EXHIBIT 10.6
CREDIT AGREEMENT
DATED AS OF MAY 28, 1998
AMONG
▇▇▇▇▇ HOMES, INC.,
a Florida corporation,
as Borrower,
AND
THE BANKS NAMED HEREIN,
as Banks,
AND
SUNTRUST BANK, SOUTH FLORIDA, NATIONAL ASSOCIATION,
a national banking association,
as Administrative Agent,
AND
NATIONSBANK, N.A.,
a national banking association,
as Documentation Agent
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS............................................................................1
ARTICLE II THE CREDITS...........................................................................24
2.1 Commitment............................................................................24
2.2 Required Payments.....................................................................24
2.3 Ratable Loans.........................................................................25
2.4 Types of Advances.....................................................................26
2.5 Fees; Reduction in Commitment.........................................................26
2.6 Minimum Amount of Each Advance........................................................28
2.7 Optional Principal Payments...........................................................28
2.8 Method of Selecting Types and Interest Periods for
New Advances.................................................................29
2.9 Conversion and Continuation of Outstanding Advances...................................29
2.10 Changes in Interest Rate, etc.........................................................29
2.11 Determination of Applicable Margins and Applicable
Unused Commitment Rate.......................................................30
2.12 Types of Advances and Rates Applicable During Default.................................30
2.13 Method of Payment.....................................................................31
2.14 Notes; Telephonic Notices............................................................ 31
2.15 Interest Payment Dates; Interest Basis................................................32
2.16 Notification of Advances, Interest Rates, Prepayments
and Commitment Reductions....................................................32
2.17 Lending Installations.................................................................32
2.18 Non-Receipt of Funds by Agent.........................................................32
2.19 Swing Line............................................................................32
2.20 Withholding Tax Exemption.............................................................34
2.21 Extension of Facility Maturity Date...................................................35
2.22 Conversion Period.....................................................................36
2.23 Replacement of Certain Banks..........................................................38
ARTICLE III CHANGE IN CIRCUMSTANCES...............................................................39
3.1 Yield Protection......................................................................39
3.2 Changes in Capital Adequacy Regulations...............................................40
3.3 Availability of Types of Advances.....................................................40
3.4 Funding Indemnification...............................................................41
3.5 Bank Statements; Survival of Indemnity................................................41
ARTICLE IV THE LETTER OF CREDIT FACILITY.........................................................41
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4.1 Facility Letters of Credit............................................................41
4.2 Limitations...........................................................................41
4.3 Conditions............................................................................42
4.4 Procedure for Issuance of Facility Letters of Credit..................................43
4.5 Duties of Issuing Bank................................................................44
4.6 Participation.........................................................................45
4.7 Compensation for Facility Letters of Credit...........................................46
4.8 Issuing Bank Reporting Requirements...................................................47
4.9 Indemnification; Nature of Issuing Bank's Duties......................................47
4.10 No Obligation to Issue................................................................49
4.11 Obligations of Issuing Bank and Other Banks...........................................49
ARTICLE V CONDITIONS PRECEDENT..................................................................49
5.1 Initial Advance.......................................................................49
5.2 Each Advance..........................................................................50
ARTICLE VI REPRESENTATIONS AND WARRANTIES........................................................51
6.1 Existence and Standing................................................................51
6.2 Authorization and Validity............................................................51
6.3 No Conflict; Government Consent.......................................................52
6.4 Financial Statements and Condition....................................................52
6.5 Material Adverse Change...............................................................52
6.6 Taxes.................................................................................52
6.7 Litigation and Contingent Obligations.................................................53
6.8 Subsidiaries..........................................................................53
6.9 ERISA.................................................................................53
6.10 Accuracy of Information...............................................................53
6.11 Regulations G, U and X................................................................53
6.12 Material Agreements...................................................................53
6.13 Labor Disputes and Acts of God........................................................54
6.14 Ownership.............................................................................54
6.15 Operation of Business.................................................................54
6.16 Laws; Environment.....................................................................54
6.17 Investment Company Act................................................................55
6.18 Public Utility Holding Company Act and
and Similar Acts.............................................................55
6.19 Indenture Provisions..................................................................55
6.20 Year 2000 Compliance..................................................................55
ARTICLE VII AFFIRMATIVE COVENANTS..........................................................................55
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7.1 Financial and Other Reporting.........................................................56
7.2 Use of Proceeds.......................................................................58
7.3 Notice of Certain Events..............................................................58
7.4 Conduct of Business...................................................................59
7.5 Taxes.................................................................................59
7.6 Insurance.............................................................................59
7.7 Compliance with Laws..................................................................59
7.8 Maintenance of Properties.............................................................59
7.9 Inspection............................................................................59
7.10 Environment...........................................................................60
7.11 Wholly Owned Status...................................................................60
7.12 Ranking of Obligations................................................................60
7.13 Retirement of Old Senior Notes........................................................60
7.14 Year 2000 Compliance..................................................................60
ARTICLE VIII NEGATIVE COVENANTS.............................................................................61
8.1 Dividends.............................................................................61
8.2 Indebtedness..........................................................................61
8.3 Merger................................................................................62
8.4 Sale of Assets........................................................................63
8.5 Investments and Acquisitions..........................................................63
8.6 Liens.................................................................................64
8.7 Redemption............................................................................65
8.8 Affiliates............................................................................66
8.9 Subordinated Indebtedness.............................................................66
8.10 Amendments............................................................................66
8.11 Negative Pledge Agreements Prohibited; and
other Prohibited Agreements..................................................66
8.12 Intercompany Debt.....................................................................66
8.13 Ancillary Business Limitations........................................................66
8.14 Fiscal Year Calculation...............................................................67
8.15 Material Adverse Effect...............................................................67
ARTICLE IX FINANCIAL COVENANTS...................................................................67
9.1 Minimum Consolidated Tangible Net Worth Test..........................................67
9.2 Leverage Test.........................................................................67
9.3 Interest Coverage Test................................................................67
9.4 Fixed Charge Coverage Test............................................................67
9.5 Dividend Payout Test..................................................................67
9.6 Land Holding Test.....................................................................67
ARTICLE X EVENTS OF DEFAULT.....................................................................68
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10.1 Representations and Warranties........................................................68
10.2 Non-payment...........................................................................68
10.3 Other Defaults........................................................................68
10.4 Other Indebtedness....................................................................68
10.5 Bankruptcy............................................................................69
10.6 Receiver..............................................................................69
10.7 Judgment..............................................................................70
10.8 Unfunded Liabilities..................................................................70
10.9 Withdrawal Liability..................................................................70
10.10 Increased Contributions...............................................................70
10.11 Change in Control.....................................................................70
10.12 Dissolution...........................................................................71
10.13 Guaranty..............................................................................71
10.14 Collateral............................................................................71
10.15 Financial Covenants...................................................................71
10.16 Senior Debt Rating....................................................................71
ARTICLE XI ACCELERATION, WAIVERS, AMENDMENTS
AND REMEDIES.................................................................72
11.1 Acceleration; Remedies................................................................72
11.2 Amendments............................................................................72
11.3 Preservation of Rights................................................................73
11.4 New Guarantor.........................................................................74
ARTICLE XII GENERAL PROVISIONS....................................................................74
12.1 Survival of Representations...........................................................74
12.2 Governmental Regulation...............................................................74
12.3 Taxes.................................................................................74
12.4 Headings..............................................................................75
12.5 Entire Agreement......................................................................75
12.6 Nature of Obligations; Benefits of this Agreement.....................................75
12.7 Expenses; Indemnification.............................................................75
12.8 Numbers of Documents..................................................................75
12.9 Accounting............................................................................75
12.10 Severability of Provisions............................................................76
12.11 Nonliability of Banks and Issuing Bank................................................76
12.12 CHOICE OF LAW.........................................................................76
12.13 Arbitration...........................................................................76
12.14 CONSENT TO JURISDICTION...............................................................77
12.15 WAIVER OF JURY TRIAL..................................................................78
12.16 Confidentiality.......................................................................78
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12.17 Limit on Interest.....................................................................78
ARTICLE XIII AGENT.................................................................................79
13.1 Appointment...........................................................................79
13.2 Powers................................................................................79
13.3 General Immunity......................................................................79
13.4 No Responsibility for Loans, Recitals, etc............................................79
13.5 Action on Instructions of Banks.......................................................79
13.6 Employment of Agents and Counsel......................................................80
13.7 Reliance on Documents; Counsel........................................................80
13.8 Agent's Reimbursement and Indemnification.............................................80
13.9 Rights as a Bank or Issuing Bank......................................................80
13.10 Bank Credit Decision..................................................................81
13.11 Successor Agent.......................................................................81
13.12 Agent's Fee...........................................................................81
ARTICLE XIV SETOFF; RATABLE PAYMENTS..............................................................82
14.1 Setoff................................................................................82
14.2 Ratable Payments......................................................................82
ARTICLE XV BENEFIT OF AGREEMENT, ASSIGNMENTS;
PARTICIPATIONS...............................................................82
15.1 Successors and Assigns................................................................82
15.2 Participations........................................................................83
15.2.1 Permitted Participants; Effect.......................................83
15.2.2 Voting Rights........................................................83
15.2.3 Benefit of Setoff....................................................83
15.3 Assignments...........................................................................83
15.3.1 Permitted Assignments................................................83
15.3.2 Effect; Effective Date...............................................84
15.4 Dissemination of Information..........................................................85
15.5 Tax Treatment.........................................................................85
ARTICLE XVI NOTICES...............................................................................85
16.1 Giving Notice.........................................................................85
16.2 Change of Address.....................................................................85
ARTICLE XVII COUNTERPARTS...................................................................................86
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LIST OF SCHEDULES AND EXHIBITS
EXHIBITS:
EXHIBIT "A" Form of Environmental Agreement
EXHIBIT "B" Form of Guaranty
EXHIBIT "C" Form of Mortgage
EXHIBIT "D" Form of Note
EXHIBIT "E" Form of Borrowing Notice
EXHIBIT "F" Form of Opinion of Greenberg, Traurig, Hoffman, Lipoff, ▇▇▇▇▇
& Quentel, P.A.
EXHIBIT "G" Form of Opinion of General Counsel
EXHIBIT "H" Compliance Certificate of Authorized Officer (Financial
Covenant Tests)
EXHIBIT "I" Assignment (with Form of Notice of Assignment attached as
EXHIBIT "1")
SCHEDULES:
SCHEDULE "A" List of Banks and their Commitments
SCHEDULE "1" Refinanced Loans
SCHEDULE "4.4" Existing Letters of Credit
SCHEDULE "6.3" Required Orders, Consents and Approvals
SCHEDULE "6.4" Existing Indebtedness
SCHEDULE "6.7" Existing Litigation and Proceedings
SCHEDULE "6.8" Subsidiaries
SCHEDULE "8.2(II)" Permitted Indebtedness
vi
CREDIT AGREEMENT
THIS AGREEMENT is entered into as of May 28, 1998, among ▇▇▇▇▇ HOMES,
INC., a Florida corporation, and SUNTRUST BANK, SOUTH FLORIDA, NATIONAL
ASSOCIATION, a national banking association, as Agent for the Banks, and the
following Banks (also listed on the signature pages of this Agreement): SUNTRUST
BANK, SOUTH FLORIDA, NATIONAL ASSOCIATION, NATIONSBANK, N.A., BANKBOSTON, N.A.,
BANK ONE, ARIZONA, N.A., NORWEST BANK COLORADO, NATIONAL ASSOCIATION, GUARANTY
FEDERAL BANK, FSB, CREDIT LYONNAIS ATLANTA AGENCY AND BANQUE PARIBAS. The
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Actual Cost" means the total actual direct costs incurred by a
Guarantor (excluding interest expense, overhead, closing, carrying and other
indirect costs), calculated in accordance with GAAP.
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which
Borrower or any Guarantor (i) acquires any going concern or all or substantially
all of the assets of any firm, corporation or division thereof, whether through
purchase of assets, merger or otherwise or (ii) directly or indirectly acquires
(in one transaction or as the most recent transaction in a series of
transactions) at least a majority (in number of votes) of the securities of a
corporation which have ordinary voting power for the election of directors
(other than securities having such power only by reason of the happening of a
contingency) or a majority (by percentage or voting power) of the outstanding
partnership or other ownership interests of a partnership, joint venture,
limited liability company or other similar business organization.
"Administrative Agent" means the Agent.
"Advance" means a borrowing hereunder consisting of the aggregate
amount of the several Loans made by Banks (or Swing Line Advances made by
SunTrust) to Borrower of the same Type and, in the case of a LIBOR Advance, for
the same Interest Period.
"Affected Bank" is defined in Section 2.23.
"Affiliate of any Person" means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person beneficially
owns (within the meaning of Rule 13d-3 of
the Securities Exchange Act of 1934, as amended) 10% or more of any class of
voting securities (or other ownership interests) of the controlled Person or
possesses, directly or indirectly, the power to direct or cause the direction of
the management or policies of the controlled Person, whether through ownership
of stock, by contract or otherwise.
"Affiliate" means any Person which directly or indirectly controls, or
is controlled by, or is under common control with, Borrower. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise.
"Agent" means SunTrust Bank, South Florida, National Association, a
national banking association, in its capacity as agent for Banks pursuant to
Article XIII, and not in its individual capacity as a Bank, and any successor
Agent appointed pursuant to Article XIII. The Documentation Agent is not the
Agent.
"Aggregate Available Credit" means the aggregate of the Available
Credits of all of Banks.
"Aggregate Commitment" means the aggregate of the Commitments of all
Banks, as reduced from time to time pursuant to the terms hereof. As of the date
of this Agreement, the Aggregate Commitment is $170,000,000.00.
"Aggregate Senior Indebtedness" means the aggregate principal balance
outstanding with respect to (i) the Senior Notes, (ii) the Old Senior Notes,
(iii) any Refinancing Indebtedness of the Senior Notes and the Old Senior Notes,
and (iv) any other Public Indebtedness.
"Agreement" means this Credit Agreement, as it may be amended or
modified and in effect from time to time.
"Applicable LIBOR Rate Margin" means, as at any date of determination,
the margin indicated in Section 2.11 as then applicable in the determination of
LIBOR Rates.
"Applicable Unused Commitment Rate" means, as at any date of
determination, the rate per annum indicated in Section 2.11 as then applicable
in the determination of the Unused Commitment Fee under Section 2.5(b).
"Article" means an article of this Agreement unless another document is
specifically referenced.
"Authorized Officer" means any one or more of the chairman, president,
chief executive officer, executive vice president, chief financial officer,
treasurer, or any vice president or other officer of Borrower or each Guarantor,
as applicable, acting singly or together, in accordance with the applicable
resolutions and bylaws of Borrower or such Guarantor.
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"Available Credit" means, at any date with respect to any Bank, the
amount (if any) by which such Bank's Commitment exceeds the sum of (i) the
outstanding principal balance of such Bank's Loans as of such date, plus (ii)
such Bank's ratable share (determined in accordance with Section 4.6) of the
Facility Letter of Credit Obligations as of such date.
"Banks" means the lending institutions listed on SCHEDULE "A" attached
hereto and on the signature pages of this Agreement and their respective
successors and assigns.
"Borrower" means ▇▇▇▇▇ HOMES, INC., a Florida corporation, and its
successors and assigns.
"Borrowing Base" means the sum of the following assets of the Borrower
and Guarantors, without duplication:
(i) ninety percent (90%) of all Housing Unit Costs, plus
(ii) eighty percent (80%) of all Lot Costs of Presold Lots,
plus
(iii) seventy percent (70%) of all Lot Costs of Spec Lots,
plus
(iv) fifty percent (50%) of all Land Under Development Costs,
plus
(v) twenty-five percent (25%) of all Actual Costs to acquire
Land Not Under Development, plus
(vi) twenty-five percent (25%) of all Investments in Joint
Ventures, plus
(vii) fifty percent (50%) of all Actual Costs to construct a
Sales Center at any master planned unit development;
provided, however, that:
(a) no asset shall be included in the Borrowing Base to the
extent it is subject to any Lien other than a Permitted Lien,
(b) no more than Twenty Two Million and 00/100 Dollars
($22,000,000.00) of Housing Unit Costs for Model Units shall be
included in the Borrowing Base,
(c) no more than Twenty Nine Million and 00/100 Dollars
($29,000,000.00) of Housing Unit Costs for Spec Units shall be included
in the Borrowing Base,
(d) the total number of Model Units included in the Borrowing
Base shall not
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at any time exceed ten percent (10%) of the total number of Units
actually sold and conveyed to purchasers during the last four (4)
fiscal quarter periods then ended, and to the extent any such excess
exists, then the product obtained by multiplying the excess number of
Model Units by the quotient obtained by dividing ninety percent (90%)
of all Housing Unit Costs for all Model Units by the total number of
all Model Units shall reduce and be applied as a deduction when making
the calculation in clause (i) above,
(e) the total number of Spec Units included in the Borrowing
Base shall not at any time exceed twenty percent (20%) of the total
number of Units actually sold and conveyed to purchasers during the
last four (4) fiscal quarter periods then ended, and to the extent any
such excess exists, then the product obtained by multiplying the excess
number of Spec Units by the quotient obtained by dividing ninety
percent (90%) of all Housing Unit Costs for all Spec Units by the total
number of all Spec Units shall reduce and be applied as a deduction
when making the calculation in clause (i) above,
(f) the total amount of all Lot Costs of Spec Lots, Land Under
Development Costs, Actual Costs to acquire Land Not Under Development,
and Investments in Joint Ventures shall not exceed sixty-five percent
(65%) of the total amount of all Housing Unit Costs, Lot Costs of
Presold Lots, Lot Costs of Spec Lots, Land Under Development Costs,
Actual Costs to acquire Land Not Under Development, Investments in
Joint Ventures, and Actual Costs to construct a Sales Center at any
master planned unit developments and to the extent any such excess
exists, then the excess shall directly reduce and be applied first as a
deduction against Lot Costs of Spec Lots when making the calculation in
clause (iii) above and then any balance of the excess shall reduce and
be applied as a deduction against Land Under Development Costs when
making the calculation clause (iv) above, and lastly any remaining
excess shall reduce and be applied as a deduction against Actual Costs
to acquire Land Not Under Development when making the calculation in
clause (v) above,
(g) no more than Fifteen Million and 00/100 Dollars
($15,000,000.00) of the amount in clause (v) above shall be included in
the Borrowing Base,
(h) no more than Three Million Seven Hundred Fifty Thousand
and 00/100 Dollars ($3,750,000.00) of the amount in clause (vi) above
shall be included in the Borrowing Base,
(i) no more than One Million and 00/100 Dollars
($1,000,000.00) of the amount in clause (vii) above shall be included
in the Borrowing Base, and
(j) the total Borrowing Base shall be reduced by the total
amount of ▇▇▇▇▇▇▇ money deposits and down payments on Presold Lots and
Presold Housing Units, and any other deposits and down payments, that
are paid by a buyer but not held in escrow until closing.
4
"Borrowing Base Certificate" means a written certificate in a form and
detail acceptable to Agent setting forth the amount of the Borrowing Base with
respect to the calendar month most recently completed, certified as true and
correct by the chief financial officer or treasurer of Borrower.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Borrowing Notice" is defined in Section 2.8.
"Business Day" means (i) with respect to any borrowing, payment or rate
selection of LIBOR Advances, a day (other than a Saturday or Sunday) on which
banks generally are open in West Palm Beach, Florida and New York for the
conduct of substantially all of their commercial lending activities and on which
dealings in United States dollars are carried on in the London interbank market,
and (ii) for all other purposes, a day (other than a Saturday or Sunday) on
which banks generally are open in West Palm Beach, Florida for the conduct of
substantially all of their commercial lending activities.
"Capitalized Lease" of a Person means any lease of Property by such
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with GAAP.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with GAAP.
"Cash Equivalents" means:
(i) direct obligations of the United States or any agency
thereof or obligations guaranteed by the United States or any agency
thereof, in each case maturing within one (1) year after the date of
acquisition thereof;
(ii) certificates of deposit or bankers' acceptances maturing
within one (1) year after the date of acquisition thereof issued by a
bank, trust company or savings and loan association which is organized
under the laws of the United States or any state thereof having
capital, surplus and undivided profits aggregating in excess of $250
million and a ▇▇▇▇▇ Bank Watch Rating of A or better;
(iii) commercial paper rated A1 or better by Standard & Poor's
Corporation or P1 by ▇▇▇▇▇'▇ Investors Service, Inc., and given the
highest rating by any other established national credit rating agency,
and maturing not more than one (1) year after the date of the
acquisition thereof; and
5
(iv) repurchase agreements or money market accounts which are
fully secured by direct obligations of the United States or any agency
thereof.
"Change in Control" means (a) as to Borrower, the acquisition by any
Person, or two or more Persons acting in concert, of beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934) of 50% or more of the outstanding
shares of voting stock of Borrower, or (b) as to any Guarantor, the acquisition
by any Person (except Borrower or one or more of the Guarantors), or two or more
Persons acting in concert of any beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of any of the outstanding shares of voting stock of such
Guarantor.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Collateral" means all (i) Presold Units, Spec Units, Model Units,
Finished Lots, and Land Under Development, Land Not Under Development,
Investments in Joint Ventures, and Sales Centers owned by Borrower or any
Guarantor from time to time, and (ii) all fixtures, tangible and intangible
personal property and tenements, hereditaments and appurtenances described in
the Collateral Documents; provided, however, if the encumbering of all of the
Collateral by the Collateral Documents would result in an exceedance of the
forty percent (40%) limitation in clause (i) of the definition of "Permitted
Liens" in the Indenture, then, for so long as the Senior Debt is outstanding
there shall be excluded from the Collateral a portion thereof selected by Agent
sufficient to avoid a violation of the forty percent (40%) limitation.
"Collateral Documents" means the Mortgage, and any UCC-1 Financing
Statements and other documents and instruments (satisfactory in form and
substance to Agent) as the Agent shall require to ▇▇▇▇▇ ▇▇▇▇▇ a properly
perfected first and prior lien on and security interest in the Collateral as
security for the Obligations and obligations under the Guaranty.
"Commitment" means, for each Bank, the obligation of such Bank to make
Loans, and to participate in the Facility Letters of Credit in accordance with
Section 4.6(a), not exceeding the amount set forth opposite its signature below
and on SCHEDULE "A" hereto or as set forth in any Notice of Assignment relating
to any assignment that has become effective pursuant to Section 15.3.2, as such
amount may be modified from time to time pursuant to the terms hereof.
"Consolidated Indebtedness" means, at any date, the outstanding amount
of all Indebtedness of Borrower and its Subsidiaries, without duplication, all
determined on a consolidated basis for Borrower and its Subsidiaries in
conformity with GAAP.
"Consolidated Interest Expense" means for any most recent rolling four
fiscal quarter period, without duplication, the aggregate amount of interest
which, in conformity with GAAP, would be set opposite the caption "interest
expense" or any like caption on a consolidated income statement for Borrower and
its Subsidiaries (other than for Borrower's mortgage lending and title
6
insurance Subsidiaries), including, without limitation, imputed interest
included on Capitalized Lease Obligations, all commissions, discounts and other
fees and charges owed with respect to Letters of Credit and bankers' acceptance
financing, the net costs associated with Rate Hedging Obligations, amortization
of other financing fees and expenses, the interest portion of any deferred
payment obligation, amortization of discount or premiums, if any, and all other
noncash interest expense other than interest and other charges amortized to cost
of sales. Consolidated Interest Expense includes, with respect to Borrower and
Guarantors (other than for Borrower's mortgage lending and title insurance
Subsidiaries), without duplication, all interest included as a component of cost
of sales for such period.
"Consolidated Interest Incurred" means for any most recent rolling
four fiscal quarter period, without duplication, the aggregate amount of
interest which, in conformity with GAAP, would be set opposite the caption
"interest expense" or any like caption on a consolidated income statement for
Borrower and its Subsidiaries (other than for Borrower's mortgage lending and
title insurance Subsidiaries), including, without limitation, imputed interest
included on Capitalized Lease Obligations, all commissions, discounts and other
fees and charges owed with respect to Letters of Credit and bankers' acceptance
financing, the net costs associated with Rate Hedging Obligations, amortization
of other financing fees and expenses, the interest portion of any deferred
payment obligation, amortization of discount or premiums, if any, and all other
noncash interest expense other than interest and other charges amortized to cost
of sales. Consolidated Interest Incurred includes, without duplication, all
capitalized interest for such period, all interest attributable to discontinued
operations for such period to the extent not set forth on the income statement
under the caption "interest expense" or any like caption, and all interest
actually paid by Borrower or its Subsidiaries (other than for Borrower's
mortgage lending and title insurance Subsidiaries) under any contingent
obligation during such period.
"Consolidated Liabilities" means, at any date, all amounts which are
required to be classified as "liabilities" by GAAP on the consolidated balance
sheet for Borrower and its Subsidiaries, less only those "liabilities" relating
to the Borrower's financial services Subsidiaries to the extent offset by assets
of those Subsidiaries. When calculating Consolidated Liabilities, "unrestricted
cash and unrestricted cash equivalents" shall be netted against "accounts
payable."
"Consolidated Net Income" means, for any period, the net income (or
loss) of Borrower and its Subsidiaries on a consolidated basis for such period
taken as a single accounting period, determined in conformity with GAAP.
"Consolidated Tangible Net Worth" means, at any date, the sum of all
capital accounts (including without limitation, any paid-in capital, capital
surplus, and retained earnings) determined on a consolidated basis for Borrower
and its Subsidiaries in conformity with GAAP, less its consolidated Intangible
Assets. For purposes of this definition "Intangible Assets" means the amount (to
the extent reflected in determining such consolidated stockholders' equity) of
(I) all write-ups in the book value of any asset owned by Borrower or any
Subsidiary, (II) any amount, however designated on the balance sheet,
representing the excess of the purchase price
7
paid for assets or stock acquired over the value assigned thereto on the books
of Borrower or any Subsidiary, (III) all unamortized debt and debt issuance
expense, deferred charges, goodwill, patents, trademarks, service marks, trade
names, copyrights, organization or developmental expenses and other intangible
items, and (IV) all items that would be considered intangible assets under GAAP.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with Borrower, Guarantors or any Subsidiary, are
treated as a single employer under Section 414 of the Code.
"Conversion/Continuation Notice" is defined in Section 2.9.
"Conversion Date" means the first day of the Conversion Period,
determined pursuant to Section 2.22.
"Conversion Period" means the period of time (i) commencing on the
Conversion Date and expiring when all Obligations have been satisfied in full,
and (ii) during which, among other things, Borrower shall provide, and cause
Guarantors to provide, Banks Collateral for the Obligations, in accordance with
Section 2.22.
"Default Rate" means the applicable rate specified in Section 2.12.
"Dividend" means (i) any dividend paid or declared by Borrower or any
Subsidiary, as applicable; (ii) any purchase, redemption, retirement or other
acquisition by Borrower or any Subsidiary, as applicable for value, or the
setting aside of any funds or issuance of any warrants for such purpose, of any
of the capital stock of Borrower or such Subsidiary, as applicable now or
hereafter outstanding or any interest therein; and (iii) as to any Subsidiary,
any distribution of assets, properties, cash, rights, obligations or other
consideration or securities of such Subsidiary, directly or indirectly, to
Borrower, excluding repayment of Indebtedness to Borrower permitted by clause
(v) of Section 8.2.
