Base Indenture, shall replace such definition for purposes of the Notes:
"1993 Notes" means the Company's 11% Senior Notes due April 15, 2003
issued under that certain Indenture dated as of September 30, 1993, as amended,
among the Company, Homes, NVR Financial Services, Inc., RVN, Inc. and Fox Ridge
Homes, Inc. and IBJ Xxxxxxxxx Bank & Trust Company.
"Acquired Indebtedness" means Indebtedness of any Person that is not a
Restricted Subsidiary, which Indebtedness is outstanding at the time such Person
becomes a Restricted Subsidiary, or is merged into or consolidated with, the
Company or a Restricted Subsidiary; provided, however, that such Indebtedness
was not incurred in connection with, or in contemplation of, such Person
becoming a Restricted Subsidiary or such merger or consolidation.
"Adjusted Net Assets" of a Subsidiary Guarantor at any date shall mean
the lesser of (i) the amount by which the fair value of the property of such
Subsidiary Guarantor exceeds
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the total amount of liabilities, including, without limitation, contingent
liabilities (after giving effect to all other fixed and contingent liabilities
incurred or assumed on such date), but excluding liabilities under the
Subsidiary Guarantee, of such Subsidiary Guarantor at such date and (ii) the
amount by which the present fair salable value of the assets of such Subsidiary
Guarantor at such date exceeds the amount that will be required to pay the
probable liability of such Subsidiary Guarantor on its debts (after giving
effect to all other fixed and contingent liabilities incurred or assumed on such
date and after giving effect to any collection from any Subsidiary of such
Subsidiary Guarantor in respect of the obligations of such Subsidiary under the
Subsidiary Guarantee), excluding debt in respect of the Subsidiary Guarantee, as
they become absolute and matured.
"Affiliate" means, with respect to any specified Person, any other
Person directly or indirectly controlling or controlled by, or under direct or
indirect common control with, such specified Person. For purposes of this
definition, the term "control" means the power to direct the management and
policies of a Person, either directly or through one or more intermediaries,
whether through the ownership of voting securities, by contract, or otherwise,
or (b) without limiting the foregoing, ownership of 20% or more of the voting
power of the voting common equity of such Person (on a fully diluted basis).
Notwithstanding the foregoing, the term "Affiliate" shall not include, with
respect to the Company or any Restricted Subsidiary, any Restricted Subsidiary
or, with respect to any Restricted Subsidiary, the Company.
"Asset Sale" means, with respect to any Person, the sale, lease,
conveyance or other disposition (including, without limitation, by merger or
consolidation, and whether by operation of law or otherwise) of any of that
Person's assets (including, without limitation, the sale or other disposition of
Capital Stock of any Subsidiary of such Person, whether by such Person or by
such Subsidiary) whether owned on the Issue Date or subsequently acquired, in
one transaction or a series of related transactions, in which such Person and/or
its Subsidiaries receive cash and/or other consideration (including, without
limitation, the unconditional assumption of Indebtedness of such Person and/or
its Subsidiaries) having an aggregate fair market value of $10,000,000 or more
as to such transaction or series of related transactions (each such transaction
being referred to herein as a "disposition"); provided, however, that the
following transactions shall not constitute an Asset Sale: (i) a transaction or
series of related transactions that results in a Change of Control; (ii)
dispositions of land, building lots, homes, infrastructure, other buildings,
improvements, appurtenances and entitlements in the ordinary course of business
and dispositions of obsolete equipment; (iii) exchanges or swaps of real estate
by the Company in the ordinary course of business for real estate of
substantially equivalent value (or for real estate and cash or Cash Equivalents
which, in the aggregate, have a substantially equivalent value); (iv)
dispositions between or among the Company and any one or more Restricted
Subsidiaries or between or among Restricted Subsidiaries; (v) a disposition that
is a Permitted Investment (to the extent such Permitted Investment may be deemed
to constitute an Asset Sale) or a Restricted Payment permitted under Section
5.01 hereof; and (vi) dispositions of the Capital Stock of Xxxx Mortgage
Acceptance Corporation IV.
"Attributable Debt" means, with respect to any Capitalized Lease
Obligations, the capitalized amount thereof determined in accordance with GAAP.
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"Bank Credit Facility" means the Amended and Restated Credit and
Security Agreement, dated as of May 5, 1995, among NVR Homes, as borrower, the
Company, as a guarantor, and the lenders named therein and BankBoston N.A., as
agent (together with the documents related thereto (including, without
limitation, any guaranty agreements), as such facility has been or may be
amended, restated, supplemented or otherwise modified from time to time, and
includes any facility extending the maturity of, increasing the total commitment
of, or restructuring (including, without limitation, the inclusion of Subsidiary
Guarantors thereunder that are Restricted Subsidiaries of the Company) all or
any portion of, the Indebtedness under such facility or any successor or
replacement facilities and includes any facility with one or more agents or
lenders refinancing or replacing all or any portion of the Indebtedness under
such facility or any successor facilities.
"Bankruptcy Law" means Title 11 of the United States Code, as amended,
or any similar federal or state law for the relief of debtors.
"Base Indenture" has the meaning set forth in the Recitals.
"Board of Directors" means the board of directors of the Company or
any authorized committee thereof.
"Capital Stock" means any and all shares, interests, participations or
other equivalents (however designated) of or in a Person's capital stock or
other equity interests, and options, rights or warrants to purchase such capital
stock or other equity interests, whether now outstanding or issued after the
Issue Date, including, without limitation, all Preferred Stock of such Person if
such Person is a corporation or membership interests if such Person is a limited
liability company and each general and limited partnership interest of such
Person if such Person is a partnership.
"Capitalized Lease Obligations" of any Person means the obligations of
such Person to pay rent or other amounts under a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP, and the
amount of such obligations shall be the capitalized amount thereof determined in
accordance with GAAP.
"Cash Equivalents" means (a) U.S. government obligations; (b) GNMA
securities; (c) debt issued by other agencies of the United States of America;
(d) commercial paper rated either "A1" or comparable by S&P or "P1" or
comparable by Xxxxx'x; (e) Dutch auction preferred stocks rated either "AA" or
comparable by S&P or "Aa2" or comparable by Moody's; (f) certificates of deposit
issued by commercial banks or savings and loan associations whose short-term
debt is rated either "A1" or comparable by S&P or "P1" or comparable by Moody's
or a comparable rating by Xxxxxxxx'x Bank Watch, or if such an institution is a
subsidiary, then its parent corporation may have such a rating; (g) bankers
acceptances issued by financial institutions that meet the requirements for
certificates of deposit; (h) deposits in institutions having the same
qualifications required for investments in certificates of deposit; (i)
repurchase agreements collateralized by any otherwise acceptable collateral as
defined above; (j) money market accounts a majority of whose assets are composed
of items described by any of the foregoing clauses (a) through (i) through
brokerage firms deemed acceptable by the
5
Company's management; and (k) investments in mutual funds that are registered
under the Investment Company Act of 1940, as amended, which have net assets of
at least $100,000,000 and at least 85% of whose assets consist of securities
having a rating of not less than AAA or its equivalent by Moody's or investments
or other obligations of the type described in clauses (a) through (j) above
(without regard to maturities).
"Change of Control" means the occurrence of any of the following
events:
(i) the sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation) in one or more series of related
transactions of all or substantially all of the assets of the Company on a
consolidated basis;
(ii) any "person" or "group" (as such terms are used in Section 13(d)
of the Exchange Act) is or becomes the beneficial owner (as defined in Rules
13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50
percent of the total voting power of all securities generally entitled to vote
in the election of directors of the Company;
(iii) during any period of two consecutive calendar years, individuals
who at the beginning of such period constituted the Board of Directors (together
with any new directors whose election by such Board of Directors or whose
nominations for elections by the stockholders of the Company was approved by a
majority vote of the directors of the Company then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors then in office; or
(iv) the merger or consolidation of the Company with or into another
person or the merger of another person with or into the Company in a transaction
with the effect that immediately after such transaction the stockholders of the
Company immediately prior to such transaction hold less than 50% of the total
voting power of all securities generally entitled to vote in the election of
directors of the Person surviving such merger or consolidation.
"Consolidated EBITDA" of any Person for any period means (a) the
Consolidated Net Income of such Person for such period, plus (b) the sum,
without duplication (and only to the extent such amounts are deducted in
determining such Consolidated Net Income), of (i) the provision for income taxes
for such period for such Person and its Subsidiaries (or, with respect to the
Company, for the Company and its Restricted Subsidiaries) (except to the extent
of tax benefits associated with an extraordinary loss) for such period, (ii)
depreciation and amortization expense of such Person and its Subsidiaries (or,
with respect to the Company, for the Company and its Restricted Subsidiaries),
(iii) Consolidated Interest Expense of such Person for such period, and (iv) all
other noncash, nonextraordinary charges (excluding any non-cash charges to the
extent they represent an accrual of or reserve for cash charges in any future
period or amortization of a prepaid cash charge that was paid in a prior period)
reducing Consolidated Net Income for such period determined, in each case, on a
consolidated basis for such Person and its Subsidiaries (or, with respect to the
Company, for the Company and its Restricted Subsidiaries) in accordance with
GAAP.
6
"Consolidated Fixed Charge Coverage Ratio" on any date (the
"Transaction Date") means, with respect to any Person, the ratio of (a) the
aggregate amount of Consolidated EBITDA of such Person attributable to
continuing operations and businesses for the Reference Period to (b) the sum of
(i) the aggregate Consolidated Interest Incurred of such Person (exclusive of
amounts attributable to discontinued operations and businesses, but in each case
only to the extent that the obligations giving rise to such Consolidated
Interest Incurred would no longer be obligations contributing to such Person's
Consolidated Interest Incurred subsequent to the Transaction Date) for the
Reference Period, plus (ii) dividends paid or accrued (unless paid to, or
accrued in favor of, the Company or its Restricted Subsidiaries) on Disqualified
Capital Stock of the Company and Restricted Subsidiaries of the Company during
the Reference Period times a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state and
local statutory tax rate of the Company; provided that for purposes of such
computation, in calculating Consolidated EBITDA and Consolidated Interest
Incurred, (w) the transaction giving rise to the need to calculate the
Consolidated Fixed Charge Coverage Ratio shall be assumed to have occurred (on a
pro forma basis) on the first day of the Reference Period; (x) the Incurrence of
any Refinancing Indebtedness during the Reference Period or subsequent thereto
and on or prior to the Transaction Date (and the proceeds of which were used to
refinance Indebtedness other than Indebtedness under revolving credit
facilities) shall be assumed to have occurred (on a pro forma basis) on the
first day of such Reference Period; (y) Consolidated Interest Incurred
attributable to any Indebtedness being Incurred bearing a floating interest rate
shall be computed as if the rate in effect on the Transaction Date had been the
applicable rate for the entire period, unless the Company or any of its
Restricted Subsidiaries is a party to an Interest Swap Obligation (which shall
remain in effect for the 12-month period after the Transaction Date) that has
the effect of fixing the interest rate on the date of computation, in which case
such rate (whether higher or lower) shall be used; and (z) all members of the
consolidated group of the Company on the Transaction Date that were acquired
during the Reference Period or on or prior to the Transaction Date shall be
deemed to be members of the consolidated group of the Company, along with any
Indebtedness incurred in connection with the acquisition thereof, for the entire
Reference Period.
"Consolidated Interest Expense" of any Person for any period means the
Interest Expense of such Person and its Subsidiaries or, with respect to the
Company, of the Company and its Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Incurred" of any Person for any period means
the Interest Incurred of such Person and its Subsidiaries or, with respect to
the Company, of the Company and its Restricted Subsidiaries (other than the
Company's financial services segment Restricted Subsidiaries) for such period,
determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Assets" of the Company as of any date means the
total amount of assets of the Company and its Restricted Subsidiaries (less
applicable reserves) on a consolidated basis at the end of the fiscal quarter
immediately preceding such date for which financial information is available, as
determined in accordance with GAAP, as reflected on the
7
consolidated balance sheet of the Company and its Restricted Subsidiaries as of
the end of such fiscal quarter.
"Consolidated Net Income" of any Person for any period means the
aggregate net income (or loss) of such Person and its Subsidiaries (or, with
respect to the Company, of the Company and its Restricted Subsidiaries)
(collectively for the purposes of this definition of Consolidated Net Income
only, the "Relevant Person") for such period, determined on a consolidated basis
in accordance with GAAP, excluding without duplication: (a) the net income (or
loss) of any other Person in which the Relevant Person has an ownership
interest, other than cash dividends or cash distributions during such period
that have been received by the Relevant Person; (b) extraordinary gains and
losses, net of the tax effects thereof; (c) except to the extent includable in
Consolidated Net Income pursuant to the foregoing clause (a), the net income (or
loss) of any Person that accrued prior to the date that such Person was acquired
by the Relevant Person or is merged into or consolidated with the Relevant
Person or any of its Subsidiaries (or in the case of the Company, any Person
that is an Unrestricted Subsidiary or prior to the date that such Person is
acquired by the Company as a Restricted Subsidiary or becomes a Restricted
Subsidiary); (d) the net income of any Restricted Subsidiary to the extent that
(and only so long as) the declaration or payment of dividends or similar
distributions by such Restricted Subsidiary of that income is prohibited by the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Restricted
Subsidiary during such period; (e) any expense related to the amortization of
reorganization value in excess of amounts allocable to identifiable assets (as
defined by GAAP) and (f) any noncash expense related to the issuance of
Qualified Capital Stock of the Company pursuant to the Company's 1994 Management
Incentive Plan.
"Consolidated Net Worth" of any Person as of any date means the
stockholders' equity (including any preferred stock that is classified as equity
under GAAP, but excluding Disqualified Capital Stock) of such Person and its
Subsidiaries (or, with respect to the Company, of the Company and its Restricted
Subsidiaries) on a consolidated basis at the end of the fiscal quarter
immediately preceding such date for which financial information is available, as
determined in accordance with GAAP.
"Currency Agreement" of any Person means any foreign exchange
contract, currency swap agreement or other similar agreement or arrangement
designed to protect such Person or any of its Subsidiaries or Affiliates against
fluctuations in currency values.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means any event, act or condition that is, or after notice
or the passage of time or both would be, unless otherwise timely cured, an Event
of Default.
"Designation Amount" has the meaning set forth in the definition of
"Unrestricted Subsidiary."
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"Disinterested Director" means a member of the Board of Directors of
the Company who does not have any material direct or indirect financial interest
in or with respect to the transaction being considered.
"Disqualified Capital Stock" means (a) with respect to any Person, any
Capital Stock of such Person or its Subsidiaries that, by its terms or by the
terms of any security into which it is convertible or exchangeable, is, or upon
the happening of an event or the passage of time would be, required to be
redeemed or repurchased by such Person or its Subsidiaries, including at the
option of the Holder, in whole or in part, or has, or upon the happening of an
event or passage of time would have, a redemption or similar payment due on or
prior to the Stated Maturity; and (b) with respect to any Restricted Subsidiary,
any Capital Stock (other than (i) Capital Stock owned by the Company or a
Restricted Subsidiary; and (ii) common stock with no preferences or privileges
and with no redemption or repayment provisions).
