1
EXHIBIT 10.23
CREDIT AGREEMENT
DATED AS OF MAY 29, 1998
AMONG
DOMINION HOMES, INC., AS THE COMPANY
THE INSTITUTIONS FROM TIME TO TIME PARTY HERETO, AS LENDERS
HUNTINGTON CAPITAL CORP., AS SYNDICATION AGENT
THE HUNTINGTON NATIONAL BANK, AS ADMINISTRATIVE AGENT
AND
THE HUNTINGTON NATIONAL BANK, AS ISSUING BANK
Porter, Wright, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
2
TABLE OF CONTENTS
-----------------
SECTION HEADING PAGE #
SECTION 1 AMOUNT AND TERMS OF EXTENSIONS OF CREDIT 1
1.1 The Revolving Credit Facility. 1
1.2 Letters of Credit. 3
1.3 Potential Defaults. 6
SECTION 2 BORROWING BASE DEFINITIONS 6
2.1 Borrowing Base. 6
2.2 Available Cash. 7
2.3 Developed Lots. 7
2.4 Eligible Accounts Receivable. 8
2.5 Eligible Acquisition Assets. 8
2.6 Eligible Lumber Inventory. 9
2.7 Eligible Real Estate. 9
2.8 Investments in Joint Ventures. 9
2.9 Lots Under Development. 9
2.10 Model Homes. 10
2.11 Real Estate Held for Development. 10
2.12 Home Work-in-Process. 10
2.13 Speculative Homes. 10
2.14 Mutual Exclusivity. 10
SECTION 3 INTEREST RATES, FEES, ADDITIONAL COSTS AND PAYMENTS 10
3.1 Interest Rates. 11
3.2 Prepayment. 11
3.3 Eurodollar Rate. 11
3.4 Interest on Advances for the Eligible Acquisition Assets. 12
3.5 Conversions of Advances. 12
3.6 Additional Costs. 12
3.7 Limitation on Requests and Elections. 13
3.8 Illegality and Impossibility. 13
3.9 Compensation. 14
3.10 Survival of Obligations. 14
3.11 Interest Rate Protection. 14
3.12 Default Interest Rate. 15
3.13 Fees. 15
3.14 Capital Adequacy and Removal of Affected Lender. 16
3.15 Mandatory Reduction. 17
SECTION 4 EVIDENCE OF INDEBTEDNESS 17
i
3
SECTION 5 COSTS AND EXPENSES. 18
SECTION 6 CONDITIONS PRECEDENT. 18
6.1 Effectiveness and Initial Advance. 18
6.2 Conditions Precedent to Subsequent Advances. 19
SECTION 7 WARRANTIES AND REPRESENTATIONS 19
7.1 Organization and Authority. 20
7.2 Borrowing is Legal and Authorized. 20
7.3 Taxes. 20
7.4 Corporate Information. 21
7.5 Compliance with Law. 21
7.6 Financial Statements; Full Disclosure. 21
7.7 Litigation: Adverse Effects. 22
7.8 No Insolvency. 22
7.9 Government Consent. 22
7.10 Title to Properties. 22
7.11 No Defaults. 23
7.12 Environmental Protection. 23
7.13 Margin Loans. 23
7.14 Real Estate Ownership. 23
SECTION 8 COMPANY BUSINESS COVENANTS 25
8.1 Payment of Taxes and Claims. 25
8.2 Maintenance of Properties and Corporate Existence. 26
8.3 Sale of Assets. 26
8.4 Liens and Encumbrances (Negative Pledge). 27
8.5 Indebtedness 27
8.6 Contingent Liabilities. 28
8.7 Operating Lease Rentals. 28
8.8 Acquisition of Capital Stock. 29
8.9 Restrictions on Dividends. 29
8.10 Management. 29
8.11 Investments, Loans and Advances. 29
8.12 ERISA. 30
8.13 Tangible Net Worth. 31
8.14 Leverage Ratio. 31
8.15 No Losses. 31
8.16 Ratio of Uncommitted Land Holdings to Consolidated
Tangible Net Worth. 31
8.17 Interest Coverage Ratio. 31
8.18 Land Held for Development (Unzoned). 31
8.19 Maintenance of Deposits. 32
8.20 Model Homes Inventory. 32
8.21 Speculative Homes. 32
ii
4
8.22 Further Real Estate Acquisition Limitations, New
Market Investment Amoun. 32
8.23 Conduct of Business, Subsidiaries. 33
8.24 Permitted Acquisitions. 33
8.25 Restriction on Fundamental Changes. 33
SECTION 9 INFORMATION AS TO COMPANY AND SUBSIDIARIES. 34
SECTION 10 EVENTS OF DEFAULT 36
10.1 Nature of Events. 36
10.2 Default Remedies. 37
SECTION 11 THE ADMINISTRATIVE AGENT AND SYNDICATION AGENT 38
11.1 Appointment. 38
11.2 Powers. 39
11.3 General Immunity. 39
11.4 No Responsibility for Loans, Recitals. 39
11.5 Action on Instructions of Lenders. 40
11.6 Employment of Administrative Agents and Counsel. 40
11.7 Reliance on Documents, Counsel. 40
11.8 Reimbursement and Indemnification. 40
11.9 Rights as a Lender. 41
11.10 Lender Credit Decision. 41
11.11 Successor Administrative Agent. 41
11.12 Ratable Payments. 42
SECTION 12 BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS 3
12.1 Successors and Assigns. 43
12.2 Participations. 43
12.3 Assignments. 44
12.4 Dissemination of Information. 45
12.5 Tax Treatment. 45
SECTION 13 NOTICES 45
13.1 Notices. 46
13.2 Reproduction of Documents. 46
13.3 Survival. 46
13.4 Amendments. 46
13.5 Duplicate Originals. 47
13.6 Enforceability and Governing Law. 47
iii
5
13.7 Fiscal Year. 48
13.8 Consent to Jurisdiction and Waiver of Objection to Venue. 48
13.9 Waiver of Jury Trial. 48
13.10 Confidentiality. 49
SECTION 14 DEFINITIONS 49
14.1 Accounting Terms. 49
14.2 Other Definitional Provisions. 49
14.3 Defined Terms. 49
EXHIBITS
A - Form of Revolving Credit Note
B - Form of Standby Letter of Credit Reimbursement Agreement
C - Form of Notice of Borrowing or Continuation/Conversion
D - Form of Officer's Certificate to Accompany Reports
E - Form of Assignment and Acceptance
F - Form of Subsidiary Guaranty
SCHEDULES
Schedule 6.1(a) - Conditions Precedent to Initial Disbursement (Closing
Memorandum)
Schedule 7.4 - Corporate Information
Schedule 7.10 - Schedule of Permitted Encumbrances
iv
6
CREDIT AGREEMENT
This Credit Agreement (the "Agreement") dated as of May 29, 1998, is
entered into among Dominion Homes, Inc., an Ohio corporation (the "Company"),
the institutions from time to time party hereto as lenders, whether by execution
of this Agreement or an Assignment and Acceptance (individually, a "Lender" and
collectively, the "Lenders"), The Huntington National Bank ("Huntington") as
issuing bank and as a Lender, Huntington Capital Corp. ("Huntington Capital") in
its capacity as syndication agent for the Lenders (the "Syndication Agent"), and
Huntington, in its separate capacity as administrative agent for the Lenders and
the issuing bank (with its successors in such capacity, "Administrative Agent").
1 SECTION AMOUNT AND TERMS OF EXTENSIONS OF CREDIT
2
2.1 The Revolving Credit Facility.
2.2
2.3 (a) Subject to the terms and conditions hereof, each Lender hereby
severally (and not jointly) agrees to make revolving loans, in U.S. dollars
(each individually a "Revolving Loan" and collectively the "Revolving Loans") to
the Company from time to time during the period from the initial advance
hereunder to the Business Day prior to the Revolving Credit Termination Date, in
an amount not to exceed at any time outstanding such Lender's Revolving Credit
Commitment at such time; provided, that (i) the aggregate amount of the
Revolving Loans made to the Company by each Lender at any time shall not exceed
such Lender's Pro Rata Share of the Revolving Credit Availability on such date.
All Revolving Loans hereunder shall be made by such Lenders simultaneously and
proportionately to their then respective Revolving Credit Commitments.
2.4
2.5 (b) Borrowing Base Availability. In addition to the foregoing
limitation, the Revolving Credit Obligations shall at no time exceed the
Borrowing Base Availability.
2.6
2.7 (c) Frequency and Amount of Advances. Subject to the provisions hereof,
the Company may borrow and repay any outstanding advance under the Revolving
Loans on any Business Day, and any amounts so repaid may be reborrowed.
2.8
2.9 (d) Notices of Borrowing. When the Company desires to borrow or convert
an advance hereunder, it shall deliver to the Administrative Agent an
irrevocable notice of borrowing, in form attached hereto as Exhibit C ("Notice
of Borrowing") or such other form satisfactory to the Administrative Agent, no
later than 12:00 noon (Columbus, Ohio time) (i) at least one Business Day in
advance of the proposed funding or conversion date in the case of a Prime Rate
Advance, and (ii) at least three (3) Business Days in advance of the proposed
funding or conversion date in the case of a Eurodollar Advance. The Notice of
Borrowing shall specify (i) the proposed funding or conversion date, (ii) the
amount of the proposed advance, (iii) whether the proposed advance will be a
Eurodollar Advance or a Prime Rate Advance and if a Eurodollar Advance the
Interest Period therefor, and (iv) instructions for the disbursement of the
proceeds of the advance.
1
7
2.10
2.11 (e) Making of Revolving Loans. (i) Promptly after receipt of a Notice of
Borrowing, the Administrative Agent shall notify each Lender by telecopy or
other similar form of notice of the proposed borrowing. Each Lender shall
deposit with the Administrative Agent an amount equal to its Pro Rata Share of
the amount requested by the Company to be made as Revolving Loans in immediately
available funds on the funding date specified in the applicable Notice of
Borrowing, subject to the fulfillment of the conditions precedent set forth
below. The Administrative Agent shall make the proceeds of such amounts received
by it available to the Company at the office of the Administrative Agent on such
funding date and shall disburse such proceeds in accordance with the Company's
disbursement instructions set forth in the applicable Notice of Borrowing. The
failure of any Lender to deposit the amount described with the Administrative
Agent on the applicable funding date shall not relieve any other Lender of its
obligations hereunder to make its Revolving Loan on such funding date. No Lender
shall be responsible for any failure by any other Lender to perform its
obligation to make a Revolving Loan hereunder, nor shall the Revolving Credit
Commitment of any Lender be increased or decreased as a result of such failure.
2.12
2.13 (ii) Unless the Administrative Agent shall have been notified by any
Lender on the Business Day immediately preceding the applicable funding date in
respect of any borrowing of Revolving Loans that such Lender does not intend to
fund its Revolving Loan requested to be made on such funding date, the
Administrative Agent may assume that such Lender has funded its Revolving Loan
and is depositing the proceeds thereof with the Administrative Agent, on such
funding date, and the Administrative Agent, in its sole discretion may, but
shall not be obligated to, disburse a corresponding amount to the Company on
such funding date. If the Revolving Loan proceeds corresponding to that amount
are advanced to the Company by the Administrative Agent, but are not in fact
deposited with the Administrative Agent by such Lender on or prior to the
applicable funding date, such Lender agrees to pay, and in addition the Company
agrees to repay, to the Administrative Agent, forthwith on demand such
corresponding amount, together with interest thereon, for each day from the date
such amount is disbursed to or for the benefit of the Company until the date
such amount is paid or repaid to the Administrative Agent, (A) in the case of
the Company, at the interest rate applicable to such borrowing and (B) in the
case of such Lender, at the Federal Funds Rate for the first Business Day, and
thereafter at the interest rate applicable to such borrowing. If such Lender
shall pay to the Administrative Agent, the corresponding amount, the amount so
paid shall constitute such Lender's Revolving Loan, and if both such Lender and
the Company shall pay and repay such corresponding amount, the Administrative
Agent shall promptly pay to the Company such corresponding amount. This Section
1.1(e) does not relieve any Lender of its obligation to make its Revolving Loan
on any funding date.
2.14
2.15 (f) Use of Proceeds of Revolving Loans. The proceeds of the Revolving
Loans may be used (i) to pay the purchase price of any Permitted Acquisition and
other related transaction costs and expenses and to fund any refinancing of
Indebtedness in connection with a Permitted Acquisition as set forth and
certified in the Notice of Borrowing pertaining thereto, (ii) to fund working
capital in the ordinary course of the business of the Company and its
Subsidiaries, (iii) to refinance existing Indebtedness under the Prior Loan
Agreement, (iv) to make Investments permitted by Section 8.11 of this Agreement,
and (v) for other lawful general corporate purposes
2
8
not prohibited hereunder. Notwithstanding anything herein to the contrary, no
proceeds of Revolving Loans may be used to fund payments not permitted by this
Agreement.
2.16
2.17 (g) Revolving Credit Termination Date. The Revolving Credit
Commitments shall terminate, and all outstanding Revolving Credit Obligations
shall be paid in full (or, in the case of unmatured Letter of Credit
Obligations, provision for payment of cash collateral shall be made to the
satisfaction of Huntington and the Administrative Agent), on the Revolving
Credit Termination Date. Each Lender's obligation to make Revolving Loans shall
terminate at the close of business of the Administrative Agent on the Business
Day next preceding the Revolving Credit Termination Date.
2.18
2.19 (h) Interest. Accrued interest under the Revolving Loans shall be due
and payable on each Interest Payment Date.
2.20
2.21 Letters of Credit.
(a) Issuance. Subject to the terms and conditions set forth herein,
Huntington hereby agrees to issue for the account of the Company, a Restricted
Subsidiary, or an Approved Joint Venture, one or more letters of credit in U.S.
dollars (each individually a "Letter of Credit" and collectively the "Letters of
Credit") from time to time during the period from the date hereof to the
Revolving Credit Termination Date, provided that the Letter of Credit
Obligations shall at no time exceed the sum of $20,000,000, provided that the
Revolving Credit Obligations shall at no time exceed the Maximum Revolving
Credit Amount; and provided further, however, that the Revolving Credit
Obligations shall not exceed the Borrowing Base Availability.
(b) Expiry Dates. The Company, a Restricted Subsidiary or an Approved
Joint Venture, as applicable, shall have no right to obtain issuance of Letters
of Credit which have an expiration date later than the earlier of (i) the
Revolving Credit Termination Date or (ii) 24 months from issuance of such Letter
of Credit.
(c) Participations. (i) Immediately upon issuance by Huntington of any
Letter of Credit in accordance with the procedures set forth in this Section
1.2, each Lender shall be deemed to have irrevocably and unconditionally
purchased and received from Huntington, without recourse or warranty, an
undivided interest and participation in such Letter of Credit to the extent of
such Lender's Pro Rata Share.
(ii) If Huntington makes any payment under any Letter of Credit, and
such amount is not repaid to Huntington within two Business Days, Huntington
shall promptly notify the Administrative Agent, which shall promptly notify each
Lender, and each such Lender shall promptly and unconditionally pay to the
Administrative Agent for the account of Huntington, in immediately available
funds, the amount of such Lender's Pro Rata Share of such payment, and the
Administrative Agent shall promptly pay to Huntington such amounts received by
it, and any other amounts received by the Administrative Agent for Huntington's
account, pursuant to this Section 1.2. All such payments shall constitute
Revolving Loans made to the Company (irrespective of the satisfaction of the
conditions in Section 6 or the requirement to deliver a Notice of Borrowing,
which conditions and requirement, for the purpose of refunding any
3
9
Reimbursement Obligation owing to Huntington, the Lenders irrevocably waive) and
shall thereupon cease to be unpaid Reimbursement Obligations. Such Revolving
Loans shall be Prime Rate Advances. If a Lender does not make its Pro Rata Share
of the amount of such payment available to the Administrative Agent, such Lender
agrees to pay to the Administrative Agent for the account of Huntington,
forthwith on demand, such amount together with interest thereon, for the first
Business Day after the date such payment was first due at the Federal Funds
Rate, and thereafter at the interest rate then applicable to Prime Rate
Advances. The failure of any such Lender to make available to the Administrative
Agent for the account of Huntington its Pro Rata Share of any such payment shall
neither relieve any other Lender of its obligation hereunder to make available
to the Administrative Agent for the account of Huntington such other Lender's
Pro Rata Share of any payment on the date such payment is to be made nor
increase the obligation of any other Lender to make such payment to the
Administrative Agent. This Section does not relieve any Lender of its obligation
to purchase Pro Rata Share participations in Letters of Credit; nor does this
Section relieve the Company of its obligation to pay or repay Huntington's
funding of such payment pursuant to this Section or interest on the amount of
such payment from such date such payment is to be made until the date on which
payment is repaid in full.
(iii) In the event that any draw occurs under any of the
Letters of Credit, and such draw is not reimbursed within two Business Days
after demand to the Company or the Company has insufficient ability to obtain
Revolving Loans to pay such draw, the Administrative Agent is hereby authorized
to repay such draw by charging any or all of the Company's accounts or checking
accounts in such order as it deems appropriate, in its sole discretion.
(iv) Whenever Huntington receives a payment on account of a
Reimbursement Obligation, including any interest thereon, as to which any Lender
has made a Revolving Loan pursuant to clause (ii) of this Section, Huntington
shall promptly pay to the Administrative Agent such payment. Each such payment
shall be made by Huntington or the Administrative Agent, as the case may be, on
the Business Day on which such Person receives the funds paid to such Person, if
received prior to 11:00 a.m. (Columbus time) on such Business Day, and otherwise
on the next succeeding Business Day.
(v) Upon the request of any Lender to the Administrative
Agent, Huntington shall furnish such Lender copies of any Letter of Credit or
Letter of Credit Application to which Huntington is party and such other
documentation as reasonably may be requested by such Lender.
(vi) The obligations of a Lender to make payments to the
Administrative Agent for the account of Huntington with respect to a Letter of
Credit, shall be irrevocable, shall not be subject to any qualification or
exception whatsoever, except willful misconduct or gross negligence of
Huntington as such issuing bank as determined in a final, non-appealable
judgment by a court of competent jurisdiction, and shall be honored in
accordance with this Section (irrespective of the satisfaction of the conditions
described in Section 6, as applicable which conditions, for the purposes of the
repayment of Letters of Credit to Huntington, such Lenders irrevocably waive)
under all circumstances, including, without limitation, any of the following
circumstances: (A) any lack of validity or enforceability hereof or of any of
the other Loan
4
10
Documents; (B) the existence of any claim, setoff, defense or other right which
the Company may have at any time against a beneficiary named in a Letter of
Credit or any transferee of a beneficiary named in a Letter of Credit (or any
Person for whom any such transferee may be acting), the Administrative Agent,
the Syndication Agent, any issuing bank, any Lender, or any other Person,
whether in connection herewith, with any Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including any underlying
transactions between the account party and beneficiary named in any Letter of
Credit); (C) any draft, certificate or any other document presented under the
Letter of Credit having been determined to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect; (D) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan Documents; (E)
any failure by Huntington to make any reports required pursuant to this Section
1.2 or the inaccuracy of any such report; or (F) the occurrence of any Event of
Default or Potential Default.
(d) Requirements for Issuance of Letters of Credit.
(i) The Company may request Huntington to issue or cause the
issuance of a Letter of Credit by delivering to the Administrative Agent
Huntington's standard form of Letter of Credit Application and Agreement for
Standby Letter of Credit and/or Reimbursement Agreement (collectively the
"Letter of Credit Application") completed to the satisfaction of Huntington, and
such other certificates, documents and other papers and information as the
Administrative Agent or Huntington may request.
(ii) Each Letter of Credit shall, among other things, provide
for the payment of sight drafts when presented for honor thereunder in
accordance with the terms thereof and when accompanied by the documents
described therein. Each Letter of Credit Application and each Letter of Credit
shall be subject to the Uniform Customs and Practice for Documentary Credits
(1993 Revision), International Chamber of Commerce Publication No. 500, and any
amendments or revision thereof and, to the extent not inconsistent therewith,
the laws of the State of Ohio.