"Documentation Agent" means Nationsbank, N.A., a national banking
association. The Documentation Agent is not the Agent, carries the title of
Documentation Agent in name only, and is not an agent of any Bank pursuant to
this Agreement.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"Due Diligence Documents" means all of the following, as required
pursuant to Section 2.22, certified to the Banks and in form and substance
satisfactory to Agent:
(i) mortgagee's forms of title insurance policies, issued by
Commonwealth Land Title Insurance Company or any other nationally
recognized title insurance
8
company satisfactory to Agent, in an amount not less than the amount of
the Obligations that Agent determines is allocable to the property
insured, with premiums fully paid, insuring that the Mortgages grant
valid and perfected first priority mortgage or similar liens on and
security interests in, the Collateral, in each case free and clear of
all defects and encumbrances other than those that are acceptable to
the Agent, and containing, to the extent such coverage is available in
the state in which the Collateral is located, (a) full coverage, by
affirmative insurance, against liens of mechanics', materialmen,
laborers, and any other person who might claim statutory or other
common law lien rights relating to services performed, (b) no survey
exceptions, (c) such other endorsements as the Agent may deem necessary
to insure that any off site easements benefiting the Collateral are
valid and enforceable, (d) a "tie-in" endorsement aggregating the
insurance amount of the policies, and (e) such other endorsements and
coverages as may be required by Agent and permitted in the state where
the Collateral is located.
(ii) evidence satisfactory to Agent that the insurance
coverages required by the Mortgages and other Loan Documents are in
full force and effect.
(iii) evidence satisfactory to Agent that all taxes due with
respect to the Collateral Documents, other recording and filing fees,
all title insurance fees and premiums, survey costs, fees of Bank
counsel and all other costs, charges, expenses and fees in connection
with the Collateral, Collateral Documents and/or the perfection of the
liens and security interests granted thereby have been paid in full.
(iv) (a) a certificate of the appropriate state official from
the State of Florida, certifying that the Borrower and each Guarantor
is a corporation in existence, and active and in good standing, under
the laws of such state; (b) a certificate of the appropriate official
of each state where the Collateral is located, certifying that each
Guarantor that owns Collateral in that state is duly authorized to
transact business in that state; (c) the articles of incorporation with
all amendments thereto for the Borrower and each of the Guarantors,
certified by the appropriate official of the state of Florida as being
true and complete; (d) a certificate of the secretary of the Borrower
and each of the Guarantors showing the resolutions adopted by their
respective boards of directors authorizing the execution and delivery
of the Collateral Documents for their respective purposes, showing the
names, offices and specimen signatures of each of the officers signing
the Collateral Documents and certifying that the by-laws that are
attached to the certificate are true and complete.
(v) an original print of each actual survey, or a true and
correct copy of each recorded plat along with the original supporting
certification, relied upon by the title insurer to issue the title
insurance policies described in clause (i) above free and clear of
survey exceptions.
(vi) a certificate from a qualified engineer satisfactory to
Agent certifying what
9
portions of the Collateral are located within any flood plain area.
(vii) a UCC-11 or comparable search of a professional records
search firm satisfactory to Agent stating that no chattel mortgage,
financing statement or other document or instrument granting or
perfecting any lien or security interest in any Collateral exists.
(viii) if required by Agent, copies of any certificates of
occupancy, building permits, development orders and other licenses,
consents, approvals or permits required by applicable laws or
governmental authorities or requirements to own, construct, develop,
use, operate, sell or occupy the Collateral or encumber the Collateral
as security for the Obligations.
(ix) if required by Agent, current reports prepared by an
environmental engineering firm satisfactory to Agent certifying whether
there are any hazardous or toxic materials, wastes, or other substances
or other environmental, safety, or health concerns with respect to any
of the Collateral.
(x) if required by Agent or any law, statute, rule, regulation
or requirement of any regulatory or governmental agency or authority,
an appraisal report satisfactory to Agent showing the appraised fair
market value of the Collateral.
(xi) if required by Agent, evidence from local utilities
companies or governmental authorities confirming whether electricity,
potable water, sanitary sewer and other utilities are available to the
Collateral at its boundaries in capacities adequate to use the
Collateral for Housing Unit purposes.
(xii) opinions of counsel satisfactory to Agent of Borrower
and Guarantors licensed to practice law in Florida and each state where
any Collateral is located with respect to all of the Collateral
Documents and the Environmental Agreement substantially similar to the
opinions in Exhibit "F" and EXHIBIT "G" hereto and addressing such
other matters as Agent may require.
(xiii) such other documents, instruments, materials, data and
information as Agent may reasonably require.
"EBITDA" means, for any most recent rolling four fiscal quarter period,
without duplication, the following, all as determined on a consolidated basis
for Borrower and its Subsidiaries in conformity with GAAP,
(i) the sum of the amounts for such period of (a) Consolidated
Net Income, (b) Consolidated Interest Expense, (c) charges against
income for all federal, state and local taxes, (d) depreciation
expense, (e) amortization expense, (f) other non-cash charges and
expenses (but specifically excluding losses arising from the sale of a
Subsidiary
10
which were due in whole or in part to amortization of good will), and
(g) any losses arising outside of the ordinary course of business which
have been included in the determination of Consolidated Net Income,
less
(ii) any gains arising outside of the ordinary course of
business which have been included in the determination of Consolidated
Net Income.
"EBITDAR" means, for any most recent rolling four fiscal quarter
period, EBITDA plus rental and operating lease expenses, determined, without
duplication, on a consolidated basis for Borrower and its Subsidiaries in
conformity with GAAP.
"Environmental Agreement" means each and all Environmental Indemnity
Agreements executed by Borrower and Guarantors from time to time for the benefit
of Banks and Agent, and relating to the Collateral, as the same may be amended
or modified and in effect from time to time, each being substantially in the
form of EXHIBIT "A".
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"Event of Default" means an event described in Article X after the
expiration of any applicable cure or notice period provided in Article X.
"Excluded Taxes" is defined in Section 3.1(i).
"Existing Letters of Credit" is defined in Section 4.4(e).
"Extension Request" is defined in Section 2.21(a).
"Facility Letter of Credit" means a Letter of Credit issued by the
Issuing Bank for the account of Borrower in accordance with Article IV.
"Facility Letter of Credit Fee" means a fee, payable with respect to
each Facility Letter of Credit issued by the Issuing Bank, in an amount per
annum equal to the product of (i) one percent (1%), and (ii) the face amount of
such Facility Letter of Credit.
"Facility Letter of Credit Obligations" means, at any date, the sum of
(i) the aggregate undrawn face amount of all outstanding Facility Letters of
Credit, plus (ii) the aggregate amount paid by an Issuing Bank on any Facility
Letters of Credit to the extent (if any) not reimbursed by Banks under Section
4.6 or by the Borrower.
"Facility Maturity Date" means May 29, 2001, as the same may be
extended for one (1) year as provided in Section 2.21.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to
11
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published for such day (or, if such day is not a Business Day, for the
immediately preceding Business Day) by the Federal Reserve Bank of New York, or,
if such rate is not so published for any day which is a Business Day, the
average of the quotations at approximately 10:00 a.m., West Palm Beach, Florida
time, on such day on such transactions received by Agent from three (3) Federal
funds brokers of recognized standing selected by Agent in its sole discretion.
"Financial Covenant Test" means each or any (as the context requires)
of the Consolidated Tangible Net Worth Test, the Leverage Test, the Interest
Coverage Test, the Fixed Charge Coverage Test, Dividend Payout Test, and Land
Holding Test, each as defined in Article IX and measured on a current quarterly
basis from time to time by the Agent, based on the financial statements and
information delivered to Agent pursuant to Section 7.1 or Section 7.3.
"Finished Lot" means a parcel of land owned by Borrower or any
Guarantor which (i) is duly platted and zoned and fully or substantially
developed with roads, drainage and other infrastructure necessary for use as a
site for a Housing Unit, (ii) has or where there would be upon application all
requisite building permits and other governmental and private consents and
approvals necessary to allow immediate construction of a Housing Unit, and (iii)
has available for connection at its boundaries potable water, sanitary sewer,
electricity and all other necessary utilities in capacities sufficient for the
Housing Unit. The term "Finished Lot" shall also include any real property upon
which the construction of a Housing Unit has commenced or has been completed,
but shall specifically not include the Housing Unit (or any portion thereof).
"Fixed Charges" means for any most recent rolling four fiscal quarter
period, without duplication, the sum of the following, as determined on a
consolidated basis for Borrower and its Subsidiaries in conformity with GAAP,
(i) Consolidated Interest Incurred,
(ii) current maturities of long-term Indebtedness, and
(iii) rental and operating lease expenses.
"Floating Rate" means, for any day, a rate per annum equal to the
higher of (i) the Prime Rate for such day, changing when and as the Prime Rate
changes, and (ii) the Federal Funds Effective Rate for such day, plus one half
of one percent (.5%), changing when and as the Federal Funds Effective Rate
changes.
"Floating Rate Advance" means an Advance which bears interest at the
Floating Rate.
"Floating Rate Loan" means a Loan which bears interest at the Floating
Rate.
12
"GAAP" means generally accepted accounting principles in effect from
time to time, consistently applied.
"Guarantors" means ▇▇▇▇▇ HOMES/ORLANDO, INC., ▇▇▇▇▇ HOMES/PALM BEACH,
INC., ▇▇▇▇▇ HOMES/BROWARD, INC., ▇▇▇▇▇ HOMES/PEMBROKE, INC., ▇▇▇▇▇ HOMES/GULF
COAST, INC., ▇▇▇▇▇ HOMES/ATLANTA, INC. (f/k/a ▇▇▇▇▇ Homes/Dade, Inc.), ▇▇▇▇▇
HOMES/SOUTHWEST FLORIDA, INC. (f/k/a ▇▇▇▇▇ Homes/Naples, Inc.), ▇▇▇▇▇ HOMES/▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, INC., ▇▇▇▇▇ HOMES/COLORADO, INC. (f/k/a Park ▇▇▇▇▇ Homes, Inc.),
▇▇▇▇▇ HOMES/ARIZONA, INC. (f/k/a ▇▇▇▇▇ Homes/Maryland, Inc.), ▇▇▇▇▇ HOMES/NORTH
CAROLINA, INC., ▇▇▇▇▇ HOMES/TEXAS, INC., ▇▇▇▇▇ HOMES/VIRGINIA, INC., ▇▇▇▇▇▇▇▇▇
HOMES, INC., PREFERRED BUILDERS REALTY, INC., PREFERRED HOME MORTGAGE COMPANY,
UNIVERSAL LAND TITLE, INC., PEMBROKE FALLS REALTY, INC., ST. TROPEZ AT BOCA
GOLF, INC., BILTMORE SOUTH CORP., ▇▇▇▇▇ HOMES/JACKSONVILLE, INC. and BANYAN
TRAILS, INC., each a Florida corporation, ▇▇▇▇▇ HOMES/ARIZONA CONSTRUCTION INC.,
an Arizona corporation, UNIVERSAL LAND TITLE OF COLORADO, INC., a Colorado
corporation, and ▇▇▇▇▇ HOMES REALTY, INC., a Georgia corporation, and their
successors and assigns. After the date of this Agreement, "Guarantor" shall also
include any Person that shall hereafter become a Subsidiary of Borrower or
required to become a Guarantor in accordance with Section 11.4 hereof, and their
successors and assigns. "Guarantor" means any one of the Guarantors.
"Guaranty" means a Guaranty, in substantially the form of EXHIBIT "B",
duly executed by Guarantors, as the same may be amended or modified from time to
time.
"Housing Unit" means a single-family dwelling, constructed or under
construction on a Finished Lot, whether detached or attached (including
condominiums but excluding mobile homes). Each "Housing Unit" is either a
Presold Unit, a Spec Unit or a Model Unit.
"Housing Unit Costs" means, with respect to each Housing Unit, the
total Actual Costs to construct the Housing Unit, including, without limitation,
labor and materials, construction and building permits, tap, connection and
impact fees, improvement district fees, and fees charged by governmental
authorities. "Housing Unit Costs" shall specifically exclude the acquisition
cost and any other costs, expenses and fees associated with the Finished Lot or
parcel on which the Housing Unit is located.
"Indebtedness" of a Person means, without duplication, and whether
contingent or absolute, and howsoever and whensoever created, arising, evidenced
or acquired, as measured at any time in accordance with GAAP on a consolidated
basis, such Person's
(i) obligations for borrowed money, including, without
limitation, obligations evidenced by bonds, debentures, notes, drafts
or similar instruments,
13
(ii) obligations representing the deferred purchase price of
Property or services or for the cost of Property constructed or of
improvements (other than trade accounts payable and accrued expenses
arising or occurring in the ordinary course of such Person's business
which are not overdue by more than thirty (30) days or which are being
contested in good faith by appropriate proceedings),
(iii) obligations, whether or not assumed, secured by Liens
on, or payable out of the proceeds or production from, Property now or
hereafter owned or acquired by such Person,
(iv) conditional sales contracts and similar title retention
debt instruments,
(v) Capitalized Lease Obligations,
(vi) net liabilities under Rate Hedging Obligations, and
obligations under asset securitization vehicles,
(vii) obligations to redeem capital stock at a stated time or
at the option of the holder,
(viii) obligations to make any loan, advance, or capital
contribution,
(ix) reimbursement obligations with respect to a Letter of
Credit (whether drawn or undrawn),
(x) withdrawal liability under ERISA,
(xi) all liabilities and obligations of others of the kind
described in clauses (i) through (x) that such Person has guaranteed,
endorsed or that is otherwise its legal liability (other than
endorsements of negotiable instruments for collection in the ordinary
course of business).
Indebtedness includes, without limitation, (A) in the case of Borrower, the
Obligations and the obligations evidenced by the Senior Notes, the Old Senior
Notes and the documents executed in connection therewith, and (B) in the case of
Guarantors, the obligations under the Guaranty, and the obligations under the
guaranties executed pursuant to the Indenture.
"Indenture" means that certain Indenture, dated as of February 2, 1998,
between Borrower, guarantors party thereto, and American Stock Transfer & Trust
Company, as trustee, pursuant to which the Senior Notes were issued.
"Interest Period" means, for each LIBOR Advance, the period commencing
on the date of such LIBOR Advance and ending on the last day of the period
selected by Borrower pursuant to
14
the provisions herein and, thereafter, each subsequent period commencing on the
last day of the immediately preceding Interest Period and ending on the last day
of the period selected by Borrower pursuant to the provisions of this Agreement.
The duration of each Interest Period shall be one (1), two (2), or three (3)
months as selected by Borrower (A), for a new Advance, in the Borrowing Notice,
or (B), for an outstanding Advance, in the Conversion/Continuation Notice;
provided, however, that:
(i) Whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding
Business Day, provided that if such extension would cause the last day
of such Interest Period to occur in the next following calendar month,
the last day of such Interest Period shall occur on the next preceding
Business Day; and
(ii) No Interest Period with respect to any LIBOR Advance
shall extend beyond the Facility Maturity Date.
"Inventory Valuation Date" means the last day of the most recent
calendar month with respect to which Borrower is required to have delivered a
Borrowing Base Certificate pursuant to Section 7.1(vi) hereof.
"Investment" of a Person means any loan, advance, extension of credit
(other than, as to Borrower and Guarantors, accounts receivable and extensions
of trade credit arising in the ordinary course of business in accordance with
normal trade practices of Borrower or such Guarantor, as the case may be), or
contribution of capital by such Person to any other Person or any investment in,
or purchase or other acquisition of, the stock, partnership, joint venture or
limited liability company interests, notes, debentures or other securities of
any other Person made by such Person.
"Investments in Joint Ventures" means any Investment of Borrower or any
of its Subsidiaries in a Person that (i) is not a Subsidiary, (ii) has at all
times no Indebtedness (other than trade accounts payable and other accrued
expenses in the ordinary course of business) or Liens on its Property (other
than Permitted Liens), and (iii) that is comprised of financially solvent
Persons with experience in the for sale home building business comparable to
Borrower or otherwise of sound reputation in the real estate industry, for the
purpose of acquiring land that is zoned for use as a site for single family
dwellings, or developing such land with single family dwellings.
"Issuance Date" means the date on which a Facility Letter of Credit is
issued, amended or extended.
"Issuing Bank" means SunTrust or such other Bank as Borrower, Agent and
such other Bank may agree upon, that may from time to time issue Facility
Letters of Credit.
"Land Not Under Development" means any parcel of land owned by Borrower
or any
15
Guarantor that is zoned for use as a site for Housing Units but that is not (i)
a Finished Lot, or (ii) Land Under Development.
"Land Under Development" means any parcel of land owned by Borrower or
any Guarantor that is zoned for use as a site for Housing Units and that is
being or within the ensuing six (6) month period will be actively and physically
developed into Finished Lots, and that will be fully developed into Finished
Lots within one (1) year after commencement of physical development; provided,
however, that the term "Land Under Development" shall not include any Finished
Lot. If active and physical development of any Land Under Development into
Finished Lots is not commenced within said six (6) month period or is not fully
developed into Finished Lots within one (1) year after commencement of physical
development, it shall thereafter be treated for all purposes as Land Not Under
Development.
"Land Under Development Costs" means, with respect to any Land Under
Development, the Actual Costs to acquire and develop the land into Finished
Lots.
"Lending Installation" means, with respect to a Bank or Agent, any
office, branch, banking subsidiary of the holding company of a Bank or Agent, or
banking Affiliate of such Bank or Agent.
"Letter of Credit" means a letter of credit or similar instrument which
is issued by a financial institution upon the application of a Person or upon
which such Person is an account party or for which such Person is in any way
liable, including without limitation any Facility Letter of Credit.
"LIBOR Advance" means an Advance which bears interest at a LIBOR Rate.
"LIBOR Base Rate" means, with respect to a LIBOR Advance for the
relevant Interest Period, the rate of interest determined by Agent, based on
Telerate System reports or other source as may be selected by Agent, to be the
"London Interbank Offered Rate" at which deposits in United States dollars are
offered by major banks in London, England, as of 11:00 a.m. London, England
time, two (2) Business Days before the first day of the respective Interest
Period, in the approximate amount of the relevant LIBOR Advance and having a
maturity approximately equal to such LIBOR Advance's Interest Period.
"LIBOR Loan" means a Loan which bears interest at a LIBOR Rate.
"LIBOR Rate" means, with respect to a LIBOR Advance for the relevant
Interest Period, the sum of (i) the quotient of (a) the LIBOR Base Rate
applicable to such Interest Period, divided by (b) one minus the Reserve
Requirement (expressed as a decimal) applicable to such Interest Period, plus
(ii) the Applicable LIBOR Rate Margin. The LIBOR Rate shall be rounded to the
next higher multiple of 1/100th of 1% if the rate is not such a multiple.
16
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment (the purpose of which is to grant a security
interest), deposit arrangement (the purpose of which is to grant a security
interest), encumbrance or other security agreement or arrangement of any kind or
nature whatsoever the purpose of which is to grant a security interest, whether
or not filed or recorded or otherwise perfected (including the interest of a
vendor or lessor under any conditional sale, any Capitalized Lease or any lease
deemed to constitute a security interest, or any other title retention
agreement).
"Loan" means, with respect to a Bank, such Bank's portion of any
Advance. For purposes of a Swing Line Advance, SunTrust's portion of such
Advance is 100%.
"Loan Documents" means this Agreement, the Notes, and any Reimbursement
Agreements, and if applicable, the Environmental Agreements, Mortgages and other
Collateral Documents.
"Lot Costs" means, with respect to each Finished Lot, the Actual Costs
to acquire and develop the Finished Lot.
"Majority Banks" means Banks in the aggregate having at least fifty-one
percent (51%) of the Aggregate Commitment, or if the Aggregate Commitment has
been terminated, Banks in the aggregate holding at least fifty-one percent (51%)
of the aggregate unpaid principal amount of the outstanding Advances.
"Material Adverse Effect" means a material adverse effect, based on
commercially reasonable standards, on (i) the business, Property, condition
(financial or otherwise), or results of operations of Borrower and Guarantors,
taken as a whole, (ii) the ability of Borrower or any Guarantor to perform its
obligations under any of the Loan Documents or the Guaranty, or (iii) the
validity or enforceability under applicable law of any of the Loan Documents or
the Guaranty or the rights or remedies of Agent, Banks or any Issuing Bank
thereunder.
"Model Unit" means a Housing Unit used and furnished for inspection by
prospective purchasers of Housing Units.
"Mortgage" means each Indenture of Mortgage, Deed of Trust, Deed to
Secure Debt, Assignment of Rents and Leases, Security Agreement and Fixture
Filing, securing the Obligations and the obligations under the Guaranty, granted
from time to time pursuant to Section 2.22 by each person owning or having any
interest in the Collateral (whether Borrower or any Guarantor) as
Trustor/Mortgagor, for the benefit of Agent on behalf of Banks, as
Beneficiary/Mortgagee, as the same may be amended or modified and in effect from
time to time, each being substantially in the form of EXHIBIT "C" attached
hereto (conformed as necessary with respect to the laws of the state where the
Collateral described therein is located).
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement as described in Section 3(37) of
ERISA to which Borrower,
17
any Guarantor or any member of the Controlled Group is a party to which more
than one employer is obligated to make contributions.
"Non-Recourse Indebtedness" with respect to any Person means
Indebtedness of such Person (i) for which the sole legal recourse for collection
of principal and interest on such Indebtedness is against the specific property
identified in the instruments evidencing or securing such Indebtedness and such
property was acquired with the proceeds of such Indebtedness or such
Indebtedness was incurred within ninety (90) days after the acquisition of such
property and for which no other assets of such Person may be realized upon in
collection of principal or interest on such Indebtedness, or (ii) that
refinances Indebtedness described in clause (i) and for which the recourse is
limited to the same extent described in clause (i).
"Note" means a promissory note, in substantially the form of EXHIBIT
"D" hereto, duly executed by Borrower and payable to the order of a Bank in the
amount of its Commitment, including any amendment, modification, renewal or
replacement of such promissory note.
"Notice of Assignment" is defined in Section 15.3.2.
"Obligations" means all unpaid principal of and accrued and unpaid
interest on the Notes, the Facility Letter of Credit Obligations, all accrued
and unpaid fees and all expenses, reimbursements, indemnities and other
obligations of Borrower to Banks or to any Bank, Agent, any Issuing Bank or any
indemnified party hereunder arising under the Loan Documents.
"Old Indenture" means that certain Indenture, dated as of March 15,
1994, between Borrower and American Stock Transfer & Trust Company, as trustee,
pursuant to which the Old Senior Notes were issued.
"Old Senior Notes" means the 11.75% Senior Notes due December 2000 of
Borrower in the maximum aggregate principal amount of $40,000,000.00 issued
pursuant to the Old Indenture.
"Participants" is defined in Section 15.2.1.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Permitted Liens" means, as to any Property of Borrower or any of its
Subsidiaries, any of the following:
(i) Liens for taxes, assessments or governmental charges or
levies on its Property if the same (A) shall not at the time be
delinquent or thereafter can be paid without penalty, or (B) are being
contested in good faith and by appropriate proceedings and for which
adequate reserves shall have been established on its books in
accordance with GAAP.
18
(ii) Liens imposed by law, such as landlord's, carriers',
warehousemen's, mechanics' and materialmen's Liens and other similar
Liens arising in the ordinary course of business with respect to
amounts that either (A) are not yet delinquent, or (B) are delinquent
but are being contested in good faith by appropriate proceedings and
for which adequate reserves shall have been established on its books in
accordance with GAAP.
(iii) Utility easements, rights of way, zoning restrictions,
covenants, reservations, and such other burdens, encumbrances or
charges against real property, or other minor irregularities of title,
as are of a nature generally existing with respect to properties of a
similar character and which do not in any material way interfere with
the use thereof or the sale thereof in the ordinary course of business
(including, without limitation, restrictive covenants of general
application created and reserved in the ordinary course of business by
a declarant of a planned residential development that require payment
of marketing, development or other fees or that reserve rights of first
refusal or repurchase options to the declarant to ensure compliance
with restrictive covenants requiring construction of a dwelling to
commence or be completed within a stated period of time).
(iv) Easements, dedications, assessment district or similar
Liens in connection with municipal financing and other similar
encumbrances or charges, reserved or vested in any governmental
authority, in each case reasonably necessary or appropriate for the
development of real property, and which are granted in the ordinary
course of the business, and which in the aggregate do not materially
burden or impair the fair market value or use of such real property (or
the project to which it is related) for the purposes for which it is or
may reasonably be expected to be held.
"Person" means any natural person, corporation, firm, joint venture,
partnership, limited liability company, association, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.
"Plan" means an employee pension benefit plan which is covered by Title
IV of ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which Borrower, any Guarantor or any member of the Controlled Group
may have any liability.
"Presold Lot" means a Finished Lot owned by Borrower or any Guarantor
that is subject to a bona fide written agreement for sale and purchase, between
the Borrower or any Guarantor, as seller, and a Person other than an Affiliate,
as buyer, entered into in the ordinary course of business, under which a ▇▇▇▇
▇▇▇▇▇▇▇ money deposit or down payment in an amount customary for the locale has
been paid, and that is subject only to customary contingencies to the closing of
the agreement and the buyer's purchase obligation.
"Presold Unit" means a Housing Unit owned by Borrower or any Guarantor
that is
19
subject to a bona fide written agreement for sale and purchase, between the
Borrower or any Guarantor, as seller, and a Person other than an Affiliate, as
buyer, entered into in the ordinary course of business, under which a ▇▇▇▇
▇▇▇▇▇▇▇ money deposit or down payment in an amount customary for the locale has
been paid, and that is subject only to customary contingencies to the closing of
the agreement and the buyer's purchase obligation.
"Prime Rate" means the rate per annum most recently publicly announced
by SunTrust Banks of Florida, Inc., or its successors, in Orlando, Florida, as
its "prime rate," as in effect from time to time. The Prime Rate will change on
each day the "prime rate" changes. The "prime rate" is not necessarily the best
or lowest rate offered by said bank, and said bank may lend to its customers at
rates that are at, above, or below its "prime rate."
"Property" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other assets owned,
leased or operated by such Person.
"Public Indebtedness" means Indebtedness evidenced by notes,
debentures, or other similar instruments issued after the date of this Agreement
pursuant to either (i) a registered public offering or (ii) a private placement
of such instruments in accordance with an exemption from registration (other
than Indebtedness evidenced by the Senior Notes, the Old Senior Notes, or any
Refinancing Indebtedness with respect to any of the foregoing) under the
Securities Act of 1933 and/or the Securities Exchange Act of 1934 or similar
law.
"Purchasers" is defined in Section 15.3.1.
"Rate Hedging Obligations" of a Person means any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, forward rate currency or interest rate options, puts and warrants,
(ii) any arrangement with any other Person whereby, directly or indirectly, such
Person is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such Person calculated by
applying a fixed or a floating rate of interest on the same notional amount,
including without limitation, interest rate swaps, caps, floors, collars and
similar arrangements, and (iii) any and all cancellations, buy backs, reversals,
terminations or assignments of any of the foregoing.
"Refinanced Loans" means, severally and collectively, the loans listed
on SCHEDULE "1" hereto.
20
"Refinancing Indebtedness" means Indebtedness that refunds, refinances
or extends any Indebtedness (or that refunds, refinances or extends any refund,
refinancing or extension of such Indebtedness), but only to the extent that:
(i) the Refinancing Indebtedness is subordinated to or pari
passu with the Obligations (or Guarantors' obligations under the
Guaranty, as applicable) to the same extent as the Indebtedness being
refunded, refinanced or extended,
(ii) the Refinancing Indebtedness is scheduled to mature no
earlier than the earlier of (A) the then current maturity date of such
Indebtedness, or (B) the Facility Maturity Date,
(iii) such Refinancing Indebtedness is in an aggregate amount
that is equal to or less than the sum of the aggregate amount then
outstanding plus all amounts committed but undisbursed under the
Indebtedness being refunded, refinanced or extended,
(iv) the Person or Persons liable for the payment of such
Refinancing Indebtedness are the same Person or Persons (or
successor(s) thereto) that were liable for the Indebtedness being
refunded, refinanced or extended when such Indebtedness was initially
incurred,
(v) such Refinancing Indebtedness is incurred within 120 days
after the Indebtedness being refunded, refinanced or extended is so
refunded, refinanced or extended, and
(vi) in the case of any Refinancing Indebtedness of the Old
Senior Notes, Senior Notes, or any other Public Indebtedness, the terms
and conditions of the Refinancing Indebtedness are no more restrictive
or adverse to Borrower or its Subsidiaries or the rights of the Banks
under this Agreement and other Loan Documents than those in the
Indenture on the date it was issued (including, without limitation,
with respect to the ability to incur Indebtedness and grant Liens to
secure Indebtedness, financial performance, and events of default).
