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Exhibit 10.16
▇▇▇▇▇▇ NATIONAL CORPORATION
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$15,000,000
CREDIT AGREEMENT
dated as of February 23, 1998
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NATIONSBANK, N.A.,
as Agent
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SECTION 1 DEFINITIONS............................................................1
1.1 Defined Terms.......................................................1
1.2 Other Definitional Provisions......................................12
SECTION 2 AMOUNT AND TERMS OF COMMITMENTS.......................................13
2.1 Commitments........................................................13
2.2 Procedure for Borrowing............................................13
2.3 Use of Proceeds of Loans...........................................14
SECTION 3 PROVISIONS RELATING TO THE EXTENSIONS OF CREDIT;......................14
3.1 Repayment of Loans; Evidence of Indebtedness.......................14
3.2 Commitment Fee.....................................................15
3.3 Agent's Fees.......................................................15
3.4 Optional Prepayments...............................................15
3.5 Optional Termination or Reduction of Commitments...................15
3.6 Mandatory Reduction of Commitments and Prepayments.................16
3.7 Application of Prepayments.........................................16
3.8 Prepayment Premium.................................................16
3.9 Conversion and Continuation Options................................17
3.10 Minimum Amounts and Maximum Number of Tranches.....................18
3.11 Interest Rates and Payment Dates...................................18
3.12 Computation of Interest and Fees...................................18
3.13 Inability to Determine Interest Rate...............................19
3.14 Pro Rata Treatment and Payments....................................19
3.15 Illegality.........................................................20
3.16 Requirements of Law................................................21
3.17 Taxes..............................................................22
3.18 Indemnity..........................................................23
3.19 Change of Lending Office...........................................24
SECTION 4 REPRESENTATIONS AND WARRANTIES.........................................24
4.1 Financial Condition................................................24
4.2 No Change..........................................................25
4.3 Disclosure.........................................................25
4.4 Corporate Existence; Compliance with Law...........................25
4.5 Corporate Power, Authorization, Enforceable Obligations............25
4.6 No Legal Bar.......................................................26
4.7 No Material Litigation.............................................26
4.8 No Default.........................................................26
4.9 Ownership of Property; Liens.......................................26
4.10 Intellectual Property..............................................26
4.11 No Burdensome Restrictions.........................................26
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4.12 Taxes..............................................................26
4.13 Federal Regulations................................................27
4.14 ERISA..............................................................27
4.15 Investment Company Act; Other Regulations..........................27
4.16 Subsidiaries.......................................................28
4.17 Environmental Matters..............................................28
4.18 Solvency...........................................................29
4.19 Note Pledge Agreement..............................................29
SECTION 5 CONDITIONS PRECEDENT..................................................29
5.1 Conditions to Initial Extensions of Credit.........................29
5.2 Conditions to Each Extension of Credit.............................31
SECTION 6 AFFIRMATIVE COVENANTS.................................................32
6.1 Financial Statements...............................................32
6.2 Certificates; Other Information....................................32
6.3 Payment of Excess Proceeds.........................................33
6.4 Payment of Obligations.............................................33
6.5 Conduct of Business and Maintenance of Existence...................34
6.6 Maintenance of Property; Insurance.................................34
6.7 Inspection of Property; Books and Records; Discussions.............34
6.8 Notices............................................................35
6.9 Environmental Laws.................................................35
6.10 Further Assurances; Additional Collateral..........................36
6.11 Additional Subsidiaries............................................36
SECTION 7 NEGATIVE COVENANTS....................................................36
7.1 Financial Condition Covenants......................................36
7.2 Limitation on Indebtedness and Preferred Stock.....................37
7.3 Limitation on Liens................................................37
7.4 Limitation on Guarantee Obligations................................38
7.5 Limitation on Fundamental Changes..................................38
7.6 Limitation on Sale of Assets.......................................38
7.7 Limitation on Dividends............................................38
7.8 Limitation on Investments, Loans and Advances......................39
7.9 Limitation on Transactions with Affiliates.........................39
7.10 Limitations on Sales and Leasebacks................................39
7.12 Limitation on Changes in Fiscal Year...............................39
7.13 Limitation on Lines of Business....................................40
SECTION 8 EVENTS OF DEFAULT.....................................................40
SECTION 9 THE AGENT.............................................................42
9.1 Appointment........................................................42
9.2 Delegation of Duties...............................................42
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9.3 Exculpatory Provisions.............................................43
9.4 Reliance by Agent..................................................43
9.5 Notice of Default..................................................43
9.6 Non-Reliance on Agent and Other Lenders............................44
9.7 Indemnification....................................................44
9.8 Agent in its Individual Capacity...................................45
9.9 Successor Agent....................................................45
SECTION 10 MISCELLANEOUS.........................................................45
10.1 Amendments and Waivers.............................................45
10.2 Releases of Collateral Security and Guarantee Obligations..........46
10.3 Notices............................................................46
10.4 No Waiver; Cumulative Remedies.....................................47
10.5 Survival of Representations and Warranties.........................48
10.6 Payment of Expenses and Taxes......................................48
10.7 Termination........................................................48
10.8 Successors and Assigns; Participations and Assignments.............49
10.9 Adjustments; Set-off...............................................51
10.10 Counterparts.......................................................52
10.11 Severability.......................................................52
10.12 Integration........................................................52
10.13 Governing Law......................................................52
10.14 Submission To Jurisdiction; Waivers................................52
10.15 Acknowledgments....................................................53
10.16 Waivers of Jury Trial..............................................53
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SCHEDULES
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Schedule I Addresses for Notices
Schedule II Commitments and Commitment Percentages
Schedule III Subsidiaries
Schedule IV Indebtedness
Schedule V Liens
Schedule VI Guarantees
Schedule VII Existing Investments
EXHIBITS
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Exhibit A Form of Note
Exhibit B-1 Form of HomeMax, Inc. Group
Exhibit B-2 Form of ▇▇▇▇▇▇ Homes, Inc. Guarantee
Exhibit C Form of Note Pledge Agreement
Exhibit D-1 Form of Notice of Borrowing (Drawings)
Exhibit D-2 Form of Notice of Borrowing (Continuations)
Exhibit D-3 Form of Notice of Borrowing (Conversions)
Exhibit E Form of Officer's Compliance Certificate
Exhibit F Form of Opinion of Frost & ▇▇▇▇▇▇, LLP.
Exhibit G Form of Assignment and Acceptance
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CREDIT AGREEMENT, dated as of February 23, 1998, among:
(a) ▇▇▇▇▇▇ National Corporation, (the "BORROWER");
(b) the banks and other financial institutions from time to time parties
to this Agreement, (the "LENDERS"); and
(c) NATIONSBANK, N.A. as agent (in such capacity, the "AGENT") for the
Lenders hereunder.
WITNESSETH:
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WHEREAS, the Borrower has requested that the Lenders make
available to it credit facilities of up to $15,000,000.00 in the aggregate upon
the terms, and subject to the conditions, set forth herein to provide financing
for the ongoing working capital and for the other general corporate purposes of
the Borrower's wholly-owned subsidiary, HomeMax, Inc.;
WHEREAS, the Agent and the Lenders are willing to provide such
financing to the Borrower only upon the terms and subject to the conditions set
forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto hereby agree as follows:
SECTION 1 DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms shall
have the following meanings:
"ABR": for any day, a rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to the greater of (i) the Prime Rate in effect on
such day and (ii) the Federal Funds Effective Rate in effect on such day plus
1/2 of 1%. If for any reason the Agent shall have determined (which
determination shall be conclusive absent manifest error) that the Agent is
unable to ascertain the Federal Funds Effective Rate for any reason, including
the inability or failure of the Agent to obtain sufficient quotations in
accordance with the terms thereof, the ABR shall be determined without regard to
clause (ii) of the first sentence of this definition, until the circumstances
giving rise to such inability no longer exist. Any change in the ABR due to a
change in the Prime Rate or Federal Funds Effective Rate shall be effective on
the effective date of such change in the Prime Rate or Federal Funds Effective
Rate, respectively.
"ABR LOANS": Loans the rate of interest applicable to which is based upon
the ABR.
"ACQUIRED LAND PARCEL": any interests in real properties and improvements
thereon acquired by HomeMax or any of its Subsidiaries under the HM Facility.
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"AGENT": as defined in the preamble to this Agreement.
"AFFILIATE": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with, such Person. For purposes of this definition,
"control" of a Person means the power, directly or indirectly, either to (a)
vote 5% or more of the securities having ordinary voting power for the election
of directors of such Person or (b) direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
"AGGREGATE OUTSTANDING EXTENSIONS OF CREDIT": as to any Lender at any
time, an amount equal to the aggregate principal amount of all Loans made by
such Lender then outstanding.
"AGREEMENT": this Credit Agreement, as amended, supplemented or otherwise
modified from time to time.
"APPLICABLE MARGIN": for each Type of Loan outstanding, the rate per annum
set forth below:
ABR Eurodollar Rate
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125% 1.75%
"ASSIGNEE": as defined in subsection 10.8(c).
"AVAILABLE COMMITMENT": as to any Lender, at any time an amount equal to
the excess, if any, of (a) the lesser of (i) the Commitment of such Lender or
(ii) the amount of the HM Note then outstanding minus (b) the Aggregate
Outstanding Extensions of Credit of such Lender.
"BANK DEFAULT": means (i) the refusal (which has not been retracted) of a
Lender to make available an amount equal to its Lender's Commitment Percentage
of any borrowing or (ii) a Lender having notified the Agent and or the Borrower
that such Lender does not intend to comply with the obligations under subsection
2.1 in the case of either (i) or (ii) above including as a result of the
appointment of a receiver or conservator with respect to such Lender at the
direction or request of any regulatory agency or authority.
"BUSINESS": as defined in subsection 4.17(b).
"BUSINESS DAY": a day other than a Saturday, Sunday or other day on which
commercial banks in Charlotte, North Carolina are authorized or required by law
to close; PROVIDED that, with respect to matters relating to Eurodollar Loans,
the term "BUSINESS DAY" shall mean a day other than a Saturday, Sunday or other
day on which commercial banks in Charlotte, North Carolina or London, England,
are authorized or required by law to close.
"CAPITAL STOCK": any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation) and any
and all warrants or options to purchase any of the foregoing.
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"CASH EQUIVALENTS": (a) securities with maturities of one year or less
from the date of acquisition issued or fully guaranteed or insured by the United
States Government or any agency thereof, (b) certificates of deposit and
eurodollar time deposits with maturities of one year or less from the date of
acquisition and overnight bank deposits of any Lender or of any commercial bank
having capital and surplus in excess of $100,000,000, (c) repurchase obligations
of any Lender or of any commercial bank or investment bank satisfying the
requirements of clause (b) of this definition, having a term of not more than
thirty (30) days with respect to securities issued or fully guaranteed or
insured by the United States Government or any agency thereof, (d) commercial
paper issued in the United States which is rated at least A-1 by S&P or P-1 by
▇▇▇▇▇'▇, (e) securities with maturities of one (1) year or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States, by any political subdivision or taxing authority of any
such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government are rated at least A by S&P or A by
▇▇▇▇▇'▇, (f) securities with maturities of one year or less from the date of
acquisition backed by standby letters of credit issued by any Lender or any
commercial bank satisfying the requirements of clause (b) of this definition or
(g) shares of money market mutual or similar funds which invest substantially
exclusively in assets satisfying the requirements of clauses (a) through (f) of
this definition.
"CHANGE IN CONTROL": any transaction or group of transactions after
which (i) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III (together with his executors, administrators or
heirs in the event of his death) shall directly or indirectly own less than
twenty-five percent (25%) of Borrower's issued and outstanding common stock, or
(ii) another Person has acquired beneficial ownership of Borrower's issued and
outstanding common stock in an amount greater than the amount owned directly or
indirectly in the aggregate by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III (together with his
executors, administrators or heirs in the event of his death).
"CLOSING DATE": the date on which the conditions precedent set forth in
subsection 5.1 shall be satisfied.
"CODE": the Internal Revenue Code of 1986, as amended from time to
time.
"COLLATERAL": as defined in the Note Pledge Agreement.
"COMMITMENT": as to any Lender, the obligation of such Lender to make
Loans to the Borrower hereunder in an aggregate principal amount at any one time
outstanding not to exceed the amount set forth opposite such Lender's name on
SCHEDULE II; as the same may be reduced from time to time pursuant to
subsections 3.4, 3.5 and 3.6; as to all Lenders collectively, the "COMMITMENTS."
"COMMITMENT FEE": a fee of 0.25% of the average daily unused portion of
the Facility from the Closing Date until the Maturity Date.
"COMMITMENT PERCENTAGE": as to any Lender at any date, the percentage
which such Lender's Commitment then constitutes of the aggregate Commitments
(or, at any time after the Commitments shall have expired or terminated, the
percentage which the Aggregate Outstanding
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Extensions of Credit of such Lender then constitutes of the Aggregate
Outstanding Extensions of Credit of all Lenders).
"COMMITMENT PERIOD": the period from and including the date hereof to
but not including the Maturity Date or such earlier date on which the
Commitments shall terminate as provided herein.
"COMMONLY CONTROLLED ENTITY": an entity, whether or not incorporated,
which is under common control with the Borrower within the meaning of Section
4001 of ERISA or is part of a group which includes the Borrower and which is
treated as a single employer under Section 414 of the Code.
"CONSOLIDATED FIXED CHARGES": for any fiscal period, the sum (without
duplication) of the following determined on a consolidated basis: (a) the amount
of interest expense of the Borrower and its Subsidiaries both expensed and
capitalized for such period, (b) required cash amortization of Indebtedness for
such period and discount or premium related to any such Indebtedness for such
period, whether expensed or capitalized and (c) the aggregate amount of fixed
and contingent rentals payable by the Borrower and its Subsidiaries for such
period with respect to leases of real and personal property.
"CONSOLIDATED NET INCOME" or "CONSOLIDATED NET LOSS": for any fiscal
period, the amount which, in conformity with GAAP, would be set forth opposite
the caption "net income" (or any like caption) or "net loss" (or any like
caption), as the case may be, on a consolidated statement of earnings of the
Borrower and its Subsidiaries for such fiscal period.
"CONSOLIDATED NET WORTH": for any fiscal period, the sum of (a) Capital
Stock and additional paid-in capital plus (b) retained earnings (or minus
accumulated deficits) of the Borrower and its Subsidiaries determined on a
consolidated basis.
"CONSOLIDATED TANGIBLE NET WORTH": for any fiscal period, the sum of
(a) Consolidated Net Worth MINUS (b) any amounts which would be considered
intangible assets on a consolidated balance sheet of the Borrower and its
Subsidiaries (including without limitation, copyrights, patents, trademarks,
contract rights, development costs and goodwill).
"CONTRACTUAL OBLIGATION": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"DEBT": of any Person, at any date, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) the deferred purchase price
of property or services (other than current trade liabilities incurred in the
ordinary course of business and payable in accordance with customary practices),
(c) any other indebtedness of such Person which is evidenced by a note, bond,
debenture or similar instrument, and (d) all Debt of the types referred to in
clauses (a) through (c) above which is guaranteed directly or indirectly by such
Person.
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"DEFAULT": any of the events specified in Section 8, whether or not any
requirement for the giving of notice, the lapse of time, or both, or any other
condition, has been satisfied.
"DEFAULTING LENDER": any Lender with respect to which a Bank Default is
in effect.
"DOLLARS" and "$": dollars in lawful currency of the United States of
America.
"EBITDA": for any fiscal period for any Person, the Consolidated Net
Income or Consolidated Net Loss, as the case may be, for such fiscal period,
after excluding therefrom the amount of extraordinary gain and restoring thereto
(a) depreciation and amortization, (b) the amount of interest expense of such
Person, determined on a consolidated basis, for such period on the aggregate
principal amount of their consolidated Indebtedness and any fees (including
commitment and administrative fees) with respect to such Indebtedness, (c) the
amount of tax expense of such Person, determined on a consolidated basis for
such period and (d) the aggregate amount of fixed and contingent rentals payable
by the Borrower and its Subsidiaries, determined on a consolidated basis for
such period, with respect to leases of real and personal property.