(iii) Huntington shall give the Administrative Agent written
notice, or telephonic notice confirmed promptly thereafter in writing, of the
issuance of a Letter of Credit, which notice to the Administrative Agent shall
promptly transmit by telecopy, telephone or similar transmission to each Lender.
(iv) In connection with the issuance of any Letter of Credit,
the Company shall indemnify, save and hold Huntington, the Administrative Agent,
the Syndication Agent and each Lender harmless from any loss, cost, expense or
liability, including, without limitation, payments made by Huntington, the
Administrative Agent, the Syndication Agent or any Lender, and expenses and
reasonable attorneys' fees incurred by any of the same arising out of, or in
connection with, any Letter of Credit issued on behalf of the Company, a
Restricted Subsidiary or any Approved Joint Venture. The Company shall be bound
by Huntington's or any issuing or accepting bank's regulations and good faith
interpretations of any Letter of Credit, regardless of whether any such
interpretation may be different from the Company's. Neither Huntington, the
Administrative Agent, the Syndication Agent nor any Lender, nor any of its
correspondents shall
5
11
be liable for any error, negligence, or mistakes, whether of omission or
commission, in following the Company's instructions or those contained in any
Letter of Credit or in any modifications, amendments or supplements thereto or
in issuing or paying any Letter of Credit, except in the case of the
Administrative Agent's, the Syndication Agent's, any Lender's, the issuing
bank's or such correspondents' gross negligence or willful misconduct.
(v) The Company shall authorize and direct Huntington with
respect to each Letter of Credit to name the Company, a Restricted Subsidiary or
an Approved Joint Venture as the "Account Party" therein, shall deliver to
Huntington, upon request of Huntington, all instruments, documents, and other
writings and property pursuant to the Letter of Credit and shall accept and rely
upon Huntington's instructions and agreements with respect to all matters
arising in connection with the Letter of Credit or the application therefor.
(e) Use of Proceeds for Letters of Credit. The Letters of Credit
shall be used by the Company, a Restricted Subsidiary or any Approved Joint
Venture (i) to support bonding requirements for real estate site improvements or
maintenance in favor of various municipal entities, (ii) to secure the
Company's, a Restricted Subsidiary's or any Approved Joint Venture's contractual
performance with respect to the Company's land and lot development activities,
and (iii) to secure the Company's, a Restricted Subsidiary's or any Approved
Joint Venture's contractual performance in connection with land acquisition
activities.
1.1 Potential Defaults.
None of the Lenders shall have any obligation to advance or re-advance
any sums pursuant to the Revolving Loans, and Huntington shall have no
obligation to issue or extend any Letters of Credit at any time when (a) an
Event of Default has occurred and is continuing or (b) a set of facts or
circumstances exists, which, by themselves, upon the giving of notice, the lapse
of time, or any one or more of the foregoing, would constitute an Event of
Default under Sections 10.1(g), (h), (i) or (j) of this Agreement (herein a
"Potential Default").
1 SECTION BORROWING BASE DEFINITIONS
2
2.1 Borrowing Base.
2.2
2.3 "Borrowing Base" shall mean (without duplication) the aggregate sum of
the following:
2.4
(a) 100% of Available Cash, plus
(b) 80% of Eligible Accounts Receivable, plus
(c) 75% of Eligible Lumber Inventory, plus
(d) 90% of Eligible Home Work-in-Process, plus
(e) the lesser of $15,000,000.00 or 50% of Eligible Real Estate
Held for Development, plus
6
12
(f) the lesser of $10,000,000.00 or 50% of Eligible Investments
in Joint Ventures, plus
(g) the lesser of or $5,850,000.00 or 90% of the aggregate sum of
Eligible Model Homes, plus
(h) the lesser of $6,000,000.00 or 90% of Eligible Speculative
Homes, plus
(i) 62.5% of Eligible Developed Lots, plus
(j) 50% of Eligible Lots Under Development, plus
(k) 100% of the Eligible Acquisition Assets.
The Administrative Agent shall deduct from any borrowing availability
under the Borrowing Base 100% of the amounts of outstanding Excess Permitted
Nonrecourse Borrowings (the "Excess Permitted Nonrecourse Borrowings Reserve").
1.1 Available Cash.
1.2
"Available Cash" means all of the cash or cash equivalents of the
Company or any Restricted Subsidiary held (a) for its own account at Huntington,
or (b) by title companies or other escrow agents, consisting solely of the net
closing proceeds from residential real estate closings, which cash or cash
equivalents are not subject to a lien or offset in favor of such entity.
1.1 Developed Lots.
1.2
1.3 "Developed Lots" means all lots of the Company and its Restricted
Subsidiaries located in the State of Ohio or any contiguous state on which all
development activity has been completed, including without limitation, all site
development for streets and sewers, and for which application has been made for
final acceptance by the applicable controlling municipality, valued at the
lesser of cost or market.
1.4
7
13
1.5 Eligible Accounts Receivable.
1.6
The term "Eligible Accounts Receivable" means the portion of the
accounts or accounts receivable of the Company or its Restricted Subsidiaries
which are free and clear of all liens and encumbrances and which the
Administrative Agent determines from time to time, based on the creditworthiness
of the Account Debtor, is eligible for use in calculating the Borrowing Base. No
account will be an Eligible Account Receivable in calculating the Borrowing Base
unless, at a minimum, such account arises from a final sale (excluding
consignments) in the ordinary course of business, is due and owing to the
Company or a Restricted Subsidiary from an entity (the "Account Debtor"), and
meets all the following requirements until it is collected in full: (a) the
account is not paid in full and not more than 90 days have elapsed from the
original invoice therefor, or if a special dating program has been approved in
writing by the Administrative Agent, the account is due and payable on a date
permitted by the terms of such dating program and is not past-due; (b) the
account arises from the completed performance of a sale of goods or real estate,
or services, (if involving a sale of goods such goods having been lawfully
shipped and invoiced to the Account Debtor, and the Company or a Restricted
Subsidiary having possession of copies of all shipping documents and delivery
receipts evidencing such shipment); (c) the account does not arise from a
contract with the United States government or any agency thereof; (d) the
account is not subject to any prior assignment, claim, lien, security interest,
setoff, credit, contra account, allowance, adjustment, discount, levy, or return
of goods (other than pursuant to the terms of standard warranty); (e) the
account does not arise from a transaction with a person, corporation or entity
affiliated with the Company, except for accounts from ▇▇▇▇▇▇ Realty Company and
Alliance Title Agency, Ltd.; (f) the account does not, when added to all other
accounts of the Account Debtor with the Company and its Restricted Subsidiaries,
produce an aggregate indebtedness from the Account Debtor of more than 50% of
the total of all the Eligible Accounts Receivable of the Company and its
Restricted Subsidiaries; (g) the Company or a Restricted Subsidiary has not
received notice of bankruptcy or insolvency of the Account Debtor; (h) the
account is not evidenced by any chattel paper, promissory note, payment
instrument or written agreement; (i) the account does not arise from an Account
Debtor whose mailing address or executive office is located outside the United
States or Canada (provided such account is payable in U.S. dollars), unless the
Administrative Agent is the beneficiary of an irrevocable letter of credit from
a bank acceptable to the Administrative Agent for the payment of such account;
and (j) the account does not arise from an Account Debtor who has more than 50%
of its accounts or account balances with the Company and its Restricted
Subsidiaries, unpaid more than 90 days after the original invoice dates
therefor.
1.1 Eligible Acquisition Assets.
1.2
1.3 The term "Eligible Acquisition Assets" means the aggregate Purchase
Price of all Permitted Acquisitions, minus any (a) assets purchased in any
Permitted Acquisition which become eligible for inclusion in the Borrowing Base
or (b) assets which become eligible for inclusion in the Borrowing Base of a
Person that becomes a Restricted Subsidiary as a result of such Permitted
Acquisition, both clauses (a) or (b) determined immediately upon consummation of
such Permitted Acquisition; provided, however, that the aggregate amount of all
advances attributable to Eligible Acquisition Assets shall not exceed the
aggregate sum of $10,000,000.00, and provided further that the amount of all
Eligible Acquisition Assets shall be zero, beginning
8
14
May 31, 2001, and continuing thereafter. The amount of the Eligible Acquisition
Assets shall be determined as of the effective date of each Permitted
Acquisition.
1.4
1.5 Eligible Lumber Inventory.
1.6 The term "Eligible Lumber Inventory" means that portion of the
Company's or any Restricted Subsidiary's inventory consisting of finished lumber
or other building materials, raw materials and finished goods, which shall be
free and clear of all liens and encumbrances, valued at the lesser of cost or
market (calculated on a FIFO basis and in accordance with GAAP).
1.1 Eligible Real Estate.
With respect to Developed Lots, Lots under Development, Model Homes,
Real Estate Held for Development, Home Work-In-Process, Speculative Homes, or
any other form or type of real estate of the Company or any Restricted
Subsidiary which may be considered for the purposes of the Borrowing Base, the
term "Eligible" used in connection with any such type of real estate shall mean
that portion of real property (a) owned in fee simple title by the Company or a
Restricted Subsidiary, and (b) which is not subject to any mortgage, lien, or
encumbrance, except for Unleveraged Seller Financing, and except for
reservations, exceptions, encroachments, easements, rights-of-way, restrictions,
leases or other similar title exceptions which do not materially detract from
the value of such real estate or interfere with its use or resale.
1.1 Investments in Joint Ventures.
1.2
1.3 "Investments in Joint Ventures" shall mean the net equity investment
of the Company or any Restricted Subsidiary in all real estate limited liability
companies, partnerships or joint ventures (including without limitation Approved
Joint Ventures) entered into solely for the purpose of acquiring real property,
developing residential lots or other developments and distributing the same to
the owners of such entities, valued at the equity method. The term "Eligible"
used in connection with Investments in Joint Ventures means any of the foregoing
joint ventures or other entities between the Company or a Restricted Subsidiary
on one hand, and M/I Schottenstein Homes, Inc., Homewood Corporation, Rockford
Homes, Inc. or other joint venture partner or member whose profitability and
balance sheet demonstrate creditworthiness, as determined by the Administrative
Agent.
1.4
1.5 Lots Under Development.
1.6
"Lots Under Development" shall mean all lots of the Company or any
Restricted Subsidiary that such entity intends to use for residential
development during the time period between the commencement of development of
such lots (by the issuance of a Letter of Credit to support development
activities) and the completion of such lot as a Developed Lot, valued at the
lesser of cost or market.
1.1 Model Homes.
1.2
9
15
1.3 "Model Homes" shall mean residential dwellings of the Company or its
Restricted Subsidiaries that have been or are being constructed for the purpose
of marketing similar dwellings and for which there is no present intention to
sell, valued at the lesser of cost or market.
1.4
1.5 Real Estate Held for Development.
1.6
1.7 "Real Estate Held for Development" shall mean that portion of the real
estate of the Company or its Restricted Subsidiaries consisting of all
undeveloped real estate, prior to the commencement of construction for which
such entity intends to develop into residential lots, valued at the lesser of
cost or market and if such property is subject to Unleveraged Seller Financing,
net of the amount of such Unleveraged Seller Financing.
1.8
1.9 Home Work-in-Process.
1.10
"Home Work-in-Process" shall mean that portion of the real estate of
the Company or any Restricted Subsidiary consisting of (a) work-in-process prior
to completion and (b) completed units for which such entity has an effective and
existing, executed arm's-length, bona fide purchase contract (an "Arm's-Length
Contract"), valued at the lesser of cost or market.
1.1 Speculative Homes.
1.2
1.3 "Speculative Homes" shall mean residential dwellings or lots on which
the Company or a Restricted Subsidiary has commenced construction for such
dwellings, which such entity presently intends to sell, but for which such
entity does not have an Arm's-Length Contract, valued at the lesser of cost or
market.
1.4
1.5 Mutual Exclusivity.
1.6
Each of the terms defined in Sections 2.1 through 2.13 (excluding
Section 2.7) shall be mutually exclusive, and none of the real or personal
property of the Company or any Restricted Subsidiary shall be considered to be
in more than one of the foregoing categories at the same time.
10
16
1 SECTION INTEREST RATES, FEES, ADDITIONAL COSTS AND PAYMENTS
2
2.1 Interest Rates.
2.2
All advances under the Revolving Loans shall bear interest upon the
unpaid principal amount thereof from the date such advances are made until paid
in full as follows: at the election of the Company at (a) the Applicable Prime
Rate Margin plus the Prime Commercial Rate from time to time in effect, with
each change in the Prime Commercial Rate automatically and immediately changing
the interest rate on such Revolving Loans without notice to the Company, or (b)
the Applicable Eurodollar Margin plus the Eurodollar Rate, or (c) the Applicable
Eligible Acquisition Assets Rate automatically and without the election of the
Company to the extent that the Revolving Credit Obligations exceed the Borrowing
Base calculated without respect to any Eligible Acquisition Assets.
1.1 Prepayment.
1.2
1.3 The Company shall have the right to prepay without penalty at any time
and from time to time before the Revolving Credit Termination Date any and all
Prime Rate Advances.
1.4
1.5 Eurodollar Rate.
1.6
1.7 (a) Eurodollar Rate. Each Eurodollar Advance shall be in a minimum
amount of $5,000,000 and integral multiples of $1,000,000 in excess thereof, and
no more than ten (10) Eurodollar Advances shall be outstanding at any time under
the Revolving Loans.
1.8
1.9 The Eurodollar Rate shall be adjusted automatically on
and as of the effective date of any change in the Eurodollar Reserve Percentage.
1.10
1.11 Each Eurodollar Advance shall be reserve adjusted, including all types
of reserve insurance and brokerage costs.
1.12
1.13 (b) Change in Margin. The Interest Coverage Ratio used to compute the
Applicable Eurodollar Margin initially shall be the Interest Coverage Ratio set
forth in the compliance certificate most recently delivered by the Company to
the Administrative Agent prior to the date hereof, and changes in the Applicable
Eurodollar Margin resulting from a change in the Interest Coverage Ratio shall
become effective as to all Eurodollar Advances upon the first day of the
calendar quarter following delivery by the Company to the Administrative Agent
of a new compliance certificate pursuant to Section 9(a) and notice by the
Company to the Administrative Agent that a rate change is required. If the
Company shall fail to deliver a certificate in respect of the Interest Coverage
Ratio within forty-five (45) days after the end of any fiscal quarter, the
Applicable Eurodollar Margin from and including the first day of the following
quarter to the date the Company delivers to the Administrative Agent such
certificate shall conclusively equal the highest Applicable Eurodollar Margin
set forth herein.
1.14
1.15 Interest on Advances for the Eligible Acquisition Assets.
1.16
11
17
1.17 Notwithstanding the foregoing, the aggregate amount of Revolving Credit
Obligations outstanding at any time attributable to Eligible Acquisition Assets
shall bear interest at a rate equal to the applicable Eurodollar Rate or the
Prime Commercial Rate, as the Company shall elect, plus the Applicable
Eurodollar Margin or the Applicable Prime Margin, as applicable, plus one-half
of one percent (.5%) per annum (the "Applicable Eligible Acquisition Assets
Rate"). The Applicable Eligible Acquisition Assets Rate shall be effective as of
the first day of the calendar month following delivery of a Borrowing Base
certificate (or other computation determined by the Administrative Agent)
demonstrating the applicability of such rate, and such rate shall continue until
the first day of the month following delivery of a Borrowing Base certificate
(or other computation determined by the Administrative Agent) demonstrating that
such rate is no longer applicable.
1.18
1.19 Conversions of Advances.
1.20
An outstanding advance may only be converted on the last day of the
then current Interest Period (if applicable) with respect to such advance, and
provided, further, that upon the continuation or conversion of an advance such
notice shall also specify the Interest Period (if applicable) to be applicable
thereto upon such continuation or conversion. If the Company shall fail to
timely deliver such a notice with respect to any outstanding advance, the
Company shall be deemed to have elected to convert such advance to a Prime Rate
Advance on the last day of the then current Interest Period with respect to such
advance.
1.1 Additional Costs.
1.2
1.3 In the event that any applicable law, treaty, rule or regulation
(whether domestic or foreign) now or hereafter in effect, or any interpretation
or administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by the Administrative
Agent or any of the Lenders with any request or directive of any such authority
(whether or not having the force of law), shall (a) affect the basis of taxation
of payments to the Administrative Agent or any of the Lenders of any amounts
payable by the Company for Revolving Credit Obligations or any advance under
this Agreement (other than taxes imposed on the overall net income of the
Administrative Agent or any of the Lenders by the jurisdiction, or by any
political subdivision or taxing authority of any such jurisdiction, in which the
Administrative Agent or any of the Lenders has its principal office), or (b)
shall impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by the Administrative Agent or any of the Lenders, and the result of
any of the foregoing is to increase the cost to the Administrative Agent or any
of the Lenders of making or maintaining the Revolving Credit Obligations or any
advance hereunder, to reduce the amount of any sum receivable by the
Administrative Agent or any of the Lenders thereon, or to reduce the rate of
return on the Administrative Agent's or any Lender's capital, then the Company
shall pay to the Administrative Agent or such Lender, as the case may be, from
time to time, upon request of the Administrative Agent, additional amounts
sufficient to compensate the Administrative Agent or such Lender, as the case
may be, for such increased cost, reduced sum receivable or reduced rate of
return to the extent the Administrative Agent or any Lender, as the case may be,
is not compensated therefor in the computation of the interest rates applicable
to the Revolving Loans.
12
18
A detailed statement as to the amount of such increased cost, reduced sum
receivable or reduced rate of return, prepared in good faith and submitted by
the Administrative Agent or any Lender, as the case may be, to the Company,
shall be conclusive and binding for all purposes relative hereto, absent
manifest error in computation.
1.4
1.5 Limitation on Requests and Elections.
1.6
Notwithstanding any other provision of this Agreement to the contrary,
if, upon receiving a request for an advance or a request for a continuation of
an advance as an advance of the then existing type or conversion of an advance
to an advance of another type, the Required Lenders advise the Administrative
Agent (a) that, in the case of any Eurodollar Advance, deposits in dollars for
periods comparable to the Interest Period elected are not generally available in
the London interbank or secondary market, or (b) that the Eurodollar Rate, as
determined by the Administrative Agent, will not accurately cover the cost to
such Lenders of making or maintaining the related Eurodollar Advance or (c) that
by reason of national or international financial, political or economic
conditions or by reason of any applicable law, treaty, rule or regulation
(whether domestic or foreign) now or hereafter in effect, or the interpretation
or administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by such Lenders with any
request or directive of such authority (whether or not having the force of law),
including without limitation exchange controls, it is impracticable, unlawful or
impossible for such Lenders (i) to make the relevant Eurodollar Advance or (ii)
to continue such advance as a Eurodollar Advance or (iii) to convert an advance
to a Eurodollar Advance, then the Company shall not be entitled, so long as such
circumstances continue, to request a Eurodollar Advance or a conversion to such
advance from the Lenders. In the event that such circumstances no longer exist,
the Lenders shall again consider requests for Eurodollar Advances of the
affected type and requests for continuations of and conversions to such advances
of the affected type.