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto
or other regulation or official interpretation of said Board of Governors
relating to reserve requirements applicable to member banks of the Federal
Reserve System.
"Regulation G", "Regulation U" and "Regulation X" mean Regulation G,
Regulation U, and Regulation X, respectively, of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto
or other regulation or official interpretation of said Board of Governors
relating to the extension of credit by banks for the purpose of
21
purchasing or carrying margin stocks applicable to member banks of the Federal
Reserve System.
"Related Business" means (i) the for sale home building business, or
(ii) a residential mortgage lending or title insurance business of Borrower or
its Subsidiaries, in each case substantially as in existence on the date hereof,
all as reasonably determined by Agent.
"Rejecting Bank" is defined in Section 2.21(b).
"Reimbursement Agreement" means, with respect to a Facility Letter of
Credit, such form of application therefor and form of reimbursement agreement
therefor (whether in a single or several documents, taken together) as an
Issuing Bank may employ in the ordinary course of business for its own account,
with such modifications thereto as may be agreed upon by such Issuing Bank and
Borrower and as are not materially adverse (in the reasonable judgment of such
Issuing Bank and Agent) to the interests of Banks; provided, however, in the
event of any conflict between the terms of any Reimbursement Agreement and this
Agreement, the terms of this Agreement shall control.
"Replacement Bank" is defined in Section 2.23.
"Reportable Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such Section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within thirty (30)
days of the occurrence of such event; provided, however, that a failure to meet
the minimum funding standard of Section 412 of the Code and of Section 302 of
ERISA shall be a Reportable Event regardless of the issuance of any such waiver
of the notice requirement in accordance with either Section 4043(a) of ERISA or
waiver of the funding requirements under Section 412(d) of the Code.
"Reserve Requirement" means, with respect to an Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities (as defined therein).
"Sales Center" means a sales center used to market and promote sales of
Housing Units.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Senior Debt" means the Senior Notes or, if the Senior Notes are
refinanced, the Refinancing Indebtedness with respect thereto.
"Senior Debt Rating" means the publicly announced ratings by any two
(2) of the following nationally recognized rating agencies (provided, however,
that at least one (1) of the two (2) agencies shall be ▇▇▇▇▇'▇ Investors
Service, Inc. or Standard & Poor's Corporation):
22
▇▇▇▇▇'▇ Investors Service, Inc., Standard & Poor's Corporation, Fitch's
Investment Service, and Duff & ▇▇▇▇▇▇ Credit Rating Co., as selected by
Borrower, on Borrower's Senior Debt; provided, however, (i) except as provided
in clause (ii), if the two ratings are not identical, the Senior Debt Rating
shall be the lower of the two ratings, and (ii) if more than one rating
gradation exists between the two ratings, the Senior Debt Rating shall be the
rating that is one gradation below the higher of the two ratings, and provided
further that, notwithstanding clauses (i) and (ii), if the rating by Standard &
Poor's Corporation or ▇▇▇▇▇'▇ Investors Service, Inc. is B or B2 respectively,
and the rating issued by the second of the two (2) selected agencies is lower,
then the Senior Debt Rating shall be the B or B2 rating, as applicable. The
Senior Debt Rating shall change if and when such rating(s) change.
"Senior Notes" means the unsecured 9.25% Senior Notes due 2008 of
Borrower in the maximum aggregate principal amount of $100,000,000.00 issued
pursuant to the Indenture.
"Single Employer Plan" means a Plan maintained by Borrower, any
Guarantor or any member of the Controlled Group for employees of Borrower, any
Guarantor or any member of the Controlled Group.
"Spec Lot" means a Finished Lot that is not a Presold Lot.
"Spec Unit" means any Housing Unit owned by any Guarantor that is not a
Presold Unit or a Model Unit.
"Subordinated Indebtedness" means any Indebtedness of Borrower the
payment of which is subordinated to payment of the Obligations to the reasonable
satisfaction of Majority Banks.
"Subsidiary" of a Person means (i) in the case of any corporation, a
corporation of which shares of stock having ordinary voting power to elect at
least a majority of the board of directors or other managers of which shall at
the time be owned, or the management of which is otherwise controlled, directly
or indirectly, by such Person or through one or more intermediaries, or both, by
such Person, or (ii) in the case of any partnership, association, joint venture,
limited liability company or similar business organization, any partnership,
association, joint venture, limited liability company or similar business
organization of which ownership interests having ordinary voting power to elect
at least a majority of the managers of which shall at the time be so owned or
controlled. Unless otherwise expressly provided, all references herein to a
"Subsidiary" shall mean a direct or indirect Subsidiary of Borrower.
"Substantial Portion" means, with respect to the Property of Borrower
and Guarantors, taken as a whole, Property which represents more than 10% of the
book value of the assets of Borrower and Guarantors, as shown in the
consolidated financial statements of Borrower and its Subsidiaries as of the
beginning of the fiscal quarter in which such determination is made.
"SunTrust" means SunTrust Bank, South Florida, National Association, in
its individual
23
capacity, and its successors.
"Swing Line Advances" is defined in Section 2.19.
"Swing Line Advance Maturity Date" means that day that is the five (5)
Business Days following the date on which a Swing Line Advance was funded by
SunTrust.
"Transferee" is defined in Section 15.4.
"Type" means, with respect to any Advance, its nature as a Floating
Rate Advance or LIBOR Advance.
"Unfunded Liabilities" means the amount (if any) by which the present
value of all vested nonforfeitable benefits under all Single Employer Plans
exceeds the fair market value of the assets of such Plans allocable to such
benefits, all determined as of the then most recent valuation date for such
Plans, using the actuarial methods and assumptions utilized in the actuarial
report for each such Plan as of such date.
"Unmatured Event of Default" means an event which but for the lapse of
time or the giving of notice, or both, would constitute an Event of Default.
"Unused Commitment" means, at any date with respect to any Bank, the
amount (if any) by which such Bank's Commitment exceeds the sum of (i) the
outstanding principal balance of such Bank's Loans as of such date, plus (ii)
such Bank's ratable share (determined in accordance with Section 4.6) of the
outstanding amount of the Facility Letters of Credit.
"Unused Commitment Fee" means a fee payable by Borrower to each Bank
with respect to such Bank's Unused Commitment, calculated in accordance with
Section 2.5(b).
"Warehouse Facility" means one or more commitments from one or more
banks or other lending institutions to lend funds for the purpose of financing
the making of residential mortgage loans originated by Borrower or any of its
Subsidiaries.
"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of
the outstanding voting securities (or the election of the board of directors) of
which shall at the time be beneficially owned (within the meaning of Rule 13d-3
of the Securities Exchange Act of 1934, as amended) directly or indirectly, by
such Person or one or more Wholly-Owned Subsidiaries of such Person, or by such
Person and one or more Wholly-Owned Subsidiaries of such Person, or (ii) any
partnership, association, joint venture, limited liability company or similar
business organization 100% of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
24
ARTICLE II
THE CREDITS
2.1 COMMITMENT. From and including the date of this Agreement and prior
to the Facility Maturity Date, each Bank severally agrees, on the terms and
conditions set forth in this Agreement, to make Loans and to participate
pursuant to Section 4.6 in the issuance of Facility Letters of Credit to
Borrower from time to time in amounts not to exceed in the aggregate at any one
time outstanding the amount of its Commitment; provided, however, that
notwithstanding anything to the contrary in this Agreement (including, without
limitation, in Section 2.19(d) or 4.6(b)) (i) a Bank shall not be required to
make any Loan or Loans in excess of the amount of such Bank's then Available
Credit, and (ii) the aggregate principal amount of all Advances outstanding plus
the aggregate amount of the Facility Letter of Credit Obligations outstanding
plus the Aggregate Senior Indebtedness outstanding at any time and from time to
time shall not exceed the Borrowing Base determined as of the most recent
Inventory Valuation Date. Subject to the terms of this Agreement, Borrower may
borrow, repay and reborrow at any time prior to the Facility Maturity Date. The
Commitments to lend hereunder shall expire on the Facility Maturity Date.
2.2 REQUIRED PAYMENTS. Any outstanding Advances and all other unpaid
Obligations shall be paid in full by Borrower on the Facility Maturity Date.
Additionally, if for any reason at any time either (i) the principal amount of
all Advances plus the aggregate amount of the Facility Letter of Credit
Obligations outstanding exceeds the Aggregate Commitment, or (ii) the aggregate
principal amount of all Advances outstanding plus the aggregate amount of the
Facility Letter of Credit Obligations outstanding plus the Aggregate Senior
Indebtedness outstanding exceeds the Borrowing Base determined as of the most
recent Inventory Valuation Date, then:
(a) Borrower shall, within five (5) Business Days after notice
from Agent, make a payment to Agent for the benefit of Banks in an amount equal
to such excess principal amount; and
(b) Until Borrower shall have made the payment to Agent
described in subparagraph (a) above, Borrower shall not, directly or indirectly,
declare, make or pay, or incur any liability to make or pay, or cause or permit
to be declared, made or paid, any Dividend. The foregoing paragraph will not
prevent the payment of any Dividend by Borrower within sixty (60) days after the
date of its declaration if such Dividend could have been made on the date of its
declaration in compliance with the foregoing provisions.
The amount due pursuant to clause (a) of this Section 2.2 (the "Amount
Due") shall be paid to and used by Agent first to repay outstanding Advances. If
the Amount Due is payable at a time when the Amount Due exceeds the Advances
outstanding, then the Amount Due shall be paid to and used by Agent first to
repay Advances, next to repay amounts paid by any Issuing
25
Bank on any Facility Letter of Credit to the extent (if any) not reimbursed by
Borrower ("Unreimbursed LOC Payments"), and any balance shall be held by Agent
as collateral security for and used by Agent to repay Unreimbursed LOC Payments
as they may arise in connection with any Facility Letters of Credit outstanding
from time to time, without notice to Borrower. Any portion of such balance
retained for collateral security as aforesaid need not be segregated by Agent
but shall bear interest at a rate selected by Agent substantially similar to
rates generally offered by financial institutions on similar funds for similar
purposes (the amounts so held by Agent from time to time, including such
interest, are hereinafter referred to as the "Collateral Security Funds"). To
the extent Agent holds any Collateral Security Funds at any time when an Amount
Due is no longer required pursuant to clause (a), the remaining balance of the
Collateral Security Funds not used for repayment of Unreimbursed LOC Payments
shall be returned to Borrower by Agent but only if no Unmatured Event of Default
or Event of Default exists. If any Unmatured Event of Default or Event of
Default shall ever occur, then all Collateral Security Funds shall be applied by
Agent toward repayment of the Obligations without notice to Borrower. The Agent
and each Bank (including each Issuing Bank) are hereby granted a first priority
lien on and security interest in all amounts paid by Borrower or held by Agent
(including interest earned) for the purposes expressed in this paragraph.
Sections 2.7, 2.13, 2.15, 3.4 and other provisions of this Agreement
contain further provisions regarding payment.
2.3 RATABLE LOANS. Each Advance hereunder, including without
limitation, any Advance made by the Banks pursuant to Section 2.19(d), but
excluding Swing Line Advances, shall consist of Loans made by the several Banks
ratably in proportion to the ratio that their respective Commitments bear to the
Aggregate Commitment. Swing Line Advances shall consist of Loans made by
SunTrust.
2.4 TYPES OF ADVANCES. The Advances may be Floating Rate Advances or
LIBOR Advances, or a combination thereof, selected by Borrower in accordance
with Sections 2.8 and 2.9.
2.5 FEES; REDUCTION IN COMMITMENT.
(a) AGENCY FEE. Borrower shall pay to Agent annually for the
account of Agent (and not the Banks) an agency fee in the amount set forth in
the commitment letter (including the letter agreement incorporated therein)
dated March 9, 1998 between Agent, SunTrust Equitable Securities Corporation,
and Borrower (signed and accepted by Borrower on March 11, 1998). This fee shall
be paid by Borrower to Agent in advance, contemporaneously with the execution of
this Agreement, and annually thereafter until (and excluding) the Facility
Maturity Date, and shall be non-refundable in any event.
(b) UNUSED COMMITMENT FEE. Borrower agrees to pay to Agent for
the account of each Bank an Unused Commitment Fee, at a rate per annum equal to
the Applicable
26
Unused Commitment Rate, calculated on the basis of a 360-day year in accordance
with this Section from the date hereof and to and including the Facility
Maturity Date, and payable quarterly in arrears as of the first day of each
January, April, July and October hereafter and on the Facility Maturity Date.
The Unused Commitment Fee shall be due and payable within ten (10) days after
Borrower's receipt of a statement therefor from Agent. For each quarter (or
portion thereof), the Unused Commitment Fee shall be equal to (A) such Bank's
average daily Commitment during such quarter (or portion thereof) minus (B) such
Bank's "average daily outstandings" for the quarter (or portion thereof) with
respect to which the Unused Commitment Fee is being computed, with the resulting
difference (the difference is hereinafter referred to as the "Unused
Commitment") multiplied by (C) the Applicable Unused Commitment Rate, and the
final product multiplied by (D) the quotient obtained by dividing the actual
number of days elapsed during the quarter by three hundred sixty (360);
PROVIDED, HOWEVER, that during the first five hundred forty (540) day period
following the date of this Agreement, the Unused Commitment Fee shall be equal
to the amount calculated as follows if (i) Borrower has not reduced the
Aggregate Commitment in accordance with Section 2.5 (d), (ii) Borrower has used
Public Indebtedness permitted by clause (x) (b) of Section 8.2 and not any
Advances or other funds to pay, redeem and retire all of the Old Senior Notes in
full, and (iii) no Unmatured Event of Default or Event of Default exists: (A)
the Unused Commitment multiplied by (B) (i) .05% if the Unused Commitment is
less than or equal to such Banks' ratable share of $40,000,000.00 (in proportion
to the ratio that its Commitment bears to the Aggregate Commitment), or (ii) if
the Unused Commitment is greater than such Banks' ratable share of
$40,000,000.00 (in proportion to the ratio that its Commitment bears to the
Aggregate Commitment), then by .05% with respect to the Bank's ratable share of
$40,000,000.00 (in proportion to the ratio that its Commitment bears to the
Aggregate Commitment) and by the Applicable Unused Commitment Rate with respect
to the difference between the Unused Commitment and the Bank's ratable share of
$40,000,000.00 (in proportion to the ratio that its Commitment bears to the
Aggregate Commitment), and the final product multiplied by (C) the quotient
obtained by dividing the actual number of days elapsed during the quarter by
three hundred sixty (360).
As used herein, "average daily outstandings" means the sum of (i) the
outstanding principal balance of such Bank's Loans (including, with respect to
SunTrust only, the outstanding principal balance of Swing Line Advances) plus
(ii) such Bank's ratable share (determined in accordance with Section 4.6) of
the outstanding amount of the Facility Letters of Credit, all calculated for
each day during the quarter (or portion thereof) for which the fee is being
computed, divided by the number of days in that quarter (or portion thereof).
The Unused Commitment Fee shall continue to be payable irrespective of whether
the Conversion Period is in effect. All accrued Unused Commitment Fees shall be
payable on the effective date of any termination of the obligations of Banks to
make Loans hereunder.
(c) EXTENSION FEE. If the Facility Maturity Date is extended
pursuant to the provisions of Section 2.21, then Borrower shall pay to Agent an
extension fee in the amount set forth in the commitment letter (including the
letter agreement incorporated therein) dated March 9, 1998 between Agent,
SunTrust Equitable Securities Corporation, and Borrower (signed and accepted by
Borrower on March 11, 1998). The extension fee shall be paid by Borrower to
27
Agent in advance, within five (5) Business Days after Agent notifies Borrower of
the extension of the Facility Maturity Date pursuant to Section 2.21(a). The
extension fee shall be non-refundable in any event. Agent shall pay to each Bank
(other than SunTrust) as its portion of the extension fee paid by Borrower an
amount determined in accordance with the following schedule, based on such
Bank's total Commitment at the time of Agent's receipt of the fee, it being
recognized that the entire balance of the fee not payable to Banks other than
SunTrust in accordance with the following schedule shall be retained by SunTrust
as its portion of the extension fee:
---------------------------------------- ---------------------------------------
BANK'S EXTENSION FEE
COMMITMENT (as a percentage of Bank's Commitment)
---------------------------------------- ---------------------------------------
$30,000,000.00 or more .05 %
---------------------------------------- ---------------------------------------
$20,000,000.00 to $29,999,999.99 .035 %
---------------------------------------- ---------------------------------------
$10,000,000.00 to $19,999,999.99 .0175 %
---------------------------------------- ---------------------------------------
(d) REDUCTIONS IN AGGREGATE COMMITMENT. Borrower may
permanently reduce the Aggregate Commitment in whole, or in part in integral
multiples of $5,000,000.00 at any time or from time to time, upon at least five
(5) Business Days' written notice to Agent, which notice shall specify the
amount of any such reduction; provided, however, that the amount of the
Aggregate Commitment may not be reduced below the sum of (i) the aggregate
principal amount of the outstanding Advances plus (ii) the Facility Letter of
Credit Obligations. Any reduction of the Aggregate Commitment in part shall
reduce each Bank's Commitment ratably (in proportion to the ratio that its
respective Commitment bears to the Aggregate Commitment). The Aggregate
Commitment, once reduced or terminated, may not be reinstated.
2.6 MINIMUM AMOUNT OF EACH ADVANCE. Each LIBOR Advance shall be in the
minimum amount of $2,000,000.00 and in multiples of $1,000,000.00 if in excess
thereof. Each Floating Rate Advance shall be in the minimum amount of
$1,000,000.00 and in multiples of $100,000.00 if in excess thereof. There shall
be no required minimum or multiple amount for any Swing Line Advance.
2.7 OPTIONAL PRINCIPAL PAYMENTS. Borrower may at any time or from time
to time pay, without penalty or premium, all Floating Rate Advances, or, in a
minimum aggregate amount of $100,000.00 or any integral multiple of $50,000.00
in excess thereof (except with respect to Swing Line Advances), any portion of
the outstanding Floating Rate Advances upon one (1) Business Day's prior notice
to Agent, given not later than 11:00 a.m. West Palm Beach, Florida time.
Borrower may, (i) upon one (1) Business Day's prior notice to Agent, given not
later than 11:00 a.m. West Palm Beach, Florida time, pay, without penalty or
premium, any LIBOR Advance in full on the last day of the Interest Period for
such LIBOR Advance, and (ii)
28
upon three (3) Business Days' prior notice to Agent, given not later than 11:00
a.m. West Palm Beach, Florida time, prepay any LIBOR Advance in full (or, if
less, in a minimum amount of $1,000,000.00 and integral multiples of $100,000.00
in excess thereof) prior to the last day of the Interest Period for such LIBOR
Advance, provided that Borrower shall also pay at the time of such prepayment
all amounts payable with respect thereto pursuant to Section 3.4 hereof.
Sections 2.2, 2.13, and 2.15 and other provisions of this Agreement contain
further provisions regarding payment.
2.8 METHOD OF SELECTING TYPES AND INTEREST PERIODS FOR NEW ADVANCES.
Borrower, when requesting an Advance, shall select the Type of Advance and, in
the case of each LIBOR Advance, the Interest Period applicable to each Advance
from time to time. Borrower shall give Agent irrevocable notice (a "Borrowing
Notice") in the form of EXHIBIT "E" not later than (a) 11:00 a.m., West Palm
Beach, Florida time, one (1) Business Day before the Borrowing Date of each
Floating Rate Advance (except a Swing Line Advance), (b) 11:00 a.m., West Palm
Beach, Florida time, three (3) Business Days before the Borrowing Date of each
LIBOR Advance, and (c) 1:00 p.m., West Palm Beach, Florida time, on the
Borrowing Date of each Swing Line Advance, specifying:
(i) the Borrowing Date, which shall be a Business Day, of such
Advance,
(ii) whether the Advance is a Swing Line Advance,
(iii) the aggregate amount of such Advance,
(iv) the Type of Advance selected; provided, however, that the
aggregate number of LIBOR Advances outstanding at any one time shall
not exceed ten (10), and further provided that any Swing Line Advance
shall be a Floating Rate Advance, and
(v) in the case of each LIBOR Advance, the Interest Period
applicable thereto.
With respect to each Floating Rate Advance (except Swing Line Advances)
and each LIBOR Advance, Agent shall notify Banks by 4:00 p.m., West Palm Beach,
Florida time, on the date Agent receives the Borrowing Notice as described
above. With respect to such Advances, not later than 11:00 a.m., West Palm
Beach, Florida time, on each Borrowing Date, each Bank shall make available its
Loan or Loans, in funds immediately available in West Palm Beach, Florida to
Agent at its address specified pursuant to Article XVI. Agent will make the
funds so received from Banks available to Borrower at Agent's aforesaid address.
Disbursements of all Advances (other than Swing Line Advances) to Borrower may
be
29
made not more frequently than one time per Business Day. Disbursements of all
Swing Line Advances to Borrower may be made not more frequently than one time
per Business Day, or on a more frequent basis as SunTrust may agree.
2.9 CONVERSION AND CONTINUATION OF OUTSTANDING ADVANCES. Floating Rate
Advances shall continue as Floating Rate Advances unless and until such Floating
Rate Advances are converted into LIBOR Advances. Each LIBOR Advance shall
continue as a LIBOR Advance until the end of the then applicable Interest Period
therefor, at which time the LIBOR Advance shall be automatically converted into
a Floating Rate Advance unless Borrower shall have given Agent a
Conversion/Continuation Notice in compliance with this Section requesting that,
at the end of such Interest Period, the LIBOR Advance either continue as a LIBOR
Advance for the same or another Interest Period or be repaid. Subject to the
other terms of this Agreement, Borrower may elect from time to time to convert
all or any part of an Advance of any Type into any other Type or Types of
Advances; provided, however, that any conversion of any LIBOR Advance may be
made on, and only on, the last day of the Interest Period applicable thereto,
and further provided that the aggregate number of LIBOR Advances outstanding at
any one time shall not exceed ten (10). Borrower shall give Agent irrevocable
notice (a "Conversion/Continuation Notice") in a Borrowing Notice of each
conversion of an Advance or continuation of a LIBOR Advance not later than 11:00
a.m., West Palm Beach, Florida time, at least one (1) Business Day, in the case
of a conversion into a Floating Rate Advance, or three (3) Business Days, in the
case of a conversion into or continuation of a LIBOR Advance, prior to the date
of the requested conversion or continuation, specifying:
(i) the requested date which shall be a Business Day, of such
conversion or continuation;
(ii) the aggregate amount and Type of the Advance which is to
be converted or continued; and
(iii) the amount and Type(s) of Advance(s) into which such
Advance is to be converted or continued and, in the case of a
conversion into or continuation of a LIBOR Advance, the Interest Period
applicable thereto.
2.10 CHANGES IN INTEREST RATE, ETC. Each Floating Rate Advance shall
bear interest on the outstanding principal amount thereof, for each day, from
and including the date the Advance is made or is converted from a LIBOR Advance
into a Floating Rate Advance pursuant to Section 2.9 to but excluding the date
it becomes due or is converted into a LIBOR Advance pursuant to Section 2.9
hereof, at a rate per annum equal to the Floating Rate for such day. Changes in
the rate of interest on any Advance maintained as a Floating Rate Advance will
take effect simultaneously with each change in the Floating Rate. Each LIBOR
Advance shall bear interest, from and including the first day of the Interest
Period applicable thereto to (but not including) the last day of such Interest
Period, at its applicable LIBOR Rate. No Interest Period may end after the
Facility Maturity Date.
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2.11 DETERMINATION OF APPLICABLE LIBOR RATE MARGIN AND APPLICABLE
UNUSED COMMITMENT RATE.
(a) SENIOR DEBT RATING. The Applicable LIBOR Rate Margin and
the Applicable Unused Commitment Rate shall be determined by reference to the
Senior Debt Rating, in accordance with the following table:
------------------------------- ---------------------- ---------------------- ------------------------
SENIOR DEBT RATING SENIOR DEBT RATING APPLICABLE LIBOR APPLICABLE UNUSED
(STANDARD & POOR'S OR ▇▇▇▇▇'▇) (▇▇▇▇ & ▇▇▇▇▇▇ OR RATE MARGIN (%) COMMITMENT RATE (%)
FITCH)
------------------------------- ---------------------- ---------------------- ------------------------
BB/Ba2 or higher BB/BB 1.50 0.25
------------------------------- ---------------------- ---------------------- ------------------------
BB-/Ba3 BB-/BB- 1.75 0.30
------------------------------- ---------------------- ---------------------- ------------------------
B+/B1 B+/B+ 2.00 0.35
------------------------------- ---------------------- ---------------------- ------------------------
B/B2 B/B 2.25 0.375
------------------------------- ---------------------- ---------------------- ------------------------
(b) ADJUSTMENT OF MARGINS. The Applicable Unused Commitment
Rate and Applicable LIBOR Rate Margin shall be adjusted, as applicable from time
to time, effective on the first Business Day after any change in the Senior Debt
Rating.
(c) CHANGES TO RATINGS. If the rating system used by any
rating agency shall change, then Borrower and Banks, acting through Agent, shall
negotiate in good faith to amend the references to specific ratings in the
foregoing table to reflect such changed rating system.
2.12 TYPES OF ADVANCES AND RATES APPLICABLE DURING DEFAULT.
Notwithstanding anything to the contrary contained in Section 2.8, 2.9 or 2.10,
or in any other provision of this Agreement:
(i) during the continuance of an Unmatured Event of
Default the Majority Banks may, at their option, by notice to Borrower
(which notice may be revoked at the option of the Majority Banks
notwithstanding any provision of Section 11.2 requiring unanimous
consent of Banks to changes in interest rates), and declare that no
Advance may be made as or converted into a LIBOR Advance; and
(ii) during the continuance of an Event of Default,
the Majority Banks may, at their option, by notice to Borrower (which
notice may be revoked at the option of the Majority Banks
notwithstanding any provision of Section 11.2 requiring unanimous
31
consent of Banks to changes in interest rates), declare that (a) no
Advance may be made as converted into or continued as a LIBOR Advance
after expiration of the applicable Interest Period, (b) each LIBOR
Advance shall bear interest for the remainder of the applicable
Interest Period at the rate otherwise applicable to such Interest
Period plus 3% per annum, and (c) each Floating Rate Advance shall bear
interest at a rate per annum equal to the Floating Rate otherwise
applicable to the Floating Rate Advance plus 3% per annum.
2.13 METHOD OF PAYMENT. All payments of the Obligations shall be made,
without setoff, deduction, or counterclaim, in immediately available funds to
Agent at Agent's address specified pursuant to Article XVI, or at any other
Lending Installation of Agent specified in writing by Agent to Borrower, by 1:00
p.m. (local time at the place of receipt) on the date when due (or with respect
to Swing Line Advances, in accordance with Section 2.19). If any payment of
principal of or interest on an Advance shall become due on a day which is not a
Business Day, such payment shall be made on the next succeeding Business Day,
and such extension of time shall be included in computing interest in connection
with such payment. Except for payments of Swing Line Advances or where this
Agreement otherwise indicates that a payment is for the account of a specific
Bank or the Agent, all payments of the Obligations shall be applied ratably by
Agent among Banks, in proportion to the ratio that each Bank's Commitment bears
to the Aggregate Commitment. Each payment delivered to Agent for the account of
any Bank shall be delivered promptly by Agent to such Bank in the same type of
funds that Agent received at its address specified pursuant to Article XVI or at
any Lending Installation specified in a notice received by Agent from such Bank.
If Agent receives, for the account of a Bank, a payment from Borrower and fails
to remit such payment to the Bank on the Business Day such payment is received
by Agent (if received by 1:00 p.m., West Palm Beach, Florida time) or on the
next Business Day (if received after 1:00 p.m., West Palm Beach, Florida time),
Agent shall pay to such Bank interest on such payment at a rate per annum equal
to the Federal Funds Effective Rate for each day for which such payment is so
delayed.