"ENVIRONMENTAL LAWS": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees
or other Requirements of Law (including common law) regulating, relating to or
imposing liability or standards of conduct concerning pollution or protection of
the environment (including protection of human health from environmental
hazards), as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"EUROCURRENCY RESERVE REQUIREMENTS": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates (expressed as
a decimal or fraction) of reserve requirements in effect on such day (including,
without limitation, basic, supplemental, marginal and emergency reserves under
any regulations of the Board of Governors of the Federal Reserve System or other
Governmental Authority having jurisdiction with respect thereto) dealing with
reserve requirements prescribed for eurocurrency funding (currently referred to
as "Eurocurrency Liabilities" in Regulation D of such Board) maintained by a
member bank of such System.
"EURODOLLAR BASE RATE": the rate per annum determined by the Agent to
be the average of the respective rates per annum posted by each of the principal
London office of banks posting rates as displayed on the Telerate screen, page
3750 or such other page as may replace such page on such service for the purpose
of displaying the London interbank offered rate of major banks for deposits in
US dollars at approximately 11:00 A.M. (London Time) two (2) Business Days prior
to the beginning of the relevant Interest Period, as specified in the Notice of
Borrowing (and rounded, if necessary, upward to the next whole multiple of 1/16
of 1%); PROVIDED that, to the extent an interest rate is not ascertainable
pursuant to the foregoing provisions of this definition, the "Eurodollar Base
Rate" shall be the interest rate per annum determined by the Agent to be the
average (rounded, if necessary, upward to the nearest whole multiple of 1/16th
of 1% per annum, if such average is not such a multiple) of the rates per annum
at which deposits in Dollars are offered for such relevant Interest Period to
major banks in the London interbank
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market in London, England by such other major banks in the London interbank
market in London, England at approximately 11:00 A.M. (London time) on the date
which is two (2) Business Days prior to the beginning of such Interest Period.
"EURODOLLAR LOANS": Loans the rate of interest applicable to which is
based upon the Eurodollar Rate.
"EURODOLLAR RATE": with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, a rate per annum determined for such day in
accordance with the following formula (rounded, if necessary, upward to the
nearest whole multiple of 1/16th of 1%).
Eurodollar Base Rate
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1.00 - Eurocurrency Reserve Requirements
"EVENT OF DEFAULT": any of the events specified in Section 8, PROVIDED
that any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"FACILITY": as provided for in Section 2 hereof.
"FEDERAL FUNDS EFFECTIVE RATE": for any day, the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Agent from three
Federal funds brokers of recognized standing selected by it.
"FINANCING LEASE": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
"GAAP": generally accepted accounting principles in the United States
of America as in effect from time to time.
"GOVERNMENTAL AUTHORITY": any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"GUARANTEE": a HomeMax Guarantee, a ▇▇▇▇▇▇ Homes Guarantee and each
other guarantee from time to time made in favor of the Agent to secure all or
any part of the obligations of the Borrower hereunder as amended, supplemented
or otherwise modified from time to time; collectively, the "GUARANTEES".
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"GUARANTEE OBLIGATION": as to any Person (the "GUARANTEEING PERSON"),
any obligation of the guaranteeing person or another Person (including, without
limitation, any bank under any letter of credit) to induce the creation of which
the guaranteeing person has issued a reimbursement, counter indemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "PRIMARY OBLIGATIONS")
of any other third Person (the "PRIMARY OBLIGOR") in any manner, whether
directly or indirectly, including, without limitation, any obligation of the
guaranteeing person incurred for the purpose of providing credit support,
whether or not contingent, including, without limiting the generality of the
foregoing, any agreement to indemnify or hold harmless any other Person, any
performance bond or other suretyship arrangement and any form of assurance
against loss, except endorsement of negotiable instruments or other instruments
for deposit or collection in the ordinary course of business.
"GUARANTOR": any Person delivering a Guarantee.
"HM FACILITY": the $12,000,000 credit facility described in the Credit
Agreement dated as of the date hereof (as amended, supplemented or otherwise
modified from time to time the "HM CREDIT AGREEMENT") by and among HomeMax,
Inc., as borrower, the Lenders from time to time party thereto and Nationsbank,
N.A. as agent for such lenders.
"HM NOTE": the promissory note evidencing an amount payable from
HomeMax to the Borrower, from time to time, with respect to any intercompany
loans made by the Borrower to HomeMax which use all or a portion of the proceeds
of this Facility, in form and substance satisfactory to the Agent as the same
may be amended, supplemented or otherwise modified from time to time.
"HOMEMAX" HomeMax, Inc., an Ohio corporation and a Subsidiary of the
Borrower.
"HOMEMAX GUARANTEE": each guarantee to be executed and delivered by
HomeMax and its Subsidiaries in the form of EXHIBIT B-1, as the same may be
amended, supplemented or otherwise modified from time to time.
"INDEBTEDNESS": of any Person, at any date, without duplication, (a)
all indebtedness of such Person for borrowed money, (b) the deferred purchase
price of property or services (other than current trade liabilities incurred in
the ordinary course of business and payable in accordance with customary
practices), (c) any other indebtedness of such Person which is evidenced by a
note, bond, debenture or similar instrument, (d) all obligations of such Person
under Financing Leases, (e) all obligations of such Person in respect of letters
of credit and acceptances and letters of credit issued or created for the
account of such Person (including without limitation all issued and outstanding
letters of credit), (f) all liabilities secured by any Lien on any property
owned by such Person even though such Person has not assumed or otherwise become
liable for the payment thereof, (g) all obligations of such Person in respect of
surety and appeal bonds, performance bonds and other obligations of a like
nature and (h) all Indebtedness of the types referred to in clauses (a) through
(g) above which is guaranteed directly or indirectly by such Person.
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"INSOLVENCY": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"INSOLVENT": pertaining to a condition of Insolvency.
"INTEREST PAYMENT DATE": (a) as to any ABR Loan, the last Business Day
of each calendar month, (b) as to any Eurodollar Loan having an Interest Period
of three months or less, the last day of such Interest Period and (c) as to any
Eurodollar Loan having an Interest Period of four months, the day which is three
months (or a whole multiple thereof) after the first day of such Interest Period
and the last day of such Interest Period.
"INTEREST PERIOD": with respect to any Eurodollar Loan: (a) initially,
the period commencing on the borrowing or conversion date, as the case may be,
with respect to such Eurodollar Loan and ending one, two, three or four months
thereafter, as selected by the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto and (b) thereafter,
each period commencing on the last day of the next preceding Interest Period
applicable to such Eurodollar Loan and ending one, two, three or four months
thereafter, as selected by the Borrower in a Notice of Borrowing delivered to
the Lender by 10:00 A.M., Charlotte, North Carolina time, not less than three
(3) Business Days prior to the last day of the then current Interest Period with
respect thereto; PROVIDED that, all of the foregoing provisions relating to
Interest Periods are subject to the following:
(1) if any Interest Period pertaining to a Eurodollar Loan
would otherwise end on a day that is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless the
result of such extension would be to carry such Interest Period into
another calendar month in which event such Interest Period shall end on
the immediately preceding Business Day;
(2) any Interest Period that would otherwise extend beyond the
Maturity Date shall end on the Maturity Date;
(3) any Interest Period pertaining to a Eurodollar Loan that
begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Business Day
of a calendar month; and
(4) the Borrower shall select Interest Periods so as not to
require a payment or prepayment of any Eurodollar Loan during an
Interest Period for such Loan.
"LIEN": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any Financing Lease
having substantially the same economic effect as any of the foregoing).
"LOANS": as defined in subsection 2.1.
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"LOAN DOCUMENTS": this Agreement, the Notes, the Note Pledge Agreement,
the Guarantees and any other instruments, certificates, agreements or documents
delivered or contemplated to be delivered hereunder or thereunder or in
connection herewith or therewith, as the same may be amended, supplemented or
otherwise modified from time to time.
"LOAN PARTIES": the Borrower, HomeMax and its Subsidiaries and ▇▇▇▇▇▇
Homes and with respect to Section 8, the Subsidiaries of ▇▇▇▇▇▇ Homes.
"MAJORITY LENDERS": at any time Lenders having Commitments (or if
Commitments have terminated, Aggregate Outstanding Extensions of Credit) which
aggregate more than 51% of the sum of the amount of the Commitments of the
Non-Defaulting Lenders (or Aggregate Outstanding Extensions of Credit of the
Non-Defaulting Lenders as the case may be) then in effect, provided that
Majority Lenders shall in no way consist of less than two (2) Lenders.
"MATERIAL ADVERSE AMOUNT": an amount payable by the Borrower and/or its
Subsidiaries in excess of $100,000 for remedial costs, non-routine compliance
costs, compensatory damages, punitive damages, fines, penalties or any
combination thereof.
"MATERIAL ADVERSE EFFECT": a material adverse effect on (a) the
business, operations, property, financial condition or prospects of the Borrower
and its Subsidiaries taken as a whole, (b) the validity or enforceability of
this or any of the other Loan Documents or (c) the rights or remedies of the
Agent or the Lenders hereunder or under any of the other Loan Documents.
"MATERIALS OF ENVIRONMENTAL CONCERN": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Law, including, without limitation, asbestos,
polychlorinated biphenyls and urea-formaldehyde insulation.
"MATURITY DATE": March 1, 2000.
"MOODY'S": ▇▇▇▇▇'▇ Investors Service, Inc.
"MULTIEMPLOYER PLAN": a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"NON-DEFAULTING LENDER": any Lender other than a Defaulting Lender.
"NON-EXCLUDED TAXES": as defined in subsection 3.17(a).
"NOTE": as defined in subsection 3.1(e).
"NOTE PLEDGE AGREEMENT": the Note Pledge Agreement to be executed and
delivered by a duly authorized officer of the Borrower, substantially in the
form of Exhibit C, as the same may be amended, supplemented or otherwise
modified from time to time.
"NOTICE OF BORROWING": means (a) with respect to a request for a
borrowing hereunder, a request in the form of EXHIBIT D-1 hereto, (b) with
respect to a request for continuation of a
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Eurodollar Loan hereunder, a request in the form of EXHIBIT D-2 hereto, (c) with
respect to a request for conversion of or to a Eurodollar Loan hereunder, a
request in the form of EXHIBIT D-3 hereto, each as delivered to the Agent by a
Responsible Officer of the Borrower.
"PARTICIPANTS": as defined in subsection 10.8(b).
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.
"PERSON": an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other legal entity.
"PLAN": at a particular time, any employee benefit plan or other plan
established, maintained or contributed to by the Borrower or a Commonly
Controlled Entity that is covered by Title IV of ERISA.
"PRIME RATE": the rate of interest per annum publicly announced from
time to time by the Agent at its principal office as its prime rate on a
particular day in effect for domestic (United States) commercial loans; such
rate is not necessarily intended to be the lowest rate of interest charged by
the Lenders in connection with extensions of credit. Each change in the Prime
Rate shall be effective on the date such change is publicly announced.
"PROCEEDS": with respect to any Proceeds Event, the gross cash
consideration, and all cash proceeds (as and when received) of non-cash
consideration (including without limitation, any such cash proceeds in the
nature of principal and interest payments on account of promissory notes or
similar obligations), received by the Borrower or any other Loan Party in
connection with such Proceeds Event.
"PROCEEDS EVENT": (a) the issuance or sale of any equity securities by
the Borrower or any of the other Loan Parties to any Person, other than (i) the
issuance or sale of any equity securities to the Borrower by any of the other
Loan Parties, (ii) the issuance of Capital Stock upon the sale or exercise of
stock options, (iii) the issuance and sale of Capital Stock under employee stock
purchase plans, (iv) the issuance and sale of Capital Stock and/or stock options
under employee stock ownership and incentive plans and similar programs or
individual arrangements;
(b) the sale, transfer or other disposition by the Borrower or any of
the other Loan Parties of any real or personal, tangible or intangible, property
(other than inventory sold, transferred or otherwise disposed of in the ordinary
course of business) of the Borrower or such Loan Party to any Person (other than
to the Borrower or any of the other Loan Parties);
(c) the sale, transfer or other disposition by the Borrower or any of
its Subsidiaries of any Capital Stock of the Borrower or such Subsidiary to any
Person (other than to the Borrower or any of the other Loan Parties); and
(d) the whole or partial prepayment or payment by HomeMax or its
Subsidiaries to the Borrower with respect to the HM Note.
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"PROPERTIES": as defined in subsection 4.17(a).
"REGULATION G": Regulation G of the Board of Governors of the Federal
Reserve System as in effect from time to time.
"REGULATION U": Regulation U of the Board of Governors of the Federal
Reserve System as in effect from time to time.
"REORGANIZATION": with respect to any Multiemployer Plan, the condition
that such plan is in reorganization within the meaning of Section 4241 of ERISA.
"REPORTABLE EVENT": any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the thirty (30) day notice period is
waived under subsections .22, .25, .27 or .28 of PBGC Reg. ss.4043.
"REQUIREMENT OF LAW": as to any Person, the Articles or Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"RESPONSIBLE OFFICER": the chief executive officer, the president, an
executive vice president, the chief financial officer or the treasurer of the
Borrower.
"RESTRICTED PAYMENTS": as defined in subsection 7.7.
"S&P": Standard and Poor's Ratings Group, a division of McGraw Hill
Companies Inc.
"SEC": means the United States Securities and Exchange Commission, or
any Governmental Authority succeeding to any of its principal functions.
"SECURED OBLIGATIONS": shall be the collective reference to the unpaid
principal of and interest on the Notes and all other obligations and liabilities
(including, without limitation, interest accruing at the then applicable rate
provided in this Agreement after the maturity of the Loans and interest accruing
at the then applicable rate provided in this Agreement after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to the Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding), of the
Borrower to the Agent and the Lenders, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, this Agreement, the Notes and
the other Loan Documents or any other document made, delivered or given in
connection therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all reasonable fees and disbursements of counsel
to the Agent or to the Lenders that are required to be paid by the Borrower
pursuant to the terms of this Agreement or any other Loan Document).
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"SINGLE EMPLOYER PLAN": any Plan which is covered by Title IV of ERISA,
but which is not a Multiemployer Plan.
"SUBSIDIARY": as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise qualified, all references to a "Subsidiary" or
to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries
of the Borrower.
"TRANCHE": the collective reference to Eurodollar Loans having then
current Interest Periods which began on the same date and end on the same later
date (whether or not such Loans shall originally have been made on the same
day).
"TRANSFEREE": as defined in subsection 10.8(f).
"TYPE": as to any Loan, as the context requires, its nature as (i) a
Eurodollar Loan or (ii) an ABR Loan.
"UNIFORM CUSTOMS": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No. 500,
as the same may be amended from time to time.
"▇▇▇▇▇▇ HOMES": ▇▇▇▇▇▇ Homes, Inc., an Ohio corporation and a
wholly-owned Subsidiary of the Borrower.
"▇▇▇▇▇▇ HOMES GUARANTEE": the guarantee to be executed and delivered by
▇▇▇▇▇▇ Homes, substantially in the form of EXHIBIT B-2, as the same may be
amended, supplemented or otherwise modified from time to time.
"ZH FACILITY": the $87,500,000 credit facilities described in the
amended and restated credit agreement (as amended, supplemented or otherwise
modified from time to time, the "ZH CREDIT AGREEMENT") by and among ▇▇▇▇▇▇
Homes, Inc., and ▇▇▇▇▇▇ Holdings, Inc. as borrowers, Hearthside Homes, LLC,
▇▇▇▇▇▇ National Corporation, ▇▇▇▇▇▇ Homes of Indiana L.L.C. and ▇▇▇▇▇▇ Homes
Kentucky, LLC., as guarantors, the banks from time to time party thereto and PNC
Bank National Association, as agent for the banks and NationsBank, N.A. and The
First National Bank of Chicago, as co-agents.
1.2 OTHER DEFINITIONAL PROVISIONS
(a) Unless otherwise specified therein, all terms defined in this
Agreement shall have the defined meanings when used in any Notes or any
certificate or other document made or delivered pursuant hereto.
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(b) Unless otherwise specified herein, all accounting terms used herein
(and in any other Loan Document and any certificate or other document made or
delivered pursuant hereto or thereto) shall be interpreted, all accounting
determinations shall be made, and all financial statements required to be
delivered hereunder shall be prepared, in accordance with GAAP as in effect from
time to time.
(c) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including" and the words
"to" and "until" each mean "to but excluding". Periods of days referred to in
this Agreement shall be counted in calendar days unless Business Days are
expressly prescribed. Any period determined hereunder by reference to a month or
months or year or years shall end on the day in the relevant calendar month in
the relevant year, if applicable, immediately preceding the date numerically
corresponding to the first day of such period, PROVIDED, that if such period
commences on the last day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month during which such period is
to end), such period shall, unless otherwise expressly required by the other
provisions of this Agreement, end on the last day of the calendar month.