13
19
1.1 Illegality and Impossibility.
1.2
In the event that any applicable law, treaty, rule or regulation
(whether domestic or foreign) now or hereafter in effect, or any interpretation
or administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by the Administrative
Agent or any Lender with any request or directive of such authority (whether or
not having the force of law), including without limitation exchange controls,
shall make it unlawful or impossible for the Administrative Agent or any Lender
to maintain any advance under this Agreement, the Company shall upon receipt of
notice thereof from the Administrative Agent, repay in full the then outstanding
principal amount of all such advances made by the Administrative Agent together
with all accrued interest thereon to the date of payment and all amounts due to
the Administrative Agent under Section 3.1(b) or 1.1(h) on the last day of the
then current Interest Period, if any, applicable to such advance, if the
Administrative Agent or any Lender may lawfully continue to maintain such
advance to such day, or immediately if the Administrative Agent or any Lender
may not continue to maintain such advance to such day, in which case, the
Administrative Agent will permit such prepayment without payment of any
additional compensation or breakage costs. This Section 3.8 shall apply only as
long as such illegality exists. As an alternative to the repayment obligation
provided in this Section 3.8, the Company may, at its option, and at the time
provided in this Section 3.8, convert any affected advance to a Prime Rate
Advance.
1.1 Compensation.
1.2
Subject to Section 3.8 above, in addition to all amounts required to be
paid by the Company pursuant to this Section 3, the Company shall compensate the
Administrative Agent and the Lenders, and each of them, upon demand, for all
losses, expenses and liabilities (including, without limitation, any loss or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by the Administrative Agent or any Lender to fund or
maintain the Eurodollar Advances) which the Administrative Agent or any Lender
may sustain (a) if for any reason an advance, conversion into or continuation of
such an advance does not occur on the date specified therefor in the Notice of
Borrowing or in a telephonic request by the Company for borrowing or conversion
or continuation or a successive Interest Period does not commence after notice
therefor is given to the Administrative Agent, (b) if for any reason any
Eurodollar Advance is prepaid on a date which is not the last day of the
applicable Interest Period, (c) as a consequence of a required conversion of a
Eurodollar Advance to a Prime Rate Advance as a result of any of the events
indicated in Section 3.6 or 3.7, or (d) as a consequence of any failure by the
Company to repay a Eurodollar Advance when required by the terms hereof. The
Company shall reimburse the Administrative Agent and each Lender, or any of
them, as the case may be, on demand for any resulting loss or expense incurred
by such entity, determined in such entity's reasonable opinion, including
without limitation any loss incurred in obtaining, liquidating or employing
deposits or other sources of funding from third parties or funding sources. A
detailed statement as to the amount of such loss or expense, prepared in good
faith and submitted by such entity to the Company shall be conclusive and
binding for all purposes absent manifest error in computation.
14
20
1.1 Survival of Obligations.
1.2
The provisions of Sections 3.6 and 3.9 shall survive the termination of
this Agreement and the payment in full of all Notes outstanding pursuant hereto.
1.1 Interest Rate Protection.
1.2
1.3 In the event that on any Business Day any Eurodollar Rate with respect
to any Interest Period available to the Company under this Agreement equals or
exceeds 8.50% per annum, the Company shall enter into or have entered into
interest rate contracts with any financial institution with an aggregate
notional amount of not less than 50% of the Revolving Credit Obligations
outstanding on such Business Day for a term extending to the Revolving Credit
Termination Date on terms reasonably satisfactory to the Administrative Agent.
1.4
1.5 Default Interest Rate.
1.6 Upon the occurrence of any Event of Default, interest shall thereafter
accrue (a) on the principal amount of the Revolving Loans and upon any unpaid
Reimbursement Obligations at a rate equal to two percentage points in excess of
the Prime Commercial Rate, and (b) on that portion of the Revolving Credit
Obligations attributable to Eligible Acquisition Assets at a rate equal to two
percentage points in excess of the Applicable Eligible Acquisition Assets Rate.
1.7
1.8 Fees.
1.9
1.10 Until and unless the Company pays the Revolving Credit Obligations in
full, and has no right to seek further extensions of credit pursuant thereto,
the Company agrees to pay to the Administrative Agent and the Syndication Agent
the fees set forth in this Section 3.13.
1.11
1.12 (a) On or prior to the date of this Agreement, the Company agrees to
pay to the Administrative Agent for the benefit of each of the Lenders who were
"Banks" under the Loan Agreement dated as of September 29, 1997 (the "Prior Loan
Agreement"), all fees which have accrued under the Prior Loan Agreement but
which are not yet due and payable under the terms thereof, payable on or before
execution of this Agreement, which fees shall be shared by each of the "Banks"
pursuant to the Prior Loan Agreement.
1.13
1.14 (b) The Company agrees to pay to the Administrative Agent for the
account of the Lenders fees in respect of the Letters of Credit equal to the
Applicable Eurodollar Margin per annum of the stated amount of each Letter of
Credit. Huntington, as issuing bank, shall retain a fee equal to one-eighth
percent of one percent per annum, and the remainder of such fee shall be shared
by the Lenders pursuant to each Lender's Pro Rata Share. Each fee shall be
payable as follows: (i) one-fourth of the amount of such fee shall be payable
upon the issuance of any Letter of Credit, and (ii) the remaining portion
(three-fourths of the amount of each fee) shall be payable quarterly in arrears,
beginning on the first day of the calendar quarter after issuance of each Letter
of Credit. In addition, the Company agrees to pay to Huntington, as issuing
bank, its normal and customary issuing, servicing and amendment fees for each
Letter of Credit.
1.15
15
21
1.16 (c) The Company agrees to pay the Administrative Agent for the account
of the Lenders in accordance with their respective Pro Rata Shares, an unused
fee accruing from the initial disbursement of Revolving Loans hereunder through
and including the Revolving Credit Termination Date at the Applicable Unused
Commitment Fee Rate in effect from time to time on the daily amount by which the
Revolving Credit Commitments exceeds the Revolving Credit Obligations for such
period. Such fees shall be payable quarterly in arrears, beginning on the last
day of June, 1998, and continuing on the last day of each September, December,
March, and June thereafter.
1.17
1.18 (d) Change in Unused Commitment Fee Rate. The Interest Coverage Ratio
used to compute the Applicable Unused Commitment Fee Rate initially shall be the
Interest Coverage Ratio set forth in the compliance certificate most recently
delivered by the Company to the Administrative Agent prior to the date hereof,
and changes in the Applicable Unused Commitment Fee Rate resulting from a change
in the Interest Coverage Ratio shall become effective upon the first day of the
calendar quarter following delivery by the Company to the Administrative Agent
of a new compliance certificate pursuant to Section 9(a) and notice by the
Company to the Administrative Agent that a rate change is required. If the
Company shall fail to deliver a certificate in respect of the Interest Coverage
Ratio within forty-five (45) days after the end of any fiscal quarter, the
Applicable Unused Commitment Fee Rate from and including the first day of the
following fiscal quarter to the date the Company delivers to the Administrative
Agent such certificate shall conclusively equal the highest Applicable Unused
Commitment Fee Rate set forth herein.
1.19
1.20 (e) The Company shall pay to the Administrative Agent such other fees
as the Company is obligated to pay pursuant to the Letter Agreement.
1.21
1.22 Capital Adequacy and Removal of Affected Lender.
1.23
1.24 In the event that any Lender shall have determined that the adoption
of any articles of incorporation, bylaws, code of regulations or any other
organizational or governing document, or any law, treaty, rule or regulation, or
determination of any Governmental Authority, regarding capital adequacy, or any
change therein or in the interpretation or application thereof or compliance by
any Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) from any central bank or Governmental Authority,
does or shall have the effect of reducing the rate of return on such Lender's
capital as a consequence of its obligations hereunder to a level below that
which such Lender could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's policies with respect to
such capital adequacy) by an amount deemed by such Lender to be material, then
from time to time, upon submission by such Lender to the Company (with a copy to
the Administrative Agent), of a written request therefore setting forth in
reasonable detail the assumptions used by such Lender in determining such amount
and the manner in which such amount was calculated, the Company shall pay to
such Lender such additional amount or amounts that will compensate such Lender
for such reduction in rate of return; provided, however, that if such event or
condition with respect to capital adequacy applies only to one Lender and/or the
Company receives notice only from one Lender, then the Company shall not be
required to pay any such additional amount that accrues during the initial 120
day period after notice to the Company of
16
22
the occurrence of such event or condition with respect to capital adequacy. If
any Lender becomes entitled to claim any additional amounts pursuant to this
subsection, it shall promptly notify the Company, through the Administrative
Agent, of the entitling event. A certificate as to any additional amounts
payable pursuant to this subsection submitted by any Lender to the Company,
through the Administrative Agent, shall be presumed correct with respect to the
Company, absent manifest error.
1.25
1.26 In the event that (a) the Company receives certification of the type
described in the immediately preceding paragraph from any Lender and (b) such
increase in capital requirements is not generally applicable to the Lenders, the
Company, at its option and in its discretion, shall have the right to designate
an assignee which is not affiliated with the Company and which is acceptable to
the Administrative Agent and the Required Lenders, to purchase for cash,
pursuant to an Assignment and Acceptance in form satisfactory to the
Administrative Agent and the Company, the outstanding Revolving Credit
Obligations of such Lender and to assume all of such Lender's other rights and
obligations (including, without limitation, such Lender's obligation to
participate in all outstanding Letters of Credit) hereunder without recourse to
or warranty by, or expense to, such Lender, for a purchase price equal to the
principal amount of all of such Lender's outstanding Revolving Loans plus any
accrued but unpaid interest thereon and the accrued but unpaid fees in respect
of such Lender's Revolving Credit Commitment hereunder and any other amounts
that may be owing to such Lender hereunder.
1.27
1.28 Mandatory Reduction.
1.29
1.30 The Company shall make a mandatory reduction or repayment of the
Revolving Credit Obligations immediately if at any time (a) the sum of the
Revolving Credit Obligations exceeds (b) the Borrowing Base Availability, in an
amount equal to such difference.
1.31
1.32
2 SECTION EVIDENCE OF INDEBTEDNESS
3
(a) Evidence of the Revolving Loans. The Company hereby agrees to pay
when due the principal amount of each Revolving Loan and further agrees to pay
when due all unpaid interest accrued thereon, in accordance with the terms
hereof and with the Notes evidencing the Revolving Loans. The Company shall
execute and deliver to each Lender, as applicable, revolving credit promissory
notes substantially in the form of Exhibit A and thereafter shall execute and
deliver such other promissory notes as are necessary to evidence the Revolving
Loans owing to the Lenders after giving any effect to any assignment or
substitution thereof pursuant to this Agreement, all in form and substance
acceptable to the Administrative Agent and the parties to such assignment (all
such promissory notes and all amendments thereto, replacements thereof, and
substitutions thereof being collectively referred to as the "Notes" and
separately as a "Note").
(b) Evidence of the Letters of Credit. Subject to the terms hereof, the
Company unconditionally agrees to pay Huntington the amount of all Reimbursement
Obligations, interest and other amounts payable to Huntington under and in
connection with any Letter of Credit when such amounts are due and payable,
irrespective of any claim, setoff, defense, or other right
17
23
which the Company may have at any time against Huntington or any other Person.
The Company shall execute and deliver to Huntington as issuing bank a Standby
Letter of Credit Reimbursement Agreement substantially in the form of Exhibit B.
In the event any payment by the Company received by Huntington with respect to a
Letter of Credit and distributed by the Administrative Agent to the Lenders on
account of their participation is thereafter set aside, voided or recovered from
Huntington in connection with any receivership, liquidation or bankruptcy
proceeding, each such Lender which received such distribution shall, upon demand
by Huntington, contribute such Lender's Pro Rata Share of the amount set aside,
voided or recovered, together with interest at the rate required to be paid by
Huntington upon the amount required to be repaid or returned by it.
1 SECTION COSTS AND EXPENSES.
2
(a) The Company shall pay all reasonable costs and expenses of the
Syndication Agent, the Administrative Agent and Huntington in connection with
the preparation, negotiation and execution of the Loan Documents and any
proposal or commitment letters or otherwise incidental to the Revolving Credit
Commitments, any amendment or modification of this Agreement or any Loan
Documents, any litigation, contest, dispute, proceeding or action in any way
relating to this Agreement or to any instrument, promissory note, agreement, or
other document executed in connection with this Agreement, whether any of the
foregoing be incurred prior to or after maturity, the occurrence of an Event of
Default, or the rendering of a judgment. Such costs shall include, but not be
limited to, reasonable fees and out-of-pocket expenses of counsel for the
Administrative Agent, the Syndication Agent, and Huntington, recording fees,
revenue stamps and note and mortgage taxes.
(b) The Company further agrees to pay or reimburse the Administrative
Agent, the Syndication Agent, Huntington, and the Lenders upon demand for all
out-of-pocket costs and expenses, including, without limitation, reasonable
attorneys' fees and out-of-pocket expenses, incurred by any of the foregoing
after the occurrence of an Event of Default (i) in enforcing any Loan Document
or exercising or enforcing any other right or remedy available by reason of any
Event of Default; (ii) in connection with any refinancing or restructuring of
the credit arrangements provided hereunder in the nature of a "work-out" or any
insolvency or bankruptcy proceeding; and (iii) in commencing, defending or
intervening in any litigation or legal proceeding relating to the Revolving
Credit Obligations, the Company or any Subsidiary related to or arising out of
the transactions contemplated hereby except to the extent that such proceeding
(A) involves the gross negligence or willful conduct of a party hereto other
than the Company or a Restricted Subsidiary or (B) is between or among parties
hereto and does not include the Company or a Restricted Subsidiary.
18
24
1 SECTION CONDITIONS PRECEDENT.
2
2.1 Effectiveness and Initial Advance.
2.2
This Agreement shall become effective, each Lender shall be obligated
to make the initial advance hereunder, and Huntington shall be required to issue
Letters of Credit only after the Administrative Agent shall have received from
the Company each of the following items in form and substance satisfactory to
the Administrative Agent:
(a) The Administrative Agent shall have received this Agreement, the
Notes and the Letter of Credit reimbursement agreement referenced above and all
other agreements, documents and instruments described in Schedule 6.1(a)
attached hereto and made a part hereof, each duly executed where appropriate in
form and substance satisfactory to the Administrative Agent, and without
limiting the foregoing, the Company hereby directs its counsel Vorys, ▇▇▇▇▇,
▇▇▇▇▇▇▇ and ▇▇▇▇▇, LLP to prepare and deliver to the Administrative Agent and
the Lenders the opinion referred to in such Schedule.
(b) The Administrative Agent shall have received a certificate signed
by the chief operating officer and chief financial officer of the Company,
stating to the best of his knowledge after due inquiry, on such effective date
no Event of Default has occurred and is continuing.
1.1 Conditions Precedent to Subsequent Advances.
1.2
1.3 The obligation of each Lender to make any disbursement or advance
subsequent to the initial disbursement or initial advance under the Revolving
Loans, or of Huntington as issuing bank to issue any Letters of Credit is
subject to all the conditions and requirements of this Agreement and delivery of
the following required documents, or other action, all of which are conditions
precedent:
1.4
1.5 (a) Warranties and Representations. On the date of each advance
pursuant to the Revolving Loans, the warranties and representations set forth in
Section 7 hereof and each of the representations and warranties contained in any
certificate, document or financial or other statement furnished at any time
pursuant to this Agreement or any related document shall be true and correct on
and as of such date with the same effect as though such warranties and
representations had been made on and as of such date, except to the extent that
such warranties and representations expressly relate to an earlier date.
1.6
1.7 (b) Compliance. The Company and any Subsidiary shall have complied and
shall then be in compliance with all the terms, covenants and conditions of this
Agreement which are binding upon it, and no Event of Default or Potential
Default shall have occurred and be continuing on such date or after giving
effect to the advances requested to be made.
1.8
1.9 (c) Confirmation of Conditions Precedent. The Company and any
Subsidiary shall then be in compliance with and able to confirm all the
foregoing conditions precedent with the same effect as though such conditions
precedent were requirements to the making of any advance contemplated herein.
19
25
1.10
1.11
2 SECTION WARRANTIES AND REPRESENTATIONS
3
4 In order to induce the Administrative Agent, the Syndication Agent and
each of the Lenders to enter into this Agreement and to make the Revolving
Loans, the Letters of Credit and the other financial accommodations to the
Company, the Company represents and warrants to the Administrative Agent, the
Syndication Agent and each of the Lenders that each of the following statements
is true and correct:
5
5.1 Organization and Authority.
5.2
5.3 The Company and each of the Subsidiaries (a) is a corporation, limited
liability company, partnership or joint venture duly organized, validly existing
and in good standing under the laws of the state of its formation; (b) has all
requisite power and authority and all necessary licenses and permits to own and
operate its properties and to carry on its business as now conducted and as
presently proposed to be conducted; and (c) is not doing business or conducting
any activity in any jurisdiction in which it has not duly qualified and become
authorized to do business, where the failure to do so has or is reasonably
likely to have a Material Adverse Effect.
5.4
5.5 Borrowing is Legal and Authorized.
5.6
5.7 (a) The execution and delivery of each of the Loan Documents which have
been executed and to which the Company or any Subsidiary is a party has been
authorized by the Board of Directors or other manager of such entity and will
constitute valid and binding obligations enforceable in accordance with their
respective terms; (b) the execution of this Agreement and related Notes and Loan
Documents and the compliance with all the provisions of this Agreement (i) are
within the corporate or constituent powers of such entity; and (ii) are legal
and will not conflict with, result in any breach in any of the provisions of,
constitute a default under, or result in the creation of any lien or encumbrance
upon any property of the Company or any Subsidiary under the provisions of, any
agreement, charter instrument, bylaw, or other instrument to which the Company
or any Subsidiary is a party or by which it may be bound; and (c) there are no
limitations in any indenture, material contract or agreement, mortgage, deed of
trust or other agreement or instrument to which the Company or any Subsidiary is
now a party or by which the Company or any Subsidiary may be bound with respect
to the payment of principal or interest on any Indebtedness, or the Company's or
any Subsidiary's ability to incur Indebtedness, including the Notes to be
executed in connection with this Agreement.
5.8
5.9 Taxes.
5.10
5.11 All tax returns required to be filed by the Company and each Subsidiary
in any jurisdiction have in fact been filed, and all taxes, assessments, fees
and other governmental charges which are required to be paid pursuant to Section
8.1 or other provisions of this Agreement in respect of the Company, and each
Subsidiary, or upon any of properties of the same, which are due and payable
have been paid. The Company does not know of any proposed
20
26
additional tax assessment against it or any Subsidiary. The accruals for taxes
on the books of the Company and each Subsidiary for its current fiscal period
are adequate.
5.12
5.13 Corporate Information.
5.14
Schedule 7.4 attached hereto accurately represents as of the date
hereof the following: (a) the classes of capital stock of the Company and each
Subsidiary and par value of each such class, all as authorized by the Company's
or such Subsidiary's Articles of Incorporation, (b) the number of shares of each
such class of stock issued and outstanding, and (c) the Company's and each
Subsidiary's employer tax identification number. All shares of all classes of
capital stock issued and outstanding are fully paid and nonassessable. Except
for options granted pursuant to the Company's Incentive Stock Plan, neither the
Company nor any Subsidiary has outstanding any other stock or other equity
security, or any other instrument convertible to an equity security of the
Company or such Subsidiary, or any commitment, understanding, agreement or
arrangement to issue, sell or have outstanding any of the foregoing.
1.1 Compliance with Law.
1.2
1.3 Neither the Company nor any Subsidiary (a) is in violation of any laws,
ordinances, governmental rules or regulations to which it is subject, including
without limitation any laws, rulings or regulations relating to ERISA or Section
4975 of the Internal Revenue Code or (b) has failed to obtain any licenses,
permits, franchises or other governmental or environmental authorizations
necessary to the ownership of its properties or to the conduct of its business,
which violation or failure under clause (a) or clause (b) above has or is
reasonably likely to have a Material Adverse Effect.
