THIRD AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
Dated as of September 30, 1999
▇▇▇▇▇▇▇ HOMES, INC.,
as the Borrower,
CERTAIN FINANCIAL INSTITUTIONS,
as the Banks,
FIRST HAWAIIAN BANK,
as the Administrative and Syndication Agent,
BANK OF AMERICA, N.A.,
as the Documentation Agent
BANC OF AMERICA SECURITIES, LLC,
as the Sole Lead Arranger and Sole Book Manager
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
This THIRD AMENDED AND RESTATED CREDIT AGREEMENT is dated SEPTEMBER 30,
1999, and, except as otherwise provided herein, effective as of OCTOBER 1, 1999,
among ▇▇▇▇▇▇▇ HOMES, INC., a Delaware corporation (the "Borrower"), the banks
from time to time party to this Agreement (collectively referred to as the
"Banks", and individually referred to as a "Bank"), FIRST HAWAIIAN BANK, a
Hawaii corporation, as administrative and syndication agent for the Banks (the
"Administrative Agent"), and BANK OF AMERICA, N.A., formerly BANK OF AMERICA
NT&SA, a national banking association, as documentation agent for the Banks
(the "Documentation Agent", the Administrative Agent and the Documentation Agent
are collectively referred to as the "Agents").
WITNESSETH:
WHEREAS, the Borrower, the Banks and the Administrative Agent entered
into that certain Credit Agreement dated as of March 29, 1996 (the "Original
Credit Agreement"), relating to the establishment of a revolving credit facility
in the amount of U.S. ONE HUNDRED TEN MILLION AND NO/100 DOLLARS (U.S.
$110,000,000.00) (the "Credit Facility") made available to the Borrower by the
Banks; and
WHEREAS, in connection therewith, the Borrower, the Banks and the
Administrative Agent executed certain Loan Documents (as defined in the Original
Credit Agreement); and
WHEREAS, the Borrower, the Banks and the Administrative Agent entered
into that certain Amended and Restated Credit Agreement dated March 27, 1997
(the "1997 Credit Agreement"), which amended the terms of the Original Credit
Agreement by, among other things, increasing the amount of the Credit Facility
to $137,600,000.00 and extending the Termination Date (as defined in the
Original Credit Agreement) to July 1, 1999; and
WHEREAS, the Borrower, the Banks and the Agents entered into that certain
Second Amendment to Loan Documents dated April 29, 1998, which further amended
the terms of the 1997 Credit Agreement to permit the Borrower to issue "Senior
Notes" on a PARI PASSU basis with the Credit Facility; and
WHEREAS, the Borrower, the Banks and the Agents entered into that certain
Second Amended and Restated Credit Agreement dated September 30, 1998 (the "1998
Credit Agreement"), which reduced the amount of the Credit Facility to
$90,000,000.00; and
WHEREAS, the 1998 Credit Agreement was amended by that certain First
Amendment to Second Amended and Restated Credit Agreement dated January 21,
1999; and
WHEREAS, the Borrower, the Banks and the Agents entered that certain
Second Amendment to Second Amended and Restated Credit Agreement dated July 2,
1999, which increased the amount of the Credit Facility to $120,000,000.00 and
extended the Termination Date to July 1, 2002; and
WHEREAS, the 1998 Credit Agreement was further amended by that certain
Third Amendment to Second Amended and Restated Credit Agreement dated July 22,
1999; and
WHEREAS, the Borrower has requested the Banks and the Agents to further
amend the terms of the Credit Facility to increase the amount of the Credit
Facility to $170,000,000.00 and to amend other provisions contained in the 1998
Credit Agreement; and
WHEREAS, the Banks and the Agents are willing to comply with such
request, upon and subject to the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the Borrower, the Banks and the Agents hereby agree
to amend and completely restate the 1998 Credit Agreement, as amended, in its
entirety, effective as of the date stated above, as follows:
ARTICLE I
DEFINITIONS
1.01 DEFINED TERMS. In addition to the terms defined elsewhere in this
Agreement, the following terms have the following meanings:
"ADMINISTRATIVE AGENT" means First Hawaiian Bank, in its capacity
as administrative and syndication agent for the Banks hereunder, and any
successor agent.
"ADMINISTRATIVE AGENT'S PAYMENT OFFICE" means the address for
payments set forth on the signature page hereto in relation to the
Administrative Agent or such other address as the Administrative Agent may from
time to time specify in accordance with Section 10.02.
"ADVANCE" means a disbursement of loan proceeds in connection
with a Borrowing, as described in Section 2.03, or upon the conversion of a
Swing-Line Advance, as described in Section 2.04, or upon the negotiation of
a Letter of Credit, as described in Section 2.05, pursuant to the terms and
conditions set forth in Article II of this Agreement, and shall consist of
Prime Rate Advances and LIBO Rate Advances.
"AFFECTED BANK" has the meaning specified in Section 3.06.
"AFFILIATE" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. A Person shall be deemed to control another Person
if the controlling Person possesses, directly or indirectly, the power to direct
or cause the direction of the management and policies of the other Person,
whether through the ownership of voting securities, by contract or otherwise.
Notwithstanding the foregoing, no Bank shall be deemed an "Affiliate" of the
Borrower or any of its Subsidiaries, nor shall the Borrower or any of its
Subsidiaries be deemed an "Affiliate" of any Bank.
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"AGENT-RELATED PERSONS" means with respect to any Agent, such
Agent and any successor agent arising under Section 9.09, together with their
respective Affiliates, and the officers, directors, employees, agents, and
attorneys-in-fact of such Persons and Affiliates.
"AGENTS" means collectively the Administrative Agent and the
Documentation Agent.
"AGGREGATE COMMITMENT" means the combined Revolving Commitments of
the Banks, in the amount of U.S. ONE HUNDRED SEVENTY MILLION DOLLARS (U.S.
$170,000,000.00), as such amount may be reduced pursuant to this Agreement.
"AGREEMENT" means this Third Amended and Restated Credit
Agreement, as the same may be amended from time to time in accordance with the
terms hereof.
"APPLICABLE MARGIN" means: (i) for any Prime Rate "A" Advance --
0.000%; (ii) for any Prime Rate "B" Advance -- 0.000%; (iii) for any Prime Rate
"C" Advance -- 0.250%; (iv) for any LIBO Rate "A" Advance -- 1.500%; (v) for any
LIBO Rate "B" Advance -- 1.750%; and (vi) for any LIBO Rate "C" Advance --
2.000%.
"BANK" has the meaning specified in the introductory clause
hereto.
"BASE GRID" means the parameters for the Leverage Ratio and the
Interest Coverage Ratio as set forth in Section 7.02 herein.
"BORROWING" means a borrowing hereunder consisting of Advances
made to the Borrower on the same day by the Banks pursuant to Section 2.03.
"BORROWING BASE" means, at any date, the GAAP consolidated net
book value, including all inventoriable costs as set forth as "Real Estate
Inventories" in the consolidated financial statement of the Borrower and its
Subsidiaries, at such date, of: (i) Unentitled Land x 0%; plus (ii) Unimproved
Land x 50%; plus (iii) Land Under Development x 65%; plus (iv) Unsold Homes
Under Construction x 75%; plus (v) Completed Unsold Homes x 75%; plus (vi)
Completed Unsold Homes Over 180 Days x 0%; plus (vii) Contracted Homes x 90%,
excluding, however, the entirety of any assets from Country Club Village,
unconsolidated Subsidiaries of the Borrower, and joint venture projects, such as
Iao Parkside, which are not consolidated in the Real Estate Inventories. All of
such properties described in (i) through (vii) above must be Unencumbered.
"BORROWING BASE CERTIFICATE" means a certificate described in
Section 6.02(d) of this Agreement.
"BUSINESS DAY" means any day other than a Saturday, Sunday, United
States federal holiday or other day on which commercial banks in Honolulu,
Hawaii, and any other jurisdiction in which any Bank maintains its Lending
Office, are authorized or required by law to close and, if the applicable
Business Day relates to any LIBO Rate Advance, means such a day on which
dealings are carried on in the London Interbank Market.
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"BUSINESS PLAN" means that certain plan with budget and cash flow
projections presented by the Borrower and its Subsidiaries to the Banks on June
22, 1999, as identified and delivered to the Banks prior to the Closing Date.
"CAPITAL ADEQUACY REGULATION" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other law,
rule or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any bank or of any corporation controlling a bank.
"CAPITALIZED INTEREST" means any interest incurred by the Borrower
or any Subsidiary of the Borrower that is added to the assets of the Borrower on
the consolidated balance sheet of the Borrower and expensed in future periods
other than the current applicable period.
"CAPTIVE INSURANCE SUBSIDIARY" means a Subsidiary of the Borrower
which is organized and authorized pursuant to Article 19 of Chapter 431 of the
Hawaii Revised Statutes.
"CLOSING DATE" means the date on which all conditions precedent
set forth in Section 4.01 are satisfied or waived by all of the Banks.
"CODE" means the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated thereunder.
"COMMITMENT PERCENTAGE" means, as to any Bank, the percentage
equivalent of such Bank's Revolving Commitment divided by the Aggregate
Commitment. Each Bank's initial Commitment Percentage is set forth opposite
such Bank's name in SCHEDULE 1 attached hereto.
"COMPLETED UNSOLD HOMES" means all condominium units and
one-to-four family residences (including Model Homes) owned by the Borrower
or its Subsidiaries as part of their respective real estate development
business, for which construction has been "completed" less than 180 days
before such date, but for which there is in existence no written Contract for
Sale. Construction will be considered "completed" for a condominium unit
when the temporary certificate of occupancy for such unit has been issued;
construction will be considered "completed" for a one-to-four family
residence when all electrical and plumbing fixtures have been installed and
utility services in connection therewith have been connected.
Notwithstanding the foregoing, Model Homes will continue to be considered
Completed Unsold Homes until the date which is 180 days after the last
production unit in the particular real estate project (for which such Model
Home is used as a model) has been sold.
"COMPLETED UNSOLD HOMES OVER 180 DAYS" means Completed Unsold
Homes which have been completed 180 days or more before such date.
Notwithstanding the foregoing, Model Homes will not be considered Completed
Unsold Homes Over 180 Days until the date which is 180 days after the last
production unit in the particular real estate project (for which such Model Home
is used as a model) has been sold.
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"CONSOLIDATED NET EARNINGS" means consolidated gross revenues of
the Borrower and its Subsidiaries less all operating and non-operating expenses
of the Borrower and its Subsidiaries (including current and deferred taxes on
income, provision for taxes on unremitted foreign earnings which are included in
gross revenues, current additions to reserves, and other similar charges); all
determined in accordance with GAAP.
"CONSOLIDATED TANGIBLE NET WORTH" means the Tangible Net Worth of
the Borrower and its Subsidiaries, determined, on a consolidated basis, in
accordance with GAAP.
"CONTINUATION DATE" means the effective date, at the end of an
Interest Period, on which a LIBO Rate Advance shall be continued as a LIBO Rate
Advance, as provided in Section 2.06(a)(iii).
"CONTRACT FOR SALE" means a sale and purchase agreement between
the Borrower or its Subsidiaries and an unrelated third party purchaser, who has
made an ▇▇▇▇▇▇▇ money deposit of not less than $250.00 and who has been
pre-qualified by the Borrower, its Subsidiaries or an institutional lender;
PROVIDED, that such agreement shall not contain any contingency clause,
conditioning such purchaser's obligation upon the sale of such purchaser's
property.
"CONTRACTED HOMES" means all condominium units and one-to-four
family residences (including Model Homes) owned by the Borrower or its
Subsidiaries as part of their respective real estate development business, on
which a building permit has been issued and construction has begun, and for
which the Borrower or its Subsidiaries has entered into a written Contract for
Sale.
"CONTROLLED GROUP" means the Borrower, its Subsidiaries and all
Persons (whether or not incorporated) under common control or treated as a
single employer with the Borrower and its Subsidiaries pursuant to Section
414(b), (c), (m) or (o) of the Code.
"CONVERSION DATE" means the effective date on which a Prime Rate
Advance shall be converted into one or more LIBO Rate Advances, or on which one
or more LIBO Rate Advances shall be converted into a Prime Rate Advance, as
provided in Section 2.06(a)(i) or 2.06(a)(ii).
"COUNTRY CLUB VILLAGE" means the Country Club Village condominium
project, Phases I through VI, located in Salt Lake, Oahu, Hawaii, which is being
developed, or which is to be developed, by the Borrower.
"COUNTRY CLUB VILLAGE SUBORDINATE MORTGAGE" means the Subordinate
Mortgage, Security Agreement and Financing Statement dated February 9, 1993,
filed in the Office of the Assistant Registrar of the Land Court of the State of
Hawaii as Document No. 1996140, as amended by Amended and Restated Subordinate
Mortgage, Security Agreement and Financing Statement dated April 7, 1994, filed
in said Office as Document No. 2149634, in favor of HCI (America) Inc., which
encumbers Lots 3878 and 3879 in Country Club Village.
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"DEFAULT" means any event or circumstance which, with the giving
of notice, the lapse of time, or both, would (if not cured or otherwise remedied
during such time) constitute an Event of Default.
"DEVELOPMENT RATIO" means Real Estate Development Assets divided
by Real Estate Indebtedness.
"DOCUMENTATION AGENT" means Bank of America N.A., in its capacity
as documentation agent for the Banks hereunder, and any successor agent.
"ENTITLED LAND" means all land owned by the Borrower or its
Subsidiaries as part of their respective real estate development business, which
does have residential zoning and the provision of potable water, sewage and
other utilities available to the boundary of such land.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated thereunder.
"EQUITY OFFERING" means the raising of capital by the Borrower or
any Subsidiary of the Borrower through a public or private issuance and sale of
stock of such entity not previously offered for sale.
"EVENT OF DEFAULT" means any of the events or circumstances
specified in Section 8.01.
"FEDERAL FUNDS RATE" means, for any period, the rate set forth in
the weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Board (including any such
successor, "H.15(519)") for such day opposite the caption "Federal Funds
(Effective)". If on any relevant day such rate is not yet published in
H.15(519), the rate for such day will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m.
Quotations") for such day under the caption "Federal Funds Effective Rate". If
on any relevant day the appropriate rate for such previous day is not yet
published in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate
for such day will be the arithmetic mean as determined by the Administrative
Agent of the rates for the last transaction in overnight Federal Funds arranged
prior to 9:00 a.m. (New York time) on that day by each of three leading brokers
of Federal Funds transactions in New York selected by the Administrative Agent.
"FEDERAL RESERVE BOARD" means the Board of Governors of the
Federal Reserve System, or any entity succeeding to any of its principal
functions.
"FORM 1001" has the meaning specified in subsection 3.01(f).
"FORM 4224" has the meaning specified in subsection 3.01(f).
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"GAAP" means generally accepted accounting principles set forth
from time to time in statements and pronouncements of the Financial Accounting
Standards Board, or in such other statements by such other entity as may be in
general use by significant segments of the U.S. accounting profession, which are
applicable to the circumstances as of the date of determination.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state
or other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"GUARANTOR" or "GUARANTORS" means, singularly or collectively,
▇▇▇▇▇▇▇ HOMES OF CALIFORNIA, INC., a California corporation, ▇▇▇▇▇▇▇ HOMES OF
OREGON, INC., an Oregon corporation, ▇▇▇▇▇▇▇ HOMES OF WASHINGTON, INC., a
Washington corporation, MELODY HOMES, INC., a Delaware corporation, ▇▇▇▇▇▇▇
REALTY/MAUI, INC., a Hawaii corporation, ▇▇▇▇▇▇▇ REALTY/OAHU, INC., a Hawaii
corporation, LOKELANI CONSTRUCTION CORPORATION, a Delaware corporation, MELODY
MORTGAGE CO., a Colorado corporation, SHLR OF WASHINGTON, INC., a Washington
corporation, SHLR OF UTAH, INC., a Utah corporation, SHLR OF COLORADO, INC., a
Colorado corporation, SSHI LLC, a Delaware limited liability company, SHLR OF
NEVADA, INC., a Nevada corporation, and SRHI LLC, a Delaware limited liability
company.
"GUARANTY" means an agreement or agreements in form and substance
satisfactory to the Banks and the Agents, duly executed by the Guarantors,
jointly and severally guaranteeing the due and punctual payment of the Note, and
the observance and performance of the Borrower's obligations under the Loan
Documents.
"GUARANTY OBLIGATION" means, as applied to any Person, any direct
or indirect liability of that Person with respect to any Indebtedness, lease,
dividend, letter of credit or other obligation (the "primary obligations") of
another Person (the "primary obligor"), including any obligation of that Person,
whether or not contingent (a) to purchase, repurchase or otherwise acquire such
primary obligations or any property constituting direct or indirect security
therefor, or (b) to advance or provide funds (i) for the payment or discharge of
any such primary obligation, or (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial condition of
the primary obligor, or (c) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, or (d) otherwise to assure or hold harmless the holder of any such
primary obligation against loss in respect thereof; in each case (a), (b), (c)
or (d), including arrangements wherein the rights and remedies of the holder of
the primary obligation are limited to repossession or sale of certain property
of such Person. The amount of any Guaranty Obligation shall be deemed equal to
the stated or determinable amount of the primary obligation in respect of which
such Guaranty Obligation is made or, if not stated or if indeterminable, the
maximum reasonably anticipated liability in respect thereof. Notwithstanding
the foregoing, if the primary obligor is a Subsidiary of the Borrower, the term
"Guaranty Obligation" shall not include any direct or indirect liability of the
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Borrower with respect to any primary obligation of such Subsidiary, which the
Borrower itself would not otherwise be prohibited from assuming or limited in
undertaking, pursuant to the terms of this Agreement.
"IAO PARKSIDE" means the 480-unit low-rise condominium project
being developed by Iao Partners on 28 acres of land located in Wailuku, Hawaii.
"IAO PARTNERS" means the joint venture, registered as a Hawaii
general partnership, formed by and between the Borrower (with a 50% general
partnership interest) and ▇. ▇▇▇▇▇▇ Homes, Inc. (with a 50% general partnership
interest).
"INDEBTEDNESS" of any Person means, without duplication, (a) all
indebtedness for borrowed money (including Subordinated Debt); (b) all
obligations issued, undertaken or assumed as the deferred purchase price of
property or services (other than accounts payable and accrued expenses as set
forth in the consolidated financial statements of the Borrower and its
Subsidiaries entered into in the ordinary course of business pursuant to
ordinary terms); (c) all non-contingent reimbursement or payment obligations
with respect to Surety Instruments; (d) all obligations evidenced by notes,
bonds, debentures or similar instruments, including obligations so evidenced
incurred in connection with the acquisition of property, assets or businesses;
(e) all indebtedness created or arising under any conditional sale or other
title retention agreement, or incurred as financing, in either case with respect
to property acquired by such Person (even though the rights and remedies of the
seller under such agreement in the event of default are limited to repossession
or sale of such property); (f) all capital lease obligations; (g) all net
obligations with respect to Rate Contracts; (h) any indebtedness which is
guaranteed, directly or indirectly, by such Person; and (i) all indebtedness
referred to in clauses (a) through (h) above secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any lien upon or in property (including accounts and contracts
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness, but does not include any
indebtedness referred to in clauses (a) through (g) above incurred by a Person
as a joint venture partner of any Joint Venture unless such indebtedness is
guaranteed, directly or indirectly (including general partner liability), by
such Person as a joint venture partner, or such indebtedness owed by one member
of the Borrower's consolidated group to another member of such consolidated
group.
"INDEMNIFIED PERSON" has the meaning specified in Section 10.05.
"INDEMNIFIED LIABILITIES" has the meaning specified in Section
10.05.
"INSOLVENCY PROCEEDINGS" means, in respect of any Person (a) any
case, action or proceeding before any court or other Governmental Authority
relating to bankruptcy, reorganization, insolvency, liquidation, receivership,
dissolution, winding-up or relief of debtors, or (b) any general assignment for
the benefit of creditors, composition, marshalling of assets for creditors, or
other similar arrangement in respect of its creditors generally or any
substantial portion of its creditors; in each case (a) and (b) undertaken under
U.S. Federal, State or foreign law, including the Bankruptcy Code (11 U.S.C.
Section 101, ET SEQ.).
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"INTER-BANK AGREEMENT" means an agreement executed by and among
the Administrative Agent, as administrative and syndication agent for the Banks,
the Documentation Agent as documentation agent for the Banks, and the Banks,
which shall supplement the provisions of Article IX hereof, relative to the
administration of the credit facility established by this Agreement.
"INTEREST COVERAGE RATIO" means, with respect to the Borrower and
its Subsidiaries, consolidated earnings before impairment loss recognized
pursuant to Financial Accounting Standards Board Statement No. 121, interest
expense (including Capitalized Interest expensed during the applicable period),
depreciation, taxes and amortization, divided by total consolidated interest
incurred.
"INTEREST PAYMENT DATE" means, with respect to any Prime Rate
Advance, the first day of each calendar month; with respect any LIBO Rate
Advance having an Interest Period of one month, the last day of the Interest
Period applicable to such Advance; and, with respect to any other LIBO Rate
Advance, the first day of each calendar month, AND the last day of each Interest
Period applicable to such Advance.
"INTEREST PERIOD" means, with respect to any LIBO Rate Advance,
the period commencing on the Business Day such LIBO Rate Advance is disbursed
or continued or on the Conversion Date on which a Prime Rate Advance is
converted to a LIBO Rate Advance and ending on the date one (1), two (2),
three (3) or six (6) months thereafter, as selected by the Borrower, in its
Notice of Borrowing or Notice of Conversion/Continuation;
PROVIDED THAT:
(i) if any Interest Period pertaining to a LIBO Rate
Advance would otherwise end on a day which is not a Business Day,
that Interest Period shall be extended to the next succeeding
Business Day unless the result of such extension would be to carry
such Interest Period into another calendar month, in which event
such Interest Period shall end on the immediately preceding
Business Day;
(ii) any Interest Period pertaining to a LIBO Rate
Advance that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall
end on the last Business Day of the calendar month at the end of
such Interest Period; and
(iii) no Interest Period shall extend beyond the
Termination Date.
"ISSUANCE" means the issuance of a Letter of Credit hereunder at
the request of the Borrower and for the account of the Borrower or its
Subsidiaries, pursuant to Section 2.05.
"ISSUING BANK" means any Bank or any Affiliate of any Bank, other
than the Administrative Agent, which issues a Letter of Credit hereunder at the
request of the Borrower and
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for the account of the Borrower or its Subsidiaries, in accordance with a
requirement by the beneficiary of such Letter of Credit, and pursuant to
Section 2.05.
"JOINT VENTURE" means a general partnership, duly registered and
validly existing under the laws of any state of The United States, which is
formed for the purpose of developing one or more specific real estate projects.
"KULALEI PROPERTY" means 193 improved subdivided lots in the Ewa
by ▇▇▇▇▇▇ development in Ewa, Oahu, Hawaii.
"LAND UNDER DEVELOPMENT" means all land owned by the Borrower or
its Subsidiaries as part of their respective real estate development business,
on which grading or construction of on-site infrastructure improvements has
begun, and for which all necessary zoning and large-lot subdivision approvals
have been obtained and are in full force and effect, but for which construction
of the residential improvements thereon has not begun.
"LENDING OFFICE" means, with respect to any Bank, the office or
offices of such Bank specified as its "Lending Office" or "Domestic Lending
Office" or "LIBO Lending Office", as the case may be, opposite its name on the
applicable signature page hereto, or such other office or offices of such Bank
as it may from time to time notify the Borrower and the Administrative Agent.
"LETTERS OF CREDIT" means standby letters of credit issued by the
Administrative Agent or the Issuing Bank, at the request of the Borrower and for
the account of the Borrower or its Subsidiaries, pursuant to the terms and
conditions set forth in Article II of this Agreement.
"LEVERAGE RATIO" means total Indebtedness of the Borrower and its
Subsidiaries, on a consolidated basis, including all Quantifiable Contingent
Liabilities, but not including all accounts payables and accrued expenses as set
forth in the consolidated financial statements of the Borrower and its
Subsidiaries entered into in the ordinary course of business pursuant to
ordinary terms; divided by Consolidated Tangible Net Worth. The initial
Leverage Ratio will be determined by the Banks at the Closing Date and such
determination shall be effective for the next Quarter following the Closing
Date; thereafter, the Leverage Ratio for each succeeding Quarter will be
determined as of the end of the preceding Quarter (such determination to be made
no later than seventy-five (75) days after the end of such preceding Quarter,
based upon the Leverage Ratio Certificate provided to the Administrative Agent
by the Borrower, pursuant to Section 6.02(e) of this Agreement, and verified by
the Administrative Agent to its satisfaction). The Administrative Agent shall
promptly notify the Borrower, and each Bank of each determination of the
Leverage Ratio. Any determination of the Leverage Ratio shall be conclusively
deemed to be correct unless objected to by the Borrower, or the Majority Banks
within five (5) Business Days after receipt of such notification.
"LEVERAGE RATIO/INTEREST COVERAGE RATIO/BASE GRID CERTIFICATE"
means a certificate more particularly described in Section 6.02(e) of this
Agreement.
"LIBO RATE" means, for each Interest Period in respect of LIBO
Rate Advances comprising part of the same Borrowing, either (i) the rate of
interest per annum (rounded upward to
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the nearest 1/16th of 1%) equal to the rate for deposits in U.S. dollars with
a maturity approximately equal to such Interest Period which appears on the
Telerate Screen LIBO Page (or such other display page on the Telerate System
as may replace such page) as of 11:00 a.m. (London time) on the day that is
two (2) Business Days prior to the day on which the applicable Interest
Period is to begin, or (ii) if no such rate of interest appears on the
Telerate Screen LIBO Page for such specified Interest Period, the rate of
interest per annum equal to the rate for deposits in U.S. Dollars with a
maturity occurring immediately before or immediately after such specified
Interest Period, whichever is higher, as determined by the Administrative
Agent from the Telerate Screen LIBO Page (or such other display page on the
Telerate System as may replace such page) at approximately 11:00 a.m. (London
time) on the day that is two (2) Business Days prior to the day on which the
applicable Interest Period is to begin. Any LIBO Rate determined on the
basis of the rate displayed on the Telerate Screen LIBO Page in accordance
with the foregoing provisions of this paragraph shall be subject to
corrections, if any, made in such rate and displayed by the Telerate System
within one hour of the time when such rate is first displayed by such service.
