Document:

Exhibit 10.1

  

  

  

  
    SEPARATION AND RELEASE AGREEMENT

     

    This Separation and Release Agreement (this “Agreement”), is being offered by Chembio Diagnostics, Inc., a Nevada corporation (the “Company”), to John J. Sperzel III (“Employee”) on January 6, 2020.

     

    This Agreement may be accepted by Employee by executing it without change and delivering it to the Company no later than 5 p.m., Eastern standard time, on January 7, 2020 (the “Offer Expiration Date”). This Agreement will not become effective or enforceable for a period of seven calendar days following the date of such delivery (the “Revocation Period”),

      during which time Employee may further review and consider this Agreement and revoke his acceptance of this Agreement by notifying the Company in writing. To be effective, such revocation must be received by the Company no later than the last day of
      the Revocation Period. Provided that this Agreement is timely executed and delivered as set forth above and Employee has not timely revoked it, the eighth calendar day following the date on which this Agreement is executed and delivered to the
      Company shall be the “Effective Date”.

     

    Whereas, Employee is currently employed by the Company as its Chief Executive Officer and currently serves as a member of the Company’s Board of
      Directors;

     

    Whereas, Employee is party to an Employment Agreement with the Company entered into as of March 31, 2017 and effective as of March 13, 2017 (the “Employment Agreement”);

     

    Whereas, Employee’s position as an employee and director of the Company terminated at 5 p.m., Eastern standard time, on January 3, 2020 (the “Separation Date”);

     

    Whereas, this Agreement contains a general release of claims that Employee may have against the Company and its subsidiaries and affiliated companies
      (collectively, the “Company Group”), and their respective affiliates and related parties, and by delivery of this Agreement, Employee is notified, and acknowledges his understanding, that Employee’s execution
      of this Agreement and its effectiveness as set forth above is required for Employee to receive any of the payments and benefits set forth in this Agreement; and

     

    Whereas, except as expressly set forth in this Agreement, the parties intend for this Agreement to supersede any and all prior agreements that Employee
      has with any member of the Company Group relating to the terms and conditions of his employment or service with any member of the Company Group following the Effective Date.

     

    Now, Therefore, in consideration of the promises and mutual covenants contained in this Agreement and for other good and valuable consideration, the
      receipt and sufficiency of which are mutually acknowledged, the Company and Employee agree as follows:

     

    
      
        	1.	
                Employment Status. Employee acknowledges and agrees that termination of his service with the Company and from each other position he holds as an officer, director or other service provider of any member of the Company Group
                  became effective on the Separation Date. Except as otherwise expressly set forth in this Agreement, Employee shall not represent himself after the Separation Date as being an employee, officer, director, agent or representative of the
                  Company or any other member of the Company Group for any purpose. The Separation Date shall be the termination date of Employee’s employment for purposes of participation in and coverage under all benefit plans and programs sponsored by
                  or through any member of the Company Group, except as otherwise provided in this Agreement.

              

         

        

      

    

    
      
        

    

    
    
      
        	2.	
                Separation Payments and Benefits; Trading Restrictions; Taxes.

              

      

    

     

    
      
        	

              	(a)	
                Accrued Amounts. Following the Separation Date, Employee will be paid or provided all accrued but unpaid base salary and approved unreimbursed business expenses through the Separation Date, if any, regardless of whether this
                  Agreement becomes effective. In addition, except as set forth in the last sentence of this paragraph, Employee shall be entitled to all benefits accrued up to the Separation Date, to the extent vested, under all employee benefit plans of
                  any member of the Company Group in which Employee participates in accordance with the terms of such plans and to any other amounts required to be paid pursuant to applicable law. For the avoidance of doubt, following the date on which
                  Employee’s coverage under the Company group health plan would otherwise terminate, Employee shall be entitled to enroll in Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”)
                  continuation coverage under the Company’s group health plan, as provided under the applicable law, at his expense. Information about electing COBRA coverage will be provided to Employee in connection with his separation from service in
                  accordance with the Company’s customary practices. Notwithstanding the foregoing, and for the avoidance of doubt, Employee agrees that he is not due any compensation from any member of the Company Group with respect his employment or
                  other service with any member of the Company Group or the termination thereof, other than the unpaid base salary and approved unreimbursed business expenses set forth above and as set forth in Section 2(b), related to severance,
                  accelerated vesting of equity awards, accrued but unused vacation, and any prior, current or future performance periods under any cash bonus plan.

              

      

    

     

    
      
        	

              	(b)	
                Severance Payment. In consideration for and subject to the terms contained in this Agreement, including Employee’s agreement to, and continued compliance with, the non-competition and other provisions set forth in Section
                    6(b), as well as the timely execution and non-revocation of this Agreement, Employee will be entitled to receive and retain a cash amount equal to one million dollars ($1,000,000.00), five hundred thousand dollars ($500,000) of
                  which will be payable in a lump sum to Employee on the Company’s first regular payroll date following the Effective Date (the “First Payroll Date”), and five hundred thousand dollars ($500,000) of
                  which will be payable to Employee over twelve months in equal installments on the Company’s regular payroll dates beginning with the Company’s first regular payroll date following the First Payroll Date.

              

      

    

     

    
      
        	

              	(c)	
                No Further Benefits. Employee acknowledges and agrees that the payment provided pursuant to Section 2(b) is in full discharge of any and all liabilities and obligations of each member of the Company Group to him,
                  monetarily or with respect to employee benefits or otherwise, including any and all obligations arising under any written or oral agreement, policy, plan or procedure of any member of the Company Group or any understanding or arrangement
                  between Employee and any member of the Company Group, provided that the foregoing expressly excludes (i) any Claim (as defined in Section 3(a)) to enforce any right Employee has under this
                  Agreement, including the right to the payment under Section 2(b), and (ii) any right that cannot be released as a matter of law (collectively, “Unreleased Claims”).

              

      

    

     

    
      
        	

              	(d)	
                Equity, Equity Awards and Equity Plans. Employee may exercise any options granted under the Company’s stock incentive plans that are vested and are exercisable as of the Separation Date to the extent provided and in accordance
                  with the provisions of such stock incentive plans. Employee forfeited any unvested stock options and  restricted stock outstanding as of the Separation Date. Employee is not be eligible for additional grants of stock options or restricted
                  stock or any other equity awards following the Separation Date. Employee is not entitled to any accelerated vesting of equity awards in connection with his termination of service with the Company or any other member of the Company Group.
                  Employee does not have any “put rights” with respect to any equity of the Company or any other member of the Company Group. Employee acknowledges that his equity awards ceased vesting following the Separation Date and the following
                  portions of the following equity awards are vested and outstanding: 250,000 shares of the Company’s common stock (“Common Stock”) covered under the stock option granted by the Company on March 13,
                  2014; 3,333 shares of Common Stock covered under the stock option granted by the Company on March 15, 2017; 13,333 shares of Common Stock covered under the stock option granted by the Company on March 31, 2017; and 32,815 shares of Common
                  Stock under a restricted stock award granted by the Company on October 8, 2018.

              

         

        

        
          2

          
            

        

      

    

    
      
        	

              	(e)	
                Trading Restrictions. Employee acknowledges and agrees that he (i) will not buy or sell any securities of the Company during the period from the Effective Date until the commencement of the second trading day on the NASDAQ Stock
                  Market after the date on which the Company files its Annual Report on Form 10-K for the fiscal year ended December 31, 2019 with the Securities and Exchange Commission and (ii) will comply in all respects with applicable federal
                  securities laws pertaining to “insider trading” with respect to securities of the Company.

              

      

    

     

    
      
        	

              	(f)	
                Taxes. The payments referenced in this Section 2 shall be subject to reduction for tax and other withholding obligations. In no event shall the Releasees (as defined below) be liable to Employee for any Claim related to
                  taxes, interest or penalties that may be imposed on Employee under Section 409A of the Internal Revenue Code of 1986, as amended, and similar state laws related to the payments referenced in this Section 2. Employee shall be
                  liable for any such taxes, interest and penalties.

              

      

    

     

    
      
        	3.	
                Release and Waiver of Claims.

              

      

    

     

    
      
        	

              	(a)	
                Claims. As used in this Agreement, the term “Claims” shall include all claims, complaints, charges, covenants, warranties, promises, undertakings, actions, suits, causes of action,
                  obligations, debts, accounts, damages, attorneys’ fees, judgments, losses and liabilities of any kind or nature whatsoever, in law or equity.

              

      

    

     

    
      
        	

              	(b)	
                Release. In consideration of the payments and benefits described in this Agreement, to which Employee agrees that Employee is not entitled unless he executes this Agreement and it becomes effective in accordance with the terms
                  of this Agreement, Employee, for and on behalf of himself and his heirs, successors and assigns (collectively, the “Releasors”), subject to the last sentence of this Section 3(b), waives
                  and releases all common law, statutory and other Claims, whether known or unknown, that Employee ever had, now has or may have against the Company and its shareholders, subsidiaries, affiliates, predecessors, successors, assigns,
                  directors, officers, partners, members, managers, employees, trustees (in their official capacities), employee benefit plans and their administrators and fiduciaries (in their official capacities), insurers, representatives, or agents, or
                  any of affiliates, successors or assigns of any of the foregoing (collectively, the “Releasees”), by reason of facts or omissions that have occurred on or prior to the Effective Date, including any
                  and all (i) Claims arising out of Employee’s employment or other service or termination of employment or other service, or any term or condition of that employment or other service, or arising under federal, state, local or foreign laws
                  pertaining to employment, the Age Discrimination in Employment Act, the National Labor Relations Act, the Civil Rights Act of 1991, the Americans With Disabilities Act of 1990, Title VII of the Civil Rights Act of 1964, the Employee
                  Retirement Income Security Act of 1974, the Family and Medical Leave Act, the Sarbanes-Oxley Act of 2002, the Worker Adjustment and Retraining Notification Act, the New York State Human Rights Law, the New York City Human Rights Act, the
                  New York State Equal Pay Law, the New York State Labor Law, the New York Whistleblower Law, or any other federal, state, local or foreign laws relating to discrimination on the basis of age, sex or other protected class, (ii) Claims under
                  federal, state, local or foreign laws for express or implied breach of contract, breach of the Employment Agreement, wrongful discharge, defamation, torts or intentional infliction of emotional distress, and (iii) related Claims for
                  attorneys’ fees and costs. Except with respect to Unreleased Claims, Employee agrees that the foregoing release may be pleaded as a full defense to any action, suit, arbitration, or other proceeding covered by the terms of this Agreement
                  that is or may be initiated, prosecuted, or maintained by the Releasors. Employee acknowledges that he intends to waive and release all rights, known or unknown, that he may have against the Releasees under these or any other laws.