"Equity Investor" with respect to any Person means any other Person
that has made an investment in the capital stock, shares, interests,
participation or other ownership interests of such other Person (including any
option, warrant or right to acquire any such interest) or has made any capital
contribution to such other Person and owns a minority interest in such Person.
"Event of Default" has the meaning set forth in Section 4.01 hereof
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Indebtedness" means all of the Indebtedness of the Company
and its Subsidiaries that is outstanding on the Issue Date.
"First Supplemental Indenture" means the Base Indenture as modified
and supplemented by this First Supplemental Indenture, as either may be
modified, amended or supplemented in accordance with their terms.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, as in effect on the date of this First
Supplemental Indenture.
"Holder" means the person in whose name a Note is registered on the
register for the Notes.
"Incur" means, with respect to any Indebtedness or other obligation of
any Person, to create, issue, incur (including by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or other obligation on the balance sheet
of such Person (and "Incurrence," "Incurred" and "Incurring"
9
shall have meanings correlative to the foregoing). Indebtedness of a Person
existing at the time such Person becomes a Restricted Subsidiary or is merged or
consolidated with or into the Company or any Restricted Subsidiary shall be
deemed to be Incurred at such time. Neither the accrual of interest, nor the
accretion of original issue discount, nor the payment of interest on any
Indebtedness in the form of additional Indebtedness with the same terms, nor the
payment of dividends on Disqualified Capital Stock in the form of additional
shares of the same class of Disqualified Capital Stock shall be deemed to be an
Incurrence of Indebtedness or an issuance of Disqualified Capital Stock for
purposes of this First Supplemental Indenture; provided, in each such case, that
the amount thereof is included for purposes of the Consolidated Fixed Charge
Coverage Ratio of the Company. In addition, the mere extension of the term of
lender commitments to extend credit or funds to the Company or any of its
Subsidiaries pursuant to a revolving credit agreement or similar arrangement
shall not be deemed to be an Incurrence of Indebtedness.
"Indebtedness" of any Person means, without duplication, (a) any
liability of such Person (other than accounts payable, other trade payables,
general contingency and tax reserves, liabilities for deposits and deferred
income which in accordance with GAAP are recorded as liabilities and accrued
expenses (including without limitation, obligations for insurance premiums)
Incurred in the ordinary course of business) (i) for borrowed money or under any
reimbursement obligation relating to a letter of credit or other similar
instruments (other than standby letters of credit, performance, completion,
surety or similar bonds or instruments issued for the benefit of such Person or
surety, performance, completion or payment xxxxx, xxxxxxx money notes or similar
purpose undertakings or indemnifications issued by, such Person in the ordinary
course of business); (ii) evidenced by a bond, note, debenture or similar
instrument (including a purchase money obligation) given in connection with the
acquisition of any businesses, properties or assets of any kind or with services
(other than any obligation to pay a contingent purchase price which, as of the
date of Incurrence thereof is not required to be recorded as a liability in
accordance with GAAP); or (iii) in respect of Capitalized Lease Obligations (to
the extent of the Attributable Debt in respect thereof), (b) any Indebtedness of
others that such Person has guaranteed to the extent of the guaranty, (c) to the
extent not otherwise included, Interest Swap Obligations or the obligations of
such Person under Currency Agreements, in either case to the extent recorded as
liabilities not constituting Interest Incurred, net of amounts recorded as
assets in respect of such agreements, in accordance with GAAP, (d) all
Indebtedness of others secured by a Lien (other than a Permitted Lien) on any
asset of such Person, whether or not such Indebtedness is assumed by such
Person, and (e) all Disqualified Stock issued by such Person (the amount of
indebtedness represented by any Disqualified Stock shall equal the greater of
the voluntary or involuntary liquidation preference plus accrued and unpaid
dividends). The amount of Indebtedness of any Person at any date shall be (A)
the outstanding balance at such date of all unconditional obligations as
described above, net of any unamortized discount to be accounted for as Interest
Expense, in accordance with GAAP, (B) the maximum liability of such Person for
any contingent obligations under clause (b) above at such date, net of, any
unamortized discount to be accounted for as Interest Expense in accordance with
GAAP and (C) in the case of clause (d) above, the lesser of (1) the fair market
value of any asset subject to a Lien securing the Indebtedness of others on the
date that the Lien attaches and (2) the amount of the Indebtedness secured.
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"Interest Expense" of any Person for any period means, without
duplication, the aggregate amount of interest which, in conformity with GAAP,
should be set opposite the caption "interest expense" or any like caption on an
income statement for such Person (including, without limitation, imputed
interest included on Capitalized Lease Obligations, the interest portion of any
deferred payment obligation, amortization of discount or premium, if any, and
all other noncash interest expense) plus, with respect to the Company and its
Restricted Subsidiaries, without duplication (including duplication of the
foregoing items), amortization of issue costs on Indebtedness, all interest
included as a component of cost of sales for such period, and all commissions,
discounts and other fees and charges owed with respect to bankers' acceptance
financing, and amortization and expensing of other financing fees and expenses,
and all interest actually paid by the Company or a Restricted Subsidiary under
any guaranty of Indebtedness (including, without limitation, a guaranty of
principal, interest or any combination thereof) of any other Person during such
period.
"Interest Incurred" of any Person for any period means, without
duplication, the aggregate amount of interest which, in conformity with GAAP,
should be set opposite the caption "interest expense" or any like caption on an
income statement for such Person (including, without limitation, imputed
interest included on Capitalized Lease Obligations, the interest portion of any
deferred payment obligation, amortization of discount or premium, if any, and
all other noncash interest expense) plus, with respect to the Company and its
Restricted Subsidiaries, without duplication (including duplication of the
foregoing items), all interest capitalized for such period, amortization of
issue costs on Indebtedness, all commissions, discounts and other fees and
charges owed with respect to bankers' acceptance financing, amortization and
expensing of other financing fees and expenses, and all interest actually paid
by the Company or a Restricted Subsidiary under any guaranty of Indebtedness
(including, without limitation, a guaranty of principal, interest or any
combination thereof) of any other Person during such period.
"Interest Swap Obligation" means any obligation of any Person pursuant
to any arrangement whereby such Person is entitled to receive from time to time
periodic payments calculated by applying either a fixed or floating rate of
interest on a stated notional amount in exchange for periodic payments made by
such Person calculated by applying a fixed or floating rate of interest on the
same notional amount; provided, that the term "Interest Swap Obligation" shall
also include interest rate exchange, collar, swap option, futures contracts or
other similar agreements providing interest rate protection.
"Investment" by any Person in any other Person means (without
duplication) (a) the acquisition by such Person (whether for cash, property,
services, securities or otherwise) of Capital Stock, bonds, notes, debentures,
partnership, or other ownership interests, or other securities of such other
Person, (b) the making by such Person of any deposit with, or advance, loan or
other extension of credit to, such other Person (including the purchase of
property from such other Person subject to an understanding or agreement,
contingent or otherwise, to resell such property to such other Person), except
in the ordinary course of business, (c) the entering into by such Person of any
guaranty of, or other contingent obligation with respect to,
11
Indebtedness or other liability of such other Person, or (d) the making of any
capital contribution by such Person to such other Person.
"Investment Grade" shall mean BBB- or higher by S&P or Baa3 or higher
by Xxxxx'x or the equivalent of such ratings by S&P or Moody's.
"Issue Date" means the date of original issuance of the Notes.
"Lien" means any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind with respect to any Property.
"Moody's" means Xxxxx'x Investors Service, Inc. or any successor to
its debt rating business.
"Net Cash Proceeds" means (i) cash (in U.S. dollars or freely
convertible into U.S. dollars) received by the Company or any Restricted
Subsidiary from an Asset Sale net of all (a) brokerage commissions, and all
other fees and expenses (including, without limitation, fees and expenses of
counsel and investment bankers) related to such Asset Sale, (b) provisions for
all income and other taxes measured by or resulting from such Asset Sale, (c)
payments made to retire Indebtedness where payment of such Indebtedness is
required by instruments governing such indebtedness and secured by the assets
sold pursuant to and in connection with such Asset Sale, (d) amounts required to
be paid to any Person (other than the Company or a Restricted Subsidiary) owning
a legal or beneficial interest in the assets subject to the Asset Sale, (e)
appropriate amounts to be provided by the Company or any Restricted Subsidiary
thereof, as the case may be, as a reserve, in accordance with GAAP, against any
liabilities associated with such Asset Sale and retained by the Company or any
Restricted Subsidiary thereof, as the case may be, after such Asset Sale,
including, without limitation, pension and other post-employment liabilities
under any indemnification obligations associated with such Asset Sale, all as
reflected in an Officers' Certificate delivered to the Trustee, and (ii) all
noncash consideration received by the Company or any of its Restricted
Subsidiaries from such Asset Sale promptly thereupon liquidated or converted
into cash, without duplication, net of all items enumerated in subclauses (a)
through (e) of clause (i) hereof.
"Non-Recourse Indebtedness" means, with respect to any Person,
Indebtedness (or any portion thereof) of such Person for which the sole legal
recourse for collection of principal, premium, and interest on such Indebtedness
is against the specific property identified in the instruments evidencing or
securing such Indebtedness, which property was acquired with the proceeds of
such Indebtedness or such Indebtedness was Incurred within 180 days after the
acquisition of such property, without any liability on the part of any such
Person for any deficiency with respect to principal, premium or interest.
"Notes" means the 8% Senior Notes due 2005 issued hereunder, as
supplemented from time to time in accordance with the terms hereof.
12
"Officer" means the Chairman of the Board, the President, the Chief
Executive Officer, any Vice President, the Treasurer or the Secretary of the
Company or, as applicable, any Restricted Subsidiary.
"Permitted Business" means any business primarily engaged in
homebuilding (including townhomes, condominiums and single family homes),
related financial services, or other activities reasonably related or incident
to the foregoing.
"Permitted Investment" means (a) Investments in Cash Equivalents, (b)
Investments in the Company or in its Restricted Subsidiaries, (c) Investments by
the Company or any Restricted Subsidiary of the Company in a Person, if as a
result of such Investment (i) such Person becomes a Restricted Subsidiary of the
Company or (ii) such Person is merged, consolidated or amalgamated with or into,
or transfers or conveys substantially all of its assets to, or is liquidated
into, the Company or a Restricted Subsidiary; (d) advances to Xxxx Mortgage
Acceptance Corporation IV for the purpose of redeeming the bonds of such entity;
provided that (i) the net proceeds of the sale of the collateral securing such
bonds shall be used to repay such advance with any remaining net proceeds to be
distributed as a dividend to NVRFS, (ii) at the time of such Investment, a valid
written commitment shall be in place from an investor not affiliated with the
Company to purchase such collateral within a specified period of time, which
period shall in no event exceed 60 days, and at a specific price or yield and
(iii) each advance is repaid within two Business Days after the delivery of the
collateral pursuant to such written commitment; (e) loans or advances made in
the ordinary course of business to officers, directors or employees of the
Company or any of its Restricted Subsidiaries in an amount not to exceed
$2,000,000 at any one time outstanding, (f) Investments made prior to the Issue
Date, (g) Investments in the form of guaranties to the extent such guaranties
are permitted to be Incurred pursuant to Section 5.02 hereof, (h) net cash
Investments in and advances to Unrestricted Subsidiaries in an amount not to
exceed $20,000,000 at any one time outstanding, (i) Investments having an
aggregate fair market value (measured on the date each such Investment is made
and without giving effect to subsequent changes in value) not to exceed
$15,000,000 in any fiscal year and not to exceed $30,000,000 at any one time
outstanding, in any Permitted Business and (j) Investments in NVR Mortgage
Finance, Inc. to be used by NVR Mortgage Finance, Inc. solely for the purpose of
funding mortgage loans in the ordinary course of business in an amount not to
exceed $25,000,000; provided, however, that (i) a valid take-out commitment is
in place at the time of the closing of the mortgage loan from an investor not
affiliated with the Company, and (ii) any particular advance remains outstanding
for no more than 15 consecutive calendar days in any calendar month.
"Permitted Liens" means (a) Liens for taxes, assessments or
governmental charges or claims that either (i) are not yet delinquent, (ii) are
being contested in good faith by appropriate proceedings and as to which
appropriate reserves have been established or other provisions have been made in
accordance with GAAP, or (iii) solely encumber property abandoned or in the
process of being abandoned, (b) statutory Liens of landlords and carriers',
warehousemen's, mechanics', suppliers', materialmen's, repairmen's or other
Liens imposed by law and arising in the ordinary course of business and with
respect to amounts that, to the extent applicable, either (i) are not yet
delinquent or (ii) are being contested in good faith by appropriate
13
proceedings and as to which appropriate reserves have been established or other
provisions have been made in accordance with GAAP, (c) Liens Incurred or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, (d)
Liens Incurred or deposits made to secure the performance of tenders, bids,
leases, statutory obligations, surety and appeal bonds, performance bonds,
completion bonds, performance guaranty bonds, progress payments, government
contracts, utility services and other obligations of like nature in each case
Incurred in the ordinary course of business, (e) attachment or judgment Liens
with respect to judgments or proceedings which, with the passage of time, would
not constitute an Event of Default and which are being contested in good faith
by appropriate proceedings, (f) easements, dedications, assessment district or
similar Liens in connection with municipal or special district financing,
rights-of-way, zoning restrictions, reservations and other similar charges,
encumbrances or burdens not materially interfering with the ordinary course of
business, (g) leases or subleases granted to others not materially interfering
with the ordinary course of business, (h) Liens on assets securing Refinancing
Indebtedness which refinanced Indebtedness that was previously secured by such
assets, (i) any interest in or title of a lessor to property subject to any
Capitalized Lease Obligation Incurred in compliance with this First Supplemental
Indenture, (j) Liens existing on the date of this First Supplemental Indenture,
including without limitation, Liens securing Existing Indebtedness, (k) any
right of first refusal, right of first offer, option, contract or other
agreement to sell or purchase an asset, pay lot premiums or participate in the
income or revenue derived therefrom, (l) Liens securing Non-Recourse
Indebtedness of the Company or a Restricted Subsidiary, (m) Liens on property or
assets of any Restricted Subsidiary securing Indebtedness of such Restricted
Subsidiary owing to the Company or one or more of its Restricted Subsidiaries,
(n) any legal right of, or right granted in good faith to, a lender or lenders
to which the Company or a Restricted Subsidiary may be indebted to offset
against, or appropriate and apply to the payment of, such Indebtedness any and
all balances, credits, deposits, accounts or monies of the Company or a
Restricted Subsidiary with or held by such lender or lenders, (o) Liens in favor
of the Trustee arising pursuant to this First Supplemental Indenture, (p) Liens
Incurred in the ordinary course of business as security for the Company's or its
Restricted Subsidiaries' obligations with respect to indemnification in favor of
title insurance providers, (q) letters of credit, bonds or other assets pledged
to secure insurance in the ordinary course of business, (r) Liens on property of
a person existing at the time such person is merged into or consolidated with
the Company or any Restricted Subsidiary of the Company; provided, that such
Liens were not incurred in connection with, or in contemplation of, such merger
or consolidation; (s) Liens on property existing at the time of acquisition
thereof by the Company or any Restricted Subsidiary of the Company; provided
that such Liens (a) were not incurred in connection with, or in contemplation
of, such acquisition and (b) do not extend to any assets of the Company or any
of its Restricted Subsidiaries other than the property so acquired; (t) Liens
incurred or pledges or deposits made in the ordinary course of business to
secure payment of workers' compensation, or to participate in any fund in
connection with workers' compensation, unemployment insurance, old age pensions
or other social security programs; (u) Liens created by special assessment
districts used to finance infrastructure improvements; (v) interests of
purchasers of housing units in such units arising under the applicable contracts
of sale or applicable law; (w) any pledge or deposit of cash or property in
conjunction with obtaining bonds or letters of credit required to engage in
constructing on-site and off-site improvements required by municipalities or
other governmental
14
authorities in the ordinary course of business; (x) purchase money mortgages
(including, without limitation, Capitalized Lease Obligations and purchase money
security interests); and (y) any other Liens, provided, that the aggregate
amount of obligations secured by such other Liens outstanding at any one time
does not exceed 10% of the Company's Consolidated Net Worth at the time of
Incurrence thereof.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, incorporated or unincorporated association,
joint stock company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Preferred Stock" of any Person means all Capital Stock of such Person
which has a preference in liquidation or with respect to the payment of
dividends.