"LIBO RATE "A" ADVANCE" means any outstanding LIBO Rate Advance
during a time when the Leverage Ratio and the Interest Coverage Ratio then in
effect (computed on a Quarterly basis in advance) are as follows:
(i) the Leverage Ratio is less than 1.35 to 1 and the
Interest Coverage Ratio is greater than 2.00 to 1; or
(ii) the Leverage Ratio is less than 1.50 to 1 and the
Interest Coverage Ratio is greater than 2.50 to 1.
"LIBO RATE "B" ADVANCE" means any outstanding LIBO Rate Advance
during a time when the Leverage Ratio and the Interest Coverage Ratio then in
effect (computed on a Quarterly basis in advance) are as follows:
(i) the Leverage Ratio is less than or equal to 1.35 to 1
and the Interest Coverage Ratio is greater than or equal to 1.75 to 1, but
less than 2.00 to 1; or
(ii) the Leverage Ratio is less than or equal to 1.50 to 1
and the Interest Coverage Ratio is greater than or equal to 2.00 to 1, but
less than 2.50 to 1; or
(iii) the Leverage Ratio is less than or equal to 1.60 to 1 and
the Interest Coverage Ratio is greater than or equal to 2.50 to 1.
"LIBO RATE "C" ADVANCE" means any outstanding LIBO Rate Advance
during a time when the Leverage Ratio and the Interest Coverage Ratio then in
effect (computed on a Quarterly basis in advance) are as follows:
(i) the Leverage Ratio is greater than 1.35 to 1, but less
than or equal to 1.50 to 1, and the Interest Coverage Ratio is greater than
or equal to 1.75 to 1, but less than 2.00 to 1; or
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(ii) the Leverage Ratio is greater than 1.50 to 1, but less
than or equal to 1.60 to 1, and the Interest Coverage Ratio is greater than
or equal to 2.00 to 1, but less than 2.50 to 1.
"LIBO RATE ADVANCE" means an Advance that bears interest based
on the LIBO Rate.
"LOAN DOCUMENTS" means this Agreement, the Note, the Guaranty,
and all documents delivered to the Administrative Agent in connection
herewith or therewith.
"MAJORITY BANKS" means at any time Banks then holding 66.6% or
more of the Aggregate Commitment.
"MARGIN STOCK" means "margin stock" as such term is defined in
Regulation G, T, U or X of the Federal Reserve Board.
"MATERIAL ADVERSE EFFECT" means (a) a material impairment of
the ability of the Borrower or its Subsidiaries on a consolidated basis to
perform under any Loan Document and avoid any Event of Default; or (b) a
material adverse effect upon the legality, validity, binding effect or
enforceability of any Loan Document.
"MODEL HOMES" means all condominium units and one-to-four
family residences owned by the Borrower or its Subsidiaries as part of their
respective real estate development business, which are used as models or
sales offices to market a particular real estate development project.
"MULTI-EMPLOYER PLAN" means a "multi-employer plan" (within the
meaning of Section 4001(a)(3) of ERISA) to which any member of the Controlled
Group makes, is making, or is obligated to make, contributions or, during the
preceding three calendar years, has made, or been obligated to make,
contributions.
"NOTE" means the promissory note, as amended and restated, and
dated the date of this Agreement, executed by the Borrower in favor of the
Administrative Agent (as agent for the Banks), evidencing the Borrower's
agreement to repay all amounts outstanding under the Aggregate Commitment,
together with all interest thereon, as provided therein.
"NOTICE OF BORROWING" means a notice given by the Borrower, to
the Administrative Agent pursuant to Section 2.03, in substantially the form
of EXHIBIT A-1.
"NOTICE OF CONVERSION/CONTINUATION" means a notice given by the
Borrower, to the Administrative Agent pursuant to Section 2.06, in
substantially the form of EXHIBIT B.
"NOTICE OF SWING-LINE BORROWING" means a notice given by the
Borrower, to the Administrative Agent pursuant to Section 2.04, in
substantially the form of EXHIBIT A-2.
"OBLIGATIONS" means all Advances, Swing-Line Advances and other
Indebtedness, loans, debts, fees, charges, liabilities, obligations,
covenants and duties owing by the Borrower to
-12-
any Bank, the Administrative Agent, or any other Person required to be
indemnified, that arises under this Agreement or any Loan Document, whether
or not for the payment of money, whether arising by reason of an extension of
credit, loan, guaranty, indemnification or in any other manner, whether
direct or indirect (including those acquired by assignment), absolute or
contingent, due or to become due now existing or hereafter arising and
however acquired.
"OTHER TAXES" has the meaning specified in subsection 3.01(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any of its principal functions under ERISA.
"PARTICIPANT" has the meaning specified in subsection 10.08(a).
"PERMITTED INDEBTEDNESS" means:
(i) the Country Club Village Subordinate Mortgage;
(ii) the existing Indebtedness and obligations of the Borrower
as a joint venture partner in Iao Partners (including any Indebtedness of
Iao Partners for which there is recourse to the Borrower); PROVIDED,
HOWEVER, that the Borrower shall be permitted, after March 31, 1997, (A)
to incur additional Indebtedness as a joint venture partner of Iao
Partners, (B) to make additional net investments in Iao Partners, and (C)
to make additional net advances to Iao Partners, in amounts which shall
not exceed $5,000,000.00, in the aggregate, for all such indebtedness,
investments and advances described in (A), (B) and (C) above;
(iii) Subordinated Debt of the Borrower (including the Borrower's
existing subordinated convertible debentures);
(iv) Indebtedness, not to exceed $10,000,000 in the aggregate,
created or arising under a conditional sale or other title retention
agreement, or incurred as purchase money financing, with respect to
property acquired by the Borrower or any of its Subsidiaries; provided
that the rights and remedies of the seller under such agreement in the
event of default are limited to repossession or sale of such property;
(v) Indebtedness to the extent incurred upon the indorsement of
an instrument in order to negotiate the same, and for taxes, assessments,
governmental charges, or levies to the extent that payment thereof shall
not at the time be required to be made;
(vi) in addition to matters permitted in item (ii) above,
Indebtedness and Guaranty Obligations (except for indemnification of
sureties issuing bonds in connection with the Borrower's or any of its
Subsidiaries' real estate development businesses), not to exceed
$10,000,000 in the aggregate, incurred in the ordinary course of the
Borrower's and its Subsidiaries' real estate development businesses;
-13-
(vii) Premium Payments;
(viii) Guaranty Obligations (a) incurred in respect of
indemnification of sureties for the issuance of bonds in connection with
the Borrower's or any of its Subsidiaries' real estate development
businesses and (b) associated with the acquisition of Melody Homes, Inc.
and Melody Mortgage Co. by the Borrower;
(ix) Senior Debt and any guaranties thereof by any Guarantor;
(x) the Guaranty; and
(xi) Indebtedness in respect of the Aggregate Commitment
hereunder.
"PERMITTED INVESTMENT" means
(a) the creation of or investment in a wholly-owned Subsidiary of
the Borrower which is used exclusively as an exchange vehicle to
facilitate a like-kind exchange under Section 1031 of the Code;
(b) loan receivables from sales incentive programs, not to exceed
$10,000,000.00;
(c) any one of the following dollar denominated investments,
maturing within one year from the date of acquisition, selected by the
Borrower:
(i) marketable direct obligations issued or
unconditionally guaranteed by the United States government
or issued by any agency thereof and backed by the full
faith and credit of the United States;
(ii) marketable direct obligations issued by any
state of the United States or any political subdivision of
any such state or any public instrumentality thereof and,
at the time of acquisition, having the highest credit
rating obtainable from either Standard & Poor's Ratings
Group, a division of ▇▇▇▇▇▇-▇▇▇▇, Inc. ("S&P") or ▇▇▇▇▇'▇
Investors Service, Inc. ("Moody's");
(iii) commercial paper or corporate promissory
notes bearing at the time of acquisition the highest credit
rating either of S&P or Moody's issued by United States,
Australian, Canadian, European or Japanese bank holding
companies or industrial or financial companies (other than
an Affiliate of the Borrower);
(iv) certificates of deposit issued by and bankers
acceptances of and interest bearing deposits with any Bank,
or any commercial bank having capital and surplus of at
least $500,000,000 or the equivalent and which issues (or
the parent of which issues) commercial paper or other short
term
-14-
securities bearing the highest credit rating obtainable from
either S&P or Moody's; and
(v) money market funds organized under the laws
of the United States or any state thereof that invest
solely in any of the foregoing investments permitted under
clauses (i), (ii), (iii) and (iv);
(d) the acquisition of the remaining 11% interest in SSHI LLC, a
Delaware limited liability company ("▇▇▇▇▇▇▇▇"), pursuant to the terms of
that certain Interest Purchase Agreement dated as of July 31, 1997,
entered into by and among SSHI LLC, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
Construction, Inc., the Borrower and SHLR of Washington, Inc.. Upon the
acquisition of the majority ownership interest in ▇▇▇▇▇▇▇▇ by the
Borrower, (i) ▇▇▇▇▇▇▇▇ shall be considered a Subsidiary of the Borrower
and shall be subject to the provisions of Section 6.12 herein, (ii) the
Unencumbered real estate assets of ▇▇▇▇▇▇▇▇ may be included in the
determination of the Borrowing Base, and (iii) the Borrower shall be
permitted to make additional investments in Stafford for the purpose of
repaying ▇▇▇▇▇▇▇▇'▇ existing indebtedness and fund the ongoing operations
of ▇▇▇▇▇▇▇▇;
(e) a $1,000,000 non-recourse capital investment in the Ranch at
South Pointe, LLC, through SHLR of Colorado, Inc.; and
(f) the investment (including advances and guaranties) in
unconsolidated Subsidiaries of the Borrower or joint ventures (in which
the Borrower is a joint venture partner) which are involved in home
building in the principal markets of the Borrower or its Subsidiaries,
provided such investment shall not exceed $10,000,000 in the aggregate
subsequent to December 31, 1997, which shall include the acquisition of a
49% interest in ▇▇▇▇▇▇ Homes Madison, LLC, a Delaware limited liability
company, a 49% interest in ▇▇▇▇▇▇ Carlsbad, LLC, a Delaware limited
liability company, a 24.5% interest in Venturanza Del Verde, LLC, a
Delaware limited liability company, a 50% interest in Fairway Farms, LLC,
a Delaware limited liability company and a 50% interest in PH-▇▇▇▇▇▇
Orange ▇▇▇▇▇▇, LLC, a Delaware limited liability company.
(g) Loan receivable from ▇▇▇▇▇▇ Homes, Inc. ▇▇▇▇▇▇ ▇▇▇▇▇▇ or
▇▇▇▇▇ ▇▇▇▇▇▇ in amounts not to exceed $8.0 million.
"PERSON" means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association, joint
venture or Governmental Authority.
"PLAN" means an employee benefit plan (as defined in Section
3(3) of ERISA) which the Borrower, any of its Subsidiaries or any member of
the Controlled Group sponsors or maintains or to which the Borrower, any of
its Subsidiaries or any member of the Controlled Group makes, is making or is
obligated to make contributions.
"PREMIUM PAYMENTS" means (i) payments that are to be made by
the Borrower to Amfac Property Development Corp., if the average sales price
for or number of homes built
-15-
by the Borrower on parcels of land in the Waikele master-planned community
exceeds the applicable amount set forth in the purchase agreement between the
Borrower and Amfac Property Development Corp. for such parcels; (ii) payments
that are to be made by the Borrower to ▇▇▇▇▇▇ Homes, Ltd., if the Borrower
sells certain homes located on the Kulalei Property at a premium over the
price of certain other homes located elsewhere at the Kulalei Property,
pursuant to that certain Amended and Restated Purchase and Sale Agreement
dated November 20, 1995; and (iii) payments that are to be made by the
Borrower to HCI (America) Inc., in the event the Borrower constructs more
than 580 units in Country Club Village.
"PRIME RATE" means, for any day, the lending rate of interest
announced publicly from time to time by First Hawaiian Bank as its "prime
interest rate", which rate shall not necessarily be the best or lowest rate
charged by First Hawaiian Bank from time to time. Any change in the prime
interest rate announced by First Hawaiian Bank shall take effect at the
opening of business on the day specified in the public announcement of such
change.
"PRIME RATE "A" ADVANCE" means any outstanding Prime Rate
Advance during a time when the Leverage Ratio and the Interest Coverage Ratio
then in effect (computed on a Quarterly basis in advance) are as follows:
(i) the Leverage Ratio is less than 1.35 to 1 and the
Interest Coverage Ratio is greater than 2.00 to 1; or
(ii) the Leverage Ratio is less than 1.50 to 1 and the
Interest Coverage Ratio is greater than 2.50 to 1.
"PRIME RATE "B" ADVANCE" means any outstanding Prime Rate
Advance during a time when the Leverage Ratio and the Interest Coverage Ratio
then in effect (computed on a Quarterly basis in advance) are as follows:
(i) the Leverage Ratio is less than or equal to 1.35 to 1
and the Interest Coverage Ratio is greater than or equal to 1.75 to 1, but
less than 2.00 to 1; or
(ii) the Leverage Ratio is less than or equal to 1.50 to 1
and the Interest Coverage Ratio is greater than or equal to 2.00 to 1, but
less than 2.50 to 1; or
(iii) the Leverage Ratio is less than or equal to 1.60 to 1 and
the Interest Coverage Ratio is greater than or equal to 2.50 to 1.
"PRIME RATE "C" ADVANCE" means any outstanding Prime Rate
Advance during a time when the Leverage Ratio and the Interest Coverage Ratio
then in effect (computed on a Quarterly basis in advance) are as follows:
(i) the Leverage Ratio is greater than 1.35 to 1, but less
than or equal to 1.50 to 1, and the Interest Coverage Ratio is greater than
or equal to 1.75 to 1, but less than 2.00 to 1; or
-16-
(ii) the Leverage Ratio is greater than 1.50 to 1, but less
than or equal to 1.60 to 1, and the Interest Coverage Ratio is greater than
or equal to 2.00 to 1, but less than 2.50 to 1.
"PRIME RATE ADVANCE" means an Advance or a Swing-Line Advance
that bears interest based on the Prime Rate.
"QUANTIFIABLE CONTINGENT LIABILITIES" means, with respect to
the Borrower and its Subsidiaries, an estimated loss from a loss contingency
recognized pursuant to Financial Accounting Standards Board Statement No. 5.
"QUARTER" means any one of the following three-calendar-month
periods in any calendar year: April 1 through June 30; July 1 through
September 30; October 1 through December 31; and January 1 through March 31.
"RATE CONTRACTS" means swap agreements (as such term is defined
in Section 101 of the Bankruptcy Code (11 U.S.C. Section 101 ET SEQ.) and any
other agreements or arrangements designed to provide protection against
fluctuations in interest or currency exchange rates.
"REAL ESTATE DEVELOPMENT ASSETS" means, at any date, the GAAP
consolidated book value of inventories, at such date, as set forth as "Real
Estate Inventories" in the consolidated financial statements of the Borrower
and its Subsidiaries, including Unentitled Land, Unimproved Land, Land Under
Development, Unsold Homes Under Construction, Completed Unsold Homes,
Completed Unsold Homes Over 180 Days, and Contracted Homes.
"REAL ESTATE INDEBTEDNESS" means the total outstanding amount
under: (1) the Aggregate Commitment; (2) the Subordinated Debt of the
Borrower (including the Borrower's existing subordinated convertible
debentures); (3) the Senior Debt; and (4) other indebtedness, as may be
permitted by the Banks, in connection with the development of any Real Estate
Development Assets.
"REPORTABLE EVENT" means, as to any Plan, (a) any of the events
set forth in Section 4043(b) of ERISA or the regulations thereunder, other
than any such event for which the 30-day notice requirement under ERISA has
been waived in regulations issued by the PBGC, (b) a withdrawal from a Plan
described in Section 4063 of ERISA, or (c) a cessation of operations
described in Section 4062(e) of ERISA.
"REQUEST FOR ISSUANCE OF LETTER OF CREDIT" means a notice given
by the Borrower, to the Administrative Agent pursuant to Section 2.05, in
substantially the form of EXHIBIT C.
"REQUIREMENT OF LAW" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or determination of an
arbitrator or of a Governmental Authority, in each case applicable to or
binding upon the Person or any of its property or to which the Person or any
of its property is subject.
-17-
"RESPONSIBLE OFFICER" of the Borrower or any of its
Subsidiaries means the chief executive officer, the president, or the chief
financial officer of the Borrower or such Subsidiary, or any other officer
having substantially the same authority and responsibility; or, with respect
to compliance with financial covenants, the chief financial officer, the
controller, or the treasurer of the Borrower, or any other officer having
substantially the same authority and responsibility.
"REVOLVING COMMITMENT", with respect to each Bank, has the
meaning specified in Section 2.01.
"SENIOR DEBT" means all monetary obligations, evidenced by
bonds, debentures, notes or similar instruments which are or are intended to
be issued pursuant to a registration statement under the Securities Act of
1933 or an exemption from the registration requirements thereunder, of the
Borrower or its Subsidiaries, including principal and interest thereon,
unless such obligation, by its terms or by the terms of any agreement or
instrument pursuant to which such obligation is issued, is subordinated in
right of payment to the Obligations of the Borrower hereunder. The term
"Senior Debt" shall include the "Senior Notes".
"SENIOR NOTES" means the 9% Senior Notes maturing 2008, in the
principal amount of US$100,000,000 issued by the Borrower pursuant to that
certain Prospectus dated July 7, 1998.
"SOLVENT" means, as to any Person at any time, that (a) the
fair value of the property of such Person is greater than the amount of such
Person's liabilities (including disputed, contingent and unliquidated
liabilities) as such value is established and liabilities evaluated for
purposes of Section 101(31) of the Bankruptcy Code (11 U.S.C. Section 101 ET
SEQ.) and, in the alternative, for purposes of the Hawaii Uniform Fraudulent
Transfer Act; (b) the present fair saleable value of the property of such
Person is not less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute and matured;
(c) such Person is able to realize upon its property and pay its debts and
other liabilities (including disputed, contingent and unliquidated
liabilities) as they mature in the normal course of business; (d) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature; and (e) such Person is not engaged in business or a transaction, and
is not about to engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital.
"SUBSIDIARY" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than 50% of
the voting stock or other equity interests (in the case of Persons other than
corporations), is owned or controlled directly or indirectly by the Person,
or one or more of the Subsidiaries of the Person, or a combination thereof;
but does not include a Joint Venture.
"SUBORDINATED DEBT" means Indebtedness of the Borrower or its
Subsidiaries (including subordinated debentures and subordinated convertible
debentures) to another lender or creditor who has expressly agreed by virtue
of documents or instruments acceptable to the Majority Banks, that the
Indebtedness of such entity to such lender or creditor is subordinated to the
Obligations of the Borrower hereunder, and that such lender or creditor will
not demand or assert
-18-
payment of any portion of such lender's or creditor's Indebtedness until the
Obligations of the Borrower hereunder have been paid in full.
"SURETY INSTRUMENTS" means all letters of credit (including
standby and commercial), banker's acceptances, bank guaranties, shipside
bonds, surety bonds and similar instruments.
"SWING-LINE ADVANCE" means a disbursement of loan proceeds in
connection with a Swing-Line Borrowing, pursuant to the terms and conditions
set forth in Article II of this Agreement, and shall consist of Prime Rate
Advances only.
"SWING-LINE BORROWING" means a borrowing hereunder consisting
of Swing-Line Advances made to the Borrower on the same day by the
Administrative Agent pursuant to Section 2.04.
"TANGIBLE NET WORTH" of a Person means such Person's total
assets (exclusive of goodwill, patents, trademarks, trade names, organization
expense, treasury shares, unamortized debt discount and premium, and other
like intangibles), less all liabilities (including accrued and deferred
income taxes and subordinated liabilities).
"TAXES" has the meaning specified in subsection 3.01(a).
"TERMINATION DATE" means July 1, 2002, unless extended by the
Banks pursuant to subsection 2.09.
"UNENCUMBERED" when used to describe real property owned by the
Borrower or any of its Subsidiaries, means property which is not subject to
any lien, whether the same is recorded, unrecorded, springing, resulting from
a court judgment or arbitration award, or otherwise; PROVIDED, (i) that the
filing of an application for mechanic's or materialman's lien on such real
property under Chapter 507, Hawaii Revised Statutes, or such similar statutes
under the laws of any other state, shall not prevent such property from being
Unencumbered, as long as the Borrower or its Subsidiaries are diligently
defending or causing another party in interest to defend such application;
(ii) that the attachment of any such lien to any such property shall not
prevent such property from being Unencumbered, as long as the Borrower or its
Subsidiaries have filed a bond, sufficient to discharge such lien, with the
clerk of the applicable court, as provided in Section 507-43, Hawaii Revised
Statutes, or such similar statutes under the laws of any other state; and
(iii) that the recording of any lien by the obligee of any Premium Payment
against property for which a Premium Payment is required and has not been
paid, shall not prevent such property from being Unencumbered, as long as the
Borrower or its Subsidiaries have filed a bond, in form and substance
satisfactory to the Majority Banks, in an amount equal to no less than 125%
of the claimed amount of the lien.
"UNENTITLED LAND" means all land owned by the Borrower or its
Subsidiaries as part of their respective real estate development business,
that does not have residential zoning, or that does have residential zoning
but does not have the provision of potable water, sewage, or other utilities
available to the boundary of such land.
-19-
"UNFUNDED PENSION LIABILITIES" means the excess of a Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the current
value of that Plan's assets, determined in accordance with the assumptions
used by that Plan's actuaries for funding that Plan pursuant to Section 412
of the Code for the applicable plan year.
"UNIMPROVED LAND" means all Entitled Land owned by the Borrower
or its Subsidiaries as part of their respective real estate development
business, on which no construction of on-site infrastructure improvements has
begun.
"UNSOLD HOMES UNDER CONSTRUCTION" means all condominium units
and one-to-four family residences (including Model Homes) owned by the
Borrower or its Subsidiaries as part of their respective real estate
development business, for which building permits have been issued and
construction has commenced (and not been abandoned), but not completed, and
for which there is no written contract of sale with an unrelated third party
purchaser. Construction will be considered to have "commenced" when the slab
or foundation for the condominium building or one-to-four family residence
has been completed.
1.02 OTHER INTERPRETIVE PROVISIONS.
(a) DEFINED TERMS. Unless otherwise specified herein or
therein, all terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant
hereto. The meaning of defined terms shall be equally applicable to the
singular and plural forms of the defined terms. Terms (including
uncapitalized terms) not otherwise defined herein and that are defined in the
Uniform Commercial Code of Hawaii shall have the meanings therein described.
(b) THE AGREEMENT. The words "hereof", "herein",
"hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of
this Agreement; and subsection, section, schedule and exhibit references are
to this Agreement unless otherwise specified.
(c) CERTAIN COMMON TERMS.
(i) The term "documents" includes any and all
instruments, documents, agreements, certificates, indentures, notices and
other writings, however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(d) PERFORMANCE; TIME. Whenever any performance obligation
hereunder (other than a payment obligation) shall be stated to be due or
required to be satisfied on a day other than a Business Day, such performance
shall be made or satisfied on the next succeeding Business Day. In the
computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including"; the words "to" and "until"
each mean "to but excluding", and the word "through" means "to and
including." If any provision of this Agreement refers to any action taken
-20-
or to be taken by any Person, or which such Person is prohibited from taking,
such provision shall be interpreted to encompass any and all means, direct or
indirect, of taking, or not taking. such action.
(e) CONTRACTS. Unless otherwise expressly provided herein,
references to agreements and other contractual instruments shall be deemed to
include all subsequent amendments and other modifications thereto, but only to
the extent such amendments and other modifications are not prohibited by the
terms of any Loan Document.
(f) LAWS. References to any statute or regulation are to be
construed as including all statutory and regulatory provisions consolidating,
amending, replacing, supplementing or interpreting the statute or regulation.
(g) CAPTIONS. The captions and headings of this Agreement are
for convenience of reference only and shall not affect the interpretation of
this Agreement.
(h) INDEPENDENCE OF PROVISIONS. The parties acknowledge that
this Agreement and the other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters, and
that such limitations, tests and measurements are cumulative and must each be
performed, except as expressly stated to the contrary in this Agreement.
(i) INTERPRETATION. This Agreement is the result of
negotiations among and has been reviewed by counsel to the Administrative Agent,
the Borrower, its Subsidiaries and other parties, and is the product of all
parties hereto. Accordingly, this Agreement and the other Loan Documents shall
not be construed against the Banks or the Administrative Agent merely because of
the Administrative Agent's or Banks' involvement in the preparation of such
documents and agreements.
1.03 ACCOUNTING PRINCIPLES.
(a) Unless the context otherwise clearly requires, all
accounting terms not expressly defined herein shall be construed, and all
financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied.
(b) References herein to "fiscal year" refer to such fiscal
year of the Borrower.