2.14 NOTES; TELEPHONIC NOTICES. Each Bank is hereby authorized to
record the principal amount of each of its Loans and each repayment on a
schedule attached to its Note; provided, however, that the failure to so record
shall not affect Borrower's obligations under the Note. Borrower hereby
authorizes Agent to extend, convert or continue Advances, effect selections of
Types of Advances and to transfer funds based on telephonic notices made by any
person or persons who Agent in good faith believes to be acting on behalf of
Borrower. Borrower agrees to deliver promptly to Agent a written confirmation,
if such confirmation is requested by Agent, of each telephonic notice signed by
an Authorized Officer of Borrower. If the written confirmation differs in any
material respect from the action taken by Agent, the records of Agent shall
govern absent manifest error.
2.15 INTEREST PAYMENT DATES; INTEREST BASIS. Interest on all Advances
shall be calculated on the basis of a 360 day year, based on the actual days
elapsed. Interest accrued on each Floating Rate Advance and Swing Line Advance
shall be paid on the first day of each
32
calendar month and interest accrued on each LIBOR Advance shall be paid at the
end of each Interest Period, commencing with the first such date to occur after
the date hereof, and shall be payable, in arrears. Interest shall also be
payable in arrears on the Facility Maturity Date and on any date on which an
Advance is prepaid, whether due to acceleration or otherwise. Interest shall be
payable for the day an Advance is made but not for the day of any payment on the
amount paid if payment is received prior to 1:00 p.m. (local time at the place
of receipt). Section 2.13 and other provisions of this Agreement contain further
provisions regarding payments of interest.
2.16 NOTIFICATION OF ADVANCES, INTEREST RATES, PREPAYMENTS AND
COMMITMENT REDUCTIONS. Promptly after receipt thereof, Agent will notify each
Bank of the contents of each Aggregate Commitment reduction notice, Borrowing
Notice, Conversion/Continuation Notice, and repayment notice received by it
hereunder. Agent will notify each Bank of the interest rate applicable to each
LIBOR Advance promptly upon determination of such interest rate and will give
each Bank prompt notice of each change in the Floating Rate, the Applicable
LIBOR Rate Margin or the Applicable Unused Commitment Rate.
2.17 LENDING INSTALLATIONS. Each Bank may book its Loans at any Lending
Installation selected by such Bank and may change its Lending Installation from
time to time. All terms of this Agreement shall apply to any such Lending
Installation and the Notes shall be deemed held by each Bank for the benefit of
such Lending Installation. Each Bank may, by written or telex notice to Agent
and Borrower, designate a Lending Installation through which Loans will be made
by it and for whose account Loan payments are to be made.
2.18 NON-RECEIPT OF FUNDS BY AGENT. Unless Borrower or a Bank, as the
case may be, notifies Agent prior to the date on which such payment is due to
Agent of (i) in the case of a Bank, the proceeds of a Loan or (ii) in the case
of Borrower, a payment of principal, interest, fees or other amounts due under
the Loan Documents to Agent for the account of Banks, that it does not intend to
make such payment, Agent may assume that such payment has been made. Agent may,
but shall not be obligated to, make the amount of such payment available to the
intended recipient in reliance upon such assumption. If Borrower or such Bank,
as the case may be, has not in fact made such payment to Agent, the recipient of
such payment shall, on demand by Agent, repay to Agent the amount so made
available together with interest thereon in respect of each day during the
period commencing on the date such amount was so made available by Agent until
the date Agent recovers such amount at a rate per annum equal to (a) in the case
of payment by a Bank, the Federal Funds Effective Rate for such day or (b) in
the case of payment by Borrower, the interest rate applicable to the relevant
Advance.
2.19 SWING LINE. Notwithstanding the minimum amount of an Advance that
may be requested and the minimum amount of an Advance that may be repaid under
this Agreement, Banks desire for SunTrust to fund Advances for Borrower in
amounts that may be less than the minimum Advance amounts required under Section
2.6, and Banks desire to permit Borrower to
33
repay Advances in amounts that may be less than the minimum repayment amounts
required under Section 2.7. Such Advances made pursuant to this Section 2.19
shall be deemed to be Advances for purposes of this Agreement and are referred
to herein as "Swing Line Advances." Swing Line Advances shall be requested,
advanced, and repaid in accordance with the provisions and limitations of this
Agreement relating to all Advances, subject to the following:
(a) AGGREGATE LIMIT. The aggregate amount of all outstanding
Swing Line Advances shall not exceed at any one time $10,000,000.00.
(b) FLOATING RATE ADVANCES. All Swing Line Advances shall be
Floating Rate Advances.
(c) FUNDING SWING LINE ADVANCES. Swing Line Advances shall be
funded by SunTrust pursuant to the procedures set forth in Section 2.8 of this
Agreement. The principal amount of each Swing Line Advance, together with all
accrued interest, shall be repaid by Borrower to SunTrust in same day funds by
1:00 p.m. (or such later time as may be acceptable to Agent), West Palm Beach,
Florida time, on the Swing Line Advance Maturity Date. Additionally, if the
aggregate principal amount of all outstanding Swing Line Advances exceeds
$10,000,000.00, Borrower shall pay to SunTrust the excess amount in same day
funds by 1:00 p.m., West Palm Beach, Florida time, on the first Business Day
following the day that the excess amount occurs.
(d) REPAYMENT OF SWING LINE ADVANCES. If Borrower fails to pay
any Swing Line Advances on the applicable Swing Line Advance Maturity Date, then
such Advances shall no longer be Swing Line Advances, but shall continue to be
Floating Rate Advances for purposes of this Agreement. Each Bank shall be deemed
to have irrevocably and unconditionally purchased and received from Agent an
undivided interest and participation (ratably in proportion to the ratio that
such Bank's Commitment bears to the Aggregate Commitment) in such Advances. In
such event, as of 11:59 p.m., West Palm Beach, Florida time, on the Swing Line
Advance Maturity Date, Agent shall notify each Bank of the total principal
amount of all matured Swing Line Advances and each Bank's ratable share thereof.
Upon receipt of such notice (whether or not delinquent), each Bank shall
promptly and unconditionally pay to Agent for the account of SunTrust the amount
of such Bank's share (ratably in proportion to the ratio that such Bank's
Commitment bears to the Aggregate Commitment) of such payment in same day funds,
and Agent shall pay such amount, and any other amounts received by Agent for
SunTrust's account pursuant to this Section 2.19(d), to SunTrust, in accordance
with the payment provisions of Section 2.13. If Agent so notifies such Bank
prior to 11:00 a.m., West Palm Beach, Florida time, on any Business Day, such
Bank shall make available to Agent for the account of SunTrust such Bank's share
of the amount of such payment on such Business Day in same day funds. If
34
Agent notifies such Bank after 11:00 a.m., West Palm Beach, Florida time, on any
Business Day, such Bank shall make available to Agent for the account of
SunTrust such Bank's share of the amount of such payment on the next succeeding
Business Day in same day funds. If and to the extent such Bank shall not have so
made its share of the amount of such payment available to Agent for the account
of SunTrust, such Bank agrees to pay to Agent for the account of SunTrust
forthwith on demand such amount, together with interest thereon, for each day
from the date such payment was first due until the date such amount is paid to
Agent for the account of SunTrust, at the Federal Funds Effective Rate. The
failure of any Bank to make available to Agent for the account of SunTrust such
Bank's share of any such payment shall not relieve any other Bank of its
obligation hereunder to make available to Agent for the account of SunTrust its
share of any payment on the date such payment is to be made.
(e) ADVANCES. The payments made by Banks to SunTrust in
reimbursement of Swing Line Advances shall constitute, and Borrower hereby
expressly acknowledges and agrees that such payments shall constitute, Advances
hereunder to Borrower and such payments shall for all purposes be treated as
Advances to Borrower (notwithstanding that the amounts thereof may not comply
with the provisions of Section 2.6 and 2.7). Such Advances shall be Floating
Rate Advances, subject to Borrower's rights to convert the Advance to another
Type in accordance with this Article II.
2.20 WITHHOLDING TAX EXEMPTION. At least five (5) Business Days prior
to the first date on which interest or fees are payable hereunder for the
account of any Bank, each Bank (if any) that is not incorporated under the laws
of the United States of America, or a state thereof, agrees that it will deliver
to each of Borrower and Agent two (2) duly completed copies of United States
Internal Revenue Service Form 1001 or 4224 (or any more current form then in
use), certifying in either case that such Bank is entitled to receive payments
under this Agreement and the Notes without deduction or withholding of any
United States federal taxes and an Internal Revenue Service Form W-8 or W-9 (or
any more current form then in use) entitling such Bank to receive a complete
exemption from United States tax backup withholding. Each Bank which so delivers
a Form 1001 or 4224 (or any more current form then in use) further undertakes to
deliver to each of Borrower and Agent two (2) additional copies of such form (or
any more current form then in use) on or before the date that such form expires
or becomes obsolete or after the occurrence of any event requiring a change in
the most recent forms so delivered by it, and such amendments thereto or
extensions or renewals thereof as may be reasonably requested by Borrower or
Agent, in each case certifying that such Bank is entitled to receive payments
under this Agreement and the Notes without deduction or withholding of any
United States federal taxes, unless an event (including without limitation any
change in treaty, law or regulation) has occurred prior to the date on which any
such delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Bank from duly completing and
delivering any such form with respect to it and such Bank advises Borrower and
Agent that it is not capable of receiving payments without any deduction or
withholding of United States federal tax. If a Bank does not provide duly
executed forms to Borrower and Agent within the time periods set forth in this
Section, Borrower or Agent shall withhold taxes from payments to such Bank at
the applicable statutory rates and Borrower shall not be required to pay any
additional amounts as a result of such withholding. Upon the
35
reasonable request of Borrower or Agent, each Bank that has not provided the
forms or other documents, as provided above, on the basis of being a "United
States person," shall submit to Borrower and Agent a certificate or other
evidence to the effect that it is such a "United States person."
2.21 EXTENSION OF FACILITY MATURITY DATE.
(a) EXTENSION REQUESTS. Borrower may request a single,
one-year extension of the Facility Maturity Date by submitting a written request
for an extension to Agent (an "Extension Request") no earlier than two hundred
seventy (270) days and no later than one (1) year after the date of this
Agreement. Promptly upon (but not later than five (5) Business Days after)
receipt of the Extension Request, Agent shall notify each Bank of the contents
thereof and shall request each Bank to approve the Extension Request. Approval
of an Extension Request shall be in each Bank's sole discretion, and no Bank
shall have any liability to Borrower or any other Bank if it fails to approve an
Extension Request. Each Bank approving the Extension Request shall deliver its
written approval to Agent no later than sixty (60) days after the date of the
Extension Request. If the approval of each Bank is received by Agent within
sixty (60) days after the date of the Extension Request (or as otherwise
provided in Section 2.21(b)), Agent shall promptly so notify Borrower and each
Bank, and the Facility Maturity Date shall be extended by one (1) year. If any
Bank does not deliver to Agent such Bank's written approval to any Extension
Request within sixty (60) days after the date of such Extension Request, the
Facility Maturity Date shall not be extended, except as otherwise provided in
Section 2.21(b).
(b) FULL ASSIGNMENT BY REJECTING BANKS. If (i) any Bank or
Banks ("Rejecting Bank(s)") in its sole discretion shall not approve an
Extension Request, and (ii) not later than one hundred eighty (180) days after
the date of the Extension Request, all rights and obligations of all Rejecting
Banks under this Agreement and under the other Loan Documents (including,
without limitation, their Commitment and all Loans owing to them) shall have
been assigned in accordance with Section 2.23, to one or more Replacement Banks
who shall have approved in writing such Extension Request at the time of such
assignment, then Agent shall promptly so notify Borrower and each Bank and the
Facility Maturity Date shall be extended by one (1) year.
(c) NO FULL ASSIGNMENT BY REJECTING BANKS. If (i) any
Rejecting Bank shall not approve an Extension Request, and (ii) all Rejecting
Banks have not assigned their rights and obligations under this Agreement to
Replacement Banks in accordance with clause (b)(ii) in this Section 2.21, then
Agent shall promptly so notify Borrower and each Bank (including any Replacement
Bank) and the Facility Maturity Date shall not be extended.
(d) APPROVAL OF EXTENSION. Within ten (10) days after Agent's
notice to Borrower that all Banks (including, if applicable, Replacement Banks)
have approved an Extension Request (whether pursuant to Section 2.21(a) or (b)),
Borrower shall pay to Agent for
36
the account of each Bank approving the extension (including, if applicable,
Replacement Banks) an extension fee calculated in the manner set forth in
Section 2.5(c).
(e) NO EXTENSION. Notwithstanding anything in this Section
2.21 to the contrary, if the Extension Request is not approved pursuant to
Section 2.21(a) or (c), or if Borrower does not request an extension pursuant to
this Section 2.21, or if any Unmatured Event of Default or Event of Default
exists at the time of any Extension Request or at any other time, then the
Facility Maturity Date shall not be extended.
(f) REJECTING BANKS BOUND. Each Rejecting Bank shall remain
bound by all of its obligations under this Agreement except to the extent any of
its obligations arising after any assignment to a Replacement Bank are relieved
pursuant to Section 2.23.
2.22 CONVERSION PERIOD.
(a) COMMENCEMENT OF CONVERSION PERIOD. If at any time (i) the
ratio of Consolidated Liabilities to Consolidated Tangible Net Worth equals or
exceeds 3.0:1.0 for any fiscal quarter, or (ii) the ratio of EBITDA to
Consolidated Interest Incurred equals or is less than 1.25:1.0 for any fiscal
quarter, or (iii) if not triggered by clause (i) or (ii) of this Section 2.22
(a), Borrower fails to satisfy any Financial Covenant Test (even if not the same
one) for two (2) consecutive fiscal quarters or three (3) of the trailing five
(5) fiscal quarters (in any such case, the "Triggering Event"), then unless the
Majority Banks in their sole and absolute discretion agree otherwise, the
Conversion Period shall automatically commence. The Conversion Date shall be
first day of the first month after the Triggering Event.
(b) DELIVERY OF COLLATERAL DOCUMENTS AND ENVIRONMENTAL
AGREEMENTS. Within thirty (30) days after the Conversion Date, Borrower shall,
and shall cause the Guarantors to, execute and deliver to Agent all Collateral
Documents and Environmental Agreements relating to the Collateral. All
Collateral Documents shall be in recordable form and sufficient to accomplish
their intended purposes of granting the Banks a properly perfected first and
prior lien on and security interest in the Collateral as security for the
Obligations and the obligations under the Guaranty.
(c) COLLATERAL. The Collateral subject to the properly
perfected first and prior lien on and security interest imposed by the
Collateral Documents shall at all times have an aggregate fair market value, in
the judgment of the Agent, not less than the Borrowing Base required to support
the outstanding Advances and Facility Letter of Credit Obligations. After
delivery to Agent of the Collateral Documents, Borrower shall make payments on
account of the Obligations (in addition to payments otherwise required by this
Agreement) or cause additional Collateral to be subjected to the first and prior
lien and encumbrance of the Collateral Documents as and when Agent in its sole
discretion may require to maintain the minimum Borrowing Base required by this
Agreement.
37
(d) DELIVERY OF DUE DILIGENCE DOCUMENTS. Within ninety (90)
days after the Conversion Date, Borrower shall, and shall cause Guarantors to,
provide to Agent all Due Diligence Documents relating to the Collateral. As and
when any additional Collateral is required to be subjected to the first and
prior lien and encumbrance of the Collateral Documents pursuant to Section 2.22
(c), Borrower shall deliver to Agent the Due Diligence documents pertaining to
the additional Collateral.
(e) PARTIAL RELEASES. During the Conversion Period, Agent
shall release any Collateral from the lien and encumbrance of the Collateral
Documents within a reasonable time after request by Borrower or any Guarantor
if:
(i) the Collateral is sold and transferred in the
ordinary course of business to a person that is not an Affiliate;
(ii) at the time of the request and the release, no
Unmatured Event of Default or Event of Default exists;
(iii) at the time of and immediately after the
release, the Borrowing Base is not less than the then outstanding
Advances, plus the outstanding Facility Letter of Credit Obligations
plus the outstanding Aggregate Senior Indebtedness (taking into
account, among other things, any payments by Borrower and the
encumbering of any additional Collateral by the Collateral Documents as
Agent may require pursuant to Section 2.22 (c) to maintain the minimum
Borrowing Base required by this Agreement); and
(iv) the Agent is provided with such plats, surveys,
appraisals, Borrowing Base Certificates, certificates as to the actual
cost of the Collateral, and other documents and information as it may
reasonably require in connection with the release; and
(v) the cost of preparation, review and approval of
the instrument of release, and all other costs and expenses incurred by
Agent in connection with the release, are paid in full by Borrower or
Guarantors.
(f) EFFECT OF CONVERSION PERIOD. If any Triggering Event
described in Section 2.22(a) occurs and no Unmatured Event of Default or Event
of Default has occurred, then the Triggering Event, by itself, shall not
constitute an Unmatured Event of Default or Event of Default under this
Agreement. If, however, (i) the ratio of Consolidated Liabilities to
Consolidated Tangible Net Worth equals or exceeds 3.0:1.0 for two (2)
consecutive fiscal quarters or three (3) of any trailing five (5) fiscal
quarters, or (ii) the ratio of EBITDA to Consolidated Interest Incurred equals
or is less than 1.25:1.0 for two (2) consecutive fiscal
38
quarters or three (3) of any trailing five (5) fiscal quarters, or (iii)
Borrower fails to satisfy any Financial Covenant Test (even if not the same one)
for three (3) consecutive fiscal quarters or four (4) of any trailing six (6)
fiscal quarters, then the occurrence of any such event shall constitute an Event
of Default pursuant to Section 10.15.
(g) FINANCIAL REPORTING AND COMPLIANCE. During the Conversion
Period and for so long as the Senior Debt is outstanding (i) in addition to the
other financial reports, documents and information required to be submitted
pursuant to this Agreement, Borrower shall furnish to Agent by the fifteenth
(15th) day of each calendar month a signed certificate certifying the amount of
its Consolidated Tangible Assets (as defined in the Indenture) effective as of
the end of the most recent calendar month then ended and with such current
financial statements, reports and other documents and information as Agent may
reasonably require to verify that the encumbering of the Collateral by the
Collateral Documents does not result in an exceedance of the forty percent (40%)
limitation in clause (i) of the definition of "Permitted Liens" in the
Indenture, and (ii) Borrower shall not, nor will permit any Subsidiary to, cause
or permit any exceedance of the forty percent (40%) limitation.
2.23 REPLACEMENT OF CERTAIN BANKS. In the event a Bank (the "Affected
Bank"):
(i) shall have requested compensation from Borrower
under Sections 3.1 or 3.2 to cover additional costs incurred by such
Bank that are not being incurred generally by the other Banks, or
(ii) shall have delivered a notice pursuant to
Section 3.3 that such Affected Bank is unable to extend LIBOR Loans for
reasons not generally applicable to the other Banks, or
(iii) is a Rejecting Bank pursuant to Section 2.21,
then, in any such case, and at any time after any such event occurs, Borrower
and Agent may make written demand on such Affected Bank for the Affected Bank to
assign all of its rights and obligations under this Agreement (including,
without limitation, its Commitment and all Loans owing to it) in accordance with
this Agreement, and such Affected Bank shall assign, pursuant to one or more
duly executed assignment agreements in substantially the form provided for in
Section 15.3.1, within five (5) Business Days after the date of such demand, to
one or more financial institutions that comply with the provisions of Section
15.3, and that are selected by Borrower and Agent, that are reasonably
acceptable to Agent and Borrower, that Borrower or Agent, as the case may be,
shall have engaged for such purpose (the "Replacement Bank"), all of such
Affected Bank's rights and obligations under this Agreement and the other Loan
Documents (including, without limitation, its Commitment and all Loans owing to
it) in accordance with Section 15.3. If any Affected Bank fails to execute and
deliver such assignment agreements within thirty (30) days after demand, then
such Affected Bank shall have no further right to
39
receive any amounts payable under Sections 3.1 and 3.2 with respect to such
Affected Bank.
Agent agrees, upon the occurrence of any such event with respect to an
Affected Bank and upon written request of Borrower, to use its reasonable
efforts to obtain the commitments from one or more financial institutions to act
as a Replacement Bank. Agent is authorized, but shall not be obligated to,
execute one or more of such assignment agreements as attorney-in-fact for any
Affected Bank failing to execute and deliver the same within five (5) Business
Days after the date of such demand. Further, with respect to such assignment,
the Affected Bank shall have concurrently received, in cash, all amounts due and
owing to the Affected Bank hereunder or under any other Loan Document, including
without limitation the aggregate outstanding principal amount of the Loans owed
to such Bank, together with accrued interest thereon through the date of such
assignment, amounts payable under Sections 3.1 and 3.2 with respect to such
Affected Bank (unless forfeited in accordance with the foregoing provisions of
this Section 2.23), and all fees payable to such Affected Bank hereunder;
provided that, upon such Affected Bank's replacement, such Affected Bank shall
cease to be a party hereto but shall continue to be entitled to the benefits of
Article III (unless forfeited in accordance with the foregoing provisions of
this Section 2.23), and Section 12.7, as well as to any fees accrued hereunder
and not yet paid, and shall continue to be obligated under Section 13.8 with
respect to obligations and liabilities accruing prior to the replacement of such
Affected Bank.
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1 YIELD PROTECTION. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law), or any interpretation thereof, or the compliance
of any Bank therewith,
(i) subjects any Bank or any applicable Lending
Installation to any tax, duty, charge or withholding on or from
payments due from Borrower (excluding any taxes imposed on, or based
on, or determined by reference to the net income of any Bank or
applicable Lending Installation, including, without limitation,
franchise taxes, alternative minimum taxes and any branch profits tax
(collectively, "Excluded Taxes")), any taxes imposed on, or based on,
or determined by reference to or changes the basis of taxation of
payments to any Bank in respect of its Loans or other amounts due it
hereunder (except for Excluded Taxes),
(ii) imposes or increases or deems applicable any
reserve, assessment, insurance charge, special deposit or similar
requirement against assets of, deposits with or for the account of, or
credit extended by, any Bank or any applicable Lending Installation
(other than reserves and assessments taken into account in determining
the interest rate applicable to LIBOR Rates), or
40
(iii) imposes any other condition or requirement the
result of which is to increase the cost to any Bank or any applicable
Lending Installation of making, funding or maintaining loans or reduces
any amount receivable by any Bank or any applicable Lending
Installation in connection with loans, or requires any Bank or any
applicable Lending Installation to make any payment calculated by
reference to the amount of loans held or interest received by it, by an
amount deemed material by such Bank,
then, within fifteen (15) days after demand by such Bank and delivery to
Borrower of documentation or other evidence supporting the Bank's demand,
Borrower shall pay such Bank that portion of such increased expense incurred or
reduction in an amount received which such Bank determines is attributable to
making, funding and maintaining its Loans and its Commitment; provided, however,
that Borrower shall not be required to pay any such increase to any Bank (1) if
such Bank fails to comply with the requirements of Section 2.20 hereof or
forfeits the increase in accordance with Section 2.23 or (2) to the extent that
such Bank determines, in its sole reasonable discretion, that it can, after
notice from Borrower, through reasonable efforts, eliminate or reduce the amount
of tax liabilities payable (without additional costs or expenses unless Borrower
agrees to bear such costs or expenses) or other disadvantages or risks (economic
or otherwise) to such Bank or Agent. If any Bank receives a refund in respect of
any tax for which such Bank has received payment from Borrower hereunder, such
Bank shall promptly notify Borrower of such refund and such Bank shall repay the
amount of such refund to Borrower, provided that Borrower, upon the request of
such Bank, agrees to return such refund (plus any penalties, interest or other
charges) to such Bank in the event such Bank is required to repay such refund.
The determination as to whether any Bank has received a refund shall be made by
such Bank and such determination shall be conclusive absent manifest error.
3.2 CHANGES IN CAPITAL ADEQUACY REGULATIONS. If a Bank or Issuing Bank
determines the amount of capital required or expected to be maintained by such
Bank, any Lending Installation of such Bank or Issuing Bank or any corporation
controlling such Bank or Issuing Bank is increased as a result of a Change,
then, within fifteen (15) days after demand by such Bank or Issuing Bank, and
delivery to Borrower of documentation or other evidence supporting the Bank's
demand, Borrower shall pay such Bank or Issuing Bank the amount necessary to
compensate for any shortfall in the rate of return on the portion of such
increased capital which such Bank or Issuing Bank determines is attributable to
this Agreement, its Loans or its obligation to make Loans hereunder, or its
issuance or maintenance of or participation in, or commitment to issue, to
maintain or to participate in, the Facility Letters of Credit hereunder (after
taking into account such Bank's or Issuing Bank's policies as to capital
adequacy); provided, however, that Borrower shall not be required to pay any
such increase to any Bank if such Bank forfeits the increase in accordance with
Section 2.23. "Change" means (i) any change after the date of this Agreement in
the Risk-Based Capital Guidelines or (ii) any adoption of or change in any other
law, governmental or quasi-governmental rule, regulation, policy, guideline,
interpretation, or directive (whether or not having the force of law) after the
date of this
41
Agreement which affects the amount of capital required or expected to be
maintained by any Bank, Issuing Bank, Lending Installation or any corporation
controlling any Bank or Issuing Bank. "Risk-Based Capital Guidelines" means (A)
the risk-based capital guidelines in effect in the United States on the date of
this Agreement, including transition rules, and (B) the corresponding capital
regulations promulgated by regulatory authorities outside the United States
implementing the July 1988 report of the Basle Committee on Banking Regulation
and Supervisory Practices Entitled "International Convergence of Capital
Measurements and Capital Standards," including transition rules, and any
amendments to such regulations adopted prior to the date of this Agreement.
3.3 AVAILABILITY OF TYPES OF ADVANCES. If any Bank determines and
notifies Agent that maintenance of any of such Bank's LIBOR Loans at a suitable
Lending Installation would violate any applicable law, rule, regulation or
directive, whether or not having the force of law, Agent shall suspend the
availability of the affected Type of Advance and require any LIBOR Advances of
the affected Type to be repaid; or if the Majority Banks determine and notify
Agent that (i) deposits of a type or maturity appropriate to match fund LIBOR
Advances are not available, Agent shall suspend the availability of the affected
Type of Advance with respect to any LIBOR Advances made after the date of any
such determination, or (ii) an interest rate applicable to a Type of Advance
does not accurately reflect the cost of making a LIBOR Advance of such Type,
then, if for any reason whatsoever the provisions of Section 3.1 are
inapplicable, Agent shall suspend the availability of the affected Type of
Advance with respect to any LIBOR Advance made after the date of any such
determination.
3.4 FUNDING INDEMNIFICATION. If any payment of a LIBOR Advance occurs
on a date which is not the last day of the applicable Interest Period, whether
because of acceleration, prepayment or otherwise, or a LIBOR Advance is not made
on the date specified by Borrower for any reason other than default by Banks,
Borrower will indemnify each Bank for any loss or cost or expense incurred by it
resulting therefrom, including, without limitation, any loss or cost of
re-employment of funds at a lower rate of interest or in liquidating or
employing deposits required to fund or maintain the LIBOR Advance.
3.5 BANK STATEMENTS; SURVIVAL OF INDEMNITY. To the extent reasonably
possible, each Bank shall designate an alternate Lending Installation with
respect to its LIBOR Advances to reduce any liability of Borrower to such Bank
under Sections 3.1 and 3.2 or to avoid the unavailability of a Type of Advance
under Section 3.3, so long as such designation is not disadvantageous to such
Bank. Each Bank or Issuing Bank shall deliver a written statement of such Bank
or Issuing Bank as to the amount due, if any, under Sections 3.1, 3.2 or 3.4.