"Property" of any Person means all types of real, personal, tangible,
intangible or mixed property owned by such Person, whether or not included in
the most recent consolidated balance sheet of such Person and its Subsidiaries
under GAAP.
"Qualified Capital Stock" means Capital Stock other than Disqualified
Capital Stock.
"Public Equity Offering" means an underwritten public offering by the
Company of its Qualified Capital Stock pursuant to a registration statement
effective under the Securities Act (other than a registration statement on Form
S-8 or similar form).
"Rating Agencies" shall mean (i) S&P and (ii) Xxxxx'x.
"Reference Period" with regard to any Person means the four full
fiscal quarters of such Person ended on or immediately preceding any date upon
which any determination is to be made pursuant to the terms of the Notes or this
First Supplemental Indenture for which financial information is available.
"Refinancing Indebtedness" means Indebtedness that is an extension,
renewal, replacement or refunding of Indebtedness permitted to be Incurred by
this First Supplemental Indenture; provided, however, that (a) the maximum
principal amount of Refinancing Indebtedness (or, if such Refinancing
Indebtedness does not require cash payments prior to maturity or is otherwise
issued at a discount, the original issue price of such Refinancing Indebtedness)
permitted may not exceed (i) the principal amount of the Indebtedness being
extended, renewed, replaced or refunded plus reasonable financing fees and other
associated reasonable out-of-pocket expenses and any prepayment premium,
penalty, consent fees and accrued interest (collectively, "Refinancing Fees");
or (ii) if such Indebtedness being extended, renewed, replaced, or refunded was
issued at an original issue discount, the original issue price, plus
amortization of the original issue discount to the time of the Incurrence of the
Refinancing Indebtedness plus Refinancing Fees, (b) except with respect to
Indebtedness Incurred to finance the acquisition, holding or development of real
property and related appurtenances and the construction of improvements thereon
and Incurred in the ordinary course of business and in compliance with the terms
of this First Supplemental Indenture, the Refinancing Indebtedness
15
has a Weighted Average Life and a final maturity that is equal to or greater
than the Indebtedness being extended, renewed, replaced or refunded at the time
of such extension, renewal, replacement or refunding, (c) the Refinancing
Indebtedness shall rank with respect to the Notes to an extent no less favorable
in respect thereof to the Holders than the Indebtedness being refinanced, and
(d) the Company may Incur Refinancing Indebtedness only to refinance
Indebtedness of the Company or a Subsidiary Guarantor, and a Subsidiary
Guarantor may Incur Refinancing Indebtedness only to refinance Indebtedness of
the Company or a Subsidiary Guarantor and a Restricted Subsidiary that is not a
Subsidiary Guarantor may incur Refinancing Indebtedness only to refinance
Indebtedness of such Restricted Subsidiary or another Restricted Subsidiary that
is not a Subsidiary Guarantor.
"Restricted Payment" means, with respect to any Person, (a) any
dividend or other distribution on shares of Capital Stock of the Company or any
Restricted Subsidiary, (b) any payment on account of the purchase, redemption or
other acquisition or retirement for value, in whole or in part, of any shares of
Capital Stock of the Company or any Restricted Subsidiary, (c) any defeasance,
redemption, repurchase, or other acquisition or retirement for value, or any
payment in respect of any amendment (in anticipation of or in connection with
any such retirement, acquisition, or defeasance), in whole or in part, of any
Indebtedness of the Company or a Restricted Subsidiary that is subordinate in
right of payment to the Notes, but only if such defeasance, redemption,
repurchase or other acquisition or retirement is made prior to the scheduled
payment on such Indebtedness and (d) any Investment (other than a Permitted
Investment); provided, however, that the term "Restricted Payment" does not
include (i) any dividend, distribution, or other payment on shares of Capital
Stock of the Company or a Restricted Subsidiary solely in shares of Qualified
Capital Stock of the Company or such Restricted Subsidiary, (ii) any dividend,
distribution, or other payment to the Company or any of its Restricted
Subsidiaries by any of its Subsidiaries, (iii) the purchase, redemption or other
acquisition or retirement for value of any shares of Capital Stock of a
Subsidiary owned by the Company, (iv) any defeasance, redemption, repurchase or
other acquisition or retirement for value, in whole or in part, of (A)
Indebtedness of the Company payable solely in shares of Capital Stock or
Subordinated Indebtedness of the Company, (B) Indebtedness or Disqualified
Capital Stock of a Restricted Subsidiary payable solely in shares of Capital
Stock of the Company or such Restricted Subsidiary or Subordinated Indebtedness
of the Company, or (C) Indebtedness of the Company owed to Subsidiary Guarantors
and Indebtedness of the Company that is subordinated in right of payment to the
Notes and owed to its Restricted Subsidiaries that are not Subsidiary
Guarantors, (v) any defeasance, redemption, repurchase, or other acquisition or
retirement for value, in whole or in part, of Subordinated Indebtedness of the
Company or a Restricted Subsidiary existing on the Issue Date or (vi) any
proportionate payment in respect of minority interests in Restricted
Subsidiaries to the extent that the payment constitutes a return of capital that
was not included in the Company's shareholders' equity or a dividend or similar
distribution not included in determining the Company's Consolidated Net Income.
"Restricted Subsidiary" means each of the Subsidiaries of the Company
which is not an Unrestricted Subsidiary.
16
"S&P" means Standard and Poor's Ratings Group or any successor to its
debt rating business.
"SEC" means the Securities and Exchange Commission or any successor
agency performing the duties now assigned to it under the TIA.
"Securities" has the meaning set forth in the Recitals.
"Securities Act" means the Securities Act of 1933, as amended.
"Significant Subsidiary" means any Subsidiary of the Company which
would constitute a "significant subsidiary" as defined in Rule 1.02 of
Regulation S-X under the Securities Act and the Exchange Act.
"Stated Maturity," when used with respect to any Note, means June 1,
2005.
"Subordinated Indebtedness" means Indebtedness of the Company which is
subordinated in right of payment to the prior payment in full, including all
payment of principal, premium and all accrued interest (and post-petition
interest) on, and all other amounts owing in connection with the Notes.
"Subsidiary" of any Person means any corporation or other entity
(other than political subdivisions or enterprises thereof or governmental
agencies) of which at least 50% of the Capital Stock having ordinary voting
power to elect the Board of Directors or other persons performing similar
functions is at the time directly or indirectly owned or controlled by such
Person.
"Subsidiary Guarantor" means NVR Homes, Inc. and any other Subsidiary
of the Company that is required to execute a Subsidiary Guarantee pursuant to
this First Supplemental Indenture.
"Subsidiary Guarantee" means the guarantee of the Notes by any
Subsidiary Guarantor as set forth in Exhibit B hereto.
"TIA" means the Trust Indenture Act of 1939, as in effect from time to
time.
"Trustee" means the party named as such in the Base Indenture and this
First Supplemental Indenture until a successor replaces it pursuant to the Base
Indenture and thereafter means the successor serving under the Base Indenture
and this First Supplemental Indenture.
"U.S. Legal Tender" means such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts.
"Unrestricted Subsidiary" means each of the Subsidiaries of the
Company so designated by a resolution adopted by the Board of Directors of the
Company as provided below and whose creditors have no direct or indirect
recourse (including, without limitation, no recourse with respect to the payment
of principal or interest on Indebtedness of such Subsidiary)
17
to the Company or a Restricted Subsidiary. The Board of Directors of the Company
may redesignate an Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that (i) any such redesignation shall be deemed to be an Incurrence by
the Company and its Restricted Subsidiaries of the Indebtedness (if any) of such
redesignated Subsidiary for purposes of this First Supplemental Indenture as of
the date of such redesignation, and (ii) immediately after giving effect to such
redesignation and the incurrence of any such additional Indebtedness, the
Company and its Restricted Subsidiaries could incur $1.00 of additional
Indebtedness pursuant to paragraph (b) of Section 5.02 hereof. Subject to the
foregoing, the Board of Directors of the Company also may designate any
Restricted Subsidiary to be an Unrestricted Subsidiary; provided that (i) a
Restricted Payment shall be deemed to be made at the time of such designation
and such designation shall reduce the Basket to the extent of the book value (in
accordance with GAAP) of the Company's or a Restricted Subsidiary's investment
in the Subsidiary being designated an Unrestricted Subsidiary (the "Designation
Amount"), and (ii) immediately after giving effect to such designation and
reduction of the Basket, the Company and its Restricted Subsidiaries could incur
$1.00 of additional Indebtedness pursuant to paragraph (b) of Section 5.02
hereof. Any such designation or redesignation by the Board of Directors of the
Company shall be evidenced to the Trustee by the filing with the Trustee a
certified copy of the resolution of the Board of Directors of the Company giving
effect to such designation or redesignation and an Officers' Certificate
certifying that such designation or redesignation complied with the foregoing
conditions and setting forth the underlying calculations of such Officers'
Certificate.
"Weighted Average Life" means, as of the date of determination, with
respect to any debt instrument, the quotient obtained by dividing (i) the sum of
the products of the number of years from the date of determination to the dates
of each successive scheduled principal payment of such debt instrument
multiplied by the amount of such principal payment by (ii) the sum of all such
principal payments.
ARTICLE IV.
EVENTS OF DEFAULT
SECTION 4.01. EVENTS OF DEFAULT. Pursuant to Section 301(15) of the
Base Indenture, so long as any Notes are outstanding, the Company covenants and
agrees that "Event of Default," wherever used herein, means any one of the
following events, which are applicable to the Notes instead of the Events of
Default specified in Section 501 of the Base Indenture:
(a) default in the payment of interest on the Notes as and when the same
becomes due and payable and the continuance of any such failure for 30 days;
(b) default in the payment of all or any part of the principal or premium,
if any, on the Notes when and as the same become due and payable at maturity,
redemption, by declaration of acceleration or otherwise;
(c) failure by the Company or a Restricted Subsidiary, as the case may be,
to comply with Sections 5.01, 5.02, 5.04, 5.08, 5.09, 5.10 or Article VI hereof;
18
(d) default in the observance or performance of, or breach of, any
covenant, agreement or warranty of the Company contained in the Notes, the Base
Indenture or this First Supplemental Indenture (unless specifically dealt with
elsewhere), and continuance of such default or breach for a period of 60 days
after there has been given, by registered or certified mail, to the Company by
the Trustee, or to the Company and the Trustee by Holders of at least 25% in
aggregate principal amount of the outstanding Notes, a written notice specifying
such default or breach, requiring it to be remedied and stating that such notice
is a "Notice of Default" hereunder;
(e) a decree, judgment, or order by a court of competent jurisdiction
shall have been entered adjudging the Company or any of its Significant
Subsidiaries as bankrupt or insolvent, or approving as properly filed a petition
in an involuntary case or proceeding seeking reorganization of the Company or
any of its Significant Subsidiaries under any bankruptcy or similar law, or a
decree, judgment or order of a court of competent jurisdiction directing the
appointment of a receiver, liquidator, trustee, or assignee in bankruptcy or
insolvency of the Company, any of its Significant Subsidiaries, or of the
property of any such Person, or the winding up or liquidation of the affairs of
any such Person, shall have been entered, and the continuance of any such
decree, judgment or order unstayed and in effect for a period of 90 consecutive
days;
(f) the Company or any of its Significant Subsidiaries shall institute
proceedings to be adjudicated a voluntary bankrupt (including conversion of an
involuntary proceeding into a voluntary proceeding), or shall consent to the
filing of a bankruptcy proceeding against it, or shall file a petition or answer
or consent to the filing of any such petition, or shall consent to the
appointment of a Custodian, receiver, liquidator, trustee, or assignee in
bankruptcy or insolvency of it or any of its assets or property, or shall make a
general assignment for the benefit of creditors, or shall admit in writing its
inability to pay its debts generally as they become due, or shall, within the
meaning of any Bankruptcy Law, become insolvent, or fail generally to pay its
debts as they become due;
(g) (i) the acceleration of any Indebtedness (other than Non-Recourse
Indebtedness) of the Company or any of its Restricted Subsidiaries (in
accordance with the terms of such Indebtedness and after giving effect to any
applicable grace period set forth in the documents governing such Indebtedness)
that has an outstanding principal amount of $25,000,000 or more individually or
in the aggregate to be immediately due and payable; and (ii) the failure by the
Company or any of its Restricted Subsidiaries to make any principal, premium,
interest or other required payment in respect of Indebtedness (other than Non-
Recourse Indebtedness) of the Company or any of its Restricted Subsidiaries with
an outstanding aggregate principal amount of $25,000,000 or more individually or
in the aggregate (after giving effect to any applicable grace period set forth
in the documents governing such Indebtedness);
(h) one or more final nonappealable judgments (in the amount not covered
by insurance or not reserved for) or the issuance of any warrant of attachment
against any portion of the property or assets (except with respect to Non-
Recourse Indebtedness) of the Company or any Restricted Subsidiary, which are
$10,000,000 or more individually or in the aggregate, at any one time rendered
against the Company or any of its Restricted Subsidiaries by a court of
19
competent jurisdiction and not bonded, satisfied or discharged for a period
(during which execution shall not be effectively stayed) of (i) 45 days after
the judgment (which, if there is more than one judgment, causes such judgments
to exceed $10,000,000 in the aggregate) becomes final and such court shall not
have ordered or approved, and the parties shall not have agreed upon, the
payment of such judgment at a later date or dates or (ii) 60 days after all or
any part of such judgment is payable pursuant to any court order or agreement
between the parties; and
(i) any Subsidiary Guarantee of the Notes shall be held in a judicial
proceeding to be unenforceable or invalid or shall, except as permitted by this
First Supplemental Indenture, cease for any reason to be in full force and
effect, or any Subsidiary Guarantor, or any Person acting on behalf of a
Subsidiary Guarantor, shall deny or disaffirm its obligations in respect of the
Notes.