              

         

        

        
          3

          
            

        

      

    

    
      
        	

              	(c)	
                No Claims. Employee acknowledges and agrees that as of the date he executes this Agreement, he has no knowledge of any facts or circumstances that give rise or could give rise to any Claims waived in the preceding paragraph.

              

      

    

     

    
      
        	

              	(d)	
                Acknowledgement of Full and Final Release. Employee acknowledges and agrees that by virtue of the foregoing, he has waived any relief available to him (including monetary damages, equitable relief and reinstatement) under any of
                  the Claims waived in this Section 3.

              

      

    

     

    
      
        	

              	(e)	
                Non-Disparagement. Employee agrees that, at all times following his signing of this Agreement, Employee shall not engage in any vilification of any member of the Company Group or any of its directors, officers, employees or
                  service providers and shall refrain from making any false, negative, critical or disparaging statements, implied or expressed, concerning any member of the Company Group or any of its directors, officers, employees or service providers,
                  including with respect to management or communication style, methods of doing business, quality of products and services, or role in the community. Employee further agrees to do nothing that would damage the business reputation or
                  goodwill of any member of the Company Group or any of its directors, officers, employees or service providers. The Company agrees that its Chairman of the Board of Directors will instruct the members of the Company’s Board of Directors
                  and Executive Leadership Team that they shall refrain from making any false, negative, critical or disparaging statements, implied or expressed, concerning Employee that would damage his reputation.

              

      

    

     

    
      
        	4.	
                Knowing and Voluntary Waiver. Employee expressly acknowledges and agrees that he:

              

      

    

     

    
      
        	

              	(a)	
                is able to read the language, and understand the meaning and effect, of this Agreement;

              

      

    

     

    
      
        	

              	(b)	
                has no physical or mental impairment of any kind that has interfered with his ability to read and understand the meaning of this Agreement or its terms and is not acting under the influence of any medication, drug or chemical of any
                  type in entering into this Agreement;

              

      

    

     

    
      
        	

              	(c)	
                is specifically agreeing to the terms of the release contained in this Agreement because the Company has agreed to provide him with the payments and benefits provided by this Agreement, which it has agreed to provide him because of his
                  agreement to accept them in full settlement of all possible Claims that he is releasing under this Agreement;

              

      

    

     

    
      
        	

              	(d)	
                acknowledges that, but for his timely execution and non-revocation of this Agreement, he would not be entitled to the payment provided by this Agreement;

              

      

    

     

    
      
        	

              	(e)	
                had or could have had until the Offer Expiration Date in which to review and consider this Agreement and, if he has executed this Agreement prior to the Offer Expiration Date, has voluntarily and knowingly waived the remainder of the
                  review period;

              

      

    

     

    
      
        	

              	(f)	
                was advised in writing to consult with his attorney regarding the terms and effect of this Agreement; and

              

         

        

        
          4

          
            

        

      

    

    
      
        	

              	(g)	
                has signed this Agreement knowingly and voluntarily.

              

      

    

     

    
      
        	5.	
                No Suit. Employee represents and warrants that he has not previously filed, and to the maximum extent permitted by law agrees that he will not file, a complaint, charge, or lawsuit against any of the Releasees regarding any of
                  the Claims released in this Agreement. If, notwithstanding this representation and warranty, Employee has filed or files such a complaint, charge or lawsuit, Employee agrees that he shall cause such complaint, charge or lawsuit to be
                  dismissed with prejudice against him and shall pay any and all costs required in obtaining dismissal of such complaint, charge or lawsuit, including the attorneys’ fees of any of the Releasees against whom Employee has filed such
                  complaint, charge or lawsuit.

              

      

    

     

    
      
        	6.	
                No Re-Employment and Employment Agreement Provisions.

              

      

    

     

    
      
        	

              	(a)	
                No Re-Employment. Employee waives any and all Claims to re-employment with any member of the Company Group.

              

      

    

     

    
      
        	

              	(b)	
                Covenants. Employee covenants and agrees that he will abide by the post-termination covenants and other agreements set forth in Section 4(b) (“Term”), Section 7 (“Confidentiality”), Section 8 (“Company's Right to Inventions and
                  Discoveries”), Section 9 (“Non-Compete”) and Section 11 (“Termination”) of the Employment Agreement, all of which will survive the termination of his employment and service with the Company Group. Notwithstanding anything to the contrary
                  in the Employment Agreement, Employee covenants and agrees that Employee’s non-competition covenant under Section 9 of the Employment Agreement, including Section 9(iii) of the Employment Agreement, will continue for twelve months
                  following the Separation Date.

              

      

    

     

    
      
        	

              	(c)	
                Company Property. Employee agrees that he has returned to the Company all documents of each member of the Company Group (and all copies thereof), any other property in Employee's possession or control that belongs to a member of
                  the Company Group, and any materials of any kind that contain or embody any proprietary or confidential material of any member of the Company Group.

              

      

    

     

    
      
        	7.	
                Successors and Assigns. The parties acknowledge and agree that this Agreement shall be binding upon and inure to the benefit of the parties and their respective heirs, legal representatives, successors and permitted assigns.

              

      

    

     

    
      
        	8.	
                Severability. The invalidity, illegality or unenforceability of any provision or provisions of this Agreement shall not affect any other provision of this Agreement, which shall remain in full force and effect, nor shall the
                  invalidity, illegality or unenforceability of a portion of any provision of this Agreement affect the balance of such provision. In the event that any one or more of the provisions contained in this Agreement or any portion thereof shall
                  for any reason be held to be invalid, illegal or unenforceable in any respect, this Agreement shall be reformed, construed and enforced as if such invalid, illegal or unenforceable provision had never been contained in this Agreement.

              

         

        

        
          5

          
            

        

      

    

    
      
        	9.	
                Confidentiality. Employee acknowledges that during his period of service with the Company, he was in possession of valuable, confidential and proprietary information of the Company Group and its members. Accordingly, Employee
                  agrees that all such information shall remain the exclusive property of the Company Group and that he will hold all such information in the strictest confidence. Employee shall not communicate any such information in any form to any third
                  party without the Company’s prior written consent. Employee understands that nothing contained in this Agreement limits Employee’s ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor
                  Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission, or any other federal, state or local governmental agency or commission (each a “Government
                    Agency”). Employee further understands that this Agreement does not limit Employee’s ability to communicate with any Government Agency or an attorney retained by Employee or otherwise participate in any investigation or
                  proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company. This Agreement does not limit Employee’s right to receive an award for information provided to
                  any Government Agency or to engage in any future activities protected under whistleblower statutes. Notwithstanding anything in this Agreement to the contrary, Employee may not be held criminally or civilly liable under any federal or
                  state trade secret law for the disclosure of a trade secret that (a) is made (i) in confidence to a Government Agency or official thereof, either directly or indirectly, or to any attorney and (ii) for the purpose of reporting or
                  investigating a suspected violation of law or (b) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding. Furthermore, Employee understands an individual who files a lawsuit alleging retaliation
                  by the Company for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the
                  trade secret under seal and does not disclose the trade secret, except pursuant to court order.

              

      

    

     

    
      
        	10.	
                Support. Upon the request of the Company, Employee shall make himself reasonably available to assist, give testimony and review discovery requests in connection with litigation or other disputes involving the Company. If such
                  services are requested, Employee will be compensated at the rate of $218.75 per hour for such services as an independent contractor. In addition, the Company will reimburse Employee for any required travel expenses consistent with the
                  Company’s expense reimbursement policies and procedures. In addition, Employee shall make himself reasonably available to consult for transition matters for a period of ninety calendar days following the Separation Date.

              

      

    

     

    
      
        	11.	
                Non-Admission. Nothing contained in this Agreement will be deemed or construed as an admission of wrongdoing or liability on the part of Employee or the Company.

              

      

    

     

    
      
        	12.	
                Entire Agreement. This Agreement and the provisions of the Employment Agreement referenced in this Agreement constitute the entire understanding and agreement between the Company and Employee regarding the termination of
                  Employee’s service with the Company and each member of the Company Group. This Agreement supersedes all prior negotiations, discussions, correspondence, communications, understandings and agreements between Employee and any member of the
                  Company Group and all benefit plans of the Company and each member of the Company Group relating to the subject matter of this Agreement.

              

      

    

     

    
      
        	13.	
                Modifications. This Agreement may not be modified or amended, nor may any rights under it be waived, except in a writing signed and agreed to by both the Company and Employee.

              

      

    

     

    
      
        	14.	
                Interpretation. For purposes of this Agreement:

              

      

    

     

    
      
        	

              	(a)	
                headings used in this Agreement are for convenience of reference only and shall not, for any purpose, be deemed a part of this Agreement;

              

      

    

     

    
      
        	

              	(b)	
                any references in this Agreement to a Section refer to a Section of this Agreement, unless specified otherwise;

              

      

    

     

    
      
        	

              	(c)	
                the words “include,” “includes” and “including” as used in this Agreement shall not be construed so as to exclude any other thing not referred to or described;

              

      

    

     

    
      
        	

              	(d)	
                the word “or” is not exclusive;

              

         

        

      

    

    
      6

      
        

    

    
      
        	

              	(e)	
                unless the context otherwise requires, (i) references in this Agreement to an agreement, instrument or other document mean such agreement, instrument or other document as amended, supplemented and modified from time to time to the
                  extent permitted by the provisions thereof and (ii) references in this Agreement to a statute means such statute as amended from time to time and include any successor legislation thereto and any rules and
                  regulations promulgated thereunder; and

              

      

    

     

    
      
        	

              	(j)	
                this Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted.