Such written statement shall set forth in reasonable detail the calculations
upon which such Bank or Issuing Bank determined such amount and shall be final,
conclusive and binding on Borrower in the absence of manifest error.
Determination of amounts payable under such Sections in connection with a LIBOR
Advance shall be calculated as though each Bank funded its LIBOR Advance through
the purchase of a deposit of the type and maturity corresponding to the deposit
42
used as a reference in determining the LIBOR Advance applicable to such Loan,
whether in fact that is the case or not. Unless otherwise provided herein, the
amount specified in the written statement shall be payable within three (3) days
after receipt by Borrower of the written statement. The obligations of Borrower
under Sections 3.1, 3.2 and 3.4 shall survive payment of the Obligations and
termination of this Agreement.
ARTICLE IV
THE LETTER OF CREDIT FACILITY
4.1 FACILITY LETTERS OF CREDIT. The Issuing Bank agrees, on the terms
and conditions set forth in this Agreement, to issue from time to time for the
account of Borrower, through such offices or branches as it and Borrower may
jointly agree, one or more Facility Letters of Credit in accordance with this
Article IV, during the period commencing on the date hereof and ending on the
Business Day prior to the Facility Maturity Date. Each Facility Letter of Credit
shall be either (i) a standby letter of credit to support obligations of
Borrower or a Guarantor, contingent or otherwise, arising in the ordinary course
of business, or (ii) a documentary letter of credit in respect of the purchase
of goods or services by Borrower or a Guarantor in the ordinary course of
business.
4.2 LIMITATIONS. No Issuing Bank shall issue, amend or extend, at any
time, any Facility Letter of Credit:
(i) if the aggregate maximum amount then available
for drawing under Letters of Credit issued by such Issuing Bank, after
giving effect to the Facility Letter of Credit or amendment or
extension thereof requested hereunder, shall exceed any limit imposed
by law or regulation upon such Issuing Bank;
(ii) if, after giving effect to the Facility Letter
of Credit or amendment or extension thereof requested hereunder, the
aggregate principal amount of the Facility Letter of Credit Obligations
would exceed $10,000,000.00;
(iii) that, in the case of the issuance of a Facility
Letter of Credit, is in, or in the case of an amendment of a Facility
Letter of Credit, increases the face amount thereof by, an amount in
excess of the then Aggregate Available Credit;
(iv) if, after giving effect to the Facility Letter
of Credit or amendment or extension thereof requested hereunder, the
aggregate principal amount of the Facility Letter of Credit Obligations
outstanding plus the principal amount of all Advances outstanding plus
the Aggregate Senior Indebtedness outstanding would exceed the
Borrowing Base as of the most recent Inventory Valuation Date;
(v) if such Issuing Bank receives written notice from
Agent at or before noon, West Palm Beach, Florida time, on the proposed
Issuance Date of such
43
Facility Letter of Credit that one or more of the conditions precedent
contained in Sections 5.1 or 5.2, as applicable, would not on such
Issuance Date be satisfied, unless such conditions are thereafter
satisfied and written notice of such satisfaction is given to such
Issuing Bank by Agent;
(vi) that has an expiration date (taking into account
any automatic renewal provisions thereof) that is later than the
Issuing Bank may agree; provided, however in no event shall the
expiration date be later than the Business Day next preceding the
scheduled Facility Maturity Date; or
(vii) that is in a currency other than Dollars, or
that is not consistent with the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be updated.
4.3 CONDITIONS. In addition to being subject to the satisfaction of the
conditions contained in Sections 5.1 and 5.2, as applicable, the issuance of any
Facility Letter of Credit is subject to the satisfaction in full of the
following conditions:
(i) Borrower shall have delivered to the Issuing Bank
at such times and in such manner as the Issuing Bank may reasonably
prescribe a Reimbursement Agreement and such other documents and
materials as may be reasonably required pursuant to the terms thereof,
and the proposed Facility Letter of Credit shall be reasonably
satisfactory to such Issuing Bank in form and content; and
(ii) as of the Issuance Date no order, judgment or
decree of any court, arbitrator or governmental authority shall enjoin
or restrain such Issuing Bank from issuing the Facility Letter of
Credit and no law, rule or regulation applicable to such Issuing Bank
and no directive from any governmental authority with jurisdiction over
the Issuing Bank shall prohibit such Issuing Bank from issuing Letters
of Credit generally or from issuing that Facility Letter or Credit.
4.4 PROCEDURE FOR ISSUANCE OF FACILITY LETTERS OF CREDIT.
(a) REQUEST FOR FACILITY LETTER OF CREDIT. Borrower shall give
the Issuing Bank and Agent not less than five (5) Business Days' prior written
notice of any requested issuance of a Facility Letter of Credit under this
Agreement. Such notice shall specify (i) the stated amount of the Facility
Letter of Credit requested, (ii) the requested Issuance Date, which shall be a
Business Day, (iii) the date on which such requested Facility Letter of Credit
is to expire, which date shall be in compliance with the requirements of Section
4.2(vi), (iv) the purpose for which such Facility Letter of Credit is to be
issued (which shall be a purpose permitted pursuant to Section 7.2), and (v) the
Person for whose benefit the requested Facility Letter of Credit is to be
issued. At the time such request is made, Borrower shall also provide
44
Agent and the Issuing Bank with a copy of the form of the Facility Letter of
Credit it is requesting be issued.
(b) ISSUING BANK. Within two (2) Business Days after receipt
of a request for issuance of a Facility Letter of Credit in accordance with
Section 4.4(a), the Issuing Bank shall approve or disapprove, in its reasonable
discretion, the form of such requested Facility Letter of Credit, but the
issuance of such approved Facility Letter of Credit shall continue to be subject
to the provisions of this Article IV. The Issuing Bank shall use reasonable
efforts to notify Borrower of any changes in the Issuing Bank's policies or
procedures that could reasonably be expected to affect adversely the Issuing
Bank's approval of the form of any requested Facility Letters of Credit.
(c) CONFIRMATION OF ISSUANCE. Upon receipt of a request for
issuance of a Facility Letter of Credit in accordance with Section 4.4(a), Agent
shall determine, as of the close of business on the day it receives such
request, whether the issuance of such Facility Letter of Credit would be
permitted under the provisions of Sections 4.2(ii), (iii), (iv) and (v) and,
prior to the close of business on the second Business Day after Agent received
such request, Agent shall notify the Issuing Bank and Borrower (in writing or by
telephonic notice confirmed promptly thereafter in writing) whether issuance of
the requested Facility Letter of Credit would be permitted under the provisions
of Sections 4.2(ii), (iii), (iv) and (v). If Agent notifies the Issuing Bank and
Borrower that such issuance would be so permitted, then, subject to the terms
and conditions of this Article IV and provided that the applicable conditions
set forth in Sections 5.1 and 5.2 have been satisfied, the Issuing Bank shall,
on the requested Issuance Date, issue the requested Facility Letter of Credit in
accordance with the Issuing Bank's usual and customary business practices. The
Issuing Bank shall give Agent written notice, or telephonic notice confirmed
promptly thereafter in writing, of the issuance of a Facility Letter of Credit.
(d) EXTENSION AND AMENDMENT. An Issuing Bank shall not extend
or amend any Facility Letter of Credit unless the requirements of this Section
4.4 are met as though a new Facility Letter of Credit were being requested and
issued; provided, however, that if the Facility Letter of Credit, as originally
issued, sets forth such extension or amendment, then the Issuing Bank shall so
extend or amend the Facility Letter of Credit upon the request of Borrower given
in the manner set forth in Section 4.4(a) and upon satisfaction of the terms and
conditions of Section 4.4(c).
(e) EXISTING LETTERS OF CREDIT. As of the date of this
Agreement, certain of the Banks have previously issued, and there are currently
outstanding, Letters of Credit for the benefit of Borrower and/or a Guarantor
(the "Existing Letters of Credit"), all pursuant to the Refinanced Loans. All
Existing Letters of Credit are listed in SCHEDULE "4.4" attached hereto. Such
Existing Letters of Credit shall remain outstanding after the date of this
Agreement. Borrower and/or the applicable Guarantor remain obligated with
respect to the Existing Letters of Credit on an unsecured or cash secured basis.
Subject to the limitations and procedures of this
45
Article IV, all Existing Letters of Credit shall be converted to Facility
Letters of Credit no later than their next renewal, replacement or reissue date.
The date of such conversion shall be deemed to be the date of issuance of such
Facility Letter of Credit for purposes of this Agreement, including without
limitation, for purposes of calculating the fees payable under Section 4.7.
Immediately upon such conversion, the Issuing Bank, through Agent, shall be
deemed to have sold and transferred, and each Bank shall be deemed to have
irrevocably and unconditionally purchased and received from Agent, without
recourse or warranty, in each case without further action on the part of any
Person, an undivided interest and participation, (ratably in proportion to the
ratio that such Bank's Commitment bears to the Aggregate Commitment) in such
Facility Letter of Credit. Each Bank severally agrees to fund any disbursements
by the Issuing Bank pursuant to Existing Letters of Credit by funding in
accordance with Section 4.6. The Existing Letters of Credit converted to
Facility Letters of Credit pursuant to this Section 4.4(e) shall be deemed to be
Facility Letters of Credit for all purposes under this Agreement, and shall be
subject to all terms and conditions hereof.
4.5 DUTIES OF ISSUING BANK. Any action taken or omitted to be taken by
an Issuing Bank under or in connection with any Facility Letter of Credit, if
taken or omitted in the absence of willful misconduct or gross negligence, shall
not put such Issuing Bank under any resulting liability to any Bank or, assuming
that such Issuing Bank has complied with the procedures specified in Section
4.4, relieve any Bank of its obligations hereunder to such Issuing Bank. In
determining whether to pay under any Facility Letter of Credit, the Issuing Bank
shall have no obligation relative to Banks other than to confirm that any
documents required to be delivered under such Facility Letter of Credit appear
to have been delivered in compliance and that they appear to comply on their
face with the requirements of such Facility Letter of Credit.
4.6 PARTICIPATION.
(a) PROPORTIONATE SHARE OF BANKS. Immediately upon issuance by
an Issuing Bank of any Facility Letter of Credit in accordance with Section 4.4,
each Bank shall be deemed to have irrevocably and unconditionally purchased and
received from such Issuing Bank, without recourse or warranty, an undivided
interest and participation (ratably in proportion to the ratio that such Bank's
Commitment bears to the Aggregate Commitment) in such Facility Letter of Credit.
(b) PAYMENT BY ISSUING BANK. In the event that an Issuing Bank
makes any payment under any Facility Letter of Credit and Borrower shall not
have repaid such amount to such Issuing Bank on or before the date of such
payment by such Issuing Bank, such Issuing Bank shall promptly so notify Agent,
which shall promptly so notify each Bank. Upon receipt of such notice, each Bank
shall promptly and unconditionally pay to Agent for the account of such Issuing
Bank the amount of such Bank's share (ratably in proportion to the ratio that
such
46
Bank's Commitment bears to the Aggregate Commitment) of such payment in same day
funds, and Agent shall promptly pay such amount, and any other amounts received
by Agent for such Issuing Bank's account pursuant to this Section 4.6(b), to
such Issuing Bank. If Agent so notifies such Bank prior to 11:00 a.m., West Palm
Beach, Florida time, on any Business Day, such Bank shall make available to
Agent for the account of such Issuing Bank such Bank's share of the amount of
such payment on such Business Day in same day funds. If and to the extent such
Bank shall not have so made its share of the amount of such payment available to
Agent for the account of such Issuing Bank, such Bank agrees to pay to Agent for
the account of such Issuing Bank forthwith on demand such amount, together with
interest thereon, for each day from the date such payment was first due until
the date such amount is paid to Agent for the account of such Issuing Bank, at
the Federal Funds Effective Rate. The failure of any Bank to make available to
Agent for the account of such Issuing Bank such Bank's share of any such payment
shall not relieve any other Bank of its obligation hereunder to make available
to Agent for the account of such Issuing Bank its share of any payment on the
date such payment is to be made.
(c) ADVANCES. The payments made by Banks to an Issuing Bank in
reimbursement of amounts paid by it under a Facility Letter of Credit shall
constitute, and Borrower hereby expressly acknowledges and agrees that such
payments shall constitute, Advances hereunder to Borrower and such payments
shall for all purposes be treated as Advances to Borrower (notwithstanding that
the amounts thereof may not comply with the provisions of Section 2.6). Such
Advances shall be Floating Rate Advances, subject to Borrower's rights to
convert the Advance to another Type in accordance with Article II hereof.
(d) COPIES OF DOCUMENTS. Upon the request of Agent or any
Bank, an Issuing Bank shall furnish to the requesting Agent or Bank copies of
any Facility Letter of Credit or Reimbursement Agreement to which such Issuing
Bank is party and such other documentation as may reasonably be requested by
Agent or the Bank.
(e) OBLIGATIONS OF BANKS. The obligations of Banks to make
payments to Agent for the account of an Issuing Bank with respect to a Facility
Letter of Credit shall be irrevocable, not subject to any qualification or
exception whatsoever and shall be made in accordance with, but not subject to,
the terms and conditions of this Agreement under all circumstances
notwithstanding:
(i) any lack of validity or enforceability of this
Agreement, any Facility Letter of Credit (except where due to the gross
negligence or willful misconduct of the Issuing Bank), or any of the
other Loan Documents;
(ii) the existence of any claim, setoff, defense or
other right which Borrower or any Guarantor may have at any time
against a beneficiary named in a Facility Letter of Credit or any
transferee of any Facility Letter of Credit (or any Person for whom any
such transferee may be acting), such Issuing Bank, Agent, any Bank, or
47
any other Person, whether in connection with this Agreement, any
Facility Letter of Credit, the transactions contemplated herein or any
unrelated transactions (including any underlying transactions between
Borrower or any Subsidiary and the beneficiary named in any Facility
Letter of Credit) other than the defense of payment in accordance with
this Agreement or a defense based on the gross negligence or willful
misconduct of the Issuing Bank;
(iii) any draft, certificate or any other document
presented under the Facility Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect of any statement
therein being untrue or inaccurate in any respect so long as the
payment by the Issuing Bank under such Facility Letter of Credit
against presentation of such draft, certificate or other document shall
not have constituted gross negligence or willful misconduct;
(iv) the surrender or impairment of any security for
the performance or observance of any of the terms of any of the Loan
Documents;
(v) any failure by Agent or the Issuing Bank to make
any reports required pursuant to Section 4.8; or
(vi) the occurrence of any Event of Default or
Unmatured Event of Default.
4.7 COMPENSATION FOR FACILITY LETTERS OF CREDIT
(a) PAYMENT OF FACILITY LETTER OF CREDIT FEE. Borrower agrees
to pay to Agent, in the case of each outstanding Facility Letter of Credit, the
Facility Letter of Credit Fee therefor. The Facility Letter of Credit Fee shall
be payable annually and in advance, on the Issuance Date and annually thereafter
for so long as the Facility Letter of Credit is outstanding. All Facility Letter
of Credit Fees shall be non-refundable in any event and shall not be calculated
on a pro rata basis for the period to which such payment applies. Agent shall
promptly remit such Facility Letter of Credit Fees, when paid, to Banks (ratably
in the proportion that each Bank's Commitment bears to the Aggregate
Commitment).
(b) ADMINISTRATIVE FEE. In addition to the Facility Letter of
Credit Fee payable on each outstanding Facility Letter of Credit in accordance
with Section 4.7(a), Borrower shall pay to the Issuing Bank on the Issuance Date
an administrative fee in the amount of $250.00 for each Facility Letter of
Credit issued.
(c) AMOUNTS OWED TO ISSUING BANK. An Issuing Bank shall have
the right to receive solely for its own account such amounts as Borrower may
agree, in writing, to pay to such Issuing Bank with respect to issuance fees and
for such Issuing Bank's out-of-pocket costs
48
of issuing and servicing Facility Letters of Credit.
4.8 ISSUING BANK REPORTING REQUIREMENTS. Each Issuing Bank shall, no
later than the tenth day following the last day of each month, provide to Agent
a schedule of the Facility Letters of Credit issued by it, in form and substance
reasonably satisfactory to Agent, showing the Issuance Date, account party,
original face amount, amount (if any) paid thereunder, expiration date and the
reference number of each Facility Letter of Credit outstanding at any time
during such month and the aggregate amount (if any) payable by Borrower to such
Issuing Bank during the month pursuant to Section 3.2. Copies of such reports
shall be provided promptly to each Bank and Borrower by Agent.
4.9 INDEMNIFICATION; NATURE OF ISSUING BANK'S DUTIES.
(a) INDEMNITY. In addition to amounts payable as elsewhere
provided in this Article IV, Borrower hereby agrees to protect, indemnify, pay
and hold harmless Agent and each Bank and Issuing Bank from and against any and
all claims, demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys' fees) arising from the claims of third parties
against Agent, Issuing Bank or Bank as a consequence, direct or indirect, of (i)
the issuance of any Facility Letter of Credit other than, in the case of an
Issuing Bank, as a result of its willful misconduct or gross negligence, or (ii)
the failure of an Issuing Bank issuing a Facility Letter of Credit to honor a
drawing under such Facility Letter of Credit as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
government or governmental authority.
(b) ASSUMPTION OF RISK. As among Borrower, Banks, Agent and
the Issuing Bank, Borrower assumes all risks of the acts and omissions of, or
misuse of Facility Letters of Credit by, the respective beneficiaries of such
Facility Letters of Credit. In furtherance and not in limitation of the
foregoing, neither the Issuing Bank nor Agent nor any Bank shall be responsible:
(i) for the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in
connection with the application for and issuance of the Facility
Letters of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged;
(ii) for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or
assign a Facility Letter of Credit or the rights or benefits thereunder
or proceeds thereof, in whole or in part, which may prove to be invalid
or ineffective for any reason;
(iii) for failure of the beneficiary of a Facility
Letter of Credit to
49
comply fully with conditions required in order to draw upon such
Facility Letter of Credit;
(iv) for errors, omissions, interruptions or delays
in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher;
(v) for errors in interpretation of technical terms;
(vi) for any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any
Facility Letter of Credit or of the proceeds thereof;
(vii) for the misapplication by the beneficiary of a
Facility Letter of Credit of the proceeds of any drawing under such
Facility Letter of Credit; and
(viii) for any consequences arising from causes
beyond the control of Agent, the Issuing Bank and Banks including,
without limitation, any act or omission, whether rightful or wrongful,
of any present or future de jure or de facto government or governmental
authority. None of the above shall affect, impair, or prevent the
vesting of any of the Issuing Bank's rights or powers under this
Section 4.9.
(c) GOOD FAITH. In furtherance and extension and not in
limitation of the specific provisions hereinabove set forth, any action taken or
omitted by an Issuing Bank under or in connection with the Facility Letters of
Credit or any related certificates, if taken or omitted in good faith under
commercially reasonable standards, shall not put such Issuing Bank, Agent or any
Bank under any resulting liability to Borrower or relieve Borrower of any of its
obligations hereunder to any such Person.
(d) CERTAIN ACTS OF ISSUING BANK. Notwithstanding anything to
the contrary contained in this Section 4.9, Borrower shall have no obligation to
indemnify an Issuing Bank under this Section 4.9 in respect of any liability
incurred by such Issuing Bank arising primarily out of the willful misconduct or
gross negligence of such Issuing Bank, as determined by a court of competent
jurisdiction, or out of the wrongful dishonor by such Issuing Bank of a proper
demand for payment made under the Facility Letters of Credit issued by such
Issuing Bank, unless such dishonor was made at the request of Borrower.
4.10 NO OBLIGATION TO ISSUE. The Issuing Bank shall not at any time be
obligated to issue any Facility Letter of Credit if such issuance would conflict
with, or cause the Issuing Bank or any other Bank, to exceed any limits imposed
by any applicable law, rule or regulation.
4.11 OBLIGATIONS OF ISSUING BANK AND OTHER BANKS. Except to the extent
that a
50
Bank shall have agreed to be designated as an Issuing Bank, no Bank shall have
any obligation to accept or approve any request for, or to issue, amend or
extend, any Letter of Credit, and the obligations of the Issuing Bank to issue,
amend or extend any Facility Letter of Credit are expressly limited by and
subject to the provisions of this Article IV.
ARTICLE V
CONDITIONS PRECEDENT
5.1 INITIAL ADVANCE. Banks shall not be required to make the initial
Advance hereunder, and the Issuing Bank shall not be required to issue the
initial Facility Letter of Credit hereunder, unless Borrower has paid to Agent
the fees set forth in the commitment letter (including the letter agreement
incorporated therein) dated March 9, 1998 between Agent, SunTrust Equitable
Securities Corporation, and Borrower (signed and accepted by Borrower on March
11, 1998), and any other amounts then due pursuant to this Agreement, and
Borrower has furnished to Agent with the following in form and substance
acceptable to Agent:
(i) Copies of the certificate of incorporation of
Borrower and each Guarantor, together with all amendments, and a
certificate of good standing, all certified by the appropriate
governmental officer in the jurisdiction of incorporation.
(ii) Copies, certified by the Secretary or Assistant
Secretary of Borrower and each Guarantor, of each such corporation's
by-laws and of its Board of Directors' resolutions (and resolutions of
other bodies, if any are deemed necessary by counsel for any Bank)
authorizing the execution of the Loan Documents and the Guaranty.
(iii) Incumbency certificates, executed by the
Secretary or Assistant Secretary of Borrower and each Guarantor, which
shall identify by name and title and bear the signature of the officers
of the such corporation authorized to sign the Loan Documents and the
Guaranty (as applicable) and (if applicable) to make borrowings
hereunder and to request, apply for and execute Facility Letter of
Credit Reimbursement Agreements with respect to Facility Letters of
Credit hereunder, upon which certificates Agent, Banks and the Issuing
Bank shall be entitled to rely until informed of any change in writing
by Borrower or the applicable Guarantor.
(iv) A written opinion of Greenberg, Traurig,
Hoffman, Lipoff, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.A., counsel to Borrower and
Guarantors, addressed to Agent and Banks in substantially the form of
EXHIBIT "F" hereto.
(v) A written opinion of general counsel of Borrower,
addressed to Agent and Banks in substantially the form of EXHIBIT "G"
hereto.
51
(vi) Notes payable to the order of each of Banks.
(vii) Written money transfer instructions, in form
acceptable to Agent, addressed to Agent and signed by an Authorized
Officer, together with such other related money transfer authorizations
as Agent may have reasonably requested.
(viii) The Guaranty duly executed by Guarantors.
(ix) Evidence satisfactory to Agent (A) of payment in
full (which payment may be made from the proceeds of the initial
Advance hereunder) of all obligations of Borrower and Guarantors with
respect to, and termination of the financing arrangements evidenced by,
the Refinanced Loans, and (B) that all Liens securing the obligations
and financing arrangements related to the Refinanced Loans shall be
discharged promptly, but in no event later than sixty (60) days,
following the payment of such obligations.
(x) Evidence of insurance required pursuant to
Section 7.6.
(xi) Such other documents as any Bank or Issuing Bank
or their respective counsel may have reasonably requested.
5.2 EACH ADVANCE. Banks shall not be required to make any Advance
(other than the conversion of an Advance of one Type to an Advance of another
Type that does not increase the aggregate amount of outstanding Advances), and
the Issuing Bank shall not be required to issue, amend or extend a Facility
Letter of Credit, unless on the applicable Borrowing Date or Issuance Date:
(i) There exists no Event of Default or Unmatured
Event of Default.
(ii) The representations and warranties contained in
Article VI are true and correct in all material respects as of such
Borrowing Date or Issuance Date.
(iii) After the making of such Advance or issuance of
such Facility Letter of Credit and giving effect thereto, (A) the
principal amount of all Advances outstanding plus the aggregate amount
of the Facility Letter of Credit Obligations outstanding shall not
exceed the Aggregate Commitment, (B) the aggregate principal amount of
all Advances outstanding plus the aggregate amount of the Facility
Letter of Credit Obligations outstanding plus the Aggregate Senior
Indebtedness outstanding shall not exceed the Borrowing Base
(determined as of the most recent Inventory Valuation Date).
(iv) Borrower shall have delivered to Agent, within
the time period
52
specified in Section 2.8, a duly completed Borrowing Notice.
(v) All legal matters incident to (A) the making of
such Advance shall be reasonably satisfactory to Agent and its counsel
and (B) the issuance of such Facility Letter of Credit shall be
reasonably satisfactory to Agent, such Issuing Bank and their
respective counsel.
Each Borrowing Notice with respect to each such Advance and each
request for a Facility Letter of Credit shall constitute a representation and
warranty by Borrower that the conditions contained in Sections 5.2(i) and (ii)
have been satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Banks and Agent that:
6.1 EXISTENCE AND STANDING. Borrower is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation. Borrower also has all requisite authority to
conduct its business in each jurisdiction in which its business is conducted
(except where the failure to maintain such authority would not reasonably be
expected to have and does not have a Material Adverse Effect). Each Guarantor is
a corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation. Each Guarantor also has all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted (except where the failure to maintain such authority would not
reasonably be expected to have and does not have a Material Adverse Effect).
6.2 AUTHORIZATION AND VALIDITY. Borrower has the corporate power and
authority to execute and deliver the Loan Documents and to perform its
obligations hereunder and thereunder. The execution and delivery by Borrower of
the Loan Documents and the performance of its obligations thereunder have been
duly authorized and the Loan Documents constitute legal, valid and binding
obligations of Borrower enforceable against Borrower in accordance with their
terms, subject to bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and general principles of equity.
Guarantors have the corporate power and authority to execute and deliver the
Guaranty and the Loan Documents and to perform its obligations thereunder. The
execution and delivery by Guarantors of the Guaranty and the Loan Documents and
the performance of its obligations thereunder have been duly authorized, and the
Guaranty and the Loan Documents constitute the legal, valid and binding
obligations of Guarantors enforceable against Guarantors in accordance with
their terms, subject to bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and general principles of equity.
53
6.3 NO CONFLICT; GOVERNMENT CONSENT. Neither the execution and delivery
by Borrower of the Loan Documents or by each Guarantor of the Guaranty and the
Loan Documents, nor the consummation of the transactions herein contemplated,
nor compliance with the provisions hereof or thereof will violate in any
material respect any law, rule, regulation, order, writ, judgment, injunction,
decree or award binding on Borrower or any Guarantor or Borrower's or any
Guarantor's certificate of incorporation or bylaws or the provisions of any
indenture (including without limitation the Indenture), instrument or agreement
to which Borrower or any Guarantor is a party or is subject, or by which it, or
its Property, is bound, or conflict with or constitute a default thereunder, or
result in the creation or imposition of any Lien in, of or on the Property of
Borrower or any Guarantor pursuant to the terms of any such indenture,
instrument or agreement. Except as set forth on SCHEDULE "6.3" hereto, no order,
consent, approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption by, any governmental or public body
or authority, or any subdivision thereof, is required to authorize, or is
required in connection with the execution, delivery and performance of, or the
legality, validity, binding effect or enforceability of, any of the Loan
Documents or the Guaranty.
6.4 FINANCIAL STATEMENTS AND CONDITION. The October 31, 1997 audited
consolidated financial statements of Borrower and its Subsidiaries and the
January 31, 1998 unaudited financial statements of Borrower and its Subsidiaries
delivered to Banks were prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. Such statements fairly present, in all
material respects, the consolidated financial condition and operations of
Borrower and its Subsidiaries at such date and the consolidated results of their
operations for the period then ended. Neither the Borrower nor any Guarantor has
any Indebtedness except as listed in SCHEDULE 6.4 hereto.
6.5 MATERIAL ADVERSE CHANGE. Since the dates of the specific financial
statements (whether quarterly or annual) described in Section 6.4, there has
been no change in the business, Property, condition (financial or otherwise) or
results of operations of Borrower and Guarantors (taken as a whole) that has had
or would reasonably be expected to have a Material Adverse Effect.