SECTION 4.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
The following shall replace Section 502 of the Base Indenture in its entirety:
If an Event of Default with respect to the Notes occurs and is
continuing (other than an Event of Default specified in sub-clauses (e) or (f)
above relating to the Company), then in each such case, unless the principal of
all of the Notes shall have already become due and payable, either the Trustee
or the holders of 25% in aggregate principal amount of the Notes then
outstanding, by notice in writing to the Company (and to the Trustee if given by
the Holders) (an "Acceleration Notice"), may declare all principal, determined
as set forth below, including in each case accrued interest thereon, to be due
and payable immediately. If an Event of Default specified in sub-clauses (e) or
(f) above occurs relating to the Company, all principal and accrued and unpaid
interest thereon shall be immediately due and payable on all outstanding Notes
without any declaration or other act on the part of the Trustee or the Holders.
The Holders of a majority in principal amount of the Notes then outstanding by
written notice to the Trustee and the Company may waive any Default or Event of
Default (other than any Default or Event of Default in payment of principal or
interest) on the Notes under this First Supplemental Indenture. Holders of a
majority in principal amount of the then outstanding Notes may rescind an
acceleration and its consequence (except an acceleration due to nonpayment of
principal or interest on the Notes) if the rescission would not conflict with
any judgment or decree and if all existing Events of Default (other than the
non-payment of accelerated principal) have been cured or waived.
ARTICLE V.
COVENANTS OF THE COMPANY
Pursuant to Section 301(15) of the Base Indenture, so long as any of
the Notes are Outstanding, the Company covenants and agrees, in addition to the
covenants and agreements contained in Article Ten of the Base Indenture, 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:
20
(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 therewith)
received by the Company from the sale or 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
21
(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 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); or
(iv) the retirement of Capital Stock of the Company or the
retirement of 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.
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.
22
SECTION 5.02. LIMITATIONS ON INDEBTEDNESS.
(a) Neither the Company nor any of its Restricted Subsidiaries may,
directly or indirectly, Incur any Indebtedness except (i) Non-Recourse
Indebtedness Incurred in the ordinary course of business; (ii) Indebtedness
evidenced by Notes and Subsidiary Guarantees issued on the Issue Date; (iii)
Indebtedness of the Company solely to any Subsidiary Guarantor, Indebtedness of
any Subsidiary Guarantor to any other Subsidiary Guarantor or to the Company or
Indebtedness of any Restricted Subsidiary that is not a Subsidiary Guarantor to
the Company or to any Restricted Subsidiary, provided that neither the Company
nor any Restricted Subsidiary shall become liable to any Person with respect to
such Indebtedness other than the Company or a Restricted Subsidiary; (iv)
Refinancing Indebtedness (including any subsequent refinancing, extension,
renewal, replacement or refunding thereof that satisfies the conditions set
forth in the definition of "Refinancing Indebtedness") (A) of any Indebtedness
permitted to be Incurred pursuant to clauses (ii) or (iv) of this paragraph (a)
or the immediately following paragraph (b) or (B) of any Indebtedness to the
extent outstanding on the Issue Date (other than under the Bank Credit Facility,
the 1993 Notes or Capitalized Lease Obligations being repaid using proceeds from
the sale of the Notes); (v) Indebtedness Incurred solely in respect of
performance, completion, guaranty and similar bonds and similar purpose
undertakings and Indebtedness under any xxxxxxx money notes, tenders, bids,
leases, statutory obligations, surety and appeal bonds, progress statements,
government contracts, letters of credit, escrow agreements and other obligations
of like nature and deposits made to secure performance of any of the foregoing,
in each case in the ordinary course of business; (vi) Indebtedness incurred by
the Company or any Subsidiary Guarantor under the Bank Credit Facility in an
aggregate principal amount not to exceed $100,000,000 at any time, less the
aggregate amount of all proceeds of sales or dispositions of assets applied to
permanently reduce the outstanding amount (or, in the case of a revolving credit
facility the committed amount) of such Indebtedness pursuant to Section 5.04
hereof and guaranties thereof by Subsidiary Guarantors; (vii) (A) Indebtedness
which represents the assumption by the Company or a Restricted Subsidiary of
Indebtedness of a Restricted Subsidiary permitted to be Incurred pursuant to the
terms of this First Supplemental Indenture, and (B) Indebtedness of a Subsidiary
Guarantor represented by guaranties in respect of Indebtedness of the Company or
another Subsidiary Guarantor permitted to be Incurred pursuant to this First
Supplemental Indenture and (C) Indebtedness of the Company represented by
guaranties in respect of Indebtedness of a Subsidiary Guarantor permitted to be
Incurred pursuant to this First Supplemental Indenture; (viii) other
Indebtedness outstanding on the Issue Date, including the 1993 Notes; (ix)
purchase money obligations and Capitalized Lease Obligations; and (x)
Indebtedness of the Company or any Subsidiary Guarantor to any Unrestricted
Subsidiary or any Restricted Subsidiary that is not a Subsidiary Guarantor in an
aggregate amount not to exceed $20,000,000 at any one time outstanding.
(b) Notwithstanding the foregoing, the Company and its Restricted
Subsidiaries that are Subsidiary Guarantors may Incur Indebtedness, in each
case, if, at the time such Indebtedness is Incurred: (i) no Default or Event of
Default shall have occurred and be continuing or would occur after giving effect
to such transaction, and (ii) immediately after giving effect thereto (without
duplication) on a pro forma basis, either (A) the Consolidated Fixed Charge
Coverage Ratio of the Company on the date of such Incurrence is at least equal
to 2.0 to 1 or (B) the ratio
23
of Indebtedness of the Company and its Restricted Subsidiaries on a consolidated
basis on the date of such Incurrence (excluding for purposes of such calculation
other Indebtedness specifically permitted to be Incurred pursuant to clause (i)
or clause (v) of the preceding paragraph), to Consolidated Net Worth of the
Company is less than 3.25 to 1.
Neither the Company nor any Restricted Subsidiary shall incur any
Indebtedness that is contractually subordinated in right of payment to any other
Indebtedness of the Company or such Restricted Subsidiary unless such
Indebtedness is also contractually subordinated in right of payment to the Notes
on substantially identical terms; provided, however, that no Indebtedness of the
Company or a Restricted Subsidiary shall be deemed to be contractually
subordinated in right of payment to any other Indebtedness of the Company solely
by virtue of being unsecured.
Furthermore, for purposes of determining compliance with this covenant
in the event that an item of proposed Indebtedness meets the criteria of more
than one of the categories described in clauses (i) through (x) of paragraph (a)
above as of the date of incurrence thereof, or is entitled to be Incurred
pursuant to paragraph (b) of this covenant as of the date of incurrence thereof,
the Company shall, in its sole discretion, classify such item of Indebtedness on
the date of its Incurrence in any manner that complies with this covenant.
SECTION 5.03. LIMITATIONS ON TRANSACTIONS WITH AFFILIATES. 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 may,
directly or indirectly, make any loan, advance, guaranty or capital contribution
to or for the benefit of, or sell, lease, transfer or otherwise dispose of any
of its properties or assets to, or for the benefit of, or purchase or lease any
property or assets from, or enter into or amend any contract, agreement or
understanding with, or for the benefit of any Affiliate (each an "Affiliate
Transaction"), except for (i) Restricted Payments otherwise permitted under this
First Supplemental Indenture, and (ii) transactions, the terms of which are at
least as favorable as the terms which could be obtained by the Company or such
Restricted Subsidiary, as the case may be, in a comparable transaction made on
an arm's-length basis with Persons who are not Affiliates.
(b) In addition, (i) with respect to any Affiliate Transaction or series
of related Affiliate Transactions with an aggregate value in excess of
$5,000,000, such transaction must first be approved by a majority of the
Disinterested Directors and (ii) with respect to any Affiliate Transaction or
related series of Affiliate Transactions with an aggregate value in excess of
$25,000,000, the Company must first deliver to the Trustee a favorable written
opinion from an investment banking firm of national reputation as to the
fairness from a financial point of view of such transaction to the Company or
such Restricted Subsidiary, as the case may be, or with respect to transactions
involving real property, a determination of value by a licensed real estate
appraisal firm that is of regional standing in the region in which the subject
property is located and which has professionals that are MAI certified.
(c) Notwithstanding the foregoing, Affiliate Transactions shall not
include (i) transactions exclusively between or among the Company and one or
more Restricted Subsidiaries
24
or between or among one or more Restricted Subsidiaries, (ii) any contract,
agreement or understanding with, or for the benefit of, or planned for the
benefit of, employees, officers or directors of the Company or any Restricted
Subsidiary (in their capacity as such) that has been approved by the Board of
Directors (or a committee thereof) or is in the ordinary course of business and
consistent with past practice, (iii) issuances of Qualified Capital Stock of the
Company to members of the Board of Directors, officers and employees of the
Company or its Subsidiaries pursuant to plans approved by the stockholders or
the Board of Directors (or a committee thereof) or is in the ordinary course of
business and consistent with past practice of the Company, (iv) home sales and
readily marketable mortgage loans to employees, officers and directors of the
Company and Subsidiaries in the ordinary course of business, (v) payment of
regular fees and reimbursement of expenses to members of the Board of Directors
who are not employees of the Company and reimbursement of expenses and payment
of wages and other compensation to officers and employees of the Company or any
of its Subsidiaries or loans or advances in respect thereof, (vi) contractual
arrangements in effect on the Issue Date and renewals and extensions thereof not
involving modifications materially adverse to the Company or any Restricted
Subsidiary, (vii) Restricted Payments or Permitted Investments otherwise made in
compliance with this First Supplemental Indenture or (viii) the advancement of
general and administrative expenses of the Company and its Subsidiaries that are
reimbursed in the ordinary course of business.
SECTION 5.04. LIMITATIONS ON ASSET SALES. Subject to Article VI
hereof and 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, neither the Company nor any Restricted Subsidiary may, directly or
indirectly, consummate an Asset Sale, unless the Company (or such Restricted
Subsidiary, as the case may be) receives consideration at the time of such Asset
Sale at least equal to the fair market value (reasonably evidenced by a good
faith resolution of the Board of Directors or the board of directors or
comparable governing body of such Restricted Subsidiary, whose resolution shall
be conclusive) of the assets sold or otherwise disposed of, provided that the
aggregate fair market value of the consideration received from any Asset Sale
that is not in the form of cash or Cash Equivalents shall not, when aggregated
with the fair market value of all other noncash consideration received by the
Company and its Restricted Subsidiaries from all previous Asset Sales since the
Issue Date that has not been converted into cash or Cash Equivalents, exceed 10%
of the Consolidated Net Assets of the Company at the time of the Asset Sale
under consideration; and, provided, further, however, that the amount of (x) any
liabilities of the Company or any Restricted Subsidiary (other than liabilities
that are Incurred in connection with or in contemplation of such Asset Sale)
that are assumed by the transferee of any such assets and (y) any notes or other
obligations received by the Company or any such Restricted Subsidiary from such
transferee that are promptly converted by the Company or such Restricted
Subsidiary into cash, shall be deemed to be cash (to the extent of the cash
received) for purposes of this provision.
Within 180 days after the receipt of any Net Cash Proceeds from an
Asset Sale, the Company may apply such Net Cash Proceeds in its sole discretion
(a) to permanently repay Indebtedness under the Bank Credit Facility (and to
permanently reduce the commitment thereunder for purposes of clause (a)(vi) of
Section 5.02 hereof) or (b) to acquire all or
25
substantially all of the assets of, or Capital Stock representing a majority of
the voting power in the election of directors or other governing body of,
another Permitted Business, (c) to make a capital expenditure or (d) to acquire
other assets not classified as current under GAAP that are used or useful in a
Permitted Business. Pending the final application of any such Net Cash Proceeds,
the Company may temporarily reduce revolving credit borrowings or otherwise
invest such Net Cash Proceeds in any manner that is not prohibited by this First
Supplemental Indenture. Any Net Cash Proceeds from Asset Sales that are not
applied or invested as provided in the first sentence of this paragraph shall be
deemed to constitute "Excess Proceeds." When the aggregate amount of Excess
Proceeds exceeds $10,000,000, the Company shall be required to make an offer to
all Holders of Notes and all holders of other Indebtedness that is pari passu
with the Notes containing provisions similar to those set forth in this First
Supplemental Indenture with respect to offers to purchase or redeem with the
proceeds of sales of assets (an "Asset Sale Offer") to purchase the maximum
principal amount of Notes and such other pari passu Indebtedness that may be
purchased out of the Excess Proceeds, at an offer price for the Notes in cash in
an amount equal to 100% of the principal amount thereof plus accrued and unpaid
interest thereon, if any, to the date of purchase, in accordance with the
procedures set forth in this First Supplemental Indenture and such other pari
passu Indebtedness. To the extent that any Excess Proceeds remain after
consummation of an Asset Sale Offer, the Company may use such Excess Proceeds
for any purpose not otherwise prohibited by this First Supplemental Indenture.
If the aggregate principal amount of Notes and such other pari passu
Indebtedness tendered into such Asset Sale Offer surrendered by Holders thereof
exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and
such other pari passu Indebtedness to be purchased on a pro rata basis. Upon
completion of such offer to purchase (and without regard to whether all Excess
Proceeds are used therefor), the amount of Excess Proceeds shall be reset at
zero.
Any Asset Sale Offer shall be conducted by the Company in compliance
with applicable law, including, without limitation, Section 14(e) of the
Exchange Act and Rule 14e-1 thereunder, if applicable.