              

      

    

     

    
      
        	15.	
                Governing Law; Jurisdiction. EXCEPT WHERE PREEMPTED BY FEDERAL LAW, THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN THAT
                  STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

              

      

    

     

    In Witness Whereof, each of the parties has executed this Agreement as of the date set forth underneath its signature below.

     

    
      	
              Chembio Diagnostics, Inc.

            	 	
              John J. Sperzel III

            
	 	 	 
	
              By:

            	
              /s/ Neil A. Goldman

            	 	
              /s/ John J. Sperzel III

            
	
              

              

            	Title:	
              Chief Financial Officer and Executive Vice President

            	
              

              

            	

            

      

      

      	
              Date:

            	
              January 7, 2020

            	
              
                Date:

              

            	
              January 7, 2020

            

       

      

       

      

      7ex_168899.htm

Exhibit 4.2

 

 

 

 

M.D.C. HOLDINGS, INC. AND THE GUARANTORS PARTY HERETO

 

 

 

3.850% Senior Notes due 2030

 

 

 

 

 

 

Supplemental Indenture

 

Dated as of January 9, 2020

 

 

 

 

U.S. Bank National Association,

Trustee

 

 

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

 

Page

 

 

	
			ARTICLE One Scope of Supplemental Indenture; General

				
			2

			
	 	 	 
	
			ARTICLE Two Certain Definitions

				
			2

			
	 	 	 
	
			ARTICLE Three Redemption

				
			11

			
	 	 	 
	
			Section 3.01.

				
			Right of Redemption.

				
			11

			
	
			Section 3.02.

				
			No Sinking Fund.

				
			12

			
	 	 	 
	
			ARTICLE Four Covenants

				
			12

			
	 	 	 
	
			Section 4.01.

				
			Restrictions on Secured Debt.

				
			12

			
	
			Section 4.02.

				
			Limitations on Sale and Leaseback Transactions.

				
			14

			
	
			Section 4.03.

				
			SEC Reports.

				
			14

			
	 	 
	
			ARTICLE Five Successor Corporation

				
			15

			
	 	 
	
			Section 5.01.

				
			Consolidation, Merger and Sale of Assets.

				
			15

			
	 	 	 
	
			ARTICLE Six Guarantees

				
			16

			
	 	 	 
	
			Section 6.01.

				
			Unconditional Guarantee.

				
			16

			
	
			Section 6.02.

				
			Fraudulent Conveyance Limitation.

				
			17

			
	
			Section 6.03.

				
			Waiver.

				
			17

			
	
			Section 6.04.

				
			Subordinated Indebtedness.

				
			18

			
	
			Section 6.05.

				
			Execution of Guarantee.

				
			20

			
	
			Section 6.06.

				
			Additional Guarantees and Release of Guarantees.

				
			20

			
	 	 	 
	
			ARTICLE Seven Miscellaneous

				
			21

			
	 	 	 
	
			Section 7.01.

				
			Confirmation of Indenture.

				
			21

			
	
			Section 7.02.

				
			Concerning the Trustee.

				
			21

			
	
			Section 7.03.

				
			Governing Law.

				
			22

			
	
			Section 7.04.

				
			Separability.

				
			22

			
	
			Section 7.05.

				
			Counterparts.

				
			22

			
	
			Section 7.06.

				
			No Adverse Interpretation of Other Agreements.

				
			22

			
	
			Section 7.07.

				
			No Recourse Against Others.

				
			22

			
	
			Section 7.08.

				
			Successors and Assigns.

				
			22

			
	
			Section 7.09.

				
			Duplicate Originals.

				
			22

			
	
			Section 7.10.

				
			Severability.

				
			22

			

 

-i-

 

 

SUPPLEMENTAL INDENTURE dated as of January 9, 2020 (“Supplemental Indenture”), to the Senior Debt Securities Indenture dated as of December 3, 2002 (as amended, modified or supplemented from time to time in accordance therewith, the “Indenture”), by and among M.D.C. HOLDINGS, INC., a Delaware corporation (the “Company”), the Guarantors (as defined herein) and U.S. Bank National Association, as trustee (the “Trustee”).

 

Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the holders of Notes (as defined herein):

 

WHEREAS, the Company and the Trustee have executed an Indenture to provide for the issuance from time to time of senior debt securities (the “Securities”) to be issued in one or more series as in the Indenture provided;

 

WHEREAS, the Company and the Guarantors desire and have requested the Trustee to join them in the execution and delivery of this Supplemental Indenture in order to establish and provide for the issuance by the Company of a series of Securities designated as its 3.850% Senior Notes due 2030, substantially in the form attached hereto as Exhibit A, guaranteed by the Guarantors, on the terms set forth herein;

 

WHEREAS, Section 2.01 of the Indenture provides that a supplemental indenture may be entered into for such purpose provided certain conditions are met;

 

WHEREAS, the conditions set forth in the Indenture for the execution and delivery of this Supplemental Indenture have been complied with; and

 

WHEREAS, all things necessary to make this Supplemental Indenture a valid agreement of the Company, the Guarantors and the Trustee, in accordance with its terms, and a valid amendment of, and supplement to, the Indenture have been done;

 

NOW, THEREFORE:

 

In consideration of the premises and the purchase and acceptance of the Notes by the holders thereof the Company and the Guarantors mutually covenant and agree with the Trustee, for the equal and ratable benefit of the Holders, that the Indenture is supplemented and amended, to the extent expressed herein, as follows:

 

 

 

 

ARTICLE One

Scope of Supplemental Indenture; General

 

The changes, modifications and supplements to the Indenture effected by this Supplemental Indenture shall be applicable only with respect to, and govern the terms of, the Notes, which shall not be limited in aggregate principal amount, and shall not apply to any other Securities that may be issued under the Indenture unless a supplemental indenture with respect to such other Securities specifically incorporates such changes, modifications and supplements. Pursuant to this Supplemental Indenture, there is hereby created and designated a series of Securities under the Indenture entitled “3.850% Senior Notes due 2030.” The Notes shall be in the form of Exhibit A hereto. The Notes shall be guaranteed by the Guarantors as provided in such form and this Supplemental Indenture. If required, the Notes may bear an appropriate legend regarding original issue discount for federal income tax purposes and any other legend required by applicable law or the rules of any exchange on which the Notes may be listed.

 

ARTICLE Two

Certain Definitions

 

The following terms have the meanings set forth below in this Supplemental Indenture. Capitalized terms used but not defined herein have the meanings ascribed to such terms in the Indenture. To the extent terms defined herein differ from the Indenture the terms defined herein will govern.

 

“Attributable Debt” means, in respect of a Sale and Leaseback Transaction, the present value (discounted at the weighted average effective interest cost per annum of the outstanding debt securities of all series, compounded semiannually) of the obligation of the lessee for rental payments during the remaining term of the lease included in such transaction, including any period for which such lease has been extended or may, at the option of the lessor, be extended or, if earlier, until the earliest date on which the lessee may terminate such lease upon payment of a penalty (in which case the obligation of the lessee for rental payments shall include such penalty), after excluding all amounts required to be paid on account of maintenance and repairs, insurance, taxes, assessments, water and utility rates and similar charges.

 

“Business Day” means any day other than a Legal Holiday.

 

“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.

 

-2-

 

 

“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 will be the capitalized amount thereof determined in accordance with GAAP.

 

“cash” means U.S. Legal Tender.

 

“Change of Control” means the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” (as that term is used in Section 13(d)(3) of the Exchange Act) becomes the beneficial owner, directly or indirectly, of more than 50% of the Company’s Voting Stock, measured by voting power rather than number of shares. Notwithstanding the foregoing, a transaction will not be deemed to involve a Change of Control if (1) the Company becomes a wholly owned subsidiary of a holding company and (2) the holders of the Voting Stock of such holding company immediately following that transaction are substantially the same as the holders of the Company’s Voting Stock immediately prior to that transaction.

 

“Comparable Treasury Issue” means the United States Treasury security selected by the Reference Treasury Dealer as having a maturity comparable to the remaining term (the “Remaining Life”) of the Notes to be redeemed calculated as if the maturity date of such Notes was the Par Call Date, that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the Remaining Life of such Notes.

 

“Comparable Treasury Price” means, with respect to any Redemption Date, (a) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third Business Day preceding such Redemption Date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated “Composite 3:30 p.m. Quotations for U.S. Government Securities” or (b) if such release (or any successor release) is not published or does not contain such price on such Business Day, (i) the average of the Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (ii) if the Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations.

 

“Consolidated Net Tangible Assets” means the total amount of assets which would be included on a combined balance sheet of the Company and the Guarantors under GAAP (less applicable reserves and other properly deductible items) after deducting therefrom:

 

(1)     all short-term liabilities, except for (x) liabilities payable by their terms more than one year from the date of determination (or renewable or extendible at the option of the obligor for a period ending more than one year after such date) and (y) liabilities in respect of retiree benefits other than pensions for which the Restricted Subsidiaries are required to accrue pursuant to Statement of Financial Accounting Standards No. 106;

 

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(2)     investments in subsidiaries that are not Restricted Subsidiaries; and

 

(3)     all goodwill, trade names, trademarks, patents, unamortized debt discount, unamortized expense incurred in the issuance of debt and other intangible assets.

 

“Consolidated Net Worth” of any Person means the consolidated stockholders’ equity of the Person determined in accordance with GAAP.

 

“Credit Facility” means the credit agreement dated as of December 13, 2013, among the Company, its subsidiaries parties thereto as guarantors, U.S. Bank National Association, as designated agent and co-administrative agent, Citibank, N.A., as co-administrative agent, and the other lenders party thereto, as amended or supplemented from time to time, and any refinancing, extension, renewal or replacement thereof.