ARTICLE II
THE CREDITS
2.01 AMOUNTS AND TERMS OF COMMITMENTS. Each Bank severally agrees, on
the terms and conditions hereinafter set forth, to make Advances to the Borrower
from time to time on any Business Day during the period from the Closing Date to
the Termination Date (as the same may be extended pursuant to Section 2.09
hereof); and the Administrative Agent agrees, on the terms and conditions
hereinafter set forth, to make Swing-Line Advances to the Borrower from time to
time
- 21 -
on any Business Day during the period from the Closing Date to the
Termination Date (as the same may be extended pursuant to Section 2.09
hereof); and the Administrative Agent and the Issuing Bank agree, on the
terms and conditions hereinafter set forth, to issue Letters of Credit for
the account of the Borrower from time to time on any Business Day during the
period from the Closing Date to the Termination Date (as the same may be
extended pursuant to Section 2.09 hereof). The aggregate amount of each
Bank's obligation to make Advances, together with such Bank's share of
funding for any Letter of Credit upon negotiation by the beneficiary thereof,
shall not exceed at any time the amount set forth opposite such Bank's name
in SCHEDULE 1 under the heading "Commitment", and the aggregate amount of the
Administrative Agent's obligation to make Advances and Swing-Line Advances,
together with the Administrative Agent's share of funding for any Letter of
Credit upon negotiation by the beneficiary thereof, shall not exceed at any
time the amount set forth opposite the Administrative Agent's name in
SCHEDULE 1 under the heading "Commitment" (such amount, as the same may be
reduced pursuant to the terms of this Agreement, being such Bank's "Revolving
Commitment"); PROVIDED, HOWEVER, that, after giving effect to any Borrowing,
any Swing-Line Borrowing or any Issuance, the aggregate principal amount of
all outstanding Advances, all outstanding Swing-Line Advances, and all
outstanding Letters of Credit shall not exceed the amount of the Aggregate
Commitment. Within the limits of the Aggregate Commitment, and subject to
the other terms and conditions hereof, the Borrower may borrow, prepay, and
reborrow.
2.02 DETERMINATION OF BORROWING BASE; RESTRICTION ON ADVANCES,
SWING-LINE ADVANCES AND LETTERS OF CREDIT. The Administrative Agent will
determine the initial Borrowing Base at the Closing Date, calculated as of
August 31, 1999, and evidenced by a Borrowing Base Certificate delivered by
the Borrower, to the Administrative Agent no later than September 30, 1999.
Such determination shall be effective for the first month following the
Closing Date. Thereafter, the Borrowing Base for each succeeding month will
be determined by the Administrative Agent, calculated as of the end of the
preceding month, evidenced by the Borrowing Base Certificate provided to the
Administrative Agent by the Borrower, pursuant to Section 6.02(c) of this
Agreement, and verified by the Administrative Agent to its satisfaction. The
Administrative Agent shall promptly notify the Borrower and each Bank of each
determination by the Administrative Agent of the Borrowing Base. Any
determination of the Borrowing Base by the Administrative Agent shall be
conclusively deemed to be correct unless objected to by the Borrower or the
Majority Banks within five (5) Business Days of the receipt of such
determination. The aggregate amount of all Advances and Swing-Line Advances
outstanding hereunder, and all Letters of Credit issued and outstanding
hereunder, shall not exceed the Borrowing Base, as determined by the
Administrative Agent for any succeeding month, less (i) the outstanding
principal amount of Senior Debt, and (ii) 50% of the outstanding principal
amount of new Subordinated Debt (i.e., Subordinated Debt incurred after the
effective date of this Agreement), and shall in no event exceed the amount of
the Aggregate Commitment. In the event the Borrowing Base, for any month, as
determined by the Administrative Agent hereunder, less (i) the principal
amount of Senior Debt, and (ii) 50% of the principal amount of new
Subordinated Debt, is less than the aggregate amount of all outstanding
Advances and Swing-Line Advances and all issued and outstanding Letters of
Credit at the date of such determination, the Borrower shall, within fifteen
(15) Business Days of the receipt of notification by the Administrative
Agent, repay Advances or Swing-Line Advances and/or repay or cash
collateralize issued and outstanding Letters of Credit, in such amounts as
may be necessary to
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reduce the aggregate amount of all outstanding Advances and Swing-Line
Advances and all issued and outstanding Letters of Credit, to the amount of
the newly-determined Borrowing Base, less (i) the principal amount of Senior
Debt, and (ii) 50% of the principal amount of new Subordinated Debt.
2.03 PROCEDURE FOR BORROWING.
(a) Each Borrowing shall be made upon the Borrower's
irrevocable written notice delivered to the Administrative Agent in accordance
with Section 10.02 in the form of a Notice of Borrowing (which notice must be
received by the Administrative Agent prior to 10:00 a.m. Honolulu, Hawaii time)
(i) four Business Days prior to the requested Borrowing date, in the case of
LIBO Rate Advances; and (ii) one Business Day prior to the requested Borrowing
date, in the case of Prime Rate Advances, specifying:
(A) whether the Borrowing is to be comprised of LIBO
Rate Advances and/or Prime Rate Advances;
(B) the amount of the Borrowing; PROVIDED that LIBO Rate
Advances shall be in an aggregate minimum principal amount of Two Million
Dollars ($2,000,000) or any integral multiple of One Hundred Thousand
Dollars ($100,000) in excess thereof; and that Prime Rate Advances shall
be in an aggregate minimum principal amount of One Hundred Thousand
Dollars ($100,000) or any integral multiple of One Hundred Thousand
Dollars ($100,000) in excess thereof;
(C) the requested Borrowing date, which shall be a
Business Day; and
(D) if the requested Borrowing consists of one or more
LIBO Rate Advances, the duration of the Interest Period applicable
thereto; PROVIDED HOWEVER, that if the Notice of Borrowing shall fail to
specify the duration of the Interest Period for any such LIBO Rate
Advances, such Interest Period shall be three (3) months.
(b) Upon receipt of the Notice of Borrowing, the Administrative
Agent will promptly notify each Bank thereof and of the amount of such Bank's
Commitment Percentage of the Borrowing.
(c) Each Bank will make the amount of its Commitment Percentage
of the Borrowing available to the Administrative Agent for the account of the
Borrower at the Administrative Agent's Payment Office by 11:00 a.m. Honolulu,
Hawaii time on the Borrowing date requested by the Borrower in funds immediately
available to the Administrative Agent. The proceeds of all such Advances will
then be made available to the Borrower by the Administrative Agent at such
office by crediting the account of the Borrower on the books of First Hawaiian
Bank or such other accounts as the Borrower, may specify, with the aggregate of
the amounts made available to the Administrative Agent by the Banks and like
funds as received by the Administrative Agent.
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(d) The proceeds from Advances shall be used for general
corporate purposes, including working capital, set aside letters for bonding
purposes, development and land acquisition and not in contravention of any
provision of this Agreement or any Requirement of Law.
(e) Unless the Majority Banks shall otherwise agree, during
the existence of a Default or Event of Default, all LIBO Rate Advances shall
automatically be converted into Prime Rate Advances. The Borrower shall
reimburse each Bank and hold each Bank harmless from any loss or expense
which such Bank may sustain or incur as a consequence of any such conversion
of a LIBO Rate Advance to a Prime Rate Advance on a day that is not the last
day of the Interest Period for such LIBO Rate Advance, as provided in Section
3.04 below.
(f) After giving effect to any Borrowing, there shall not be
more than five (5) LIBO Rate Advances in effect.
2.04 PROCEDURE FOR SWING-LINE BORROWING.
(a) Each Swing-Line Borrowing shall be made upon the
Borrower's irrevocable written notice delivered to the Administrative Agent
in accordance with Section 10.02 in the form of a Notice of Swing-Line
Borrowing (which notice must be received by the Administrative Agent prior to
11:00 a.m. Honolulu, Hawaii time) on or before the requested Swing-Line
Borrowing date, specifying:
(A) the amount of the Swing-Line Borrowing, which
shall be in an aggregate minimum principal amount of Ten Thousand
Dollars ($10,000); and
(B) the requested Swing-Line Borrowing date, which
shall be a Business Day.
(b) All Swing-Line Advances shall be made by the
Administrative Agent alone, for its own account, and no other Bank shall be
required or permitted to participate in, or otherwise disburse any portion
of, any Swing-Line Advance; provided, however, that (i) the Administrative
Agent shall convert, no less than weekly, all Swing-Line Advances into an
Advance, upon one (1) Business Day's written notice given by the
Administrative Agent to each Bank (with a copy of such notice being given to
the Borrower), if the outstanding balance of all Swing-Line Advances is
$1,000,000 or more, (ii) all Swing-Line Advances which are not converted as
provided in subsection 2.04(b)(i) shall be repaid by the Borrower (from its
own funds or through a Borrowing) no later than seven (7) days after the date
of the Swing-Line Borrowing therefor, and (iii) all Swing-Line Advances shall
automatically be converted into Advances upon the occurrence of a Default or
an Event of Default.
(c) [RESERVED]
(d) If the Administrative Agent shall convert a Swing-Line
Advance into an Advance, the Administrative Agent will notify each Bank of
such conversion, of the amount of such Bank's Commitment Percentage therein,
and the date (which shall be not less than one (1) Business
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Day after the date of such notification) for such conversion (with a copy of
such notification being given to the Borrower). Each Bank will thereupon
make the amount of its Commitment Percentage therein available to the
Administrative Agent at the Administrative Agent's Payment Office by 11:00
a.m. Honolulu, Hawaii time, on the date specified in such notice, in funds
immediately available to the Administrative Agent. The proceeds received
from the Banks will be used by the Administrative Agent to reimburse itself
for the former Swing-Line Advance so converted.
(e) The proceeds from Swing-Line Advances shall be used for
general corporate purposes, including working capital, development and land
acquisition and may also be used to repay Prime Rate Advances upon approval
of the Administrative Agent, and not in contravention of any provision of
this Agreement or any Requirement of Law.
(f) The aggregate amount of all Swing-Line Advances
outstanding at any one time may not exceed Ten Million Dollars ($10,000,000),
and the amount available to the Borrower for Advances shall be reduced by the
aggregate amount of all Swing-Line Advances outstanding at any one time.
(g) All Swing-Line Advances shall be Prime Rate Advances.
All Swing-Line Advances that have been converted into Advances as described
in subsection 2.04(d) above, shall be Prime Rate Advances, unless and until
the Borrower has converted the same into LIBO Rate Advances, in accordance
with Section 2.06(a)(i) hereof.
2.05 PROCEDURE FOR ISSUANCE OF LETTERS OF CREDIT.
(a) Each Issuance shall be made upon the Borrower's
irrevocable written request delivered to the Administrative Agent in
accordance with Section 10.02 in the form of a Request for Issuance of Letter
of Credit (which request must be received by the Administrative Agent prior
to 11:00 a.m. Honolulu, Hawaii time), together with an Application and
Agreement for Standby Letter of Credit in the form attached hereto as EXHIBIT
D (as the same may be revised by the Administrative Agent from time to time),
or in a form that is acceptable to the Issuing Bank, no less than five (5)
Business Days prior to the requested Issuance date, if the Issuance is by the
Administrative Agent, or no less than ten (10) Business Days prior to the
requested Issuance date, if the Issuance is by the Issuing Bank.
(b) Upon receipt of the Request for Issuance of Letter of
Credit, the Administrative Agent will promptly notify each Bank thereof. The
Issuing Bank will immediately notify the Administrative Agent upon the
Issuance of a Letter of Credit.
(c) Upon any negotiation of an outstanding Letter of Credit
by the beneficiary thereof, the Issuing Bank shall notify the Administrative
Agent and the Administrative Agent will promptly notify each Bank of such
negotiation, and of the amount of such Bank's Commitment Percentage thereof.
Each Bank will make the amount of its Commitment Percentage of the negotiated
Letter of Credit available to the Administrative Agent at the Administrative
Agent's Payment Office by 11:00 a.m. Honolulu, Hawaii time on the date
requested by the Administrative Agent in funds immediately available to the
Administrative Agent. The proceeds received from the
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Banks will be used by the Administrative Agent to pay the beneficiary of the
Letter of Credit upon such negotiation, or to reimburse the Administrative
Agent or the Issuing Bank, as applicable, for such amounts if payment to such
beneficiary has already been made.
(d) Unless all of the Banks shall otherwise agree, (i) no
Letter of Credit shall have an expiry date later than the Termination Date; (ii)
no Letter of Credit shall contain an automatic renewal clause or feature; and
(iii) no Letter of Credit shall be issued for credit enhancement, provided,
however, that Letters of Credit may be issued to the Borrower to comply with
capital requirements for the Captive Insurance Subsidiary.
The aggregate amount of all Letters of Credit issued and outstanding
at any one time may not exceed Twenty-Five Million Dollars ($25,000,000), and
the amount available to the Borrower for Advances and Swing-Line Advances
shall be reduced by the aggregate amount of all Letters of Credit issued and
outstanding at any one time. In addition to the Letter of Credit Fee payable
by the Borrower pursuant to Section 2.11(d) of this Agreement, the Borrower
shall, at the time of the Issuance of each Letter of Credit, pay to the
Administrative Agent or the Issuing Bank, as applicable, its standard letter
of credit issuance fee. Upon the negotiation of any Letter of Credit by the
beneficiary thereof, the amount drawn thereunder shall become and be deemed
an Advance under and subject to the terms and provisions of this Agreement
relating to Advances. Upon the occurrence of an Event of Default hereunder,
the Borrower shall deposit with the Administrative Agent cash in an amount
sufficient to fully collateralize all outstanding Letters of Credit as of
such date, and if the Borrower shall fail to do so, the full amount of such
outstanding Letters of Credit shall become and be deemed an Advance under and
subject to the terms and provisions of this Agreement relating to Advances.
The Letters of Credit shall be issued to support performance requirements and
obligations of the Borrower or its Subsidiaries in connection with their real
estate development businesses (including any required deposits for like-kind
exchanges under Section 1031 of the Code), and to support capital and
performance requirements and obligations of the Captive Insurance Subsidiary,
and not in contravention of any provision of this Agreement or any
Requirement of Law.
2.06 CONVERSION AND CONTINUATION ELECTIONS.
(a) The Borrower may upon irrevocable written notice to the
Administrative Agent in accordance with subsection 2.06(b):
(i) elect to convert on any Business Day, any Prime
Rate Advance (other than a Swing-Line Advance), or any part thereof in
an amount not less than $2,000,000, or that is an integral multiple of
$100,000 in excess thereof, into LIBO Rate Advances; or
(ii) elect to convert on the last day of any Interest
Period applicable thereto any LIBO Rate Advances (or any part hereof in
an amount not less than $100,000, or that is an integral multiple of
$100,000 in excess thereof) into a Prime Rate Advance; or
- 26 -
(iii) elect to continue on the last day of any Interest
Period applicable thereto any LIBO Rate Advances (or any part thereof
in an amount not less than $2,000,000, or that is an integral multiple
of $100,000 in excess thereof);
PROVIDED, that if the aggregate amount of any LIBO Rate Advance in respect of
any Borrowing shall have been reduced, by payment, prepayment, or conversion
of part thereof to be less than $2,000,000, such LIBO Rate Advance shall
automatically convert into a Prime Rate Advance, and on and after such date
the right of the Borrower to continue such Advance as, and convert such
Advance into, a LIBO Rate Advance, shall terminate.
(b) The Borrower shall deliver a Notice of
Conversion/Continuation in accordance with Section 10.02 to be received by
the Administrative Agent no later than 10:00 a.m., Honolulu, Hawaii time at
least (i) four Business Days prior to the Conversion Date or Continuation
Date, if the Advances are to be converted into or continued as LIBO Rate
Advances; and (ii) one Business Day in advance of the Conversion Date, if the
Advances are to be converted into Prime Rate Advances, specifying:
(i) the proposed Conversion Date or Continuation Date;
(ii) the aggregate amount of Advances to be converted or
continued;
(iii) the nature of the proposed conversion or
continuation; and
(iv) if applicable, the duration of the requested
Interest Period.
(c) If upon the expiration of any Interest Period applicable
to LIBO Rate Advances, the Borrower failed to select timely a new Interest
Period to be applicable to such LIBO Rate Advances, or if any Default or
Event of Default shall then exist, the Borrower shall be deemed to have
elected to convert such LIBO Rate Advances into Prime Rate Advances effective
as of the expiration date of such current Interest Period.
(d) Upon receipt of a Notice of Conversion/Continuation, the
Administrative Agent will promptly notify each Bank thereof, or, if no timely
notice is provided by the Borrower, the Administrative Agent will promptly
notify each Bank of the details of any automatic conversion. All conversions
and continuations shall be made pro rata among the Banks according to the
respective outstanding principal amounts of the Advances held by each Bank
with respect to which the notice was given.
(e) Notwithstanding any other provision contained in this
Agreement, after giving effect to any conversion or continuation of any
Advances, there shall not be more than five (5) LIBO Rate Advances in effect.
(f) The Borrower shall reimburse each Bank and hold each Bank
harmless from any loss or expense which such Bank may sustain or incur as a
consequence of any conversion of
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a LIBO Rate Advance to a Prime Rate Advance on a day that is not the last day
of the Interest Period for such LIBO Rate Advance, as provided in Section
3.04 below.
2.07 VOLUNTARY TERMINATION OR REDUCTION OF COMMITMENT. The Borrower
may, (i) at the end of any Quarter and upon not less than five Business Days'
prior notice to the Administrative Agent (which shall promptly notify each
Bank thereof), terminate the Aggregate Commitment, or (ii) after the
Aggregate Commitment has been increased to $170,000,000 for a period of not
less than six months, and only on a one time basis, at the end of any
Quarter and upon not less than five Business Days' prior notice to the
Administrative Agent (which shall promptly notify each Bank thereof),
permanently reduce the Aggregate Commitment by an aggregate minimum amount of
$10,000,000 or any integral multiple of $10,000,000 in excess thereof, up to
an aggregate maximum amount of $30,000,000; PROVIDED that no such termination
or reduction shall be permitted if, after giving effect thereto and to any
prepayments of the Advances or Swing-Line Advances made on the effective date
thereof, the then outstanding principal amount of all Advances, Swing-Line
Advances and Letters of Credit issued and outstanding would exceed the amount
of the Aggregate Commitment then in effect and, PROVIDED, FURTHER, that once
reduced in accordance with this Section, the Aggregate Commitment may not be
increased without the written approval of the Administrative Agent and each
Bank. Any reduction of the Aggregate Commitment shall be applied to each
Bank's Revolving Commitment in accordance with such Bank's Commitment
Percentage. All accrued interest, and all accrued fees described in Section
2.11 hereof, to, but not including, the effective date of any reduction or
termination of the Aggregate Commitment, shall be paid on the effective date
of such reduction or termination. The Borrower shall reimburse each Bank and
hold each Bank harmless from any loss or expense which such Bank may sustain
or incur as a consequence of any reduction or termination of the Aggregate
Commitment which is effective, with respect to a LIBO Rate Advance, on a day
that is not the last day of the Interest Period for such LIBO Rate Advance,
as provided in Section 3.04 below.
2.08 PREPAYMENTS.
(a) OPTIONAL PREPAYMENTS. Subject to Section 3.04, the
Borrower may, at any time or from time to time, (i) prepay LIBO Rate Advances
in whole or in part, upon at least three Business Days' prior notice, by the
Borrower, to the Administrative Agent, in amounts of $1,000,000 or any
integral multiple of $100,000 in excess thereof (PROVIDED that after any such
prepayment, the balance of any such LIBO Rate Advance shall be $2,000,000 or
any integral multiple of $100,000 in excess thereof), (ii) prepay Prime Rate
Advances (other than Swing-Line Advances) in whole or in part, upon at least
one Business Day's prior notice, by the Borrower to the Administrative Agent,
in the amount of or greater than $15,000,000, and (iii) prepay Swing-Line
Advances or Prime Rate Advances, in an amount less than $15,000,000, in whole
or in part without prior notice to the Administrative Agent. Any such notice
of prepayment shall specify the date and amount of such prepayment and
whether such prepayment is of Prime Rate Advances, or LIBO Rate Advances, or
any combination thereof. Such notice for prepayment of LIBO Rate Advances
shall not thereafter be revocable by the Borrower, and the Administrative
Agent will promptly notify each Bank thereof and of such Bank's Commitment
Percentage of such prepayment. If such notice for prepayment of LIBO Rate
Advances is given by the Borrower, the Borrower shall make such prepayment,
and the payment amounts specified in such notice shall be due and payable on
the date specified therein,
- 28 -
together with accrued interest to each such date on the amount prepaid and
any amounts required pursuant to Section 3.04. The Borrower shall reimburse
each Bank and hold each Bank harmless from any loss or expense which such
Bank may sustain or incur as a consequence of any prepayment of a LIBO Rate
Advance, on a day that is not the last day of the Interest Period for such
LIBO Rate Advance, as provided in Section 3.04 below.
(b) MANDATORY PREPAYMENTS. If the Borrower or any of its
Subsidiaries sells (other than a sale to the Borrower or any other
Subsidiary) any portion of any property or assets of the Borrower or any of
its Subsidiaries for $10,000,000.00 or more, or if the Borrower or any of its
Subsidiaries sells, in a single transaction, all or substantially all of the
property or assets of the Borrower or of any of its Subsidiaries, the
Borrower shall use 100% of the proceeds of such sale, net of commissions and
closing costs (the "Sale Proceeds") to prepay any Advances, subject to
Section 3.04. If the Sale Proceeds are used to prepay LIBO Rate Advances in
whole or in part, then the Borrower shall provide at least three Business
Days' prior notice to the Administrative Agent, of such prepayment and such
prepayments shall be in amounts of $1,000,000 or any integral multiple of
$100,000 in excess thereof (PROVIDED that after any such prepayment, the
balance of any such LIBO Rate Advance shall be $2,000,000 or any integral
multiple of $100,000 in excess thereof; unless the total Advances outstanding
after giving effect to any other prepayments required by this section, is
less than $2,000,000, in which case, the LIBO Rate Advances outstanding shall
be reduced by the balance of the such prepayment). Such notice for
prepayment of LIBO Rate Advances shall not thereafter be revocable by the
Borrower, and the Administrative Agent will promptly notify each Bank thereof
and of such Bank's Commitment Percentage of such prepayment. If such notice
for prepayment of LIBO Rate Advances is given by the Borrower, the Borrower
shall make such prepayment, and the payment amounts specified in such notice
shall be due and payable on the date specified therein, together with accrued
interest to each such date on the amount prepaid and any amounts required
pursuant to Section 3.04. The Borrower shall reimburse each Bank and hold
each Bank harmless from any loss or expense which such Bank may sustain or
incur as a consequence of any prepayment of a LIBO Rate Advance, on a day
that is not the last day of the Interest Period for such LIBO Rate Advance,
as provided in Section 3.04 below. If the Sale Proceeds are used to prepay
Prime Rate Advances (other than Swing-Line Advances) in whole or in part,
then the Borrower shall provide at least one Business Day's prior notice to
the Administrative Agent, and such prepayments may be made in any amounts.
Prepayments of Swing-Line Advances in whole or in part may be made without
prior notice to the Administrative Agent.
2.09 REPAYMENT; EXTENSION OF TERMINATION DATE.
(a) The Borrower shall, on the Termination Date, repay to
the Banks in full the aggregate principal amount of all outstanding Advances,
and all accrued interest thereon, and shall repay to the Administrative Agent
in full the aggregate principal amount of all outstanding Swing-Line
Advances, and all accrued interest thereon, shall pay to the Banks all fees,
charges and other sums outstanding hereunder on the Termination Date.
(b) Notwithstanding the foregoing, upon the request of the
Borrower made not earlier than April 1, 2000, and not earlier than April 1st
of each subsequent year, and not later than June 30, 2000, and not later than
June 30th of each subsequent year, and the concurrence of all of
- 29 -
the Banks, in their sole and absolute discretion, the Termination Date may be
extended for an additional period of one year; provided, however, and except
for any request to extend the Termination Date made in 1999, that the
Borrower shall have, in the immediately preceding year, exercised its option,
and all of the Banks shall have concurred, to extend the Termination Date;
provided, further, if any Bank does not concur in the extension of the
Termination Date (the "Dissenting Bank"), the Borrower may:
(i) request that the Dissenting Bank continue its
Commitment Percentage until the original Termination Date; or
(ii) request one or more of the other Banks (the
"Non-Dissenting Banks") to acquire and assume all or part of such Dissenting
Bank's Advances and Revolving Commitment, which request may be granted or
denied in such Non-Dissenting Bank's sole discretion; or
(iii) designate a replacement bank or financial
institution to acquire and assume all or part of such Dissenting Bank's
Advances and Revolving Commitment (a "REPLACEMENT BANK"); or
(iv) notwithstanding the provisions of Section 2.07,
permanently reduce the Aggregate Commitment by the aggregate amount of such
Dissenting Bank's Advances and Revolving Commitment, by prepaying the amount
of such Dissenting Bank's Advances and all accrued interest and fees and
reimbursing such Dissenting Bank and holding such Dissenting Bank harmless
from any loss or expense which such Dissenting Bank may sustain or incur as a
consequence of such reduction of the Aggregate Commitment which is effective,
with respect to a LIBO Rate Advance, on a day that is not the last day of the
Interest Period for such LIBO Rate Advance, as provided in Section 3.04
below.
Any acquisition of a Dissenting Bank's Advances and Revolving Commitment,
designation of a Replacement Bank or reduction of the Aggregate Commitment
shall be subject to the prior written consent of the Administrative Agent
(which consent shall not be unreasonably withheld), and shall be effective
upon such consent. In the event of the replacement of a Dissenting Bank,
such Dissenting Bank agrees to assign without recourse its rights and
obligations hereunder to the Replacement Bank upon payment by the Replacement
Bank to the Dissenting Bank of the principal amount of such Dissenting
Banks's outstanding Advances and any accrued and unpaid interest thereon, and
any other amounts owed to such Dissenting Bank and to execute and deliver to
the Administrative Agent an assignment and acceptance in form and substance
reasonably satisfactory to the Administrative Agent and such Dissenting Bank
evidencing such assignment and the acceptance by the Replacement Bank of such
Dissenting Bank's obligations hereunder. The designation of a Replacement
Bank shall not affect the Borrower's obligations to such Dissenting Bank
hereunder.
(c) As a condition to such extension as provided
hereinabove, the Banks may require the Borrower to pay an extension fee, in
an amount to be determined by the Banks and agreed to by the Borrower.