SECTION 5.05. LIMITATIONS ON RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES. The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (a)(i) pay dividends or make any other distributions to
the Company or any of its Restricted Subsidiaries on its Capital Stock or with
respect to any other interest or participation in, or measured by, its profits,
or (ii) pay any Indebtedness owed to the Company or any of its Restricted
Subsidiaries, (b) make loans or advances to the Company or any of is Restricted
Subsidiaries, (c) transfer any of its properties or assets to the Company or any
of its Restricted Subsidiaries, or (d) guarantee the Notes or any Indebtedness
issued in exchange for, or the proceeds of which are used to extend, refinance,
renew, replace, or refund the Notes, except for such encumbrances or
restrictions described in (a) through (d) above existing under or by reasons of
(i) Existing Indebtedness as in effect on the date of this First Supplemental
Indenture, (ii) applicable law or regulation, (iii) any instrument governing
Acquired Indebtedness as in effect at the time of acquisition, which encumbrance
or restriction is not applicable to any person, or the properties or assets of
any person, other than the person, or the properties or assets of the person, so
acquired, provided that the Consolidated Net
26
Income of such person shall not be taken into account in determining whether
such acquisition was permitted by the terms of this First Supplemental
Indenture, (iv) by reason of customary non-assignment provisions or prohibitions
on subletting in leases or other contracts entered into in the ordinary course
of business, (v) Refinancing Indebtedness permitted under clause (iv) of
paragraph (a) of Section 5.02 hereof, provided that the restrictions contained
in the agreements governing such Refinancing Indebtedness are no more
restrictive than those contained in the agreements governing the Indebtedness
being refinanced, or (vi) with respect to clause (c) above, (A) purchase money
obligations, Non-Recourse Indebtedness and Capital Lease Obligations for
property acquired or leased in the ordinary course of business, (B) any
agreement restricting the sale or other disposition of properties securing
Indebtedness permitted by this First Supplemental Indenture if such agreement
does not expressly restrict the ability of a Restricted Subsidiary to pay
dividends or make loans or advances to the Company, (C) restrictions or
encumbrances contained in any security agreements permitted by this First
Supplemental Indenture securing Indebtedness permitted by this First
Supplemental Indenture to the extent that such restrictions or encumbrances
restrict the transfer of assets (or proceeds thereof) subject to such security
agreement, or (D) any restrictions or encumbrances with respect to a Restricted
Subsidiary imposed pursuant to an agreement which has been entered into for the
sale or disposition of the Capital Stock or assets of such Restricted Subsidiary
or such an agreement which has been entered into for the sale or disposition of
assets of the Company to the extent otherwise permitted by this First
Supplemental Indenture, including in connection with any Asset Sale, as
applicable only to such assets or Capital Stock to be sold, or (vii) customary
agreements entered into in the ordinary course of business restricting the
ability of a joint venture to make distributions or payments of cash or property
to participants in such joint venture.
SECTION 5.06. LIMITATIONS ON LIENS. The Company may not and may not
permit any Restricted Subsidiary to Incur, or suffer to exist any Lien (other
than Permitted Liens) upon any of its property or assets, whether now owned or
hereafter acquired.
SECTION 5.07. PAYMENTS FOR CONSENT. Neither the Company nor any of
its Subsidiaries shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder of
the Notes for or as an inducement to any consent, waiver or amendment of any
terms or provisions of this First Supplemental Indenture or the Notes unless
such consideration is offered and paid to all Holders of the Notes that so
consent, waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.
SECTION 5.08. GUARANTEES OF CERTAIN INDEBTEDNESS. The Company shall
not permit any of its Restricted Subsidiaries other than the Subsidiary
Guarantors, directly or indirectly, to guarantee the payment of any Indebtedness
under the Bank Credit Facility, any other credit facility, or any other
Indebtedness of the Company or any other Restricted Subsidiary, unless such
Restricted Subsidiary, the Company and the Trustee execute and deliver a
supplemental indenture evidencing a Subsidiary Guarantee of the Notes. Neither
the Company nor any Subsidiary Guarantor shall be required to make a notation on
the Notes to reflect any such subsequent Subsidiary Guarantee. Nothing in this
covenant shall be construed to permit any
27
Restricted Subsidiary of the Company to incur Indebtedness otherwise prohibited
by Section 5.02 hereof.
SECTION 5.09. MAINTENANCE OF CONSOLIDATED NET WORTH. The Company is
required to furnish to the Trustee an Officers' Certificate within 55 days after
the end of any fiscal quarter (100 days after the end of any fiscal year)
notifying the Trustee that the Company's Consolidated Net Worth has declined
below $80.0 million (the "Minimum Required Net Worth") at the end of any fiscal
quarter in which the Company's Consolidated Net Worth has so declined. If, on
the last day of each of any two consecutive fiscal quarters (the last day of the
second fiscal quarter being referred to herein as a "Deficiency Date"), the
Company's Consolidated Net Worth is less than the Minimum Required Net Worth,
then the Company is required, no later than 65 days after each such Deficiency
Date (110 days if such Deficiency Date is the last day of the Company's fiscal
year), to make an offer to all Holders of Notes to purchase (a "Purchase Offer")
10% of the aggregate principal amount of the Notes theretofore issued under this
First Supplemental Indenture (the "Offer Amount") at a purchase price equal to
100% of the principal amount of the Notes, plus accrued interest to the date of
purchase. The Purchase Offer is required to remain open for a period of 20
Business Days following its commencement, except to the extent otherwise
permitted by applicable law (as extended, the "Offer Period") and the Company is
required to purchase the Offer Amount of the Notes on a designated date no later
than one Business Day after the termination of the Offer Period, or if less than
the Offer Amount of Notes shall have been tendered, all Notes then tendered;
provided, however, that the Company shall not be obligated to purchase any of
such Notes unless Holders of Notes of at least 10% of the Offer Amount shall
have tendered and not subsequently withdrawn their Notes for repurchase. If the
aggregate principal amount of Notes tendered exceeds the Offer Amount, the
Company is required to purchase the Notes tendered to it pro rata among the
Notes tendered (with such adjustments as may be appropriate so that only Notes
in denominations of $1,000 and integral multiples thereof shall be purchased).
The Company shall comply with all applicable federal and state securities laws
in connection with each Purchase Offer. In no event shall the failure of the
Company's Consolidated Net Worth to equal or exceed the Minimum Required Net
Worth at the end of the fiscal quarter be counted toward the making of more than
one Purchase Offer. The Company may reduce the principal amount of Notes to be
purchased pursuant to the Purchase Offer by subtracting 100% of the principal
amount (excluding premium) of Notes acquired by the Company subsequent to the
Deficiency Date through purchase (otherwise than pursuant to this Section 5.09
or Section 5.04 or Section 5.10 hereof), optional redemption or exchange and
surrender for cancellation.
SECTION 5.10. REPURCHASE OF NOTES UPON CHANGE OF CONTROL. In the
event that a Change of Control has occurred, each Holder shall have the right,
at such Holder's option, subject to the terms and conditions of this First
Supplemental Indenture, to require the Company to repurchase all or any part of
such Holder's Notes (provided that the principal amount of such Notes must be
$1,000 or an integral multiple thereof) on the date that is no later than 60
Business Days (unless a later date is required by applicable law) after the
occurrence of such Change of Control (the "Change of Control Payment Date"), at
a cash price equal to 101% of the principal amount thereof, plus accrued and
unpaid interest, if any (the "Change of Control Purchase Price"), to the Change
of Control Payment Date.
28
The Company shall notify the Trustee within ten Business Days after
the Company becomes aware of the occurrence of a Change of Control. Within 20
Business Days after the occurrence of a Change of Control, the Company shall
make an unconditional offer (a "Change of Control Offer") to all Holders of
Notes to purchase all of the Notes at the Change of Control Purchase Price by
sending written notice of a Change of Control Offer, by first class mail, to
each Holder at its registered address, with a copy to the Trustee.
On or before the Change of Control Payment Date, the Company shall (i)
accept for payment Notes or portions thereof properly tendered pursuant to the
Change of Control Offer, (ii) deposit with the Paying Agent U.S. Legal Tender
sufficient to pay the Change of Control Purchase Price (together with accrued
and unpaid interest) of all Notes so tendered and (iii) deliver to the Trustee
Notes so accepted together with an Officers' Certificate listing the Notes or
portions thereof being purchased by the Company. The Paying Agent shall promptly
mail to the Holders of Notes so accepted payment in an amount equal to the
Change of Control Purchase Price (together with accrued and unpaid interest),
and the Trustee shall promptly authenticate and mail or deliver to such Holders
a new Note equal in principal amount to any unpurchased portion of the Note
surrendered. Any Note not so accepted shall be promptly mailed or delivered by
the Company to the Holder thereof. The Company shall publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.
The Change of Control purchase feature of the Notes may make more
difficult or discourage a takeover of the Company, and, thus, the removal of
incumbent management. To the extent applicable and if required by law, the
Company shall comply with Section 14 of the Exchange Act and the provisions of
Regulation 14E and any other tender offer rules under the Exchange Act and other
securities laws, rules and regulations which may then be applicable to any offer
by the Company to purchase the Notes at the option of Holders upon a Change of
Control.
SECTION 5.11. USE OF CERTAIN PROCEEDS. The Company shall commence a
tender offer to repurchase the remaining 1993 Notes as promptly as practicable
following the Issue Date. The Company shall redeem all remaining untendered
outstanding 1993 Notes in December 1998 at a purchase price of 105.5% of the
principal amount thereof in accordance with the terms of the indenture governing
the 1993 Notes, and shall maintain, at all times prior to completion of such
redemption, Investments in Cash Equivalents at least equal to the lesser of (i)
$80.0 million, and (ii) the outstanding principal amount of 1993 Notes not
theretofore redeemed or repurchased. In addition, the Company shall, as
promptly as practicable, deposit in escrow with an escrow agent that is not an
Affiliate of the Company, $12,000,000 pending the Company's use of such funds to
exercise its purchase option under that certain Lease Agreement dated May 15,
1989 by and among Corporate Property Associates 9, L.P., as landlord and NVHomes
L.P., Xxxx Operations G.P. and Xxxx Homes, Inc., as amended, or as otherwise
permitted in accordance with the terms of the escrow agreement. The Company
shall use its commercially reasonable efforts to effect such purchase option in
accordance with its terms.
29
ARTICLE VI.
MERGER, CONSOLIDATION OR SALE OF ASSETS
Pursuant to Section 301(15) of the Base Indenture, so long as any of the
Notes are outstanding, the following provision shall replace Section 801 of the
Base Indenture for purposes of the Notes:
(a) The Company shall not consolidate with or merge with or into, any
other Person, or transfer all or substantially all of its assets to, any entity
unless permitted by law and unless (i) the resulting, surviving or transferee
entity, which shall be a corporation, partnership, limited liability company or
other entity organized and existing under the laws of the United States or a
State thereof or the District of Columbia, assumes by supplemental indenture, in
a form reasonably satisfactory to the Trustee, all of the obligations of the
Company under the Notes and this First Supplemental Indenture, (ii) immediately
after giving effect to, and as a result of, such transaction, no Default or
Event of Default shall have occurred and be continuing, (iii) immediately after
giving effect to such transaction on a pro forma basis, the net worth of the
surviving or transferee entity on a stand-alone basis is at least equal to the
Consolidated Net Worth of the Company immediately prior to such transaction; and
(iv) the Company or the surviving or transferee entity thereof would immediately
thereafter be permitted to Incur at least $1.00 of additional Indebtedness
pursuant to the provisions described in paragraph (b) under Section 5.02 hereof.
The provisions of clause (iii) or clause (iv) above shall not apply to a
transaction or series of related transactions in which the sole participants are
Restricted Subsidiaries of the Company or to a transaction between the Company
and one or more of its Restricted Subsidiaries, subject to any limitations on
mergers involving Subsidiary Guarantors.
(b) For purposes of clause (a), the sale, lease, conveyance, assignment,
transfer, or other disposition of all or substantially all of the properties and
assets of one or more Subsidiaries of the Company, which properties and assets,
if held by the Company instead of such Subsidiaries, would constitute all or
substantially all of the properties and assets of the Company, on a consolidated
basis, shall be deemed to be the transfer of all or substantially all of the
properties and assets of the Company. Thereafter such successor corporation or
corporations shall succeed to and be substituted for the Company with the same
effect as if it had been named herein as the "Company" and all such obligations
of the predecessor corporation shall terminate.
ARTICLE VII.
REDEMPTION
The Notes shall be redeemable at the option of the Company, in whole
or in part, at any time on or after June 1, 2003, at the redemption prices
(expressed as a percentage of principal amount) set forth below, plus accrued
and unpaid interest thereon, if any, to the redemption date, if redeemed during
the 12-month period beginning on June 1 of the years indicated below:
30
REDEMPTION YEAR PRICE
--------------------------- ----------
2003....................... 104.000
2004....................... 102.000
2005....................... 100.000
In addition, prior to June 1, 2001, the Company may redeem up to 35%
of the aggregate principal amount of the Notes issued under this First
Supplemental Indenture at a redemption price equal to 108% of the principal
amount of the Notes so redeemed, plus accrued and unpaid interest thereon, if
any, to the redemption date with the net cash proceeds of one or more Public
Equity Offerings; provided, however, that (x) at least $113,750,000 aggregate
principal amount of all Notes issued under the Indenture remains outstanding
immediately after giving effect to any such redemption (excluding any Notes held
by the Company) and (y) notice of any such redemption is given within 60 days of
the applicable Public Equity Offering.
Selection of the Notes or portions thereof for redemption pursuant to
the foregoing shall be made by the Trustee pro rata or by lot. Notice of
redemption shall be mailed via courier guaranteeing overnight delivery at least
30 days but not more than 60 days before the redemption date to each Holder
whose Notes are to be redeemed at the registered address of such Holder. On and
after the redemption date, interest shall cease to accrue on the Notes or
portions thereof called for redemption.
ARTICLE VIII.
GUARANTEES
Pursuant to Section 301(23) of the Base Indenture, and until the 91st
day after the Notes have been paid in full, the following provisions shall be a
part of this First Supplemental Indenture.
SECTION 8.01. UNCONDITIONAL SUBSIDIARY GUARANTEE. Each Subsidiary
Guarantor hereby unconditionally, jointly and severally, guarantees (such
guarantee to be referred to herein as the "Subsidiary Guarantee") to each Holder
of a Note authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of this
First Supplemental Indenture, the Notes or the obligations of the Company
hereunder or thereunder, that: (i) the principal of, interest and premium, if
any, on the Notes will be promptly paid in full when due, subject to any
applicable grace period, whether at stated maturity, by acceleration or
otherwise and interest on the overdue principal of, and interest on any
interest, to the extent lawful, and premium, if any, on the Notes and all other
obligations of the Company to the Holders or the Trustee hereunder or thereunder
will be promptly paid in full, all in accordance with the terms hereof and
thereof; and (ii) in case of any extension of time of payment or renewal of any
Notes or of any such other obligations, the same will be promptly paid in full
when due in accordance with the terms of the extension or renewal, subject to
any applicable grace period, whether at stated maturity, by acceleration or
otherwise, subject, however, in the case of clauses (i) and (ii) above, to the
limitations set forth in Section 8.04. Each Subsidiary Guarantor hereby agrees
that its obligations hereunder shall be unconditional, irrespective of the
validity, regularity or enforceability of the Notes or this First
31
Supplemental Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any action
to enforce the same or any other circumstances which might otherwise constitute
a legal or equitable discharge or defense of a guarantor (other than
indefeasable payment in full of the Notes). Each Subsidiary Guarantor hereby
waives diligence, presentment, demand for payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenants that this Subsidiary Guarantee will not be discharged except by
complete performance of the obligations contained in the Notes, this First
Supplemental Indenture and in the Subsidiary Guarantee. If any Holder or the
Trustee is required by any court or otherwise to return to the Company, any
Subsidiary Guarantor, or any Custodian, trustee, liquidator or other similar
official acting in relation to the Company or any Subsidiary Guarantor, any
amount paid by the Company or any Subsidiary Guarantor to the Trustee or such
Holder, this Subsidiary Guarantee, to the extent theretofore discharged, shall
be reinstated in full force and effect as to such amount only. Each Subsidiary
Guarantor further agrees that, as between each Subsidiary Guarantor, on the one
hand, and the Holders and the Trustee, on the other hand, (x) the maturity of
the obligations guaranteed hereby may be accelerated as provided in this First
Supplemental Indenture for the purposes of this Subsidiary Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the
event of any acceleration of such obligations as provided in this First
Supplemental Indenture, such obligations (whether or not due and payable) shall
forthwith become due and payable by each Subsidiary Guarantor for the purpose of
the Subsidiary Guarantee.