 

“Custodian” means any receiver, trustee, assignee, liquidator, custodian, sequestrator or similar official under any Bankruptcy Law.

 

“Event of Default” means any one of the following events:

 

(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, at redemption, by declaration of acceleration or otherwise;

 

(c) default in the observance or performance of, or breach of, any covenant, agreement or warranty of the Company contained in the Notes, the Indenture or this 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;

 

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(d) 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 assets or 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;

 

(e) 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;

 

(f) (i) the acceleration of any Indebtedness (other than Non-Recourse Indebtedness) of the Company or any of its Significant 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 $40,000,000 or more in the aggregate to be immediately due and payable; provided that, in the event any such acceleration is withdrawn or otherwise rescinded (including satisfaction of such Indebtedness) within a period of ten business days after such acceleration by the holders of such Indebtedness, any Event of Default under this clause (f) will be deemed to be cured and any acceleration hereunder will be deemed withdrawn or rescinded; or (ii) the failure by the Company or any of its Significant 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 Significant Subsidiaries with an outstanding aggregate principal amount of $25,000,000 or more individually or $40,000,000 or more in the aggregate (after giving effect to any applicable grace period set forth in the documents governing such Indebtedness);

 

(g) 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 of its Restricted Subsidiaries, which are $25,000,000 or more individually or $40,000,000 or more in the aggregate, at any one time rendered against the Company or any of its Restricted Subsidiaries by a court of competent jurisdiction and not bonded, satisfied or discharged for a period (during which execution shall not be effectively stayed) of (i) 60 days after the judgment 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; or

 

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(h) the Guarantee of any Guarantor shall fail to remain in full force and effect except in accordance with this Indenture or any action shall be taken by any Guarantor to discontinue or to assert the invalidity or unenforceability of its Guarantee, or any Guarantor shall fail to comply with any of the terms or provisions of its Guarantee, or any Guarantor denies that it has any further liability under its Guarantee or gives notice to such effect.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Finance Subsidiary” means any Subsidiary of the Company substantially all of whose operations consist of (a) the mortgage financing business or (b) the insurance business.

 

“Fitch” means Fitch Ratings.

 

“Funded Indebtedness” means notes, bonds, debentures or other similar evidences of Indebtedness for money borrowed which by their terms mature at or are extendible or renewable at the option of the obligor to a date more than 12 months after the date of the creation of such debt.

 

“Guarantee” has the meaning set forth in Section 6.01 hereof.

 

“Guaranteed Indebtedness” has the meaning set forth in Section 6.06 hereof.

 

“Guaranteed Obligations” has the meaning set forth in Section 6.01 hereof.

 

“Guarantors” means (i) initially, each of:

 

M.D.C. Land Corporation, a Colorado corporation;

RAH of Florida, Inc., a Colorado corporation;

Richmond American Construction, Inc., a Delaware corporation;

Richmond American Homes of Arizona, Inc., a Delaware corporation;

Richmond American Homes of Colorado, Inc., a Delaware corporation;

Richmond American Homes of Florida, LP, a Colorado limited partnership;

 

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Richmond American Homes of Illinois, Inc., a Colorado corporation;

Richmond American Homes of Maryland, Inc., a Maryland corporation;

Richmond American Homes of Nevada, Inc., a Colorado corporation;

Richmond American Homes of New Jersey, Inc., a Colorado corporation;

Richmond American Homes of Oregon, Inc. (formerly known as Richmond American Homes of Delaware, Inc.), a Colorado corporation;

Richmond American Homes of Pennsylvania, Inc., a Colorado corporation;

Richmond American Homes of Utah, Inc., a Colorado corporation;

Richmond American Homes of Virginia, Inc., a Virginia corporation; and

Richmond American Homes of Washington, Inc., a Colorado corporation;

 

and (ii) any other Subsidiary of the Company that executes and delivers a guarantee of the Notes pursuant to the provisions of the Indenture.

 

“Indebtedness” means (a) any liability of any Person (i) for borrowed money, or (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 (other than a trade payable or a current liability arising in the ordinary course of business), or (iii) for the payment of money relating to a Capitalized Lease Obligation or (iv) for all Redeemable Capital Stock valued at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; (b) any liability of others described in the preceding clause (a) that such Person has guaranteed or that is otherwise its legal liability; (c) all Indebtedness referred to in (but not excluded from) clauses (a) and (b) above of other Persons and all dividends of other Persons, the payment of which is secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Security Interest upon or in property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness; and (d) any amendment, supplement, modification, deferral, renewal, extension or refunding of any liability of the types referred to in clauses (a), (b) and (c) above.

 

“Interest Payment Date” means the stated due date of an installment of interest on the Notes.

 

“Investment Grade” means a rating of Baa3 or better by Moody’s (or its equivalent under any successor rating categories of Moody’s); a rating of BBB- or better by Fitch (or its equivalent under any successor rating categories of Fitch); a rating of BBB- or better by S&P (or its equivalent under any successor rating categories of S&P); and the equivalent investment grade credit rating from any additional Rating Agency or Rating Agencies selected by us.

 

“Issue Date” means January 9, 2020, the date of original issuance of the Notes.

 

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“Legal Holiday” means a Saturday, a Sunday, a legal holiday or a day on which banking institutions in Denver, Colorado and New York, New York are not required to be open.

 

“Moody’s” means Moody’s Investors Service, Inc.

 

“Non-Recourse Indebtedness” means Indebtedness or other obligations secured by a lien on property to the extent that the liability for the Indebtedness or other obligations is limited to the security of the property without liability on the part of the Company or any Restricted Subsidiary (other than the Restricted Subsidiary which holds title to the property) for any deficiency.

 

“Notes” means the 3.850% Senior Notes due 2030 created under Article One hereof.

 

“Par Call Date” means July 15, 2029.

 

“Paying Agent” means an office or agency where Notes may be presented for payment.

 

“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.

 

“Preferential Payment” has the meaning set forth in Section 6.01.

 

“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.

 

“Primary Treasury Dealer” means a primary U.S. Government securities dealer in New York City.

 

“Rating Agency” means (1) each of Moody’s, Fitch and S&P; and (2) if any of Moody’s, Fitch or S&P ceases to rate the Notes or fails to make a rating of the Notes publicly available (for reasons outside of our control), a “nationally recognized statistical rating organization” registered under Section 15E of the Exchange Act, selected by us (as certified by a resolution of our board of directors) as a replacement agency for Moody’s, Fitch or S&P, or all three, as the case may be.

 

“Record Date” means a Record Date specified in the Notes whether or not such Record Date is a Business Day.

 

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“Redeemable Capital Stock” means any Capital Stock of the Company or any of its Subsidiaries that, either by its terms, by the terms of any security into which it is convertible or exchangeable or otherwise, (a) is or upon the happening of an event or passage of time would be required to be redeemed on or prior to the final stated maturity of the securities or (b) is redeemable at the option of the holder thereof at any time prior to such final stated maturity or (c) is convertible into or exchangeable for debt securities at any time on or prior to such final stated maturity.

 

“Redemption Date,” when used with respect to any Note to be redeemed, means the date fixed for such redemption pursuant to this Indenture and Paragraph 5 of the Notes.

 

“Redemption Price,” when used with respect to any Note to be redeemed, means the price for such redemption pursuant to Paragraph 5 of the Notes, which shall include, without duplication, in each case, accrued and unpaid interest to the Redemption Date.

 

“Reference Treasury Dealer” means (a) Citigroup Global Markets Inc. (or its respective affiliates which are Primary Treasury Dealers), and its successors; provided, however, that if any of the foregoing shall cease to be a Primary Treasury Dealer, the Company will substitute therefor another Primary Treasury Dealer, and (b) any other Primary Treasury Dealer(s) selected by the Company.

 

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day preceding such Redemption Date.

 

“Registrar” means the office or agency where Notes may be presented for registration of transfer or for exchange.

 

“Remaining Scheduled Payments” means, with respect to any Note, the remaining scheduled payments of the principal thereof to be redeemed and interest thereon that would be due after the related Redemption Date but for such redemption; provided, however, that if such Redemption Date is not an Interest Payment Date with respect to such Note, the amount of the next succeeding scheduled interest payment thereon will be reduced by the amount of interest accrued thereon to such Redemption Date.

 

“Restricted Subsidiary” means any Guarantor and any successor to such Guarantor.

 

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“Sale and Leaseback Transaction” means a sale or transfer made by the Company or a Restricted Subsidiary (except a sale or transfer made to the Company or a Restricted Subsidiary) of any property which is either (a) a manufacturing facility, office building or warehouse whose book value equals or exceeds 1% of Consolidated Net Tangible Assets as of the date of determination or (b) another property (not including a model home) which exceeds 5% of Consolidated Net Tangible Assets as of the date of determination, if such sale or transfer is made with the agreement, commitment or intention of leasing such property to the Company or a Restricted Subsidiary for more than a three-year term.

 

“Secured Debt” means any Indebtedness, except Indebtedness of the Finance Subsidiaries, which is secured by (i) a Security Interest in any of the property of the Company or any Restricted Subsidiary or (ii) a Security Interest in shares of stock owned directly or indirectly by the Company or a Restricted Subsidiary in a corporation or in equity interests owned by the Company or a Restricted Subsidiary in a partnership or other entity not organized as a corporation or in the Company’s rights or the rights of a Restricted Subsidiary in respect of Indebtedness of a corporation, partnership or other entity in which the Company or a Restricted Subsidiary has an equity interest. The securing in the foregoing manner of any such Indebtedness which immediately prior thereto was not Secured Debt shall be deemed to be the creation of Secured Debt at the time security is given.

 

“Security Interests” means any mortgage, pledge, lien, encumbrance or other security interest which secures the payment or performance of an obligation.

 

“Significant Subsidiary” means any Subsidiary (a) whose revenues exceed 10% of our total consolidated revenues, in each case for the most recent fiscal year, or (b) whose net worth exceeds 10% of our total stockholders’ equity, in each case as of the end of the most recent fiscal year.

 

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.