(e) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2 AMOUNT AND TERMS OF COMMITMENTS
2.1 COMMITMENTS
(a) Subject to the terms and conditions hereof, each Lender severally
agrees to make loans ("LOANS") immediately available to the Borrower from time
to time during the Commitment Period in an aggregate principal amount at any one
time outstanding which does not exceed such Lender's Commitment PROVIDED, that
no additional loan will exceed the Available Commitment. During the Commitment
Period the Borrower may use the Commitments by borrowing, prepaying the Loans in
whole or in part, and reborrowing, all in accordance with the terms and
conditions hereof.
(b) The Loans may from time to time be (i) Eurodollar Loans, (ii) ABR
Loans or (iii) a combination thereof, as determined by the Borrower and notified
to the Agent in accordance with subsections 2.2 and 3.9, PROVIDED that no Loan
shall be made as a Eurodollar Loan after the day that is one month prior to the
Maturity Date.
2.2 PROCEDURE FOR BORROWING. The Borrower may borrow under the
Commitments during the Commitment Period on any Business Day, PROVIDED that the
Borrower shall deliver to the Agent the Borrower's irrevocable Notice of
Borrowing which notice must be in writing or by telephone promptly confirmed in
writing prior to 11:00 A.M., Charlotte, North Carolina time,
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(a) three (3) Business Days prior to the requested borrowing date, if all or any
part of the requested Loans are to be initially Eurodollar Loans or (b) on the
day of the requested borrowing date, otherwise. Upon receipt of any such Notice
of Borrowing from the Borrower, the Agent shall promptly notify each Lender
thereof. Each Lender will make the amount of its pro rata share of each
borrowing available to the Agent for the account of the Borrower at the office
of the Agent specified in subsection 10.3 prior to 1:00 P.M., Charlotte, North
Carolina time on the borrowing date, in funds immediately available to the
Agent. Such borrowing will then be made available to the Borrower by the Agent
transferring to an account (which shall be maintained for such purpose by the
Agent) with the aggregate of the amounts made available to the Agent by the
Lenders and in like funds as received by the Agent.
2.3 USE OF PROCEEDS OF LOANS. The proceeds of the Loans shall be
utilized by the Borrower to provide financing for HomeMax for (a) working
capital and (b) other general corporate needs.
SECTION 3 PROVISIONS RELATING TO THE EXTENSIONS OF CREDIT;
FEES AND PAYMENTS
3.1 REPAYMENT OF LOANS; EVIDENCE OF INDEBTEDNESS
(a) The Borrower hereby unconditionally promises to pay to the Agent
for the account of each applicable Lender the then unpaid principal amount of
each Loan on the Maturity Date (or such earlier date on which the Loans become
due and payable pursuant to Section 8). The Borrower hereby further agrees to
pay interest on the unpaid principal amount of the Loans from time to time
outstanding from the date hereof until payment in full thereof at the rates per
annum, and on the dates, set forth in subsection 3.11.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing Indebtedness of the Borrower to the Lender
resulting from each loan of such Lender from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement.
(c) The Agent shall maintain the Register pursuant to subsection
10.8(d) and a subaccount therein for each Lender, in which shall be recorded (i)
the amount of each Loan made hereunder, the Type thereof and each Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to the Lenders hereunder
and (iii) the amount and date of any sum received by the Agent hereunder from
the Borrower.
(d) The entries made in the Register and the accounts of each Lender
maintained pursuant to subsection 10.8(d) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; PROVIDED, HOWEVER, that the
failure of the Agent or any Lender to maintain the Register or any such account,
or any error therein, shall not in any manner affect the obligation of the
Borrower to repay (with applicable interest) the Loans made to such Borrower by
the Lenders in accordance with the terms of this Agreement.
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(e) The Borrower agrees that, upon request of any Lender through the
Agent, the Borrower will execute and deliver to such Lender a promissory note of
the Borrower evidencing the Loans of such Lender, substantially in the form of
EXHIBIT A with appropriate insertions as to date and principal amount (a
"NOTE").
3.2 COMMITMENT FEE
(a) The Borrower agrees to pay the Commitment Fee.
(b) Such Commitment Fee shall be calculated on the basis of a 365- or a
366-day year, as the case may be.
(c) Such Commitment Fee shall be payable quarterly, in arrears, on the
last Business Day of each December, March, June and September and the Maturity
Date or such earlier date as the Commitments shall terminate as provided herein,
commencing on the first of such dates to occur after the date hereof.
3.3 AGENT'S FEES. The Borrower agrees to pay to the Agent, for its own
account, such fees as may be agreed from time to time between the Borrower and
the Agent, when and as due.
3.4 OPTIONAL PREPAYMENTS. The Borrower may at any time and from time to
time prepay the Loans, in whole or in part, without premium or penalty, upon at
least three (3) Business Days' (or, in the case of prepayments of ABR Loans, one
(1) Business Day's) notice to the Agent (which notice must be received by the
Agent prior to 11:00 A.M., Charlotte, North Carolina time, on the date upon
which such notice is due and shall be irrevocable except in connection with
prepayments that are contingent on sales of assets to the extent of such
contingency), specifying the date and amount of prepayment and whether the
prepayment is of Eurodollar Loans, ABR Loans or a combination thereof, and, if
of a combination thereof, the amount allocable to each. Upon receipt of any such
notice the Agent shall promptly notify each Lender thereof. If any such notice
is given and not withdrawn prior to the date upon which payment is made, the
amount specified in such notice shall be due and payable on the date specified
therein, together with any amounts payable pursuant to subsection 3.18 and,
except in the case of prepayments of Loans that are ABR Loans, accrued interest
to such date on the amount prepaid. Partial prepayments, in the case of Loans
that are ABR Loans, shall be in an aggregate principal amount of $500,000, or a
whole multiple in excess thereof. Partial prepayments in the case of Loans that
are Eurodollar Loans shall be in an aggregate principal amount of $500,000 or a
whole multiple of in excess thereof.
3.5 OPTIONAL TERMINATION OR REDUCTION OF COMMITMENTS. The Borrower
shall have the right, upon not less than three (3) Business Days' notice to the
Agent, to terminate the Commitments or, from time to time, to reduce the amount
of the Commitments; PROVIDED that (i) no such termination shall be permitted
with respect to the Commitments until after the termination of the HM Facility
pursuant to the terms and conditions of the HM Credit Agreement and (ii) no such
termination or reduction shall be permitted with respect to the Commitments (A)
to the extent that after giving effect thereto and to any repayments or
prepayments of the Loans made on the effective date thereof, the aggregate
principal amount of the Loans then outstanding
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would exceed the Commitments then in effect and (B) after the date that is three
(3) Business Days prior to the Commitment Termination Date. Any such reduction
shall be in an amount equal to $500,000 or a whole multiple in excess thereof
and shall reduce permanently the affected Commitments then in effect.
3.6 MANDATORY REDUCTION OF COMMITMENTS AND PREPAYMENTS
(a) If at any time the Aggregate Outstanding Extensions of credit
exceed the Available Commitment, the Borrower shall immediately repay the Loans,
such repayment to be in an aggregate amount equal to such excess.
(b) The Borrower shall, as promptly as is practicable (and, in any
event, within one (1) Business Day following the receipt thereof), repay the
Loans and permanently reduce the Commitments by the amount equal to the
aggregate amount of Proceeds received from any Proceeds Event; PROVIDED that no
reduction in the Commitments shall be required pursuant to this subsection
3.6(b) with respect to any Proceeds Event on account of the payment or
prepayment of the HM Note (as described in paragraph (d) of the definition of
Proceeds Event) and PROVIDED further that no such repayment and reduction shall
be due pursuant to this subsection 3.6(b) with respect to any Proceeds Event on
account of:
(i) the sale or other disposition of obsolete, inoperative,
surplus or worn out real or personal, tangible or intangible, property
(including without limitation, any property which is no longer used or
useful in the business of the Borrower or its Subsidiaries) in the
ordinary course of business and for fair market value; or
(ii) the sale, transfer or other disposition by the Borrower
or any other Loan Party of any real or personal, tangible or
intangible, property of the Borrower and or any other Loan Party, to
the extent that the Proceeds from such sale, transfer or other
disposition (in the aggregate with the Proceeds from all other sales,
transfers and other dispositions occurring during the fiscal year in
which such sale, transfer or other disposition occurred other than
those described in paragraph (i)) is less than $500,000.
3.7 APPLICATION OF PREPAYMENTS
(a) Any payments of the Loans and reductions of the Commitments made
pursuant to subsections 3.4, 3.5 or 3.6 shall be applied FIRST, to the
prepayment of ABR Loans and SECOND, to the prepayment of Eurodollar Loans.
(b) Any payments of the Loans and reductions of the Commitments made
pursuant to subsections 3.4, 3.5 or 3.6 shall not be applied to the prepayment
of the Loans of a Defaulting Lender at any time under the Facility when the
aggregate amount of Loans of any Non-Defaulting Lender exceeds such
Non-Defaulting Lender's Commitment Percentage of all Loans then outstanding.
3.8 PREPAYMENT PREMIUM
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(a) If, on or before the Maturity Date, the Borrower prepays any
portion of the Loans with the proceeds of a loan from a lender other than the
Lenders hereto under the terms of this Agreement, the Borrower shall pay to the
Lender, on or before the date of such prepayment, a prepayment premium of 1% on
any outstanding obligations so repaid.
(b) Anything contained herein to the contrary notwithstanding
(including without limitation paragraph (a) of this subsection 3.8), the
Borrower shall not be required to pay the foregoing prepayment premium if such
prepayment (as described in this subsection 3.8) is made because of increased
costs to the Borrower because of any of the events described in subsection 3.16;
PROVIDED that, prior to the date of such prepayment a Responsible Officer of the
Borrower shall provide the Agent with the reason for such prepayment in
reasonable form and detail.
3.9 CONVERSION AND CONTINUATION OPTIONS
(a) The Borrower may elect from time to time to convert Eurodollar
Loans to ABR Loans by delivering to the Agent an irrevocable Notice of Borrowing
by 11:00 A.M., Charlotte, North Carolina time, on the requested date of
conversion; PROVIDED that any such conversion of Eurodollar Loans may only be
made on the last day of an Interest Period with respect thereto. The Borrower
may elect from time to time to convert ABR Loans to Eurodollar Loans by
delivering to the Agent an irrevocable Notice of Borrowing by 11:00 A.M.,
Charlotte, North Carolina time, at least three (3) Business Days prior to the
requested conversion date. Any such Notice of Borrowing with respect to a
conversion to Eurodollar Loans shall specify the length of the initial Interest
Period or Interest Periods therefor. Upon receipt of any such Notice of
Borrowing the Agent shall promptly notify each Lender thereof. All or any part
of outstanding Eurodollar Loans and ABR Loans may be converted as provided
herein, PROVIDED that (i) no Loan may be converted into a Eurodollar Loan when
any Default or Event of Default has occurred and is continuing and the Agent has
or the Majority Lenders have determined that such a conversion is not
appropriate and (ii) no Loan may be converted into a Eurodollar Loan after the
date that is one month prior to the Maturity Date. Any ABR Loan not converted to
a Eurodollar Loan hereunder shall continue as an ABR Loan.
(b) Any Eurodollar Loans may be continued as Eurodollar Loans of the
same Type upon the expiration of the then current Interest Period with respect
thereto by the Borrower delivering to the Agent an irrevocable Notice of
Borrowing, in accordance with the applicable provisions of the term "Interest
Period" set forth in subsection 1.1, of the length of the next INTEREST PERIOD
to be applicable to such Loans, PROVIDED that:
(i) no Eurodollar Loan may be continued as such when any Event
of Default has occurred and is continuing and the Agent has or the
Majority Lenders have determined that such a continuation is not
appropriate;
(ii) no Loan may be continued as such after the date that is
one month prior to the Maturity Date;
and PROVIDED, FURTHER, that if the Borrower shall fail to give such notice or if
such continuation is not permitted such Loans shall be automatically converted
to ABR Loans on the last day of such
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then expiring Interest Period. Upon receipt of any such Notice of Borrowing the
Agent shall promptly notify each Lender thereof.
3.10 MINIMUM AMOUNTS AND MAXIMUM NUMBER OF TRANCHES
(a) All borrowings, conversions and continuations of Eurodollar Loans
hereunder and all selections of Interest Periods hereunder shall be in such
amounts and be made pursuant to such elections so that, after giving effect
thereto, the aggregate principal amount of the Eurodollar Loans comprising each
Tranche shall be equal to $500,000 or a whole multiple of $250,000 in excess
thereof. In no event shall there be more than six (6) Tranches of Eurodollar
Loans outstanding at any time.
(b) All borrowings and repayments of ABR Loans hereunder shall be in
such amounts so that, after giving effect thereto, the aggregate principal
amount of the ABR Loans shall be equal to $500,000 or a whole multiple of
$250,000 in excess thereof.
3.11 INTEREST RATES AND PAYMENT DATES
(a) Each Eurodollar Loan shall bear interest for each day during each
Interest Period with respect thereto at a rate per annum equal to the Eurodollar
Rate determined for such day plus the Applicable Margin in effect for such day.
(b) Each ABR Loan shall bear interest at a rate per annum equal to the
ABR plus the Applicable Margin in effect for such day.
(c) If all or a portion of (i) any principal of any Loan, (ii) any
interest payable thereon or (iii) any other amount payable hereunder shall not
be paid when due (whether at the stated maturity, by acceleration or otherwise),
the principal of the Loans and any such overdue interest or other amount shall
bear interest at a rate per annum which is (x) in the case of principal, the
rate that would otherwise be applicable thereto pursuant to the foregoing
provisions of this subsection 3.11 plus 2% or (y) in the case of any such
overdue interest or other amount, the rate described in paragraph (b) of this
subsection plus 2%, in each case from the date of such non-payment until such
overdue principal, interest or other amount is paid in full (as well after as
before judgment).
(d) Interest on each Loan shall be payable in arrears on each Interest
Payment Date and shall accrue from and including the date such Loan is made or
continued to be made but excluding the date of repayment thereof, PROVIDED that
interest accruing pursuant to paragraph (d) of this subsection shall be payable
from time to time on demand.
(e) Notwithstanding anything to the contrary contained herein, in no
event shall the Borrower be obligated to pay interest in excess of the maximum
amount which is chargeable under applicable law.
3.12 COMPUTATION OF INTEREST AND FEES
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(a) The Commitment Fee shall be calculated in accordance with
subsection 3.2. Interest whenever it is calculated on the basis of the ABR,
interest shall be calculated on the basis of a 365- (or 366, as the case may be)
day year for the actual days elapsed; and otherwise, interest shall be
calculated on the basis of a 360-day year for the actual days elapsed. The Agent
shall as soon as practicable notify the Borrower and the Lenders of each
determination of the Eurodollar Rate. Any change in the interest rate on a Loan
resulting from a change in the ABR or the Eurocurrency Reserve Requirements
shall become effective as of the opening of business on the day on which such
change becomes effective.
(b) Each determination of an interest rate by the Agent pursuant to any
provision of this Agreement shall be conclusive and binding on the Borrower and
the Lenders in the absence of manifest error. The Agent shall, at the request of
the Borrower, deliver to the Borrower a statement showing the quotations used by
the Agent in determining any interest rate pursuant to subsection 3.11(a).
3.13 INABILITY TO DETERMINE INTEREST RATE
(a) If prior to the first day of any Interest Period pertaining to
Eurodollar Loans:
(i) the Agent shall have determined (which determination shall
be conclusive and binding upon the Borrower in the absence of manifest
error) that, by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period; or
(ii) the Agent shall have received notice from the Majority
Lenders that the Eurodollar Rate determined or to be determined for
such Interest Period will not adequately and fairly reflect the cost to
such Lenders (as conclusively certified by such Lenders) of making or
maintaining their affected Loans during such Interest Period;
The Agent shall give telecopy or telephonic notice thereof to the Borrower and
the Lenders as soon as possible thereafter. If such notice is given, (i) any
Eurodollar Loans requested to be made on the first day of such Interest Period
shall be made as ABR Loans, (ii) any Loans that were to have been converted on
the first day of such Interest Period to Eurodollar Loans shall be converted to
or continued as ABR Loans and (iii) any outstanding Eurodollar Loans shall be
converted, on the first day of such Interest Period, to ABR Loans. Until such
notice has been withdrawn by the Agent, no further Eurodollar Loans shall be
made or continued as such, nor shall the Borrower have the right to convert
Loans to Eurodollar Loans.