1.4
1.5 Financial Statements; Full Disclosure.
1.6
1.7 The financial statements for the fiscal year ending December 31, 1997,
which have been supplied to the Administrative Agent and the Lenders on or prior
to the date hereof, have been prepared in accordance with GAAP and fairly
represent the Company's consolidated financial condition as of such date, and
the financial statements for the interim period ending March 31, 1998, which
have been supplied to the Administrative Agent and the Lenders prior to the date
hereof, fairly represent the Company's consolidated financial condition as of
such date. No material adverse change in the Company's consolidated financial
condition has occurred since such dates. The financial statements referred to in
this paragraph do not, nor does this Agreement or any written statement
furnished by the Company to the Administrative Agent and the Lenders in
connection with obtaining the Revolving Loans and the Letters of Credit, contain
any untrue statement of a material fact or omit a material fact necessary to
make the statements contained therein or herein not misleading. The Company has
disclosed to the Administrative Agent and the Lenders in writing all facts,
including, without limitation, all pending litigation, administrative
proceedings, and arbitration proceedings, which may or is likely to have a
Material Adverse Effect.
1.8
21
27
1.9 Litigation: Adverse Effects.
1.10
There is no action, suit, audit, proceeding, investigation or
arbitration (or series of related actions, suits, proceedings, investigations or
arbitrations) before or by any Governmental Authority or private arbitrator
pending or, to the knowledge of the Company, threatened against the Company or
any Subsidiary or any property of the Company or any Subsidiary (a) challenging
the validity or the enforceability of any of this Agreement, or any Loan
Document, agreement, or instrument executed in connection herewith, or (b) which
has had, shall have or is reasonably likely to have a Material Adverse Effect.
Neither the Company nor any Subsidiary is (i) in violation of any applicable
requirements of law which violation shall have or is likely to result in a
Material Adverse Effect, or (ii) subject to or in default with respect to any
final judgment, writ, injunction, restraining order or order of any nature,
decree, rule or regulation of any court or Governmental Authority, in each case
which shall have or is likely to have a Material Adverse Effect.
1.1 No Insolvency.
1.2
1.3 On the date of this Agreement and after giving effect to all
Indebtedness of the Company (including, without limitation, the Revolving Credit
Obligations and all Contingent Obligations) and on the date of each advance
under the Revolving Loans or the issuance of any Letter of Credit hereunder,
each of the Company and each Subsidiary (a) will be able to pay its obligations
as they become due and payable; (b) has assets, the present fair saleable value
of which exceeds the amount that will be required to pay its probable liability
on its obligations as the same become absolute and matured; (c) has sufficient
property, the sum of which at a fair valuation exceeds all of its Indebtedness;
and (d) will have sufficient capital to engage in its business.
1.4
1.5 Government Consent.
1.6
1.7 Neither the nature of the Company or any Subsidiary or of any of their
businesses or properties, nor any relationship between the Company or any
Subsidiary and any other entity or person, nor any circumstance in connection
with the execution of this Agreement, is such as to require a consent, approval
or authorization of, or filing, registration or qualification with, any
Governmental Authority on the part of the Company or any Subsidiary as a
condition to the execution and delivery of this Agreement or the Loan Documents.
1.8
1.9 Title to Properties.
1.10
The Company and each of its Subsidiaries (a) has good title to all the
property in which it has a property interest, free from any liens and
encumbrances, except as set forth on Schedule 7.10 attached hereto or as
permitted by Section 8.4 of this Agreement, and (b) has not agreed or consented
to cause or permit in the future (upon the happening of a contingency or
otherwise) any of its property whether now owned or hereafter acquired to be
subject to a lien or encumbrance except as provided in this Section 7.10.
1.1 No Defaults.
1.2
22
28
1.3 No event has occurred and no condition exists which would constitute a
Potential Default or an Event of Default pursuant to this Agreement. Neither the
Company nor any Subsidiary is in violation of any term of any agreement, charter
instrument, bylaw or other instrument to which it is a party or by which it may
be bound, which violation has or is reasonably likely to have a Material Adverse
Effect.
1.4
1.5 Environmental Protection.
1.6
1.7 Except for matters, conditions, operations and noncompliance which
would not have or be reasonably likely to have a Material Adverse Effect,
neither the Company nor any Subsidiary has actual knowledge of (a) the permanent
placement, burial or disposal of any Hazardous Substances (as hereinafter
defined) on any real property owned, leased, or used by the Company or any
Subsidiary (the "Premises"), of any spills, releases, discharges, leaks, or
disposal of Hazardous Substances that have occurred or are presently occurring
on, under, or onto the Premises, or of any spills, releases, discharges, leaks
or disposal of Hazardous Substances that have occurred or are occurring off the
Premises as a result of the improvement, operation, or use of the Premises which
would result in non-compliance with any of the Environmental Laws (as
hereinafter defined); (b) a violation of any applicable Environmental Laws; (c)
any pending or threatened environmental civil, criminal or administrative
proceedings against the Company or any Subsidiary relating to Hazardous
Substances; (d) any facts or circumstances that would give rise to any future
civil, criminal or administrative proceeding against the Company or any
Subsidiary relating to Hazardous Substances; or (e) any of its employees,
agents, contractors, subcontractors, or any other person occupying or present on
the Premises generating, manufacturing, storing, disposing or releasing on,
about or under the Premises any Hazardous Substances which would result in the
Premises not complying with the Environmental Laws.
1.8
1.9 Margin Loans.
1.10
None of the transactions contemplated in the Agreement will violate or
result in a violation of Section 7 of the Securities Exchange Act of 1934, as
amended, or any regulation issued pursuant thereto, including, without
limitation, Regulation U of the Board of Governors of the Federal Reserve
System, 12 C.F.R., Chapter II. Neither the Company nor any Subsidiary owns or
intends to carry or purchase any "margin security" within the meaning of said
Regulation U. None of the proceeds of the Revolving Loans or the Letters of
Credit have been or will be used to purchase or refinance any borrowing, the
proceeds of which were used to purchase any "security" within the meaning of the
Securities Exchange Act of 1934, as amended.
1.1 Real Estate Ownership.
1.2
1.3 With respect to each tract of unimproved or improved real property
which the Company or any Subsidiary now owns or acquires after the date hereof
(hereinafter "Real Property Parcel"), except where a failure, violation,
condition, requirement or noncompliance with any of the items specified below
does not or is not reasonably likely to have a Material Adverse Effect:
1.4
23
29
1.5 (a) Neither the Company nor any Subsidiary has received notice of any
pending or threatened condemnation proceeding or notice of any special
assessment for improvements to and/or for the benefit of any Real Property
Parcel;
1.6
1.7 (b) Neither the Company nor any Subsidiary has knowledge of any
boundary line dispute, encroachment, access limitation or other survey defect
affecting any Real Property Parcel. Each Real Property Parcel has legal access
to a public street by unrestricted frontage or over a title-insured easement and
complies with applicable subdivision regulations, except for minor survey
defects which do not materially interfere with the Company's or any Subsidiary's
intended use and except for subdivision of acreage into residential lots after
acquisition in the ordinary course of the Company's or any Subsidiary's
business. The Company has a survey of each Real Property Parcel obtained prior
to the acquisition thereof;
1.8
1.9 (c) The surveys obtained for each Real Property Parcel certify those
portions, if any, of the Real Property Parcel which are located within a flood
hazard area;
1.10
1.11 (d) The Company or such Subsidiary has a "Phase One" environmental
study prepared by an environmental engineering company obtained prior to
acquisition of each Real Property Parcel;
1.12
1.13 (e) Neither the Company nor any Subsidiary has filled any Real
Property Parcel which contains "wetlands," or did contain "wetlands," unless
such fill was approved by state and federal authorities having jurisdiction, as
"wetlands" are defined or described in applicable state and federal laws and
regulations. Neither the Company nor any Subsidiary has acquired any Real
Property Parcel without obtaining a wetlands determination study by a qualified
expert;
1.14
1.15 (f) Except to the extent permitted by Section 8.18 below, each Real
Property Parcel is finally and unappealably zoned for the Company's or such
Subsidiary's intended use prior to purchase, except for Real Property Parcels
which will be rezoned by the Company or such Subsidiary for development as
residential lots in the ordinary course of its business in which case the
Company or such Subsidiary will use its best efforts to obtain the appropriate
rezoning as soon as practicable after acquisition;
1.16
1.17 (g) The Company and each of the Subsidiaries has obtained appropriate
assurances of availability in adequate capacities of all necessary utilities, at
a property line or by extension through publicly dedicated rights-of-way or
recorded easements, prior to acquisition of such Real Property Parcel;
1.18
1.19 (h) The Company or a Subsidiary has good and marketable fee simple
title to each Real Property Parcel, free and clear of all liens and encumbrances
except: (i) the lien of real estate taxes and assessments not yet due; (ii)
easements, covenants, conditions and restrictions of record which do not
materially interfere with present lawful use or the Company's or a Subsidiary's
intended use; (iii) the effect of zoning and building laws; (iv) the effect of
legal highways; and (v) liens or encumbrances disclosed as set forth on Schedule
7.10 to this Agreement or permitted in connection with borrowings or lease
obligations permitted pursuant to Sections 8.4 or 8.5 or 8.7 hereof. Neither the
Company nor any Subsidiary has knowledge of
24
30
any off-record or undisclosed legal or equitable interest claimed by any person
in any Real Property Parcel or any pending or threatened litigation or
administrative proceeding against or affecting any Real Property Parcel or any
claim of right to file a mechanic's or materialman's lien against any Real
Property Parcel. The Company or a Subsidiary has obtained owner's title
insurance in the amount of the purchase price showing good and marketable fee
simple title to each Real Property Parcel, free and clear of all liens and
encumbrances except as permitted by this Section 7.14; and
1.20
1.21 (i) Upon receipt of written request by the Administrative Agent, the
Company will promptly furnish to the Administrative Agent copies of existing
documentation or certificates in the Company's or a Subsidiary's possession
affecting any Real Property Parcel, as the Administrative Agent may reasonably
request.
1.22
1.23
2 SECTION COMPANY BUSINESS COVENANTS
3
4 Effective on and after the date of this Agreement, so long as any of
the indebtedness or credit provided for herein remains unpaid or outstanding,
the Company covenants and agrees in favor of the Administrative Agent, the
Syndication Agent and each Lender as follows:
5
5.1 Payment of Taxes and Claims.
5.2
5.3 The Company and each of the Subsidiaries will pay before they become
delinquent (a) all taxes, assessments and governmental charges or levies imposed
upon it or its property; and (b) all claims or demands of materialmen and
mechanics in excess of $100,000.00 in the aggregate, carriers, warehousemen,
landlords, bailees and other like persons which, if unpaid, might result in the
creation of a lien or encumbrance upon its property, provided, however, that
items of the foregoing description need not be paid (i) while being contested in
good faith and by appropriate proceedings or (ii) if uncontested, such entity is
able to obtain title insurance insuring against such items, and provided further
that adequate book reserves have been established with respect thereto and
provided further that the such entity's title to, and its right to use, its
property are not materially adversely affected thereby. In the case of any item
of the foregoing description involving in excess of the amount which the
Company's independent public accountants shall fix as the threshold of
materiality for purposes of their audit of the then current year, the
appropriateness of the proceedings shall be supported by an opinion of the
independent counsel responsible for such proceedings and the adequacy of such
reserves shall be supported by the opinion of the independent accountants.
5.4
5.5 Maintenance of Properties and Corporate Existence.
5.6
The Company and the Subsidiaries shall each:
(a) Property -- maintain its property in good condition, ordinary wear
and tear excepted, and make all renewals, replacements, additions, betterments
and improvements thereto which are deemed necessary by the Company or such
Subsidiary;
25
31
(b) Insurance -- maintain, with financially sound and reputable
insurers, insurance with respect to its properties and business against such
casualties and contingencies, of such types (including but not limited to fire
and casualty, public liability, products liability, larceny, embezzlement or
other criminal misappropriation insurance) and in such amounts as is customary
in the case of corporations of established reputations engaged in the same or a
similar business and similarly situated;
(c) Financial Records -- keep true books of records and accounts in
which full and correct entries will be made of all its business transactions,
and reflect in its financial statements adequate accruals and appropriations to
reserves, all in accordance with GAAP;
(d) Existence and Rights -- except as otherwise permitted by this
Agreement, do or cause to be done all things necessary (i) to preserve and keep
in full force and effect its existence, rights and franchises, and (ii) to
maintain its status as a corporation, limited liability company, partnership or
other entity duly organized and existing and in good standing under the laws of
the state of its formation; and
(e) Compliance with Law -- not be in violation of any laws, ordinances,
or governmental rules and regulations to which it is subject and will not fail
to obtain any licenses, permits, franchises or other governmental authorizations
necessary to the ownership of its properties or to the conduct of its business,
which violation or failure to obtain has or is reasonably likely to have a
Material Adverse Effect.
1.1 Sale of Assets.
1.2
1.3 Neither the Company nor any Subsidiary shall sell, lease, transfer,
assign or otherwise dispose of, any of its assets or property, whether now owned
or hereafter acquired, or any income or profits therefrom, or enter into any
agreement to do so, except (a) sales, transfers or other distributions of
personal property or real property in the ordinary course of business, including
without limitation, the sale of Model Homes, Real Estate Held for Development,
Developed Lots, and Lots Under Development for consideration not less than fair
market value (but in no event less than the amount advanced to the Company under
the Borrowing Base); and (b) the disposition of obsolete equipment in the
ordinary course of business.
1.4
1.5 Liens and Encumbrances (Negative Pledge).
1.6
Neither the Company nor any of the Subsidiaries will cause or permit or
agree or consent to cause or permit in the future (upon the happening of a
contingency or otherwise), any of its property, whether now owned or hereafter
acquired, to be subject to a lien or encumbrance except for:
(a) liens securing taxes, assessments or governmental charges or levies
or the claims or demands of materialmen, mechanics, carriers, warehouses,
landlords and other like persons in connection with such items permitted by
Section 8.1 above;
26
32
(b) liens incurred or deposits made in the ordinary course of business
in connection with worker's compensation, unemployment insurance, social
security and other like laws;
(c) attachment, judgment and other similar liens arising in connection
with court proceedings in an aggregate amount less than $1,000,000.00;
(d) attachment, judgment or other similar liens arising in connection
with court proceedings for the payment of money aggregating in excess of
$1,000,000.00, but less than $10,000,000.00, provided that (i) fewer than 21
days have elapsed from the date of the filing of such lien or liens, or (ii)
such lien or liens have been discharged in the full amount or the execution or
other enforcement of such lien or liens are effectively stayed or bonded in
full, and the claims secured thereby are being actively contested in good faith
and by appropriate proceedings;
(e) reservations, exceptions, encroachments, easements, rights of way,
covenants, conditions, restrictions, leases and other similar title exceptions
or encumbrances affecting real property, provided they do not materially
interfere with its use in the ordinary conduct of the Company's or its
Subsidiary's business;
(f) inchoate liens arising under ERISA to secure the contingent
liability of the Company or any of the Subsidiaries; and
(g) the liens and encumbrances disclosed on Schedule 7.10 to this
Agreement or made pursuant to the Indebtedness and operating lease rentals
permitted by Sections 8.5(b) or (c) and 8.7 below.
In addition, neither the Company nor any of the Subsidiaries will
contractually agree with any other creditor to provide such creditor a negative
pledge, or other covenant similar to this Section 8.4.
1.1 Indebtedness.
1.2
1.3 Neither the Company nor any of the Subsidiaries shall directly or
indirectly create, incur, assume or otherwise become or remain directly or
indirectly liable with respect to any Indebtedness (other than Contingent
Obligations permitted by Section 8.6 below), except for (a) the Revolving Credit
Obligations; (b) up to the aggregate sum of $10,000,000.00 outstanding at any
time in (i) secured nonrecourse Indebtedness, and (ii) capital lease or purchase
money Indebtedness incurred to finance the acquisition of capital assets,
provided that such Indebtedness (A) has a scheduled maturity and is not due on
demand, (B) is secured only by the property being purchased and does not exceed
the purchase price thereof, and (C) does not exceed the aggregate sum of
$2,000,000.00 outstanding at any time outstanding at any time, in connection
with the Company's or any Restricted Subsidiaries' business; (c) additional
nonrecourse Indebtedness to sellers of real estate not to exceed the purchase
price of such real estate incurred in connection with the purchase of such real
estate in an aggregate sum up to $5,000,000.00 outstanding at any time (which
Indebtedness shall be termed the "Excess Permitted Nonrecourse Borrowings" if
and to the extent that the Company's and its Subsidiaries' Indebtedness pursuant
to clauses (b) and (c) of this paragraph exceeds the aggregate sum of
27
33
$10,000,000.00 outstanding at any time); (d) unsecured indebtedness subordinated
to the Revolving Credit Commitments, which shall be subordinated in a manner
satisfactory to the Administrative Agent; and (e) Indebtedness evidenced by
interest rate agreements in respect of interest rate, swap, collar, cap or
similar agreements pursuant to which the Company ▇▇▇▇▇▇ its actual interest rate
exposure pursuant to the terms of this Agreement.
1.4
1.5 Contingent Liabilities.
1.6
Neither the Company nor any of the Subsidiaries directly or indirectly
will create or become liable with respect to any Contingent Obligations, except
(a) by indorsement of negotiable instruments for deposit or collection in the
ordinary course of business; (b) the guaranty of Letters of Credit issued in
connection with Approved Joint Ventures, (c) up to the maximum aggregate stated
amount of $10,000,000.00 in guaranteed obligations outstanding at any time in
connection with (i) Non-Facility Contingent Obligations, and (ii) Indebtedness
in connection with seller financing for Approved Joint Ventures, (d) the
guaranty of any Indebtedness of the Company or any Subsidiary that is permitted
to be incurred under Section 8.5 above; (e) the Company's contingent liability
as a partner or joint venture partner in connection with joint ventures or
partnerships; (f) the guaranty of any other Indebtedness not to exceed the sum
of $100,000.00 in the aggregate outstanding at any time; (g) obligations,
warranties and indemnities not relating to Indebtedness, which have been or are
undertaken or made in the ordinary course of business, and (h) Contingent
Obligations with respect to surety, appeal and performance bonds obtained by the
Company or any Restricted Subsidiary.
1.1 Operating Lease Rentals.
1.2
1.3 Neither the Company nor any of the Subsidiaries will enter into: (a)
operating leases (excluding Model Home rentals) providing in the aggregate for
annual rentals which exceed $2,000,000.00, or (b) Model Home rentals providing
in the aggregate for annual rentals which exceed $1,000,000.00.
1.4
1.5 Acquisition of Capital Stock.
1.6
The Company shall not redeem or acquire any of its own capital stock or
any options or other interests in respect thereof having an aggregate value in
excess of $500,000.00 in any fiscal year, except (a) the purchase or redemption
of capital stock in connection with a simultaneous sale of an equivalent or
greater amount of capital stock for not less than the same aggregate purchase or
redemption price, or (b) up to the aggregate amount of $1,000,000.00 in any
fiscal year for the purchase of capital stock, options or other interests in
respect thereto using funds escrowed pursuant to the Company's Amended and
Restated Executive Deferred Compensation Plan or otherwise pursuant to any of
the Company's management incentive plans. None of the Subsidiaries shall redeem
or acquire any of its own capital stock.
1.1 Restrictions on Dividends.
1.2
1.3 The Company shall not declare or pay any cash dividends for any fiscal
year, which total in excess of 25% of the Company's Consolidated Net Income
after taxes for such fiscal year.
28
34
None of the Subsidiaries shall declare or pay any cash dividends or
distributions for any fiscal year, except to or for the benefit of the Company.
1.4
1.5 Management.
1.6
1.7 The Company shall not replace or change the position of its chief
executive officer or the chief operating officer unless such replacement or
change will not or is not reasonably likely to have or cause a Material Adverse
Effect.