 

“Specified Indebtedness” means Indebtedness under (i) the Notes, (ii) the Indenture and (iii) the Credit Facility, and any refinancing, extension, renewal or replacement of any of the foregoing.

 

“Stated Maturity” when used with respect to any Note, means January 15, 2030.

 

“Subordinated Indebtedness” has the meaning set forth in Section 6.04.

 

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“Subsidiary” means any Person of which at the time of determination by the Company, directly and/or indirectly through one or more Subsidiaries, the Company owns more than 50% of its Voting Stock.

 

“Supplemental Indenture” has the meaning set forth in Article One hereof.

 

“TIA” means the Trust Indenture Act of 1939, as in effect from time to time.

 

“Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

 

“Trustee” means the party named as such in this Indenture until a successor replaces it pursuant to this Indenture and thereafter means the successor serving hereunder.

 

“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.

 

“Voting Stock” means, with respect to any Person, the Capital Stock of such Person that is generally entitled to vote in the election of the members of the board of directors (or functional equivalent) of such Person.

 

ARTICLE Three

Redemption

 

Section 3.01.        Right of Redemption.

 

Redemption of Notes, as permitted by any provision of this Indenture, shall be made in accordance with such provision and Article Three of the Indenture.

 

The Notes may be redeemed at the election of the Company, in whole at any time or in part from time to time, as set forth below on at least 30 but not more than 60 days’ prior notice.

 

If the Notes are redeemed prior to the Par Call Date, the Redemption Price for the Notes to be redeemed will equal the greater of: (i) 100% of their principal amount, and (ii) the present value of the Remaining Scheduled Payments on the Notes being redeemed on the Redemption Date, discounted to the Redemption Date, on a semi-annual basis, at the Treasury Rate plus 50 basis points (0.50%), plus, in each case, accrued and unpaid interest, if any, on the Notes to the Redemption Date.

 

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If the Notes are redeemed on or after the Par Call Date, the Redemption Price for the Notes to be redeemed will equal 100% of the principal amount of such Notes, plus accrued and unpaid interest, if any, on the Notes to the Redemption Date.

 

In determining the Redemption Price and accrued interest, interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months.

 

If money sufficient to pay the redemption price of and accrued interest on the Notes to be redeemed is deposited with the Trustee on or before the Redemption Date, on and after the Redemption Date interest will cease to accrue on the Notes (or such portions thereof) called for redemption and the Notes will cease to be outstanding.

 

On and after the Redemption Date, interest will cease to accrue on the Notes or any portion of the Notes called for redemption (unless the Company defaults in the payment of the Redemption Price and accrued interest). On or before the Redemption Date, the Company will deposit with a paying agent (or the Trustee) money sufficient to pay the Redemption Price of and accrued interest on the Notes to be redeemed on that date. If less than all of the Notes are to be redeemed, the Notes to be redeemed shall be selected by lot by DTC, in the case of Notes represented by a global security.

 

Section 3.02.        No Sinking Fund.

 

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

 

ARTICLE Four

Covenants

 

The following additional covenants will apply with respect to the Notes:

 

Section 4.01.        Restrictions on Secured Debt.

 

The Company will not, and will not cause or permit a Restricted Subsidiary (other than any Finance Subsidiary) to, create, incur, assume or guarantee any Secured Debt unless the Notes will be secured equally and ratably with (or prior to) such Secured Debt, with certain exceptions. This restriction does not prohibit the creation, incurrence, assumption or guarantee of Secured Debt which is secured by:

 

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(1)     Security Interests in model homes, homes held for sale, homes that are under contract for sale, contracts for the sale of homes, land (improved or unimproved), manufacturing plants, warehouses or office buildings and fixtures and equipment located thereat or thereon;

 

(2)     Security Interests in property at the time of its acquisition by the Company or a Restricted Subsidiary, including Capitalized Lease Obligations, which Security Interests secure obligations assumed by the Company or a Restricted Subsidiary, or in the property of a corporation or other entity at the time it is merged into or consolidated with the Company or a Restricted Subsidiary (other than Secured Debt created in contemplation of the acquisition of such property or the consummation of such a merger or where the Security Interest attaches to or affects the property of the Company or a Restricted Subsidiary prior to such transaction);

 

(3)     Security Interests arising from conditional sales agreements or title retention agreements with respect to property acquired by the Company or a Restricted Subsidiary;

 

(4)     Security Interests incurred in connection with pollution control, industrial revenue, water, sewage or any similar item; and

 

(5)     Security Interests securing Indebtedness of a Restricted Subsidiary owing to the Company or a Restricted Subsidiary that is wholly owned (directly or indirectly) by the Company or Security Interests securing the Company’s Indebtedness owing to a Guarantor.

 

Such permitted Secured Debt also includes any amendment, restatement, supplement, renewal, replacement, extension or refunding, in whole or in part, of Secured Debt permitted at the time of the original incurrence thereof.

 

In addition, the Company and the Guarantors may create, incur, assume or guarantee Secured Debt, without equally and ratably securing the Notes, if immediately thereafter the sum of (1) the aggregate principal amount of all Secured Debt outstanding (excluding Secured Debt permitted under clauses (1) through (5) above and any Secured Debt in relation to which the Notes have been equally and ratably secured) and (2) all Attributable Debt in respect of Sale and Leaseback Transactions (excluding Attributable Debt in respect of Sale and Leaseback Transactions as to which the provisions of clauses (1) through (3) under Section 4.02 have been complied with) as of the date of determination would not exceed 20% of Consolidated Net Tangible Assets.

 

The provisions described above with respect to limitations on Secured Debt are not applicable to Non-Recourse Indebtedness by virtue of the definition of Secured Debt, and will not restrict the Company’s or the Guarantors’ ability to create, incur, assume or guarantee any unsecured Indebtedness, or of any Subsidiary which is not a Restricted Subsidiary to create, incur, assume or guarantee any secured or unsecured Indebtedness.

 

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Section 4.02.        Limitations on Sale and Leaseback Transactions.

 

The Company will not, and will not cause or permit any Restricted Subsidiary to, enter into any Sale and Leaseback Transaction unless (1) the net proceeds to the Company or such Restricted Subsidiary from such sale or transfer equal or exceed the fair value (as determined by the Board of Directors, chairman of the board, vice chairman, president or principal financial officer of the Company) of the property or asset so leased, (2) the Company or such Restricted Subsidiary would be entitled to incur Secured Debt pursuant to Section 4.01, (3) the Company or any Restricted Subsidiary shall, and in any case the Company and the Restricted Subsidiaries, covenant that they will, within 180 days of the effective date of any Sale and Leaseback Transaction, apply an amount equal to the fair value of the property so leased to the retirement of Funded Indebtedness, (4) the Sale and Leaseback Transaction relates to a sale which occurred within 180 days from the date of acquisition of such property or asset by the Company or a Restricted Subsidiary or the date of the completion of construction or commencement of full operations on such property, whichever is later, or (5) the Sale and Leaseback Transaction was consummated prior to the date of this Supplemental Indenture.

 

Section 4.03.        SEC Reports.

 

The Company shall deliver to the Trustee and each Holder, within 15 days after it files the same with the SEC, copies of all reports and information (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe), if any, exclusive of exhibits, which the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act or pursuant to the immediately following sentence. So long as any Notes remain outstanding, the Company shall file with the Commission such reports as may be required pursuant to Section 13 of the Exchange Act in respect of a security registered pursuant to Section 12 of the Exchange Act. If the Company is not subject to the requirements of Section 13 or 15(d) of the Exchange Act (or otherwise required to file reports pursuant to the immediately preceding sentence), the Company shall deliver to the Trustee and to each Holder, within 15 days after it would have been required to file such information with the SEC were it required to do so, financial statements, including any notes thereto (and, in the case of a fiscal year end, an auditors’ report by an independent certified public accounting firm of established national reputation), and a “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” substantially equivalent to that which it would have been required to include in such quarterly or annual reports, information, documents or other reports if it had been subject to the requirements of Section 13 or 15(d) of the Exchange Act. The Company shall also comply with the other provisions of TIA Section 314(a).

 

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The Trustee has no duty to review the financial reports and other information for the purpose of determining compliance with any provision of this Indenture.

 

ARTICLE Five

Successor Corporation

 

Article Five of the Indenture is replaced with the following in its entirety:

 

Section 5.01.        Consolidation, Merger and Sale of Assets.

 

Neither the Company nor the Guarantors will consolidate or merge into or sell, assign, transfer or lease all or substantially all of their assets to another person unless:

 

(1)     the person is a corporation organized under the laws of the United States of America or any state thereof;

 

(2)     the person assumes by supplemental indenture, in a form reasonably satisfactory to the Trustee, all of the obligations of the Company or such Guarantor, as the case may be, relating to the Notes, the Guarantees and the Indenture, as the case may be; and

 

(3)     immediately after the transaction no Event of Default exists; provided that this clause (3) will not restrict or be applicable to a merger, consolidation or liquidation of a Guarantor with or into the Company or another Subsidiary that is wholly owned, directly or indirectly, by the Company that is, or concurrently with the completion of such merger, consolidation or liquidation becomes, a Guarantor or a Restricted Subsidiary that is wholly owned, directly or indirectly, by the Company.

 

Upon any such consolidation, merger, sale, assignment or transfer, the successor corporation will be substituted for the Company or such Guarantor (including any merger or consolidation described in the proviso at the end of the immediately preceding sentence), as applicable, under the Indenture. The successor corporation may then exercise every power and right of the Company or such Guarantor under the Indenture, and the Company or such Guarantor, as applicable, will be released from all of its respective liabilities and obligations in respect of the Notes and the Indenture. If the Company or any Guarantor leases all or substantially all of its assets, the lessee corporation will be the successor to the Company or such Guarantor and may exercise every power and right of the Company or such Guarantor, as the case may be, under the Indenture, but the Company or such Guarantor, as the case may be, will not be released from its respective obligations to pay the principal of and premium, if any, and interest, if any, on the Notes.