- 30 -
2.10 INTEREST.
(a) Subject to subsection (c) of this Section, each LIBO
Rate "A" Advance, each LIBO Rate "B" Advance, each LIBO Rate "C" Advance,
each Prime Rate "A" Advance, each Prime Rate "B" Advance and each Prime Rate
"C" Advance shall bear interest on the outstanding principal amount thereof,
from the date when made until it becomes due, at a rate per annum equal to
the LIBO Rate or the Prime Rate, as the case may be, PLUS, the Applicable
Margin.
(b) Interest on each Advance and on each Swing-Line Advance
shall be paid in arrears on each Interest Payment Date. Interest shall also
be paid on any portion of Advances or Swing-Line Advances prepaid pursuant to
Sections 2.07 and 2.08; provided, however, that interest on Prime Rate
Advances shall be paid in arrears on the Interest Payment Date immediately
following the date of such prepayment. Interest shall be paid on demand
during the existence of any Event of Default.
(c) During the existence of any Event of Default, the
Borrower agrees to pay interest on any unpaid principal or other amount
payable hereunder or under any of the other Loan Documents, from the date
such amount becomes due until the date such amount is paid in full, and after
as well as before any entry of judgment thereon to the extent permitted by
law, payable on demand, at a fluctuating rate per annum equal to the Prime
Rate PLUS four percent (4%).
(d) Anything herein to the contrary notwithstanding, the
obligations of the Borrower hereunder shall be subject to the limitation that
payments of interest shall not be required, for any period for which interest is
computed hereunder, to the extent (but only to the extent) that contracting for
or receiving such payment by the respective Bank would be contrary to the
provisions of any law applicable to such Bank limiting the highest rate of
interest which may be lawfully contracted for, charged or received by such Bank,
and in such event the Borrower shall pay such Bank interest at the highest rate
permitted by law applicable to such Bank.
2.11 FEES.
(a) MODIFICATION FEES.
(i) The Borrower shall pay to the Administrative
Agent on the Closing Date, for the account of each Bank which has committed
to fund the "Increase Amount" (as shown on Schedule "1"), non-refundable fees
in an amount equal to four-tenths of one percent (0.40%) of the amount of
such Bank's "Increase Amount" (as shown on Schedule "1"), for an aggregate
fee of $200,000.00.
(ii) The Borrower shall pay to the Administrative
Agent on the Closing Date, for the account of each Bank which has funded the
"Existing Revolving Commitment" (as shown on Schedule "1") and which has also
committed to fund the "Increase Amount" (as shown on Schedule "1"),
non-refundable fees in an amount equal to one-tenth of one percent (0.10%) of
the amount of such Bank's "Increase Amount" (as shown on Schedule "1"), for
an aggregate fee of $30,000.00.
- 31 -
(iii) The Borrower shall pay to the Administrative
Agent on the Closing Date, for the account of each Bank which has funded the
"Existing Revolving Commitment" (as shown on Schedule "1") and which has not
committed to fund the "Increase Amount" (as shown on Schedule "1"),
non-refundable fees in the amount of $5,000.00.
(b) COMMITMENT FEE. The Borrower shall pay to the
Administrative Agent for the account of each Bank a non-refundable commitment
fee in the following percentage per annum on the amount of such Bank's
Revolving Commitment, computed on a Quarterly basis in advance, based upon
the Leverage Ratio and the Interest Coverage Ratio then in effect (for
example, the commitment fee due on April 1 shall be computed based upon the
Leverage Ratio then in effect, which in such case would be as of the previous
December 31), commencing on the Closing Date, and continuing on the first
Business Day of each Quarter until the Termination Date:
(i) if on the first day of such Quarter:
(A) the Leverage Ratio is less than 1.35 to 1 and
the Interest Coverage Ratio is greater than 2.00 to 1; or
(B) the Leverage Ratio is less than 1.50 to 1 and
the Interest Coverage Ratio is greater than 2.50 to 1;
then the percentage for the commitment fee shall be equal to 0.125%;
(ii) if on the first day of such Quarter:
(A) the Leverage Ratio is less than or equal to 1.35
to 1 and the Interest Coverage Ratio is greater than or equal to
1.75 to 1, but less than 2.00 to 1; or
(B) the Leverage Ratio is less than or equal to 1.50
to 1 and the Interest Coverage Ratio is greater than or equal to
2.00 to 1, but less than 2.50 to 1; or
(c) the Leverage Ratio is less than or equal to 1.60
to 1 and the Interest Coverage Ratio is greater than or equal to
2.50 to 1;
then the percentage for the commitment fee shall be equal to 0.18%; and
(iii) if on the first day of such Quarter:
(A) the Leverage Ratio is greater than 1.35 to 1,
but less than or equal to 1.50 to 1, and the Interest Coverage
Ratio is greater than or equal to 1.75 to 1, but less than 2.00 to
1; or
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(B) the Leverage Ratio is greater than 1.50 to 1,
but less than or equal to 1.60 to 1, and the Interest Coverage
Ratio is greater than or equal to 2.00 to 1, but less than 2.50 to
1;
then the percentage for the commitment fee shall be equal to 0.25%;
PROVIDED, HOWEVER, that (1) if the Borrower fails to provide the Leverage
Ratio/Interest Coverage Ratio/Base Grid Certificate as required in Section
6.02(e), and the Administrative Agent is unable to determine the Leverage
Ratio for such Quarter, then the percentage for the commitment fee for such
Quarter shall be 0.25%, or (2) if an Event of Default has occurred, then the
percentage for the commitment fee for the Quarter immediately following such
Event of Default, and for each subsequent Quarter as long as such Event of
Default is continuing, shall be 0.25%.
(c) UNUSED FACILITY FEES. The Borrower shall pay to the
Administrative Agent for the account of each Bank an unused facility fee
equal to one-fifth of one percent (0.20%) per annum of the amount equal to
the difference between (i) such Bank's Revolving Commitment (less such Bank's
Commitment Percentage of any issued and outstanding Letters of Credit) and
(ii) such Bank's Commitment Percentage of the outstanding principal balance
of all Advances made hereunder, computed on a daily balance basis in arrears,
commencing as of the Closing Date, and becoming due and payable on the last
Business Day of each Quarter, with the final payment to be made on the
Termination Date; PROVIDED HOWEVER that in the case of the Administrative
Agent, the unused facility fee shall be equal to one-fifth of one percent
(0.20%) of the amount equal to the difference between (i) the Administrative
Agent's Revolving Commitment (less the Administrative Agent's Commitment
Percentage of any issued and outstanding Letters of Credit) and (ii)(A) the
Administrative Agent's Commitment Percentage of the outstanding principal
balance of all Advances made hereunder and (B) 100% of the outstanding
principal balance of all Swing-Line Advances made hereunder, computed on a
daily balance basis in arrears, commencing as of the Closing Date and
becoming due and payable on the last Business Day of each Quarter, with the
final payment to be made on the Termination Date.
(d) LETTER OF CREDIT FEES. The Borrower shall pay to the
Administrative Agent or the Issuing Bank, as applicable, upon the Issuance
hereunder of each new Letter of Credit, or upon the extension hereunder of
each existing Letter of Credit, a letter of credit fee in an amount equal to
one and one-fourth percent (1.25%) of the amount of such Letter of Credit.
For Letters of Credit issued by the Administrative Agent, the Administrative
Agent will retain 20% of such letter of credit fee (i.e., .25% of the amount
of such Letter of Credit) for its own account, and will remit the balance of
such fee to each Bank (including the Administrative Agent) pro rata in
accordance with such Bank's Revolving Commitment. For Letters of Credit
issued by the Issuing Bank, the Issuing Bank may retain 20% of such letter of
credit fee (i.e., .25% of the amount of such Letter of Credit) for its own
account, and will remit the balance to the Administrative Agent, who will
then remit the same to each Bank (including the Issuing Bank and the
Administrative Agent) pro rata in accordance with such Bank's Revolving
Commitment.
(e) AGENCY FEE; STRUCTURING FEE. The Borrower shall pay to the
Administrative Agent for the Administrative Agent's own account an agency fee in
the amount and at the times set
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forth in those letter agreements between the Borrower and the Administrative
Agent dated September 30, 1998 and July 2, 1999.
2.12 COMPUTATION OF FEES AND INTEREST.
(a) The fees described in Section 2.11 above shall be
calculated on the basis year of 365 days, and actual days elapsed; provided,
however, all fees for Letters of Credit shall be calculated based upon a year
of 360 days.
(b) All computations of interest payable in respect of Prime
Rate Advances shall be made on the basis of a year of 365 days, and actual
days elapsed. All computations of interest payable in respect of LIBO Rate
Advances shall be made on the basis of a 360-day year and actual days
elapsed. Interest and fees shall accrue during each period during which
interest or such fees are computed from the first day thereof to the last day
thereof.
(c) The Administrative Agent will, with reasonable
promptness, notify the Borrower and the Banks of each determination of the
Borrowing Base, of the Leverage Ratio and the Interest Coverage Ratio;
PROVIDED that any failure to do so shall not relieve the Borrower of any
liability hereunder or provide the basis for any claim against the
Administrative Agent. Any change in the interest rate on an Advance or a
Swing-Line Advance resulting from a change in the Prime Rate shall become
effective as of the opening of business on the day on which such change in
the Prime Rate becomes effective. Any change in the interest rate on an
Advance or a Swing-Line Advance resulting from a change in the Leverage Ratio
and the Interest Coverage Ratio (and the resultant Applicable Margin) shall
become effective as of the opening of business on the first day of the month
following the determination of the Leverage Ratio and the Interest Coverage
Ratio. The Administrative Agent will with reasonable promptness notify the
Borrower and the Banks of the effective date and the amount of each such
change; PROVIDED that any failure to do so shall not relieve the Borrower of
any liability hereunder or provide the basis for any claim against the
Administrative Agent.
2.13 PAYMENTS BY THE BORROWER.
(a) All payments (including prepayments) to be made by the
Borrower on account of principal, interest, fees and other amounts required
hereunder shall be made without set-off, recoupment or counterclaim; shall,
except with respect to payments relating to Swing-Line Advances, and as
otherwise expressly provided herein, be made to the Administrative Agent for
the ratable account of the Banks at the Administrative Agent's Payment
Office; and shall be made in U.S. Dollars and in immediately available funds,
no later than 9:00 a.m. Honolulu, Hawaii time on the date specified herein
for payments on, or of, Advances, and no later than 1:00 p.m. Honolulu,
Hawaii time on the date specified herein for payments on, or of, Swing-Line
Advances. The Administrative Agent will promptly distribute to each Bank its
Commitment Percentage (or other applicable share as expressly provided
herein) of such principal, interest, fees or other amounts, in like funds as
received; provided however that the Administrative Agent shall retain all
payments made by the Borrower on, or of, Swing-Line Advances for the
Administrative Agent's own account. Any payment which is received by the
Administrative Agent later than 9:00 a.m. Honolulu, Hawaii
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time and any payment on, or of, Swing-Line Advances which is received by the
Administrative Agent later than 1:00 p.m. Honolulu, Hawaii time, shall be
deemed to have been received on the immediately succeeding Business Day and
any applicable interest or fee shall continue to accrue.
(b) Whenever any payment hereunder shall be stated to be due
on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of interest or fees, as the case may be; subject
to the provisions set forth in the definition of "Interest Period" herein.
(c) Unless the Administrative Agent shall have received
notice from the Borrower prior to the date on which any payment is due to the
Banks hereunder that the Borrower will not make such payment in full as and
when required hereunder, the Administrative Agent may assume that the
Borrower has made such payment in full to the Administrative Agent on such
date in immediately available funds and the Administrative Agent may (but
shall not be so required), in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to the amount then
due such Bank. If and to the extent the Borrower shall not have made such
payment in full to the Administrative Agent, each Bank shall repay to the
Administrative Agent on demand such amount distributed to such Bank, together
with interest thereon for each day from the date such amount is distributed
to such Bank until the date such Bank repays such amount to the
Administrative Agent, at the Federal Funds Rate as in effect for each such
day.
2.14 PAYMENTS BY THE BANKS TO THE ADMINISTRATIVE AGENT.
(a) Unless the Administrative Agent shall have received
notice from a Bank at least one Business Day prior to the date of any
proposed Borrowing, conversion of a Swing-Line Advance to an Advance, or
negotiation of a Letter of Credit, that such Bank will not make available to
the Administrative Agent as and when required hereunder the amount of that
Bank's Commitment Percentage thereof, the Administrative Agent may assume
that each Bank has made such amount available to the Administrative Agent in
immediately available funds on such date and the Administrative Agent may
(but shall not be so required), in reliance upon such assumption, make
available to the appropriate party on such date a corresponding amount. If
and to the extent any Bank shall not have made its full amount available to
the Administrative Agent in immediately available funds and the
Administrative Agent in such circumstances has made available to the
appropriate party such amount, that Bank shall on the next Business Day
following such date make such amount available to the Administrative Agent,
together with interest at the Federal Funds Rate for and determined as of
each day during such period. A notice of the Administrative Agent submitted
to any Bank with respect to amounts owing under this subsection shall be
conclusive, absent manifest error. If such amount is so made available, such
payment to the Administrative Agent shall constitute such Bank's Advance on
such date for all purposes of this Agreement. If, with respect to a
Borrowing, such amount is not made available to the Administrative Agent on
the next Business Day following the date of such Borrowing, the
Administrative Agent shall notify the Borrower of such failure to fund and,
upon demand by the Administrative Agent, the Borrower shall pay such amount
to the Administrative Agent for the Administrative Agent's account, together
with interest thereon for each day elapsed since the date of such Borrowing,
at a rate per annum equal to the interest rate applicable at the time to the
Advances comprising such Borrowing.
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(b) The failure of any Bank to make any Advance on the date
of any proposed Borrowing, conversion of Swing-Line Advance to an Advance, or
negotiation of a Letter of Credit, shall not relieve any other Bank of any
obligation hereunder to make an Advance on the date thereof, but no Bank
shall be responsible for the failure of any other Bank to make the Advance to
be made by such other Bank on the date thereof. The Administrative Agent
shall take such action as the Administrative Agent deems advisable, or as the
Administrative Agent may be directed by the Majority Banks, pursuant to the
Inter-Bank Agreement, to cause such Bank to make such Advance, or to cause
one or more of the other Banks to acquire and assume such Bank's Advances and
Revolving Commitment, or to designate a replacement bank or financial
institution to acquire and assume such Bank's Advances and Revolving
Commitment.
2.15 SHARING OF PAYMENTS, ETC. If, other than with respect to
Swing-Line Advances made by the Administrative Agent, or other than as
expressly provided elsewhere herein, any Bank shall obtain on account of the
Advances made by it any payment (whether voluntary, involuntary, through the
exercise of any right of set-off, or otherwise) in excess of its Commitment
Percentage of payments on account of the Advances obtained by all the Banks,
such Bank shall forthwith (a) notify the Administrative Agent of such fact,
and (b) purchase from the other Banks such participations in the Advances
made by them as shall be necessary to cause such purchasing Bank to share the
excess payment ratably with each of them; PROVIDED, HOWEVER, that if all or
any portion of such excess payment is thereafter recovered from the
purchasing Bank, such purchase shall to that extent be rescinded and each
other Bank shall repay to the purchasing Bank the purchase price paid
therefor, together with an amount equal to such paying Bank's Commitment
Percentage (according to the proportion of (i) the amount of such paying
Bank's required repayment to (ii) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The Borrower
agrees that any Bank so purchasing a participation from another Bank pursuant
to this Section may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off but subject to Section
10.09) with respect to such participation as fully as if such Bank were the
direct creditor of the Borrower in the amount of such participation. The
Administrative Agent will keep records (which shall be conclusive and binding
in the absence of manifest error) of participations purchased pursuant to
this Section and will in each case notify the Banks following any such
purchases or repayments.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 TAXES.
(a) Subject to subsection 3.01(g), any and all payments by
the Borrower to each Bank or the Administrative Agent under this Agreement
shall be made free and clear of, and without deduction or withholding for,
any and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the
case of each Bank and the Administrative Agent, such taxes (including income
taxes or franchise taxes) as are imposed on or measured by each Bank's net
income by the jurisdiction under the laws of which such Bank or the
- 36 -
Administrative Agent, as the case may be, is organized or maintains a
Lending Office or any political subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities
being hereinafter referred to as "Taxes").
(b) In addition, the Borrower shall pay any present or
future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies which arise from any payment made hereunder or from
the execution, delivery or registration of, or otherwise with respect to,
this Agreement or any other Loan Documents (hereinafter referred to as "Other
Taxes").
(c) Subject to subsection 3.01(g), the Borrower shall
indemnify and hold harmless each Bank and the Administrative Agent for the
full amount of Taxes and Other Taxes (including any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section 3.01) paid
by any Bank or the Administrative Agent and any liability (including
penalties, interest, additions to tax and expenses) arising therefor or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. Payment under this indemnification shall be made within 30
days from the date any Bank or the Administrative Agent makes written demand
therefor. If any Taxes or Other Taxes for which the Borrower have provided
an indemnity to any Bank or the Administrative Agent under this subsection
3.01(c) are found to be incorrectly or illegally assessed, then, upon the
request of the Borrower, such Bank or Administrative Agent will take such
action, if any, as such Bank or the Administrative Agent may determine in its
discretion, exercised in good faith, to be commercially reasonable to obtain
a refund of such Taxes or Other Taxes and shall promptly remit to the
Borrower any refund which the Bank or the Administrative Agent receives,
after deducting from such refund all costs and expenses incurred (including
reasonable attorneys' fees and expenses and allocated costs of internal legal
services) in collecting such refund.
(d) If the Borrower shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to any Bank or the Administrative Agent, then, subject to
subsection 3.01(g):
(i) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions
applicable to additional sums payable under this Section 3.01) such Bank
or the Administrative Agent, as the case may be, receives an amount equal
to the sum it would have received had no such deductions been made;
(ii) the Borrower shall make such deductions; and
(iii) the Borrower shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with
applicable law.
(e) Within 30 days after the date of any payment by the
Borrower of Taxes or Other Taxes, the Borrower shall furnish to the
Administrative Agent the original or a certified copy of a receipt evidencing
payment thereof, or other evidence of payment satisfactory to the
Administrative Agent.
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(f) Each Bank which is a foreign person (i.e., a person
other than a United States Person for United States Federal income tax
purposes) agrees that:
(i) it shall, no later than the Closing Date (or, in the
case of a Bank which becomes a party hereto pursuant to Section 10.08
after the Closing Date, the date upon which the Bank becomes a party
hereto) deliver to the Borrower through the Administrative Agent two
accurate and complete signed originals of Internal Revenue Service Form
4224 or any successor thereto ("Form 4224"), or two accurate and complete
signed originals of Internal Revenue Service Form 1001 or any successor
thereto ("Form 1001"), as appropriate, in each case indicating that the
Bank is on the date of delivery thereof entitled to receive payments of
principal, interest and fees under this Agreement free from withholding
of United States Federal income tax;
(ii) if at any time the Bank makes any changes
necessitating a new Form 4224 or Form 1001, it shall with reasonable
promptness deliver to each of the Borrower through the Administrative
Agent in replacement for, or in addition to, the forms previously
delivered by it hereunder, two accurate and complete signed originals of
Form 4224; or two accurate and complete signed originals of Form 1001, as
appropriate, in each case indicating that the Bank is on the date of
delivery thereof entitled to receive payments of principal, interest and
fees under this Agreement free from withholding of United States Federal
income tax;
(iii) it shall, before or promptly after the occurrence of
any event (including the passing of time but excluding any event
mentioned in (ii) above) requiring change in or renewal of the most
recent Form 4224 or Form 1001 previously delivered by such Bank, deliver
to the Borrower through the Administrative Agent two accurate and
complete original signed copies of Form 4224 or Form 1001 in replacement
for the forms previously delivered by the Bank; and
(iv) it shall, promptly upon the Borrower's or the
Administrative Agent's reasonable request to that effect, deliver to the
Borrower or the Administrative Agent (as the case may be) such other
forms or similar documentation as may be required from time to time by
any applicable law, treaty, rule or regulation in order to establish such
Bank's tax status for withholding purposes.
(g) The Borrower will not be required to pay any additional
amounts in respect of United States Federal income tax pursuant to subsection
3.01(d) to any Bank for the account of any Lending Office of such Bank:
(i) if the obligation to pay such additional amounts
would not have arisen but for a failure by such Bank to comply with its
obligations, if any, under subsection 3.01(f) in respect of such Lending
Office;
(ii) if such Bank shall have delivered to the Borrower a
Form 4224 in respect of such Lending Office pursuant to subsection
3.01(f), and such Bank shall not at any
- 38 -
time be entitled to exemption from deduction or withholding of United
States Federal income tax in respect of payments by the Borrower
hereunder for the account of such Lending Office for any reason other
than a change in United States law or regulations or in the official
interpretation of such law or regulations by any governmental authority
charged with the interpretation or administration thereof (whether or
not having the force of law) after the date of delivery of such Form
4224; or
(iii) if the Bank shall have delivered to the Borrower a
Form 1001 in respect of such Lending Office pursuant to subsection
3.01(f), and such Bank shall not at any time be entitled to exemption
from deduction or withholding of United States Federal income tax in
respect of payments by the Borrower hereunder for the account of such
Lending Office for any reason other than a change in United States law or
regulations or any applicable tax treaty or regulations or in the
official interpretation of any such law, treaty or regulations by any
governmental authority charged with the interpretation or administration
thereof (whether or not having the force of law) after the date of
delivery of such Form 1001.
(h) If the Borrower is required to pay additional amounts to
any Bank or the Administrative Agent pursuant to subsection 3.01(d), then
such Bank shall use its reasonable best efforts (consistent with legal and
regulatory restrictions) to change the jurisdiction of its Lending Office so
as to eliminate any such additional payment by the Borrower which may
thereafter accrue if such change in the judgment of such Bank is not
otherwise disadvantageous to such Bank.
3.02 ILLEGALITY.
(a) If any Bank shall determine that the introduction of any
Requirement of Law, or any change in any Requirement of Law or in the
interpretation or administration thereof, has made it unlawful, or that any
central bank or other Governmental Authority has asserted that it is
unlawful, for any Bank or its Lending Office to make LIBO Rate Advances,
then, on notice thereof by the Bank to the Borrower through the
Administrative Agent, the obligation of that Bank to make LIBO Rate Advances
shall be suspended until that Bank shall have notified the Administrative
Agent and the Borrower that the circumstances giving rise to such
determination no longer exists.
(b) If a Bank shall determine that it is unlawful to
maintain any LIBO Rate Advance, the Borrower shall prepay in full all LIBO
Rate Advances of that Bank then outstanding, together with interest accrued
thereon, either on the last day of the Interest Period thereof if that Bank
may lawfully continue to maintain such LIBO Rate Advances to such day, or
immediately, if that Bank may not lawfully continue to maintain such LIBO
Rate Advances, together with any amounts required to be paid in connection
therewith pursuant to Section 3.04.
(c) If the Borrower is required to prepay any LIBO Rate
Advance immediately as provided in subsection 3.02(b), then concurrently with
such prepayment, the Borrower shall borrow from the Affected Bank, in the
amount of such repayment, a Prime Rate Advance.
(d) If the obligation of any Bank to make or maintain LIBO Rate
Advances has been terminated, the Borrower may elect, by giving notice to that
Bank through the Administrative
- 39 -
Agent that all Advances which would otherwise be made by that Bank as LIBO
Rate Advances shall be instead Prime Rate Advances.
3.03 INCREASED COSTS AND REDUCTION OF RETURN.
(a) If any Bank shall determine that, due to either (i) the
introduction of or any change (other than any change by way of imposition of
or increase in reserve requirements to the extent included the calculation of
the LIBO Rate) in or in the interpretation of any law or regulation or (ii)
the compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), enacted
after the Closing Date, there shall be any increase in the cost to such Bank
of agreeing to make or making, funding or maintaining any LIBO Rate Advances,
then the Borrower shall be liable for, and shall from time to time, upon
demand therefor by such Bank (with copy of such demand to the Administrative
Agent), pay to the Administrative Agent for the account of such Bank,
additional amounts as are sufficient to compensate such Bank for such
increased costs.
(b) If any Bank shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in any
Capital Adequacy Regulation, (iii) any change in the interpretation or
administration of any Capital Adequacy Regulation by any central bank or
other Governmental Authority charged with the interpretation or
administration thereof, or (iv) compliance by such Bank (or its Lending
Office) or any corporation controlling such Bank, with any Capital Adequacy
Regulation affects or would affect the amount of capital required or expected
to be maintained by such Bank or any corporation controlling such Bank and
(taking into consideration such Bank's or such corporation's policies with
respect to capital adequacy and such Bank's desired return on capital) such
Bank determines that the amount of such capital is increased as a consequence
of its commitment to extend credit under this Agreement, or loans, advances,
credits or obligations under this Agreement, then, upon demand of such Bank
(with a copy to the Administrative Agent), the Borrower shall upon demand pay
to such Bank, from time to time as specified by such Bank, additional amounts
sufficient to compensate such Bank for such increase. Notwithstanding the
above, the Borrower shall not be required to pay to any Bank any amount under
this subsection 3.03(b) which reflects compensation for such increased
capital requirement which was effective more than 180 days prior to the date
of such demand, unless such increased capital requirement is made retroactive
by such (i) Capital Adequacy Regulation, (ii) change therein, (iii) change in
the interpretation or administration thereof, or (iv) compliance with any
Capital Adequacy Regulation.
(c) Any Bank claiming reimbursement or compensation pursuant
to this Section 3.03 shall deliver to the Borrower (with a copy to the
Administrative Agent) a certificate setting forth in reasonable detail the
amount payable to such Bank under this Section 3.03 and the basis therefor
and such certificate shall be rebuttable presumptive evidence of such amount.