3.14 PRO RATA TREATMENT AND PAYMENTS
(a) Each borrowing by the Borrower from the Lenders hereunder, each
payment by the Borrower on account of any Commitment Fee hereunder and any
reduction of the Commitments of the Lenders shall be made pro rata according to
the respective relevant Commitment Percentages of the Lenders holding
obligations in respect of which such amounts were paid. Each payment (including
each prepayment) by the Borrower on account of principal of and
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(subject to the provisions of subsections 3.4, 3.6, 3.7 and 3.8) interest on the
Loans shall be made pro rata according to the respective outstanding principal
amounts of such Loans then held by the Lenders. Except as otherwise set forth
herein, all payments (including prepayments) to be made by the Borrower
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without set off or counterclaim and shall be made prior to 2:00 P.M.,
Charlotte, North Carolina time, on the due date thereof to the Agent, for the
account of the applicable Lenders, at the Agent's office specified in subsection
10.3, in Dollars and in immediately available funds. The Agent shall distribute
such payments to the Lenders holding obligations on account of which such
amounts were paid promptly upon receipt in like funds as received. If any
payment hereunder becomes due and payable on a day other than a Business Day,
such payment shall be extended to the next succeeding Business Day, and, with
respect to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension.
(b) All such payments shall be applied FIRST to accrued and unpaid fees
and expenses payable hereunder, SECOND to accrued and unpaid interest on the
applicable Loan and THIRD, in accordance with subsection 3.7(a), to reduce the
outstanding principal balance of such Loan.
(c) Unless the Agent shall have been notified in writing by any Lender
prior to a borrowing that such Lender will not make the amount that would
constitute its relevant Commitment Percentage of such borrowing available to the
Agent, the Agent may assume that such Lender is making such amount available to
the Agent, and the Agent may, in reliance upon such assumption, make available
to the Borrower a corresponding amount. If such amount is not made available to
the Agent by the required time on the borrowing date therefor, such Lender shall
pay to the Agent, on demand, such amount with interest thereon at a rate equal
to the daily average Federal Funds Effective Rate for the period until such
Lender makes such amount immediately available to the Agent. A certificate of
the Agent submitted to any Lender shall, to the extent permitted by applicable
law, be prima facie evidence of the amounts owing under this subsection 3.14. If
such Lender's relevant Commitment Percentage of such borrowing is not made
available to the Agent by such Lender within three (3) Business Days of such
borrowing date, the Agent shall also be entitled to recover such amount with
interest thereon at the rate per annum applicable to ABR Loans hereunder, on
demand, from the Borrower.
3.15 ILLEGALITY. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof, in each case after the Closing Date, shall make it unlawful
for any Lender to make or maintain Eurodollar Loans, as the case may be, as
contemplated by this Agreement, (a) the commitment of such Lender hereunder to
make Eurodollar Loans, continue Eurodollar Loans as such or convert ABR Loans to
Eurodollar Loans, as the case may be, shall forthwith be suspended to the extent
unlawful and (b) to the extent unlawful the Lenders' Loans then outstanding as
Eurodollar Loans, if any, shall be converted automatically to ABR Loans on the
respective last days of the then current Interest Periods with respect to such
Loans or within such earlier period as required by law. If any such conversion
of a Eurodollar Loan occurs on a day which is not the last day of the then
current Interest Period with respect thereto, the Borrower shall pay to such
Lender such amounts, if any, as may be required pursuant to subsection 3.18.
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3.16 REQUIREMENTS OF LAW
(a) If the adoption of or any change in any applicable Requirement of
Law or in the interpretation or application thereof or compliance by any Lender
with any request or directive (whether or not having the force of law) from any
central bank or other Governmental Authority charged with the interpretation or
administration thereof made subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever
with respect to this Agreement, any Note, or any Eurodollar Loan made
by it, or change the basis of taxation of payments to such Lender in
respect thereof (except for Non-Excluded Taxes covered by subsection
3.17 and changes in the rate of net income taxes or franchise taxes
(imposed in lieu of net income taxes) of such Lender);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into
(with respect to Eurodollar Loans), continuing or maintaining Eurodollar Loans
or to reduce any amount receivable hereunder in respect thereof, then, in any
such case, the Borrower shall promptly pay such Lender such additional amount or
amounts as will compensate such Lender for such increased cost or reduced amount
receivable.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by any corporation
controlling such Lender with any request or directive regarding capital adequacy
(whether or not having the force of law, if compliance therewith is a customary
banking practice) from any Governmental Authority made subsequent to the date
hereof shall have the effect of reducing the rate of return on such Lender's or
such corporation's capital as a consequence of its obligations hereunder to a
level below that which such Lender or such corporation could have achieved but
for such adoption, change or compliance (taking into consideration such Lender's
or such corporation's policies with respect to capital adequacy) by an amount
deemed by such Lender to be material, then from time to time, the Borrower shall
pay to such Lender such additional amount or amounts as will compensate such
Lender for such reduction.
(c) If any Lender becomes entitled to claim any additional amounts
pursuant to this subsection 3.16, it shall promptly notify the Borrower (with a
copy to the Agent) of the event by reason of which it has become so entitled. A
certificate submitted by such Lender to the Borrower (with a copy to the Agent)
shall, to the extent permitted by applicable law, be prima
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facie evidence of any additional amounts payable pursuant to this subsection
3.16 conclusive in the absence of manifest error. The agreements in this
subsection 3.16 shall survive the termination of this Agreement and the payment
of the Loans and all other amounts payable hereunder.
3.17 TAXES
(a) All payments made by the Borrower under this Agreement and any
Notes shall be made free and clear of, and without deduction or withholding for
or on account of, any present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any Governmental Authority,
excluding net income taxes and franchise taxes (imposed in lieu of net income
taxes) imposed on the Agent or any Lender as a result of a present or former
connection between the Agent or such Lender and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
the Lenders having executed, delivered or performed its obligations or received
a payment under, or enforced, this Agreement or any Note). If any such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("NON-EXCLUDED TAXES") are required to be withheld from any amounts
payable to Agent or any Lender hereunder or under any Note, the amounts so
payable to the Agent or such Lender shall be increased to the extent necessary
to yield to the Agent or such Lender (after payment of all Non-Excluded Taxes)
interest or any such other amounts payable hereunder at the rates or in the
amounts specified in this Agreement. Whenever any Non-Excluded Taxes are payable
by the Borrower, as promptly as possible thereafter the Borrower shall send to
the Agent for its own account or for the account of such Lender, as the case may
be, a certified copy of an original official receipt received by the Borrower
showing payment thereof. If the Borrower fails to pay any Non-Excluded Taxes
when due to the appropriate taxing authority or fails to remit to the Agent the
required receipts or other required documentary evidence, the Borrower shall
indemnify the Agent and the Lenders for any incremental increased taxes,
interest or penalties that may become payable by the Agent or any Lender as a
result of any such failure. The agreements in this subsection 3.17 shall survive
the termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:
(i) deliver to the Borrower and the Agent (A) two duly
completed copies of the United States Internal Revenue Service Form
1001 or 4224, or successor applicable form, as the case may be, and (B)
an Internal Revenue Service Form W-8 or W-9, or successor applicable
form, as the case may be;
(ii) deliver to the Borrower and the Agent two further copies
of any such form or certification on or before the date that any such
form or certification expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower; and
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(iii) obtain such extensions of time for filing and complete
such forms or certifications as may reasonably be requested by the
Borrower or the Agent;
unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Borrower and the Agent.
Such Lender shall certify (i) in the case of a Form 1001 or 4224, that it is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes and (ii) in the case of
Form W-8 or W-9, that it is entitled to an exemption from United States backup
withholding tax. Each Person that shall become a Lender or a Participant
pursuant to subsection 10.8 shall, upon the effectiveness of the related
transfer, be required to provide all of the forms and statements required
pursuant to this subsection 3.17, provided that in the case of a Participant
such Participant shall furnish all such required forms and statements to the
Lender from which the related participation shall have been purchased.
(c) If any Lender shall receive a credit or refund from a taxing
authority with respect to, and actually resulting from, an amount of
Non-Excluded Taxes actually paid to or on behalf of such Lender by the Borrower
(a "TAX CREDIT"), such Lender shall promptly notify the Borrower of such Tax
Credit. If such Tax Credit is received by such Lender in the form of cash, such
Lender shall promptly pay to the Borrower the amount so received with respect to
the Tax Credit. If such Tax Credit is not received by such Lender in the form of
cash, such Lender shall pay the amount of such Tax Credit not later than the
time prescribed by applicable Law for filing the return (including extensions of
time) for such Lender's taxable period which includes the period in which such
Lender receives the economic benefit of such Tax Credit. In any event, the
amount of any Tax Credit payable by a Lender to the Borrower pursuant to this
clause (c) shall not exceed the actual amount of cash refunded to, or credits
received and usable (in accordance with the actual practices then in use by such
Lender) by, such Lender from a taxing authority. In determining the amount of
any Tax Credit, a Lender may use such apportionment and attribution rules as
such Lender customarily employs in allocating taxes among its various operations
and income sources and such determination shall be conclusive absent manifest
error. The Borrower further agrees promptly to return to a Lender the amount
paid to the Borrower with respect to a Tax Credit by such Lender if such Lender
is required to repay, or is determined to be ineligible for, a Tax Credit for
such amount. Notwithstanding anything to the contrary contained herein, the
Borrower hereby acknowledges and agrees that (i) neither the Agent nor any
Lender shall be obligated to provide the Borrower with details of the tax
position of the Agent or such Lender (as the case may be) and (ii) the Borrower
shall have no right to inspect any records (including tax returns) of the Agent
or such Lender (as the case may be).
3.18 INDEMNITY. The Borrower agrees to indemnify each Lender and to
hold each Lender harmless from any loss or expense which such Lender may sustain
or incur as a consequence of (a) failure by the Borrower to make a borrowing of,
conversion into or continuation of Eurodollar Loans after the Borrower has given
a notice requesting the same in accordance with the provisions of this
Agreement; (b) failure by the Borrower to make any prepayment after the
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Borrower has given a notice thereof in accordance with the provisions of this
Agreement or (c) the making of a prepayment of Eurodollar Loans on a day which
is not the last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue, the Interest
Period that would have commenced on the date of such failure in each case at the
applicable rate of interest for such Loans provided for herein (excluding,
however, the Applicable Margin included therein, if any) over (ii) with respect
to Eurodollar Loans, the amount of interest (as reasonably determined by such
Lender) which would have accrued to such Lender on such amount by placing such
amount on deposit for a comparable period with leading banks in the interbank
eurodollar market. This covenant shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.
3.19 CHANGE OF LENDING OFFICE. Each Lender agrees that if it makes any
demand for payment under subsection 3.16 or 3.17(a), or if any adoption or
change of the type described in subsection 3.15 shall occur with respect to it,
it will use reasonable efforts (consistent with its internal policy and legal
and regulatory restrictions and so long as such efforts would not be
disadvantageous to it, as determined in its good faith discretion) to designate
a different lending office if the making of such a designation would reduce or
obviate the need for the Borrower to make payments under subsection 3.16 or
3.17(a), or would eliminate or reduce the effect of any adoption or change
described in subsection 3.15.
SECTION 4 REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement and to make the
Loans, the Borrower hereby represents and warrants to the Agent and each Lender
that:
4.1 FINANCIAL CONDITION. The consolidated balance sheets of the
Borrower and its consolidated Subsidiaries as at September 30, 1997 and the
related consolidated statements of income and cash flows for the fiscal period
ended on such date, copies of which have heretofore been furnished to the Agent,
are complete and correct and present fairly in all material respects the
consolidated financial condition of the Borrower and its consolidated
Subsidiaries as at such date and the consolidated results of their operations
and their consolidated cash flows for the fiscal period then ended. All such
financial statements, including the related schedules and notes thereto, have
been prepared in accordance with GAAP applied consistently throughout the
periods involved (except as approved by such accountants or Responsible Officer,
as the case may be, and as disclosed therein). Neither the Borrower nor any of
its consolidated Subsidiaries had, at the date of the most recent balance sheet
referred to above, (a) any material Guarantee Obligation, except for Guarantee
Obligations in existence as of the date hereof and listed on Schedule VI, (b)
any contingent liability or liability for taxes or (c) any long-term lease or
unusual forward or long-term commitment, including, without limitation, any
interest rate or foreign currency swap or exchange transaction, which is not
reflected in the foregoing statements or in the notes thereto. Except to the
extent permitted under this Agreement or as disclosed to the Agent prior to the
date hereof, or as otherwise separately disclosed to the Agent in writing prior
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to the date hereof, there has been no sale, transfer or other disposition by the
Borrower or any of its consolidated Subsidiaries of any material part of its
business or property (including any capital stock of any other Person) material
in relation to the consolidated financial condition of the Borrower and its
consolidated Subsidiaries at September 30, 1997 during the period from September
30, 1997 to and including the date hereof.
4.2 NO CHANGE. Since September 30, 1997 there has been no development
or event which has had a Material Adverse Effect.
4.3 DISCLOSURE. No information, schedule, exhibit or report or other
document furnished by the Borrower or any of its Subsidiaries to the Agent or
any Lender in connection with the negotiation of this Agreement or any other
Loan Document (or pursuant to the terms hereof or thereof), as such information,
schedule, exhibit or report or other document has been amended, supplemented or
superseded by any other information, schedule, exhibit or report or other
document later delivered to the same parties receiving such information,
schedule, exhibit or report or other document, contained any material
misstatement of fact or omitted to state a material fact or any fact necessary
to make the statements contained therein, in light of the circumstances when
made, not materially misleading.
4.4 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each of the Borrower and
its Subsidiaries (a) is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, (b) has the corporate
power and authority, and the legal right, to own and operate its property, to
lease the property it operates as lessee and to conduct the business in which it
is currently engaged, (c) is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification, except to the extent that all failures to be so qualified could
not, in the aggregate, reasonably be expected to have a Material Adverse Effect
and (d) is in compliance with all Requirements of Law except to the extent that
all failures to comply therewith could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
4.5 CORPORATE POWER, AUTHORIZATION, ENFORCEABLE OBLIGATIONS. The
Borrower has the corporate power and authority, and the legal right, to make,
deliver and perform the Loan Documents to which it is a party and to borrow
hereunder and has taken all necessary corporate action to authorize the
borrowings on the terms and conditions of this Agreement and any Notes and to
authorize the execution, delivery and performance of the Loan Documents to which
it is a party. No consent or authorization of, filing with, notice to or other
act by or in respect of, any Governmental Authority or any other Person is
required in connection with the borrowings hereunder or with the execution,
delivery, performance, validity or enforceability of the Loan Documents to which
the Borrower is a party. This Agreement has been, and each other Loan Document
to which it is a party will be, duly executed and delivered on behalf of the
Borrower. This Agreement constitutes, and each other Loan Document to which it
is a party when executed and delivered will constitute, a legal, valid and
binding obligation of the Borrower enforceable against the Borrower in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to
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or affecting creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.
4.6 NO LEGAL BAR. The execution, delivery and performance of the Loan
Documents to which the Borrower is a party, the borrowings hereunder and the use
of the proceeds thereof will not violate any Requirement of Law or Contractual
Obligation of the Borrower or of any of its Subsidiaries and will not result in,
or require, the creation or imposition of any Lien on any of its or their
respective properties or revenues pursuant to any such Requirement of Law or
Contractual Obligation.
4.7 NO MATERIAL LITIGATION No litigation, investigation or proceeding
of or before any arbitrator or Governmental Authority is pending or, to the
knowledge of the Borrower, threatened by or against the Borrower or any of its
Subsidiaries or against any of its or their respective properties or revenues
(a) with respect to any of the Loan Documents or any of the transactions
contemplated hereby or thereby, or (b) which could reasonably be expected to
have a Material Adverse Effect.
4.8 NO DEFAULT. Neither the Borrower nor any of its Subsidiaries is in
default under or with respect to any of its Contractual Obligations in any
respect which could reasonably be expected to have a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
4.9 OWNERSHIP OF PROPERTY; LIENS. Each of the Borrower and its
Subsidiaries has good record and marketable title in fee simple to, or a valid
leasehold interest in, all its real property, and good title to, or a valid
leasehold interest in, all its other property, which is material to the
operations of the business of, the Borrower and its Subsidiaries, taken as a
whole and none of such property is subject to any Lien except as permitted by
subsection 7.3.