6.6 TAXES. Borrower and each Guarantor have filed all United States
federal income tax returns and all other material tax returns which are required
to be filed and have paid all taxes due pursuant to said returns or pursuant to
any assessment received by Borrower or any Guarantor, except such taxes, if any,
as are being contested in good faith and as to which adequate reserves have been
provided. No tax Liens (except Permitted Liens) have been filed and no claims
are being asserted with respect to any such taxes. The charges, accruals and
reserves on the books of Borrower and each Guarantor in respect of any taxes or
other governmental charges are adequate in accordance with GAAP.
54
6.7 LITIGATION AND CONTINGENT OBLIGATIONS. Except as set forth in
SCHEDULE "6.7" attached hereto, there is no litigation, arbitration,
governmental investigation, proceeding or inquiry pending or, to the knowledge
of any Authorized Officer, threatened against or affecting Borrower or any
Subsidiary. None of the foregoing has had or would reasonably be expected to
have a Material Adverse Effect. Borrower and each Guarantor have no material
contingent obligations (not provided for or disclosed in the specific financial
statements described in Section 6.4) that has had or would reasonably be
expected to have a Material Adverse Effect. For purposes of this Section 6.7
only, any litigation, suits or proceedings not covered by insurance where the
sole potential liability is money damages and where in the aggregate (taking all
litigation, suits and proceedings into account) the amounts claimed or in
controversy are less than $1,500,000.00 shall not, by itself, be deemed material
or to have a Material Adverse Effect.
6.8 SUBSIDIARIES. All existing Subsidiaries of Borrower and each
Guarantor are Wholly-Owned Subsidiaries, and their respective jurisdictions of
incorporation or formation, and the percentage of their respective capital stock
or interest owned by Borrower or any Guarantor or their Subsidiaries are listed
in SCHEDULE 6.8 hereto. All of the issued and outstanding shares of capital
stock of Borrower and each Guarantor have been duly authorized and validly
issued and are fully paid and non-assessable.
6.9 ERISA. There are no Unfunded Liabilities under any Single Employer
Plans and there are no withdrawal liabilities under any Multiemployer Plans of
the Borrower, any Guarantor and any other member of the Controlled Group. Each
Plan complies in all material respects with all applicable requirements of law
and regulations, no Reportable Event has occurred with respect to any Plan,
neither Borrower, nor any Guarantor nor any other member of the Controlled Group
has withdrawn from any Multiemployer Plan or initiated steps to do so, and no
steps have been taken to terminate any Plan.
6.10 ACCURACY OF INFORMATION. All factual information heretofore or
contemporaneously furnished in writing by or on behalf of Borrower or any
Guarantor to Agent or any Bank for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all other such factual
information hereafter furnished in writing by or on behalf of Borrower or any
Guarantor to Agent or any Bank will be, true and accurate (taken as a whole), in
all material respects, on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact necessary to
make such information (taken as a whole) not misleading at such time.
6.11 REGULATIONS G, U AND X. Neither Borrower, nor any Guarantor nor
any Subsidiary is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
Margin Stock (as defined in Regulation G, Regulation U or Regulation X).
6.12 MATERIAL AGREEMENTS. Neither Borrower nor any Guarantor is in
default in the
55
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in (i) any agreement or instrument to which it is a party
or by which it or its assets may be bound, (ii) the Indenture, or the Old
Indenture, or (iii) any agreement or instrument evidencing or governing any
other Indebtedness, which default (as to clauses (i) and (iii) only) has had or
would reasonably be expected to have a Material Adverse Effect.
6.13 LABOR DISPUTES AND ACTS OF GOD. Neither the business nor the
Property of Borrower or of any Guarantor is affected by any fire, explosion,
accident, strike, lockout, or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy, or other casualty
(whether or not covered by insurance), which has had or would reasonably be
expected to have a Material Adverse Effect.
6.14 OWNERSHIP. Borrower and each Guarantor have good and marketable
title to, or valid leasehold interests in, all of their respective properties
and assets, real and personal, including the properties and assets and leasehold
interests reflected in the specific financial statements referred to in Section
6.4, free and clear of all Liens other than Permitted Liens (except to the
extent that (i) such properties or assets have been disposed of in the ordinary
course of business or (ii) the failure to have such title has not had and would
not reasonably be expected to have a Material Adverse Effect).
6.15 OPERATION OF BUSINESS. Borrower and each Guarantor possess all
licenses, permits, franchises, patents, copyrights, trademarks, and trade names,
or rights thereto, to conduct their respective businesses substantially as now
conducted, and as presently proposed to be conducted, with such exceptions as
have not had and would not reasonably be expected to have a Material Adverse
Effect.
6.16 LAWS; ENVIRONMENT. Borrower and each Guarantor have duly complied,
and their businesses, operations and Property are in compliance, in all material
respects, with the provisions of all federal, state, and local statutes, laws,
codes, and ordinances and all rules and regulations promulgated thereunder
(including without limitation those relating to the environment, health and
safety). Borrower and each Guarantor have been issued all required federal,
state, and local permits, licenses, certificates, and approvals relating to (1)
air emissions; (2) discharges to surface water or groundwater; (3) solid or
liquid waste disposal; (4) the use, generation, storage, transportation, or
disposal of toxic or hazardous substances or hazardous wastes (intended hereby
and hereafter to include any and all such materials listed in any federal,
state, or local law, code, or ordinance and all rules and regulations
promulgated thereunder as hazardous); or (5) other environmental, health or
safety matters. Except in accordance with a valid governmental permit, license,
certificate or approval, to the best knowledge of Borrower, there has been no
material emission, spill, release, or discharge into or upon (1) the air; (2)
soils, or any improvements located thereon; (3) surface water or groundwater; or
(4) the sewer, septic system or waste treatment, storage or disposal system
servicing any Property of Borrower or a Guarantor, of any toxic or hazardous
substances or hazardous wastes at or from such Property.
56
Neither Borrower nor any Guarantor has received notice of any written complaint,
order, directive, claim, citation, or notice from any governmental authority or
any person or entity with respect to violations of law or damage by reason of
Borrower's or any Guarantor's (1) air emissions; (2) spills, releases, or
discharges to soils or improvements located thereon, surface water, groundwater
or the sewer, septic system or waste treatment, storage or disposal systems
servicing any Property; (3) solid or liquid waste disposal; (4) use, generation,
storage, transportation, or disposal of toxic or hazardous substances or
hazardous waste; or (5) other environmental, health or safety matters affecting
Borrower or any Guarantor or its business, operation or Property. Neither
Borrower nor any Guarantor has any material Indebtedness, obligation, or
liability, absolute or contingent, matured or not matured, with respect to the
storage, treatment, cleanup, or disposal of any solid wastes, hazardous wastes,
or other toxic or hazardous substances (including without limitation any such
indebtedness, obligation, or liability with respect to any current regulation,
law or statute regarding such storage, treatment, cleanup, or disposal).
6.17 INVESTMENT COMPANY ACT. Neither Borrower nor any Guarantor is an
"investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended.
6.18 PUBLIC UTILITY HOLDING COMPANY ACT AND SIMILAR ACTS. Neither
Borrower nor any Guarantor nor any Subsidiary is a "holding company" or a
"subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," within the meaning
of the Public Utility Holding Company Act of 1935, as amended or is subject to
any regulation under any other law which regulates the incurrence of
Indebtedness.
6.19 INDENTURE PROVISIONS. Each Guarantor is a Wholly-Owned Restricted
Subsidiary, as that term is defined in the Indenture. Each Guarantor hereunder
is a Guarantor, as that term is defined in the Indenture. The Commitments
constitute a Bank Facility, as that term is defined in the Indenture.
6.20 YEAR 2000 COMPLIANCE. The Borrower has (i) initiated a review and
assessment of all areas within its and each of its Subsidiaries' business and
operations (including those affected by suppliers and vendors) that could be
adversely affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by the Borrower or any of its Subsidiaries (or its suppliers
and vendors) may be unable to recognize and perform properly date-sensitive
functions involving certain dates prior to and any date after December 31,
1999), (ii) developed a plan and timeline for addressing the Year 2000 Problem
on a timely basis, and (iii) to date, implemented that plan in accordance with
that timetable. The Borrower reasonably believes that all computer applications
(including those of its suppliers and vendors) that are material to its or any
of its Subsidiaries' business and operations will on a timely basis be able to
perform properly date-sensitive functions for all dates before and after January
1, 2000 (that is, be "Year 2000
57
compliant"), except to the extent that a failure to do so could not reasonably
be expected to have Material Adverse Effect.
ARTICLE VII
AFFIRMATIVE COVENANTS
During the term of this Agreement, unless the Majority Banks shall
otherwise consent in writing:
7.1 FINANCIAL AND OTHER REPORTING. Borrower will maintain, and will
cause each Guarantor to maintain, a system of accounting established and
administered in accordance with GAAP, and furnish to Banks:
(i) Within 90 days after the close of each fiscal
year, (A) an unqualified (or qualified as reasonably acceptable to the
Majority Banks) audited financial statements of Borrower certified by a
nationally recognized independent certified public accountant firm,
reasonably acceptable to Agent, prepared in accordance with GAAP on a
consolidated and consolidating basis, including balance sheets as of
the end of such fiscal year and statements of income and surplus and
cash flows with schedules, in each case setting forth in comparative
form the figures for the preceding fiscal year, accompanied by a
certificate from the accounting firm acceptable to Agent, and (B)
unaudited financial statements, prepared in accordance with GAAP
(excluding footnotes) on a consolidated and consolidating basis for
Borrower and its respective Subsidiaries, including balance sheets as
of the end of such fiscal year and statements of income and surplus and
cash flows, with schedules. Each of the documents described in this
paragraph shall also be accompanied by a current certificate signed by
the Borrower's chief financial officer or treasurer, certifying on
behalf of the Borrower and its Subsidiaries that it has no knowledge of
any Event of Default or Unmatured Event of Default and that the
document it accompanies is correct and complete to the best of its
knowledge and belief.
(ii) Within forty-five (45) days after the close of
the first three (3) quarterly periods of each fiscal year, for Borrower
and each Guarantor and their respective Subsidiaries, on a consolidated
and a consolidating basis, unaudited financial statements, including
balance sheets as of the end of such period, statements of income,
surplus and cash flows, in each case for the portion of the fiscal year
ending with such fiscal period. All consolidated balance sheets shall
set forth in comparative form figures for the preceding year end. All
such income statements shall reflect current period and year-to-date
figures. Each of the documents described in this paragraph shall also
be accompanied by a current certificate signed by the Borrower's chief
financial officer or treasurer, certifying on behalf of the Borrower
and its Subsidiaries that it has no knowledge of any Event of Default
or Unmatured Event of Default and that the document
58
it accompanies is correct and complete to the best of its knowledge and
belief.
(iii) Within forty-five (45) days after the end of
each of the first three quarterly periods, and within ninety (90) days
after the end, of each fiscal year, a certificate of the Borrower's
chief financial officer or treasurer, in form and detail acceptable to
Agent, as to Borrower's compliance with each Financial Covenant Test
and certain financial covenants in Article VIII, formation and
existence of Subsidiaries, and existence of any Event of Default or
Unmatured Event of Default (at present, Agent and Borrower contemplate
using a certificate in the form of EXHIBIT "H" hereto).
(iv) Within forty-five (45) days after the end of
each fiscal quarter, (a) detailed consolidated cash flow and source and
use of funds statements, and budgeted cash flow projections for each
project or entity in which Borrower or any of its Subsidiaries has an
interest, in the form presently provided to Agent in connection with
its Refinanced Loans, and (b) a summary of the status of all threatened
and actual actions, suits, investigations, and proceedings required to
be reported pursuant to clause (ix) of this Section 7.1, each certified
by the Borrower's chief financial officer or treasurer as being correct
and complete.
(v) By the fifteenth (15th) day of each calendar
month, (a) a Borrowing Base Certificate of the chief financial officer
or treasurer of Borrower, with respect to the Inventory Valuation Date
occurring on the last day of the immediately preceding calendar month,
(b) and a summary, in form and detail acceptable to Agent, showing, as
to the Borrower and each of its Subsidiaries, all construction in
progress, land development activity, and operations of all residential
projects owned, wherever located, (c) for all residential projects, a
land inventory analysis report, in form and detail acceptable to Agent,
showing the Borrower's and each Subsidiary's inventory of sold but
unclosed Housing Units, and schedule indicating (1) project name, (2)
location, (3) number of lots/units, (4) closed lots/units, (5)
remaining lots/units, (6) lots/units completed or under construction
(segregated by sold, spec, leased, and model lots/units), (7)
lots/units sold but not started, (8) lots/units under contract, and (9)
lots/units not sold and not under construction, and (d) a report on
monthly sales, on a per project basis, in the form presently provided
to Agent in connection with its Refinanced Loans.
(vi) As soon as possible and in any event within ten
(10) days after Borrower knows that any Reportable Event has occurred
with respect to any Plan, a statement, signed by an Authorized Officer
of Borrower, describing said Reportable Event and the action which
Borrower (or any Subsidiary) proposes to take with respect thereto.
(vii) As soon as possible, and in any event within
thirty (30) days after Borrower knows or has reason to know that any
circumstances exist that constitute
59
grounds entitling the PBGC to institute proceedings to terminate a Plan
subject to ERISA with respect to Borrower or any member of the
Controlled Group and promptly but in any event within two (2) Business
Days of receipt by Borrower, any Subsidiary or any member of the
Controlled Group of notice that the PBGC intends to terminate a Plan or
appoint a trustee to administer the same, and promptly but in any event
within five (5) Business Days of the receipt of notice concerning the
imposition of withdrawal liability in excess of $500,000.00 with
respect to Borrower, any Subsidiary or any member of the Controlled
Group (when all of such liabilities are aggregated), a certificate of
an Authorized Officer setting forth all relevant details of such event
and the action which Borrower (or any Subsidiary) proposes to take with
respect thereto.
(viii) Promptly after the sending or filing thereof,
copies of all proxy statements, financial statements (including form
8-K, 10-K and 10-Q, exclusive of exhibits unless otherwise requested by
Agent), and reports and communications which Borrower sends to its
stockholders, and copies of all regular, periodic, and special reports,
and all registration statements (exclusive of exhibits unless otherwise
requested by Agent) which Borrower is required to file with the
Securities and Exchange Commission or any governmental authority which
may be substituted therefor, or with any national securities exchange,
and, upon publication or any earlier dissemination, copies of any and
all press releases by Borrower.
(ix) Promptly after the commencement thereof, notice
of all threatened or actual actions, suits, investigations and
proceedings before any arbitrator, court or governmental department,
commission, board, bureau, agency, or instrumentality, domestic or
foreign, affecting Borrower or any Subsidiary (a) which, if determined
adversely to Borrower or any Subsidiary, could reasonably be expected
to have a Material Adverse Effect or (b) in which liability not covered
by insurance in excess of $1,500,000.00 (in the aggregate with respect
to all actions, suits, investigations or proceedings) is claimed and
alleged against Borrower or any Subsidiary.
(x) As soon as possible and in any event within ten
(10) days after receipt by Borrower or any Subsidiary, a copy of (a)
any written notice or claim to the effect that Borrower or any
Subsidiary is or may be liable to any Person as a result of the release
of any toxic or hazardous waste or substance into the environment, and
(b) any notice alleging any violation of any federal, state or local
environmental, health or safety law or regulation by Borrower or any
Subsidiary.
(xi) As and when filed, copies of all federal tax
returns filed by the Borrower or any Subsidiary.
(xii) Such other information (including non-financial
information) as Agent may from time to time reasonably request.
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7.2 USE OF PROCEEDS. Subject to the limitations contained in this
Agreement, Borrower will use the proceeds of Advances to pay and retire all
Refinanced Loans, to pay, redeem and retire all of the Old Senior Notes in full,
to fund future capital expenditures and for land acquisition, development,
construction, working capital and general corporate purposes and to repay
outstanding Advances. Borrower will not, and will not permit any Guarantor or
Subsidiary to, use any of the proceeds of the Advances to purchase or carry any
"margin stock" (as defined in Regulation U) or, except as otherwise permitted by
this Agreement, to purchase any securities in any transaction that is subject to
Sections 13 and 14 of the Securities Exchange Act of 1934, as amended.
7.3 NOTICE OF CERTAIN EVENTS. Borrower will, and will cause each
Guarantor to, give prompt notice in writing to Agent of the occurrence of (i)
any change of address or name of Borrower or any Guarantor, (ii) any Event of
Default or Unmatured Event of Default, (iii) Borrower's failure to satisfy any
Financial Covenant Test, and (iv) any other development, financial or otherwise,
that has had or would be reasonably expected to have a Material Adverse Effect.
7.4 CONDUCT OF BUSINESS. Except as otherwise permitted under this
Agreement, Borrower will, and will cause each Guarantor to, carry on and conduct
business in the same general manner and in substantially the same fields of
enterprise as presently conducted, to do all things necessary to remain duly
incorporated, validly existing and in good standing as a domestic corporation in
their respective jurisdictions of incorporation, maintain all requisite
authority to conduct business in each jurisdiction in which business is
conducted, and maintain all material rights, franchises, licenses, patents,
copyrights, trademarks, trade names or other intellectual property rights, free
from burdensome restrictions and infringements that could have a Material
Adverse Effect; provided, however, that nothing contained herein shall prohibit
the dissolution of a Guarantor after written notice to Agent as long as another
Guarantor or Borrower succeeds to the assets, liabilities and business of the
dissolved Guarantor.
7.5 TAXES. Borrower will, and will cause each Guarantor to, pay prior
to delinquency all taxes, assessments and governmental charges and levies upon
them or their income, profits or Property, except (i) those that are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves have been established in accordance with GAAP, and (ii) to the
extent that the failure to do so would not reasonably be expected to have and
does not have a Material Adverse Effect.
7.6 INSURANCE. Borrower will, and will cause each Guarantor to,
maintain with financially sound and reputable insurance companies insurance on
all their Property in such amounts and covering such risks as is consistent with
sound business practice and usually carried by companies similarly situated
engaged in the same or similar business, and Borrower will furnish to Agent upon
request full information as to the insurance carried, including, without
61
limitation, certificates of insurance naming Banks as additional insureds as
their interests may appear.
7.7 COMPLIANCE WITH LAWS. Borrower will, and will cause each Guarantor
to, comply with all laws, rules, regulations, orders, writs, judgments,
injunctions, decrees or awards to which it may be subject, except to the extent
that the failure to do so would not reasonably be expected to have and does not
have a Material Adverse Effect.
7.8 MAINTENANCE OF PROPERTIES. Borrower will, and will cause each
Guarantor to, do all things necessary to maintain, preserve, protect and keep
its Property in good repair, working order and condition, except to the extent
that the failure to do so would not reasonably be expected to have and does not
have a Material Adverse Effect.
7.9 INSPECTION. Borrower will, and will cause each Guarantor to, permit
Agent and Banks, by their respective representatives and agents, to inspect any
of the Property, corporate (or partnership) books and financial records of
Borrower and Guarantors to examine and make copies of the books of accounts and
other financial records of Borrower and Guarantors, and to discuss the affairs,
finances and accounts of Borrower and Guarantors with, and to be advised as to
the same by, their respective officers after reasonable notice (which may be
oral) not to exceed three (3) Business Days (except in an emergency, when no
notice shall be required) and at such reasonable times and intervals and for
such purposes as Agent may designate.
7.10 ENVIRONMENT. Without limiting Section 7.7, 7.9 or any other
provision of this Agreement, Borrower will, and will cause Guarantor to, (i)
comply with the provisions of all federal, state, and local environmental,
health, and safety laws, codes and ordinances, and all rules and regulations
issued thereunder; (ii) promptly contain and remove or otherwise remediate any
hazardous discharge from or affecting the Property of Borrower or any Guarantor,
to the extent required by and in compliance with all applicable laws; (iii)
promptly pay any fine or penalty assessed in connection therewith or contest the
same in good faith; and (iv) permit Agent to inspect such Property, to conduct
tests thereon, and to inspect all books, correspondence, and records pertaining
thereto after reasonable notice (which may be oral) not to exceed three (3)
Business Days (except in an emergency, when no notice shall be required) and at
reasonable hours and places; and (v) at the request of the Majority Banks, and
at Borrower's expense, provide a report of a qualified environmental engineer,
satisfactory in scope, form, and content to the Majority Banks, and such other
and further assurances reasonably satisfactory to the Majority Banks that any
condition or occurrence hereafter identified in any updated form 10-K or 10-Q
has been corrected.
7.11 WHOLLY OWNED STATUS. Borrower shall ensure that each of the
Subsidiaries (i.e. - each of the Guarantors) is a Wholly-Owned Subsidiary of
Borrower.
7.12 RANKING OF OBLIGATIONS. Borrower hereby subordinates to the
Obligations any
62
and all Indebtedness owing to Borrower by any Subsidiary or Affiliate and shall
ensure that (i) all Indebtedness between or among Borrower and any Subsidiary or
Affiliate remains subordinate, in right of payment and standing, to the
Obligations under the Loan Documents, and (ii) all Obligations under the Loan
Documents shall be and constitute (a) unconditional general obligations of
Borrower ranking at least pari passu with all of its other unsecured debt or (b)
when required pursuant to Section 2.22 during any Conversion Period, secured
obligations ranking prior and superior to its unsecured debt.
7.13 RETIREMENT OF OLD SENIOR NOTES. Borrower shall pay, redeem and
retire all of the Old Senior Notes in full on or before October 31, 1998.
7.14 YEAR 2000 COMPLIANCE. The Borrower will promptly notify the Agent
in the event the Borrower discovers or determines that any computer application
(including those of its suppliers and vendors) that is material to its or any of
its Subsidiaries' business and operations will not be Year 2000 compliant on a
timely basis, except to the extent that such failure could not reasonably be
expected to have a Material Adverse Effect.
ARTICLE VIII
NEGATIVE COVENANTS
During the term of the Agreement, unless the Majority Banks shall
otherwise consent in writing:
8.1 DIVIDENDS. Borrower will not, and will not permit any Guarantor to,
directly or indirectly, declare, make or pay, or incur any liability to make or
pay, or cause or permit to be declared, made or paid, any Dividend if, prior to
or after giving effect to the declaration and payment of any Dividend, there
shall exist any Event of Default under this Agreement. The foregoing paragraph
will not prevent the payment of any Dividend by Borrower within sixty (60) days
after the date of its declaration if such Dividend could have been made on the
date of its declaration in compliance with the foregoing provisions.
8.2 INDEBTEDNESS. Borrower will not, and will not permit any Guarantor
to, create, incur or suffer to exist any Indebtedness, except, without
duplication and without duplication as to Borrower and Guarantors:
(i) The Loans and the Guaranty.
(ii) Indebtedness existing on the date hereof (and
not otherwise permitted under this Section 8.2) and described in
SCHEDULE "8.2(II)" hereto and Refinancing Indebtedness with respect
thereto.
(iii) Indebtedness under a Warehouse Facility;
provided that the
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amount of such Indebtedness (including funding drafts issued
thereunder) outstanding at any time pursuant to this clause (iii) shall
not exceed the fair market value of the mortgages pledged to secure
Indebtedness thereunder.
(iv) Rate Hedging Obligations with respect to
Borrower's Indebtedness.
(v) Intercompany Indebtedness between Borrower, any
Guarantor and/or any Subsidiary, provided that such Indebtedness is
subordinate to the Obligations and to the obligations of the Guarantors
under the Guaranty to the reasonable satisfaction of Agent.
(vi) Trade accounts payable and accrued expenses
arising or occurring in the ordinary course of business.
(vii) Indebtedness constituting Capitalized Lease
Obligations.
(viii) Contingent Indebtedness with respect to
undrawn Letters of Credit, banker's acceptances, and performance,
completion, guarantee, surety, construction and similar bonds entered
into in the ordinary course of business not to exceed in the aggregate
at any time outstanding $35,000,000.00 until October 31, 1999 or
$30,000,000.00 after October 31, 1999.
(ix) Non-Recourse Indebtedness incurred in the
ordinary course of business in an aggregate amount outstanding at any
time not to exceed $5,000,000.00, plus, until April 30, 1999,
Non-Recourse Indebtedness existing on the date of this Agreement and
disclosed in Section 6.4.
(x) (a) Indebtedness evidenced by (1) the Senior
Notes (including any related guaranties in effect that are required by
the terms of the Indenture) and Refinancing Indebtedness with respect
thereto, and (2) until October 31, 1998, the Old Senior Notes and (b)
other Public Indebtedness that constitutes a general unsecured
obligation ranking pari passu in right of payment and standing to the
Senior Notes and the Obligations (until any Conversion Period, during
which the Obligations shall be become senior ranking secured
obligations as provided in Section 2.22), provided the Public
Indebtedness is scheduled to mature no earlier than the Facility
Maturity Date and the terms and conditions of the Public Indebtedness
are no more restrictive or adverse to Borrower or its Subsidiaries or
the rights of the Banks under this Agreement and the other Loan
Documents than those in the Indenture on the date it was issued
(including, without limitation, with respect to the ability to incur
Indebtedness and grant liens to secure Indebtedness, financial
performance, and events of default).
(xi) Notwithstanding and in addition to Indebtedness
permitted by
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clause (ix) of this Section 8.2, and in accordance with Section 8.5
(v), the sum of Non-Recourse Indebtedness plus Investments in Joint
Ventures may total up to an additional $20,000,000.00 in the aggregate
at any time outstanding, if the Borrower is in compliance with each
Financial Covenant Test at the time of and after giving effect to such
incurrence (on a current pro forma rather than quarterly basis).
8.3 MERGER. Borrower will not, nor will it permit any Guarantor to,
merge or consolidate with or into any other Person, unless:
(i) the Guarantor is merging with any other Guarantor
or Borrower, and Borrower, if applicable, is the continuing
corporation; or
(ii) a Subsidiary (other than a Guarantor) is merging
with Borrower or any Guarantor or another Subsidiary, and Borrower or
the Guarantor, if applicable, is the continuing corporation; and
(iii) no Event of Default shall exist or shall occur
after giving effect to such transaction; and
(iv) after giving effect to such transaction,
Borrower shall be in compliance with each Financial Covenant Test; and
(v) if the merger or consolidation involves a Person
other than Borrower or any Guarantor, (a) the other Person to the
transaction is in a Related Business, (b) the amount paid for the
aggregate net worth of the acquired non-related entities (including,
without limitation for goodwill and any premiums paid) in all such
transactions during any 24-month period shall not exceed
$10,000,000.00, whether paid in cash or in kind (including, without
limitation with capital stock), and (c) Borrower or the Guarantor, as
applicable, is the continuing corporation; and
(vi) the transaction is not otherwise prohibited
under this Agreement; and
(vii) if required by Agent, the continuing
corporation ratifies and confirms by supplemental document in a form
reasonably satisfactory to Agent all of the obligations of Borrower or
such Guarantor, as the case may be, under the Loan Documents and/or the
Guaranty.
8.4 SALE OF ASSETS. Borrower will not, and will not permit any
Guarantor to, lease, sell or otherwise dispose of its Property, in a single
transaction or a series of transactions, to any other Person except (i) for
sales or leases in the ordinary course of business or of Property that is
obsolete or worn out, (ii) sales, leases or dispositions by any Subsidiary to
the Borrower or any
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other Subsidiary, and (iii) for leases, sales or other dispositions of its
Property that, together with all other Property of Borrower or such Guarantor
previously leased, sold or disposed of (other than in the ordinary course of
business) as permitted by this Section during the month in which any such lease,
sale or other disposition occurs, do not constitute a Material Portion of the
Property of Borrower or such Guarantor.
For purposes of this Section 8.4, "Material Portion" means any sale,
lease or other disposition of the Property of Borrower or any Guarantor which
would cause the principal amount of all Advances outstanding plus the aggregate
amount of the Facility Letter of Credit Obligations outstanding plus the
Aggregate Senior Indebtedness outstanding to exceed the Borrowing Base, after
taking into account any reduction of such amounts during the ensuing thirty (30)
days. If a Material Portion of the Property of Borrower or any Guarantor is
leased, sold or disposed of in violation of this Section 8.4, Borrower shall pay
to Agent for the benefit of Banks at the time of such lease, sale or disposal,
all amounts owed by Borrower pursuant to Section 2.2, taking into account the
effect of the lease, sale or disposal.