3.04 FUNDING LOSSES. The Borrower agrees to reimburse each Bank and
to hold each Bank harmless from any loss or expense which such Bank may
sustain or incur as a consequence of:
(a) the failure of the Borrower to make any payment or
mandatory prepayment of principal of any LIBO Rate Advance (including
payments made after any acceleration thereof);
- 40 -
(b) the failure of the Borrower to borrow, continue or convert
an Advance after the Borrower has given (or is deemed to have given) a Notice of
Borrowing or a Notice of Conversion/Continuation;
(c) the failure of the Borrower to make any prepayment after
the Borrower has given a notice in accordance with Section 2.08;
(d) the conversion pursuant to Section 2.03(e) or Section 2.06
of any LIBO Rate Advance to a Prime Rate Advance on a day that is not the last
day of the respective Interest Period;
(e) the termination or reduction in the Aggregate Commitment
which is effective, with respect to a LIBO Rate Advance, on a day that is not
the last day of the Interest Period for such LIBO Rate Advance, as provided in
Section 2.07; or
(f) the prepayment (including pursuant to Section 2.08) of a
LIBO Rate Advance on a day which is not the last day of the Interest Period with
respect thereto;
including any such loss or expense arising from the liquidation or
reemployment of funds obtained by it to maintain its LIBO Rate Advances
hereunder or from fees payable to terminate the deposits from which such
funds were obtained, such amount or amounts to include, without limitation,
an amount equal to the excess, if any, of (i) the amount of interest which
would have accrued on the amount so prepaid, not prepaid, not paid, not
borrowed, not continued or converted, or converted at the time of such action
or failure to act for the period from the date of such action or failure to
act to the last day of the then current Interest Period (or, in the case of a
failure to borrow, continue or convert, the Interest Period which would have
commenced on the date of such failure) at the LIBO Rate in effect for such
Interest Period over (ii) the amount of interest which would accrue to such
Bank on such amount by placing such amount on deposit for a comparable period
with leading banks in the London Interbank Market. Such Bank shall deliver
to the Borrower (with a copy to the Administrative Agent) a certificate
setting forth in reasonable detail the amount of such loss, cost or expense
and the basis therefor which shall be rebuttable presumptive evidence of the
amount of such loss, cost or expense. Solely for purposes of calculating
amounts payable by the Borrower to the Banks under this Section 3.04 and
under subsection 3.03(a), each LIBO Rate Advance made by a Bank (and each
related reserve, special deposit or similar requirement) shall be
conclusively deemed to have been funded at the LIBO Rate plus the Applicable
Margin for such LIBO Rate Advance by a matching deposit or other borrowing in
the London Interbank Market for a comparable amount and for a comparable
period, whether or not such LIBO Rate Advance is in fact so funded.
3.05 INABILITY TO DETERMINE RATES. If the Majority Banks shall have
determined that for any reason adequate and reasonable means do not exist for
ascertaining the LIBO Rate for any requested Interest Period with respect to a
proposed LIBO Rate Advance or that the LIBO Rate applicable pursuant to
subsection 2.10(a) for any requested Interest Period with respect to a proposed
LIBO Rate Advance does not adequately and fairly reflect the cost to such Banks
of funding such Advance, the Administrative Agent will forthwith give notice of
such determination to the Borrower and each Bank. Thereafter, the obligation of
the Banks to make or maintain LIBO Rate Advances hereunder shall be suspended
until the Administrative Agent upon the instruction of the Majority
-41-
Banks revokes such notice in writing. Upon receipt of such notice, the
Borrower may revoke any Notice of Borrowing or Notice of
Conversion/Continuation then submitted by it. If the Borrower does not
revoke such notice, the Banks shall make, convert or continue the Advances,
as proposed by the Borrower, in the amount specified in the applicable notice
submitted by the Borrower, but such Advances shall be made, converted or
continued as Prime Rate Advances instead of LIBO Rate Advances.
3.06 SUBSTITUTION OF BANKS. Upon the receipt by the Borrower from
any Bank (an "AFFECTED BANK") of a claim for compensation pursuant to Section
3.01 or Section 3.03, or a notice to the Borrower through the Administrative
Agent under Section 3.02(a), unless the Borrower and the Affected Bank have
reached an agreement or are negotiating toward reaching an agreement relative
to alleviating the impact of such claim for compensation or such notice on
the Borrower, the Borrower may: (i) request one or more of the other Banks
to acquire and assume all or part of such Affected Bank's Advances and
Revolving Commitment, which request may be granted or denied in such Bank's
sole discretion; or (ii) designate a replacement bank or financial
institution (the "Substitute Bank") to acquire and assume all or part of such
Affected Bank's Advances and Revolving Commitment. Any such designation of a
Substitute Bank under clause (ii) shall be subject to the prior written
consent of the Administrative Agent (which consent shall not be unreasonably
withheld). In the event of the replacement of an Affected Bank, such
Affected Bank agrees to assign without recourse its rights and obligations
hereunder to the Substitute Bank upon payment by the Substitute Bank to the
Affected Bank of the principal amount of such Affected Banks's outstanding
Advances and any accrued and unpaid interest thereon, and any other amounts
owed to such Affected Bank and to execute and deliver to the Administrative
Agent an assignment and acceptance in form and substance reasonably
satisfactory to the Administrative Agent and such Affected Bank evidencing
such assignment and the acceptance by the Substitute Bank of such Affected
Bank's obligations hereunder. The designation of a Substitute Bank shall not
affect the Borrower's obligations to such Affected Bank hereunder.
3.07 SURVIVAL. The agreements and obligations of the Borrower in
this Article III shall survive the payment of all other Obligations.
ARTICLE IV
CONDITIONS PRECEDENT
4.01 CONDITIONS TO CLOSING. The obligation of each Bank to make its
Revolving Commitment available to the Borrower hereunder is subject to the
condition that the Administrative Agent shall have received on or before the
Closing Date all of the following, in form and substance satisfactory to the
Administrative Agent and each Bank and in sufficient copies for each Bank:
(a) CREDIT AGREEMENT. This Agreement executed by the
Borrower, the Administrative Agent and each of the Banks.
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(b) OTHER LOAN DOCUMENTS. The Note executed by the
Borrower, in favor of the Administrative Agent, as agent for the Banks, the
Guaranty executed by the Guarantors, the Inter-Bank Agreement executed by the
Banks and the Agents, and all other Loan Documents.
(c) RESOLUTIONS: INCUMBENCY.
(i) Copies of the resolutions of the board of directors
of the Borrower approving and authorizing the execution, delivery and
performance by the Borrower of this Agreement, and the other Loan
Documents to be delivered hereunder by the Borrower, certified as of the
Closing Date by the Secretary or an Assistant Secretary of the Borrower;
and
(ii) Copies of the resolutions of the respective board of
directors of the Guarantors approving and authorizing the execution,
delivery and performance by the Guarantors of the Guaranty, certified as
of the Closing Date by the Secretary or an Assistant Secretary of such
Guarantor; and
(iii) Certificates of the Secretary or Assistant Secretary
of the Borrower and each Guarantor certifying the names and true
signatures of the officers of such entity authorized to execute, deliver
and perform this Agreement, and all other Loan Documents to be delivered
hereunder.
(d) LEGAL OPINION. An opinion of Counsel to the Borrower
and the Guarantors and addressed to the Administrative Agent and the Banks,
substantially in the form of EXHIBIT E.
(e) PAYMENT OF FEES. The Borrower shall have paid all
accrued and unpaid fees, costs and expenses to the extent then due and
payable on the Closing Date, together with fees and disbursements of counsel
for First Hawaiian Bank.
(f) CERTIFICATES. A Borrowing Base Certificate dated June
30, 1999, an initial Leverage Ratio/Interest Coverage Ratio/Base Grid
Certificate, and a compliance certificate signed by a Responsible Officer of
the Borrower, dated as of the Closing Date, stating that:
(i) the representations and warranties contained in
Article V are true and correct on and as of such date, as though made
on and as of such date;
(ii) no Default or Event of Default exists or would
result from the initial Borrowing; and
(iii) there has occurred since June 30, 1999, no event or
circumstance that has resulted or could reasonably be expected to result
in a Material Adverse Effect.
(g) FINANCIAL STATEMENTS. Unaudited consolidated financial
statements of the Borrower and its Subsidiaries as of June 30, 1999.
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(h) CERTIFICATE OF GOOD STANDING. A certificate of good
standing for the Borrower and each Guarantor, issued by the appropriate
agency of the state of incorporation for such entity and, if qualified to do
business in the State of Hawaii, by the Director of the Department of
Commerce and Consumer Affairs of the State of Hawaii, as of no earlier than
August 1, 1999.
(i) TAX CLEARANCE CERTIFICATE. A tax clearance certificate
for the Borrower and each Guarantor, issued as of no earlier than August 1,
1999, by the appropriate agency of the state of incorporation for such entity
and, if qualified to do business in the State of Hawaii, by the Department of
Taxation of the State of Hawaii, certifying that all taxes due to the
respective state by such entity, up to and including the date of such
certificate, have been paid.
(j) OTHER DOCUMENTS. Such other approvals, opinions,
documents or materials as the Administrative Agent or any Bank may reasonably
request.
4.02 CONDITIONS TO ALL BORROWINGS, SWING-LINE BORROWINGS AND
ISSUANCE OF LETTERS OF CREDIT. The obligation of each Bank to make any
Advance hereunder (including its initial Advance), or to continue or convert
any Advance pursuant to section 2.06, or of the Administrative Agent to make
any Swing-Line Advance hereunder, or of the Administrative Agent or the
Issuing Bank to issue any Letter of Credit hereunder, is subject to the
satisfaction of the following conditions precedent on the relevant date
therefor:
(a) NOTICE OF BORROWING OR CONTINUATION/CONVERSION. The
Administrative Agent shall have received a Notice of Borrowing or a Notice of
Swing-Line Borrowing or a Request for Issuance of Letter of Credit or a
Notice of Continuation/Conversion, as applicable;
(b) CONTINUATION OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made by the Borrower herein, and by the
Guarantors in the Guaranty, shall be true and correct on and as of such date,
with the same effect as if made on and as of such date (except to the extent
such representations and warranties expressly refer to an earlier date, in
which case they shall be true and correct as of such earlier date); and
(c) NO EXISTING DEFAULT. No Default or Event of Default
shall exist or shall result from such Borrowing or continuation or conversion.
Each Notice of Borrowing, Notice of Swing-Line Borrowing, Request for
Issuance of Letter of Credit and Notice of Continuation/Conversion submitted
by the Borrower, hereunder shall constitute a representation and warranty by
the Borrower hereunder, as of the applicable effective date thereof, that the
conditions in this Section 4.02 are satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Administrative Agent and each
Bank that:
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5.01 ORGANIZATION, STANDING AND AUTHORITY.
(a) ▇▇▇▇▇▇▇ HOMES, INC.: ▇▇▇▇▇▇▇ Homes, Inc. is a Delaware
corporation, validly existing and in good standing under the laws of the State
of Delaware, is registered to do business and in good standing in the State of
Hawaii, is solvent, and has all requisite corporate power and authority to carry
on the business and to own the property that it now carries on and owns.
▇▇▇▇▇▇▇ Homes, Inc. has all requisite corporate power and authority to execute
and deliver this Agreement and the other Loan Documents and to observe and
perform all of the provisions and conditions thereof. The execution and
delivery of the Loan Documents have been duly authorized by the board of
directors of ▇▇▇▇▇▇▇ Homes, Inc., and no other corporate action of or for such
company is requisite to the execution and delivery of this Agreement and the
other Loan Documents.
(b) ▇▇▇▇▇▇▇ HOMES OF CALIFORNIA, INC.: ▇▇▇▇▇▇▇ Homes of
California, Inc. is a California corporation, validly existing and in good
standing under the laws of the State of California, is solvent, and has all
requisite corporate power and authority to carry on the business and to own the
property that it now carries on and owns. ▇▇▇▇▇▇▇ Homes of California, Inc. has
all requisite corporate power and authority to execute and deliver the Guaranty
and to observe and perform all of the provisions and conditions thereof. The
execution and delivery of the Guaranty have been duly authorized by the board of
directors of ▇▇▇▇▇▇▇ Homes of California, Inc., and no other corporate action of
or for such company is requisite to the execution and delivery of the Guaranty.
(c) ▇▇▇▇▇▇▇ HOMES OF OREGON, INC.: ▇▇▇▇▇▇▇ Homes of Oregon,
Inc. is an Oregon corporation, validly existing and in good standing under the
laws of the State of Oregon, is solvent, and has all requisite corporate power
and authority to carry on the business and to own the property that it now
carries on and owns. ▇▇▇▇▇▇▇ Homes of Oregon, Inc. has all requisite corporate
power and authority to execute and deliver the Guaranty and to observe and
perform all of the provisions and conditions thereof. The execution and
delivery of the Guaranty have been duly authorized by the board of directors of
▇▇▇▇▇▇▇ Homes of Oregon, Inc., and no other corporate action of or for such
company is requisite to the execution and delivery of the Guaranty.
(d) ▇▇▇▇▇▇▇ HOMES OF WASHINGTON, INC.: ▇▇▇▇▇▇▇ Homes of
Washington, Inc. is a Washington corporation, validly existing and in good
standing under the laws of the State of Washington, is solvent, and has all
requisite corporate power and authority to carry on the business and to own the
property that it now carries on and owns. ▇▇▇▇▇▇▇ Homes of Washington, Inc. has
all requisite corporate power and authority to execute and deliver the Guaranty
and to observe and perform all of the provisions and conditions thereof. The
execution and delivery of the Guaranty have been duly authorized by the board of
directors of ▇▇▇▇▇▇▇ Homes of Washington, Inc., and no other corporate action of
or for such company is requisite to the execution and delivery of the Guaranty.
(e) MELODY HOMES, INC.: Melody Homes, Inc. is a Delaware
corporation, validly existing and in good standing under the laws of the State
of Delaware, and the State of Colorado, as applicable, is solvent, and has all
requisite corporate power and authority to carry on the business and to own the
property that it now carries on and owns. Melody Homes, Inc. has all requisite
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corporate power and authority to execute and deliver the Guaranty and to
observe and perform all of the provisions and conditions thereof. The
execution and delivery of the Guaranty have been duly authorized by the board
of directors of Melody Homes, Inc., and no other corporate action of or for
such company is requisite to the execution and delivery of the Guaranty.
(f) ▇▇▇▇▇▇▇ REALTY/MAUI, INC.: ▇▇▇▇▇▇▇ Realty/Maui, Inc. is
a Hawaii corporation, validly existing and in good standing under the laws of
the State of Hawaii, is solvent, and has all requisite corporate power and
authority to carry on the business and to own the property that it now
carries on and owns. ▇▇▇▇▇▇▇ Realty/Maui, Inc. has all requisite corporate
power and authority to execute and deliver the Guaranty and to observe and
perform all of the provisions and conditions thereof. The execution and
delivery of the Guaranty have been duly authorized by the board of directors
of ▇▇▇▇▇▇▇ Realty/Maui, Inc., and no other corporate action of or for such
company is requisite to the execution and delivery of the Guaranty.
(g) ▇▇▇▇▇▇▇ REALTY/OAHU, INC.: ▇▇▇▇▇▇▇ Realty/Oahu, Inc. is
a Hawaii corporation, validly existing and in good standing under the laws of
the State of Hawaii, is solvent, and has all requisite corporate power and
authority to carry on the business and to own the property that it now
carries on and owns. ▇▇▇▇▇▇▇ Realty/Oahu, Inc. has all requisite corporate
power and authority to execute and deliver the Guaranty and to observe and
perform all of the provisions and conditions thereof. The execution and
delivery of the Guaranty have been duly authorized by the board of directors
of ▇▇▇▇▇▇▇ Realty/Oahu, Inc., and no other corporate action of or for such
company is requisite to the execution and delivery of the Guaranty.
(h) LOKELANI CONSTRUCTION CORPORATION: Lokelani
Construction Corporation is a Delaware corporation, validly existing and in
good standing under the laws of the State of Delaware, is registered to do
business and in good standing in the State of Hawaii, is solvent, and has all
requisite corporate power and authority to carry on the business and to own
the property that it now carries on and owns. Lokelani Construction
Corporation has all requisite corporate power and authority to execute and
deliver the Guaranty and to observe and perform all of the provisions and
conditions thereof. The execution and delivery of the Guaranty have been
duly authorized by the board of directors of Lokelani Construction
Corporation, and no other corporate action of or for such company is
requisite to the execution and delivery of the Guaranty.
(i) MELODY MORTGAGE CO.: Melody Mortgage Co. is a Colorado
corporation, validly existing and in good standing under the laws of the
State of Colorado, is solvent, and has all requisite corporate power and
authority to carry on the business and to own the property that it now
carries on and owns. Melody Mortgage Co. has all requisite corporate power
and authority to execute and deliver the Guaranty and to observe and perform
all of the provisions and conditions thereof. The execution and delivery of
the Guaranty have been duly authorized by the board of directors of Melody
Mortgage Co., and no other corporate action of or for such company is
requisite to the execution and delivery of the Guaranty.
(j) SHLR OF WASHINGTON, INC.: SHLR of Washington, Inc. is a
Washington corporation, validly existing and in good standing under the laws
of the State of Washington, is solvent, and has all requisite corporate power
and authority to carry on the business and to own the
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property that it now carries on and owns. SHLR of Washington, Inc. has all
requisite corporate power and authority to execute and deliver the Guaranty
and to observe and perform all of the provisions and conditions thereof. The
execution and delivery of the Guaranty have been duly authorized by the board
of directors of SHLR of Washington, Inc., and no other corporate action of or
for such company is requisite to the execution and delivery of the Guaranty.
(k) SHLR OF UTAH, INC.: SHLR of Utah, Inc. is a Utah
corporation, validly existing and in good standing under the laws of the
State of Utah, is solvent, and has all requisite corporate power and
authority to carry on the business and to own the property that it now
carries on and owns. SHLR of Utah, Inc. has all requisite corporate power and
authority to execute and deliver the Guaranty and to observe and perform all
of the provisions and conditions thereof. The execution and delivery of the
Guaranty have been duly authorized by the board of directors of SHLR of Utah,
Inc., and no other corporate action of or for such company is requisite to
the execution and delivery of the Guaranty.
(l) SHLR OF COLORADO, INC.: SHLR of Colorado, Inc. is a
Colorado corporation, validly existing and in good standing under the laws of
the State of Colorado, is solvent, and has all requisite corporate power and
authority to carry on the business and to own the property that it now
carries on and owns. SHLR of Colorado, Inc. has all requisite corporate
power and authority to execute and deliver the Guaranty and to observe and
perform all of the provisions and conditions thereof. The execution and
delivery of the Guaranty have been duly authorized by the board of directors
of SHLR of Colorado, Inc., and no other corporate action of or for such
company is requisite to the execution and delivery of the Guaranty.
(m) SSHI LLC: SSHI LLC is a Delaware limited liability
company, validly existing and in good standing under the laws of the State of
Delaware, is solvent, and has all requisite limited liability company power
and authority to carry on the business and to own the property that it now
carries on and owns. SSHI LLC has all requisite limited liability company
power and authority to execute and deliver the Guaranty and to observe and
perform all of the provisions and conditions thereof. The execution and
delivery of the Guaranty have been duly authorized by the members of SSHI
LLC, and no other company action of or for such company is requisite to the
execution and delivery of the Guaranty.
(n) SHLR OF NEVADA, INC.: SHLR of Nevada, Inc. is a Nevada
corporation, validly existing and in good standing under the laws of the
State of Nevada, is solvent, and has all requisite corporate power and
authority to carry on the business and to own the property that it now
carries on and owns. SHLR of Nevada, Inc. has all requisite corporate power
and authority to execute and deliver the Guaranty and to observe and perform
all of the provisions and conditions thereof. The execution and delivery of
the Guaranty have been duly authorized by the board of directors of SHLR of
Nevada, Inc., and no other corporate action of or for such company is
requisite to the execution and delivery of the Guaranty.
(o) SRHI LLC: SRHI LLC is a Delaware limited liability
company, validly existing and in good standing under the laws of the State of
Delaware, is solvent, and has all requisite limited liability company power
and authority to carry on the business and to own the property that it now
carries on and owns. SRHI LLC has all requisite limited liability company
power and authority to
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execute and deliver the Guaranty and to observe and perform all of the
provisions and conditions thereof. The execution and delivery of the
Guaranty have been duly authorized by the members of SRHI LLC, and no other
company action of or for such company is requisite to the execution and
delivery of the Guaranty.
5.02 TAX RETURNS AND PAYMENTS. All material tax returns and reports
of the Borrower and its Subsidiaries required by law to be filed have been
duly filed, and all taxes, assessments, contributions, fees and other
governmental charges the liability for which could exceed $100,000 (other
than those presently payable without penalty or interest and those which have
been disclosed to the Banks but which are currently being contested in good
faith) upon the Borrower or any of its Subsidiaries or upon the properties or
assets or income of the Borrower or its Subsidiaries, which are due and
payable, have been paid.
5.03 LITIGATION. There is, to the knowledge of the Borrower, no
action, suit, proceeding or investigation pending at law or in equity or
before any Governmental Authority, or threatened against or affecting the
Borrower or its Subsidiaries, an adverse ruling in which would or might
constitute a Material Adverse Effect.
5.04 COMPLIANCE WITH OTHER INSTRUMENTS, NONE BURDENSOME. Neither
the Borrower nor any of its Subsidiaries are in violation of or in default
with respect to any term or provision of its Articles of Incorporation or
Bylaws, and neither the Borrower or any of its Subsidiaries is, to the best
knowledge of the Borrower, in violation of or in default with respect to any
term or provision of any mortgage, indenture, contract, agreement or
instrument applicable to it or by which it may be bound; and the execution,
delivery, performance of and compliance with each and all of the Loan
Documents by the Borrower and the Guaranty by the Subsidiaries will not
result in any such violation, or be in conflict with or constitute a default
under any such term or provision, or result in the creation of any mortgage,
lien or charge on any of the properties or assets of the Borrower or its
Subsidiaries; and there is no term or provision of the Borrower's or any
Subsidiaries' Articles of Incorporation or Bylaws, or any mortgage,
indenture, contract, agreement or instrument applicable to the Borrower or
its Subsidiaries or by which the Borrower or any Subsidiary may be bound,
which may adversely affect the business or prospects or condition (financial
or other) of the Borrower, any of its Subsidiaries, or any of their
respective properties or assets.
5.05 COMPLIANCE WITH LAW. The consummation of the transactions
contemplated by the Loan Documents will not conflict with or result in a
breach of any law, statute, ordinance, regulation, order, writ, injunction,
judgment of any court or governmental instrumentality, domestic or foreign,
applicable to the Borrower or its Subsidiaries.
5.06 GOVERNMENTAL AUTHORIZATION. No consent, approval or
authorization of, or registration, declaration or filing with, any
Governmental Authority in connection with the valid execution and delivery of
each of the Loan Documents is required or, if required, such consent,
approval, order or authorization shall have been obtained prior to the
Closing Date.
5.07 FINANCIAL STATEMENTS. All financial statements heretofore
delivered to the Banks by the Borrower and its Subsidiaries are true and
correct in all respects, and fairly represent the financial
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condition of the subjects thereof as of the dates thereof; and no material,
adverse changes have occurred in the financial condition reflected therein
since the dates thereof.
5.08 BROKERS, FINDERS AND AGENTS. The Borrower has not employed or
engaged any broker, finder or agent who may claim a commission or fee or
other compensation with respect to the Aggregate Commitment or the
transactions described herein. Without in any way limiting the generality of
Section 10.05 of this Agreement, the Borrower will indemnify and hold each
Bank harmless from any and all claims of brokers or other claims for
commissions or fees in connection with the Aggregate Commitment and the
transactions described herein, and will further hold each Bank harmless and
indemnify each Bank against all losses, damages, costs and charges (including
attorneys' fees) which such Bank may sustain because of such claims or in
consequence of defending against such claims.
5.09 COMPLIANCE WITH FUNDING STANDARDS. The Borrower and each
Subsidiary has fulfilled its obligations under the minimum funding standards
of ERISA and the Code with respect to each Plan in which it is a member and
is in compliance in all material respects with the currently applicable
provisions of ERISA and the Code, and has not incurred any liability to the
PBGC.
5.10 USE OF PROCEEDS; MARGIN REGULATIONS. The proceeds of the
Advances are intended to be and shall be used solely for the purposes set
forth in and permitted by this Agreement, and are intended to be and shall be
used in compliance with Section 7.01. Neither the Borrower nor any of its
Subsidiaries is generally engaged in the business of purchasing or selling
Margin Stock or extending credit for the purpose of purchasing or carrying
Margin Stock.
5.11 NO MATERIAL ADVERSE EFFECT. Since the Closing Date, there has
been no Material Adverse Effect.
5.12 REGULATED ENTITIES. None of the Borrower, any Subsidiary of
the Borrower or any Person controlling the Borrower or any of its
Subsidiaries is (a) an "Investment Company" within the meaning of the
Investment Company Act of 1940; or (b) subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, any state public
utilities code, or any other Federal or state statute or regulation limiting
its ability to incur Indebtedness.
5.13 FULL DISCLOSURE. None of the representations or warranties
made by the Borrower or any of its Subsidiaries in the Loan Documents as of
the date such representations and warranties are made or deemed made, and
none of the statements contained in each exhibit, report, statement or
certificate furnished by or on behalf of the Borrower or any of its
Subsidiaries in connection with the Loan Documents (including the offering
and disclosure materials delivered by or on behalf of the Borrower to the
Banks prior to the Closing Date), contains any untrue statement of a material
fact or omits any material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which
they are made, not misleading as of the time when made or delivered.