4.10 INTELLECTUAL PROPERTY. The Borrower and each of its Subsidiaries
owns, or is licensed to use, all trademarks, trade names, copyrights,
technology, know-how and processes necessary for the conduct of its business as
currently conducted, except for those for which the failure to own or license
could not reasonably be expected to have a Material Adverse Effect (the
"INTELLECTUAL PROPERTY"). No claim has been asserted and is pending by any
Person challenging or questioning the use of any such Intellectual Property or
the validity or effectiveness of any such Intellectual Property which could
reasonably be expected to have a Material Adverse Effect, nor does the Borrower
know of any valid basis for any such claim. To the best knowledge of the
Borrower, the use of such Intellectual Property by the Borrower and its
Subsidiaries does not infringe on the rights of any Person, except for such
claims and infringements that, in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
4.11 NO BURDENSOME RESTRICTIONS. No Requirement of Law applicable to
the Borrower or any of its Subsidiaries could reasonably be expected to have a
Material Adverse Effect.
4.12 TAXES. Each of the Borrower and its Subsidiaries has filed or
caused to be filed all material tax returns which, to the knowledge of the
Borrower, are required to be filed and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it
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or any of its property and all other taxes, fees or other charges imposed on it
or any of its property by any Governmental Authority (other than any the amount
or validity of which are currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been
provided on the books of the Borrower or its Subsidiaries, as the case may be);
no tax Lien has been filed, other than Liens permitted by subsection 7.3, and,
to the knowledge of the Borrower, no claim is being asserted, with respect to
any such tax, fee or other charge.
4.13 FEDERAL REGULATIONS. No part of the proceeds of any Loans will be
used in any manner which would violate, or result in the violation of,
Regulation D, Regulation G or Regulation U of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in effect. If
requested by any Lender or the Agent, the Borrower will furnish to the Agent and
each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-3 or FR Form U-1 referred to in said Regulation G or
Regulation U, as the case may be.
4.14 ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no Lien
in favor of the PBGC or a Plan has arisen, during such five-year period. The
present value of all accrued benefits under each Single Employer Plan (based on
those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits. Neither the Borrower nor any Commonly Controlled Entity has had a
complete or partial withdrawal from any Multiemployer Plan, and neither the
Borrower nor any Commonly Controlled Entity would become subject to any
liability under ERISA if the Borrower or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is made or
deemed made. No such Multiemployer Plan is in Reorganization or Insolvent. The
present value (determined using actuarial and other assumptions which are
reasonable in respect of the benefits provided and the employees participating)
of the liability of the Borrower and each Commonly Controlled Entity for post
retirement benefits to be provided to their current and former employees under
Plans which are welfare benefit plans (as defined in Section 3(l) of ERISA) does
not, in the aggregate, exceed the assets under all such Plans allocable to such
benefits by an amount in excess of $100,000.
4.15 INVESTMENT COMPANY ACT; OTHER REGULATIONS. The Borrower is not an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. The
Borrower is not subject to regulation under any Federal or State statute or
regulation (other than Regulation X of the Board of Governors of the Federal
Reserve System) which limits its ability to incur Indebtedness under this
Agreement or other Loan Documents.
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4.16 SUBSIDIARIES. SCHEDULE III hereto sets forth all of the
Subsidiaries of the Borrower at the date hereof, together with the ownership and
jurisdiction of incorporation of each.
4.17 ENVIRONMENTAL MATTERS
(a) The facilities and properties owned, leased or operated by the
Borrower or any of its Subsidiaries (the "PROPERTIES") do not contain, and have
not previously contained, any Materials of Environmental Concern in amounts or
concentrations which (i) constitute or constituted a violation of, or (ii) could
reasonably be expected to give rise to liability under, any Environmental Law
except insofar as such violation or liability or any aggregation thereof, is not
reasonably likely to result in the payment of a Material Adverse Amount;
(b) the Properties and all operations at the Properties are in
compliance in all respects with all applicable Environmental Laws, and there is
no contamination at or under (or, to the knowledge of the Borrower, about) the
Properties or violation of any Environmental Law with respect to the Properties
or the business operated by the Borrower or any of its Subsidiaries (the
"BUSINESS") except insofar as such violation or failure to be in compliance or
contamination, or any aggregation thereof, is not reasonably likely to result in
the payment of a Material Adverse Amount;
(c) neither the Borrower nor any of its Subsidiaries has received any
notice of violation, alleged violation, non-compliance, liability or potential
liability regarding compliance with Environmental Laws with regard to any of the
Properties or the Business, nor does the Borrower have knowledge that any such
notice will be received or is being threatened, except insofar as such notice or
threatened notice, or any aggregation thereof, does not involve a matter or
matters that is or are reasonably likely to result in the payment of a Material
Adverse Amount;
(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a location
which could reasonably be expected to give rise to liability under, any
Environmental Law, nor have any Materials of Environmental Concern been
generated, treated, stored or disposed of at, on or under any of the Properties
in violation of, or in a manner that could reasonably be expected to give rise
to liability under, any applicable Environmental Law, except insofar as any such
violation or liability referred to in this paragraph, or any aggregation
thereof, is not reasonably likely to result in the payment of a Material Adverse
Amount;
(i) no judicial proceeding or governmental or administrative
action is pending or, to the knowledge of the Borrower, threatened,
under any Environmental Law to which the Borrower, any of its
Subsidiaries is or will be named as a party with respect to the
Properties or the Business, nor are there any consent decrees or other
decrees, consent orders, administrative orders or other orders, or
other administrative or judicial requirements outstanding under any
Environmental Law which are binding upon Borrower or any of its
Subsidiaries with respect to the Properties or the Business, except
insofar as such proceeding, action, decree, order or other requirement,
or any aggregation thereof, is not reasonably likely to result in the
payment of a Material Adverse Amount; and
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(ii) there has been no release or threat of release of
Materials of Environmental Concern at or from the Properties, or
arising from or related to the operations of the Borrower or any
Subsidiary in connection with the Properties or otherwise in connection
with the Business, in violation of or in amounts or in a manner that
could reasonably give rise to liability under Environmental Laws,
except insofar as any such violation or liability referred to in this
paragraph, or any aggregation thereof, is not reasonably likely to
result in a payment of a Material Adverse Amount.
4.18 SOLVENCY. The aggregate value of all of the tangible and
intangible assets of the Borrower and its Subsidiaries on a consolidated basis,
at a fair valuation, exceeds the total liabilities of the Borrower and its
Subsidiaries on a consolidated basis (including contingent, subordinated,
unmatured and unliquidated liabilities). The Borrower and its Subsidiaries have
the ability to pay their respective debts as they mature and do not have
unreasonably small capital with which to conduct their respective businesses.
For purposes of this subsection 4.18, the "fair valuation" of such assets is the
price at which the assets would change hands between a willing buyer and a
willing seller, both being adequately informed of the relevant facts, and
neither being under any compulsion to buy or to sell.
4.19 NOTE PLEDGE AGREEMENT
(a) The Note Pledge Agreement constitutes a legal, valid, binding and
enforceable obligation of each of the Loan Parties thereto, enforceable against
it in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles;
and
(b) Upon delivery to the Agent of the HM Note, the security interest
granted in the Collateral pursuant to the Note Pledge Agreement will constitute
a valid, perfected first priority security interest of such Collateral,
enforceable as such against all creditors of the assignor and any Persons
purporting to obtain such Collateral, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles.
4.20 GUARANTEES. The provisions of each Guarantee are effective to
create a legal, valid, binding and enforceable guarantee of the obligations
described therein, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles.
SECTION 5 CONDITIONS PRECEDENT
5.1 CONDITIONS TO INITIAL EXTENSIONS OF CREDIT. The agreement of each
Lender to make the initial extension of credit requested to be made by it is
subject to the satisfaction, immediately prior to or concurrently with the
making of such extension of credit on the Closing Date, of the following
conditions precedent:
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(a) LOAN DOCUMENTS. The Agent shall have received (i) this Agreement,
executed and delivered by a duly authorized officer of the Borrower, (ii) the
Notes (to the extent so requested by any Lender), executed and delivered by a
duly authorized officer of the Borrower, (iii) each HomeMax Guarantee, executed
and delivered by a duly authorized officer of the party thereto, (iv) the ▇▇▇▇▇▇
Homes Guarantee, executed and delivered by a duly authorized officer of ▇▇▇▇▇▇
Homes and (iv) the Note Pledge Agreement, executed and delivered by a duly
authorized representative of each party thereto.
(b) AGREEMENTS. The Agent shall have received true and correct copies,
certified as to authenticity by the Borrower, of such documents or instruments
as may be reasonably requested by the Agent.
(c) CLOSING CERTIFICATE OF BORROWER. The Agent shall have received a
certificate of the President or any Vice President and the Secretary or an
Assistant Secretary of the Borrower, dated the Closing Date, (i) attaching the
Charter and By-Laws of the Borrower, (ii) attaching the resolutions of the Board
of Directors of the Borrower with respect to the transactions contemplated
hereby, (iii) certifying that such resolutions have not been amended, modified,
revoked or rescinded as of the date of such certificate and (iv) certifying as
to the incumbency and signature of the officers of the Borrower executing any
Loan Document; such certificate (and the attachments thereto) shall be in form
and substance satisfactory to the Agent.
(d) CLOSING CERTIFICATE OF LOAN PARTIES. The Agent shall have received
a certificate of the President or any Vice President and the Secretary or an
Assistant Secretary of each Loan Party (other than the Borrower), dated the
Closing Date, (i) attaching the Charter and By-Laws of such Loan Party, (ii)
attaching the resolutions of the Board of Directors of such Loan Party with
respect to the transactions contemplated hereby to which it is a party, (iii)
certifying that the such resolutions have not been amended, modified, revoked or
rescinded as of the date of such certificate and (iv) certifying as to the
incumbency and signature of the officers of such Loan Party executing any Loan
Document; such certificate (and the attachments thereto) shall be in form and
substance satisfactory to the Agent.
(e) CORPORATE STRUCTURE. The Agent shall be satisfied with the
corporate and legal structure and capitalization of the Loan Parties, including
the terms and conditions of the charter, bylaws and each class of Capital Stock
of the Loan Parties and of each agreement or instrument relating to such
structure or capitalization.
(f) FEES. The Borrower shall have paid the accrued fees and expenses
owing hereunder or in connection herewith (including, without limitation,
accrued fees and disbursements of counsel to the Agent), to the extent that such
fees and expenses have been presented for payment a reasonable time prior to the
Closing Date.
(g) LEGAL OPINION. The Agent shall have received, with a counterpart
for each Lender, the executed legal opinion of Frost & ▇▇▇▇▇▇, LLP., counsel to
the Borrower and the other Loan parties, substantially in the form of EXHIBIT F.
Such legal opinion shall cover such other matters incident to the transactions
contemplated by this Agreement as the Agent may reasonably require.
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(h) HM NOTE. The Agent shall have received, for the benefit of the
Lenders, the HM Note endorsed in blank.
(i) ACTIONS TO PERFECT LIENS. The Agent shall have received such duly
executed financing statements on form UCC-1 as may be necessary or, in the
reasonable opinion of the Agent, desirable to perfect the Liens created by the
Note Pledge Agreement.
(j) LIEN SEARCHES. The Agent shall have received the results of a
recent search by a Person reasonably satisfactory to the Agent, of the Uniform
Commercial Code, judgment and tax lien filings which may have been filed with
respect to personal property of the Borrower, and the results of such search
shall be reasonably satisfactory to the Agent.
(k) REVIEW OF OPERATIONS. The Agent shall have completed a review of
the operations of the Loan Parties (including, without limitation, an on-site
review of the financial statements, financial reporting and computer systems and
inventory, receivables, and equipment by the Agent), each in scope, and with
results, satisfactory to the Agent; without limiting the generality of the
foregoing, the Agent shall have been given such access to the management,
records, books of account, schedules, projections, contracts and properties of
each Loan Party as it shall have requested.
(l) INSURANCE. The Agent shall have received evidence in form and
substance satisfactory to the Agent of the existence of the insurance required
under subsection 6.6.
(m) BUSINESS PLAN AND PROJECTIONS. The Agent shall have received a
business plan with projections in scope and form satisfactory to the Agent.
(n) ZH FACILITY. The Agent shall have received evidence in form and
substance satisfactory to the Agent of the amendment of the ZH Credit Agreement
to the satisfaction of the Agent in its sole discretion.
(o) ADDITIONAL ITEMS. The Agent shall have received such other opinions
or documents as the Agent or the Majority Lenders through the Agent may
reasonably request.
5.2 CONDITIONS TO EACH EXTENSION OF CREDIT. The agreement of each
Lender to make any extension of credit requested to be made by it on any date
(including, without limitation, its initial extension of credit ) is subject to
the satisfaction of the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties made by the Borrower and each other Loan Party in or pursuant to the
Loan Documents shall be true and correct in all material respects on and as of
such date as if made on and as of such date.
(b) NO DEFAULT. No Default or Event of Default shall have occurred and
be continuing on such date or after giving effect to the extensions of credit
requested to be made on such date.
(c) ADDITIONAL ITEMS. The Agent shall have received such other
approvals, opinions or documents as the Agent or the Majority Lenders through
the Agent may reasonably request.
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Each borrowing by the Borrower hereunder shall constitute a
representation and warranty by the Borrower as of the date thereof that the
applicable conditions contained in this subsection 5.2 have been satisfied.
SECTION 6 AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in
effect or any amount is owing to any Lender or the Agent hereunder or under any
other Loan Document, the Borrower shall and (except in the case of delivery of
financial information and reports and notices) shall cause each of its
Subsidiaries to:
6.1 FINANCIAL STATEMENTS. Furnish to the Agent and to each Lender:
(a) as soon as available, but in any event within one hundred twenty
(120) days after the end of each fiscal year of the Borrower, a copy of the
consolidated balance sheet of the Borrower and its consolidated Subsidiaries as
at the end of such year and the related consolidated statements of income and
retained earnings and of cash flows for such year, setting forth in each case in
comparative form the figures for the previous year, reported on without a "going
concern" or like qualification or exception, or qualification arising out of the
scope of the audit, by independent certified public accountants of nationally
recognized standing;
(b) as soon as available, but in any event not later than forty-five
(45) days after the end of each fiscal quarter of the Borrower, the unaudited
consolidated balance sheets of the Borrower and its consolidated Subsidiaries as
at the end of such quarter and the related unaudited consolidated statements of
income and retained earnings and of cash flows of the Borrower and its
consolidated Subsidiaries for such quarter and the portion of the Borrower's
fiscal year through the end of such quarter, setting forth in each case in
comparative form the figures for the previous year, certified by a Responsible
Officer as being fairly stated in all material respects (subject to normal
year-end audit adjustments);
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
6.2 CERTIFICATES; OTHER INFORMATION Furnish to the Agent and to each
Lender:
(a) concurrently with the delivery of the financial statements referred
to in subsection 6.1(a), a certificate of the independent certified public
accountants reporting on such financial statements stating whether in the course
of conducting its annual audit they became aware of any Default or Event of
Default pertaining to accounting matters and, if so, the nature of such Default
or Event of Default;
(b) concurrently with the delivery of the financial statements referred
to in subsections 6.1(a) and (b), a certificate of a Responsible Officer
substantially in the form of Exhibit E hereto (i) stating that, to the best of
such Officer's knowledge, during such period (A) no Subsidiary has
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been formed or acquired without complying with this Agreement and the
requirements of subsection 6.11 with respect thereto, (B) neither the Borrower
nor any of its Subsidiaries has changed its name, its principal place of
business, its chief executive office or the location of any material item of
tangible Collateral without complying with the requirements of this Agreement
with respect thereto, (C) no Acquired Land Parcel contains Materials of
Environmental Concern and (D) the Borrower has observed or performed all of its
covenants and other agreements, and satisfied every condition, contained in this
Agreement and the other Loan Documents to be observed, performed or satisfied by
it, and that such Officer has obtained no knowledge of any Default or Event of
Default except as specified in such certificate and (ii) setting forth the
computations used by the Borrower in determining (as of the end of such fiscal
period) compliance with the covenants contained in subsection 7.1;
(c) not later than one hundred twenty (120) days after the end of each
fiscal year of the Borrower, a copy of the projections by the Borrower of the
operating budget and cash flow budget of the Borrower and its Subsidiaries for
the succeeding fiscal year as adopted by the Board of Directors of the Borrower,
such projections to be accompanied by a certificate of a Responsible Officer to
the effect that such projections have been prepared on the basis of assumptions
believed by the Borrower to be reasonable;
(d) concurrently with the delivery of the accountants' certificates
referred to in subsection 6.2(a), any comment letter submitted by such
accountants to management as of that date;
(e) concurrently with the delivery of the projections referred to in
subsection 6.2(c), the consolidated financial plan and financial forecasts as
customarily prepared by the management of the Borrower for internal use;
(f) as soon as available, but in any event (i) not later than one
hundred twenty (120) days after the end of each fiscal year of the Borrower, a
copy of all financial statements and regular, periodical or special reports that
the Borrower may make to, or file with, the SEC on an annual basis and (ii) not
later than forty-five (45) days after the end of each fiscal quarter of the
Borrower, a copy of all financial statements and regular, periodical or special
reports that the Borrower may make to, or file with, the SEC on a quarterly
basis; and
(g) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
6.3 PAYMENT OF EXCESS PROCEEDS. Cause HomeMax to make a partial or
whole prepayment or payment of the intercompany indebtedness evidenced by the HM
Note equal to the aggregate amount of excess Proceeds of a Proceeds Event
remaining after such Proceeds have been applied to the HM Facility pursuant to
the terms and conditions of the HM Credit Agreement.