1.8
1.9 Investments, Loans and Advances.
1.10
1.11 Neither the Company nor any of its Subsidiaries shall directly or
indirectly make or own any Investment except: (a) cash or cash equivalents
(marketable direct obligations issued or unconditionally guaranteed and backed
by the full faith and credit of the United States government), bonds or other
obligations of the United States of America, certificates of deposit issued by
commercial banks with a minimum capital of $500,000,000.00, and commercial paper
rated at least A-1 or P-1 and having a maturity of not more than one year; (b)
Investments in Joint Ventures, provided that such Investment does not cause the
Company and its Subsidiaries to exceed the Maximum New Market Investment Amount;
(c) Investments in Permitted Acquisitions not to exceed the aggregate Purchase
Price of $25,000,000.00 after the date hereof, provided, however, that such
Acquisition does not cause the Company and its Subsidiaries to exceed the
Maximum New Market Investment Amount; (d) Investments in Restricted
Subsidiaries, provided, however, that such Investments does not cause the
Company and its Subsidiaries to exceed the Maximum New Market Investment Amount;
(e) investments consisting of deposit accounts maintained or managed by the
Company or its Subsidiaries; (f) loans or advances to employees of the Company
or any Subsidiary, which loans and advances shall not in the aggregate exceed
$200,000.00 outstanding at any time; (g) Investments up to the sum of $2,000,000
after the date hereof in one or more mortgage companies which (i) conduct
business in areas in which the Company or its Subsidiaries also conduct business
and (ii) are principally in the residential mortgage lending business; (h) loans
and advances evidenced by promissory notes from the purchasers of any of the
Company's real property (individually which shall not exceed the purchase price
paid for such property) in an amount not to exceed the aggregate sum of
$2,000,000.00 outstanding at any time; and (i) any other Investment (including
Alliance Title Agency, Ltd.) not to exceed the aggregate amount of $100,000
outstanding at any time.
1.12
1.13 ERISA.
1.14
1.15 The Company and each of the Subsidiaries shall with respect to any
pension plan or profit-sharing plan in effect now or in the future:
1.16
(a) at all times make prompt payment of contributions required to meet
the minimum funding standards set forth in Section 302 through 305 of
ERISA with respect to its plan,
29
35
(b) promptly, after the filing thereof, upon the request of the
Administrative Agent, furnish to the Administrative Agent copies of
each annual report required to be filed pursuant to Section 103 of
ERISA in connection with its plan for the plan year, including any
certified financial statements or actuarial statements required
pursuant to said Section 103,
(c) notify the Administrative Agent immediately of any fact, including,
but not limited to, any "Reportable Event," as that term is defined in
Section 4043 of ERISA, arising in connection with the plan which might
constitute grounds for termination thereof by the Pension Benefit
Guaranty Corporation or for the appointment by the appropriate United
States District Court of a Trustee to administer the plan, and
(d) notify the Administrative Agent of any "Prohibited Transaction" as
that term is defined in Section 406 of ERISA.
Neither the Company nor any of the Subsidiaries will:
(e) engage in any "Prohibited Transaction," or
(f) terminate any such plan in a manner which could result in the
imposition of a lien on the property of the Company or any Subsidiary
pursuant to Section 4068 of ERISA.
1.1 Tangible Net Worth.
1.2
At all times, the Company shall maintain a Consolidated Tangible Net
Worth of the following amounts for the following periods: (a) from closing
through and including December 30, 1998, not less than $35,000,000; and (b) from
and after December 31, 1998, the sum of (i) $35,000,000, plus (ii) 75% of the
Company's Consolidated Net Income after taxes in each fiscal year which the
Company's Consolidated Net Income after taxes is positive, beginning with the
fiscal year ending December 31, 1998, and ending with the most recently ended
fiscal year as of the date of calculation.
1.1 Leverage Ratio.
1.2
1.3 The Company shall maintain at all times a Leverage Ratio of (a) not
greater than 2.75 to 1.00, beginning with the date hereof and continuing through
and including December 31, 1999, and (b) not greater than 2.50 to 1.00 for the
period beginning January 1, 2000, and continuing at all times thereafter.
1.4 No Losses.
1.5
Beginning with the quarter ending June 30, 1998, and continuing as of
the end of each quarter thereafter, the Company and its consolidated
Subsidiaries shall not incur an Adjusted Loss in any five consecutive fiscal
quarters ending on the date of determination.
30
36
1.1 Ratio of Uncommitted Land Holdings to Consolidated Tangible Net Worth.
The Company and its Subsidiaries shall maintain at all times a ratio of
Uncommitted Land Holdings to Consolidated Tangible Net Worth of (a) not greater
than 2.00 to 1.00 from the date of this Agreement through and including December
31, 1999, and (b) not greater than 1.75 to 1.00 for the period beginning January
1, 2000, and continuing at all times thereafter.
1.1 Interest Coverage Ratio.
1.2
1.3 The Interest Coverage Ratio of the Company and its Subsidiaries on a
consolidated basis, as determined as of the last day of each fiscal quarter for
the twelve month period ending on such date, shall not be less than 2.25 to
1.00.
1.4
1.5 Land Held for Development (Unzoned).
1.6
1.7 Without the consent of the Administrative Agent and the Required
Lenders, the Company and its Subsidiaries shall not purchase or hold any Real
Estate Held for Development, whether now owned or acquired hereafter which is
not zoned for single-family residential use, or any series of purchases of
adjacent, related or contiguous parcels of such property, or such property in
the same geographical location, in excess of the aggregate sum of $2,500,000.00,
valued at the lesser of cost or market outstanding at any time.
1.8
1.9 Maintenance of Deposits.
1.10
1.11 The Company and each of the Subsidiaries shall maintain its primary
operating and deposit accounts at Huntington, except for those deposits managed
by the Company, but not owned by the Company.
1.12
1.13 Model Homes Inventory.
1.14
The Company and its Subsidiaries shall not permit at any time Model
Homes, whether now owned or hereafter acquired, to exceed the aggregate sum of
$6,500,000.00, outstanding at any time, valued at the lesser of cost or market.
1.1 Speculative Homes.
1.2
The Company and its Subsidiaries, shall not permit at any time its
inventory of Speculative Homes and other dwellings built for speculation,
whether now owned or hereafter acquired, to exceed $12,500,000.00 in the
aggregate outstanding at any time valued at the lesser of cost or market.
31
37
1.1 Further Real Estate Acquisition Limitations, New Market Investment
Amount.
1.2
(a) The Company and its Subsidiaries shall not permit their Uncommitted
Land Holdings in Central Ohio whether now owned or hereafter acquired to exceed
the aggregate amount of $73,000,000.00, as of December 31, 1997, and
$73,000,000.00, plus 50% of the Company's Consolidated Net Income in each year
the Company's Consolidated Net Income is positive beginning with the Company's
fiscal year ending December 31, 1998, and ending with the most recently ended
fiscal year as of the date of calculation; provided, however, the Company's
Uncommitted Land Holdings in Central Ohio shall not exceed $90,000,000.00 at any
time and shall be valued at the lesser of cost or market, as of the end of any
fiscal year.
(b) The Company and its Subsidiaries shall not permit the Maximum New
Market Investment Amount to exceed the sum of $25,000,000.00 outstanding at any
time; provided, however the Company's total Investment or purchase of any
Uncommitted Land Holdings, Speculative Homes, Model Homes and all other real or
personal property constituting one or more "start up operations" or other de
novo entries in any markets outside Central Ohio shall not exceed the aggregate
sum of $15,000,000.00 outstanding at any time. In addition, the Company shall
not build homes or develop real estate in any locations or markets other than
the State of Ohio or any contiguous state.
1.1 Conduct of Business, Subsidiaries.
1.2
Neither the Company nor any of its Subsidiaries shall engage in any
business other than the businesses engaged in by them on the date hereof and any
business or activities which are substantially similar, related or incidental
thereto including, without limitation, a mortgage company pursuant to Section
8.11 above. The Company shall not permit any of its Subsidiaries to create,
capitalize or acquire any Subsidiary after the date hereof except in connection
with a Permitted Acquisition or an Investment permitted pursuant to Section 8.11
above.
1.1 Permitted Acquisitions.
1.2
1.3 (a) Neither the Company nor any Subsidiary shall make any Acquisition
without the prior written consent of the Administrative Agent and the Required
Lenders, except in connection with a Permitted Acquisition, the Purchase Price
of which, together with the aggregate Purchase Price of all other Permitted
Acquisitions made after the date hereof does not exceed the sum of
$25,000,000.00, provided, however such Acquisition, does not cause the Company
and its Subsidiaries to exceed the Maximum New Market Investment Amount. In
addition, the Company and its Subsidiaries shall not make more than four
Acquisitions, without the consent of the Required Lenders; and
1.4
1.5 (b) on the funding date for any borrowing of Revolving Loans for the
purpose of consummating a Permitted Acquisition, the Administrative Agent shall
have received an officer's certificate from a Financial Officer certifying that
(i) the Acquisition meets the requirements of the definition of Permitted
Acquisition and sets forth detailed calculations of all financial covenants,
(ii) the liabilities assumed with respect to such Permitted Acquisition do not
or are not reasonably likely to have a Material Adverse Effect, (iii) the
Company shall deliver to the
32
38
Administrative Agent copies of all material documentation evidencing the
Permitted Acquisition, and (iv) the Company shall have delivered to the
Administrative Agent copies of all material, business and financial information
(with appropriate supporting detail) relating to the business purchased in the
Permitted Acquisition as the Administrative Agent may reasonably request.
1.6
1.7 Restriction on Fundamental Changes.
1.8
1.9 Neither the Company nor any of its Subsidiaries shall (a) enter into
any merger or consolidation, or (b) liquidate, wind up or dissolve (or suffer
any liquidation or dissolution), or convey, lease, sell, transfer or otherwise
dispose of, in one transaction or a series of transactions, all or substantially
all of the Company's or any such Subsidiary's business or property, whether now
or hereafter acquired, except for a Permitted Acquisition involving the (i)
Company in which the Company is the surviving constituent or (ii) a Subsidiary
in which the Company owns directly or indirectly the Person acquired, and except
for the merger or liquidation of assets of a Subsidiary into the Company. The
Company shall cause each Subsidiary to be a direct or indirect wholly-owned
Subsidiary of the Company.
1.10
1.11
2 SECTION INFORMATION AS TO COMPANY AND SUBSIDIARIES.
3
4 The Company shall deliver the following to the Administrative Agent,
the Syndication Agent and each Lender:
5
6 (a) within 45 days after the end of each month, consolidated financial
statements, including a balance sheet, statements of operations of the Company
and the Subsidiaries, and statements of income and surplus, in the form of
Exhibit D attached hereto certified by the president, chief operating officer
and chief financial officer, or treasurer (a "Financial Officer") of the Company
as fairly representing the financial condition of the Company and the
Subsidiaries as of the end of such period;
7
8 (b) within 45 days after the end of each month, a statement signed by
a Financial Officer of the Company setting forth and certifying the calculation
of the Borrowing Base as of the end of that period;
9
10 (c) within 45 days after the end of each month, a statement signed by
a Financial Officer of the Company certifying that the Company is in compliance
with terms of this Agreement and calculating the financial covenants and ratios
of the Company set forth in Sections 8.13, 8.14, 8.16 and 8.17 above;
11
12 (d) within 45 days after the end of each month, and at such other
times as the Administrative Agent may request, a report for the Company and the
Subsidiaries, signed by a Financial Officer of the Company setting forth the
number and dollar total of accounts receivable in format satisfactory to the
Administrative Agent and consistent with past practices;
13
14 (e) within 45 days after the end of each month, a report signed by a
Financial Officer of the Company in form substantially similar to that being
currently provided to the
33
39
Administrative Agent as of the date hereof setting forth, inter alia, the
following consolidated information with respect to the Company and its
Subsidiaries: 15
(i) work-in-process for each subdivision then under development
specifying the number of units and related costs;
(ii) backlog report, including beginning backlog, sales,
closings, and ending backlog;
(iii)the number of Model Homes for each subdivision then under
development specifying the number of units and related
costs;
(iv) sales of units and closings of units for each subdivision
then under development by the Company and its Subsidiaries;
and
(v) Speculative Homes for each subdivision then under
development by the Company and its Subsidiaries specifying
the number of units and related costs;
(f) within 45 days after the end of each month, a Land Development Lot
Availability Report, specifying the completed lots and lots under development
for each subdivision then under development by the Company or any of the
Subsidiaries;
(g) within 45 days after the end of each quarter, (i) consolidating
financial statements, including a balance sheet, statements of the operations of
the Company and each of the Subsidiaries, and statement of income and surplus
certified by a Financial Officer of the Company as fairly representing the
financial condition of the Company and each of the Subsidiaries as of the end of
such period, and (ii) a report substantially similar to the report required by
Section 9(d) above for the Company and for each Subsidiary;
(h) immediately upon the filing, release or disclosure, as the case may
be, copies of all filings, documents, disclosures or other information filed
with the Securities and Exchange Commission or state or local securities
commissions or other regulatory agency and all press releases;
(i) within 90 days of the end of each fiscal year, audited consolidated
financial statements prepared in accordance with GAAP and certified by
independent public accountants satisfactory to the Administrative Agent,
containing a balance sheet and statement of income and surplus, statement of
cash flows and a reconciliation of capital accounts, along with any management
letters written by such accountants;
(j) immediately upon becoming aware of the existence of any condition
or event which constitutes an Event of Default, a written notice specifying the
nature and period of existence thereof and what action the Company is taking or
proposes to take with respect thereto;
(k) at the request of the Administrative Agent, such other information
the Administrative Agent may from time to time reasonably require; and
34
40
(l) within 45 days after the end of each quarter, a real estate
acquisition report for the Company and its Subsidiaries detailing all real
estate acquired or obtained for such quarter and the total of such acquisitions
on a year to date basis through the end of such quarter; which includes (i) the
total amount of acreage or developed lots, both for such quarter and on a year
to date basis through the end of such quarter; (ii) the total dollar amount of
such acquisitions, both for such quarter and on a year to date basis through the
end of such quarter; (iii) the title and common name or subdivision name of such
real property, both for such quarter and on a year to date basis through the end
of such quarter; and (iv) such other information as the Administrative Agent
shall request.
1 SECTION EVENTS OF DEFAULT
2
2.1 Nature of Events.
2.2
An "Event of Default" shall exist if any of the following occurs:
(a) the Company fails to make any payment of principal (including
without limitation any payment or reduction required under Section 3.15 above)
or fails to reimburse a Lender pursuant to this Agreement or any Note,
reimbursement agreement, or guaranty agreement executed in connection with this
Agreement on or before five days after the date such payment is due;
(b) the Company fails to make any payment of interest on any Note
executed in connection with this Agreement on or before five days after the date
such payment is due;
(c) the Company fails to perform or observe any covenant contained in
Sections 8.2(d), 8.3, or 8.12 of this Agreement;
(d) the Company fails to perform or observe any covenant contained in
Sections 8.4, 8.5, or 8.6 of this Agreement and such failure involves an amount
in excess of the aggregate sum of $1,000,000.00;
(e) the Company fails to comply (i) with any covenant contained in
Sections 8.4, 8.5 or 8.6 and such failure involves an amount of $1,000,000.00 or
less or (ii) with any other provision of this Agreement, and such failure
continues for more than 30 days after such failure shall first become known to
any Financial Officer of the Company;
(f) any warranty, representation or other statement by or on behalf of
the Company contained in this Agreement or by a Subsidiary in any Loan Document
or in any instrument furnished by an officer thereof in compliance with or in
reference to this Agreement is false or misleading in any material respect on
the date made (or deemed made);
(g) the Company or any Material Subsidiary makes an assignment for the
benefit of creditors, or consents to the appointment of a trustee, receiver or
liquidator;
35
41
(h) bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings are instituted by the Company or any Material Subsidiary;
(i) bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings are instituted against the Company or any of the Subsidiaries, and
remain undismissed for a period of 90 days;
(j) a final judgment or judgments for the payment of money aggregating
in excess of $1,000,000.00 in excess of applicable insurance coverage (as
verified by the Administrative Agent) is or are outstanding against the Company
or any of the Subsidiaries, and such judgment or judgments have been outstanding
for more than 21 days from the date of entry and have not been discharged,
stayed or bonded in the full amount of such judgment or judgments;
(k) the Company's audited financial statements referred to in Section
9(i) above, or any discussion draft thereof, reflects that the Company's
financial statement is a "qualified" statement and such circumstance has existed
for more than 48 hours;
(l) the Company or any Subsidiary fails to perform or observe any
covenant not specified in Section 10.1 (a) through (k) above in favor of the
Administrative Agent or any of the Lenders pursuant to any Loan Document or any
agreement, instrument, or document executed in connection with this Agreement,
including, without limitation, any interest rate contracts or agreements
relating to interest rate limitations or interest rate "swaps," and such failure
continues for more than 30 days after such failure shall become first known to
any Financial Officer of the Company;
(m) any Change of Control shall occur; or
(n) the Administrative Agent and the Required Lenders shall determine
that a Material Adverse Effect has occurred.
1.1 Default Remedies.
1.2
1.3 (a) Acceleration and Termination. Upon the occurrence of any Event of
Default described in Sections 10.1(g), (h), or (i), the Revolving Credit
Commitments shall automatically and immediately terminate and the unpaid
principal amount of, and any and all accrued interest on, the Revolving Credit
Obligations and all accrued fees shall automatically become immediately due and
payable, without presentment, demand, or protest or other requirements of any
kind, all of which are hereby expressly waived by the Company; and upon the
occurrence of any other Event of Default, the Administrative Agent shall at the
request, or may with the consent, of the Required Lenders, by written notice to
the Company (i) declare that all or any portion of the Revolving Credit
Commitments are terminated, in which case the Revolving Credit Commitments and
the obligations of each Lender to make any Revolving Loan hereunder and of each
Lender or Huntington to issue or participate in any Letter of Credit not then
issued shall immediately terminate, (ii) declare the unpaid principal amount of
and any and all accrued and unpaid interest on the Revolving Credit Obligations
to be immediately due and payable,
36
42
without presentment, demand or protest or any requirements of any kind, all of
which are hereby expressly waived by the Company.
1.4
1.5 (b) Deposit for Letters of Credit. In addition, within five days after
the occurrence of an Event of Default, the Company shall, promptly upon demand
by the Administrative Agent, in its sole discretion, deliver to the
Administrative Agent cash collateral in such form as requested by the
Administrative Agent, together with such endorsements, and execution and
delivery of such documents and instruments as the Administrative Agent may
request in an aggregate stated amount equal to the then outstanding Letter of
Credit Obligations. Any such cash collateral shall be promptly returned to the
Company upon the satisfaction or expiration of the Letter of Credit Obligations.
1.6
1.7 (c) Nonwaiver; Remedies Cumulative. No course of dealing on the part of
the Administrative Agent or any Lender, nor any delay or failure on the part of
the Administrative Agent or any Lender in exercising any rights, powers or
privileges hereunder, shall operate as a waiver of such rights, powers or
privileges or otherwise prejudice any of the Administrative Agent's or Lenders'
rights and remedies hereunder; nor shall any single or partial exercise thereof
preclude any further exercise thereof or the exercise of any other right, power
or privilege by the Administrative Agent or each Lender. No right or remedy
conferred upon or reserved to the Administrative Agent or any Lender under this
Agreement is intended to be exclusive of any other right or remedy, and every
right and remedy shall be cumulative and in addition to every other right or
remedy given hereunder or now or hereafter existing under any applicable law.
Every right and remedy given by this Agreement or by applicable law to the
Administrative Agent or any Lender may be exercised from time to time and as
often as may be deemed expedient by the Administrative Agent or any Lender.
1.8
1.9 (d) Right of Set-Off. Upon the occurrence and during the continuance
of any Event of Default hereunder, the Administrative Agent, each Lender, and
any of them, subject to the terms of this Agreement, are hereby authorized at
any time and from time to time, without notice to the Company (any such notice
being expressly waived by the Company) and to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by the Administrative Agent or each Lender, or any of them to or for
the credit or the account of the Company against any and all of the obligations
of the Company now or hereafter existing under this Agreement, irrespective of
whether or not the Administrative Agent or any Lender shall have made any demand
hereunder and although such obligations may be unmatured. Notwithstanding the
foregoing, none of the Lenders shall be permitted to exercise any right of
offset or set-off referred to in this Section 10.2 without the prior written
consent of the Administrative Agent.