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ARTICLE VI
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, so long as any Bank shall have
any commitment to extend credit hereunder, or any Advance, Swing-Line
Advance, or Letter of Credit shall remain unpaid or unsatisfied, unless the
Majority Banks waive compliance in writing:
6.01 FINANCIAL STATEMENTS. The Borrower shall deliver to the
Administrative Agent in form and detail satisfactory to the Administrative
Agent and the Majority Banks, with sufficient copies for each Bank:
(a) as soon as available, but not later than ninety (90)
days after the end of each fiscal year, (i) a copy of the Borrower's annual
10-K Report filed with the Securities and Exchange Commission, which includes
a copy of the audited consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such year and the related consolidated
statements of income, shareholders' equity and cash flows for such fiscal
year, setting forth in each case in comparative form the figures for the
previous fiscal year, and accompanied by the opinion of a
nationally-recognized independent public accounting firm which report shall
state that such consolidated financial statements represent fairly the
financial position and results of operations as of the end of and for the
periods indicated in conformity with GAAP applied on a basis consistent with
prior years, (such opinion shall not be qualified or limited because of a
restricted or limited examination by such accountant of any material portion
of the records of the Borrower or its Subsidiaries); and (ii) a copy of the
consolidating reports of the Borrower and all of its Subsidiaries;
(b) as soon as available, but not later than forty-five (45)
days after the end of each Quarter, (i) a copy of the Borrower's quarterly
10-Q Report filed with the Securities and Exchange Commission, which includes
a copy of the unaudited consolidated balance sheets of the Borrower and its
Subsidiaries as of the end of such Quarter and the related consolidated
statements of income, shareholders' equity and cash flows for the period
commencing on the first day and ending on the last day of such Quarter, and
certified by an appropriate Responsible Officer of the Borrower as being
complete and correct and fairly presenting, in accordance with Article 10 of
SEC Regulation S-X, the consolidated financial position and the consolidated
results of operations of the Borrower and its Subsidiaries; and (ii) a copy
of the consolidating reports of the Borrower and all of its Subsidiaries;
(c) not later than five (5) days after the filing thereof,
copies of all reports and registration statements which the Borrower files
with the Securities and Exchange Commission or any national securities
exchange.
6.02 CERTIFICATES; OTHER INFORMATION The Borrower shall furnish to
the Administrative Agent, with sufficient copies for each Bank:
(a) not later than forty-five (45) days after the end of
each Quarter, a certificate of a Responsible Officer of the Borrower, in the
form of EXHIBIT F-1 stating that, to the best of such
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officer's knowledge, the Borrower and its Subsidiaries during such period,
have observed and performed all of their covenants and other agreements, and
satisfied every condition contained in this Agreement to be observed,
performed or satisfied by the Borrower and its Subsidiaries and that such
officer has obtained no knowledge of any Default or Event of Default except
as specified in such certificate, which, where a Default or Event of Default
is specified, shall set forth the details of the occurrence referred to
therein, state what action the Borrower or its Subsidiaries propose to take
with respect thereto and at what time, and describe with particularity any
and all applicable clauses or provisions of this Agreement which have been
breached or violated, together with a calculation of (i) the percentage of
common stock in the Borrower owned by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as of the end of such
Quarter, (ii) the minimum Consolidated Tangible Net Worth of the Borrower and
its Subsidiaries as of the end of such Quarter, (iii) the Consolidated Net
Earnings for the Borrower and its Subsidiaries during such Quarter, (iv) the
amount of and net proceeds received from any Equity Offering (other than the
exercise of an employee stock option) or conversion of a subordinated
convertible debenture consummated or effected during such Quarter, and (v) Real
Estate Development Assets, Real Estate Indebtedness, and the Development
Ratio for the Borrower and its Subsidiaries as of the end of such Quarter,
and showing for each item (i) through (v) above, the comparison between such
Quarter and previous Quarters (beginning with the Quarter ending June 30,
1999).
(b) not later than forty-five (45) days after the end of each
Quarter a certificate of a Responsible Officer of the Borrower, in the form
of EXHIBIT F-2 for each project in which the Borrower or any of its
Subsidiaries has an investment, relating to the status of all Unentitled Land
(location, purchase price, number of lots and entitlement schedule),
Unimproved Land (location, number of lots and development schedule), and Land
Under Development (location and status of development), as of the end of the
previous Quarter.
(c) not later than fifteen (15) days after the end of each
month, provided, however, that if the end of such month is also the end of a
Quarter, then not later than twenty-five (25) days after the end of such
month, a certificate of a Responsible Officer of the Borrower, in the form of
EXHIBIT F-3 for each project in which the Borrower or any of its Subsidiaries
has an investment, relating to the status of all Unsold Homes Under
Construction (location and number of homes), Completed Unsold Homes (location
and number of homes), Completed Unsold Homes Over 180 Days (location and
number of homes), and Contracted Homes (location, number of homes and status
of sales), as of the end of the previous month.
(d) not later than fifteen (15) days after the end of each
month, provided, however, that if the end of such month is also the end of a
Quarter, then not later than twenty-five (25) days after the end of such
month, a Borrowing Base Certificate of a Responsible Officer of the Borrower,
in the form of EXHIBIT F-4, containing a detailed listing and a summary of
all Real Estate Development Assets, as of the end of the previous month.
(e) not later than forty-five (45) days after the end of each
Quarter, a Leverage Ratio/Interest Coverage Ratio/Base Grid Certificate of a
Responsible Office of the Borrower, in the form of EXHIBIT F-5, containing a
calculation of the total Indebtedness of the Borrower and its Subsidiaries,
and the Consolidated Tangible Net Worth of the Borrower and its Subsidiaries,
as of
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the end of the previous Quarter, based on balance sheet information prepared
in accordance with GAAP.
(f) as soon as available, but not later than ninety (90) days
after the end of each fiscal year, a projected consolidated balance sheet of
the Borrower and its Subsidiaries for the next three (3) fiscal years,
prepared on a Quarterly basis, and the related projected consolidated
statements of income, shareholders' equity and cash flows for such fiscal
years, setting forth in each case in comparative form the figures for the
previous fiscal year (whether such figures for such previous fiscal year were
actual or projected).
(g) promptly, such additional business, financial, corporate
affairs and other information as the Administrative Agent, at the request of
any Bank, may from time to time reasonably request.
6.03 NOTICES. The Borrower shall promptly notify each Bank through
the Administrative Agent:
(a) (i) of the occurrence of any Default or Event of Default,
(ii) of the occurrence or existence of any event or circumstance that
foreseeably is likely to become a Default or Event of Default, and (iii) of
the occurrence or existence of any event or circumstance that would cause the
condition to Borrowing, conversion or continuation set forth in subsection
4.02(b) not to be satisfied if a Borrowing, conversion or continuation were
requested on or after the date of such event or circumstance;
(b) of any breach or non-performance of, or any default under,
any contractual obligation (including a contractual obligation by which any
of its property is bound) of the Borrower or any of its Subsidiary which
could result in a Material Adverse Effect;
(c) of the commencement of, or any material development in,
any litigation or proceeding affecting the Borrower or any of its Subsidiary
which, if adversely determined, would reasonably be expected to have a
Material Adverse Effect; or in which the relief sought is an injunction or
other stay of the performance of this Agreement; and
(d) of any Material Adverse Effect subsequent to the date of
the most recent audited financial statements of the Borrower delivered to the
Banks pursuant to this Agreement;
Each notice pursuant to this Section shall be accompanied by a
written statement by a Responsible Officer of the Borrower setting forth
details of the occurrence referred to therein, and stating what action the
Borrower proposes to take with respect thereto and at what time. Each notice
under subsection 6.03(a) shall describe with particularity any and all
clauses or provisions of this Agreement that have been breached or violated.
6.04 PAYMENT OF OBLIGATIONS. The Borrower shall, and shall cause
its Subsidiaries to, pay and discharge as the same shall become due and
payable, all their respective obligations and liabilities, including:
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(a) all tax liabilities, assessments and governmental charges
or levies upon it or its properties or assets, unless the same are being
contested in good faith by appropriate proceedings and adequate reserves in
accordance with GAAP are being maintained by the Borrower or such Subsidiary;
(b) all lawful claims which, if unpaid, would by law become a
lien upon its property; and
(c) all Indebtedness, as and when due and payable, but subject
to the restrictions contained in Section 7.05 of this Agreement.
6.05 COMPLIANCE WITH LAWS. The Borrower shall comply, and shall
cause each of its Subsidiaries to comply, in all material respects with all
Requirements of Law of any Governmental Authority having jurisdiction over
them or their business (including the Federal Fair Labor Standards Act), the
breach of which would have a Material Adverse Effect, except such as may be
contested in good faith or as to which a bona fide dispute may exist.
6.06 INSPECTION OF PROPERTY AND BOOKS AND PROCEEDS. The Borrower
shall maintain and shall cause each of its Subsidiaries to maintain books,
accounts, and records in accordance with GAAP and permit employees or agents
of the Administrative Agent and any Bank, at any reasonable time, to inspect
their properties, and permit employees or agents of the Administrative Agent
and any Bank, at any reasonable time, once per Quarter, to examine and audit
their books, accounts, and records and make copies and memoranda thereof, at
such Bank's expense, at such reasonable times during normal business hours,
upon reasonable advance notice to the Borrower; PROVIDED, HOWEVER, when an
Event of Default exists the Administrative Agent or any Bank may do any of
the foregoing at the expense of the Borrower at any time during normal
business hours and without advance notice.
6.07 MINIMUM TANGIBLE NET WORTH. The Borrower shall maintain the
Consolidated Tangible Net Worth, as at the end of each Quarter, at a level
equal to or greater than (a) $138,000,000, plus (b) fifty percent (50%) of
Consolidated Net Earnings cumulative since January 1, 1998, provided that in
no event shall such amount be decreased as a result of any losses sustained
after such date, plus (c) ninety percent (90%) of net proceeds received from
any Equity Offering, and from any conversion of a subordinated convertible
debenture, consummated or effected after the Closing Date.
6.08 PRESERVATION OF CORPORATE EXISTENCE. The Borrower shall, and
shall cause each Subsidiary to, maintain its corporate existence in good
standing under the laws of the jurisdiction in which it is incorporated and
in which it conducts business, and shall not, without the prior written
consent of the Majority Banks, make any material amendment to, or
modification of, or terminate, its constituent documents, true and correct
copies of which the Borrower represents have been provided to the Banks.
6.09 APPRAISAL. Independent FIRREA appraisals may be requested from
the Borrower, and the Borrower shall provide such appraisals, if required to
conform with FDICIA guidelines or other banking laws, rules or regulations.
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6.10 [RESERVED]
6.11 QUARTERLY MEETINGS. The Borrower shall meet quarterly with the
Banks, either in person or by telephone conference call, on such dates and at
such times as may be mutually agreeable, provided, however, that such meeting
shall held no later than forty-five (45) days after the end of each Quarter,
to discuss the progress of the Borrower in comparison to the Business Plan.
6.12 SUBSIDIARIES. Each Subsidiary of the Borrower shall
unconditionally and jointly and severally guarantee the obligations of the
Borrower under the Loan Documents pursuant to the Guaranty. The guarantee
obligations of each Guarantor will be a Permitted Indebtedness and senior to
all Subordinated Debt, but PARI PASSU with any guaranties of such Subsidiary
provided in support of the Senior Notes. To the extent that the Borrower or
its Subsidiaries are permitted under this Agreement to incorporate or
otherwise form new Subsidiaries, the Borrower agrees that such new Subsidiary
shall be added as a Guarantor under this Agreement and the Guaranty, and
shall execute such Guaranty; provided, however, that the Captive Insurance
Subsidiary shall not be subject to this section.
6.13 YEAR 2000 COVENANT. The Borrower shall reasonably take
appropriate actions to ensure that the Borrower and its Subsidiaries are Year
2000 Compliant in a timely manner, but in no event later than November 30,
1999, except to the extent that the failure to be Year 2000 Compliant could
not reasonably be expected to have a material adverse effect on the
Borrower's or its Subsidiaries' business and operations or to have a material
adverse economic impact upon the Borrower or its Subsidiaries. The term
"Year 2000 Compliant" shall mean, in regard to any property or entity, that
all software, hardware, equipment, goods or systems utilized by or material
to the physical operations, business operations, or financial reporting of
such property or entity (collectively, the "Systems") will properly perform
date sensitive functions before, during and after the year 2000. In
furtherance of this covenant, the Borrower, in addition to any other
necessary actions, shall perform a comprehensive review and assessment of all
material Systems of the Borrower and its Subsidiaries, and shall adopt a
detailed plan, with itemized budget, for the testing, remediation, and
monitoring of such Systems. In addition, the Borrower shall make reasonable
inquiries of and request reasonable validation that each of the following are
similarly Year 2000 Compliant: (a) all major tenants or other major entities
from which the Borrower or its Subsidiaries receives payments; and (b) all
major contractors, suppliers, service providers and vendors of the Borrower
and/or its Subsidiaries. As used in the previous sentence, "major" shall
mean entities the failure of which to be Year 2000 Compliant would have a
material adverse effect on the Borrower's or its Subsidiaries' business and
operations, or a material adverse economic impact upon the Borrower or its
Subsidiaries. The Borrower, within thirty business days of the
Administrative Agent's written request, shall provide to the Administrative
Agent such certifications or other evidence of the Borrower's compliance with
the terms of this paragraph as the Administrative Agent may from time to time
reasonably require.
ARTICLE VII
NEGATIVE COVENANTS
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The Borrower hereby covenants and agrees that, so long as any Bank
shall have any commitment to extend credit hereunder, or any Advance,
Swing-Line Advance, or Letter of Credit shall remain unpaid or unsatisfied,
unless the Majority Banks waive compliance in writing:
7.01 USE OF PROCEEDS. The Borrower shall not and shall not suffer
or permit any of its Subsidiaries to use any portion of the proceeds of any
Advance, directly or indirectly, (i) to purchase or carry Margin Stock,
(ii) to repay or otherwise refinance indebtedness of the Borrower or others
incurred to purchase or carry Margin Stock, (iii) to extend credit for the
purpose of purchasing or carrying any Margin Stock, or (iv) to acquire any
security in any transaction that is subject to Section 13 or 14 of the
Securities Exchange Act of 1934 and regulations promulgated under such act.
7.02 LEVERAGE RATIO.
(a) Subject to the Base Grid as provided in subsection 7.02(b),
the Borrower shall not, and shall not permit its Subsidiaries to, allow the
Leverage Ratio, measured as of the end of the Quarter ending September 30,
1999, and as of the end of each Quarter thereafter, to exceed 1.60 to 1.
(b) Notwithstanding the requirements of the Leverage Ratio
provided hereinabove and the Interest Coverage Ratio provided in Section 7.04,
the Borrower shall not, and shall not permit its Subsidiaries to, exceed the
Base Grid parameters as provided below:
(i) if the Interest Coverage Ratio is greater than or
equal to 1.75 to 1, but less than 2.00 to 1, then the Leverage
Ratio shall be less than or equal to 1.35 to 1;
(ii) if the Interest Coverage Ratio is greater than or
equal to 2.00 to 1, but less than 2.50 to 1, then the Leverage
Ratio shall be less than or equal to 1.50 to 1; and
(iii) if the Interest Coverage Ratio is greater than or
equal to 2.50 to 1, then the Leverage Ratio shall be less than or
equal to 1.60 to 1.
The Borrower shall have the option to exceed the Base Grid
parameters for two consecutive Quarters (the "Carve-Out Period") upon written
notice to the Administrative Agent, provided the following conditions are
satisfied:
(1) during the Carve-Out Period, the Borrower shall
not, and shall not permit its Subsidiaries to, allow the Interest Coverage
Ratio to be less than 1.75 to 1;
(2) during the Carve-Out Period, the Borrower shall
not, and shall not permit its Subsidiaries to, allow the Leverage Ratio to
exceed 1.60 to 1;
(3) the Administrative Agent and the Majority Banks
shall have approved the Borrower's financial statements, certificates (as
required by Sections 6.01 and 6.02), demonstrating the Borrower's compliance
with all other financial covenants contained in Section 7.02 for the
Carve-Out Period, and the Borrower's plan to return to compliance with the
Base Grid parameters; and
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(4) the Borrower shall be in compliance with the Base
Grid parameters at the end of the Carve-Out Period.
If the Borrower exercises this option, the Borrower shall be
required to maintain compliance with the Base Grid parameters for a period of
at least four consecutive Quarters before it may be permitted to exercise the
option again.
7.03 DEVELOPMENT RATIO. The Borrower shall not, and shall not
permit its Subsidiaries to, allow the Development Ratio, measured as of the
end of each Quarter, to be less than 1.50 to 1.
7.04 INTEREST COVERAGE RATIO. Subject to the Base Grid as provided
in Section 7.02(b) the Borrower shall not, and shall not permit its
Subsidiaries to, allow the Interest Coverage Ratio, measured as of the end of
each Quarter on a rolling four (4) Quarters basis, to be less than 1.75 to 1.
7.05 NO REPAYMENT OF SUBORDINATED DEBT. The Borrower shall not
repay or permit any of its Subsidiaries to repay any of the Subordinated
Debt, without the prior written consent of the Banks, which consent may be
withheld in the sole discretion of any Bank.
7.06 ADDITIONAL INDEBTEDNESS. The Borrower shall not, and shall not
permit any of its Subsidiaries to, create, assume, or become or remain liable
for or committed to incur, directly or indirectly, any Indebtedness or
Guaranty Obligation in excess of an aggregate amount of $10,000,000, other
than the Permitted Indebtedness.
7.07 ADDITIONAL INVESTMENTS AND ACQUISITIONS. The Borrower shall
not, and shall not permit any of its Subsidiaries to, except as provided
below, directly or indirectly, invest in, purchase or acquire any interest in
real property (fee or leasehold) or any stocks, bonds, notes, debentures or
other securities of or acquire by purchase or otherwise all or substantially
all of the business or assets, or stock, partnership interests or other
evidence of ownership (beneficial or otherwise) or make any other investment
in, any corporation, association, partnership, organization or individual; or
directly or indirectly, make or commit to make any loan, advance, guaranty or
extension of credit to any corporation, association, partnership,
organization or individual; or directly or indirectly, assume, endorse, be or
become liable for, or guarantee directly or indirectly any debt or obligation
of any corporation, association, partnership, organization or individual;
PROVIDED HOWEVER, that notwithstanding the foregoing, the Borrower and its
Subsidiaries may:
(a) make other real estate investments or acquisitions, not in
contravention of any provision of this Agreement or any Requirement of Law;
provided, however, the Borrower shall notify the Banks and the Agents of such
investments or acquisitions in states where the Borrower is currently not
operating no later than forty-five (45) days after each Quarter.
(b) make other investments in an amount which shall not exceed
$2,000,000 in a Captive Insurance Subsidiary;
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(c) make any other Permitted Investment, without the necessity
of obtaining the consent of the Majority Banks; and
(d) make such guaranties as may be necessary in support of the
Senior Notes.
If the Borrower wishes to obtain the consent of the Majority Banks for any
proposed deviation from the above, the Borrower shall furnish to the
Administrative Agent, and the Administrative Agent shall forward to the Banks:
(i) a copy of all contracts to be entered into by the Borrower or its
Subsidiaries with respect to the proposed transaction, (ii) a pro forma budget
and cash flow projection for the proposed transaction, (iii) supporting
market studies and projections as deemed necessary by the Majority Banks, and
(iv) supporting appraisals and/or market evaluations, if required by the
Majority Banks. The Administrative Agent shall advise the Borrower of the
decision by the Majority Banks within thirty (30) days after the receipt by
the Administrative Agent of all of the required items described above.
7.08 INVENTORY RESTRICTIONS.
(a) The Borrower shall not, and shall not permit any of its
Subsidiaries to, acquire or obtain any interest in, or contract to acquire or
obtain any interest in, any Unentitled Land.
(b) The Borrower shall not, and shall any permit any of its
Subsidiaries to, allow their inventory of Completed Unsold Homes to exceed
the applicable levels set forth in SCHEDULE 2 attached hereto.
(c) The Borrower shall not, and shall not permit any of its
Subsidiaries to, allow its inventory of Unimproved Land to exceed 35% of the
GAAP consolidated net book value of "Real Estate Inventories" in the
consolidated financial statements of the Borrower and its Subsidiaries, the
balance of which is included in the Borrowing Base calculation, as of the end
of each month.
7.09 NEGATIVE PLEDGE. The Borrower and/or any of its Subsidiaries
shall not create, incur, assume, or suffer to exist any lien, encumbrance,
mortgage, security interest, pledge, or charge of any kind (including.
without limitation, any negative pledge, or any "secret", "springing", or
other unrecorded lien) upon any of their property or assets of any character,
whether now owned or hereafter acquired, or transfer any of such property or
assets for the purpose of subjecting the same to the payment of any
indebtedness or performance of any other obligation, or acquire or have an
option to acquire any property or assets upon conditional sale or other title
retention agreement, device or arrangement; provided, however, that the
Borrower and its Subsidiaries may create or incur or suffer to be created or
incurred or to exist: (i) liens for taxes or assessments for governmental
charges or levies if payment thereof shall not at the time be required to be
made; (ii) liens in respect of pledges and deposits under workers'
compensation laws or similar legislation, and in respect of pledges or
deposits in connection with appeal or similar bonds incidental to the conduct
of litigation; (iii) liens incidental to the conduct of the business of the
Borrower and its Subsidiaries not incurred in connection with the borrowing
of money or the obtaining of advances or credit and which do not in the
aggregate materially detract from the value of their assets or property;
(iv) mechanics' and materialmen's liens which have attached pursuant to
Chapter 507, Hawaii Revised Statutes, or such
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similar statutes under the laws of the applicable state, as long as the
Borrower or its Subsidiaries have filed a bond, sufficient to discharge such
lien, with the clerk of the applicable court, as provided in Section 507-43,
Hawaii Revised Statutes, or such similar statutes under the laws of the
applicable state; and (v) liens specifically allowed with respect to
"Permitted Indebtedness". This negative pledge shall not apply to any
portion of the Borrower's or any of its Subsidiaries' property or assets
transferred, assigned or conveyed upon due consideration to a "Third Party
Purchaser". As used herein, the term "Third Party Purchaser" shall mean any
individual, partnership, corporation, business trust, joint stock company,
trust, unincorporated association, joint venture or governmental authority,
other than the Borrower or any of its Subsidiaries, Waiakoa Estates
Subdivision Joint Venture, Iao Partners, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇▇▇ ▇. Goth, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ or ▇▇▇ ▇▇▇▇▇.
7.10 NO HIGH-RISE CONSTRUCTION. The Borrower shall not, and shall
not permit its Subsidiaries to, engage in any development of a residential or
commercial building having more than four (4) stories, other than Country
Club Village.
7.11 TRANSFER OF ASSETS TO CAPTIVE INSURANCE SUBSIDIARY. Except as
may be permitted in Section 7.07, the Borrower or any of its Subsidiaries
shall not transfer any assets or property to any of the Borrower's
Subsidiaries, without the prior written consent of the Banks, which consent
may be withheld by the Banks in their sole discretion.
ARTICLE VIII
EVENTS OF DEFAULT
8.01 EVENT OF DEFAULT. Any of the following shall constitute an
"Event of Default":
(a) NON-PAYMENT. The Borrower fails to pay, when and as
required to be paid herein, (i) any amount of principal of any Advance or
Swing-Line Advance; or (ii) any interest, fee or other amount payable
hereunder or pursuant to any other Loan Document, unless such failure to pay
such interest, fee or other charge is remedied within five (5) Business Days
after the due date therefor; or
(b) REPRESENTATION OR WARRANTY. Any representation or
warranty by the Borrower made or deemed made herein or which is contained in
any certificate, document or financial or other statement by or on behalf of
the Borrower, furnished at any time under this Agreement, shall prove to have
been incorrect in any material respect on or as of the date made or deemed
made; or
(c) SPECIFIC DEFAULTS. The Borrower fails to perform or
observe any term, covenant or agreement contained in Section 7.01; or
(d) OTHER DEFAULTS. Except as provided in subsection 8.01(l)
below, the Borrower fails to perform or observe any other covenant contained
in this Agreement or any other Loan Document, and such default shall continue
unremedied for a period of 45 days after the earlier of (i)
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the date upon which a Responsible Officer of the Borrower knew of such
failure or (ii) the date upon which written notice thereof is given to the
Borrower by the Administrative Agent or any Bank; or
(e) CROSS-DEFAULT. The Borrower or any Subsidiary of the
Borrower (i) fails to make any payment in respect of any other Indebtedness
or Guaranty Obligation having an aggregate principal amount for the Borrower
and such Subsidiaries (including undrawn committed or available amounts and
including amounts owing to all creditors under any combined or syndicate
credit arrangement) of more than $5,000,000 when due (whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise), if the
effect of such failure is to cause the holder or holders of such Indebtedness
or beneficiary or beneficiaries of such Indebtedness (or a trustee or agent
on behalf of such holder or holders or beneficiary or beneficiaries) to
declare such Indebtedness to be due and payable prior to its stated maturity,
or such Guaranty Obligation to become due and payable or to demand additional
collateral therefor; or (ii) fails to perform or observe in any material
respect any other condition or covenant, or any other event shall occur or
condition exist, under any agreement or instrument relating to any
Indebtedness or Guaranty Obligation, if the effect of such failure is to
cause the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Indebtedness (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to declare such
Indebtedness to be due and payable prior to its stated maturity, or such
Guaranty Obligation to become due and payable or to demand additional
collateral therefor; or (iii) fails to make any payment in respect of or
perform or observe in any material respect any other condition or covenant of
the Senior Notes, if the effect is an event of default under the Senior
Notes; or
(f) INSOLVENCY; VOLUNTARY PROCEEDINGS. The Borrower or any
of its Subsidiaries (i) ceases or fails to be Solvent, or generally fails to
pay, or admits in writing its inability to pay, its debts as they become due,
subject to applicable grace periods, if any, whether at stated maturity or
otherwise; (ii) voluntarily ceases to conduct its business in the ordinary
course, except, in connection with a merger or acquisition of substantially
all of the assets of such Subsidiary by the Borrower or another Subsidiary of
the Borrower; (iii) commences any Insolvency Proceeding with respect to
itself; or (iv) takes any action to effectuate or authorize any of the
foregoing; or
(g) INVOLUNTARY PROCEEDINGS. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Borrower or any of its
Subsidiaries, or any writ, judgment, warrant of attachment, execution or
similar process, is issued or levied against a substantial part of such
party's properties, and any such proceeding or petition shall not be
dismissed, or such writ, judgment, warrant of attachment, execution or
similar process shall not be released, vacated or fully bonded within 60 days
after commencement, filing or levy; (ii) the Borrower or any of its
Subsidiaries admits the material allegations of a petition against it in any
Insolvency Proceeding, or an order for relief (or similar order under
non-U.S. law) is ordered in any Insolvency Proceeding; or (iii) the Borrower
or any of its Subsidiaries acquiesces in the appointment of a receiver,
trustee, custodian, conservator, liquidator, mortgagee in possession (or
agent therefor), or other similar Person for itself or a substantial portion
of its property or business; or
(h) ERISA.