 

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ARTICLE Six

Guarantees

 

Section 6.01.        Unconditional Guarantee.

 

Each Guarantor hereby fully and unconditionally, jointly and severally, guarantees (each such guarantee to be referred to herein as the “Guarantee”) to the Holders of the Notes and to the Trustee and its successors and assigns that: (i) the principal of and interest on the Notes will be promptly paid in full when due, subject to any applicable grace period, whether at maturity, by acceleration or otherwise and interest on the overdue principal, if any, and interest on any interest of the Notes and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, 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 or performed in accordance with the terms of the extension or renewal, subject to any applicable grace period, whether at stated maturity, by acceleration or otherwise (collectively, the “Guaranteed Obligations”), subject, however, in the case of clauses (i) and (ii) above, to the limitations set forth in Section 6.02. Each Guarantor hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or the Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of 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 circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor.

 

The obligations of each Guarantor hereunder are separate and independent of the obligations of the Company and of any other Guarantor, and a separate action or actions may be brought and prosecuted against a Guarantor whether action is brought against the Company or any other Guarantor or whether the Company or any other Guarantor is joined in any action or actions. The obligations of each Guarantor hereunder shall survive and continue in full force and effect until the earlier of (i) such time as such Guarantor may be released from its obligations hereunder pursuant to the terms Section 6.06 hereof, or (ii) payment in full of the Guaranteed Obligations is actually received by the Holders or the Trustee on behalf of the Holders and the period of time has expired during which any payment made by the Company or such Guarantor may be determined to be a Preferential Payment (defined below), notwithstanding any release or termination of the Company’s or any other Guarantor’s liability by express or implied agreement or by operation of law and notwithstanding that the Guaranteed Obligations or any part thereof are deemed to have been paid or discharged by operation of law or by some act or agreement. For purposes of this Guarantee, the Guaranteed Obligations shall be deemed to be paid only to the extent that the Holders, or the Trustee on behalf of the Holders, actually receive immediately available funds.

 

-16-

 

 

Each Guarantor agrees that to the extent the Company or any other Guarantor makes any payment to the Holders, or to the Trustee on behalf of the Holders, in connection with the Guaranteed Obligations, and all or any part of such payment is subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid by the Holders or the Trustee or paid over to a trustee, receiver or any other entity, whether under any bankruptcy act or otherwise (any such payment is hereinafter referred to as a “Preferential Payment”), then this Guarantee shall continue to be effective or shall be reinstated, as the case may be, and, to the extent of such payment or repayment by the Holders or the Trustee, the Guaranteed Obligations or part thereof intended to be satisfied by such Preferential Payment shall be revived and continued in full force and effect as if said Preferential Payment had not been made.

 

Section 6.02.        Fraudulent Conveyance Limitation.

 

Notwithstanding any contrary provision, the amount of the Guaranteed Obligations guaranteed by each Guarantor under this Guarantee shall be, but not in excess of, the maximum amount permitted by fraudulent conveyance, fraudulent transfer or similar laws applicable to such Guarantor. Accordingly, notwithstanding anything to the contrary contained in this Guarantee or any other agreement or instrument executed in connection with the payment of the Guaranteed Obligations, the amount of the Guaranteed Obligations guaranteed by any Guarantor by this Guarantee shall be limited to an aggregate amount equal to the largest amount that would not render such Guarantor’s obligations hereunder subject to avoidance under any Bankruptcy Law.

 

Section 6.03.        Waiver.

 

Each Guarantor waives and agrees not to assert: (a) any right to require the Holders or the Trustee to proceed against the Company or any other Guarantor, to proceed against or exhaust any security for the Guaranteed Obligations, to pursue any other remedy available to the Holders or the Trustee or to pursue any remedy in any particular order or manner; (b) the benefit of any statute of limitations affecting Guarantor’s liability hereunder or the enforcement hereof; (c) demand, diligence, presentment for payment, protest and demand, and notice of extension, dishonor, protest, demand, nonpayment and acceptance of this Guarantee; (d) notice of the existence, creation or incurring of new or additional indebtedness of the Company to the Holders; and (e) any defense arising by reason of any disability or other defense of the Company or by reason of the cessation from any cause whatsoever (other than payment in full of all amounts demanded to be paid by such Guarantor under this Guarantee) of the liability of the Company for the Guaranteed Obligations. Each Guarantor hereby expressly consents to any impairment of collateral, including, but not limited to, failure to perfect a security interest and release collateral and any such impairment or release shall not affect Guarantors’ obligations hereunder. Until payment in full of the Guaranteed Obligations, no Guarantor shall have a right of subrogation and hereby waives any right to enforce any remedy which the Holders or the Trustee now have, or may hereafter have, against the Company, and waives any benefit of, any right to participate in, any security now or hereafter held on behalf of the Holders.

 

-17-

 

 

Section 6.04.        Subordinated Indebtedness.

 

If from time to time the Company shall have liabilities or obligations to the Guarantors, whether absolute or contingent, joint, several, or joint and several, such liabilities and obligations (the “Subordinated Indebtedness”) and any and all assignments as security, grants in trust, liens, mortgages, security interests, other encumbrances, and other interests and rights securing such liabilities and obligations shall at all times be fully subordinate to payment and performance in full of the Guaranteed Obligations. Each Guarantor agrees that such liabilities and obligations of the Company to such Guarantor shall not be secured by any assignment as security, grant in trust, lien, mortgage, security interest, other encumbrance or other interest or right in any property, interests in property, or rights to property of the Company. Each Guarantor agrees that (i) so long as no Event of Default has occurred and is continuing, payments of principal and interest on the Subordinated Indebtedness may be made by the Company and accepted by Guarantor as such payments become due; and (ii) after the occurrence and during the continuation of an Event of Default, the Company shall not make and Guarantor shall not accept any payments with respect to the Subordinated Indebtedness. If, notwithstanding the foregoing, subsequent to an Event of Default, any Guarantor receives any payment from the Company, such payment shall be held in trust by such Guarantor for the benefit of the Holders, and shall be segregated from the other funds of such Guarantor, and shall forthwith be paid by Guarantor to the Holders or to the Trustee on behalf of the Holders and applied to payment of the Guaranteed Obligations whether or not then due.

 

In the event of any distribution, division, or application, partial or complete, voluntary or involuntary, by operation of law or otherwise, of all or any part of the assets of the Company, or the proceeds thereof, to creditors of the Company, by reason of the liquidation, dissolution, or other winding up of the Company’s business, or in the event of any receivership, insolvency or bankruptcy proceedings by or against the Company, or assignment for the benefit of creditors, or of any proceedings by or against the Company for any relief under any bankruptcy or insolvency laws, or relating to the relief of debtors, readjustment of indebtedness, reorganizations, arrangements, compositions or extensions, or of any other event whereby it becomes necessary or desirable to file or present claims against the Company for the purpose of receiving payment thereof, or on account thereof, then and in any such event, any payment or distribution of any kind or character, either in cash or other property, which shall be made or shall be payable with respect to any Subordinated Indebtedness shall be paid over to the Holders or to the Trustee on behalf of the Holders for application to the payment of the Guaranteed Obligations, whether due or not due, and no payments shall be made upon or in respect of the Subordinated Indebtedness unless and until the Guaranteed Obligations shall have been paid and satisfied in full. In any such event, all claims of the Holders and all claims of the Guarantors shall, at the option of the Trustee, forthwith become due and payable without demand or notice.

 

-18-

 

 

In the event of any distribution, division, or application, partial or complete, voluntary or involuntary, by operation of law or otherwise, of all or any part of the assets of the Company, or the proceeds thereof, to creditors of the Company, by reason of the liquidation, dissolution, or other winding up of the Company’s business, or in the event of any receivership, insolvency or bankruptcy proceedings by or against the Company, or assignment for the benefit of creditors, or of any proceedings by or against the Company for any relief under any bankruptcy or insolvency laws, or relating to the relief of debtors, readjustment of indebtedness, reorganizations, arrangements, compositions or extensions, or of any other event whereby it becomes necessary or desirable to file or present claims against the Company for the purpose of receiving payment thereof, or on account thereof, each Guarantor irrevocably authorizes and empowers the Trustee, or any person the Trustee may designate, to act as attorney for Guarantor with full power and authority in the name of Guarantor, or otherwise, to make and present such claims or proofs of claims against the Company on account of the Subordinated Indebtedness as the Trustee, or its appointee, may deem expedient and proper and, if necessary, to vote such claims in any proceedings and to receive and collect for the benefit of the Holders any and all dividends or other payments and disbursements made thereon in whatever form they may be paid or issued, and to give acquittance therefor and to apply same to the Guaranteed Obligations, and each Guarantor hereby agrees, from time to time and upon request, to make, execute and deliver to the Trustee such powers of attorney, assignments, endorsements, proofs of claim, pleadings, verifications, affidavits, consents, agreements or other instruments as may be requested by the Trustee in order to enable the Trustee and the Holders to enforce any and all claims upon, or with respect to, the Subordinated Indebtedness, and to collect and receive any and all payments or distributions which may be payable or deliverable at any time upon or with respect to the Subordinated Indebtedness.

 

Except as otherwise permitted herein, should any payment or distribution or security or proceeds thereof be received by a Guarantor upon or with respect to the Subordinated Indebtedness prior to the satisfaction of the Guaranteed Obligations, such Guarantor will forthwith deliver the same to the Trustee on behalf of the Holders in precisely the form as received except for the endorsement or assignment of such Guarantor where necessary for application on the Guaranteed Obligations, whether due or not due, and until so delivered the same shall be held in trust by such Guarantor as property of the Trustee on behalf of the Holders. In the event of the failure of Guarantor to make any such endorsement or assignment, the Trustee, or any of its officers or employees, on behalf of the Trustee, is hereby irrevocably authorized to make the same.