8.5 INVESTMENTS AND ACQUISITIONS. Borrower will not, and will not
permit any Guarantor to, make or suffer to exist any Investments (including
without limitation, loans and advances to, and other Investments in,
Subsidiaries), or commitments therefor, or to create any Subsidiary or to become
or remain a partner in any partnership or joint venture, or to make any
Acquisition of any Person, except:
(i) Investments in Cash Equivalents.
(ii) Loans or advances made to officers, directors or
employees of Borrower or any Guarantor or any Subsidiary not exceeding
$100,000.00 in the aggregate.
(iii) Investments in interests in issuances of
collateralized mortgage obligations, mortgages (including funding by
Borrower of mortgages originated by a Guarantor in the ordinary course
of business), mortgage loan servicing or other mortgage related assets.
(iv) Investments of Borrower in a Guarantor or of a
Guarantor in another Guarantor.
(v) Investments in Joint Ventures, provided that the
outstanding amount of such Investments of Borrower and its Subsidiaries
do not at any time exceed $5,000,000.00, or, if Borrower is in
compliance with each Financial Covenant Test when the Investments
described in this clause (v) are made after giving effect thereto (on a
current pro forma rather than quarterly basis), then, in addition to
the $5,000,000.00 Investments in Joint Ventures permitted in this
clause (v), and in accordance with Section 8.2 (xi), the sum of
Non-Recourse Indebtedness and Investments in Joint Ventures may
66
total up to an additional $20,000,000.00 in the aggregate at any time
outstanding.
(vi) Investments permitted by Section 8.3.
(vii) Stock, obligations or securities received in
satisfaction of debts owing to Borrower or any Guarantor in the
ordinary course of business.
(viii) Pledges or deposits in cash by Borrower or any
Guarantor to support surety bonds, performance bonds or guarantees of
completion in the ordinary course of business.
(ix) Investments pursuant to Borrower's or any
Guarantor's employment compensation plans or agreements.
(x) Investments in Rate Hedging Obligations with
respect to Borrower's Indebtedness.
8.6 LIENS. Borrower will not, and will not permit any Guarantor to,
create, incur, or suffer to exist any Lien in, of or on the Property of Borrower
or any Guarantor, except:
(i) Permitted Liens.
(ii) Notwithstanding any higher dollar limitations
applicable to any litigation, suits or proceedings pursuant to Section
6.7, judgments and similar Liens arising in connection with court
proceedings which do not exceed in the aggregate at any time
$500,000.00; provided the execution or enforcement thereof is stayed
and the claim is being contested in good faith, adequate reserves have
been established in accordance with GAAP, and the same do not give rise
to an Event of Default or Unmatured Event of Default.
(iii) Liens securing Non-Recourse Indebtedness of
Borrower or any Guarantor permitted by Section 8.2, provided that (A)
the amount of such Indebtedness is greater than fifty percent (50%) of
the fair market value of the Property encumbered by the Liens, (B) such
Liens apply and attach only to the property financed (out of the net
proceeds of such Indebtedness) within ninety (90) days of the creation,
incurrence or sufferance of such Non-Recourse Indebtedness.
(iv) Liens securing a Warehouse Facility, provided
that such liens shall not extend to any assets other than the
mortgages, promissory notes and other collateral that secures mortgage
loans made by Borrower or any Guarantor.
(v) Liens in respect of Rate Hedging Obligations.
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(vi) Customary Liens (other than any lien imposed by
ERISA) incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
types of social security.
(vii) Customary Liens incurred or deposits made to
secure the performance of tenders, bids, leases, statutory obligations,
surety and appeal bonds, progress payments, government contracts and
other obligations of like nature (exclusive of obligations for the
payment of borrowed money), in each case, incurred in the ordinary
course of business, provided such Liens do not attach to any real
estate.
(viii) Leases or subleases granted to others not
materially interfering with the ordinary conduct of the business of
Borrower or any Guarantor.
(ix) Liens of the Collateral Documents granted
pursuant to the provisions of Section 2.22.
Notwithstanding anything herein to the contrary, Borrower will not, and will not
permit any Guarantor to, create, incur, or suffer to exist any Lien in, of or on
the capital stock of any Guarantor.
8.7 REDEMPTION. Borrower will not purchase or redeem any of its capital
stock heretofore or hereafter issued, except that Borrower may purchase or
redeem its capital stock (i) to the extent that the consideration for such
redemption or purchase is limited to capital stock of Borrower, or (ii) if the
consideration for such purchaser or redemption is other than capital stock of
Borrower and does not exceed, in the aggregate for all such purchases and
redemptions from and after the date hereof, $5,000,000.00.
8.8 AFFILIATES. Borrower will not, and will not permit any Guarantor
to, enter into any transaction (including, without limitation, the purchase or
sale of any Property or service) with, or make any payment or transfer to, any
Affiliate (other than a Subsidiary) except (i) in the ordinary course of
business and/or pursuant to the reasonable requirements of Borrower's or such
Guarantor's business and, in either event, upon fair and reasonable terms no
less favorable to Borrower or such Guarantor than Borrower or such Guarantor
would obtain in a comparable arms-length transaction, (ii) Investments permitted
under Section 8.5, (iii) pursuant to employment compensation plans and
agreements, and (iv) with officers, directors and employees of Borrower or any
Subsidiary so long as the same are in compliance with this Agreement and duly
authorized pursuant to the articles of incorporation or bylaws (or procedures
conducted in accordance therewith) of Borrower or such Subsidiary. Majority
Banks shall not unreasonably withhold consent to any request by Borrower to
approve a transaction, payment or transfer restricted by this Section 8.8.
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8.9 SUBORDINATED INDEBTEDNESS. Borrower will not, nor will it permit
any Subsidiary to, directly or indirectly voluntarily prepay, defease, or in
substance defease, purchase, redeem or retire any Subordinated Indebtedness;
provided, however, that the foregoing shall not prohibit payment, redemption and
the repayment or prepayment of Subordinated Indebtedness solely from the net
proceeds of other Subordinated Indebtedness.
8.10 AMENDMENTS. Borrower will not, nor will it permit any Subsidiary
to, amend or modify the Indenture, the Old Indenture, or the Senior Notes or the
Old Senior Notes, except for amendments or modifications that do not (i) impose
upon Borrower or any Subsidiary obligations more onerous than those contained
therein as of the date of this Agreement, or (ii) otherwise adversely affect
Borrower or any Subsidiary or the rights of the Banks under this Agreement.
8.11 NEGATIVE PLEDGE AGREEMENTS PROHIBITED; AND OTHER PROHIBITED
AGREEMENTS. Borrower will not, nor will it permit any Subsidiary to, directly or
indirectly, agree or enter into or become liable under any agreement that at any
time: (i) restricts or prohibits the creation, incurrence or existence of any
Lien on any of their respective Properties, whether now owned or hereafter
acquired (but only to the extent prohibition by Banks of these types of
agreements and liabilities would not result in a breach of the Indenture and
Senior Notes), (ii) restricts or prohibits the amount of Dividends or loans that
may be paid or made to the Borrower by any of its Subsidiaries or Affiliates, or
(iii) that would have a Material Adverse Effect.
8.12 INTERCOMPANY DEBT. Borrower will not, nor will it permit any
Subsidiary to, modify, cancel or forgive any existing Indebtedness between or
among any of them, or accelerate, make demand for or enforce payment of any
Indebtedness from Borrower to any of its Subsidiaries.
8.13 ANCILLARY BUSINESS LIMITATIONS. Notwithstanding any conflicting
interpretations of Sections 8.3, 8.5 or other provisions of this Agreement,
Borrower will not, nor will it permit any Subsidiary to, engage in, conduct or
carry on any business, except (i) for sale homebuilding operations, (ii)
construction and operation of sales centers in master planned unit developments,
(iii) financial services operations supporting and relating to its homebuilding
operations, and (iv) manufactured housing, rental apartments, or commercial
properties of any type or other business ancillary to its for sale homebuilding
operations where the Investment does not exceed, in the aggregate, the lesser of
(a) $2,000,000.00, or (b) 1.5% of Consolidated Tangible Net Worth.
8.14 FISCAL YEAR CALCULATION. Borrower shall not, nor permit any
Subsidiary to, change the annual dates of commencement or end (presently,
October 31) of their fiscal years.
8.15 MATERIAL ADVERSE EFFECT. Borrower will not, nor will it permit any
Subsidiary to, suffer or permit to exist or occur any change in the business,
Property, condition (financial or otherwise) or results of operations of
Borrower and Guarantors (taken as a whole) that has or
69
would reasonably be expected to have a Material Adverse Effect.
ARTICLE IX
FINANCIAL COVENANTS
During the term of this Agreement, unless the Majority Banks shall
otherwise consent in writing:
9.1 CONSOLIDATED TANGIBLE NET WORTH TEST. Borrower's Consolidated
Tangible Net Worth shall not be less than (i) $147,000,000.00, plus (ii) fifty
percent (50%) of the cumulative Consolidated Net Income earned during each
quarter after April 30, 1998 (excluding any quarter in which there is a loss),
plus (iii) one hundred percent (100%) of the net proceeds of any Subordinated
Indebtedness or any capital stock or other equity interest issued by Borrower
after the date of this Agreement (the "Consolidated Tangible Net Worth Test").
9.2 LEVERAGE TEST. Borrower shall maintain a ratio of Consolidated
Liabilities to Consolidated Tangible Net Worth of not more than 2.0:1.0 (the
"Leverage Test").
9.3 INTEREST COVERAGE TEST. Borrower shall maintain a ratio of EBITDA
to Consolidated Interest Incurred of not less than 2.0:1.0 (the "Interest
Coverage Test").
9.4 FIXED CHARGE COVERAGE TEST. Borrower shall maintain a ratio of
EBITDAR to Fixed Charges of not less than 1.75:1.0 (the "Fixed Charge Coverage
Test").
9.5 DIVIDEND PAYOUT TEST. The aggregate amount of cash Dividends paid
by Borrower on its capital stock during the most recent fiscal quarterly period
shall not exceed fifty percent (50%) of its Consolidated Net Income for such
period (the "Dividend Payout Test").
9.6 LAND HOLDING TEST. The book values, determined on a consolidated
basis in conformity with GAAP of all (a) Spec Lots, plus (b) Land Under
Development, plus (c) Land Not Under Development, less the book value,
determined in accordance with GAAP, of all unsold land owned by ▇▇▇▇▇
Homes/Pembroke, Inc. shall not at any time exceed one hundred twenty-five
percent (125%) of Consolidated Tangible Net Worth (the "Land Holding Test").
ARTICLE X
EVENTS OF DEFAULT
The occurrence of any one or more of the following events shall
constitute an Event of Default:
10.1 REPRESENTATIONS AND WARRANTIES. Any representation or warranty
(except the representations and warranties in Section 6.7, but only to the
extent the same are made, or
70
deemed made, after the date hereof) made or deemed made by or on behalf of
Borrower or any Guarantor to Banks, the Issuing Bank or Agent under or in
connection with this Agreement, any Loan Document, or any certificate or
information delivered in connection with this Agreement or any other Loan
Document shall not be true and correct in any material respect on the date as of
which made.
10.2 NON-PAYMENT. Nonpayment of principal of any Note when due, or
nonpayment of interest upon any Note or of any fees or other Obligations under
any of the Loan Documents within five (5) Business Days after the same becomes
due.
10.3 OTHER DEFAULTS. The breach by Borrower of any of the terms or
provisions of this Agreement (other than any term or provision of Article IX
[which are separately addressed in Section 10.15] or any term or provision
covered by another Section of this Article X) which is not remedied within
thirty (30) days after the earlier of: (i) knowledge of the occurrence of such
breach by Borrower or any Guarantor, or (ii) notice of the breach having been
given to or received by Borrower or any Guarantor.
10.4 OTHER INDEBTEDNESS. Notwithstanding any higher dollar limitations
applicable to any litigation, suits or proceedings pursuant to Section 6.7:
(a) Failure of Borrower or any Guarantor to pay when due
(after any applicable grace period and after notice from the holder thereof) any
Indebtedness exceeding $100,000.00 in any instance or $500,000.00 in the
aggregate; or
(b) The default (after any applicable grace period and after
notice from the holder thereof) by Borrower or any Guarantor in the performance
of any term, provision or condition contained in any agreement under which any
Indebtedness exceeding $100,000.00 in any instance or $500,000.00 in the
aggregate was created or is governed; or
(c) Any other event shall occur or condition exist (after any
applicable grace period and after notice from the holder thereof), the effect of
which is to cause, or to permit the holder or holders of any Indebtedness of
Borrower or any Guarantor exceeding $100,000.00 in any instance or $500,000.00
in the aggregate to cause such Indebtedness to become due prior to its stated
maturity; or
(d) Any Indebtedness of Borrower or any Guarantor exceeding
$100,000.00 in any instance or $500,000.00 in the aggregate shall be declared to
be due and payable or required to be prepaid (other than by a regularly
scheduled payment) prior to the stated maturity thereof (after any applicable
grace period and after notice from the holder thereof); or
(e) Any contingent Indebtedness of Borrower or any Guarantor
becomes direct or absolute (including, without limitation, under any Letter of
Credit, surety bond,
71
construction bond, or other contingent obligation); or
(f) Borrower or any Guarantor shall not pay, or shall admit in
writing its inability to pay, its debts generally as they become due.
10.5 BANKRUPTCY. Borrower or any Guarantor shall:
(i) have an order for relief entered with respect to
it under the Federal bankruptcy laws as now or hereafter in effect;
(ii) make an assignment for the benefit of creditors;
(iii) apply for, seek, consent to, or acquiesce in,
the appointment of a receiver, custodian, trustee, examiner, liquidator
or similar official for it or any Substantial Portion of its Property;
(iv) institute any proceeding seeking an order for
relief under the Federal bankruptcy laws as now or hereafter in effect
or seeking to adjudicate it a bankrupt or insolvent, or seeking
dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fail
to file, within the applicable time period for the filing thereof, an
answer or other pleading denying the material allegations of any such
proceeding filed against it; or
(v) fail to contest in good faith any appointment or
proceeding described in Section 10.6.
10.6 RECEIVER. A receiver, trustee, examiner, liquidator or similar
official shall be appointed for Borrower or any Guarantor or any Substantial
Portion of its Property without the application, approval or consent of Borrower
or Guarantors, or a proceeding described in Section 10.5(v) shall be instituted
against Borrower or any Guarantor and such appointment continues undischarged or
such proceeding continues undismissed or unstayed for a period of sixty (60)
consecutive days.
10.7 JUDGMENT. Notwithstanding any higher dollar limitations applicable
to any litigation, suits or proceedings pursuant to Section 6.7, Borrower or any
Guarantor shall fail within sixty (60) days to pay, bond or otherwise discharge
any judgment or order (which has not been stayed on appeal and is not otherwise
being appropriately contested in good faith) for the payment of money in excess
of $100,000.00 in any instance or $500,000.00 in the aggregate or which has a
Material Adverse Effect.
10.8 UNFUNDED LIABILITIES.
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(a) Any Unfunded Liabilities under any Single Employer Plan
shall exist; or
(b) Any Reportable Event shall occur in connection with any
Plan, which Reportable Event has had or would reasonably be expected to have a
Material Adverse Effect.
10.9 WITHDRAWAL LIABILITY. Borrower, or any Guarantor or any member of
the Controlled Group shall have been notified by the sponsor of a Multiemployer
Plan that it has incurred withdrawal liability to such Multiemployer Plan in an
amount which, when aggregated with all other amounts required to be paid to
Multiemployer Plans by Borrower or such Guarantor or any other member of the
Controlled Group as withdrawal liability (determined as of the date of such
notification), exceeds $500,000.00 or requires payments exceeding $100,000.00
per annum; provided, however, that such event shall not constitute an Event of
Default as long as Borrower, such Guarantor or the Controlled Group member, as
applicable, is contesting in good faith the imposition of withdrawal liability.
10.10 INCREASED CONTRIBUTIONS. Borrower, or any Guarantor, or any other
member of the Controlled Group shall have been notified by the sponsor of a
Multiemployer Plan that such Multiemployer Plan is in reorganization, if as a
result of such reorganization the aggregate annual contributions of Borrower,
Guarantors and the other members of the Controlled Group (taken as a whole) to
all Multiemployer Plans which are then in reorganization have been or will be
increased over the amounts contributed to such Multiemployer Plans for the
respective plan years of each such Multiemployer Plan immediately preceding the
plan year in which the reorganization occurs by an amount exceeding $100,000.00.
10.11 CHANGE IN CONTROL.
(a) Any Change in Control shall occur; or
(b) ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and their wives,
children and children's spouses, and grandchildren fail to maintain beneficial
ownership of at least thirty percent (30%) of the issued and outstanding capital
stock of Borrower.
10.12 DISSOLUTION. The dissolution or liquidation of Borrower or any
Guarantor shall occur, except as permitted under Section 8.3.
10.13 GUARANTY. The Guaranty shall fail to remain in full force or
effect with respect to any Guarantor or any action shall be taken by any
Guarantor to discontinue or to assert the invalidity or unenforceability of the
Guaranty, or any Guarantor shall fail to comply with any of the terms or
provisions of the Guaranty, or any Guarantor denies that it has any further
liability under the Guaranty or gives notice to such effect.
10.14 COLLATERAL. Borrower shall fail to provide in accordance with
Section 2.22 (i) all
73
Collateral and Collateral Documents for the Obligations, or (ii) all Due
Diligence Documents relating to the Collateral.
10.15 FINANCIAL COVENANTS.
(a) The ratio of Consolidated Liabilities to Consolidated
Tangible Net Worth equals or exceeds 3.0:1.0 for two (2) consecutive fiscal
quarters or three (3) of any trailing five (5) fiscal quarters; or
(b) The ratio EBITDA to Consolidated Interest Incurred equals
or is less than 1.25:1.0 for two (2) consecutive or three (3) of any trailing
five (5) fiscal quarters; or
(c) Borrower shall fail to satisfy (i) the Consolidated
Tangible Net Worth Test as required in Section 9.1, (ii) the Leverage Test as
required in Section 9.2, (iii) the Interest Coverage Test as required in Section
9.3, (iv) the Fixed Charge Coverage Test as required in Section 9.4, (v) the
Dividend Payout Test as required in Section 9.5, or (vi) the Land Holding Test
as required in Section 9.6 and such failure (for any, even if not the same,
Financial Covenant Test) continues for three (3) consecutive fiscal quarters or
four (4) of any trailing six (6) fiscal quarters.
10.16 SENIOR DEBT RATING. Borrower shall fail to maintain for more that
ninety (90) days a Senior Debt Rating (i) with at least two (2) of the following
rating agencies: ▇▇▇▇▇'▇ Investors Service, Inc., Standard & Poor's Corporation,
Fitch's Investment Service and Duff & ▇▇▇▇▇▇ Credit Rating Co., one (1) of which
must be ▇▇▇▇▇'▇ Investors Service, Inc. or Standard & Poor's Corporation, or
(ii) where Standard & Poor's Corporation issues a rating of at least a B or
▇▇▇▇▇'▇ Investors Services, Inc. issues a rating of at least a B2.
ARTICLE XI
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
11.1 ACCELERATION; REMEDIES.
(a) If any Event of Default described in Section 10.5 or 10.6
occurs with respect to Borrower or any Guarantor, the obligations of Banks to
make Loans and of the Issuing Bank to issue Facility Letters of Credit hereunder
shall automatically terminate and the Obligations shall immediately become due
and payable without any election or action on the part of Agent, the Issuing
Bank or any Bank. If any other Event of Default occurs, the Majority Banks may
terminate or suspend the obligations of Banks to make Loans and of the Issuing
Bank to issue Facility Letters of Credit hereunder, or declare the Obligations
to be due and payable, or both, whereupon the Obligations shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which Borrower hereby expressly waives.
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(b) Upon the occurrence of any Event of Default and upon the
directive of the Majority Banks, Agent or, but only upon directive of all of the
Banks, any Bank shall proceed to protect, exercise and enforce the rights and
remedies of Agent and Banks under the Loan Documents and the Guaranty against
Borrower, any Guarantor and any other party and such other rights and remedies
as are provided by law or equity.
(c) The order and manner in which Banks' rights and remedies
are to be exercised shall be determined by the Majority Banks in their sole
discretion, and all payments received by Agent and Banks, or any of them, shall
be applied first to the costs and expenses (including attorneys' fees and
disbursements) of Agent and of Banks, and thereafter paid pro rata to each Bank
in the same proportions that each Bank's Commitment bears to the Aggregate
Commitment, without priority or preference among Banks. Regardless of how each
Bank may treat payments for the purpose of its own accounting, for the purpose
of computing Borrower's obligations hereunder and under the Notes, payments
shall be applied first, to the costs and expenses of Agent and Banks, as set
forth above, second, to the payment of accrued and unpaid interest due under any
Loan Documents to and including the date of such application (ratably, and
without duplication, according to the accrued and unpaid interest due under each
of the Loan Documents), and third, to the payment of all other amounts
(including principal and fees) then owing to Agent or Banks under the Loan
Documents. No application of payments will cure any Event of Default, or prevent
acceleration, or continued acceleration, of amounts payable under the Loan
Documents, or prevent the exercise, or continued exercise, of rights or remedies
of Banks hereunder or thereunder or at law or in equity.
11.2 AMENDMENTS. Subject to the provisions of this Article XI, the
Majority Banks (or Agent with the consent in writing of the Majority Banks) and
Borrower may enter into agreements supplemental hereto for the purpose of adding
or modifying any provisions to the Loan Documents or changing in any manner the
rights of Banks or Borrower hereunder or waiving any Event of Default hereunder;
provided, however, that no such supplemental agreement shall, without the
consent of each Bank and Issuing Bank affected thereby:
(i) Extend the maturity of any Loan or Note or
forgive all or any portion of the principal amount thereof, or reduce
the rate of, or extend the time of payment of, interest or fees
thereon;
(ii) Release any or all Guarantors from any of their
obligations under the Guaranty or the Environmental Agreements;
(iii) Change the percentage specified in the
definition of Majority Banks;
(iv) Increase the amount of the Commitment of any
Bank hereunder, or permit Borrower to assign its rights under this
Agreement except by operation of law
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pursuant to a merger permitted under Section 8.3;
(v) Amend any provisions of this Agreement relating
to Facility Letters of Credit;
(vi) Amend any provisions of this Agreement relating
to Swing Line Advances without the consent of SunTrust; or
(vii) Amend this Section 11.2, Section 11.4, Section
12.7, Section 14.1, Section 14.2 or Section 15.2.3.
No amendment of any provision of this Agreement relating to Agent shall be
effective without the written consent of Agent. Agent may waive payment or
reduce the amount of the fees referred to in Section 13.12 or the fee required
under Section 15.3.2 without obtaining the consent of any other party to this
Agreement.
11.3 PRESERVATION OF RIGHTS. No delay or omission of any Bank or
Issuing Bank or Agent to exercise any right under the Loan Documents shall
impair such right or be construed to be a waiver of any Event of Default or an
acquiescence therein, and the making of a Loan or the issuance, amendment or
extension of a Facility Letter of Credit notwithstanding the existence of an
Event of Default or the inability of Borrower to satisfy the conditions
precedent to such Loan or Facility Letter of Credit shall not constitute any
waiver or acquiescence. Any single or partial exercise of any such right shall
not preclude other or further exercise thereof or the exercise of any other
right, and no waiver, amendment or other variation of the terms, conditions or
provisions of the Loan Documents whatsoever shall be valid unless in writing
signed by Banks (and, if applicable, Agent) required pursuant to Section 11.2,
and then only to the extent in such writing specifically set forth. All remedies
contained in the Loan Documents or by law afforded shall be cumulative and all
shall be available to Agent, the Issuing Bank and Banks until the Obligations
have been paid in full.
11.4 NEW GUARANTOR.
(a) Unless otherwise agreed to by all of the Banks:
(i) Each Subsidiary of Borrower shall be a Guarantor
under this Agreement,
(ii) All Subsidiaries of Borrower in existence on the
date of this Agreement shall execute and deliver the Guaranty, and
(iii) All Subsidiaries of Borrower coming into
existence after the date of this Agreement (in each case, a "New Guarantor")
shall (1) be disclosed to Agent and Banks quarterly in the certificate provided
from time to time pursuant to clause (iii) of Section 7.1 (the
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"Compliance Certificate") and (2) become liable as a Guarantor and execute and
deliver the documents and instruments described in clause (b) of this Section
11.4.
(b) Unless otherwise agreed to by all of the Banks, Borrower
shall cause each New Guarantor to execute and deliver to Agent appropriate
documents and instruments whereby the New Guarantor assumes the obligations of a
Guarantor under the Guaranty and the other Loan Documents, and Borrower shall
deliver or cause to be delivered, by and with respect to each New Guarantor,
certificates, opinions and other documents substantially similar to those
required to be delivered under the provisions of Sections 5.1(i), (ii), (iii),
(iv) and (v) and such other documents as Agent or any Issuing Bank or their
respective counsel may reasonably request. All of the documents, instrument and
other items described in this clause (b) shall be in form and substance
satisfactory to Agent or such Issuing Bank, as the case may be, and shall be
delivered to Agent promptly after incorporation/formation of the New Guarantor
but in no event later than the date the next Compliance Certificate is required
to be furnished pursuant to clause (iii) of Section 7.1.
ARTICLE XII
GENERAL PROVISIONS
12.1 SURVIVAL OF REPRESENTATIONS. All representations and warranties of
Borrower contained in this Agreement shall survive delivery of the Notes and the
making of the Loans and the issuance, amendment or extension of any Facility
Letter of Credit herein contemplated.
12.2 GOVERNMENTAL REGULATION. Anything contained in this Agreement to
the contrary notwithstanding, no Bank or Issuing Bank shall be obligated to
extend credit to Borrower in violation of any limitation or prohibition provided
by any applicable statute or regulation effective after the date of this
Agreement.
12.3 TAXES. Any recording, intangible, filing or stamp fees or taxes or
other similar assessments or charges made by any governmental or revenue
authority in respect of the Loan Documents shall be paid by Borrower, together
with interest and penalties, if any.
12.4 HEADINGS. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.
12.5 ENTIRE AGREEMENT. The Loan Documents and the commitment letter
(including the letter agreements incorporated therein) referred to in this
Agreement embody the entire agreement and understanding among Borrower, Agent
and Banks and supersede all prior agreements and understandings among Borrower,
Agent, and Banks relating to the subject matter thereof.
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12.6 NATURE OF OBLIGATIONS; BENEFITS OF THIS AGREEMENT.
(a) The respective obligations of Banks hereunder are several
and not joint and no Bank shall be the partner or agent of any other (except to
the extent to which Agent is authorized to act as such). The failure of any Bank
to perform any of its obligations hereunder shall not relieve any other Bank
from any of its obligations hereunder.
(b) This Agreement shall not be construed so as to confer any
right or benefit upon any Person other than the parties to this Agreement and
their respective successors and assigns.
12.7 EXPENSES; INDEMNIFICATION. Borrower shall reimburse Agent for any
reasonable costs, internal charges and out-of-pocket expenses (including
reasonable attorneys' fees and costs) paid or incurred by Agent in connection
with the preparation, negotiation, execution, delivery, review, amendment,
modification, and administration of the Loan Documents. Borrower also agrees to
reimburse Agent, Banks and each Issuing Bank for any reasonable costs, internal
charges and out-of-pocket expenses (including reasonable attorneys' fees and
time charges of attorneys for Agent, Banks and such Issuing Bank) paid or
incurred by Agent, any Bank or such Issuing Bank in connection with the
collection and enforcement of the Loan Documents. Borrower further agrees to
indemnify and hold harmless Agent and each Bank or Issuing Bank, its directors,
officers and employees against all losses, claims, damages, penalties,
judgments, liabilities and expenses (including, without limitation, all expenses
of litigation or preparation therefor whether or not Agent or any Bank or
Issuing Bank is a party thereto and any amounts payable pursuant to Section
12.3) which any of them may pay or incur arising out of or relating to this
Agreement, the other Loan Documents, the transactions contemplated hereby or the
direct or indirect application or proposed application of the proceeds of any
Loan hereunder (except to the extent arising due to the gross negligence or
willful misconduct of the indemnified Person). The obligations of Borrower under
this Section shall survive the termination of this Agreement.