6.4 PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise satisfy at or
before maturity in accordance with customary terms or before they become
delinquent or in default, as the case may be, all of its material obligations of
whatever nature, except where the amount or validity thereof is then being
contested in good faith by appropriate proceedings and reserves in conformity
with
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GAAP with respect thereto have been provided on the books of the Borrower or its
Subsidiaries, as the case may be.
6.5 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. Continue to
engage in business of the same general type as now conducted by it and preserve,
renew and keep in full force and effect its corporate existence and take all
reasonable action to maintain all rights, privileges and franchises necessary or
(in the reasonable judgment of the Borrower) desirable in the normal conduct of
its business except as otherwise permitted pursuant to subsection 7.13; comply
with all Contractual Obligations and Requirements of Law except to the extent
that failure to comply therewith could not, in the aggregate, be reasonably
expected to have a Material Adverse Effect.
6.6 MAINTENANCE OF PROPERTY; INSURANCE
(a) Keep all material property useful and necessary in its business in
good working order and condition; maintain with financially sound and reputable
insurance companies insurance policies insuring all its material property
against loss by fire, explosion, theft and such other casualties as may be
reasonably satisfactory to the Agent, such policies to be in at least such form
and amounts, and having coverage against at least such risks as are customarily
insured against in the same general area by companies of similar size, engaged
in the same or a similar business, as may be reasonably satisfactory to the
Agent with losses payable to the Borrower or the Agent, as their respective
interests may appear;
(b) Each insurance policy described in subsection 6.6(a) shall (i)
contain endorsements, in form satisfactory to each Lender, (ii) name the Agent,
as an insured party, (iii) provide that no cancellation, material reduction in
amount or material change in coverage thereof shall be effective until at least
thirty (30) days after receipt by the Agent of written notice thereof and (iv)
be reasonably satisfactory in all other respect to the Agent. In the event of
any termination or notice of non-payment by any insurer with respect to any
policy or any lapse in the coverage thereunder, the Borrower shall cause such
insurer to give prompt written notice to each Lender of the occurrence of such
termination, nonpayment or lapse.
(c) The Borrower shall deliver to the Agent a report of a reputable
insurance broker with respect to such insurance in each calendar year and such
supplemental reports with respect thereto as the Agent may from time to time
reasonably request.
6.7 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. Keep proper
books of records and accounts in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; permit
representatives of the Agent or any Lender to visit and inspect any of its
properties and examine and make abstracts from any of its books and records at
any reasonable time (upon reasonable advance notice when no Default or Event of
Default has occurred and is continuing) and, with respect to the Agent, as often
as may reasonably be desired, or, with respect to any Lender other than the
Agent, not more than once per calendar year at the expense of such Lender (or if
an Event of Default has occurred and is continuing, at any reasonable time and
as often as may be desired, at the expense of the Borrower), and to discuss the
Business, operations, properties and financial and other condition of the
Borrower and its Subsidiaries with
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officers and employees of the Borrower and its Subsidiaries and with its
independent certified public accountants.
6.8 NOTICES. Promptly give notice to the Agent (who shall give prompt
notice thereof to the Lenders) of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between the Borrower or
any of its Subsidiaries and any Governmental Authority, which in either case, if
not cured or if adversely determined, as the case may be, could reasonably be
expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any of its
Subsidiaries in which the amount involved is $500,000 or more and not covered by
insurance or in which injunctive or similar relief is sought which could have a
Material Adverse Effect;
(d) the following events, as soon as possible and in any event within
thirty (30) days after the Borrower knows or has reason to know thereof: (i) the
occurrence or expected occurrence of any Reportable Event with respect to any
Plan that is an employee pension benefit plan (as defined in Section 3(2) of
ERISA), a failure to make any required contribution to a Plan, the creation of
any Lien in favor of the PBGC or a Plan that is an employee pension benefit plan
(as defined in Section 3(2) of ERISA) or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action by the PBGC or the
Borrower or any Commonly Controlled Entity or any Multiemployer Plan with
respect to the withdrawal from, or the terminating, Reorganization or Insolvency
of, any Plan that is an employee pension benefit plan (as defined in Section
3(2) of ERISA);
(e) the acquisition or creation of any Subsidiary which has Capital
Stock that is directly or indirectly owned by the Borrower or any Subsidiary;
(f) any Lien (other than any Liens permitted under this Agreement) or
other event that could reasonably be expected to have a Material Adverse Effect
on the aggregate value of the Collateral or on the security interest created by
this Agreement or any other Loan Document; and
each notice pursuant to this subsection 6.8 shall be accompanied by a statement
of a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action the Borrower proposes to take with respect
thereto.
6.9 ENVIRONMENTAL LAWS
(a) Comply with, and use reasonable efforts to ensure compliance by all
tenants and subtenants, if any, with, all applicable Environmental Laws and
obtain and comply
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with and maintain, and use reasonable efforts to ensure that all tenants and
subtenants obtain and comply with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by applicable Environmental
Laws, except to the extent that failure to do so could not be reasonably
expected to have a Material Adverse Effect.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws, except to the extent that failure to do so would not have a Material
Adverse Effect.
6.10 FURTHER ASSURANCES; ADDITIONAL COLLATERAL
(a) Upon the request of the Agent, promptly perform or cause to be
performed any and all acts and execute or cause to be executed any and all
documents (including, without limitation, financing statements and continuation
statements) (i) for filing under the provisions of the Uniform Commercial Code
or any Requirement of Law which are necessary or reasonably advisable to
maintain in favor of the Agent, for the benefit of the Lenders, Liens on the
Collateral that are duly perfected in accordance with all applicable
Requirements of Law.
(b) With respect to each intercompany loan made by the Borrower to
HomeMax, which uses the proceeds of the Facility, perform or cause to be
performed any other acts and execute or cause to be executed any and all
documents (including the amendment or other modification to the HM Note or the
Note Pledge Agreement) necessary or reasonably advisable to maintain the
assignment of Collateral to the Agent for the benefit of the Lenders.
(c) Upon the request of the Agent, promptly provide such documents and
legal opinions in respect of any aspect or consequence of the transactions
contemplated hereby as the Agent shall reasonably request.
6.11 ADDITIONAL SUBSIDIARIES. With respect to any Person that,
subsequent to the Closing Date, becomes a Subsidiary of HomeMax promptly (i)
cause such new Subsidiary to become a party to the HomeMax Guarantee pursuant to
documentation to be in form and substance satisfactory to the Agent and (ii) if
so requested by the Agent, deliver to the Agent legal opinions relating to due
authorization, execution, delivery of such Subsidiaries Guarantee by such new
Subsidiary and the enforceability against it of such Subsidiaries Guarantee,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Agent.
SECTION 7 NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in
effect or any amount is owing to any Lender or the Agent hereunder or under any
other Loan Document, the Borrower shall not, and (except with respect to
subsection 7.1) shall not permit any of the other Loan Parties to, directly or
indirectly:
7.1 FINANCIAL CONDITION COVENANTS
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(a) DEBT TO NET WORTH. Permit, for any of the "Test Dates" set forth
below, the ratio of Debt of the Borrower and its Subsidiaries on such date to
Consolidated Tangible Net Worth on such date to be greater than the ratio set
forth opposite such "Test Date" below:
Test Date Ratio
--------- -----
3/31/98 2.50 to 1.00
6/30/98 2.50 to 1.00
9/30/98 2.50 to 1.00
12/31/98 and thereafter 2.75 to 1.00
(b) FIXED CHARGE COVERAGE. Permit, for each of the fiscal years ending
on December 31, 1998 and December 31, 1999, the ratio of (i) EBITDA for the
twelve month period ended on such day to (ii) the Consolidated Fixed Charges of
the Borrower and its Subsidiaries for such period, to be less than 1.30 to 1.00.
7.2 LIMITATION ON INDEBTEDNESS AND PREFERRED STOCK. Create, incur,
assume or suffer to exist any Indebtedness or preferred stock (other than
preferred stock which, by its terms, does not require the payment of any cash
dividends thereon or redemption/reimbursement obligations or impose any cash
penalties (other than accrual of dividends on unpaid dividends) for the failure
to declare cash dividends thereon), except:
(a) Indebtedness of the Borrower under this Agreement;
(b) Indebtedness of any Loan Party to the Borrower or any other Loan
Party which has executed a Guarantee;
(c) Indebtedness outstanding on the date hereof and listed on Schedule
IV and any refinancings, refundings, renewals or extensions thereof in an amount
not to exceed the then current principal amount thereof;
(d) additional Indebtedness not exceeding in aggregate principal amount
at any one time outstanding: $500,000; and
(e) Guarantee Obligations permitted pursuant to subsection 7.4; and
(f) any other additional Indebtedness, PROVIDED that the Majority
Lenders, in each Majority Lender's sole discretion, shall have given prior
written consent with respect to such additional Indebtedness.
7.3 LIMITATION ON LIENS. Create, incur, assume or suffer to exist any
Lien upon any of its property, inventory, assets or revenues, whether now owned
or hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, PROVIDED that adequate reserves with respect
thereto are maintained on the books of the Borrower or the other Loan Parties,
as the case may be, in conformity with GAAP;
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(b) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements; and
(c) Liens in existence on the date hereof listed on SCHEDULE V,
securing Indebtedness permitted by subsection 7.2(c), PROVIDED that no such Lien
is spread to cover any additional property after the date hereof and that the
amount of Indebtedness secured thereby is not increased.
7.4 LIMITATION ON GUARANTEE OBLIGATIONS. Create, incur, assume or
suffer to exist any Guarantee Obligation, except Guarantee Obligations in
existence on the date hereof and listed on SCHEDULE VI and any other Guarantee
Obligations, PROVIDED that the Majority Lenders, in each Majority Lender's sole
discretion, shall have given prior written consent with respect to such
additional Guarantee Obligations.
7.5 LIMITATION ON FUNDAMENTAL CHANGES. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, except:
(a) any Loan Party may be merged or consolidated with or into the
Borrower (PROVIDED that the Borrower shall be the continuing or surviving
corporation) or with or into any one or more Loan Parties wholly-owned by the
Borrower (PROVIDED that the wholly-owned Loan Party or Loan Parties shall be the
continuing or surviving corporation); and
(b) any Loan Party wholly owned by the Borrower may sell, lease,
transfer or otherwise dispose of any or all of its assets (upon voluntary
liquidation or otherwise) to the Borrower or any other Loan Party wholly-owned
by the Borrower.
7.6 LIMITATION ON SALE OF ASSETS. Convey, sell, lease, assign, transfer
or otherwise dispose of any of its property, business or assets (including,
without limitation, receivables and leasehold interests), whether now owned or
hereafter acquired, to any Person other than the Borrower or any Loan Party
wholly owned by the Borrower, except the sale or other disposition of obsolete
or worn out property (including, without limitation, any property which is no
longer used or useful in the business of the Borrower and the other Loan
Parties) in the ordinary course of business.
7.7 LIMITATION ON DIVIDENDS. Declare or pay any dividend on, or make
any payment on account of, or set apart assets for a sinking or other analogous
fund for, the purchase, redemption, defeasance, retirement or other acquisition
of, any shares of any class of Capital Stock of the Borrower or any warrants or
options to purchase any such Stock, whether now or hereafter outstanding, or
make any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of the Borrower (such
declarations, payments, setting apart, purchases, redemptions, defeasances,
retirements, acquisitions and distributions being herein called "RESTRICTED
PAYMENTS").
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7.8 LIMITATION ON INVESTMENTS, LOANS AND ADVANCES. Make any advance,
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of or any assets constituting a
business unit of, or make any other investment in, any Person, without the prior
written consent of the Majority Lenders except:
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) loans and advances to employees of the Borrower or its Subsidiaries
for travel, entertainment and relocation expenses;
(d) investments in existence on the date hereof which are described on
SCHEDULE VII hereof;
(e) the Borrower may make intercompany loans and advances to Loan
Parties wholly owned by the Borrower which have executed a HomeMax Guarantee;
and
(f) other advances, loans and extensions of credit in an aggregate
amount not to exceed $500,000.
7.9 LIMITATION ON TRANSACTIONS WITH AFFILIATES. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) otherwise permitted under this Agreement, (b) in the
ordinary course of the Borrower's or such Loan Party's business and (c) upon
fair and reasonable terms no less favorable to the Borrower or such Loan Party,
as the case may be, than it would obtain in a comparable arm's length
transaction with a Person which is not an Affiliate.
7.10 LIMITATIONS ON SALES AND LEASEBACKS. Enter into any arrangement
with any Person providing for the leasing by the Borrower or any Loan Party of
real or personal property which has been or is to be sold or transferred by the
Borrower or such Loan Party to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of the Borrower or such Loan Party.
7.11 LIMITATION ON CHANGES IN FISCAL YEAR. Permit the fiscal year of
the Borrower to end on a day other than December 31.
7.12 LIMITATION ON NEGATIVE PLEDGE CLAUSES. Enter into with any Person
any agreement, other than this Agreement, purchase money mortgages, Financing
Leases and other similar fixed asset financings permitted by this Agreement (in
which cases, any prohibition or limitation shall only be effective against the
assets financed thereby), which prohibits or limits the ability of the Borrower
or any of its Subsidiaries to create, incur, assume or suffer to exist any Lien
upon any of its property, assets or revenues, whether now owned or hereafter
acquired.
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7.13 LIMITATION ON LINES OF BUSINESS. Enter into any business, either
directly or through any Subsidiary, except for (a) the businesses and businesses
of a similar type in which the Borrower and its Subsidiaries are engaged on the
date hereof and Borrower and its Subsidiaries are engaged on the date of the
acquisition of such entities and (b) other activities relating thereto.