SECTION 8.02. RELEASE OF A SUBSIDIARY GUARANTOR. Upon (i) a sale or
other disposition of all or substantially all of the assets of any Subsidiary
Guarantor, by way of merger, consolidation or otherwise, or (ii) a sale,
distribution or other disposition of all of the capital stock of any Subsidiary
Guarantor, including, without limitation, a distribution of all of the capital
stock of any Subsidiary Guarantor to stockholders of the Company in a
transaction that complies with Section 5.01 hereof, such Subsidiary Guarantor
(in the event of a sale or other disposition, by way of such a merger,
consolidation, distribution or otherwise, of all of the capital stock of such
Subsidiary Guarantor) or the Person acquiring the property (in the event of a
sale or disposition of all or substantially all of the assets of such Subsidiary
Guarantor) will be released and relieved of any obligations under its Subsidiary
Guarantee; provided that the Net Cash Proceeds of such sale or other disposition
are applied in accordance with the provisions of Section 5.04 hereof.
SECTION 8.03. LIMITATION OF SUBSIDIARY GUARANTOR'S LIABILITY. Each
Subsidiary Guarantor and by its acceptance hereof each Holder hereby confirms
that it is the intention of all such parties that the guarantee by such
Subsidiary Guarantor pursuant to its Subsidiary Guarantee not constitute a
fraudulent transfer or conveyance for purposes of the Bankruptcy Law, the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any
similar Federal or state law. To effectuate the foregoing intention, the
Holders and such Subsidiary Guarantor hereby irrevocably agree that the
obligations of such Subsidiary Guarantor under its Subsidiary Guarantee shall be
limited to the maximum amount as will, after giving
32
effect to all other contingent and fixed liabilities of such Subsidiary
Guarantor and after giving effect to any collections from or payments made by or
on behalf of any other Subsidiary Guarantor in respect of the obligations of
such other Subsidiary Guarantor under its Subsidiary Guarantee or pursuant to
Section 8.05, result in the obligations of such Subsidiary Guarantor under its
Subsidiary Guarantee not constituting such fraudulent transfer or conveyance.
SECTION 8.04. SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC. ON CERTAIN
TERMS. No Subsidiary Guarantor may consolidate with or merge with or into
(whether or not such Subsidiary Guarantor is the surviving Person) another
corporation, Person or entity (other than the Company or another Subsidiary
Guarantor), unless (i) subject to the provisions of Section 8.02 hereof, the
Person formed by or surviving any such consolidation or merger (if other than
the Subsidiary Guarantor) assumes all of the obligations of such Subsidiary
Guarantor under the Notes (including the Subsidiary Guarantee) and this First
Supplemental Indenture pursuant to a supplemental indenture, in form and
substance reasonably satisfactory to the Trustee, together with an Officers'
Certificate of the Company and an Opinion of Counsel stating that the
transaction and such supplemental indenture comply with this First Supplemental
Indenture (provided that this requirement will not apply to a substantially
concurrent merger involving the Company, Homes and NVR Financial Services,
Inc.), and (ii) immediately after giving effect to such transaction, no Default
or Event of Default exists.
SECTION 8.05. CONTRIBUTION. In order to provide for just and
equitable contribution among the Subsidiary Guarantors, the Subsidiary
Guarantors agree, inter se, that in the event any payment or distribution is
made by any Subsidiary Guarantor (a "Funding Subsidiary Guarantor") under this
Subsidiary Guarantee, such Funding Subsidiary Guarantor shall be entitled to a
contribution from all other Subsidiary Guarantors in a pro rata amount based on
the Adjusted Net Assets of each Subsidiary Guarantor (including the Funding
Subsidiary Guarantor) for all payments, damages and expenses incurred by that
Funding Subsidiary Guarantor in discharging the Company's obligations with
respect to the Notes or any other Subsidiary Guarantor's obligations with
respect to this Subsidiary Guarantee.
SECTION 8.06. WAIVER OF SUBROGATION. Until the Notes are paid in
full, each Subsidiary Guarantor hereby irrevocably waives any claim or other
rights which it may now or hereafter acquire against the Company that arise from
the existence, payment, performance or enforcement of such Subsidiary
Guarantor's obligations under this Subsidiary Guarantee and this First
Supplemental Indenture, including, without limitation, any right of subrogation,
reimbursement, exoneration, indemnification, and any right to participate in any
claim or remedy of any Holder of Notes against the Company, whether or not such
claim, remedy or right arises in equity, or under contract, statute or common
law, including, without limitation, the right to take or receive from the
Company, directly or indirectly, in cash or other property or by setoff or in
any other manner, payment or security on account of such claim or other rights.
If any amount shall be paid to any Subsidiary Guarantor in violation of the
preceding sentence and the Notes shall not have been paid in full, such amount
shall have been deemed to have been paid to such Subsidiary Guarantor for the
benefit of, and held in trust for the benefit of, the Holders of the Notes, and
shall forthwith be paid to the Trustee for the benefit of such Holders to be
credited and applied upon the Notes, whether matured or unmatured, in accordance
with the terms of this
33
First Supplemental Indenture. Each Subsidiary Guarantor acknowledges that it
will receive direct and indirect benefits from the financing arrangements
contemplated by this First Supplemental Indenture and that the waiver set forth
in this Section 8.06 is knowingly made in contemplation of such benefits.
SECTION 8.07. EXECUTION OF SUBSIDIARY GUARANTEE. To evidence their
guarantee to the Holders specified in Section 8.01, the Subsidiary Guarantors
hereby agree to execute the Subsidiary Guarantee in substantially the form of
Exhibit B recited to be endorsed on each Note ordered to be authenticated and
delivered by the Trustee. Each Subsidiary Guarantor hereby agrees that its
guarantee set forth in Section 8.01 shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such
Subsidiary Guarantee. Each such Subsidiary Guarantee shall be signed on behalf
of each Subsidiary Guarantor by one Officer (who shall have been duly authorized
by all requisite corporate actions) prior to the authentication of the Note on
which it is endorsed, and the delivery of such Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of such
Subsidiary Guarantee on behalf of such Subsidiary Guarantor. Such signatures
upon the Subsidiary Guarantee may be by manual or facsimile signature of such
duly authorized Officer and may be imprinted or otherwise reproduced on the
Subsidiary Guarantee, and in case any such Officer who shall have signed the
Subsidiary Guarantee shall cease to be such Officer before the Note on which
such Subsidiary Guarantee is endorsed shall have been authenticated and
delivered by the Trustee or disposed of by the Company, such Note nevertheless
may be authenticated and delivered or disposed of as though the person who
signed the Subsidiary Guarantee had not ceased to be such Officer of the
Subsidiary Guarantor.
SECTION 8.08. OBLIGATIONS OF EACH SUBSIDIARY GUARANTOR UNCONDITIONAL.
Nothing contained in this Article VIII or elsewhere in this First Supplemental
Indenture or in the Notes or the Subsidiary Guarantees is intended to or shall
impair, as among any Subsidiary Guarantor, its creditors, and the Holders of the
Notes, the obligation of such Subsidiary Guarantor, which is absolute and
unconditional, to pay to the Holders of the Notes the principal of and any
interest on the Notes as and when the same shall become due and payable in
accordance with the terms of the Subsidiary Guarantees, or is intended to or
shall affect the relative rights of the Holders of the Notes and creditors of
any Subsidiary Guarantor, nor shall anything herein or therein prevent the
Holder of any Note or the Trustee on its behalf from exercising all remedies
otherwise permitted by applicable law upon default under this First Supplemental
Indenture, subject to the rights, if any, in respect of cash, property or
securities of any Subsidiary Guarantor received upon the exercise of such
remedy.
SECTION 8.09. NOTICE TO TRUSTEE. The Company or any Subsidiary
Guarantor shall give prompt written notice to the Trustee of any fact known to
the Company or any such Subsidiary Guarantor which would prohibit the making of
any payment to or by the Trustee in respect of the Subsidiary Guarantees
pursuant to the provisions of this Article VIII. Regardless of anything to the
contrary contained in this Article VIII or elsewhere in this First Supplemental
Indenture, the Trustee shall not be charged with knowledge of the existence of
any Default or Event of Default with respect to any facts which would prohibit
the making of any payment to or by the Trustee unless and until a Responsible
Officer of the Trustee shall have received notice in
34
writing from the Company or a Subsidiary Guarantor, and, prior to receipt of any
such written notice, the Trustee shall be entitled to assume (in the absence of
actual knowledge of a Responsible Officer to the contrary) that no such facts
exist.
SECTION 8.10. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF
LIQUIDATING AGENT. Upon any payment or distribution of assets of any Subsidiary
Guarantor referred to in this Article VIII, the Trustee, subject to the
provisions of this First Supplemental Indenture, and the Holders shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which bankruptcy, dissolution, winding-up, liquidation or
reorganization proceedings are pending, or upon certificate of the receiver,
trustee in bankruptcy, liquidating trustee, agent or other person making such
payment or distribution, delivered to the Trustee or the Holders, for the
purpose of ascertaining the persons entitled to participate in such
distribution, the amount thereof or payable thereon, the amount or amounts paid
or distribution thereon and all other facts pertinent thereto or to this Article
VIII.
ARTICLE IX
OFFER TO REPURCHASE PURSUANT TO SECTION 5.04 OR 5.09 HEREOF
In the event that, pursuant to Section 5.04 or Section 5.09 hereof,
the Company shall be required to commence an Asset Sale Offer or a Purchase
Offer (a "Repurchase Offer"), it shall follow the procedures specified below.
The Repurchase Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (as extended, the "Offer Period").
No later than one Business Day after the termination of the Offer Period (the
"Purchase Date"), the Company shall purchase the principal amount of Notes
required to be purchased pursuant to Section 5.04 or Section 5.09 hereof (the
"Offer Amount") or, subject to the terms of Section 5.09 (if such repurchase is
pursuant to Section 5.09 hereof), if less than the Offer Amount has been
tendered, all Notes tendered in response to the Repurchase Offer. Payment for
any Notes so purchased shall be made in the same manner as interest payments are
made.
If the Purchase Date is on or after an interest payment record date
and on or before the related interest payment date, any accrued and unpaid
interest shall be paid to the Person in whose name a Note is registered at the
close of business on such record date, and no additional interest shall be
payable to Holders who tender Notes pursuant to the Repurchase Offer.
Upon the commencement of a Repurchase Offer, the Company shall send,
by first class mail, a notice to the Trustee and each of the Holders. The
notice shall contain all instructions and materials necessary to enable such
Holders to tender Notes pursuant to the Repurchase Offer. The Repurchase Offer
shall be made to all Holders. The notice, which shall govern the terms of the
Repurchase Offer, shall state:
(a) that the Repurchase Offer is being made pursuant to this Article IX
and, as
35
applicable, Section 5.04 or Section 5.09 hereof and the length of time the
Repurchase Offer shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date and in the
case of a Repurchase Offer being made pursuant to Section 5.09 hereof that the
Company shall not be obligated to purchase any of such Notes unless Holders of
Notes of at least 10% of the Offer Amount shall have tendered and not
subsequently withdrawn their Notes for repurchase;
(c) that any Note not tendered or accepted for payment shall continue to
accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Repurchase Offer shall cease to accrue
interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an Asset
Sale Offer may only elect to have all of such Note purchased and may not elect
to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any
Repurchase Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Company, a depositary, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Xxxxxx is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Repurchase
Offer or, subject to the terms of Section 5.09 hereof in the case of a
Repurchase Offer made pursuant thereto, if less than the Offer Amount has been
tendered, all Notes tendered, and shall deliver to the Trustee an Officers'
Certificate stating that such Notes or portions thereof were accepted for
payment by the Company in accordance with the terms of this Article IX. The
Company, the Depository Trust Company or the Paying Agent,
36
as the case may be, shall promptly (but in any case not later than one Business
Day after the Purchase Date) mail or deliver to each tendering Holder an amount
equal to the purchase price of the Notes tendered by such Holder and accepted by
the Company for purchase, and the Company shall promptly issue a new Note, and
the Trustee, upon written request from the Company shall authenticate and mail
or deliver such new Note to such Holder, in a principal amount equal to any
unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
shall publicly announce the results of the Repurchase Offer on the Repurchase
Date.
Other than as specifically provided in this Article IX, any purchase pursuant to
this Article IX shall be made pursuant to the provisions of Article Eleven of
the Base Indenture.
ARTICLE X
MISCELLANEOUS
SECTION. 10.01. DISCHARGE; DEFEASANCE. Articles 4 and 13 of the Base
Indenture relating to Satisfaction and Discharge and to Defeasance and Covenant
Defeasance, respectively, shall be applicable to the Notes issued under this
First Supplemental Indenture.
SECTION 10.02. APPLICATION OF FIRST SUPPLEMENTAL INDENTURE. Each and
every term and condition contained in this First Supplemental Indenture that
modifies, amends or supplements the terms and conditions of the Base Indenture
shall apply only to the Notes created hereby and not to any future series of
Securities established under the Base Indenture.
SECTION 10.11. BENEFITS OF FIRST SUPPLEMENTAL INDENTURE. Nothing
contained in this First Supplemental Indenture shall or shall be construed to
confer upon any person other than a Holder of the Notes, the Company and the
Trustee any right or interest to avail itself or himself, as the case may be, of
any benefit under any provision of this First Supplemental Indenture.
SECTION 10.04. DEFINED TERMS. All capitalized terms which are used
herein and not otherwise defined herein are defined in the Base Indenture and
are used herein with the same meanings as in the Base Indenture.
SECTION 10.05. EFFECTIVE DATE. This First 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 10.06. GOVERNING LAW. This First Supplemental Indenture
shall be governed by, and construed in accordance with, the internal laws of the
State of New York.
SECTION 10.07. COUNTERPARTS. This First 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.
37
SECTION 10.08. SATISFACTION AND DISCHARGE. This First Supplemental
Indenture shall cease to be of further force and effect upon compliance with
Section 401 of the Indenture with respect to the Notes created hereby.
38
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed by their respective officers hereunto
duly authorized, all as of the day and year first above written.
NVR, INC.
Dated: April 14, 1998 By:________________________________
Name:
Title:
By:________________________________
Name:
Title:
Attest:
NVR HOMES, INC.