12.8 NUMBERS OF DOCUMENTS. All statements, notices, closing documents,
and requests hereunder shall be furnished to Agent with sufficient counterparts
so that Agent may furnish one to each of Banks.
12.9 ACCOUNTING. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP.
12.10 SEVERABILITY OF PROVISIONS. Any provision in any Loan Document
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.
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12.11 NONLIABILITY OF BANKS AND ISSUING BANK. The relationship between
Borrower and Banks and Agent shall be solely that of borrower and lender.
Neither Agent nor any Bank or Issuing Bank shall have any fiduciary
responsibilities to Borrower. Neither Agent nor any Bank or Issuing Bank
undertakes any responsibility to Borrower to review or inform Borrower of any
matter in connection with any phase of Borrower's business or operations.
12.12 CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF FLORIDA, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
12.13 ARBITRATION. Subject to the provisions of this Section 12.13,
Borrower, Banks and Agent agree to submit to binding arbitration any and all
claims, disputes and controversies between or among them (and their respective
employees, officers, directors, attorneys, and other agents if permitted by law
or a contract between them and such persons) relating to this Agreement and the
Loan Documents and the negotiation, execution, collateralization,
administration, repayment, modification, extension or collection thereof or
arising thereunder. Such arbitration shall proceed in West Palm Beach, Florida,
shall be governed by Florida law and shall be conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration Association (the
"AAA"), as modified in this Section 12.13. Judgment upon the award rendered by
each arbitrator(s) may be entered in any court having jurisdiction.
(a) Nothing in the preceding paragraph, nor the exercise of
any right to arbitrate thereunder, shall limit the right of any party hereto (1)
to foreclose against any real or personal property collateral encumbered by a
Mortgage or other Loan Document, or otherwise permitted under applicable law;
(2) subject to provisions of applicable law, to exercise self-help remedies such
as setoff or repossession or other self-help remedies provided in this Agreement
or any other Loan Document; or (3) to obtain provisional or ancillary remedies
such as replevin, injunctive relief, attachment, or appointment of a receiver
from a court having jurisdiction, before, during or after the pendency of any
arbitration proceeding, or (4) to defend or obtain injunctive or other equitable
relief from a court of competent jurisdiction against the foregoing or assert
mandatory counterclaims, if any, prior to and during the pendency of a
determination in arbitration of issues of performance, default, damages and
other such claims and disputes.
(b) Arbitration hereunder shall be before a three-person panel
of neutral arbitrators, consisting of one person from each of the following
categories: (1) an attorney who has practiced in the area of commercial real
estate law for at least ten (10) years; (2) a person with at least ten (10)
years' experience in real estate lending; and (3) a person with at least ten
(10) years' experience in the homebuilding industry. The AAA shall submit a list
of persons meeting the criteria outlined above for each category of arbitrator,
and the parties shall select one
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person from each category in the manner established by the AAA.
(c) In any dispute between the parties that is arbitratable
hereunder, where the aggregate of all claims and the aggregate of all
counterclaims is an amount less than Fifty Thousand And No/100ths Dollars
($50,000.00), the arbitration shall be before a single neutral arbitrator to be
selected in accordance with the Commercial Rules of the American Arbitration
Association and shall proceed under the Expedited Procedures of said Rules.
(d) In any arbitration hereunder, the arbitrators shall decide
(by documents only or with a hearing, at the arbitrators' discretion) any
pre-hearing motions which are substantially similar to pre-hearing motions to
dismiss for failure to state a claim or motions for summary adjudication.
(e) In any arbitration hereunder, discovery shall be permitted
in accordance with the Florida Rules of Civil Procedure. Scheduling of such
discovery may be determined by the arbitrators, and any discovery disputes shall
be finally determined by the arbitrators.
(f) The Florida Rules of Evidence shall control the admission
of evidence at the hearing in any arbitration conducted hereunder; provided,
however, no error by the arbitrators in application of the Rules of Evidence
shall be grounds, as such, for vacating the arbitrators' award.
(g) Notwithstanding any AAA rule to the contrary, the
arbitration award shall be in writing and shall specify the factual and legal
basis for the award, including findings of fact and conclusions of law.
(h) Each party shall each bear its own costs and expenses and
an equal share of the arbitrators' costs and administrative fees of arbitration.
12.14 CONSENT TO JURISDICTION. BORROWER AND EACH BANK HEREBY
IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA (NORTHERN DIVISION), OR ANY
FLORIDA STATE COURT IN PALM BEACH COUNTY, FLORIDA IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND BORROWER AND EACH BANK
HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVE
ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. NOTHING IN THIS SECTION 12.14 SHALL LIMIT THE RIGHT OF AGENT
OR ANY BANK TO BRING PROCEEDINGS AGAINST BORROWER IN THE COURTS OF ANY OTHER
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JURISDICTION. SUBJECT TO THE PROVISIONS OF SECTION 12.13, UNLESS PROHIBITED BY
LAW, ANY JUDICIAL PROCEEDING BY BORROWER AGAINST AGENT OR ANY BANK OR ANY
AFFILIATE OF AGENT OR ANY BANK INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN
ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE
BROUGHT IN A COURT IN WEST PALM BEACH, FLORIDA.
12.15 WAIVER OF JURY TRIAL. BORROWER, AGENT AND EACH BANK HEREBY WAIVE
TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT
OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP
ESTABLISHED THEREUNDER.
12.16 CONFIDENTIALITY. Bank and Agent agree to use commercially
reasonable efforts to keep confidential any financial reports and other
information from time to time supplied to them by Borrower hereunder to the
extent that such information is not and does not become publicly available
through or with the consent or acquiescence of Borrower, except for disclosure
(i) to Agent and the other Banks or to a Transferee, (ii) to legal counsel,
accountants, and other professional advisors to a Bank, Agent or a Transferee,
(iii) to regulatory officials, (iv) to any Person as required by law,
regulation, or legal process, (v) to any Person in connection with any legal
proceeding to which that Bank is a party, and (vi) permitted by Section 15.4.
Any Bank or Agent disclosing such information shall use commercially reasonable
efforts to advise the Person to whom such information is disclosed of the
foregoing confidentiality agreement and to direct such Person to comply
therewith.
12.17 LIMIT ON INTEREST. Anything herein or in the Notes to the
contrary notwithstanding, the obligations of the Borrower under this Agreement
and the Notes to the Banks shall be subject to the limitation that payments of
interest to any Bank shall not be required to the extent that receipt of any
such payment by such Bank would be contrary to provisions of law applicable to
such Bank (if any) which limit the maximum rate of interest which may be charged
or collected by such Bank; PROVIDED, HOWEVER, that nothing herein shall be
construed to limit the Banks to presently existing maximum rates of interest, if
an increased interest rate is hereafter permitted by reason of applicable
federal or state legislation. In the event that the Borrower makes any payment
of interest, fees or other charges, however denominated, pursuant to this
Agreement or any of the Notes, which payment results in the interest paid by the
Borrower to any Bank to exceed the maximum rate of interest permitted by
applicable law, any excess over such maximum shall be applied in reduction of
the principal balance owed to such Bank as of the date of such payment, or if
such excess exceeds the amount of principal owed to such Bank as of the date of
such payment, the difference shall be paid by such Bank to the Borrower.
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ARTICLE XIII
AGENT
13.1 APPOINTMENT. SunTrust is hereby appointed Agent hereunder and
under each other Loan Document, and each of Banks irrevocably authorizes Agent
to act as the agent of such Bank. Agent agrees to act as such upon the express
conditions contained in this Article XIII. Agent shall not have a fiduciary
relationship in respect of Borrower, any Bank or the Issuing Bank by reason of
this Agreement.
13.2 POWERS. Agent shall have and may exercise such powers under the
Loan Documents as are specifically delegated to Agent by the terms of each
thereof, together with such powers as are reasonably incidental thereto. Agent
shall have no implied duties to Banks, or any obligation to Banks to take any
action thereunder except any action specifically provided by the Loan Documents
to be taken by Agent. Agent shall have the sole and exclusive right to take any
actions or to give any notices relating to this Agreement pursuant to the
Indenture.
13.3 GENERAL IMMUNITY. Neither Agent (in its capacity as Agent and not
in its capacity as a Bank) nor any of its directors, officers, agents or
employees shall be liable to Borrower or any Bank for action taken or omitted to
be taken by it or them hereunder or under any other Loan Document or in
connection herewith or therewith except for its or their own gross negligence or
willful misconduct.
13.4 NO RESPONSIBILITY FOR LOANS, RECITALS, ETC. Neither Agent nor any
of its directors, officers, agents or employees shall be responsible for or have
any duty to ascertain, inquire into, or verify (i) any statement, warranty or
representation made in connection with any Loan Document or any borrowing or any
request for the issuance, amendment or extension of any Facility Letter of
Credit hereunder; (ii) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document or Reimbursement Agreement,
including, without limitation, any agreement by an obligor to furnish
information directly to each Bank; (iii) the satisfaction of any condition
specified in Article IV or V, except receipt of items required to be delivered
to Agent; or (iv) the validity, effectiveness or genuineness of any Loan
Document (including without limitation any Reimbursement Agreement) or any other
instrument or writing furnished in connection with any of the foregoing. Agent
shall have no duty to disclose to Banks information that is not required to be
furnished by Borrower to Agent at such time, but is voluntarily furnished by
Borrower to Agent (either in its capacity as Agent or in its individual
capacity).
13.5 ACTION ON INSTRUCTIONS OF BANKS. Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder and under any other
Loan Document in accordance with written instructions signed by the Majority
Banks (except as otherwise provided in Section
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11.2), and such instructions and any action taken or failure to act pursuant
thereto shall be binding on all of Banks and on all holders of Notes. Agent
shall be fully justified in failing or refusing to take any action hereunder and
under any other Loan Document unless it shall first be indemnified to its
satisfaction by Banks pro rata against any and all liability, cost and expense
that it may incur by reason of taking or continuing to take any such action.
13.6 EMPLOYMENT OF AGENTS AND COUNSEL. Agent may execute any of its
duties as Agent hereunder and under any other Loan Document by or through
employees, agents, and attorneys-in-fact and shall not be answerable to Banks,
except as to money or securities or other Property received by it or its
authorized agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. Agent shall be entitled
to advice of counsel concerning all matters pertaining to the agency hereby
created and its duties hereunder and under any other Loan Document.
13.7 RELIANCE ON DOCUMENTS; COUNSEL. Agent shall be entitled to rely
upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by Agent, which counsel may
be employees of Agent.
13.8 AGENT'S REIMBURSEMENT AND INDEMNIFICATION. Banks agree to
reimburse and indemnify Agent ratably in proportion to their respective
Commitments (i) for any amounts not reimbursed by Borrower for which Agent is
entitled to reimbursement by Borrower under the Loan Documents, (ii) for any
other "out of pocket" expenses incurred by Agent on behalf of Banks, in
connection with the preparation, execution, delivery, administration and
enforcement of the Loan Documents, and (iii) for any liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against Agent in any way relating to or arising out of
the Loan Documents or any other document delivered in connection therewith or
the transactions contemplated thereby, or the enforcement of any of the terms
thereof or of any such other documents, provided that no Bank shall be liable
for any of the foregoing to the extent they arise from the gross negligence or
willful misconduct of Agent or for any fee payable to Agent pursuant to Section
2.5(a). The obligations of Banks under this Section 13.8 shall survive payment
of the Obligations and termination of this Agreement.
13.9 RIGHTS AS A BANK OR ISSUING BANK. In the event Agent is a Bank,
Agent shall have the same rights and powers hereunder and under any other Loan
Document as any Bank and may exercise the same as though it were not Agent, and
the term "Bank" or "Banks" shall, at any time when Agent is a Bank, unless the
context otherwise indicates, include Agent in its individual capacity. In the
event Agent is an Issuing Bank, Agent shall have the rights and powers of the
Issuing Bank hereunder and may exercise the same as though it were not Agent,
and the term "Issuing Bank" shall, at any time when Agent is the Issuing Bank,
unless the
83
context otherwise indicates, include and mean Agent in its capacity as the
Issuing Bank. Agent may accept deposits from, lend money to, and generally
engage in any kind of trust, debt, equity or other transaction, in addition to
those contemplated by this Agreement or any other Loan Document, with Borrower
or any of its Subsidiaries in which Borrower or such Subsidiary is not
restricted hereby from engaging with any other Person.
13.10 BANK CREDIT DECISION. Each Bank acknowledges that it has,
independently and without reliance upon Agent or any other Bank and based on the
financial statements prepared by Borrower and Guarantors and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and the other Loan Documents.
Each Bank also acknowledges that it will, independently and without reliance
upon Agent or any other Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan Documents.
13.11 SUCCESSOR AGENT. Agent may resign at any time by giving written
notice thereof to Banks and Borrower, such resignation to be effective upon the
appointment of a successor Agent or, if no successor Agent has been appointed,
sixty (60) days after the retiring Agent gives notice of its intention to
resign. Agent may be removed at any time with cause by written notice received
by Agent from the Majority Banks, such removal to be effective on the date
specified by such Banks. The consent of Borrower shall be required prior to any
removal of Agent becoming effective; provided, however, that if an Event of
Default has occurred and is continuing, the consent of Borrower shall not be
required. Upon any such resignation or removal, the Majority Banks shall have
the right to appoint, on behalf of Borrower and Banks, a successor Agent. Any
Bank can be a successor Agent upon the approval of the Majority Banks. Any other
successor Agent shall be appointed only with the prior reasonable consent of
Borrower. If no successor Agent shall have been so appointed by the Majority
Banks within forty-five (45) days after the resigning Agent's giving notice of
its intention to resign, then the resigning Agent may appoint, on behalf of
Borrower and Banks, a successor Agent. If Agent has resigned or been removed and
no successor Agent has been appointed, Banks may perform all the duties of Agent
hereunder and Borrower shall make all payments in respect of the Obligations to
the applicable Bank and for all other purposes shall deal directly with Banks.
No successor Agent shall be deemed to be appointed hereunder until such
successor Agent has accepted the appointment. Any such successor Agent shall be
a commercial bank having capital and retained earnings of at least
$250,000,000.00. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the resigning or
removed Agent. Upon the effectiveness of the resignation or the Loan Documents,
all amounts payable by Borrower under this Agreement shall be determined as if
such Bank had not sold such participating interests, and Borrower, Agent and the
Issuing Bank shall continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations under the Loan Documents.
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13.12 AGENT'S FEE. Borrower agrees to pay to Agent, for its own
account, the fees agreed to by Borrower and Agent pursuant to that certain
commitment letter (including the letter agreement incorporated therein) between
them and SunTrust Equitable Securities Corporation dated March 9, 1998 (signed
and accepted by Borrower on March 11, 1998), or as otherwise agreed from time to
time.
ARTICLE XIV
SETOFF; RATABLE PAYMENTS
14.1 SETOFF. In addition to, and without limitation of, any rights of
any Bank or any Issuing Bank under applicable law, if Borrower becomes
insolvent, however evidenced, or any Event of Default occurs, any and all
deposits (including all account balances, whether provisional or final and
whether or not collected or available) and any other Indebtedness at any time
held or owing by any Bank or Issuing Bank to or for the credit or account of
Borrower may be offset and applied toward the payment of the Obligations owing
to such Bank or Issuing Bank, whether or not the Obligations, or any part
thereof, shall then be due.
14.2 RATABLE PAYMENTS. If any Bank (whether by setoff or otherwise) has
payment made to it upon its Loans in a greater proportion than that received by
any other Bank (other than payments received pursuant to Sections 3.1, 3.2 or
3.4 or other provisions of this Agreement that indicate that the payment is for
its account, such Bank agrees, promptly upon demand, to purchase a portion of
the Loans held by the other Banks so that after such purchase each Bank will
hold its ratable proportion of Loans. If any Bank, whether in connection with
setoff or amounts which might be subject to setoff or otherwise, receives
collateral or other protection for its Obligations or such amounts which may be
subject to setoff, such Bank agrees, promptly upon demand, to take such action
necessary such that all Banks share in the benefits of such collateral ratably
in proportion to their Loans. In case any such payment is prevented, restricted
or otherwise impeded by legal process, or otherwise, appropriate further
adjustments shall be made.
ARTICLE XV
BENEFIT OF AGREEMENT, ASSIGNMENTS; PARTICIPATIONS
15.1 SUCCESSORS AND ASSIGNS. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of Borrower, Agent,
Banks and the Issuing Bank and their respective successors and assigns, except
that (i) Borrower shall not have the right to assign its rights or obligations
under the Loan Documents (except as otherwise permitted under Section 8.3), and
(ii) any assignment by any Bank must be made in compliance with Section 15.3.
Notwithstanding clause (ii) of this Section, any Bank may at any time, without
the consent of Borrower or Agent, assign all or any portion of its rights under
this Agreement and its Notes to a Federal Reserve Bank; provided, however, that
no such assignment shall release the transferor Bank from its obligations
hereunder. Agent may treat the payee of any Note as the owner thereof
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for all purposes hereof unless and until such payee complies with Section 15.3
in the case of an assignment thereof or, in the case of any other transfer, a
written notice of the transfer is filed with Agent. Any assignee or transferee
of a Note agrees by acceptance thereof to be bound by all the terms and
provisions of the Loan Documents. Any request, authority or consent of any
Person, who at the time of making such request or giving such authority or
consent is the holder of any Note, shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Note or of any Note or Notes
issued in exchange therefor.
15.2 PARTICIPATIONS.
15.2.1 PERMITTED PARTICIPANTS; EFFECT. Any Bank may, in the
ordinary course of its business and in accordance with applicable law, at any
time sell to one or more banks or other Persons that are not, and that are not
Affiliates of a Person, in the home building business ("Participants")
participating interests in any Loan owing to such Bank, any Note held by such
Bank, any Commitment of such Bank or any other interest of such Bank under the
Loan Documents in an amount of not more than one half (1/2) of its Commitment,
so long as immediately following such sale the selling Bank shall retain at
least $10,000,000.00 of its Commitment (subject to reduction by Borrower
pursuant to Section 2.5 (d)). In the event of any such sale by a Bank of
participating interests to a Participant, such Bank's obligations under the Loan
Documents shall remain unchanged, such Bank shall remain solely responsible to
the other parties hereto for the performance of such obligations, such Bank
shall remain the holder of any such Note for all purposes under the Loan
Documents, all amounts payable by Borrower under this Agreement shall be
determined as if such Bank has not sold such participating interests, and
Borrower, Agent and the Issuing Bank shall continue to deal solely and directly
with such Bank in connection with such Bank's rights and obligations under the
Loan Documents.
15.2.2 VOTING RIGHTS. Each Bank shall retain the sole right to
approve, and/or grant its consent to, without the consent of any Participant,
any amendment, modification or waiver or other matter relating to any provision
of the Loan Documents.
15.2.3 BENEFIT OF SETOFF. Borrower agrees that each
Participant shall be deemed to have the right of setoff provided in Section 14.1
in respect of its participating interest in amounts owing under the Loan
Documents to the same extent as if the amount of its participating interest were
owing directly to it as a Bank under the Loan Documents, provided that each Bank
shall retain the right of setoff provided in Section 14.1 with respect to the
amount of participating interests sold to each Participant. Banks agree to share
with each Participant, and each Participant, by exercising the right of setoff
provided in Section 14.1, agrees to share with each Bank, any amount received
pursuant to the exercise of its right of setoff, such amounts to be shared in
accordance with Section 14.2 as if each Participant were a Lender.
15.3 ASSIGNMENTS.
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15.3.1 PERMITTED ASSIGNMENTS. Any Bank may, in the ordinary
course of its business and in accordance with applicable law, at any time assign
to one or more banks or other financial institutions that are not, and that are
not Affiliates of a Person, in the home building business ("Purchasers") all or
any part of its rights and obligations under the Loan Documents in the amount of
not less than $10,000,000.00 (subject to reduction by Borrower pursuant to
Section 2.5(d) and if more than $10,000,000.00, then in minimum increments of
$10,000,000.00), provided that each such assignment shall be of a constant, and
not a varying, percentage of the assigning Bank's rights and obligations under
the Loan Documents; and provided further, that immediately following such
assignment, the assigning Bank either (i) shall retain a Commitment of not less
than $10,000,000.00 (subject to reduction by Borrower pursuant to Section 2.5
(d)), or (ii) shall have assigned all of its Commitment and have no remaining
interest in the Obligations. Before making or agreeing to make any such
assignment, the assigning Bank shall first offer to make the assignment to
SunTrust, which may accept or reject the offered assignment in whole or in part
in accordance with this Section 15.3, and then any balance not accepted by
SunTrust within ten (10) days after the Offer Notice (hereinafter defined) as
hereinafter provided shall be offered by the assigning Bank to the Banks other
than SunTrust (ratably in proportion to their Commitments), any and all of which
Banks may accept or reject the offered assignment in whole or in part in
accordance with this Section 15.3. Any offer to SunTrust or any other Bank
pursuant to the preceding sentence shall be at par as of the effective date of
the assignment without retention of fees or any profit margin or other
compensation by the assigning Bank, and notice of the offer (to SunTrust and, if
applicable, the other Banks) shall be given in writing by the assigning Bank in
accordance with Article XVI (the "Offer Notice"). SunTrust (and, if applicable,
the other Banks) shall be deemed to have rejected any assignment offered if they
do not confirm their agreement to accept the assignment by written notice given
to the assigning Bank (the "Acceptance Notice") within ten (10) days after
receiving the assigning Banks' Offer Notice. If SunTrust (or, if applicable, any
other Bank) agrees to accept the assignment described in an Offer Notice within
said ten (10) day period, then it and the assigning Bank shall close the
purchase and the assignment within ten (10) days after the giving of the
Acceptance Notice to the assigning Bank. Neither SunTrust nor any other Bank
shall ever be obligated to accept any assignment except to the extent set forth
in its Acceptance Notice, if any. Any assignment pursuant to this Section 15.3
shall be substantially in the form of EXHIBIT "I" hereto or in such other form
as may be agreed to by the parties thereto, subject to the limitations on the
terms of any assignment to SunTrust or any other Bank described above. The
consent of Borrower and Agent shall be required prior to an assignment becoming
effective, such consent not to be unreasonably withheld or delayed; provided,
however, that if an Event of Default has occurred and is continuing, the consent
of Borrower shall not be required.
15.3.2 EFFECT; EFFECTIVE DATE. Two (2) Business Days after (i)
delivery to Agent of a notice of assignment, substantially in the form attached
as EXHIBIT "1" to EXHIBIT "I" hereto (a "Notice of Assignment"), together with
any consents required by Section 15.3.1, and (ii) payment by the Bank of a
$3,000.00 fee to Agent for processing such assignment, such assignment shall
become effective on the effective date specified in such Notice of Assignment.
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The Notice of Assignment shall contain a representation by the Purchaser to the
effect that none of the consideration used to make the purchase of the
Commitment and Loans under the applicable assignment agreement are "plan assets"
as defined under ERISA and that the rights and interests of the Purchaser in and
under the Loan Documents will not be "plan assets" under ERISA.
On and after the effective date of such assignment, such Purchaser
shall for all purposes be a Bank party to this Agreement and any other Loan
Document executed by Banks and shall have all the rights and obligations of a
Bank under the Loan Documents, to the same extent as if it were an original
party hereto, and no further consent or action by Borrower, Banks or Agent shall
be required to release the transferor Bank with respect to the percentage of the
Aggregate Commitment and Loans assigned to such Purchaser. Upon the consummation
of any assignment to a Purchaser pursuant to this Section 15.3.2, the transferor
Bank, Agent and Borrower shall make appropriate arrangements so that replacement
Notes are issued to such transferor Bank and new Notes or, as appropriate,
replacement Notes, are issued to such Purchaser, in each case in principal
amounts reflecting their Commitment, as adjusted pursuant to such assignment.
15.4 DISSEMINATION OF INFORMATION. Borrower authorizes each Bank to
disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "Transferee") and any
prospective Transferee any and all public information in such Bank's possession
concerning the creditworthiness of Borrower, Guarantors and their Subsidiaries;
provided that each Transferee and prospective Transferee agrees to be bound by
Section 12.16 of this Agreement.
15.5 TAX TREATMENT. If any interest in any Loan Document is transferred
to any Transferee which is organized under the laws of any jurisdiction other
than the United States or any State thereof, the transferor Bank shall cause
such Transferee, concurrently with the effectiveness of such transfer, to comply
with the provisions of Section 2.20.
ARTICLE XVI
NOTICES
16.1 GIVING NOTICE. Except as otherwise permitted by Section 2.14 with
respect to borrowing notices, all notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing and sent by a nationally recognized overnight courier, or by personal
delivery, or by registered or certified U.S. mail, postage prepaid and return
receipt requested, addressed or delivered to such party at its address set forth
below its signature hereto or at such other address as may be designated by such
party in a notice to the other parties. Any notice given in the manner set forth
herein shall be deemed given on the earlier of (i) one (1) Business Day after
sent by such overnight courier, (ii) the day of delivery, if sent by personal
delivery, or (iii) two (2) Business Days after deposit in the U.S. Mail in the
manner described above.
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16.2 CHANGE OF ADDRESS. Borrower, Agent, any Bank and the Issuing Bank
may each change the address for service of notice upon it by a notice in writing
to the other parties hereto.
ARTICLE XVII
COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart. This
Agreement shall be effective when it has been executed by Borrower, Agent, and
Banks and each party has notified Agent by telex or telephone, that it has taken
such action.
IN WITNESS WHEREOF, Borrower, Banks, and Agent have executed this
Agreement as of the date first above written.
BORROWER:
▇▇▇▇▇ HOMES, INC., a Florida corporation
By:_________________________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
(SEAL)
▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
____________________________________________
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, VICE PRESIDENT
COMMITMENTS
BANKS:
$45,000,000.00 SUNTRUST BANK, SOUTH FLORIDA,
NATIONAL ASSOCIATION
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By:_________________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Group Vice President
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
____________________________________________
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Group Vice
President
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$30,000,000.00 NATIONSBANK, N.A.
By:_________________________________________
Name:
Title:
____________________________________________
____________________________________________
____________________________________________
Attention: _________________________________
$25,000,000.00 GUARANTY FEDERAL BANK, FSB
By:_________________________________________
Name:
Title:
____________________________________________
____________________________________________
____________________________________________
Attention: _________________________________
$20,000,000.00 BANK ONE, ARIZONA, N.A.
By:_________________________________________
Name:
Title:
____________________________________________
____________________________________________
____________________________________________
Attention: _________________________________
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$20,000,000.00 BANKBOSTON, N.A.
By:_________________________________________
Name:
Title:
____________________________________________
____________________________________________
____________________________________________
Attention: _________________________________
$10,000,000.00 NORWEST BANK COLORADO, NATIONAL ASSOCIATION
By:_________________________________________
Name:
Title:
____________________________________________
____________________________________________
____________________________________________
Attention: _________________________________
$10,000,000.00 CREDIT LYONNAIS, ATLANTA AGENCY
By:_________________________________________
Name:
Title:
____________________________________________
____________________________________________
____________________________________________
Attention: _________________________________
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$ 10,000,000.00 BANQUE PARIBAS
By:_________________________________________
Name:
Title:
____________________________________________
____________________________________________
____________________________________________
Attention: _________________________________
AGENT:
SUNTRUST BANK, SOUTH FLORIDA, NATIONAL
ASSOCIATION, a national banking association
By:_________________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Group Vice President
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
____________________________________________
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, GROUP VICE
PRESIDENT
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