SECTION 8 EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan when due
in accordance with the terms hereof or any other Loan Document, or the Borrower
shall fail to pay any interest on any Loan, or any other amount payable
hereunder or any other Loan Document, within five (5) Business Days after any
such interest or other amount becomes due in accordance with the terms thereof
or hereof; or
(b) Any representation or warranty made or deemed made by the Borrower
or any other Loan Party herein or in any other Loan Document or which is
contained in any certificate, document or financial or other statement furnished
by it at any time under or in connection with this Agreement or any such other
Loan Document shall prove to have been incorrect in any material respect on or
as of the date made or deemed made; or
(c) The Borrower or any other Loan Party shall default in the
observance or performance of any agreement contained in Section 7 or any
negative covenant contained in any other Loan Document; or
(d) The Borrower or any other Loan Party shall default in the
observance or performance of any other agreement contained in this Agreement or
any other Loan Document (other than as provided in paragraphs (a) through (c) of
this Section 8), and such default shall continue unremedied for a period of
thirty (30) days; or
(e) The Borrower or any of the other Loan Parties shall (i) default in
any payment of principal of or interest of any Indebtedness (other than the
Loans) or in the payment of any Guarantee Obligation, beyond the period of
grace, (not to exceed sixty (60) days), if any, provided in the instrument or
agreement under which such Indebtedness or Guarantee Obligation was created; or
(ii) default in the observance or performance of any other agreement or
condition relating to any such Indebtedness or Guarantee Obligation or contained
in any instrument or agreement evidencing, securing or relating thereto, or any
other event shall occur or condition exist, the effect of which default or other
event or condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Guarantee Obligation (or a
trustee or Agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice or the passage of time if
required, such Indebtedness to become due prior to its stated maturity or such
Guarantee Obligation to become payable; PROVIDED, HOWEVER, that no Default or
Event of Default shall exist under this paragraph unless the aggregate amount of
Indebtedness and/or Guarantee Obligations in respect of which any default or
other event or condition referred to in this paragraph shall have occurred shall
be equal to at least $500,000; or
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(f) An Event of Default shall have occurred and be continuing under,
and as defined in, the HM Facility or the ZH Facility; or
(g) (i) The Borrower or any other Loan Party shall commence any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian, conservator or other
similar official for it or for all or any substantial part of its assets, or the
Borrower or any Loan Party shall make a general assignment for the benefit of
its creditors; or (ii) there shall be commenced against the Borrower or any Loan
Party any case, proceeding or other action of a nature referred to in clause (i)
above which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or unbonded
for a period of thirty (30) days; or (iii) there shall be commenced against the
Borrower or any Loan Party any case, proceeding or other action seeking issuance
of a warrant of attachment, execution, distraint or similar process against all
or any substantial part of its assets which results in the entry of an order for
any such relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within thirty (30) days from the entry thereof, or (iv)
the Borrower or any Loan Party shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i), (ii), or (iii) above; or (v) the Borrower or any Loan Party
shall generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due; or
(h) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan,
(ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan or any Lien in favor
of the PBGC or a Plan shall arise on the assets of the Borrower or any Commonly
Controlled Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a trustee is,
in the reasonable opinion of the Majority Lenders, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any Single
Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the
Borrower or any Commonly Controlled Entity shall, or in the reasonable opinion
of the Majority Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or
(vi) any other adverse event or condition shall occur or exist with respect to a
Plan; and in each case in clauses (i) through (vi) above, such event or
condition, together with all other such events or conditions, if any, could
reasonably be expected to involve an aggregate amount of liability to the
Borrower or any Loan Party in excess of $500,000; or
(i) One or more judgments or decrees shall be entered against the
Borrower or any Loan Party involving in the aggregate a liability (not paid or
fully covered by insurance) of $500,000
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or more, and all such judgments or decrees shall not have been vacated,
discharged, stayed or bonded pending appeal within thirty (30) days from the
entry thereof; or
(j) (i) Any Guarantee shall cease, for any reason, to be in full force
and effect or any Guarantor shall so assert, (ii) the HM Note shall cease, for
any reason to be in full force and effect or any party thereto shall so assert
or (iii) the Note Pledge Agreement shall cease, for any reason, to be in full
force and effect or any officer of the Borrower shall so assert; or
(k) Any Change in Control shall occur;
then, and in any such event, (i) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (g) of this Section 8 with respect to the
Borrower, automatically the Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement shall immediately become due and payable, and (ii) if such
event is any other Event of Default, either or both of the following actions may
be taken: (A) with the consent of the Majority Lenders, the Agent may, or upon
the request of the Majority Lenders, the Agent shall, by notice to the Borrower
declare the Commitments to be terminated forthwith, whereupon the Commitments
shall immediately terminate; and (B) with the consent of the Majority Lenders,
the Agent may, or upon the request of the Majority Lenders, the Agent shall, by
notice to the Borrower, declare the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement to be due and payable
forthwith, whereupon the same shall immediately become due and payable. Except
as expressly provided above in this Section 8, presentment, demand, protest and
all other notices of any kind are hereby expressly waived.
SECTION 9 THE AGENT
9.1 APPOINTMENT. (a) Each Lender hereby irrevocably designates and
appoints NationsBank, N.A. as the Agent of such Lender under this Agreement and
the other Loan Documents, and each such Lender irrevocably authorizes the Agent,
in such capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
9.2 DELEGATION ON DUTIES. The Agent may execute any of its duties under
this Agreement and the other Loan Documents by or through administrative agents
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any administrative agents or attorneys-in-fact
selected by it with reasonable care.
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9.3 EXCULPATORY PROVISIONS. Neither the Agent nor any of its officers,
directors, employees, administrative agents, attorneys-in-fact or Affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with this Agreement or any other Loan
Document (except for its or such Person's own gross negligence or willful
misconduct) or (ii) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by the Borrower or any
officer thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of the Borrower to perform its obligations hereunder or
thereunder. The Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Borrower.
9.4 RELIANCE BY AGENT. The Agent shall be entitled to rely, and shall
be fully protected in relying, upon any Note, writing, resolution, notice,
consent, certificate, affidavit, letter, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrower), independent accountants and other experts
selected by the Agent. Without limiting the foregoing or the obligation of the
Borrower to confirm in writing any telephonic notice permitted to be given
hereunder, the Agent may prior to receipt of written confirmation act without
liability upon the basis of such telephonic notice, believed by the Agent in
good faith to be from a Responsible Officer or Borrower. The Agent may deem and
treat the payee of any Note as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been
filed with the Agent. The Agent shall be fully justified in failing or refusing
to take any action under this Agreement or any other Loan Document unless it
shall first receive such advice or concurrence of the Majority Lenders as it
deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement and the other Loan Documents in accordance with a request of the
Majority Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future holders of
the Loans.
9.5 NOTICE OF DEFAULT. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default hereunder unless
the Agent has received notice from a Lender or the Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default". In the event that the Agent receives such a
notice, the Agent shall give notice thereof to the Lenders. The Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Majority Lenders; PROVIDED that unless and until the
Agent shall have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action,
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with respect to such Default or Event of Default as it shall deem advisable in
the best interests of the Lenders.
9.6 NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, administrative agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of the Borrower, shall be deemed to
constitute any representation or warranty by the Agent to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon the Agent or any other Lender, and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the business, operations, property, financial and other condition and
creditworthiness of the Borrower and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Borrower. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
the Borrower which may come into the possession of the Agent or any of its
officers, directors, employees, administrative agents, attorneys-in-fact or
Affiliates.
9.7 INDEMNIFICATION. The Lenders agree to indemnify the Agent in its
capacity as such (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so), ratably according to their
respective Commitment Percentages in effect on the date on which indemnification
is sought (such Commitment Percentage to be determined as if there are not
Defaulting Lenders), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including, without
limitation, at any time following the payment of the Loans) be imposed on,
incurred by or asserted against the Agent in any way relating to or arising out
of, the Commitments, this Agreement, any of the other Loan Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; provided that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the Agent's gross negligence or willful misconduct. To the
extent that any Lender would be required to indemnify the Agent pursuant to this
subsection 9.7 but for the fact that it is a Defaulting Lender, such Defaulting
Lender shall not be entitled to receive any portion of any payment or other
distribution hereunder until each other Lender shall have been reimbursed for
the excess, if any, of the aggregate amount paid by such Lender under this
subsection 9.7 over the aggregate amount that such Lender would have been
obligated to pay
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had such first Lender not been a Defaulting Lender. The agreements in this
subsection 9.7 shall survive the payment of the Loans and all other amounts
payable hereunder.
9.8 AGENT IN ITS INDIVIDUAL CAPACITY. The Agent and each of its
respective Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with the Borrower as though the Agent were not
the Agent hereunder and under the other Loan Documents. With respect to its
Loans made or renewed by it and any Note issued to it, the Agent shall have the
same rights and powers under this Agreement and the other Loan Documents as any
Lender and may exercise the same as though it were not the Agent, and the terms
"Lender" and "Lenders" shall include the Agent in its respective individual
capacity.
9.9 SUCCESSOR AGENT. The Agent may resign as Agent upon ten (10) days'
notice to the Lenders and Borrower. If the Agent shall resign as Agent under
this Agreement and the other Loan Documents, then the Majority Lenders shall
appoint from among the Lenders a successor Agent for the Lenders, which
successor Agent (PROVIDED that it shall have been approved by the Borrower),
shall succeed to the rights, powers and duties of the Agent hereunder. Effective
upon such appointment and approval, the term "Agent" shall mean such successor
Agent, and the former Agent's rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent or any of the parties to this Agreement or any holders of the Loans. After
any retiring Agent's resignation as Agent, the provisions of this Section 9
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement and the other Loan Documents.
SECTION 10 MISCELLANEOUS
10.1 AMENDMENTS AND WAIVERS. Neither this Agreement nor any other Loan
Document, nor any terms hereof or thereof, may be amended, supplemented or
modified except in accordance with the provisions of this subsection 10.1. The
Majority Lenders may, or, with the written consent of the Majority Lenders, the
Agent may, from time to time, (a) enter into with the Borrower written
amendments, supplements or modifications hereto and to the other Loan Documents
for the purpose of adding any provisions to this Agreement or the other Loan
Documents or changing in any manner the rights of the Lenders or of the Borrower
hereunder or thereunder or (b) waive, on such terms and conditions as the
Majority Lenders or the Agent, as the case may be, may specify in such
instrument, any of the requirements of this Agreement or the other Loan
Documents or any Default or Event of Default and its consequences; PROVIDED,
HOWEVER, that no such waiver and no such amendment, supplement or modification
shall:
(i) reduce the amount or extend the scheduled date of maturity
of any Loan or of any installment thereof, or reduce the stated rate of
any interest or fee payable hereunder or extend the scheduled date of
any payment thereof or increase the amount or extend the expiration
date of any Lenders' Commitments, in each case without the consent of
each Non-Defaulting Lender directly affected thereby;
(ii) amend, modify or waive any provision of this subsection
10.1 or reduce the percentage specified in the definition of Majority
Lenders, or consent
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to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement and the other Loan Documents, in each
case without the written consent of all the Non-Defaulting Lenders;
(iii) consent to the assignment or transfer by the Borrower of
any of its rights and obligations under this Agreement and the other
Loan Documents, in each case without the written consent of all the
Non-Defaulting Lenders;
(iv) take any action having the effect of releasing any of the
material collateral or material guarantee obligations provided for in
any Guarantee, the Note Pledge Agreement or the HM Note in each case
without the written consent of the Non-Defaulting Lenders;
(v) amend, modify or waive any provision of Section 10 without
the written consent of the then Agent.
Any such waiver and any such amendment, supplement or modification shall apply
equally to each of the Lenders (including Defaulting Lenders) and shall be
binding upon the Borrower, the Lenders (including Defaulting Lenders), the Agent
and all future holders of the Loans. In the case of any waiver, the Borrower,
the Lenders (including Defaulting Lenders) and the Agent shall be restored to
their former positions and rights hereunder and under the other Loan Documents,
and any Default or Event of Default waived shall be deemed to be cured and not
continuing; no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereon.
10.2 RELEASES OF COLLATERAL SECURITY AND GUARANTEE OBLIGATIONS.
Notwithstanding anything to the contrary contained herein or in any Security
Document, upon request of the Borrower, the Agent shall (without any notice to
or vote or consent of any Lender) take any action which has the effect of
releasing any collateral security and/or guarantee obligations provided for in
any Loan Document to the extent necessary to permit the consummation of any
Proceeds Event or any asset dispositions permitted by subsection 7.6; PROVIDED
that (unless the Majority Lenders shall otherwise consent) the Proceeds of any
Proceeds Event are applied in the manner contemplated by subsection 3.6 (if so
required).
10.3 NOTICES. Unless otherwise expressly provided herein, all notices,
requests and demands to or upon the respective parties hereto to be effective
shall be in writing (including by facsimile transmission) and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made (a)
in the case of delivery by hand, when delivered, (b) in the case of delivery by
mail, three (3) days after being deposited in the mails, postage prepaid, or (c)
in the case of delivery by facsimile transmission, when sent and receipt has
been confirmed, addressed as follows in the case of the Borrower and the Agent,
and as set forth in SCHEDULE I in the case of the other parties hereto, or to
such other address as may be hereafter notified by the respective parties
hereto:
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The Borrower:
▇▇▇▇▇▇ National Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
Vice President and Chief Financial Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY TO:
Frost & ▇▇▇▇▇▇, LLP.
2500 PNC Center
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
The Agent:
NationsBank, N.A.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY TO:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: M. ▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
PROVIDED that any notice, request or demand to or upon the Agent pursuant to
subsection 2.2, 3.4, 3.5 or 3.9 shall not be effective until received.
10.4 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising on the part of the Agent or any Lender, any right, remedy,
power or privilege hereunder or under the other Loan Documents shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise
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thereof or the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges herein provided are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.
10.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.
10.6 PAYMENT OF EXPENSES AND TAXES. The Borrower agrees (a) to pay or
reimburse the Agent for all of its reasonable out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of any
amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including, without limitation, the reasonable fees and
disbursements of counsel to the Agent, (b) to pay or reimburse each Lender and
the Agent for all its costs and expenses incurred in connection with the
enforcement or preservation of any rights under this Agreement, the other Loan
Documents and any such other documents, including, without limitation, the
reasonable fees and disbursements of counsel to each Lender and of counsel to
the Agent, (c) to pay, indemnify, and hold each Lender and the Agent harmless
from, any and all recording and filing fees and any and all liabilities with
respect to, or resulting from any delay in paying, stamp, excise and other
taxes, if any, which may be payable or determined to be payable in connection
with the execution and delivery of, or consummation or administration of any of
the transactions contemplated by, or any amendment, supplement or modification
of, or any waiver or consent under or in respect of, this Agreement, the other
Loan Documents and any such other documents, and (d) to pay, indemnify, and hold
each Lender and the Agent harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever with respect
to the execution, delivery, enforcement, performance and administration of this
Agreement, the other Loan Documents or the use of the proceeds of the Loans and
any such other documents, including, without limitation, any of the foregoing
relating to the violation of, noncompliance with or liability under, any
Environmental Law applicable to the operations of the Borrower, any of its
Subsidiaries or any of the Properties (all the foregoing in this clause (d),
collectively, the "indemnified liabilities"), PROVIDED that the Borrower shall
have no obligation hereunder to the Agent or any Lender with respect to
indemnified liabilities to the extent arising from the gross negligence or
willful misconduct of the Agent or such Lender. The agreements in this
subsection 10.6 shall survive repayment of the Loans and all other amounts
payable hereunder.
10.7 TERMINATION. This Agreement shall terminate upon the termination
of all Commitments and the irrevocable repayment in full of the aggregate
outstanding principal amount of the Loans, accrued interest thereon, and all
fees and expenses and other amounts due and payable at such time under any of
the Loan documents; PROVIDED that all indemnities set forth herein including,
without limitation, in subsections 3.15, 3.16, 3.17, 3.18, 9.7 and 10.6 shall
survive such termination.
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10.8 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS
(a) This Agreement shall be binding upon and inure to the benefit of
the Borrower, the Lenders, the Agent and their respective successors and
assigns, except that the Borrower may not assign or transfer any of its rights
or obligations under this Agreement without the prior written consent of each
Lender.
(b) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time sell to one or more
banks or other financial institutions ("PARTICIPANTS") participating interests
in any Loan owing to such Lender, any Commitment of such Lender or any other
interest of such Lender hereunder and under the other Loan Documents PROVIDED,
that, in the case of any such sale to an additional bank or financial
institution, (x) the aggregate principal amount of the Loan (or prior to the
Closing Date, Commitment) being sold is not less than $5,000,000 (or such lesser
amount as may be agreed to by the Agent) and (y) the aggregate principal amount
of the Loan (or prior to the Closing Date, the Commitment) remaining with the
selling Lender is not less than $5,000,000 (or such lesser amount as may be
agreed to by the Agent). In the event of any such sale by a Lender of a
participating interest to a Participant, such Lender's obligations under this
Agreement shall remain unchanged, such Lender shall remain solely responsible
for the performance thereof, such Lender shall remain the holder of any such
Loan for all purposes under this Agreement and the other Loan Documents, and the
Borrower and the Agent shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement and the other Loan Documents. No Lender shall be entitled to create in
favor of any Participant, in the participation agreement pursuant to which such
Participant's participating interest shall be created or otherwise, any right to
vote on, consent to or approve any matter relating to this Agreement or any
other Loan Document except for those specified in clauses (i) and (ii) of the
proviso to subsection 10.1. The Borrower agrees that if amounts outstanding
under this Agreement are due or unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, each
Participant shall, to the maximum extent permitted by applicable law, be deemed
to have the right of setoff in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement, PROVIDED that, in purchasing such participating interest, such
Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as fully as if it were a Lender hereunder. The Borrower also
agrees that each Participant shall be entitled to the benefits of subsections
3.16, 3.17 and 3.18 with respect to its participation in the Commitments and the
Loans outstanding from time to time as if it was a Lender; PROVIDED that, in the
case of subsection 3.17, such Participant shall have complied with the
requirements of said subsection and PROVIDED, FURTHER, that no Participant shall
be entitled to receive any greater amount pursuant to any such subsection than
the Lenders would have been entitled to receive in respect of the amount of the
participation transferred by such Lender to such Participant had no such
transfer occurred.