Dated: April 14, 1998 By:________________________________
Name:
Title:
By:________________________________
Name:
Title:
Attest:
THE BANK OF NEW YORK
as Trustee
Dated: April 14, 1998 By:________________________________
Name:
Title:
S-1
EXHIBIT A
FORM OF NOTE
NVR, INC.
8% Senior Notes due 2005
Principal Amount
CUSIP No. 00000XXX0 $145,000,000
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER 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.
NVR, Inc., a Virginia corporation (the "Issuer," which term includes any
successor under the Indenture hereinafter referred to), for value received,
hereby promises to pay to Cede & Co., or registered assigns, the principal sum
of One Hundred Forty Five Million Dollars on June 1, 2005 (the "Maturity Date"),
and to pay interest thereof from April 14, 1998 (or from the most recent
Interest Payment Date to which interest has been paid or duly provided for),
semiannually in arrears on June 1 and December 1 of each year (each, an
"Interest Payment Date"), commencing on June 1, 1998, and on the Maturity Date,
at a rate of 8% per annum, until payment of said principal sum has been made or
duly provided for.
The interest so payable and punctually paid or duly provided for on an
Interest Payment Date and on the Maturity Date will be paid to the Holder in
whose name this Note (or one or more predecessor Notes) is registered at the
close of business on the "Regular Record Date" for such payment, which will be
the May 15 and November 15 (regardless of whether such day is a Business Day (as
defined below)) next preceding such payment date or the Maturity Date, as the
case may be. Any interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder on such Regular Record Date, and
shall be paid to the Holder in whose
A-1
name this Note (or one or more predecessor Notes) is registered at the close of
business on a subsequent record date for the payment of such defaulted interest
(which shall not be less than five Business Days prior to the date of the
payment of such defaulted interest) established by notice given by mail or by on
behalf of the Issuer to the Holders of the Notes not less than 15 days preceding
such subsequent record date. Interest on this Note will be computed on the basis
of a 360-day year of twelve 30-day months.
The principal of this Note payable on the Maturity Date will be paid
against presentation and surrender of this Note at the office or agency of the
Issuer maintained for that purpose in New York, New York. The Issuer hereby
initially designates the Corporate Trust Office of the Trustee in New York, New
York as the office to be maintained by it where Notes may be presented for
payment, registration of transfer, or exchange and where notices or demands to
or upon the Issuer in respect of the Notes or the Indenture referred to on the
reverse hereof may be served.
Interest payable on this Note on any Interest Payment Date and on the
Maturity Date, as the case may be, will be the amount of interest accrued during
the applicable Interest Period (as defined below).
An "Interest Period" is each period from and including the immediately
preceding Interest Payment Date (or from and including April 14, 1998, in the
case of the initial Interest Period) to but excluding the applicable Interest
Payment Date or the Maturity Date, as the case may be. If any Interest Payment
Date other than the Maturity Date would otherwise be a day that is not a
Business Day, any amounts payable on such Interest Payment Date will be paid on
the succeeding Business Day with the same force and effect as if it were paid on
the date such payment was due. If the Maturity Date falls on a day that is not
a Business Day, principal and interest payable on the Maturity Date will be paid
on the succeeding Business Day with the same force and effect as if paid on the
date such payment was due, and no interest will accrue on the amount so payable
for the period from and after the Maturity Date.
Payments of principal and interest in respect of this Note will be made by
wire transfer of immediately available funds (or with respect to any Note not
held in global form, by a U.S. dollar check or by wire transfer of immediately
available funds) in such coin or currency of the United States of America as at
the time of payment is legal tender for the payment of public and private debts.
Reference is made to the further provisions of this Note set forth on the
reverse hereof. Such further provisions shall for all purposes have the same
effect as though fully set forth at this place. Capitalized terms used herein,
including on the reverse hereof, and not defined herein or on the reverse hereof
shall have the respective meanings given to such terms in the Indenture.
This Note shall not be entitled to the benefits of the Indenture referred
to on the reverse hereof or be valid or become obligatory for any purpose until
the certificate of authentication hereon shall have been manually signed by the
Trustee under such Indenture.
A-2
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed
manually or by facsimile by its duly authorized officers.
Dated: April __, 1998 NVR, INC., as Issuer
By:_________________________________
Name:
Its:
By:_________________________________
Name:
Its:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated herein referred to in the
within-mentioned Indenture.
Dated: April __, 1998 THE BANK OF NEW YORK
By:_________________________________
Authorized Signatory
A-3
[REVERSE OF NOTE]
NVR, INC.
8% Senior Notes due 2005
This security is one of a duly authorized issue of debentures, notes,
bonds, or other evidences of indebtedness of the Issuer (hereinafter called the
"Securities") of the series hereinafter specified, all issued or to be issued
under and pursuant to an Indenture dated as of April 14, 1998, between the
Issuer and The Bank of New York, as trustee (the "Trustee") as supplemented by
the First Supplemental Indenture dated as of April 14, 1998 among the Issuer,
NVR Homes, Inc. as a subsidiary guarantor and the Trustee (as so supplemented,
herein called the "Indenture"), duly executed and delivered by the Issuer to The
Bank of New York, as Trustee (herein called the "Trustee," which term includes
any successor trustee under the Indenture with respect to the series of
Securities of which this Note is a part), to which Indenture and all Indentures
supplemental thereto that are applicable to the Notes (as defined below)
reference is hereby made for a description of the rights, limitations of rights,
obligations, duties, and immunities thereunder of the Trustee, the Issuer, and
the Holders of the Securities, and of the terms upon which the Securities are,
and are to be, authenticated and delivered. The Securities may be issued in one
or more series, which different series may be issued in various aggregate
principal amounts, may mature at different times, may bear interest (if any) at
different rates, may be subject to different redemption provisions (if any), and
may otherwise vary as provided in the Indenture. This Security is one of a
series designated as the 8% Senior Notes due 2005 of the Issuer (the "Notes"),
limited in aggregate principal amount to $175,000,000.
In case an Event of Default with respect to the 8% Senior Notes due 2005
shall have occurred and be continuing, the principal hereof and premium (if any)
may be declared, and upon such declaration shall become, due and payable, in the
manner, with the effect, and subject to the conditions provided in the
Indenture.
The Notes shall be redeemable at the option of the Company, in whole or in
part, at any time on or after June 1, 2003, at the redemption prices (expressed
as a percentage of principal amount) set forth below, plus accrued and unpaid
interest thereon, if any, to the redemption date, if redeemed during the 12-
month period beginning on June 1 of the years indicated below:
REDEMPTION YEAR PRICE
--------------------------- ----------
2003....................... 104.000%
2004....................... 102.000%
2005....................... 100.000%
In addition, prior to June 1, 2001, the Company may redeem up to 35% of the
aggregate principal amount of the Notes issued under this First Supplemental
Indenture at a redemption price equal to 108% of the principal amount of the
Notes so redeemed, plus accrued and unpaid interest thereon, if any, to the
redemption date with the net cash proceeds of one or more Public Equity
Offerings; provided, however, that (x) at least $113,750,000 aggregate principal
amount of all Notes issued under the Indenture remains outstanding immediately
after giving effect to
A-4
any such redemption (excluding any Notes held by the Company) and (y) notice of
any such redemption is given within 60 days of the applicable Public Equity
Offering.
Selection of the Notes or portions thereof for redemption pursuant to the
foregoing shall be made by the Trustee pro rata or by lot. Notice of redemption
shall be mailed via courier guaranteeing overnight delivery at least 30 days but
not more than 60 days before the redemption date to each Holder whose Notes are
to be redeemed at the registered address of such Holder. On and after the
redemption date, interest shall cease to accrue on the Notes or portions thereof
called for redemption.
The covenants set forth in Article V of the First Supplemental Indenture
shall be fully applicable to the Notes.
The First Supplemental Indenture provides that, subject to certain
conditions, (i) if a Change of Control (as defined in the First Supplemental
Indenture) occurs, the Issuer shall be required to make a Change of Control
Offer , (ii) in the event of certain Asset Sales, the Company shall be required
to make an Asset Sale Offer (in each case as such terms are defined in the First
Supplemental Indenture) and (iii) if the Company does not maintain a Minimum
Required Net Worth (as defined in the First Supplemental Indenture), the Company
shall be required to make a Purchase Offer (as defined in the First Supplemental
Indenture), in certain circumstances, for all or a portion of the Notes.
The Indenture contains provisions permitting the Issuer and the Trustee,
with the consent of the Holders of not less than a majority of the aggregate
principal amount of the Securities at the time Outstanding of all series to be
affected (voting as one class), evidenced as provided in the Indenture, 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 Securities of each series; provided, however, that no such supplemental
Indenture shall, without the consent of the Holder of each Security so affected,
among other things (i) change the final maturity of any Security, or reduce the
principal amount thereof or any premium thereon, or reduce the rate or extend
the time of payment of any interest thereof, or impair or affect the rights of
any Holder to institute suit for the payment on any Security, or (ii) reduce the
percentage of Securities, the Holders of which are required to consent to any
such supplemental Indenture, (iii) reduce the percentage of Securities, the
Holders of which are required to consent to any waiver of compliance with
certain provisions of the Indenture or any waiver of certain defaults thereunder
or (iv) modify the ranking or priority of the Securities. It is also provided
in the Indenture that, with respect to certain defaults or Events of Default
regarding the Securities of any series, the Holders of a majority in aggregate
principal amount outstanding of the Securities of such series (or, in the case
of certain defaults or Events of Default, all series of Securities) may on
behalf of the Holders of all the Securities of such series (or all of the
Securities, as the case may be) waive any such past default or Event of Default
and its consequences, prior to any declaration accelerating the maturity of such
Securities, or, subject to certain conditions, may rescind a declaration of
acceleration and its consequences with respect to such Securities. The
preceding sentence shall not, however, apply to a default in the payment of the
principal of or premium, if any, or interest on any of the
A-5
Securities. Any such consent or waiver by the Holder of this Security (unless
revoked as provided in the Indenture) shall be conclusive and binding upon such
Holder and upon all future Holders and owners of this Security and any
securities that may be issued in exchange or substitution herefor, irrespective
of whether or not any notation thereof is made upon this Security or such other
securities.
As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless (a) such Holder shall have previously given
the Trustee written notice of a continuing Event of Default, (b) the Holders of
not less than 25% in aggregate principal amount of the Securities Outstanding
shall have made written request to the Trustee to institute proceedings in
respect of such Event of Default as Trustee and offered the Trustee reasonable
indemnity and the Trustee shall not have received from the Holders of a majority
in aggregate principal amount of the Securities Outstanding a direction
inconsistent with such request, and (c) the Trustee shall have failed to
institute any such proceeding, for 60 days after receipt of such notice, request
and offer of indemnity. The foregoing shall not apply to any suit instituted by
the Holder of this Security for the enforcement of any payment of principal
hereof, premium, if any, or interest hereon on or after the respective due dates
expressed herein.
No references herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal, premium, if any, and interest
on this Security in the manner, at the respective times, at the rate and in the
coin or currency herein prescribed.
This Security is issuable only in registered form without coupons in
denominations of $1,000 and integral multiples thereof. Securities may be
exchanged for a like aggregate principal amount of Securities of this series of
other authorized denominations at the office or agency of the Issuer in New
York, New York, in the manner and subject to the limitations provided in the
Indenture, but without the payment of any service charge except for any tax or
other governmental charge imposed in connection therewith.
This Security is not subject to a sinking fund requirement.
Upon due presentment for registration of transfer of Securities at the
office or agency of the Issuer in New York, New York, a new Security or
Securities of the same series of authorized denominations in an equal aggregate
principal amount will be issued to the transferee in exchange therefor, subject
to the limitations provided in the Indenture, without charge except for any tax
or other governmental charge imposed in connection therewith.
No recourse under or upon any obligation, covenant or agreement contained
in the Indenture, in any Security or coupon appertaining thereto, or because of
any indebtedness evidenced hereby or thereby (including, without limitation, any
obligation or indebtedness relating to the principal of, or premium, if any, or
interest or any other amounts due, or claimed to be due, on this Security), or
for any claim based thereon or otherwise in respect thereof, shall be had
against any promoter, as such, or against any past, present or future
shareholder, office or
A-6
director, as such, of the Issuer or of any successor, either directly or through
the Issuer or any successor, under any rule of law, statute or constitutional
provision or by the enforcement of any assessment or by any legal or equitable
proceeding or otherwise, all such liability being expressly waived and released
by the acceptance hereof and as part of the consideration for the issue hereof.
Prior to due presentation of a Security for registration of transfer, the
Issuer, the Trustee, and any authorized agent of the Issuer or the Trustee may
deem and treat the Person in whose name this Security is registered as the
absolute owner of this Security (whether or not this Security shall be overdue
and notwithstanding any notation of ownership or other writing hereon), for the
purpose of receiving payment of, or on account of, the principal hereof and
premium, if any, and subject to the provisions herein and on the face hereof;
interest hereon, and for all other purposes, and neither the Issuer nor the
Trustee nor any authorized agent of the Issuer or the Trustee shall be affected
by any notice to the contrary.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY THE INTERNAL LAWS OF
THE STATE OF NEW YORK, UNITED STATES OF AMERICA.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused "CUSIP" numbers to be
printed on the Securities of this series as a convenience to the Holders of such
Securities. No representation is made as to the correctness or accuracy of such
CUSIP numbers as printed on the Securities, and reliance may be placed only on
the other identification numbers printed hereon.
A-7
ASSIGNMENT FORM AND CERTIFICATE OF TRANSFER
To assign this Security fill in the form below:
(I) or (we) assign and transfer this Security to
________________________________________________________________________________
(Insert assignee's social security or tax identification number, if any)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
Your signature:_________________________________________________________________
(Sign exactly as your name appears on the other side of this
Security)
Date:_________________________
Signature Guarantee:_______________________________________
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Trustee, which
requirements include membership or participation in the
Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by
the Trustee in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934,
as amended
A-8
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Issuer pursuant to
Section 5.04, 5.09 or 5.10 of the First Supplemental Indenture, check here____.
If you want to elect to have only a part of this Note purchased by the
Issuer pursuant to Section 5.04, 5.09 or 5.10 of the First Supplemental
Indenture, state the amount:
$________________
Dated:_________________ Your Signature:_________________________
(sign exactly as your name
appears on the other side of
this Security)
Signature Guarantee:___________________________________
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Trustee, which
requirements include membership or participation in the
Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by
the Trustee in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934,
as amended.