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(i) there shall exist an accumulated funding deficiency
(as defined in Section 302 of ERISA and Section 412 of the Code), whether
or not waived, with respect to any Plan (other than a Multi-employer
Plan) which does or would be reasonably expected to have a Material
Adverse Effect;
(ii) there shall occur a Reportable Event with respect to
any Plan (other than a Multi-employer Plan) which does or would be
reasonably expected to have a Material Adverse Effect;
(iii) any liability to the PBGC shall be incurred by the
Borrower or any of its Subsidiaries with respect to any Plan (other than
a Multi-employer Plan) which does or would be reasonably expected to have
a Material Adverse Effect;
(iv) The Borrower or any of its Subsidiaries shall incur
any withdrawal liability under Title IV of ERISA with respect to any
Multi-employer Plan which does or would be reasonably expected to have a
Material Adverse Effect; or
(i) MONETARY JUDGMENTS. One or more non-interlocutory
judgments, orders or decrees shall be entered against the Borrower or any of
its Subsidiaries involving in the aggregate (existing at any one time for
such entity) a liability (not fully covered by independent third-party
insurance) as to any single or related series of transactions, incidents or
conditions, of $5,000,000 or more, and the same shall remain unsatisfied,
unvacated, unbonded or unstayed pending appeal for a period of 60 days after
the entry thereof; or
(j) NON-MONETARY JUDGMENTS. Any non-monetary judgment,
order or decree shall be rendered against the Borrower or any of its
Subsidiaries which does or would reasonably be expected to have a Material
Adverse Effect, and there shall be any period of 10 consecutive days during
which a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; or
(k) LOSS OF LICENSES. Any Governmental Authority shall
revoke or fail to renew any license, permit or franchise of the Borrower or
any Subsidiary of the Borrower, which revocation or failure to renew does or
would reasonably be expected to have a Material Adverse Effect, or any such
entity shall for any reason lose any license, permit or franchise, and such
loss does or would reasonably be expected to have a Material Adverse Effect;
or any such entity shall suffer the imposition of any restraining order,
escrow, suspension or impound of funds in connection with any proceeding
(judicial or administrative) with respect to any license, permit or franchise
and such imposition does or would reasonably be expected to have a Material
Adverse Effect; or
(l) COMPLETED UNSOLD HOMES. The Borrower fails to perform
or observe any term, covenant or agreement contained in Section 7.08(b), and
such failure shall remain unremedied by the end of the next succeeding
Quarter after the earlier of (i) the date upon which a Responsible Officer of
the Borrower knew of such failure or (ii) the date upon which written notice
thereof is given to the Borrower by the Administrative Agent or any Bank (the
"cure period"); provided however that following any such failure and during
any such cure period, a Responsible Officer of
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the Borrower shall provide the Administrative Agent with a weekly status
report of all Completed Unsold Homes; and provided further that if at any
time during such cure period the number of Completed Unsold Homes exceeds
110% of the level set forth in SCHEDULE 2, then the cure period shall
automatically be terminated, and an Event of Default hereunder shall be
deemed to have occurred.
(m) OWNERSHIP/MANAGEMENT. (i) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall fail at
any time to retain ownership and direct control of at least thirty percent (30%)
of the common stock of the Borrower; or (ii) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall fail at any
time to retain his position as chairman of the board, chief executive officer
and president of the Borrower, or to remain active and involved in the
management of, and formation of policy for, the Borrower; PROVIDED, HOWEVER,
that the death or disability of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall not constitute an Event
of Default hereunder if the Board of Directors of the Borrower shall, within a
reasonable time thereafter, appoint a successor chairman of the board, chief
executive officer, and president of the Borrower, subject to the approval of the
Majority Banks, which approval shall not be unreasonably withheld.
(n) ADVERSE CHANGE. There shall occur a Material Adverse
Effect, and the existence thereof shall continue unremedied for a period of 30
days after the earlier of (i) the date upon which a Responsible Officer of the
Borrower knew of the occurrence of the event resulting in such Material Adverse
Effect or (ii) the date upon which written notice thereof is given to the
Borrower by the Administrative Agent or any Bank.
8.02 REMEDIES. If any Event of Default occurs, the Administrative
Agent shall, at the request of the Majority Banks,
(a) declare the Revolving Commitment of each Bank, and any
obligation of such Bank to make Advances hereunder, and any obligation of the
Administrative Agent to make Swing-Line Advances or to issue Letters of Credit
hereunder, to be terminated, whereupon such Revolving Commitments and
obligations shall forthwith be terminated;
(b) declare the amounts of all issued and outstanding Letters
of Credit to be outstanding Advances hereunder (unless the Borrower shall have
deposited with the Administrative Agent cash in an amount sufficient to fully
collateralize all outstanding Letters of Credit as of such date, as provided in
Section 2.05 hereof) and declare the unpaid principal amount of all outstanding
Advances, all interest accrued and unpaid thereon, all Swing-Line Advances, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document, including any fees, charges and
other sums payable pursuant to Section 2.11 hereof or otherwise, to be
immediately due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Borrower;
and
(c) exercise on behalf of itself and the Banks all rights and
remedies available to it and the Banks under the Loan Documents or applicable
law;
PROVIDED, HOWEVER, that upon the occurrence of any event specified in
paragraph (f) or (g) of Section 8.01 (in the case of clause (i) of paragraph
(g) upon the expiration of the 60-day period mentioned
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therein), the obligation of each Bank to make Advances and of the
Administrative Agent to make Swing-Line Advances shall automatically
terminate and the unpaid principal amount of all outstanding Advances
(including the amount of all issued and outstanding Letters of Credit which
shall be automatically deemed to be Advances, unless the Borrower shall have
deposited with the Administrative Agent cash in an amount sufficient to fully
collateralize all outstanding Letters of Credit as of such date, as provided
in Section 2.05 hereof) and all outstanding Swing-Line Advances, and all
interest and other amounts as aforesaid, shall automatically become due and
payable without presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived by the Borrower, and without further act
of the Administrative Agent or any Bank.
8.03 RIGHTS NOT EXCLUSIVE. The rights provided for in this Agreement
and the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
ARTICLE IX
THE AGENTS
9.01 APPOINTMENT AND AUTHORIZATION. Each Bank hereby irrevocably
appoints, designates and authorizes each of the Agents to take such action on
such Bank's behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto. Notwithstanding
any provision to the contrary contained elsewhere in this Agreement or in any
other Loan Document, neither Agent shall have any duties or responsibilities,
except those expressly set forth herein, nor shall any Agent have or be deemed
to have any fiduciary relationship with any Bank, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against either
Agent.
9.02 DELEGATION OF DUTIES. The Agents may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agents shall not be responsible to the
Banks for the negligence or misconduct of any agent or attorney-in-fact that it
selects with reasonable care, except to the extent such negligence or misconduct
is determined to be gross negligence or willful misconduct.
9.03 LIABILITY OF THE AGENTS. None of the Agent-Related Persons
shall (i) be liable to any of the Banks for any action taken or omitted to be
taken by any of them under or in connection with this Agreement or any other
Loan Document (except for such Agent-Related Person's own gross negligence or
willful misconduct), or (ii) be responsible in any manner to any of the Banks
for any recital, statement, representation or warranty made by the Borrower,
any Subsidiary or Affiliate of the Borrower, or any officer thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for
in, or received by the Administrative Agent under or in connection with, this
Agreement or any other Loan
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Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any failure
of the Borrower, its Subsidiaries or any other party to any Loan Document to
perform its obligation hereunder or thereunder. No Agent-Related Person
shall be under any obligation to any Bank to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of the Borrower, or any Subsidiary or any
Affiliate of the Borrower.
9.04 RELIANCE BY ADMINISTRATIVE AGENT.
(a) The Administrative Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to the Borrower), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Majority Banks (or all of the Banks where this Agreement expressly so provides)
as it deems appropriate and, if it so requests, it shall first be indemnified to
its satisfaction by the Banks against any and all liability and expense which
may be incurred by it (other than any portion of such liability or expense
resulting solely from the Administrative Agent's gross negligence or willful
misconduct) by reason of taking or continuing to take any such action. The
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement or any other Loan Document in
accordance with a request or consent of the Majority Banks (or all of the Banks
where this Agreement expressly so provides) and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 4.01, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with each
document or other matter either sent by the Administrative Agent to such Bank
for consent, approval, acceptance or satisfaction, or required thereunder to be
consented to or approved by or acceptable or satisfactory to such Bank.
9.05 NOTICE OF DEFAULT. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event
of Default, except with respect to defaults in the payment of principal,
interest and fees required to be paid to the Administrative Agent for the
account of the Banks, unless the Administrative Agent shall have received
written notice from a Bank or the Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"Notice of Default". In the event that the Administrative Agent receives
such a notice, the Administrative Agent shall give notice thereof to the
Banks. The Administrative Agent shall take such action with respect to such
Default or Event of Default as shall be requested by the Majority Banks in
accordance with Article VIII; PROVIDED, HOWEVER, that unless and until the
Administrative Agent shall have received any such request, the Administrative
Agent may (but shall
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not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall reasonably deem
advisable.
9.06 CREDIT DECISION. Each Bank expressly acknowledges that none of
the Agent-Related Persons has made any representation or warranty to it and that
no act by the Administrative Agent hereafter taken, including any review of the
affairs of the Borrower, and each of its Subsidiaries, shall be deemed to
constitute any representation or warranty by the Administrative Agent to any
Bank. Each Bank represents to the Administrative Agent that it has,
independently and without reliance upon the Administrative Agent and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Borrower,
and each of its Subsidiaries, and all applicable bank regulatory laws relating
to the transactions contemplated thereby, and made its own decision to enter
into this Agreement and extend credit to the Borrower hereunder. Each Bank also
represents that it will, independently and without reliance upon the
Administrative Agent and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of the Borrower. Except for notices,
reports and other documents expressly herein required to be furnished to the
Banks by the Administrative Agent (which shall be deemed to include documents
delivered to the Administrative Agent with sufficient copies for each Bank
pursuant to Sections 4.01, 6.01 and 6.02), the Administrative Agent shall not
have any duty or responsibility to provide any Bank with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of the Borrower which may come into the
possession of any of the Agent-Related Persons.
9.07 INDEMNIFICATION. Whether or not the transactions contemplated
hereby shall be consummated, the Banks shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Borrower and without limiting the obligation of the Borrower to do so),
ratably from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses and
disbursements of any kind whatsoever which may at any time (including at any
time following the repayment of the Advances and the termination or
resignation of the Administrative Agent) be imposed on, incurred by or
asserted against any such Person in any way relating to or arising out of
this Agreement or any document contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action
taken or omitted by any such Person under or in connection with any of the
foregoing; PROVIDED, HOWEVER, that no Bank shall be liable for the payment of
the Agent-Related Persons of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from such Person's gross negligence or willful
misconduct. Without limiting the foregoing, but subject to the proviso in
the immediately preceding sentence, each Bank shall reimburse the
Administrative Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including fees and disbursements for counsel,
allocated costs for internal legal services, and disbursements of internal
counsel) incurred by the Administrative Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise)
of, or legal advice in respect of rights
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or responsibilities under, this Agreement, any other Loan Document, or any
document contemplated by or referred to herein to the extent that the
Administrative Agent is not reimbursed for such expenses by or on behalf of
the Borrower. Without limiting the generality of the foregoing, if the
Internal Revenue Service or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Administrative Agent
did not properly withhold tax from amounts paid to or for the account of any
Bank (because the appropriate form was not delivered, was not properly
executed, or because such Bank failed to notify the Administrative Agent of a
change in circumstances which rendered the exemption from or reduction of,
withholding tax ineffective, or for any other reason) such Bank shall
indemnify the Administrative Agent fully for all amounts paid, directly or
indirectly, by the Administrative Agent as tax or otherwise, including
penalties and interest, and including any taxes imposed by any jurisdiction
on the amounts payable to the Administrative Agent under this Section,
together with all costs and expenses and attorneys' fees (including fees and
disbursements of counsel, allocated costs of internal legal services, and all
disbursements of internal counsel). The obligation of the Banks in this
Section shall survive the payment of all Obligations hereunder.
9.08 ADMINISTRATIVE AGENT AND DOCUMENTATION AGENT EACH IN INDIVIDUAL
CAPACITY. First Hawaiian Bank and its Affiliates and Bank of America, N.A.
and its Affiliates may make loans to, issue letters of credit for the account
of, accept deposits from, acquire equity interests in and generally engage in
any kind of banking, trust, financial advisory or other business with the
Borrower, and any and all Subsidiaries and Affiliates of the Borrower as
though First Hawaiian Bank was not the Administrative Agent and Bank of
America, N.A. was not the Documentation Agent hereunder and without notice to
or consent of the Banks. With respect to its Advances, First Hawaiian Bank
and Bank of America shall have the same rights and powers under this
Agreement as any other Bank and may exercise the same as though it were not
the Administrative Agent and Documentation Agent, respectively, and the terms
"Bank" and "Banks" shall include First Hawaiian Bank and Bank of America,
N.A. in their individual capacities.
9.09 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may, and
at the request of all of the other Banks shall, resign as Administrative Agent
upon 30 days' notice to the Banks. If the Administrative Agent shall resign as
Administrative Agent under this Agreement, the Banks (other than the
Administrative Agent) holding 66% of the balance of the Aggregate Commitment
(i.e., the Aggregate Commitment less the Revolving Commitment held by the
Administrative Agent) shall, with the approval of the Borrower, appoint from
among the Banks a successor agent for the Banks. If no successor agent is
appointed prior to the effective date of the resignation of the Administrative
Agent, the Administrative Agent may appoint, after consulting with the Banks and
the Borrower, a successor agent from among the Banks. Upon the acceptance of
its appointment as successor agent hereunder, such successor agent shall succeed
to all the rights, powers and duties of the retiring Administrative Agent and
the term "Administrative Agent" shall mean such successor agent and the retiring
Administrative Agent's appointment, powers and duties as Administrative Agent
shall be terminated. After any retiring Administrative Agent's resignation
hereunder as Administrative Agent, the provisions of this Article IX and
Sections 10.04 and 10.05 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent under this
Agreement. If no successor agent has accepted appointment as Administrative
Agent by the date which is 30 days following a retiring Administrative Agent's
notice of resignation, the
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retiring Administrative Agent's resignation shall nevertheless thereupon
become effective and the Banks shall perform all of the duties of the
Administrative Agent hereunder until such time, if any, as a successor agent
is appointed, as provided for above.
9.10 DOCUMENTATION AGENT. Bank of America N.A. in its capacity as the
Documentation Agent shall not have any duties or responsibilities except those
that may be required from time to time by the Administrative Agent and accepted
in writing by Bank of America N.A.
ARTICLE X
MISCELLANEOUS
10.01 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision
of this Agreement or any other Loan Document, and no consent with respect to any
departure by the Borrower therefrom, shall be effective unless the same shall be
in writing and signed by the Majority Banks and the Borrower and acknowledged by
the Administrative Agent, and then such waiver shall be effective only in the
specific instance and for the specific purpose for which given; PROVIDED,
HOWEVER, that no such waiver, amendment, or consent shall, unless in writing and
signed by all the Banks and the Borrower and acknowledged by the Administrative
Agent, do any of the following:
(a) increase the amount of or extend the term of the Revolving
Commitment of any Bank (or reinstate any commitment terminated pursuant to
subsection 8.02(a)) or subject any Bank to any additional obligations;
(b) postpone or delay any date fixed for any payment of
principal, interest, fees or other amounts due to the Banks (or any of them)
hereunder or under any other Loan Document;
(c) reduce the principal of, or the rate of interest specified
herein on any Advance, or of any fees or other amounts payable hereunder or
under any other Loan Document;
(d) change the Commitment Percentage or the percentage of the
Aggregate Commitment which shall be required for the Banks or any of them to
take any action hereunder;
(e) amend this Section 10.01 or Section 2.15 or any provision
providing for consent or other action by all Banks;
(f) discharge any Guarantor;
(g) amend any of the Events of Default set forth in Section
8.01; or
(h) amend the definition of Majority Banks;
and, PROVIDED FURTHER, that no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Majority Banks
or all the Banks, as the case may be,
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affect the rights or duties of the Administrative Agent under this Agreement
or any other Loan Document.
10.02 NOTICES
(a) All notices, requests and other communications provided for
hereunder shall be in writing (including, unless the context expressly otherwise
provides, by facsimile transmission), provided that any matter transmitted by
the Borrower by facsimile (i) shall be immediately confirmed by a telephone to
the recipient at the number specified on the applicable signature page hereof,
and (ii) shall be followed promptly by a hard copy original thereof, and,
provided further that any notice, request or other communications by the
Borrower hereunder shall be signed by a Responsible Officer of the Borrower, and
mailed, faxed or delivered, to the address or facsimile number specified for
notices on the applicable signature page hereof; or, if directed to the Borrower
or the Administrative Agent, to such other address as shall be designated by
such party in a written notice to the other parties, and if directed to each
other party, at such other address as shall be designated by such party in a
written notice to the Borrower and the Administrative Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted by facsimile machine,
respectively, or if mailed, upon the third Business Day after the date deposited
into the U.S. mail, or if delivered, upon delivery.
(c) The Borrower acknowledges and agrees that any agreement of
the Administrative Agent and the Banks at Article II to receive certain notices
by telephone and facsimile is solely for the convenience and at the request of
the Borrower. The Administrative Agent and the Banks shall be entitled to rely
on the authority of any Person purporting to be a Person authorized by the
Borrower to give such notice and the Administrative Agent and the Banks shall
not have any liability to the Borrower or any other Person on account of any
action taken or not taken by the Administrative Agent or the Banks in reliance
upon such telephonic or facsimile notice. The obligation of the Borrower to
repay the Advances shall not be affected in any way or to any extent by any
failure by the Administrative Agent and the Banks to receive written
confirmation of any telephonic or facsimile notice or the receipt by the
Administrative Agent and the Banks of a confirmation which is at variance with
the terms understood by the Administrative Agent and the Banks to be contained
in the telephonic or facsimile notice.
10.03 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of the Administrative Agent or any Bank, any
right, remedy, power or privilege hereunder, shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege.
10.04 COSTS AND EXPENSES. The Borrower shall, whether or not the
transactions contemplated hereby shall be consummated:
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(a) pay or reimburse First Hawaiian Bank (including First
Hawaiian Bank in its capacity as Administrative Agent) within five Business Days
after demand (subject to subsection 4.01(d)) for all reasonable out-of-pocket
costs and expenses incurred by First Hawaiian Bank (including in its capacity as
Administrative Agent) in connection with the development, preparation, delivery,
administration and execution of, and any amendment, supplement, waiver or
modification to (in each case, whether or not consummated), this Agreement, any
other Loan Document and any other documents prepared in connection herewith or
therewith, and the consummation of the transactions contemplated hereby and
thereby, including the reasonable fees and disbursements of counsel, with
respect thereto; and
(b) pay or reimburse each Bank and the Administrative Agent
within five Business Days after demand (subject to subsection 4.01(d)) for all
reasonable costs and expenses incurred by them, in connection with the
enforcement, attempted enforcement, or preservation of any rights or remedies
(including in connection with any "workout" or restructuring regarding the
Advances, and including in any Insolvency Proceeding or appellate proceeding)
under this Agreement, any other Loan Document, and any such other documents,
including reasonable fees and disbursements of counsel, the allocated costs of
internal legal services and disbursements of internal counsel incurred by the
Administrative Agent and any Bank.
The agreements in this Section shall survive payment of all other Obligations.
10.05 INDEMNITY. Whether or not the transactions contemplated hereby
shall be consummated: the Borrower shall pay and indemnify and hold harmless
each Bank, the Administrative Agent and each of their respective officers,
directors, employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified Person") from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, charges, expenses
and disbursements (including all fees and disbursements of counsel, the
allocated costs of internal legal services, and disbursements of internal legal
counsel) of any kind or nature whatsoever arising from claims brought by third
parties (except for such Indemnified Person's own gross negligence or willful
misconduct) with respect to and to the extent arising from the Borrower's
execution, delivery, enforcement or performance of this Agreement and any other
Loan Documents, or the Borrower's use of the proceeds of the Advances, or
arising from the action or failure to act of the Borrower, any of its
Subsidiaries or their respective officers, directors, employees, counsel, agents
or attorneys-in-fact (all the foregoing, collectively, the "Indemnified
Liabilities"). The agreements in this Section shall survive payment of all
other Obligations.
10.06 MARSHALLING; PAYMENTS SET ASIDE. Neither the Administrative Agent
nor the Banks shall be under any obligation to ▇▇▇▇▇▇▇▇ any assets in favor of
the Borrower or any other Person or against or in payment of any or all of the
Obligations. To the extent that the Borrower makes a payment or payments to the
Administrative Agent or the Banks, or the Administrative Agent or the Banks
exercise their rights of set-off, and such payment or payments or the proceeds
of such enforcement or set-off or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by the Administrative Agent in its
discretion) to be repaid to a trustee, receiver or any other party in connection
with any Insolvency Proceeding, or otherwise, then to the extent of such
recovery the
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obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not
been made or such enforcement or set-off had not occurred.
10.07 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that (i) the Borrower may not assign or transfer
any of its rights or obligations under this Agreement without the prior written
consent of the Administrative Agent and each Bank, (ii) the Administrative Agent
may not assign or transfer any of its rights or obligations except as provided
in Section 9.09, and (iii) no Bank may assign its rights and obligations except
(a) as provided in Section 3.06, (b) that each Bank may assign its rights and
obligations to an Affiliate of such Bank with the prior written consent of the
Administrative Agent and the Borrower (which consent shall not be unreasonably
withheld), (c) that each Bank may sell participating interests as provided in
Section 10.08, and (d) as provided in Section 2.09.
10.08 ASSIGNMENTS, PARTICIPATIONS, ETC.
(a) Upon notice to the Administrative Agent and the Borrower,
any Bank may, as long as no Event of Default has occurred or is occurring, sell
to one or more commercial banks or other Persons not Affiliates of the Borrower
(a "Participant") participating interests in any Advances, the Revolving
Commitment of that Bank and the other interests of that Bank (the "originating
Bank") hereunder and under the other Loan Documents, PROVIDED, HOWEVER, that the
Borrower shall have no additional expense as a result of such participation, and
PROVIDED, FURTHER, that (i) the originating Bank's obligations under this
Agreement shall remain unchanged, (ii) the originating Bank shall remain solely
responsible for the performance of such obligations, (iii) the Borrower and the
Administrative Agent shall continue to deal solely and directly with the
originating Bank in connection with the originating Bank's rights and
obligations under this Agreement and the other Loan Documents, and (iv) no Bank
shall transfer or grant any participating interest under which the Participant
shall have rights to approve any amendment to, or any consent or waiver with
respect to, this Agreement or any other Loan Document. In the case of any
participation, the Participant shall be entitled to the benefit of Sections
3.01, 3.03 and 10.05 as though it were also a Bank hereunder, and not have any
other rights under this Agreement, or any of the other Loan Documents, and all
amounts payable by the Borrower hereunder shall be determined as if such Bank
had not sold such participation; except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of set-off in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Bank under
this Agreement.
(b) Each Bank agrees to take normal and reasonable precautions
and exercise due care to maintain the confidentiality of all information
identified as "confidential" by the Borrower and provided to it by the Borrower
or any Subsidiaries of the Borrower, or by the Administrative Agent on the
Borrower's or such Subsidiary's behalf, in connection with this Agreement or any
other Loan Document, and neither such Bank nor any of its Affiliates shall
disclose any such information for any purpose or in any manner other than
pursuant to the terms contemplated by this Agreement,
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except to the extent such information was or becomes generally available to
the public other than as a result of a disclosure by such Bank; PROVIDED,
HOWEVER, that any Bank may disclose such information (A) at the request or
pursuant to any requirement of any Governmental Authority to which such Bank
is subject or in connection with an examination of such Bank by any such
authority; (B) pursuant to subpoena or other court process; (C) when required
to do so in accordance with the provisions of any applicable Requirement of
Law; (D) to the extent reasonably required in connection with any litigation
or proceeding to which the Administrative Agent, any Bank or their respective
Affiliates may be party; (E) to the extent reasonably required in connection
with the exercise of any remedy hereunder or under any other Loan Document;
and (F) to such Bank's independent auditors and other professional advisors.
Notwithstanding the foregoing, the Borrower authorizes each Bank to disclose
to any assignee and proposed assignee, and to any Participant and any
prospective Participant, such financial and other information in such Bank's
possession concerning the Borrower or its Subsidiaries which has been
delivered to the Administrative Agent or the Banks pursuant to this Agreement
or which has been delivered to the Administrative Agent or the Banks by the
Borrower in connection with the Banks' credit evaluation of the Borrower
prior to entering into this Agreement; PROVIDED that, unless otherwise agreed
by the Borrower, such recipient agrees in writing to such Bank to keep such
information confidential to the same extent required of the Banks hereunder.