1.10
1.11
2 SECTION THE ADMINISTRATIVE AGENT AND SYNDICATION AGENT
3
3.1 Appointment.
37
43
Each of the Lenders hereby designates and appoints (a) Huntington
Capital Corp. as the Syndication Agent and (b) Huntington as Administrative
Agent hereunder and under each of the Loan Documents, and each of the Lenders
irrevocably authorizes the Administrative Agent to act as the contractual
representative of such Lender. The Administrative Agent agrees to act as such
contractual representative upon the express conditions contained in this Section
11. Notwithstanding the use of the defined term "Administrative Agent" or
"Syndication Agent," it is expressly understood and agreed that neither the
Administrative Agent nor the Syndication Agent shall have any fiduciary
responsibilities to any Lender or to the Company or any Subsidiary of the
Company by reason of this Agreement and that each of the Administrative Agent
and the Syndication Agent is merely acting as the representative of the Lenders
with only those duties as are expressly set forth in this Agreement and the
other Loan Documents. In its capacity as the Lenders' contractual
representative, neither the Administrative Agent nor the Syndication Agent (i)
hereby assumes any fiduciary duties to any of the Lenders, (ii) the
Administrative Agent is a "representative" of the Lenders within the meaning of
Section 9-105 of the Uniform Commercial Code, and (iii) each of the
Administrative Agent and the Syndication Agent is acting as an independent
contractor, the rights and duties of which are limited to those expressly set
forth in this Agreement and the other Loan Documents. Each of the Lenders hereby
agrees to assert no claim against the Administrative Agent or the Syndication
Agent on any agency theory or any other theory of liability for breach of
fiduciary duty, all of which claims each Lender hereby waives.
1.1 Powers.
1.2
1.3 The Administrative Agent shall have and may exercise such powers under
the Loan Documents as are specifically delegated to the Administrative Agent by
the terms of each thereof, together with such powers as are reasonably
incidental thereto. The Administrative Agent shall have no implied duties to the
Lenders, or any obligation to the Lenders to take any action thereunder except
any action specifically provided by the Loan Documents to be taken by the
Administrative Agent.
1.4
1.5 General Immunity.
1.6
1.7 None of the Administrative Agent, the Syndication Agent or any of its
directors, officers, agents or employees shall be liable to any or all of the
Company, any Subsidiary of the Company or the Lenders for any action taken or
omitted to be taken by it or them hereunder or under any other Loan Documents or
in connection herewith or therewith, except to the extent that such action or
inaction is found in a final judgment by a court of competent jurisdiction to
have arisen solely from the gross negligence or willful misconduct of such
Persons.
1.8
1.9 No Responsibility for Loans, Recitals.
1.10
1.11 None of the Administrative Agent, the Syndication Agent, or any of
their respective directors, officers, or employees shall be responsible
for or have any duty to ascertain, inquire into, or verify (a) any statement,
warranty or representation made in connection with any Loan Documents or any
borrowing hereunder; (b) the performance or observance of any of the covenants
or agreements of any obligor under any Loan Documents, including, without
38
44
limitation, any agreement by an obligor to furnish information directly to each
Lender; (c) the satisfaction of any condition specified in Section 6, except
receipt of items required to be delivered to the Administrative Agent; or (d)
the validity, effectiveness or genuineness of any Loan Documents or any other
instrument or writing furnished in connection therewith. The Administrative
Agent shall have no duty to disclose to the Lenders information that is not
required to be furnished by the Company to the Administrative Agent at such
time, but is voluntarily furnished by the Company to the Administrative Agent
(either in its capacity as Administrative Agent or in its individual capacity).
1.12
1.13 Action on Instructions of Lenders.
1.14
1.15 The Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder and under any other Loan
Document in accordance with written instructions signed by the Required Lenders
or, in the case of any act or failure to act calculated to give rise to any of
the events or circumstances described in clauses (a) through (e) of Section
13.4, each affected Lender, and such instructions and any action taken or
failure to act pursuant thereto shall be binding on all of the Lenders and on
all holders of Notes. The Administrative Agent shall be fully justified in
failing or refusing to take any action hereunder and under any other Loan
Documents unless it shall first be indemnified to its satisfaction by the
Lenders pro rata against any and all liability, costs and expense that it may
incur by reason of taking or continuing to take any such action.
1.16
1.17 Employment of Administrative Agents and Counsel.
1.18
1.19 The Administrative Agent may execute any of its duties as
Administrative Agent hereunder and under any other Loan Documents by or through
employees, agents, and attorneys-in-fact and shall not be answerable to the
Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Administrative Agent shall be entitled
to advice of counsel concerning all matters pertaining to the agency hereby
created and its duties hereunder and under any other Loan Documents.
1.20
1.21 Reliance on Documents, Counsel.
1.22
1.23 The Administrative Agent shall be entitled to rely upon any note,
notice, consent, certificate, affidavit, letter, telegram, statement, paper or
document believed to be genuine and correct and to have been signed or sent by
the proper person or persons, and, in respect of legal matters, upon the opinion
of counsel selected by the Administrative Agent, which counsel may be employees
of the Administrative Agent.
1.24
1.25 Reimbursement and Indemnification.
1.26
1.27 The Lenders agree to reimburse and indemnify the Administrative Agent
and the Syndication Agent ratably in proportion to their respective Revolving
Credit Commitments (a) for any amounts not reimbursed by the Company for which
the Administrative Agent is entitled to reimbursement by the Company under the
Loan Documents, (b) for any amounts not
39
45
reimbursed by the Company for any other expenses incurred by the Administrative
Agent or the Syndication Agent on behalf of the Lenders, in connection with the
preparation, execution, delivery, administration and enforcement of the Loan
Documents, and (c) for any amounts not reimbursed by the Company for any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Administrative Agent or the
Syndication Agent in any way relating to or arising out of the Loan Documents or
any other document delivered in connection therewith or the transactions
contemplated thereby, or the enforcement of any of the terms thereof or of any
such other documents, provided that no Lender shall be liable for any of the
foregoing to the extent they are determined in a final judgment of a court of
competent jurisdiction to have arisen solely from the gross negligence or
willful misconduct of the Administrative Agent or the Syndication Agent. The
obligations of the Lenders under this Section 11.8 shall survive payment of the
Revolving Credit Obligations and termination of this Agreement.
1.28
1.29 Rights as a Lender.
1.30
1.31 In the event the Administrative Agent is a Lender, the Administrative
Agent shall have the same rights and powers hereunder and under any other Loan
Documents as any Lender and may exercise the same as though it were not the
Administrative Agent, and the term "Lender" or "Lenders" shall at any time when
the Administrative Agent is a Lender, unless the context otherwise indicates,
include the Administrative Agent in its individual capacity. The Administrative
Agent may accept deposits from, lend money to, and generally engage in any kind
of trust, debt, equity or other transaction, in addition to those contemplated
by this Agreement or any other Loan Documents, with the Company or any of its
Subsidiaries in which the Company or any of its Subsidiaries is not restricted
hereby from engaging with any other Person. The Administrative Agent, in its
individual capacity, is not obligated to remain a Lender, provided, however,
that in the event that the Administrative Agent ceases to be a Lender hereunder,
the Required Lenders may remove the Administrative Agent and appoint a successor
Administrative Agent, if no Event of Default has occurred and is continuing,
with the consent of the Company.
1.32
1.33 Lender Credit Decision.
1.34
1.35 Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or the Syndication Agent or any other
Lender and based on the financial statements prepared by the Company and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will, independently and without
reliance upon the Administrative Agent, the Syndication 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 decisions in taking or not taking
action under this Agreement and the other Loan Documents.
1.36
1.37 Successor Administrative Agent.
1.38
40
46
1.39 The Administrative Agent may resign at any time by giving written
notice thereof to the Lenders and the Company, such resignation to be effective
upon the appointment of a successor Administrative Agent or, if no successor
Administrative Agent has been appointed, 45 days after the resigning
Administrative Agent gives notice of its intention to resign. Upon any such
resignation the Required Lenders shall have the right to appoint, on behalf of
the Company and the Lenders, a successor Administrative Agent. If no successor
Administrative Agent shall have been so appointed by the Required Lenders within
30 days after the resigning Administrative Agent's giving notice of its
intention to resign, then the resigning Administrative Agent may appoint, on
behalf of the Company and the Lenders, a successor Administrative Agent. If the
Administrative Agent has resigned and no successor Administrative Agent has been
appointed, the Lenders may perform all the duties of the Administrative Agent
hereunder and the Company shall make all payments in respect of the Revolving
Credit Obligations to the applicable Lender and for all other purposes shall
deal directly with the Lenders. No successor Administrative Agent shall be
deemed to be appointed hereunder until such successor Administrative Agent has
accepted the appointment and, if no Event of Default or Potential Default has
occurred and is continuing, the Company has consented to such appointment. Any
such successor Administrative Agent shall be a commercial bank having capital
and retained earnings of at least $500,000,000.00. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the resigning
41
47
Administrative Agent, shall be obligated to issue substitute Letters of Credit
for the outstanding Letters of Credit issued by the resigning Administrative
Agent or otherwise to provide credit assurance satisfactory to the resigning
Administrative Agent with respect to such outstanding Letters of Credit. Upon
the effectiveness of the resignation of the Administrative Agent, the resigning
Administrative Agent shall be discharged from its duties and obligations
hereunder and under the Loan Documents. After the effectiveness of the
resignation of an Administrative Agent, the provisions of this Section 11 shall
continue in effect for the benefit of such Administrative Agent in respect of
any actions taken or omitted to be taken by it while it was acting as the
Administrative Agent hereunder and under the other Loan Documents.
1.40
1.41
1.42 Ratable Payments.
1.43
If any Lender, whether by setoff or otherwise has payment made to it
upon its Revolving Loans (other than payments received pursuant to Sections 3.6,
3.9 or 3.14 in a greater proportion than that received by any other Lender, such
Lender agrees, promptly upon demand, to purchase a portion of the Revolving
Loans held by the other Lenders so that after such purchase each Lender will
hold its Pro Rata Share of Revolving Loans. If any Lender, whether in connection
with setoff or amounts which might be subject to setoff or otherwise, receives
collateral or other protection for its Revolving Credit Obligations or such
amounts which may be subject to setoff, such Lender agrees, promptly upon
demand, to take such action necessary such that all Lenders share in the
benefits of such collateral in respect of their Pro Rata Shares. In case any
such payment is disturbed by legal process, or otherwise, appropriate further
adjustments shall be made.
1 SECTION BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
2
2.1 Successors and Assigns.
2.2
The terms and provisions of the Loan Documents shall be binding upon
and inure to the benefit of the Company, the Administrative Agent and the
Lenders and their respective successors and assigns, except that (a) the Company
shall not have the right to assign its rights or obligations under the Loan
Documents without the consent of all of the Lenders and (b) any assignment by
any Lender must be made in compliance with Section 12.3. Notwithstanding clause
(b) of the preceding sentence, any Lender may at any time, without the consent
of the Company or the Administrative Agent, assign all or any portion of its
rights under this Agreement and its Notes to a Federal Reserve Bank for the
purpose of securing loans from such Federal Reserve Bank to any such Lender;
provided, however, that no such assignment shall release the transferor Lender
from its obligations hereunder. The Administrative Agent may treat the payee of
any Note as the owner thereof for all purposes hereof unless and until such
payee complies with Section 12.3 in the case of an assignment thereof or, in the
case of any other transfer, a written notice of the transfer is filed with the
Administrative Agent. Any assignee or transferee of an Note agrees by acceptance
thereof to be bound by all the terms and provisions of the Loan Documents. Any
request, authority or consent of any Person, who at the time of making such
request or giving such authority or consent is the holder of any Note, shall be
conclusive and binding on any subsequent holder, transferee or assignee of such
Note or of any Note or Notes issues in exchange therefor.
42
48
1.1 Participations.
1.2
1.3 (a) Permitted Participants; Effect. Any Lender, in the ordinary course
of its business and in accordance with the applicable law, at any time may sell
to one or more entities (each such entity being referred to herein as a
"Participant") participating interests in any Revolving Loan owing to such
Lender, any Note held by such Lender, any interest in Letters of Credit held by
such Lender, the Revolving Credit Commitment of such Lender or any other
interest of such Lender under the Loan Documents. In the event of any such sale
by a Lender of participating interests to a Participant, such Lender's
obligations under the Loan Documents shall remain unchanged, such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, such Lender shall remain the holder of any such Note for all
purposes under the Loan Documents, all amounts payable by the Company under this
Agreement shall be determined as if such Lender had not sold such participating
interests, and the Company and the Administrative Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under the Loan Documents. The participation agreement effecting the
sale of any participating interest shall contain a representation by the
Participant to the effect that none of the consideration used to make the
purchase of the participating interest in the Revolving Credit Commitment,
Revolving Loans and interests in Letters of Credit under such participation
agreement are "plan assets" as defined under ERISA and that the rights and
interests of the Participant in and under the Loan Documents will not be "plan
assets" under ERISA.
1.4
1.5 (b) Voting Rights. Each Lender shall retain the sole right to approve,
without the consent of any Participant, any amendment, modification or waiver of
any provision of the Loan Documents.
1.6
1.7 (c) Benefit of Setoff. The Company agrees that to the extent permitted
by applicable law each Participant shall be deemed to have the right of setoff
provided in Section 10.2(d) in respect of its participating interest in amounts
owing under the Loan Documents to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under the Loan
Documents, provided that each Lender shall retain the right of setoff provided
in Section 10.2(d) with respect to the amount of participating interests sold to
each Participant. The Lenders agree to share with each Participant, and each
Participant shall be deemed to agree, by exercising the right of setoff provided
in Section 10.2(d) to share with each Lender, any amount received pursuant to
the exercise of its right of setoff, such amounts to be shared in accordance
with Section 10.2(d) as if each Participant were a Lender.
1.8
1.9 Assignments.
1.10
1.11 (a) Permitted Assignments. Any Lender may, in the ordinary course of
its business and in accordance with applicable law, at any time assign to one or
more banks or other entities ("Purchasers") all or any part of its Revolving
Credit Commitment and outstanding Revolving Loans and interests in the Letters
of Credit, together with its rights and obligations under the Loan Documents
with respect thereof; provided, however, that (i) each such assignment shall be
of a constant, and not a varying percentage of all of the assigning Lender's
rights and obligations
43
49
so assigned; (ii) the amount of the Revolving Credit Commitment of the assigning
Lender being assigned pursuant to each such assignment (determined as of the
date of such assignment) may be in the amount of such Lender's entire Revolving
Credit Commitment but otherwise shall not be less than $5,000,000 or an integral
multiple of $1,000,000 in excess of that amount; and (iii) notwithstanding the
foregoing clause (ii), (A) if the assignment is made to a Lender, the amount of
the Revolving Credit Commitment assigned shall not be less than $5,000,000 or an
integral multiple thereof and (B) if the assignment is made pursuant to Section
3.14, the Revolving Credit Commitment assigned may be in the amount of the
relevant Lender's entire remaining Revolving Credit Commitment. Such assignment
shall be substantially in the form of Exhibit E hereto or in such other form as
may be agreed to by the parties thereto. The consent of the Company, the
Syndication Agent and the Administrative Agent shall be required prior to an
assignment becoming effective with respect to a Purchaser which is not a Lender;
provided, however, that if an Event of Default has occurred and is continuing,
or if the assignment is made to an affiliate of the assigning Lender, the
consent of the Company shall not be required. Such consents shall not be
unreasonably withheld.
1.12
1.13 (b) Effect; Effective Date. Following delivery to the Administrative
Agent of a notice of assignment, substantially in the form attached to Exhibit E
hereof (a "Notice of Assignment"), together with any consents required by
Section 12.3(a), and payment by the Purchaser of a $2,500.00 fee (which the
Company shall not be obligated to pay or reimburse) to the Administrative Agent
for processing such assignment, upon the date certain specified in such Notice
of Assignment, such assignment shall become effective (the "Effective Assignment
Date"). The Notice of Assignment shall contain a representation by the Purchaser
to the effect that none of the consideration used to make the purchase of the
Revolving Credit Commitment, Revolving Loans and interests in the Letters of
Credit under the applicable assignment agreement are "loan assets" as defined
under ERISA and that the rights and interests of the Purchaser in and under the
Loan Documents will not be "plan assets" under ERISA. On and after the Effective
Assignment Date of such assignment, such Purchaser shall for all purposes be a
Lender party to this Agreement and any other Loan Documents executed by the
Lenders and shall have all the rights and obligations of a Lender under the Loan
Documents, to the same extent as if it were an original party hereto and
thereto, and no further consent or action by the Company, the Lenders or the
Administrative Agent shall be required to release the transferor Lender with
respect to the percentage of the aggregate Revolving Credit Commitments assigned
to such Purchaser. Upon the consummation of any assignment to a Purchaser
pursuant to this Section 12.3(b) the transferor Lender, the Administrative
Agent, and the Company shall make appropriate arrangements so that replacement
Notes are issued to such transferor Lender and new Notes or, as appropriate,
replacement Notes, are issued to such Purchaser, in each case in principal
amounts reflecting its Revolving Credit Commitment, as adjusted pursuant to such
assignment.
1.14
1.15 Dissemination of Information.
1.16
1.17 The Company authorizes each Lender to disclose to any Participant or
Purchaser or any other person acquiring an interest in the Loan Documents by
operation of law (each a "Transferee") and any prospective Transferee any and
all information in such Lender's
44
50
possession concerning the creditworthiness of the Company and its Subsidiaries;
provided that each Transferee and prospective Transferee agrees to be bound by
Section 13.11.
1.18
1.19 Tax Treatment.
1.20
1.21 If any interest in any Loan Documents is transferred to any Transferee
which is organized under the laws of any jurisdiction other than the United
States of America or any State thereof, the transferor Lender shall cause such
Transferee, concurrently with the effectiveness of such transfer, to comply with
the following provisions: with respect to any Lender that is not incorporated
under the laws of the United States of America, or a state thereof, such Lender
agrees that it will deliver to each of the Company and the Administrative Agent
two duly completed copies of United States Internal Revenue Service Form 1001 or
4224, certifying in either case that such Lender is entitled to receive payments
under this Agreement and the Notes without deduction or withholding of any
United States or federal income taxes. Each Lender which so delivers such form
further agrees and undertakes to deliver to each of the Company and the
Administrative Agent two additional copies of such form (or successor or related
form) on or before the date such form expires.
1.22
1.23
2 SECTION NOTICES AND GENERAL PROVISIONS
3
3.1 Notices.
3.2
(a) Giving Notice. Except as otherwise permitted by Section 1.1(d) with
respect to borrowing notices, all notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by telex or by facsimile and addressed or delivered to such party at
its address set forth below its signature hereto or at such other address as may
be designated by such party in a notice to the other parties. Any notice, if
mailed and properly addressed with postage prepaid, shall be deemed given when
received; any notice, if transmitted by telex or facsimile, shall be deemed
given when transmitted.
(b) Change of Address. The Company, the Administrative Agent and any
Lender may each change the address for service of notice upon it by a notice in
writing to the other parties hereto.
1.1 Reproduction of Documents.
1.2
1.3 This Agreement and all documents relating hereto, including, without
limitation, (a) consents, waivers and modifications which may hereafter be
executed, (b) documents received by the Administrative Agent or any Lender at
the closing or otherwise, and (c) financial statements, certificates and other
information previously or hereafter furnished to the Administrative Agent or any
Lender, may be reproduced by the Administrative Agent or any Lender by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process and the Administrative Agent or any Lender may destroy any
original document so reproduced. The Company agrees and stipulates that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether
45
51
or not the original is in existence and whether or not such reproduction was
made by the Administrative Agent or any Lender in the regular course of
business) and that any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence.