A-9
EXHIBIT B
FORM OF SUBSIDIARY GUARANTEE
NVR Homes, Inc., a Virginia corporation (hereinafter referred to as
the "Subsidiary Guarantor," which term includes any successor Subsidiary
Guarantor under the Indenture dated as of April 14, 1998 between NVR, Inc. and
The Bank of New York as Trustee (the "Trustee") as supplemented by the First
Supplemental Indenture dated as of April 14, 1998 between NVR, Inc., the
Subsidiary Guarantor and the Trustee (the "Indenture") referred to in the Note
upon which this notation is endorsed), (i) has unconditionally guaranteed that
(a) the principal of, interest and premium, if any, on the Notes will be
promptly paid in full when due, subject to any applicable grace period, whether
at stated maturity, by acceleration or otherwise and interest on the overdue
principal of, and interest on interest, to the extent lawful, and premium, if
any, on the Notes and all other obligations of the Company to the Holders or the
Trustee under the Indenture or the Notes will be promptly paid in full, all in
accordance with the terms set forth in the Indenture and Notes; and (b) in case
of any extension of time of payment or renewal of the Notes or of any such other
obligations, the same will be promptly paid in full when due in accordance with
the terms of the extension or renewal, subject to any applicable grace period,
whether at stated maturity, by acceleration or otherwise, (ii) has agreed to pay
any and all costs and expenses (including reasonable attorneys' fees) incurred
by the Trustee or any Holder in enforcing any rights under this Subsidiary
Guarantee; provided, however, that this Subsidiary Guarantee is limited as to
the Subsidiary Guarantor to the extent necessary not to constitute a fraudulent
conveyance or fraudulent transfer.
No stockholder, officer, director or incorporator, as such, past,
present or future, of any Subsidiary Guarantor shall have any personal liability
under this Subsidiary Guarantee by reason of his or its status as such
stockholder, officer, director or incorporator.
This Subsidiary Guarantee shall be binding upon the undersigned and,
to the extent provided in the Indenture, its successors and assigns and shall
inure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges herein conferred upon that party shall
automatically extend to and be vested in such transferee or assignee, all
subject to the terms and conditions hereof.
This Subsidiary Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Note upon which this
Subsidiary Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized officers.
B-1
IN WITNESS WHEREOF, the Subsidiary Guarantor has caused this
Subsidiary Guarantee to be signed manually or by facsimile by its duly
authorized officer.
NVR HOMES, INC., as Subsidiary Guarantor
By:_______________________________________________
Name:
Title:
B-2
FORM OF NOTE
NVR, INC.
8% Senior Notes due 2005
Principal Amount
CUSIP No. 00000XXX0 $145,000,000
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER 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.
NVR, Inc., a Virginia corporation (the "Issuer," which term includes any
successor under the Indenture hereinafter referred to), for value received,
hereby promises to pay to Cede & Co., or registered assigns, the principal sum
of One Hundred Forty Five Million Dollars on June 1, 2005 (the "Maturity Date"),
and to pay interest thereof from April 14, 1998 (or from the most recent
Interest Payment Date to which interest has been paid or duly provided for),
semiannually in arrears on June 1 and December 1 of each year (each, an
"Interest Payment Date"), commencing on June 1, 1998, and on the Maturity Date,
at a rate of 8% per annum, until payment of said principal sum has been made or
duly provided for.
The interest so payable and punctually paid or duly provided for on an
Interest Payment Date and on the Maturity Date will be paid to the Holder in
whose name this Note (or one or more predecessor Notes) is registered at the
close of business on the "Regular Record Date" for such payment, which will be
the May 15 and November 15 (regardless of whether such day is a Business Day (as
defined below)) next preceding such payment date or the Maturity Date, as the
case may be.
Any interest not so punctually paid or duly provided for shall forthwith cease
to be payable to the Holder on such Regular Record Date, and shall be paid to
the Holder in whose name this Note (or one or more predecessor Notes) is
registered at the close of business on a subsequent record date for the payment
of such defaulted interest (which shall not be less than five Business Days
prior to the date of the payment of such defaulted interest) established by
notice given by mail or by on behalf of the Issuer to the Holders of the Notes
not less than 15 days preceding such subsequent record date. Interest on this
Note will be computed on the basis of a 360-day year of twelve 30-day months.
The principal of this Note payable on the Maturity Date will be paid
against presentation and surrender of this Note at the office or agency of the
Issuer maintained for that purpose in New York, New York. The Issuer hereby
initially designates the Corporate Trust Office of the Trustee in New York, New
York as the office to be maintained by it where Notes may be presented for
payment, registration of transfer, or exchange and where notices or demands to
or upon the Issuer in respect of the Notes or the Indenture referred to on the
reverse hereof may be served.
Interest payable on this Note on any Interest Payment Date and on the
Maturity Date, as the case may be, will be the amount of interest accrued during
the applicable Interest Period (as defined below).
An "Interest Period" is each period from and including the immediately
preceding Interest Payment Date (or from and including April 14, 1998, in the
case of the initial Interest Period) to but excluding the applicable Interest
Payment Date or the Maturity Date, as the case may be. If any Interest Payment
Date other than the Maturity Date would otherwise be a day that is not a
Business Day, any amounts payable on such Interest Payment Date will be paid on
the succeeding Business Day with the same force and effect as if it were paid on
the date such payment was due. If the Maturity Date falls on a day that is not
a Business Day, principal and interest payable on the Maturity Date will be paid
on the succeeding Business Day with the same force and effect as if paid on the
date such payment was due, and no interest will accrue on the amount so payable
for the period from and after the Maturity Date.
Payments of principal and interest in respect of this Note will be made by
wire transfer of immediately available funds (or with respect to any Note not
held in global form, by a U.S. dollar check or by wire transfer of immediately
available funds) in such coin or currency of the United States of America as at
the time of payment is legal tender for the payment of public and private debts.
Reference is made to the further provisions of this Note set forth on the
reverse hereof. Such further provisions shall for all purposes have the same
effect as though fully set forth at this place. Capitalized terms used herein,
including on
the reverse hereof, and not defined herein or on the reverse hereof shall have
the respective meanings given to such terms in the Indenture.
This Note shall not be entitled to the benefits of the Indenture referred
to on the reverse hereof or be valid or become obligatory for any purpose until
the certificate of authentication hereon shall have been manually signed by the
Trustee under such Indenture.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed
manually or by facsimile by its duly authorized officers.
Dated: April __, 1998 NVR, INC., as Issuer
By:_____________________________________
Name:
Its:
By:_____________________________________
Name:
Its:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated herein referred to in the
within-mentioned Indenture.
Dated: April __, 1998 THE BANK OF NEW YORK
By:________________________________________________________
Authorized Signatory
[REVERSE OF NOTE]
NVR, INC.
8% Senior Notes due 2005
This security is one of a duly authorized issue of debentures, notes,
bonds, or other evidences of indebtedness of the Issuer (hereinafter called the
"Securities") of the series hereinafter specified, all issued or to be issued
under and pursuant to an Indenture dated as of April 14, 1998, between the
Issuer and The Bank of New York, as trustee (the "Trustee") as supplemented by
the First Supplemental Indenture dated as of April 14, 1998 among the Issuer,
NVR Homes, Inc. as a subsidiary guarantor and the Trustee (as so supplemented,
herein called the "Indenture"), duly executed and delivered by the Issuer to The
Bank of New York, as Trustee (herein called the "Trustee," which term includes
any successor trustee under the Indenture with respect to the series of
Securities of which this Note is a part), to which Indenture and all Indentures
supplemental thereto that are applicable to the Notes (as defined below)
reference is hereby made for a description of the rights, limitations of rights,
obligations, duties, and immunities thereunder of the Trustee, the Issuer, and
the Holders of the Securities, and of the terms upon which the Securities are,
and are to be, authenticated and delivered. The Securities may be issued in one
or more series, which different series may be issued in various aggregate
principal amounts, may mature at different times, may bear interest (if any) at
different rates, may be subject to different redemption provisions (if any), and
may otherwise vary as provided in the Indenture. This Security is one of a
series designated as the 8% Senior Notes due 2005 of the Issuer (the "Notes"),
limited in aggregate principal amount to $175,000,000.
In case an Event of Default with respect to the 8% Senior Notes due 2005
shall have occurred and be continuing, the principal hereof and premium (if any)
may be declared, and upon such declaration shall become, due and payable, in the
manner, with the effect, and subject to the conditions provided in the
Indenture.
The Notes shall be redeemable at the option of the Company, in whole or in
part, at any time on or after June 1, 2003, at the redemption prices (expressed
as a percentage of principal amount) set forth below, plus accrued and unpaid
interest thereon, if any, to the redemption date, if redeemed during the 12-
month period beginning on June 1 of the years indicated below:
REDEMPTION YEAR PRICE
--------------------------- ----------
2003....................... 104.000%
2004....................... 102.000%
2005....................... 100.000%
In addition, prior to June 1, 2001, the Company may redeem up to 35% of the
aggregate principal amount of the Notes issued under this First Supplemental
Indenture at a redemption price equal to 108% of the principal amount of the
Notes so redeemed, plus accrued and unpaid interest thereon, if any, to the
redemption date with the net cash proceeds of one or more Public Equity
Offerings; provided, however, that (x) at least $113,750,000 aggregate principal
amount of all Notes issued under the Indenture remains outstanding immediately
after giving effect to any such redemption (excluding any Notes held by the
Company) and (y) notice of any such redemption is given within 60 days of the
applicable Public Equity Offering.
Selection of the Notes or portions thereof for redemption pursuant to the
foregoing shall be made by the Trustee pro rata or by lot. Notice of redemption
shall be mailed via courier guaranteeing overnight delivery at least 30 days but
not more than 60 days before the redemption date to each Holder whose Notes are
to be redeemed at the registered address of such Holder. On and after the
redemption date, interest shall cease to accrue on the Notes or portions thereof
called for redemption.
The covenants set forth in Article V of the First Supplemental Indenture
shall be fully applicable to the Notes.
The First Supplemental Indenture provides that, subject to certain
conditions, (i) if a Change of Control (as defined in the First Supplemental
Indenture) occurs, the Issuer shall be required to make a Change of Control
Offer , (ii) in the event of certain Asset Sales, the Company shall be required
to make an Asset Sale Offer (in each case as such terms are defined in the First
Supplemental Indenture) and (iii) if the Company does not maintain a Minimum
Required Net Worth (as defined in the First Supplemental Indenture), the Company
shall be required to make a Purchase Offer (as defined in the First Supplemental
Indenture), in certain circumstances, for all or a portion of the Notes.
The Indenture contains provisions permitting the Issuer and the Trustee,
with the consent of the Holders of not less than a majority of the aggregate
principal amount of the Securities at the time Outstanding of all series to be
affected (voting as one class), evidenced as provided in the Indenture, 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 Securities of each series; provided, however, that no such supplemental
Indenture shall, without the consent of the Holder of each Security so affected,
among other things (i) change the final maturity of any Security, or reduce the
principal amount thereof or any premium thereon, or reduce the rate or extend
the time of payment of any interest thereof, or impair or affect the rights of
any Holder to institute suit for the payment
on any Security, or (ii) reduce the percentage of Securities, the Holders of
which are required to consent to any such supplemental Indenture, (iii) reduce
the percentage of Securities, the Holders of which are required to consent to
any waiver of compliance with certain provisions of the Indenture or any waiver
of certain defaults thereunder or (iv) modify the ranking or priority of the
Securities. It is also provided in the Indenture that, with respect to certain
defaults or Events of Default regarding the Securities of any series, the
Holders of a majority in aggregate principal amount outstanding of the
Securities of such series (or, in the case of certain defaults or Events of
Default, all series of Securities) may on behalf of the Holders of all the
Securities of such series (or all of the Securities, as the case may be) waive
any such past default or Event of Default and its consequences, prior to any
declaration accelerating the maturity of such Securities, or, subject to certain
conditions, may rescind a declaration of acceleration and its consequences with
respect to such Securities. The preceding sentence shall not, however, apply to
a default in the payment of the principal of or premium, if any, or interest on
any of the Securities. Any such consent or waiver by the Holder of this Security
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such Holder and upon all future Holders and owners of this Security and any
securities that may be issued in exchange or substitution herefor, irrespective
of whether or not any notation thereof is made upon this Security or such other
securities.
As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless (a) such Holder shall have previously given
the Trustee written notice of a continuing Event of Default, (b) the Holders of
not less than 25% in aggregate principal amount of the Securities Outstanding
shall have made written request to the Trustee to institute proceedings in
respect of such Event of Default as Trustee and offered the Trustee reasonable
indemnity and the Trustee shall not have received from the Holders of a majority
in aggregate principal amount of the Securities Outstanding a direction
inconsistent with such request, and (c) the Trustee shall have failed to
institute any such proceeding, for 60 days after receipt of such notice, request
and offer of indemnity. The foregoing shall not apply to any suit instituted by
the Holder of this Security for the enforcement of any payment of principal
hereof, premium, if any, or interest hereon on or after the respective due dates
expressed herein.
No references herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal, premium, if any, and interest
on this Security in the manner, at the respective times, at the rate and in the
coin or currency herein prescribed.
This Security is issuable only in registered form without coupons in
denominations of $1,000 and integral multiples thereof. Securities may be
exchanged for a like aggregate principal amount of Securities of this series of
other authorized denominations at the office or agency of the Issuer in New
York, New York, in the manner and subject to the limitations provided in the
Indenture, but without the payment of any service charge except for any tax or
other governmental charge imposed in connection therewith.
This Security is not subject to a sinking fund requirement.
Upon due presentment for registration of transfer of Securities at the
office or agency of the Issuer in New York, New York, a new Security or
Securities of the same series of authorized denominations in an equal aggregate
principal amount will be issued to the transferee in exchange therefor, subject
to the limitations provided in the Indenture, without charge except for any tax
or other governmental charge imposed in connection therewith.
No recourse under or upon any obligation, covenant or agreement contained
in the Indenture, in any Security or coupon appertaining thereto, or because of
any indebtedness evidenced hereby or thereby (including, without limitation, any
obligation or indebtedness relating to the principal of, or premium, if any, or
interest or any other amounts due, or claimed to be due, on this Security), or
for any claim based thereon or otherwise in respect thereof, shall be had
against any promoter, as such, or against any past, present or future
shareholder, office or director, as such, of the Issuer or of any successor,
either directly or through the Issuer or any successor, under any rule of law,
statute or constitutional provision or by the enforcement of any assessment or
by any legal or equitable proceeding or otherwise, all such liability being
expressly waived and released by the acceptance hereof and as part of the
consideration for the issue hereof.
Prior to due presentation of a Security for registration of transfer, the
Issuer, the Trustee, and any authorized agent of the Issuer or the Trustee may
deem and treat the Person in whose name this Security is registered as the
absolute owner of this Security (whether or not this Security shall be overdue
and notwithstanding any notation of ownership or other writing hereon), for the
purpose of receiving payment of, or on account of, the principal hereof and
premium, if any, and subject to the provisions herein and on the face hereof;
interest hereon, and for all other purposes, and neither the Issuer nor the
Trustee nor any authorized agent of the Issuer or the Trustee shall be affected
by any notice to the contrary.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY THE INTERNAL LAWS OF
THE STATE OF NEW YORK, UNITED STATES OF AMERICA.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused "CUSIP" numbers to be
printed on the Securities of this series as a convenience to the Holders of such
Securities. No representation is made as to the correctness or accuracy of such
CUSIP numbers as printed on the Securities, and reliance may be placed only on
the other identification numbers printed hereon.