(c) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time and from time to
time assign to any Lender or any affiliate thereof or, with the consent of the
Borrower and the Agent (which in each case shall not
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55
be unreasonably withheld), to an additional bank or financial
institution (an "ASSIGNEE") all or any part of its rights and obligations under
this Agreement and the other Loan Documents pursuant to an Assignment and
Acceptance, substantially in the form of EXHIBIT G, executed by such Assignee,
such assigning Lender (and, in the case of an Assignee that is not then a Lender
or an affiliate thereof, by the Borrower and the Agent) and delivered to the
Agent for its acceptance and recording, PROVIDED that, in the case of any such
assignment to an additional bank or financial institution, (x) the aggregate
principal amount of the Commitment being assigned is not less than $5,000,000
(or such lesser amount as may be agreed to by the Borrower and the Agent) and
(y) if such assignment is of less than all of the rights and obligations of the
assigning Lender, the aggregate principal amount of the Commitment remaining
with the assigning Lender is not less than $5,000,000 (or such lesser amount as
may be agreed to by the Borrower and the Agent). Upon such execution, delivery,
acceptance and recording (and the payment of the registration and processing fee
described in clause (e) below), from and after the effective date determined
pursuant to such Assignment and Acceptance, (x) the Assignee thereunder shall be
a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder with a Commitment as set
forth therein, and (y) the assigning Lender thereunder shall, to the extent
provided in such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of the Lenders' rights and obligations under this
Agreement, such assigning Lender shall cease to be a party hereto).
Notwithstanding any provision of this paragraph (c) of this subsection, the
consent of the Borrower shall not be required for any assignment which occurs at
any time when any of the events described in subsection 8(g) shall have occurred
and be continuing.
(d) The Agent, on behalf of the Borrower, shall maintain at the address
of the Agent referred to in subsection 10.3 a copy of each Assignment and
Acceptance delivered to it and a register (the "REGISTER") for the recordation
of the names and addresses of the Lenders and the Commitments of, and principal
amounts of the Loans owing to, each Lender from time to time. The entries in the
Register shall, to the extent permitted by applicable law be prima facie
evidence of the existence and amounts therein recorded. The Borrower, the Agent
and the Lenders may (and, in the case of any Loan or other obligation hereunder
not evidenced by a Note, shall) treat each Person whose name is recorded in the
Register as the owner of a Loan or other obligation hereunder as the owner
thereof for all purposes of this Agreement and the other Loan Documents,
notwithstanding any notice to the contrary. Any assignment of any Loan or other
obligation hereunder not evidenced by a Note shall be effective only upon
appropriate entries with respect thereto being made in the Register. The
Register shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an affiliate thereof, by the Borrower and the Agent), together
with payment to the Agent of a registration and processing fee of $2,500, the
Agent shall (i) promptly accept such Assignment and Acceptance and (ii) on the
effective date determined pursuant thereto record the information contained
therein in the Register and give notice of such acceptance and recordation to
the Lenders and the
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56
Borrower; PROVIDED that no such fee shall be payable with respect to any
assignment from an assigning Lender to an affiliate thereof.
(f) The Borrower authorizes each Lender to disclose to any Participant
or Assignee (each, a "TRANSFEREE") and any prospective Transferee any and all
financial information in such Lenders' possession concerning the Borrower and
its Affiliates which has been delivered to such Lender by or on behalf of the
Borrower pursuant to this Agreement or which has been delivered to such Lender
by or on behalf of the Borrower in connection with such Lenders' credit
evaluation of the Borrower and its Affiliates prior to becoming a party to this
Agreement.
(g) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this subsection 10.8 concerning assignments of Loans and
Notes relate only to absolute assignments and that such provisions do not
prohibit assignments creating security interests, including, without limitation,
any pledge or assignment by a Lender of any Loan or Note to any Federal Reserve
Bank in accordance with applicable law.
10.9 ADJUSTMENTS; SET-OFF.
(a) If any Lender (a "BENEFITED LENDER") at any time shall receive any
payment of all or part of its Loans or interest thereon, or receive any
collateral in respect thereof (whether voluntarily or involuntarily, by set-off,
pursuant to events or proceedings of the nature referred to in subsection 8(g),
or otherwise), in a greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of such other Lenders' Loans or
interest thereon, such benefited Lender shall purchase for cash from the other
Lenders such portion of each such other Lenders' Loans, or shall provide such
other Lenders with the benefits of any such collateral, or the proceeds thereof,
as shall be necessary to cause such benefited Lender to share the excess payment
or benefits of such collateral or proceeds ratably with each of the Lenders, and
if after taking into account such sharing the benefited Lender continues to have
access to addition funds of or collateral granted by the Borrower for
application on account of its debt, then the benefited Lender shall use such
funds or collateral to reduce debt of the Borrower held by it and share such
payments and the benefits of such collateral with the other Lenders; PROVIDED,
HOWEVER, that if all or any portion of such excess payment or benefits is
thereafter recovered from such benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. The Borrower agrees that each Lender so
purchasing a portion of another Lenders' Loans may exercise all rights of
payment (including, without limitation, rights of set-off) with respect to such
portion as fully as if such Lender were the direct holder of such portion.
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to the Borrower, any
such notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise) to
set-off and appropriate and apply against such amount any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured
-51-
57
or unmatured, at any time held or owing by such Lender or any branch, agency or
(to the extent permitted by applicable law) banking affiliate thereof to or for
the credit or the account of the Borrower. Each Lender agrees promptly to notify
the Borrower and the Agent or any Lender after any such set-off and application
made by such Lender, PROVIDED that the failure to give such notice shall not
affect the validity of the set-off and application.
10.10 COUNTERPARTS. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by facsimile transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be lodged with the Borrower and the
Agent.
10.11 SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.12 INTEGRATION. This Agreement and the other Loan Documents
represent the agreement of the Borrower, the Agent and the Lenders with respect
to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Agent or any Lender relative to subject
matter hereof not expressly set forth or referred to herein or in the other Loan
Documents.
10.13 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF OHIO.
10.14 SUBMISSION TO JURISDICTION; WAIVERS. The Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the Courts of the State of
Ohio, the courts of the United States of America for the Sixth Circuit, and
appellate courts from any thereof,
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail),
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58
postage prepaid, to the Borrower at its address set forth in subsection 10.3 or
at such other address of which the Lenders shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right to effect service
of process in any other manner permitted by law or shall limit the right to ▇▇▇
in any other jurisdiction; and
(e) waives, except in the case of extreme bad faith (and otherwise to
the maximum extent not prohibited by law), any right it may have to claim or
recover in any legal action or proceeding referred to in this subsection 10.14
any special, exemplary, punitive or consequential damages.
10.15 ACKNOWLEDGEMENTS. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Agent nor any Lender has any fiduciary relationship
with or duty to the Borrower arising out of or in connection with this Agreement
or any of the other Loan Documents, and the relationship between Agent and
Lenders, on the one hand, and the Borrower, on the other hand, in connection
herewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among the
Borrower and the Lenders.
10.16 WAIVERS OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, THE BORROWER, THE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
▇▇▇▇▇▇ NATIONAL CORPORATION,
as Borrower
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
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59
NATIONSBANK, N.A.,
as Agent and Lender
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
STAR BANK, N.A.
as Lender
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
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60
SCHEDULE I
LENDERS; ADDRESSES FOR NOTICES
1. NATIONSBANK, N.A.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
2. STAR BANK, N.A.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
ML ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
61
SCHEDULE II
COMMITMENTS AND COMMITMENT PERCENTAGES
COMMITMENT
COMMITMENT
LENDER PERCENTAGE
NATIONSBANK, N.A. $7,500,000 50%
STAR BANK, N.A. $7,500,000 50%
62
SCHEDULE III
▇▇▇▇▇▇ NATIONAL CORPORATION
SUBSIDIARIES:
NAME STATUS JURISDICTION OF INCORPORATION OWNERSHIP PERCENTAGE
-------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ Homes, Inc. Guarantor Ohio 100%
▇▇▇▇▇▇ Holdings, Inc. N/A Ohio 100%
Hearthside Homes, LLC N/A Indiana 99%*
Legacy Mortgage Corporation N/A Indiana 100%
Centron Financial Services Corp. N/A North Carolina 100%
HomeMax, Inc. Guarantor Delaware 95%**
* Remaining 1% ownership by ▇▇▇▇▇▇ Holdings, Inc.
** Remaining 5% ownership by the Founders
63
SCHEDULE IV
▇▇▇▇▇▇ NATIONAL CORPORATION
INDEBTEDNESS
LONG TERM INDEBTEDNESS
As Of February 23, 1998
ENTITY ISSUE TYPE BANK ISSUE MATURITY
DATE DATE
-----------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ National Corporation None
PNC Bank, National Association
▇▇▇▇▇▇ Homes, Inc. Revolving Credit Notes (Agent) 02/19/1998 07/01/2000
Term Note PNC Bank, National Association 02/19/1998 04/01/2001
(Agent)
HomeMax, Inc. Promissory Note NationsBank, N.A. (Agent) 02/19/1998 02/28/2001
Promissory Note NationsBank, N.A. (Agent) 02/23/1998 02/23/2003
HomeMax Indiana, LLC Promissory Note Nations Bank N.A. (Agent) 02/19/1998 02/28/2001
HomeMax Kentucky, LLC Promissory Note NationsBank N.A. (Agent) 02/19/1998 02/28/2001
HomeMax Ohio, Inc. Promissory Note NationsBank N.A. (Agent) 02/19/1998 02/28/2001
HomeMax N. Carolina, Inc. Promissory Note NationsBank N.A. (Agent) 02/19/1998 02/28/2001
HomeMax S. Carolina, Inc. Promissory Note NationsBank N.A. (Agent) 02/19/1998 02/28/2001
HomeMax Tennessee, Inc. Promissory Note NationsBank N.A. (Agent) 02/19/1998 02/28/2001
ENTITY RATE AMOUNT
-------------------------------------------------------------------------------
▇▇▇▇▇▇ National Corporation
▇▇▇▇▇▇ Homes, Inc. Euro-Rate or Base Rate $72,500,000
Euro-Rate or Base Rate $15,000,000
HomeMax, Inc. Eurodollar Rate or ABR $33,920,000
Greater of Prime Rate or $12,000,000
the Federal Funds
Effective Rate
HomeMax Indiana, LLC Eurodollar Rate or ABR $33,920,000
HomeMax Kentucky, LLC Eurodollar Rate or ABR $33,920,000
HomeMax Ohio, Inc. Eurodollar Rate or ABR $33,920,000
HomeMax N. Carolina, Inc. Eurodollar Rate or ABR $33,920,000
HomeMax S. Carolina, Inc. Eurodollar Rate or ABR $33,920,000
HomeMax Tennessee, Inc. Eurodollar Rate or ABR $33,920,000
64
SCHEDULE V
LIENS
▇▇▇▇▇▇ NATIONAL CORPORATION:
N/A
▇▇▇▇▇▇ HOMES, INC.:
N/A
HOMEMAX, INC.:
UCC-1 filings for furniture and computer equipment leased from CLG, Inc. and
Colonial Pacific Leasing Corporation*
THE LIENS DESCRIBED BELOW APPLY TO THE FOLLOWING ENTITIES:
HomeMax, Inc.
HomeMax Indiana, LLC
HomeMax Kentucky, LLC
HomeMax North Carolina, Inc.
HomeMax South Carolina, Inc.
HomeMax Ohio, Inc.
HomeMax Tennessee, Inc.
HM Properties, Inc.
HM Services, Inc.
UCC-1 filings for all inventory together with any and all accounts, chattel
paper, documents, equipment, general intangibles and all proceeds and products
of any and all of the foregoing.
Such liens are the result of security agreements delivered to NationsBank, N.A.,
as agent for itself and the other lenders (collectively "Lenders") under the
Floor Plan Agreement between HomeMax, Inc., HomeMax Indiana, LLC, HomeMax
Kentucky, LLC, HomeMax North Carolina, Inc., HomeMax South Carolina, Inc.,
HomeMax Ohio, Inc and HomeMax Tennessee, Inc. (collectively, "Borrowers") and
Lenders dated February 19, 1998.
* See attachment 1 to Schedule V
65
Attachment 1 to Schedule V
---------------------------------------------- ---------------------------------- -----------------------------
LESSOR NATURE OF LEASE ITEMS LEASED UCC FILING
---------------------------------------------------------------------------------------------------------------
CLG, Inc. 3001 Equipment Lease Misc. computer equipment Yes
Spring Forest Road Agreement dated 8/22/97 Modular Office Furniture
▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇ and Supplements
---------------------------------------------------------------------------------------------------------------
Colonial Pacific Leasing Company Master Equipment Lease Modular Office Furniture Yes
▇.▇. ▇▇▇ ▇▇▇▇▇▇ dated 9/22/97
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ and Addendums
---------------------------------------------------------------------------------------------------------------
66
SCHEDULE VI
GUARANTEES
▇▇▇▇▇▇ NATIONAL ASSOCIATION HAS DELIVERED THE FOLLOWING GUARANTEES:
1) Guarantee of $87,500,000 loan dated February 19, 1998 to PNC Bank,
National Association as agent for itself and the other lenders
(collectively, "Lenders"), under the Amended and Restated Credit
Agreement between ▇▇▇▇▇▇ Homes, Inc., ▇▇▇▇▇▇ Holdings, Inc. and
Hearthside Homes, LLC (collectively, "Borrowers") and Lenders dated
February 19, 1998.
2) Guarantee of $12,000,000 loan dated February 23, 1998 to NationsBank,
N.A., as agent for itself and the other lenders (collectively,
"Lenders"), under the Credit Agreement between HomeMax, Inc. and
Lenders dated February 23, 1998.
▇▇▇▇▇▇ HOMES, INC. HAS DELIVERED THE FOLLOWING GUARANTEE:
1) Guarantee of $87,500,000 loan dated February 19, 1998 to PNC Bank,
National Association, as agent for itself and the other lenders
(collectively, "Lenders"), under the ammended and Restated Credit
Agreement between ▇▇▇▇▇▇ Homes, Inc., ▇▇▇▇▇▇ holdings, Inc. and
Hearthside Homes, LLC (collectively "Borrowers") and Lenders dated
February 19, 1998.
EACH OF THE FOLLOWING ENTITIES HAS DELIVERED THE GUARANTEES DESCRIBED BELOW:
HomeMax, Inc.
HomeMax Indiana, LLC
HomeMax Kentucky, LLC
HomeMax North Carolina, Inc.
HomeMax South Carolina, Inc.
HomeMax Ohio, Inc.
HomeMax Tennessee, Inc.
HM Properties, Inc.
HM Services, Inc.
1) Guarantee of $33,920,000 loan dated February 19, 1998 delivered to
NationsBank, N.A., as agent for itself and the other lenders
(collectively, "Lenders"), under the Floor Plan Agreement between
HomeMax, Inc., HomeMax Indiana, LLC, HomeMax Kentucky, LLC, HomeMax
Ohio, Inc., HomeMax North Carolina, Inc., HomeMax South Carolina, Inc.
and HomeMax Tennessee, Inc. (collectively, "Borrowers") and Lenders
dated February 19, 1998.
2) Guarantee of $12,000,000 loan dated February 23, 1998 delivered to
NationsBank, as agent for itself and the other lenders (collectively,
"Lenders"), under the Credit Agreement between HomeMax, Inc. and
Lenders dated February 23, 1998.
67
SCHEDULE VII
▇▇▇▇▇▇ NATIONAL CORPORATION
EXISTING INVESTMENTS
--------------------
Entity Investment
------ ----------
▇▇▇▇▇▇ National Corporation Subsidiaries
▇▇▇▇▇▇ Homes, Inc. Subsidiaries
HomeMax, Inc. Subsidiaries
HomeMax Indiana, Inc. N/A
HomeMax Kentucky, LLC N/A
HomeMax Ohio, Inc. N/A
HomeMax North Carolina, Inc. N/A
HomeMax South Carolina, Inc. N/A
HomeMax Tennessee, Inc. N/A
HM Properties, Inc. N/A
HM Services, Inc. N/A