 

-19-

 

 

Each Guarantor agrees to maintain in its records notations satisfactory to the Trustee of the rights and priorities of the Holders hereunder, and from time to time, upon request, to furnish the Trustee for the benefit of the Holders with sworn financial statements. The Trustee may inspect the books of account and any records of each Guarantor at any time during business hours. Each Guarantor agrees that any promissory note now or hereafter evidencing the Subordinated Indebtedness shall be nonnegotiable and shall be marked with a specific statement that the indebtedness thereby evidenced is subject to the provisions of this Guarantee.

 

Section 6.05.        Execution of Guarantee.

 

Each Guarantor hereby agrees to execute a notation of Guarantee in substantially the form attached to the form of Note, and to deliver such notation to the Trustee.

 

Section 6.06.        Additional Guarantees and Release of Guarantees.

 

(a)     The Company shall not permit any of its Subsidiaries that are not Guarantors, directly or indirectly, to guarantee any Specified Indebtedness (“Guaranteed Indebtedness”) unless such Subsidiary simultaneously executes and delivers to the Trustee a supplemental indenture, in a form reasonably satisfactory to the Trustee, pursuant to which such Subsidiary guarantees, jointly and severally with all other Guarantors, on the same basis as such Guaranteed Indebtedness is guaranteed, the Guaranteed Obligations. The Company shall deliver to the Trustee an opinion of counsel that such supplemental indenture has been duly authorized, executed and delivered by such Subsidiary and, subject to customary exceptions, constitutes a valid and legally binding and enforceable obligation of such Subsidiary. If the Guaranteed Indebtedness (1) ranks pari passu in right of payment with the Notes, then the guarantee of such Guaranteed Indebtedness shall rank pari passu with, or be subordinated in right of payment to, the Guarantee of such Subsidiary or (2) is subordinated by its terms in right of payment to the Notes, then the guarantee of such Guaranteed Indebtedness shall be subordinated to the Guarantee of such Subsidiary at least to the extent that the Guaranteed Indebtedness is subordinated to the Notes.

 

(b)     The Guarantee of any Guarantor will be automatically and unconditionally released and discharged so long as:

 

(i)     no Default or Event of Default exists or would result from release of such Guarantee;

 

-20-

 

 

(ii)     the Guarantor being released has Consolidated Net Worth of less than 5% of the Company’s Consolidated Net Worth as of the end of the most recent fiscal quarter;

 

(iii)     the Guarantors released from their Guarantees in any year-end period comprise in the aggregate less than 10% (or 15% if and to the extent necessary to permit the Company to cure a Default) of the Company’s Consolidated Net Worth as of the end of the most recent fiscal quarter;

 

(iv)     such release would not have a material adverse effect on the homebuilding business of the Company and its Subsidiaries; and

 

(v)     the Guarantor is released from its guarantee(s) under all Specified Indebtedness (other than by reason of payment under its guarantee of Specified Indebtedness);

 

provided, in each such case, the Company has delivered to the Trustee an Officers’ Certificate and Opinion of Counsel, each stating that all conditions precedent provided for in the Indenture relating to such transactions have been complied with and that such release is authorized and permitted under the Indenture.

 

(c)     If there are no guarantors under any Specified Indebtedness, the Guarantors under this Supplemental Indenture will be released from their Guarantees.

 

ARTICLE Seven

Miscellaneous

 

Section 7.01.        Confirmation of Indenture.

 

The Indenture, as supplemented and amended by this Supplemental Indenture, is in all respects ratified and confirmed, and the Indenture, this Supplemental Indenture and all indentures supplemental thereto shall be read, taken and construed as one and the same instrument.

 

Section 7.02.        Concerning the Trustee.

 

The rights and duties of the Trustee set forth in Article Seven of the Indenture shall not be modified by reason of this Supplemental Indenture.

 

-21-

 

 

Section 7.03.        Governing Law.

 

This Supplemental Indenture, the Indenture, the Notes, and the Guarantee shall be governed by the laws of the State of New York.

 

Section 7.04.        Separability.

 

In case any one or more of the provisions contained in this Supplemental Indenture shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Supplemental Indenture, but this Supplemental Indenture shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.

 

Section 7.05.        Counterparts.

 

This Supplemental Indenture may be executed in any number of counterparts each of which shall be an original, but such counterparts shall together constitute but one and the same instrument.

 

Section 7.06.        No Adverse Interpretation of Other Agreements.

 

This Supplemental Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or a Subsidiary. Any such indenture, loan or debt agreement may not be used to interpret this Supplemental Indenture.

 

Section 7.07.        No Recourse Against Others.

 

All liability described in Paragraph 13 of the Notes of any director, officer, employee or stockholder, as such, of the Company or any Guarantor is waived and released.

 

Section 7.08.        Successors and Assigns.

 

All covenants and agreements of the Company and the Guarantors in this Supplemental Indenture and the Notes shall bind its successors and assigns. All agreements of the Trustee in this Supplemental Indenture shall bind its successors and assigns.

 

Section 7.09.        Duplicate Originals.

 

The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

 

Section 7.10.        Severability.

 

In case any one or more of the provisions contained in this Supplemental Indenture or in the Notes shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Supplemental Indenture or of the Notes.

 

[Signature Page Follows]

 

-22-

 

 

SIGNATURES

 

IN WITNESS WHEREOF, the parties have caused this Supplemental Indenture to be duly executed, all as of the date first above written.

 

M.D.C. HOLDINGS, INC.

 

 

By:      /s/ Robert N. Martin                                                                       

     Name:  Robert N. Martin

     Title:    Senior Vice President and

                           Chief Financial Officer

 

 

 

GUARANTORS:

 

M.D.C. LAND CORPORATION

RAH OF FLORIDA, INC.

RICHMOND AMERICAN CONSTRUCTION, INC.

RICHMOND AMERICAN HOMES OF ARIZONA, INC.

RICHMOND AMERICAN HOMES OF COLORADO, INC.

RICHMOND AMERICAN HOMES OF ILLINOIS, INC.

RICHMOND AMERICAN HOMES OF MARYLAND, INC.

RICHMOND AMERICAN HOMES OF NEVADA, INC.

RICHMOND AMERICAN HOMES OF NEW JERSEY, INC.

RICHMOND AMERICAN HOMES OF OREGON, INC.

RICHMOND AMERICAN HOMES OF PENNSYLVANIA, INC.

RICHMOND AMERICAN HOMES OF UTAH, INC.

RICHMOND AMERICAN HOMES OF VIRGINIA, INC.

 

S-1

 

 

RICHMOND AMERICAN HOMES OF WASHINGTON, INC.

 

 

By:      /s/ Robert N. Martin                                                                       

     Name:  Robert N. Martin

     Title:    Authorized Officer

 

 

 

RICHMOND AMERICAN HOMES OF FLORIDA, LP

By: RAH OF FLORIDA, INC., its general partner

 

 

By:      /s/ Robert N. Martin                                                                       

     Name:  Robert N. Martin

     Title:    Senior Vice President

 

S-2

 

 

U.S. Bank National Association, as Trustee

 

 

By:   /s/ Donald T. Hurrelbrink                                             

Name:   Donald T. Hurrelbrink

Title:     Authorized Signatory

 

S-3

 

 

Exhibit A

 

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

 

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

 

A-1

 

 

 

 

CUSIP No.:                   

3.850% Senior Notes due 2030

M.D.C. HOLDINGS, INC.

a Delaware corporation

promises to pay to

[         ]

or registered assigns

the principal sum of $                on

January 15, 2030.

3.850% Senior Notes due 2030

 

Interest Payment Dates:     January 15 and July 15, commencing July 15, 2020

Record Dates:                     January 1 and July 1

 

 

Dated:                    

 

 

 

	
			 

				
			M.D.C. HOLDINGS, INC.

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			By: 

				
			 

				
			 

			
	
			 

				
			 

				
			Name:

				
			 

			
	
			 

				
			 

				
			Title:

				
			 

			
	 	 	 	 
	 	 	 	 
	 	By:	 	 
	 	 	Name:	 
	 	 	Title:	 

 

 

A-2

 

 

U.S. Bank National Association, as Trustee, certifies that this

is one of the Notes referred to in the within mentioned

Indenture.

 

 

By:                                                                             

Name:

Authorized Signatory

 

A-3

 

 

M.D.C. HOLDINGS, INC.

3.850% Senior Notes due 2030

 

	
			1.

				
			Interest.

			

 

M.D.C. HOLDINGS, INC. (the “Company”), a Delaware corporation, promises to pay interest on the principal amount of this Note at the rate per annum shown above. The Company will pay interest semi-annually on January 15 and July 15 of each year, commencing on July 15, 2020, until the principal is paid or made available for payment. Interest on the Notes will accrue from the most recent date to which interest has been paid or duly provided for or, if no interest has been paid, from January 9, 2020; provided that, if there is no existing default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding interest payment date, interest shall accrue from such interest payment date. Interest will be computed on the basis of a 360-day year of twelve 30-day months.

 

	
			2.

				
			Method of Payment.

			

 

The Company will pay interest on the Notes (except defaulted interest, if any, which will be paid on such special payment date to Holders of record on such special record date as may be fixed by the Company) on each Interest Payment Date to the persons who are registered Holders of Notes at the close of business on the January 1 and July 1 preceding such Interest Payment Date. Holders must surrender Notes to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts.

 

	
			3.

				
			Paying Agent and Registrar.

			

 

Initially, U.S. Bank National Association (the “Trustee”) will act as Paying Agent and Registrar. The Company may change or appoint any Paying Agent, Registrar or co-Registrar without notice. The Company or any of its Subsidiaries may act as Paying Agent, Registrar or co-Registrar.

 

	
			4.

				
			Indenture.

			

 

The Company issued the Notes under an Indenture dated as of December 3, 2002 between the Company and the Trustee, as supplemented by a Supplemental Indenture dated as of January 9, 2020 among the Company, the Guarantors and the Trustee (together, the “Indenture”). The terms of the Notes and the Guarantees include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (“TIA”) as in effect on the date of the Indenture. The Notes and the Guarantees are subject to all such terms, and Holders are referred to the Indenture and the TIA for a statement of them.