(c) Notwithstanding any other provision contained in this
Agreement or any other Loan Document to the contrary, any Bank may assign all or
any portion of the Advances made by it to any Federal Reserve Bank or the United
States Treasury as collateral security pursuant to Regulation A of the Federal
Reserve Board and any Operating Circular issued by such Federal Reserve Bank,
provided that any payment in respect of such assigned Advances made by the
Borrower to or for the account of the assigning or pledging Bank in accordance
with the terms of this Agreement shall satisfy the Borrower's obligations
hereunder in respect of such assigned Advances to the extent of such payment.
No such assignment shall release the assigning Bank from its obligations
hereunder.
10.09 SET-OFF. In addition to any rights and remedies of the Banks
provided by law, if an Event of Default exists, each Bank is authorized at any
time and from time to time, without prior notice to the Borrower, any such
notice being waived by the Borrower 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 by, and other indebtedness at any time
owing to, such Bank to or for the credit or the account of the Borrower against
any and all Obligations owing to such Bank, now or hereafter existing,
irrespective of whether or not the Administrative Agent or such Banks shall have
made demand under this Agreement or any other Loan Document and although such
Obligations may be contingent or unmatured. Each Bank agrees promptly to notify
the Borrower and the Administrative Agent after any such set-off and application
made by such Bank; PROVIDED, HOWEVER, that the failure to give such notice shall
not affect the validity of such set-off and application. The rights of each
Bank under this Section are in addition to the other rights and remedies
(including other rights of set-off) which such Bank may have.
10.10 AUTOMATIC DEBITS OF FEES. Upon approval by the Borrower of any
invoice with respect to any fee, or any other cost or expense (including fees
and disbursements of counsel, the
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allocated costs of internal legal services and disbursements of internal
counsel) due and payable to the Administrative Agent under the Loan
Documents, the Borrower hereby irrevocably authorizes the Administrative
Agent to debit any deposit account of the Borrower with the Administrative
Agent in an amount such that the aggregate amount debited from all such
deposit accounts does not exceed such fee or other cost or expense. If there
are insufficient funds in such deposit accounts to cover the amount of the
fee or other cost or expense then due, such debits will be reversed (in whole
or in part, in the Administrative Agent's sole discretion) and such amount
not debited shall be deemed to be unpaid. No such debit under this Section
shall be deemed a setoff.
10.11 NOTIFICATION OF ADDRESSES, LENDING OFFICES, ETC. Each Bank
shall notify the Administrative Agent in writing of any changes in the
address to which notices to such Bank should be directed, of addresses of any
of its Lending Offices, of payment instructions in respect of all payments to
be made to it hereunder and of such other administrative information as the
Administrative Agent shall reasonably request.
10.12 COUNTERPARTS. This Agreement may be executed by one or more of
the parties to this Agreement in any number of separate counterparts, each of
which, when so executed, shall be deemed an original, and all of said
counterparts taken together shall be deemed to constitute but one and the
same instrument. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Borrower and the Administrative Agent.
10.13 SEVERABILITY. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement
required hereunder.
10.14 NO THIRD PARTIES BENEFITTED. This Agreement is made and
entered into for the sole protection and legal benefit of the Borrower, the
Banks and the Administrative Agent, and their permitted successors and
assigns, and no other Person shall be a direct or indirect legal beneficiary
of, or have any direct or indirect cause of action or claim in connection
with, this Agreement or any of the other Loan Documents. Neither the
Administrative Agent nor any Bank shall have any obligation to any Person not
a party to this Agreement or other Loan Documents.
10.15 TIME. Time is of the essence as to each term or provision of
this Agreement and each of the other Loan Documents.
10.16 GOVERNING LAW AND JURISDICTION.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF HAWAII; PROVIDED THAT THE BORROWER,
THE ADMINISTRATIVE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER
FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT AND ANY OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE
-71-
COURTS OF THE STATE OF HAWAII OR OF THE UNITED STATES FOR THE DISTRICT OF
HAWAII, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE
BORROWER, THE ADMINISTRATIVE AGENT AND THE BANKS CONSENTS, FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.
EACH OF THE BORROWER, THE ADMINISTRATIVE AGENT, AND THE BANKS IRREVOCABLY
WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED
ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF
THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE BORROWER, THE
ADMINISTRATIVE AGENT AND THE BANKS EACH WAIVES PERSONAL SERVICE OF ANY
SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY HAWAII LAW.
10.17 WAIVER OF JURY TRIAL. THE BORROWER, THE BANKS AND THE
ADMINISTRATIVE AGENT EACH WAIVES THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO
THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE
BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER
WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE BORROWER,
THE BANKS AND THE ADMINISTRATIVE AGENT EACH AGREES THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE
RIGHTS TO A TRIAL BY JURY ARE WAIVED BY OPERATION OF THIS SECTION AS TO ANY
ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
10.18 ENTIRE AGREEMENT. This Agreement (together with the Exhibits
and Schedules attached hereto), and the other Loan Documents, embodies the
entire agreement and understanding among the Borrower, the Banks and the
Administrative Agent, and supersedes all prior or contemporaneous agreements
and understandings of such Persons, verbal or written, relating to the
subject matter hereof and thereof; PROVIDED, that the agency fee letter
agreement referenced in subsection 2.11(e) shall govern the payment by the
Borrower to the Administrative Agent of such agency fee, and that the
relationship between the Administrative Agent and the Banks, and among the
Banks themselves, shall also be subject to the terms and provisions of the
Inter-Bank Agreement.
-72-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers
as of the day and year first above written.
▇▇▇▇▇▇▇ HOMES, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President of Finance
"Borrower"
FIRST HAWAIIAN BANK, as Administrative
Agent and Syndication Agent
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇
Title: Assistant Vice President
ADDRESS FOR PAYMENTS:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Commercial Real Estate Division
ADDRESS FOR NOTICES:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Commercial Real Estate Division
BANK OF AMERICA, N.A, as Documentation
Agent
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
ADDRESS FOR NOTICES:
Bank of America National Trust and
Savings Association
▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-73-
FIRST HAWAIIAN BANK, as a Bank
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇
Title: Assistant Vice President
ADDRESS FOR NOTICES:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Commercial Real Estate Division
DOMESTIC AND OFFSHORE LENDING OFFICE:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Commercial Real Estate Division
ADDRESS FOR PAYMENTS:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Commercial Real Estate Division
BANK OF AMERICA N.A, as a Bank
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
ADDRESS FOR NOTICES:
Bank of America National Trust and
Savings Association
▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
DOMESTIC AND OFFSHORE LENDING OFFICE:
Bank of America National Trust and
Savings Association
▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
-74-
ADDRESS FOR PAYMENTS:
BANK ONE, ARIZONA, NA
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
ADDRESS FOR NOTICES:
Bank One, Arizona, N.A.
Corporate Real Estate
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
DOMESTIC AND OFFSHORE LENDING OFFICE:
Bank One, Arizona, N.A.
Corporate Real Estate
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ADDRESS FOR PAYMENTS:
Bank One, Arizona, N.A.
Real Estate Loan Administration
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Real Estate Loan Administration AZ1-1328
BANK BOSTON, NA
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
-75-
ADDRESS FOR NOTICES:
BANKBOSTON, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
DOMESTIC AND OFFSHORE LENDING OFFICE:
BANKBOSTON, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ADDRESS FOR PAYMENTS:
BANKBOSTON, N.A.
Commercial Loan Services
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-76-
BANK OF HAWAII
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
ADDRESS FOR NOTICES:
Bank of Hawaii
CIPLD #▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
DOMESTIC AND OFFSHORE LENDING OFFICE:
Bank of Hawaii
CIPLD #366
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
ADDRESS FOR PAYMENTS:
Bank of Hawaii
CIPLD #▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
-77-
U.S. Bank National Association
By /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
ADDRESS FOR NOTICES:
U.S. Bank National Association
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
DOMESTIC AND OFFSHORE LENDING OFFICE:
U.S. Bank National Association
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
ADDRESS FOR PAYMENTS:
U.S. Bank National Association
Commercial Loan Service Center West
▇▇▇ ▇▇ ▇▇▇ ▇▇-▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
-▇▇-
▇▇▇▇▇▇▇ "▇-▇"
▇▇▇▇▇▇ OF BORROWING
To: First Hawaiian Bank Date:
------------------------------
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Commercial Real Estate Division
▇▇▇▇▇▇▇ Homes, Inc. (the "Borrower"), refers to the Third Amended and
Restated Credit Agreement dated , executed by and among
the Borrower, First Hawaiian Bank (as administrative and syndication agent for
the Banks therein listed), Bank of America, N.A. (as documentation agent for the
Banks therein listed) and Bank of America, N.A., Bank Boston, NA, Bank of
Hawaii, Bank One, Arizona, NA, U.S. Bank National Association and First Hawaiian
Bank (the "Credit Agreement"), and hereby gives you notice irrevocably, pursuant
to Section 2.03 of the Credit Agreement, of the Borrowing specified herein:
1. The Business Day for the proposed Borrowing shall be
, .
---- -----------
2. The aggregate amount of the proposed Borrowing is $
.
------------
3. The Borrowing shall be comprised of:
(a) $ of Prime Rate Advances;
-----------------
(b) $ of LIBO Rate Advances with an Interest
-----------------
Period of 1 month
(c) $ of LIBO Rate Advances with an Interest
-----------------
Period of 2 months
(d) $ of LIBO Rate Advances with an Interest
-----------------
Period of 3 months
(e) $ of LIBO Rate Advances with an Interest
-----------------
Period of 6 months
All capitalized terms used herein have the same meaning such terms have
in the Credit Agreement.
The undersigned hereby certifies, on behalf of the Borrower, that the
following statements are true on the date hereof, and will be true on the date
of the proposed Borrowing, before and after giving effect thereto and to the
application of the proceeds therefrom:
(i) the representations and warranties of the Borrower
contained in Article V of the Credit Agreement are true and correct as though
made on and as of the date of the proposed Borrowing (except to the extent such
representations and warranties relate to an earlier date, in which case they are
true and correct as of such earlier date); and
(ii) no Default or Event of Default has occurred and is
continuing, or would result from such proposed Borrowing.
▇▇▇▇▇▇▇ HOMES, INC.
By:
---------------------------------
Title:
------------------------------
EXHIBIT "A-2"
NOTICE OF SWING-LINE BORROWING
To: First Hawaiian Bank Date:__________________
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Commercial Real Estate Division
▇▇▇▇▇▇▇ Homes, Inc. (the "Borrower"), refers to the Third Amended and
Restated Credit Agreement dated_______________________, executed by and among
the Borrower, First Hawaiian Bank (as administrative and syndication agent for
the Banks therein listed), Bank of America, N.A. (as documentation agent for the
Banks therein listed) and Bank of America, N.A., Bank Boston, NA, Bank of
Hawaii, Bank One, Arizona, NA, U.S. Bank National Association and First Hawaiian
Bank (the "Credit Agreement"), and hereby gives you notice irrevocably, pursuant
to Section 2.04 of the Credit Agreement, of the Swing-Line Borrowing specified
herein:
1. The Business Day for the proposed Swing-Line Borrowing shall be
_______________,_______________________.
2. The aggregate amount of the proposed Swing-Line Borrowing is
$__________________.
3. The Swing-Line Borrowing shall be comprised of Prime Rate
Advances.
All capitalized terms used herein have the same meaning such terms
have in the Credit Agreement.
The undersigned hereby certifies, on behalf of the Borrower, that the
following statements are true on the date hereof, and will be true on the
date of the proposed Swing-Line Borrowing, before and after giving effect
thereto and to the application of the proceeds therefrom:
(i) the representations and warranties of the Borrower
contained in Article V of the Credit Agreement are true and correct as though
made on and as of the proposed Swing-Line Borrowing (except to the extent
such representations and warranties relate to an earlier date, in which case
they are true and correct as of such earlier date); and
(ii) no Default or Event of Default has occurred and is
continuing, or would result from such proposed Swing-Line Borrowing.
▇▇▇▇▇▇▇ HOMES, INC.
By:_________________________________
Title:______________________________
EXHIBIT "B"
NOTICE OF CONVERSION/CONTINUATION
To: First Hawaiian Bank Date:______________________________
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Commercial Real Estate Division
▇▇▇▇▇▇▇ Homes, Inc. (the "Borrower"), refers to the Third Amended and
Restated Credit Agreement dated_______________________, executed by and among
the Borrower, First Hawaiian Bank (as administrative and syndication agent
for the Banks therein listed), Bank of America, N.A. (as documentation agent
for the Banks therein listed), and Bank of America, N.A., Bank Boston, NA,
Bank of Hawaii, Bank One, Arizona, NA, U.S. Bank National Association, and
First Hawaiian Bank (the "Credit Agreement"), and hereby gives you notice
irrevocably, pursuant to Section 2.06 of the Credit Agreement, of the
Conversion/Continuation specified herein:
1. The Business Day for the proposed Conversion/Continuation shall be
____________________,____________________________.
2. CONVERSION: The aggregate amount of the proposed Conversion is $
______________________.
The Conversion shall consist of:
(a) $_________________of Prime Rate Advances shall be
converted into LIBO Rate Advances with an Interest Period of
______months.
(b) $_________________of LIBO Rate Advances with an Interest
Period of______months shall be converted into Prime Rate
Advances.
3. CONTINUATION: The aggregate amount of the proposed Continuation
is $_________________.
The Continuation shall consist of :
(a) $__________________of LIBO Rate Advances with an Interest
Period of________________months shall be continued at LIBO Rate
Advances with the same Interest Period.
(b) $__________________of LIBO Rate Advances with an Interest
Period of________________months shall be continued at LIBO Rate
Advances, but with an Interest Period of____________months.
All capitalized terms used herein have the same meaning such terms
have in the Credit Agreement.
The undersigned hereby certifies, on behalf of the Borrower, that the
following statements are true on the date hereof, and will be true on the
date of the proposed Conversion/Continuation, before and after giving effect
thereto and to the application of the proceeds therefrom:
Exhibit "B"
Page 1 of 2
(i) the representations and warranties of the Borrower
contained in Article V of the Credit Agreement are true and correct as though
made on and as of the date of the proposed Conversion/Continuation (except to
the extent such representations and warranties relate to an earlier date, in
which case they are true and correct as of such earlier date); and
(ii) no Default or Event of Default has occurred and is
continuing, or would result from such proposed Conversion/Continuation.
▇▇▇▇▇▇▇ HOMES, INC.
By:_________________________________
Title:______________________________
Exhibit "B"
Page 2 of 2
EXHIBIT "C"
REQUEST FOR ISSUANCE OF LETTER OF CREDIT
To: First Hawaiian Bank Date:______________________________
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Commercial Real Estate Division
▇▇▇▇▇▇▇ Homes, Inc. (the "Borrower"), refers to the Third Amended and
Restated Credit Agreement dated_________________________, executed by and among
the Borrower, First Hawaiian Bank (as administrative and syndication agent for
the Banks therein listed), Bank of America, N.A. (as documentation agent for the
Banks therein listed) and Bank of America, N.A., Bank Boston, NA, Bank of
Hawaii, Bank One, Arizona, N.A., U.S. Bank National Association and First
Hawaiian Bank (the "Credit Agreement"), and hereby gives you notice irrevocably,
pursuant to Section 2.05 of the Credit Agreement, of the request for Issuance of
a Letter of Credit specified herein:
1. The Business Day for the requested Issuance shall be
_____,______________.
2. The amount of the requested Letter of Credit is $______________.
3. The applicant for the Letter of Credit is______________________.
Attached hereto is an Application and Agreement for Standby Letter of
Credit executed by the Borrower, in connection with the requested Issuance.
All capitalized terms used herein have the same meaning such terms
have in the Credit Agreement.
The undersigned hereby certifies, on behalf of the Borrower, that the
following statements are true on the date hereof, and will be true on the
date of the requested Issuance, before and after giving effect thereto:
(i) the representations and warranties of the Borrower
contained in Article V of the Credit Agreement are true and correct as though
made on and as of such date (except to the extent such representations and
warranties relate to an earlier date, in which case they are true and correct
as of such date); and
(ii) no Default or Event of Default has occurred and is
continuing, or would result from such requested Issuance.
▇▇▇▇▇▇▇ HOMES, INC.
By:_________________________________
Title:______________________________
EXHIBIT "D"
[Form of Application and Agreement for Standby Letter of Credit]
EXHIBIT "E"
__________________, 1999
First Hawaiian Bank
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Bank of America N.A.
_______________________________
_______________________________
Bank Boston, NA
_______________________________
_______________________________
Bank of Hawaii
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Bank One, Arizona, N.A.
_______________________________
_______________________________
U.S. Bank
_______________________________
_______________________________
Re: ▇▇▇▇▇▇▇ Homes, Inc.; ▇▇▇▇▇▇▇ Homes of California, Inc.;
▇▇▇▇▇▇▇ Homes of Oregon, Inc.; ▇▇▇▇▇▇▇ Homes of Washington,
Inc.; Melody Homes, Inc.; ▇▇▇▇▇▇▇ Realty/Maui, Inc.;
▇▇▇▇▇▇▇ Realty/Oahu, Inc.; Lokelani Construction
Corporation; Melody Mortgage Co.; SHLR of Washington, Inc.;
SHLR of Colorado, Inc.; SHLR of Utah, Inc.; SSHI LLC; SHLR
OF NEVADA, INC.; SRHI LLC
Ladies and Gentlemen:
We have acted as counsel for ▇▇▇▇▇▇▇ Homes, Inc., a Delaware corporation
(the "Borrower"); and ▇▇▇▇▇▇▇ Homes of California, Inc., a California
corporation; ▇▇▇▇▇▇▇ Homes of Oregon, Inc., an Oregon corporation; ▇▇▇▇▇▇▇
Homes of Washington, Inc., a Washington corporation; Melody Homes, Inc., a
Delaware corporation; ▇▇▇▇▇▇▇ Realty/Maui, Inc., a Hawaii corporation;
▇▇▇▇▇▇▇ Realty/Oahu, Inc., a Hawaii corporation; Lokelani Construction
Corporation, a Delaware corporation; Melody Mortgage Co., a Colorado
corporation; SHLR of Washington,
EXHIBIT "E"
(Page 1 of 5)
_________________, 1999
Page 2
Inc., a Washington corporation; SHLR of Colorado, Inc., a Colorado
corporation; SHLR of Utah, Inc., a Utah corporation; SSHI LLC, a Delaware
limited liability company; SHLR OF NEVADA, INC., a Nevada corporation; and
SRHI LLC, a Delaware limited liability company (collectively, the
"Guarantors"), in connection with an amendment to the credit facility made
available to the Borrower by First Hawaiian Bank, Bank of America N.A., Bank
Boston, NA, Bank of Hawaii, Bank One, Arizona, N.A. and U.S. Bank (the
"Banks"), under the Third Amended and Restated Credit Agreement dated
__________, effective as of __________________ (the "Credit Agreement"). We
are rendering this opinion pursuant to Section 4.01(d) of the Credit
Agreement. Except as otherwise defined herein, capitalized terms used but
not defined herein have the meanings given to them in the Credit Agreement.
As used herein, the term "Loan Documents" shall mean the Credit
Agreement and the Third Amended and Restated Promissory Note dated____________
________, in the principal amount of $170,000,000 executed by the Borrower in
favor of the Banks, and the Guaranty dated_______________________, executed
by the Guarantors in favor of the Banks.
In connection with this opinion, we have examined and relied upon the
representations and warranties as to factual matters contained in and made
pursuant to the Loan Documents by the various parties and upon originals or
copies certified to our satisfaction of such records, documents,
certificates, opinions, memoranda and other instruments as in our judgment
are necessary or appropriate to enable us to render the opinion expressed
below.
Where we render an opinion "to the best of our knowledge" or concerning
an item "known to us" or our opinion otherwise refers to our knowledge, it is
based solely upon (a) an inquiry of attorneys within this firm who perform
legal services for the Borrowers, (b) receipt of a certificate executed by an
officer of the Borrowers covering such matters, and (c) such other
investigation, if any, that we specifically set forth herein.
In rendering this opinion, we have assumed the genuineness and
authenticity of all signatures on original documents (except the signatures
of officers of the Borrowers on the Loan Documents); the authenticity of all
documents submitted to us as originals; the conformity to originals of all
documents submitted to us as copies; the accuracy, completeness and
authenticity of certificates of public officials; and the due authorization,
execution and delivery of all documents (except the due authorization,
execution and delivery by the Borrowers of the Loan Documents) where
authorization, execution and delivery are prerequisites to the effectiveness
of such documents. We have also assumed that all individuals executing and
delivering documents had the legal capacity to so execute and deliver; that
you have received all documents you were to receive under the Loan Documents;
and that the Loan Documents are obligations binding upon you.
Our opinion is expressed with respect only to the federal laws of the
United States of America, the laws of the State of Hawaii and the General
Corporations Law of the States of
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___________________, 1999
Page 3
Delaware, California, Washington, Oregon, Colorado, Utah and Nevada. We
express no opinion as to whether the laws of any particular jurisdiction
apply, and no opinion to the extent that the laws of any jurisdiction other
than those identified above are applicable to the subject matter hereof.
We express no opinion relative to the applicability or effect of any
law, rule or regulation relating to securities or to the sale or issuance
thereof.
On the basis of the foregoing, in reliance thereon, and with the
foregoing qualifications, we are of the opinion that:
1. ▇▇▇▇▇▇▇ Homes, Inc. has been duly incorporated and is a validly
existing corporation in good standing under the laws of the State of
Delaware, and is qualified to do business in and is in good standing under
the laws of the State of Hawaii, and any other state in which it may conduct
its business. ▇▇▇▇▇▇▇ Homes of California, Inc. has been duly incorporated
and is a validly existing corporation in good standing under the laws of the
State of California, and is qualified to do business in and is in good
standing under the laws of the State of California, and any other state in
which it may conduct its business. ▇▇▇▇▇▇▇ Homes of Oregon, Inc. has been
duly incorporated and is a validly existing corporation in good standing
under the laws of the State of Oregon, and is qualified to do business in and
is in good standing under the laws of the State of Oregon, and any other
state in which it may conduct its business. ▇▇▇▇▇▇▇ Homes of Washington, Inc.
has been duly incorporated and is a validly existing corporation in good
standing under the laws of the State of Washington, and is qualified to do
business in and is in good standing under the laws of the State of
Washington, and any other state in which it may conduct its business. Melody
Homes, Inc. has been duly incorporated and is a validly existing corporation
in good standing under the laws of the State of Delaware, and is qualified to
do business in and is in good standing under the laws of the States of
Delaware and Colorado, and any other state in which it may conduct its
business. ▇▇▇▇▇▇▇ Realty/Maui, Inc. has been duly incorporated and is a
validly existing corporation in good standing under the laws of the State of
Hawaii, and any other state in which it may conduct its business. ▇▇▇▇▇▇▇
Realty/Oahu, Inc. has been duly incorporated and is a validly existing
corporation in good standing under the laws of the State of Hawaii, and any
other state in which it may conduct its business. Lokelani Construction
Corporation has been duly incorporated and is a validly existing corporation
in good standing under the laws of the State of Delaware, and is qualified to
do business in and is in good standing under the laws of the States of
Delaware and Hawaii, and any other state in which it may conduct its
business. Melody Mortgage Co. has been duly incorporated and is a validly
existing corporation in good standing under the laws of the State of
Colorado, and is qualified to do business in and is in good standing under
the laws of the State of Colorado, and any other state in which it may
conduct its business. SHLR of Washington, Inc. has been duly incorporated
and is a validly existing corporation in good standing under the laws of the
State of Washington, and is qualified to do business in and is in good
standing under the laws of the State of Washington, and any other state in
which it may conduct its business. SHLR of Colorado, Inc. has been duly
EXHIBIT "E"
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________________, 1999
Page 4
incorporated and is a validly existing corporation in good standing under the
laws of the State of Colorado, and is qualified to do business in and is in
good standing under the laws of the State of Colorado, and any other state in
which it may conduct its business. SHLR of Utah, Inc. has been duly
incorporated and is a validly existing corporation in good standing under the
laws of the State of Utah, and is qualified to do business in and is in good
standing under the laws of the State of Utah, and any other state in which it
may conduct its business. SSHI LLC has been duly formed and is a validly
existing limited liability company in good standing under the laws of the
State of Delaware, and is qualified to do business in the States of Delaware
and Utah, and any other state in which it may conduct its business. SHLR of
Nevada, Inc. has been duly incorporated and is a validly existing corporation
in good standing under the laws of the State of Nevada, and is qualified to
do business in and is in good standing under the laws of the State of Nevada,
and any other state in which it may conduct its business. SRHI LLC has been
duly formed and is a validly existing limited liability company in good
standing under the laws of the State of Delaware, and is qualified to do
business in the States of Delaware and Nevada, and any other state in which
it may conduct its business.
2. The Borrower and each Guarantor has the requisite corporate power
and authority to own, lease, license and operate its property and assets and
to conduct its business as it is currently being conducted, and to execute
and deliver, and to perform and observe the provisions of, the Loan
Documents, as applicable.
3. The execution and delivery by the Borrower and the Guarantors of
the Loan Documents and any borrowings by the Borrower pursuant thereto do not
violate any provision of the Borrower's or any Guarantor's Certificate of
Incorporation or Bylaws, or Articles of Organization or Operating Agreements,
as applicable.
4. The Loan Documents have been duly and validly authorized, executed
and delivered by the Borrower and the Guarantors, as applicable, and
constitute valid and binding agreements enforceable against the Borrower and
the Guarantor, as applicable, in accordance with their respective terms,
except as enforceability may be subject to or limited by (a) general equity
principles and limitations on the availability of equitable relief including
specific performance; (b) the effect of applicable bankruptcy, insolvency,
reorganization, arrangement, moratorium or other laws relating to or
affecting the rights of creditors generally, including but not limited to
those affecting the rights of secured creditors; (c) limitations on a
borrower's ability to waive rights or benefits given by statute or otherwise.
EXHIBIT "E"
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____________________, 1999
Page 5
This opinion is intended solely for your benefit and is not to be made
available to or relied upon by any other person, firm, or entity without our
prior written consent.
Very truly yours,
By_________________________________
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