1.4
1.5 Survival.
1.6
1.7 All warranties, representations, and covenants made by the Company
herein or on any certificate or other instrument delivered by it or on its
behalf under this Agreement shall be considered to have been relied upon by the
Administrative Agent, the Syndication Agent and each Lender and shall survive
the closing of the Revolving Credit Commitments regardless of any investigation
made by the Administrative Agent or any Lender on their behalf. All statements
in any such certificate or other instrument shall constitute warranties and
representations by the Company. This Agreement shall inure to the benefit of and
be binding upon the heirs, successors and assigns of each of the parties.
1.8
1.9 Amendments.
1.10
1.11 Subject to the provisions of this Section 13.4, the Required Lenders
(or the Administrative Agent with the consent in writing of the Required
Lenders) and the Company may enter into agreements supplemental hereto for the
purpose of adding to or modifying any provisions of the Loan Documents or
changing in any manner the rights of the Lenders and the Company hereunder or
waiving any Event of Default hereunder; provided, however, that no such
supplemental agreement, waiver or amendment or modification shall, without the
consent of each Lender affected thereby,
1.12
1.13 (a) extend the Revolving Credit Termination Date, any Note, or
Reimbursement Obligation or forgive all of any portion of the principal amount
thereof, any interest thereon, or any fees or other amounts payable hereunder
(except that the Administrative Agent may waive payment of the fee required
under Section 12.3(b) without obtaining the consent of any other party to this
Agreement) or reduce the rate or rates of interest or extend the time of payment
of interest, fees or other amounts payable hereunder;
1.14
1.15 (b) reduce the percentage specified in the definition of Required
Lenders or change the aggregate Pro Rata Share required for the Lenders or any
of them to take action hereunder;
1.16
1.17 (c) reduce the amount or extend the payment date for any payments
required under Section 3.16 or increase the amount of the Revolving Credit
Commitment of any Lender hereunder or permit the Company to assign its rights or
obligations under this Agreement;
1.18
1.19 (d) change or amend the percentages applicable to any component of the
Borrowing Base; or
1.20 (e) amend this Section 13.4.
1.21
1.22 No amendment of any provision of this Agreement relating in any way to
the Administrative Agent or the Syndication Agent or any of the Letters of
Credit shall be effective without the written consent of the Administrative
Agent or the Syndication Agent, as the case may be. No
46
52
delay or failure or other course of conduct by the Administrative Agent or any
Lender in the exercise of any power or right shall operate as a waiver thereof;
nor shall any single or partial exercise of the same preclude any other or
further exercise thereof, or the exercise of any other power or right.
1.23
1.24 Duplicate Originals.
1.25
1.26 Multiple duplicate originals of this Agreement may be signed by the
parties, each of which shall be an original but all of which together shall
constitute one and the same instrument.
1.27
1.28 Enforceability and Governing Law.
1.29
1.30 Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction, as to such jurisdiction, shall 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. No delay or omission on the part of the Administrative Agent
or any of the Lenders in exercising any right shall operate as a waiver of such
right or any other right. All of the Administrative Agent's or any Lender's
rights and remedies, whether evidenced hereby or by any other agreement or
instrument, shall be cumulative and may be exercised singularly or concurrently.
This Agreement shall be governed by and construed in accordance with the laws of
the State of Ohio.
1.31
1.32 Fiscal Year.
The Company's fiscal year begins January 1 and ends December 31 of each
calendar year, and the Company will not change its fiscal year without the prior
written consent of the Administrative Agent and the Required Lenders.
1.1 Consent to Jurisdiction and Waiver of Objection to Venue.
The Company, the Administrative Agent, the Syndication Agent and each
Lender agree that any legal action or proceeding with respect to this Agreement,
the Notes or the other Loan Documents or the transactions contemplated hereby
may be brought in the Court of Common Pleas of Franklin County, Ohio, or in the
United States District Court for the Southern District of Ohio, Eastern
Division, and the Company, the Administrative Agent, the Syndication Agent and
each Lender hereby irrevocably submit to and accept generally and
unconditionally the jurisdiction of those courts with respect to its person,
property and revenues and irrevocably consent to service of process in any such
action or proceeding by the mailing thereof by U.S. mail to the designated party
at the address referenced in Section 13.1 hereof.
The Company, the Administrative Agent, the Syndication Agent and each
Lender hereby irrevocably waive any objection to the laying of venue of any such
suit or proceeding in the above described courts, and unconditionally waive and
agree not to plead or claim that any such suit or proceeding brought in any such
court has been brought in an inconvenient forum, provided, that this provision
shall not preclude any party from seeking to consolidate actions brought against
it.
47
53
Nothing in this paragraph shall affect the right of the Administrative
Agent or any Lender to serve process in any other manner permitted by law or
limit the right of the Administrative Agent or any Lender to bring any such
action or proceeding against the Company or to obtain execution on any judgment
in any other jurisdiction or in any other manner permitted by law.
1.1 Waiver of Jury Trial.
1.2
1.3 THE PARTIES ACKNOWLEDGE THAT, AS TO ANY AND ALL DISPUTES THAT MAY
ARISE BETWEEN THE PARTIES, THE COMMERCIAL NATURE OF THE TRANSACTION OUT OF WHICH
THIS AGREEMENT ARISES WOULD MAKE ANY SUCH DISPUTE UNSUITABLE FOR TRIAL BY JURY.
ACCORDINGLY, EACH OF THE PARTIES TO THIS AGREEMENT HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY AS TO ANY AND ALL DISPUTES THAT MAY ARISE RELATING TO THIS
AGREEMENT OR TO ANY OF THE OTHER INSTRUMENTS OR DOCUMENTS EXECUTED IN CONNECTION
HEREWITH.
1.4
1.5 Confidentiality.
1.6
1.7 The Administrative Agent, the Syndication Agent and each Lender shall
hold all non-public information obtained pursuant to the requirements hereof and
identified as such by the Company in accordance with the customary procedures of
the Administrative Agent, the Syndication Agent and each of the Lenders
respectively for handling confidential information of this nature and in
accordance with safe and sound banking practices, and in any event may make
disclosures reasonably required by a bona fide participant or co-lender in
connection with the contemplated participation or assignment, or as required or
requested by any Governmental Authority or any representative thereof, or
pursuant to any legal process, or to its accountants, lawyers and other
advisors.
1.8
1.9
2 SECTION DEFINITIONS
3
3.1 Accounting Terms. As used in this Agreement, and any promissory
notes, certificates, reports or other documents made or delivered pursuant
hereto, accounting terms not defined in this Agreement shall have the respective
meanings given to such terms under GAAP. "GAAP" means generally accepted
accounting principles consistently applied set forth in the opinions and
pronouncements of the Accounting Principles Board, the American Institute of
Certified Public Accountants and the Financial Accounting Standards Board as in
effect on the date hereof.
3.2 Other Definitional Provisions.
3.3
3.4 (a) 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;
3.5
48
54
3.6 (b) Whenever required by the context of this Agreement, the Notes or
other Loan Documents executed in connection herewith, the singular shall include
the plural, and vice versa and the masculine and feminine genders shall include
the neuter gender and vice versa.
3.7
3.8 Defined Terms.
3.9
3.10 "Account Debtor" is defined in Section 2.4.
3.11
3.12 "Acquisition" means any transaction, or any series of related
transactions, by which the Company or any of its Subsidiaries (a) acquires any
going business or all or substantially all of the assets of any firm,
corporation or division thereof which constitutes a going business, whether
through purchase of assets, merger or otherwise, or (b) directly or indirectly
acquires (in one transaction or in a series of transactions) at least a majority
(in number of votes) of the securities of a corporation which have ordinary
voting power for the election of directors or a majority (by percentage or
voting power) of the outstanding partnership interest of a partnership or a
majority (by percentage or voting power) of the outstanding ownership interest
of a limited liability company.
3.13
3.14 "Adjusted EBITDA" means for any period the sum of such Person's
(a) EBITDA, plus (b) the compensation of any shareholders and affiliates of such
Person and other expenses outside of the ordinary course of business for such
shareholders or affiliates (if such shareholders and affiliates will not remain
with the business or if such related expenses will not be continued in the
operation of the acquired entity), plus (c) any extraordinary losses, as
determined by GAAP, minus (d) any extraordinary gains, as determined by GAAP.
3.15
3.16 "Adjusted Loss" shall mean with respect to any fiscal quarter, if the
Company and its consolidated Subsidiaries' (a) Consolidated Net Income before
taxes as determined in accordance with GAAP, minus (b) the sum of all
extraordinary gains (and any unusual gains arising outside the ordinary course
of business not included in extraordinary gains determined in accordance with
GAAP), is less than $1.00.
3.17
3.18 "Administrative Agent" is defined in the Preamble.
3.19
3.20 "Agreement" is defined in the Preamble.
3.21
3.22 "Applicable Eligible Acquisition Assets Rate" is defined in
Section 3.4.
3.23
3.24 "Applicable Eurodollar Margin" means the applicable rate per annum set
forth below based on the Interest Coverage Ratio as of the end of the Company's
most recently ended fiscal quarter:
3.25
------------------------------------------------------------------------------------------
Interest Coverage Ratio Applicable Eurodollar Margin
------------------------------------------------------------------------------------------
greater than 3.75 to 1.00 1.75%
------------------------------------------------------------------------------------------
greater than or equal to 3.25 to 1.00,
but less than or equal to 3.75 to 1.00 2.00%
------------------------------------------------------------------------------------------
greater than or equal to 2.75 to 1.00,
but less than 3.25 to 1.00 2.25%
------------------------------------------------------------------------------------------
less than 2.75 to 1.00 2.50%
------------------------------------------------------------------------------------------
49
55
"Applicable Prime Rate Margin" means zero percent (0%).
"Applicable Unused Commitment Fee Rate" means the applicable rate per
annum set forth below based on the Interest Coverage Ratio as of the end of the
Company's most recently ended quarter:
---------------------------------------------------------------------------------------------
Interest Coverage Ratio Applicable Unused Commitment Fee Rate
---------------------------------------------------------------------------------------------
greater than or equal to 2.75 to 1.00 0.25%
---------------------------------------------------------------------------------------------
less than 2.75 to 1.00 0.375%
---------------------------------------------------------------------------------------------
"Approved Joint Venture" means (a) any entity which satisfies all the
requirements of the last sentence of this paragraph, or (b) any other entity in
which the Company has an Investment in Joint Venture for which for which (A) the
Company acts as managing partner or similar manager, as applicable, (B) the
Administrative Agent for the benefit of the Lenders has received guaranty
agreements or other undertakings satisfactory to the Administrative Agent in an
aggregate amount not less than the full amount of any Letter of Credit issued on
account of such entity, and (C) such entity satisfies the following conditions
to the satisfaction of the Administrative Agent and the Required Lenders (i)
review and approval by the Administrative Agent of financial statements and
financial condition of such partner or partners, including confirmation of the
absence of any borrowings by such entity (other than purchase money seller
financing in an amount not to exceed the purchase price of any undeveloped real
property), (ii) review and approval by the Administrative Agent of articles of
incorporation of such partner or partners, joint venture agreement or
partnership agreement or other evidence of the Company's ownership interest in
such entity, (iii) execution and delivery to the Administrative Agent of an
application and agreement for standby letter of credit for such entity in form
satisfactory to the Administrative Agent, (iv) review and approval by the
Administrative Agent of resolutions or other indicia of authority for those
persons signing on behalf of such entity, (v) execution and delivery of a
guaranty agreement in form acceptable to the Administrative Agent by each of the
partners or owners in such entity, (vi) review and approval by the
Administrative Agent of resolutions or other indicia of authority of those
persons executing such guaranty agreements, (vii) review and approval by the
Administrative Agent of any other documents, instruments or agreements deemed
necessary by the Administrative Agent with respect to the issuance of such
Letters of Credit in respect of such entity or the other partner or owner
therein, and (viii) evidence that all of the real property owned by such entity
is located in the State of Ohio or any state contiguous thereto. The
Administrative Agent and each Lender stipulate that until the Administrative
Agent gives the Company notice to the contrary, any limited liability company,
partnership or joint venture (a) in which (i) the Company and (ii) M/I
Schottenstein Homes, Inc., Homewood Corporation or Rockford Homes, Inc. (or any
combination thereof) are the sole owners or partners, (b) for which the Company
is liable for the full amount of all Letters of
50
56
Credit issued on behalf of such entity, and (c) for which the Company acts as
managing partner or similar manager, as applicable, shall constitute an Approved
Joint Venture.
"Arm's-Length Contract" is defined in Section 2.12.
"Assignment and Acceptance" means an assignment and acceptance in
substantially the form of Exhibit E attached hereto and made a part hereof (with
blanks appropriately completed) delivered to the Administrative Agent in
connection with an assignment of a Lender's interest hereunder in accordance
with the provisions of this Agreement.
"Available Cash" is defined in Section 2.2.
"▇▇▇▇▇▇ Group" means (a) any corporation, partnership, entity or trust
in respect of which ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and/or his lineal descendants directly or
indirectly (i) exercise voting control and (ii) have a majority of the
beneficial interests thereof, (b) any individual shareholder of ▇▇▇▇▇▇ Realty
Company as of the date of this Agreement, (c) any lineal descendant of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, or (d) any combination thereof.
"Borrowing Base" is defined in Section 2.1.
"Borrowing Base Availability" means, at any time, the sum of the
Borrowing Base, minus the amount of the Excess Permitted Nonrecourse Borrowings
Reserve, if any.
"Business Day" means a day, in the applicable local time, which is not
a Saturday or Sunday or a legal holiday and on which banks are not required or
permitted by law or other governmental action to close (a) in Columbus, Ohio,
and (b) in the case of a Eurodollar Advance, in London, England.
"Central Ohio" means any area within a 60 mile radius from the
Company's corporate headquarters, Franklin County, Ohio.
"Change in Control" shall mean (a) the replacement of a majority of the
Board of Directors of the Company or ▇▇▇▇▇▇ Realty Company from the directors
who constituted the Board of Directors on the date of this Agreement for any
reason other than death or disability, and such replacement shall not have been
approved by the Board of Directors of the Company or of ▇▇▇▇▇▇ Realty Company,
as the case may be, as constituted on the date of this Agreement (or as changed
over time with the approval of the Board of Directors of such entity) or (b) a
company, person, entity or group of companies, person or entities (other than
any of the ▇▇▇▇▇▇ Group) acting in concert, shall, as a result of a tender or
exchange offer, open market purchases, privately negotiated purchases, exercise
of the stock pledge or otherwise, have become the beneficial owner (within the
meaning of Rule 13d.3 under the Securities Exchange Act of 1934, as amended) of
securities of the Company or ▇▇▇▇▇▇ Realty Company representing more than 30% of
the combined voting power of the outstanding securities of the Company
ordinarily having the right to vote in the election of directors from the
beneficial owners as of the date hereof; or (c) the failure of the ▇▇▇▇▇▇ Group
at any time to (i) have at least a majority (on a fully diluted basis) of the
beneficial ownership and voting control of the outstanding securities of the
51
57
Company or of ▇▇▇▇▇▇ Realty Company, as the case may be, or (ii) have the right
to designate or nominate at least a majority of the Board of Directors of the
Company.
"Company" is defined in the Preamble.
"Consolidated Net Income" means, for any period on a consolidated basis
for the Company and its Subsidiaries, the net income (or loss) after taxes for
such period taken as a single accounting period, determined in conformity with
GAAP.
"Consolidated Tangible Net Worth" shall mean the consolidated
stockholders' equity of the Company and its consolidated Subsidiaries, minus the
sum of all the following: (a) the excess of cost over the value of net assets of
purchased businesses, rights, and other similar intangibles, (b) organization
expenses, (c) intangible assets (to the extent not reflected in the foregoing),
(d) goodwill, (e) deferred charges or deferred financing costs, (f) loans or
advances to and/or accounts receivable or notes receivable from affiliates
(other than funds in escrow due from affiliates in connection with holdbacks or
other amounts to ensure the completion of performance for the sale of
residential dwellings), (g) non-compete agreements, and (h) to the extent
included in stockholders' equity, minority interests in any Subsidiaries held by
other persons or entities.
"Consolidated Total Liabilities" shall mean with respect to the Company
and its consolidated Subsidiaries (a) all indebtedness and obligations which, in
accordance with GAAP, would be classified upon a balance sheet as liabilities
(except capital stock and surplus earned), and further, including, without
limitation, the amount of Noncancellable Land Commitments, and (b) to the
extent, if any, not included within a GAAP classification of liabilities, all
liabilities secured by any lien or encumbrance on any property owned by the
Company even though the Company has not assumed or otherwise become liable for
the payment thereof.
"Contingent Obligations" means any agreement, undertaking or
arrangement by which the Company or any Subsidiary assumes, guaranties,
endorses, agrees to provide funding, or otherwise becomes or is contingently
liable upon the obligation or liability of any other Person.
"Developed Lots" is defined in Section 2.3.
"EBITDA" means for any period, the sum of the amounts for such period
of (a) Consolidated Net Income, (b) Interest Expense, (c) charges for federal,
state, local and foreign income taxes, and (d) depreciation, amortization
expense and non-cash charges which were deducted in determining net income.
"Effective Assignment Date" is defined in Section 12.3(b).
"Eligible" is defined in Section 2.7.
"Eligible Accounts Receivable" is defined in Section 2.4.
"Eligible Acquisition Assets" is defined in Section 2.5.
52
58
"Eligible Investments in Joint Ventures" is defined in Section 2.8.
"Eligible Lumber Inventory" is defined in Section 2.6.
"Environmental Laws" shall mean the Comprehensive Environmental
Response, Compensation and Liability Act, as amended (42 U.S.C. Section 9601, et
seq.), the Hazardous Materials Transportation Act, as amended (49 U.S.C. Section
1801, et seq.), the Toxic Substances Control Act, as amended (15 U.S.C. Section
2601, et seq.), the Resource Conservation and Recovery Act, as amended (42
U.S.C. Section 6901, et seq.), the Water Quality Act of 1987, as amended (33
U.S.C. Section 1251, et seq.), the Clean Water Act, as amended (33 U.S.C.
Section 1321 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act,
as amended (7 U.S.C. Section 136, et seq.), the National Environmental Policy
Act of 1969, as amended (42 U.S.C. Section 4321, et seq.), and the Clean Air
Act, as amended (42 U.S.C. Section 7401, et seq.), and any other federal, state
or local statute, ordinance, law, code, rule, regulation or order regulating or
imposing liability (including strict liability) or standards of conduct
regarding Hazardous Substances.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"Eurodollar Advance" shall mean any amount borrowed as part of the
Revolving Loans that bears interest at a rate calculated with a reference to the
Eurodollar Rate.
"Eurodollar Rate" shall mean, with respect to any Eurodollar Advance
and the related Interest Period, the per annum rate that is obtained by
dividing: (a) the actual or estimated arithmetic mean of the per annum rates of
interest at which deposits in U.S. dollars for the related Interest Period and
in an aggregate amount comparable to the amount of such Eurodollar Advance are
being offered to U.S. banks by one or more prime banks in the London interbank
market, as determined by the Administrative Agent in its sole discretion based
upon reference to information appearing in Telerate, a service of Telerate
Systems Incorporated, in the section captioned "British Bankers Assoc. Interest
Settlement Rates," or any comparable index selected by the Administrative Agent
for the obtaining of rate quotations, or any other reasonable procedure, at
approximately 11:00 a.m. London, England time, on the second Business Day prior
to the first day of the related Interest Period, all as determined by the
Administrative Agent, such interest rate to be rounded up to the nearest whole
multiple of 1/16 of 1% per annum, by (b) a percentage equal to 100%, minus the
Eurodollar Reserve Percentage.