 

The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to: M.D.C. Holdings, Inc., 4350 South Monaco Street, Suite 500, Denver, Colorado 80237, Attention: Secretary.

 

A-4

 

 

	
			5.

				
			Optional Redemption.

			

 

The Notes will be redeemable at the option of the Company, in whole at any time or in part from time to time, on at least 30 but not more than 60 days’ prior notice. If the Notes are redeemed prior to July 15, 2029 (the “Par Call Date”), the Redemption Price for the Notes to be redeemed will equal the greater of: (i) 100% of their principal amount, and (ii) the present value of the Remaining Scheduled Payments on the Notes being redeemed on the Redemption Date, discounted to the Redemption Date, on a semi-annual basis, at the Treasury Rate plus 50 basis points (0.50%), plus, in each case, accrued and unpaid interest, if any, on such Notes to the Redemption Date. If the Notes are redeemed on or after the Par Call Date, the Redemption Price for the Notes to be redeemed will equal 100% of the principal amount of such Notes, plus accrued and unpaid interest, if any, on such Notes to the Redemption Date. In determining the Redemption Price and accrued interest, interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months.

 

Notice of redemption will be mailed at least 30 days but not more than 60 days before the Redemption Date to each Holder of Notes to be redeemed at his registered address. Notes in denominations larger than $1,000 may be redeemed in part. On and after the Redemption Date, interest ceases to accrue on Notes or portions of them called for redemption; provided that if the Company shall default in the payment of such Note at the redemption price together with accrued interest, interest shall continue to accrue at the rate borne by the Notes.

 

	
			6.

				
			Interest Rate Adjustment.

			

 

If a Change of Control occurs and within 60 days thereafter all three of the Ratings Agencies have less than Investment Grade debt ratings assigned to the Notes, whether as a result of a downgrade or otherwise, the per annum interest rate on the Notes will increase from the interest rate payable on the Notes immediately before the Change of Control. The interest rate will increase by 0.25% for each rating level below Investment Grade by each of the two Rating Agencies with the lowest ratings (i.e., if two Rating Agencies are two levels below Investment Grade and the third Rating Agency is one level below Investment Grade, the interest rate increase will be 1.00% per annum). In the event that only two Rating Agencies have debt ratings assigned to the Notes, those two debt ratings will be used to determine any interest rate increase. In the event that only one Rating Agency has a debt rating assigned to the Notes, the interest rate increase will be two times 0.25% for each rating level below Investment Grade by the Rating Agency that has a debt rating assigned to the Notes. In the event that no Rating Agency has a debt rating assigned to the Notes, the interest rate increase will be 2.00% per annum. Any downgrade of the ratings assigned to the Notes that occurs outside of the 60 day period will not alter the per annum interest rate.

 

In no event shall: (1) the total increase in the interest rate on the Notes exceed 2.00% per annum above the interest rate payable on the Notes on the date of their initial issuance; or (2) the interest rate increase unless the debt ratings on the Notes by all Rating Agencies that have debt ratings assigned to the Notes are below Investment Grade within 60 days after the Change of Control.

 

A-5

 

 

If at any time after the interest rate on the Notes has been adjusted upward pursuant to this provision as a result of a Rating Agency rating the Notes below Investment Grade, that Rating Agency (or a replacement rating agency selected by us under the circumstance set forth in, and in accordance with, the definition of “Rating Agency”) thereafter increases its rating with respect to the Notes, the per annum interest rate on the Notes will decrease by 0.25% per annum (or, if the debt rating for only one Rating Agency was used to determine the interest rate increase pursuant to the fourth sentence of this Paragraph 6, two times 0.25% per annum) for each level of improvement in the rating of the Notes by such Rating Agency; provided that the decrease in interest rate resulting therefrom will not exceed the aggregate percentage increase in the interest rate that resulted from the prior lower rating by such Rating Agency. In no event will the interest rate on the Notes ever be less than the interest rate on the Notes on the date of their initial issuance.

 

Any interest rate change described above will take effect as of the first day of the interest period for which the next interest payment will be made.

 

The interest rate on the Notes will permanently cease to be subject to any adjustment described above (notwithstanding any subsequent decrease in the ratings by any Rating Agency) if all of the Rating Agencies subsequently increase their rating of the Notes to the following levels at the same time (Moody’s: A3; S&P: A-; Fitch A-; or the equivalent if with respect to any substitute rating agency) or higher.

 

	
			7.

				
			Denominations, Transfer, Exchange.

			

 

The Notes are in registered form without coupons in denominations of $2,000 and integral multiples of $1,000. A Holder may transfer or exchange Notes by presentation of such Notes to the Registrar or a co-Registrar with a request to register the transfer or to exchange them for an equal principal amount of Notes of other denominations. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not transfer or exchange any Note selected for redemption, except the unredeemed part thereof if the Note is redeemed in part, or transfer or exchange any Notes for a period of 15 days before a selection of Notes to be redeemed.

 

	
			8.

				
			Persons Deemed Owners.

			

 

The registered Holder of this Note shall be treated as the owner of it for all purposes.

 

	
			9.

				
			Unclaimed Money.

			

 

If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent will pay the money back to the Company at its request. After that, Holders entitled to the money must look to the Company for payment unless an abandoned property law designates another person.

 

A-6

 

 

	
			10.

				
			Amendment, Supplement, Waiver.

			

 

Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the outstanding Notes and any past default or compliance with any provision relating to the Notes may be waived in a particular instance with the consent of the Holders of a majority in principal amount of the outstanding Notes. Without the consent of any Holder, the Company and the Trustee may amend or supplement the Indenture or the Notes to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to remove a Guarantor which, in accordance with the terms of the Supplemental Indenture, ceases to be liable in respect of its Guarantee, or to make any other change, provided such action does not adversely affect the rights of any Holder.

 

	
			11.

				
			Successor Corporation.

			

 

When a successor corporation assumes all the obligations of its predecessor under the Notes and the Indenture, the predecessor corporation will be released from those obligations, except that a lease of all or substantially all its assets does not release the predecessor from its obligations to pay the principal of and premium, if any, and interest, if any, on the Notes.

 

	
			12.

				
			Trustee Dealings With Company.

			

 

U.S. Bank National Association, the Trustee under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not Trustee.

 

	
			13.

				
			No Recourse Against Others.

			

 

A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Notes or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Notes.

 

	
			14.

				
			Discharge of Indenture.

			

 

The Indenture contains certain provisions pertaining to defeasance, which provisions shall for all purposes have the same effect as if set forth herein.

 

A-7

 

 

	
			15.

				
			Authentication.

			

 

This Note shall not be valid until the Trustee signs the certificate of authentication on the other side of this Note.

 

	
			16.

				
			Abbreviations.

			

 

Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

 

A-8

 

 

ASSIGNMENT FORM

 

If you, the Holder, want to assign this Note, fill in the form below:

 

I or we assign and transfer this Note to:

 

 

 

 

 

Insert assignee’s social security or tax ID number)

 

 

 

 

 

 

(Print or type assignee’s name, address, and zip code)

 

 

and irrevocably appoint:

 

 

agent to transfer this Note on the books of the Company. The agent may substitute another to act for him.

 

 

 

 

 

 

	
			Date: 

				 	 	
			Your signature:

				 	 
	 	
			 

				 	 	
			(Sign exactly as your name appears

			on the other side of this Note)

				 

 

A-9

 

 

	Signature Guarantee:	 

 

 

SIGNATURE GUARANTEE

 

Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Registrar, 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 Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

 

A-10

 

 

[FORM OF NOTATION ON SECURITY RELATING TO GUARANTEE]

 

GUARANTEE

 

The undersigned (the “Guarantors”) have fully and unconditionally guaranteed, jointly and severally (such guarantee by each Guarantor being referred to herein as the “Guarantee”) (i) the due and punctual payment of the principal of and interest on the Notes, whether at maturity, by acceleration or otherwise, the due and punctual payment of interest on the overdue principal and interest, if any, on the Notes, to the extent lawful, and the due and punctual performance of all other obligations of the Company to the Holders or the Trustee all in accordance with the terms set forth in Article Six of the Supplemental Indenture and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise.

 

No past, present or future stockholder, officer, director, employee or incorporator, as such, of any of the Guarantors shall have any liability under the Guarantee by reason of such person’s status as stockholder, officer, director, employee or incorporator. Each holder of a Note by accepting a Note waives and releases all such liability. This waiver and release are part of the consideration for the issuance of the Guarantees.

 

Each holder of a Note by accepting a Note agrees that any Guarantor named below shall have no further liability with respect to its Guarantee if such Guarantor otherwise ceases to be liable in respect of its Guarantee in accordance with the terms of the Supplemental Indenture.

 

A-11

 

 

The Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Securities upon which the Guarantee is noted shall have been executed by the Trustee under the Supplemental Indenture by the manual signature of one of its authorized officers.

 

M.D.C. LAND CORPORATION

RAH OF FLORIDA, INC.

RICHMOND AMERICAN CONSTRUCTION, INC.

RICHMOND AMERICAN HOMES OF ARIZONA, INC.

RICHMOND AMERICAN HOMES OF COLORADO, INC.

RICHMOND AMERICAN HOMES OF ILLINOIS, INC.

RICHMOND AMERICAN HOMES OF MARYLAND, INC.

RICHMOND AMERICAN HOMES OF NEVADA, INC.

RICHMOND AMERICAN HOMES OF NEW JERSEY, INC.

RICHMOND AMERICAN HOMES OF OREGON, INC.

RICHMOND AMERICAN HOMES OF PENNSYLVANIA, INC.

RICHMOND AMERICAN HOMES OF UTAH, INC.

RICHMOND AMERICAN HOMES OF VIRGINIA, INC.

RICHMOND AMERICAN HOMES OF WASHINGTON, INC.

 

 

By:                                                                                           

     Name:     

     Title:

 

A-12

 

 

RICHMOND AMERICAN HOMES OF FLORIDA, LP

By: RAH OF FLORIDA, INC., its general partner

 

 

By:                                                                                           

     Name:     

     Title:

 

A-13

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