"Eurodollar Reserve Percentage" means, for any day, that percentage
which is in effect on such day, as prescribed by the Federal Reserve Board for
determining the maximum reserve requirement (including, without limitation, any
emergency, supplemental, or other marginal reserve requirement) for a member
bank of the Federal Reserve System in respect of "Certificate of Deposit
Liabilities" or in respect of any other category of liabilities which includes
deposits by reference to which the interest rate on Eurodollar Advances is
determined or any category of extensions of credit or other assets which
includes loans by a non-United States office of any bank to United States
residents, or with respect to any "Eurocurrency Liabilities" under
53
59
Regulation D of the Board of Governors of the Federal Reserve System, or any
other regulations of any Governmental Authority having jurisdiction with respect
thereto.
"Event of Default" is defined in Section 10.1.
"Excess Permitted Nonrecourse Borrowings" is defined in Section 8.5.
"Excess Permitted Nonrecourse Borrowings Reserve" is defined in Section
2.1.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to 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 for such day or
the next preceding Business Day by the Federal Reserve Bank of New York.
"Financial Officer" is defined in Section 9(a).
"GAAP" is defined in Section 14.1.
"Governmental Authority" means any arbitrator or court, government,
state, or political subdivision thereof, or any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Hazardous Substances" shall mean and include all hazardous and toxic
substances, wastes, materials, compounds, pollutants and contaminants
(including, without limitation, asbestos, polychlorinated biphenyls, and
petroleum products) which are included under or regulated by any Environmental
Laws, but does not include such substances as are permanently incorporated into
a structure or any part thereof in such a way as to preclude their subsequent
release into the environment, or the permanent or temporary storage or disposal
of household hazardous substances by tenants, and which are thereby exempt from
or do not give rise to any violation of any Environmental Laws.
"Home Work-in-Process" is defined in Section 2.12.
"Hostile Acquisition" shall mean to acquire, or obtain the right to
acquire, beneficial ownership of 5% or more of common stock or 5% or more of
assets then outstanding of any other business entity pursuant to a tender offer,
exchange offer, or other offer not expressly authorized in writing by the Board
of Directors of such business entity.
"Huntington" is defined in the Preamble.
"Huntington Capital" is defined in the Preamble.
"Indebtedness," as applied to the Company or any other Person shall
mean, at any time, (a) all indebtedness, obligations or other liabilities (other
than accounts payable arising in the ordinary course of business payable on
terms customary in the trade) which in accordance with
54
60
GAAP should be classified upon such Person's balance sheet as liabilities,
including, without limitation (i) for borrowed money or evidenced by debt
securities, debentures, acceptances, notes or other similar instruments, and any
accrued interest, fees and charges relating thereto, (ii) payable out of the
proceeds or production of property owned by such Person, or in respect of
obligations to redeem, repurchase or exchange any securities or to pay dividends
in respect of any stock, (iii) with respect to letters of credit issued, (iv) to
pay the deferred purchase price of property or services, except accounts payable
and accrued expenses arising in the ordinary course of business, or (v) in
respect of capital leases; (b) all indebtedness, obligations or other
liabilities secured by a lien on any property, whether or not such indebtedness,
obligations or liabilities are assumed by the owner of the same; and (c) all
indebtedness, obligations or other liabilities in respect of interest rate
contracts and currency agreements, net of liabilities owed by the counterparties
thereon.
"Interest Coverage Ratio" means, with respect to any period, the ratio
of (a) EBITDA of the Company and its Subsidiaries for such period to (b)
Interest Expense for such period.
"Interest Expense" means, for any period, as determined in conformity
with GAAP, total interest expense, whether paid or accrued or due and payable
(without duplication), including without limitation the interest component of
capital lease obligations for such period, all bank fees, commissions, discounts
and other fees and charges owed with respect to the Letters of Credit and net
costs under interest rate contracts.
"Interest Payment Date" shall mean in respect of the Revolving Loans,
the last day of each Interest Period, and for any Interest Period that exceeds
three months, on the 90th day after the commencement of such Interest Period.
"Interest Period" shall mean:
(a) With respect to any Prime Rate Advance, an initial period
commencing, as the case may be, on the day such an advance shall be made by the
Administrative Agent, or on the day of conversion of any then outstanding
advance to an advance of such type, and ending the last day of each month and on
the day of conversion to an advance of a different type.
(b) With respect to any Eurodollar Advance, an initial period
commencing, as the case may be, on the day such an advance shall be made by the
Administrative Agent, or on the day of conversion of any then outstanding
advance to an advance of such type, and ending on the date one (1), two (2),
three (3) or six (6) months thereafter, all as the Company may elect pursuant to
this Agreement; provided, that (i) any Interest Period with respect to a
Eurodollar Advance that shall commence on the last Business Day of the calendar
month (or any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business Day of the
respective subsequent calendar month; and (ii) each Interest Period with respect
to a Eurodollar Advance that would otherwise end on a day which is not a
Business Day or, if such next succeeding Business Day falls in the next
succeeding calendar month, on the next preceding Business Day. Notwithstanding
the provisions of paragraphs (a) and (b) above, no Interest Period shall be
permitted which would end after the Revolving Credit Termination Date.
55
61
(c) Interest with respect to all advances under the Revolving Loans
shall be calculated on a 360 day year basis and shall be based on the actual
number of days which elapse during the interest calculation period.
"Investment" means any loan, advance, extensions of credit (other than
accounts receivable arising in the ordinary course of business on terms
customary in the trade), deposit accounts or contribution of capital in or to
any other entity or any investment in, or purchase or other acquisition of, the
stock, partnership interests, ownership interests in any limited liability
company, notes debentures, or other securities of any other entity.
"Investments in Joint Ventures" is defined in Section 2.8.
"Land Deposits" shall mean the sum of down payments, deposits, or
other funds paid pursuant to noncancellable, bona fide, arm's length contracts
for the purchase of real property by the Company.
"Lender" and "Lenders" are defined in the Preamble.
"Letter Agreement" means the fee letter dated April 17, 1998, from the
Administrative Agent and the Syndication Agent and accepted and agreed to by the
Company.
"Letter of Credit" and "Letters of Credit" are defined in Section
1.2(a).
"Letter of Credit Application" is defined in Section 1.2(d).
"Letter of Credit Obligations" means, at any time, the sum of (i) the
aggregate non-contingent reimbursement or repayment obligations of the Company,
any Subsidiary or any Approved Joint Venture with respect to amounts drawn under
the Letters of Credit, plus (ii) the aggregate undrawn stated amount of all
outstanding Letters of Credit, plus (iii) the aggregate stated amount of all
Letters of Credit requested hereunder, but not yet issued or rejected.
"Leverage Ratio" means, for any period, the ratio of Consolidated Total
Liabilities to Consolidated Tangible Net Worth for such period.
"Loan Document" and "Loan Documents" means this Agreement, the Notes,
any Letter of Credit Application, the documents executed or delivered pursuant
to this Agreement, any interest rate contracts to which any Lender or affiliate
of a Lender is a party, and all other instruments, guaranties, agreements and
contracts between (a) the Company or any Subsidiary of the Company and (b) any
of the Administrative Agent, the Syndication Agent, the Lenders or Huntington,
in each case delivered to either the Administrative Agent, the Syndication
Agent, such Lender or Huntington pursuant to or in connection with this
Agreement or the Revolving Credit Commitments.
"Lots Under Development" is defined in Section 2.9.
56
62
"Material Adverse Effect" means a material adverse effect upon (a) the
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Company and its Subsidiaries taken as a whole,
(b) the ability of the Company or any Subsidiary to perform its obligations
under this Agreement, any Loan Document or any document, agreement, guaranty, or
instrument executed in connection herewith, or (c) the ability of the
Administrative Agent or the Lenders to enforce the terms of this Agreement, or
any document, agreement, guaranty, or instrument executed in connection
herewith.
"Material Subsidiary" means any Subsidiary in which the sum of the
Company's (a) Investment in such Subsidiary and (b) Contingent Obligations with
respect to such Subsidiary equals or exceeds $1,000,000.00.
"Maximum New Market Investment Amount" means, with respect to the
Company and its Subsidiaries, the aggregate amount of (a) each Purchase Price
for an Acquisition of a Person or the assets of a Person whose principal
business is outside Central Ohio, (b) the aggregate amount of Investments in
Restricted Subsidiaries or in Investments in Joint Ventures, whose principal
operations or property are outside Central Ohio, and (c) the aggregate cost of
all Uncommitted Land Holdings, Speculative Homes, Model Homes and all other real
or personal property located outside Central Ohio.
"Maximum Revolving Credit Amount" means, at any time, an amount equal
to the Revolving Credit Commitments, less the amount of the Excess Permitted
Nonrecourse Borrowings Reserve in effect at such time.
"Model Homes" is defined in Section 2.10.
"Noncancellable Land Commitments" shall mean the amount of the
Company's obligations with respect to the unpaid purchase price of
noncancellable contracts for the purchase of real property by the Company.
"Non-Facility Contingent Obligations" means the aggregate stated amount
of the Company's or any Subsidiary's Contingent Obligations in connection with
letters of credit or other forms of surety issued by a financial institution
other than pursuant to the terms of this Agreement.
"Note" or "Notes" is defined in Section 4(a).
"Notice of Assignment" is defined in Section 12.3(b).
"Notice of Borrowing" is defined in Section 1.1(d).
"Participant" is defined in Section 12.2(a).
"Permitted Acquisition" shall mean an Acquisition by the Company or any
Subsidiary, for which the Company or a Restricted Subsidiary satisfies each of
the following conditions to the good faith satisfaction of the Administrative
Agent and the Required Lenders:
(a) such Acquisition is of or with a Person in the homebuilding or
related industry;
57
63
(b) such Acquisition is made at a time when, after giving effect
thereto and the related financing thereof, (i) no Event of Default exists or
would occur based upon (A) a pro forma prospective calculation for the next
twelve (12) month period and (B) a pro forma historical calculation (using
Adjusted EBITDA if applicable) for the most recent twelve (12) month period of
the financial covenants set forth in this Agreement performed in accordance with
GAAP giving effect to any higher levels of Indebtedness associated with the
acquired operations, together with interest thereon to be accrued for such
twelve (12) month period, and (ii) after giving effect to such Acquisition, the
Company and each Subsidiary would remain solvent pursuant to the warranties
contained in this Agreement;
(c) the acquired business entity shall have had positive Adjusted
EBITDA for the twelve (12) month period immediately prior to the effective date
of the Acquisition;
(d) on the date of the closing of the Permitted Acquisition and after
giving effect thereto and to any advances under the Revolving Loan made to
finance such Permitted Acquisition, (i) no Event of Default shall have occurred
and be continuing and (ii) all representations and warranties under this
Agreement shall be true and correct as though made on and as of such date,
except to the extent that any such representation or warranty expressly relates
to an earlier date;
(e) the acquired business entity, if the acquisition is of capital
stock and such entity constitutes a Subsidiary, obligates itself on the
Revolving Loans or this Agreement pursuant to a guaranty or supplement
substantially in the form of Exhibit F hereto or other loan documents
satisfactory to the Administrative Agent and otherwise complies with the
requirements of this Agreement and executes and delivers such documentation as
the Administrative Agent deems appropriate with respect to intercompany
borrowings from the Company;
(f) the acquired assets are free and clear of all liens or encumbrances
except as permitted under this Agreement;
(g) the Company delivers written notice to the Administrative Agent of
its intention to make such Acquisition no less than 45 days prior to the
proposed closing date for such acquisition that sets forth, among other things,
information regarding liabilities and obligations with respect to the
environmental matters, labor matters, or ERISA matters to be incurred by the
Company (including, without limitation, the acquired business entity in the
event of an acquisition of capital stock) as a result of such Acquisition, any
indemnities afforded under the terms of such acquisition and the scope and
results of any environmental review, labor review, or ERISA review undertaken by
the Company in connection therewith and the results of any further due diligence
required by the Administrative Agent;
(h) the Company shall provide the Administrative Agent with copies of
financial statements of the proposed acquired business entity;
(i) the Company shall not engage in a Hostile Acquisition; and
(j) all assets and/or Subsidiaries acquired shall be subject to the
provisions of this Agreement.
58
64
"Person" means any natural person, corporation, limited partnership,
limited liability company, general partnership, joint stock company, joint
venture, association, company, trust, business trust, or other organization
whether the same constitutes a legal entity, and any Governmental Authority.
"Potential Default" is defined in Section 1.3.
"Premises" is defined in Section 7.12.
"Prime Commercial Rate" as used herein shall mean the rate established
by Huntington from time to time based on its consideration of economic, money
market, business and competitive factors, and it is not necessarily Huntington's
most favored rate.
"Prime Rate Advance" shall mean any amount borrowed as part of the
Revolving Loans that bears interest at a rate calculated with reference to the
Prime Commercial Rate.
"Prior Loan Agreement" is defined in Section 3.13(a).
"Pro Rata Share" means, with respect to any Lender, the percentage
obtained by dividing (a) the sum of such Lender's Revolving Credit Commitment at
such time by (b) the sum of the aggregate amount of all Revolving Credit
Commitments at such time; provided, however, if all of the Revolving Credit
Commitments are terminated pursuant to the terms of this Agreement, then "Pro
Rata Share" means the percentage obtained by dividing (c) the sum of the
aggregate amount of such Lender's Revolving Credit Obligations by (d) the sum of
the aggregate amount of all Revolving Credit Obligations.
"Purchase Price" shall mean the sum of cash and cash equivalents paid,
notes or other indebtedness given, liabilities assumed, or the fair market value
of property transferred in connection with any Acquisition.
"Purchasers" is defined in Section 12.3(a).
"Real Estate Held for Development" is defined in Section 2.11.
"Real Property Parcel" is defined in Section 7.14.
"Reimbursement Obligations" means the aggregate non-contingent
reimbursement or repayment obligations of the Company with respect to amounts
drawn under Letters of Credit issued for the account of the Company, a
Restricted Subsidiary or any Approved Joint Venture.
"Required Lenders" means, at any time, Lenders holding in the aggregate
at least 66-2/3% of the sum of the then aggregate amount of the Revolving Credit
Commitments in effect at such time; provided, however, that in the event any of
the Lenders shall have failed to fund its Pro Rata Share of any Revolving Loan
requested by the Company, which such Lenders are obligated to fund under the
terms hereof and any such failure has not been cured, then for so long as such
failure continues, "Required Lenders" means Lenders (excluding the Lenders whose
failure to fund their respective Pro Rata Share of such Revolving Loans have not
been cured)
59
65
whose Pro Rata Shares represent at least 66-2/3% of the aggregate Pro Rata
Shares of such Lenders. Provided, however, further that, in the event that the
Revolving Credit Commitments have been terminated pursuant to the terms hereof,
"Required Lenders" means Lenders (without regard to such Lenders' performance of
their respective obligations hereunder) whose aggregate ratable shares (stated
as a percentage) of the aggregate outstanding principal balance of all Revolving
Credit Obligations are at least 66-2/3%.
"Restricted Subsidiary" means a Subsidiary of the Company which (a) is
organized and existing under the laws of any state of the United States of
America, and (b) which has become obligated under the terms of this Agreement
pursuant to a supplement or guaranty agreement satisfactory to the
Administrative Agent, in its sole and absolute discretion.
"Revolving Credit Availability" means, at any time, the amount by
which the Maximum Revolving Credit Amount exceeds the Revolving Credit
Obligations outstanding at such time.
"Revolving Credit Commitment" means, with respect to any Lender, the
obligation of such Lender to make Revolving Loans and to participate in Letters
of Credit pursuant to the terms and conditions hereof, which obligation shall
not exceed the amount set forth opposite the heading Revolving Credit Commitment
under such Lender's name on the signature pages hereof or the signature page of
the Assignment and Acceptance by which it became a Lender, as modified from time
to time pursuant to the terms hereof or to give effect to any applicable
Assignment and Acceptance.
"Revolving Credit Commitments" means the aggregate amount of the
Revolving Credit Commitments of all the Lenders, provided that the maximum
aggregate principal amount of Revolving Loans and stated amount of Letters of
Credit shall not exceed $125,000,000, as reduced from time to time pursuant to
the terms hereof.
"Revolving Credit Obligations" means, at any time, the sum of (a) the
outstanding principal amount of the Revolving Loans at such time, plus (b) the
stated amount of Letter of Credit Obligations outstanding at such time.
"Revolving Credit Termination Date" means the earlier to occur of (a)
the date of termination of the Revolving Credit Commitments pursuant to the
terms hereof, and (b) May 31, 2003.
"Revolving Loan" and "Revolving Loans" are defined in Section 1.1(a).
"Speculative Homes" is defined in Section 2.13.
"Subsidiary" of the Company means any corporation or other entity more
than 50% of the outstanding securities or other ownership interest having
ordinary voting power or the equivalent thereof which shall at the time be owned
or controlled, directly or indirectly, by the Company or by one or more of its
Subsidiaries, and shall exclude Alliance Title Agency, Ltd.
"Syndication Agent" is defined in the Preamble.
"Transferee" is defined in Section 12.4.
60
66
"Uncommitted Land Holdings" shall mean the sum of all of the following,
valued at cost or market: (a) Real Estate Held for Development, (b) Lots Under
Development, (c) Developed Lots, (d) Land Deposits, (e) Noncancellable Land
Commitments, and (f) the Company's net equity investment in Investments in Joint
Venture.
"Unleveraged Seller Financing" means Real Estate Held for Development
which is subject to seller financing and secured by a mortgage or deed of trust
on such property permitted under the terms of Sections 8.4 and 8.5 of this
Agreement, for which the cost of such real property is equal to or greater than
two times the amount of the Indebtedness owing to such seller, and the value of
any such Real Estate Held for Development shall be calculated in accordance with
Section 2.11 above.
61
67
Each of the undersigned parties has signed this Agreement as of the
date set forth in the Preamble hereto.
THE COMPANY AS BORROWER:
DOMINION HOMES, INC.
By: */s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: Chief Operating Officer
Dominion Homes, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇,
Chief Operating Officer
Fax: 614/▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esq.
Senior Vice President and General Counsel
Dominion Homes, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: 614/▇▇▇-▇▇▇▇
62
68
THE SYNDICATION AGENT:
HUNTINGTON CAPITAL CORP.
By: */s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Managing Director
Huntington Capital Corp.
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
Fax: 614/▇▇▇-▇▇▇▇
63
69
THE ADMINISTRATIVE AGENT
THE HUNTINGTON NATIONAL BANK
By: */s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Assistant Vice President
The Huntington National Bank,
Administrative Agent
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Assistant Vice President
Fax: 614/▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
PORTER, WRIGHT, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Fax: 614/▇▇▇-▇▇▇▇
THE LENDERS:
THE HUNTINGTON NATIONAL BANK,
as Lender and Issuing Bank
By: */s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Assistant Vice President
REVOLVING CREDIT COMMITMENT: $35,000,000
The Huntington National Bank
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Assistant Vice President
Fax: 614/▇▇▇-▇▇▇▇
64
70
NBD BANK
By: */s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
Its: First Vice President
REVOLVING CREDIT COMMITMENT: $25,000,000
NBD Bank
Commercial Real Estate, Suite 8029
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇,
First Vice President
Fax: 313/▇▇▇-▇▇▇▇
KEYBANK NATIONAL ASSOCIATION
By: */s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Assistant Vice President
65
71
REVOLVING CREDIT COMMITMENT: $22,500,000
KeyBank National Association
▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Assistant Vice President
Fax: 614/▇▇▇-▇▇▇▇
NATIONAL CITY BANK
By: */s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Vice President
REVOLVING CREDIT COMMITMENT: $17,500,000
National City Bank
66
72
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
Vice President
Fax: 614/▇▇▇-▇▇▇▇
COMERICA BANK
By: */s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: Vice President
REVOLVING CREDIT COMMITMENT: $12,500,000
Comerica Bank
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Vice President
Fax: 313/▇▇▇-▇▇▇▇
67
73
STAR BANK, N.A.
By: */s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Vice President
REVOLVING CREDIT COMMITMENT: $12,500,000
Star Bank, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Vice President
Fax: 614/▇▇▇-▇▇▇▇
68
