1
NOTE PURCHASE AGREEMENT
DATED SEPTEMBER 30, 1996
between
M/I SCHOTTENSTEIN HOMES, INC.
and
THE FIRST NATIONAL BANK OF BOSTON
$25,000,000.00 VARIABLE RATE SENIOR SUBORDINATED DEBT
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TABLE OF CONTENTS
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Section 1. DEFINITIONS AND RULES OF INTERPRETATION 1
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Section 1.1 Definitions 1
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Section 1.2 Rules of Interpretation 15
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Section 2. PURCHASE AND SALE OF NOTE; REDEMPTION 16
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Section 2.1 Issue of Note 16
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Section 2.2 Purchase of Note 16
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Section 2.3 Purchase for Investment 16
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Section 2.4 Commitment Fee 16
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Section 2.5 Use of Proceeds 17
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Section 2.6 Notice of Transfer of Note 17
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Section 3. PAYMENT OF THE NOTE 17
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Section 3.1 Stated Maturity 17
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Section 3.2 Extension of Maturity Date 17
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Section 3.3 Interest on Note 18
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Section 3.4 Mandatory Prepayments 19
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Section 3.5 Optional Prepayments 19
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Section 3.6 Application of Payments 20
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Section 3.7 Redemption Upon Change of Control 20
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Section 4. CERTAIN GENERAL PROVISIONS 20
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Section 4.1 Conversion Options 20
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Section 4.2 Funds for Payments 21
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Section 4.3 Computations 22
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Section 4.4 Inability to Determine LIBOR Rate 22
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Section 4.5 Illegality 22
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Section 4.6 Additional Interest 22
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Section 4.7 Additional Costs, Etc. 23
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Section 4.8 Capital Adequacy 24
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Section 4.9 Indemnity of Company 24
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Section 4.10 Interest on Overdue Amounts; Late Charge 24
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Section 4.11 Certificate 25
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Section 4.12 Limitation on Interest 25
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Section 5. REPRESENTATIONS AND WARRANTIES 25
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Section 5.1 Corporate Authority; Etc. 25
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Section 5.2 Title to Properties 26
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Section 5.3 Financial Statements 27
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Section 5.4 No Material Changes, Etc. 27
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Section 5.5 Franchises, Patents, Copyrights, Etc. 27
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Section 5.6 Litigation 27
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Section 5.7 No Materially Adverse Contracts, Etc. 27
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Section 5.8 Compliance with Other Instruments, Laws, Etc. 28
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Section 5.9 Tax Status 28
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Section 5.10 No Event of Default 28
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Section 5.11 Holding Company and Investment Company Acts 28
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Section 5.12 ERISA 28
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Section 5.13 Regulations U and X 29
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Section 5.14 Full Disclosure 29
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Section 5.15 Subsidiaries 29
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Section 5.16 Private Offering 29
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Section 5.17 Brokers 30
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Section 5.18 Other Debt 29
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Section 5.19 Environmental Compliance 30
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Section 5.20 Loan Documents 30
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Section 5.21 Solvency 30
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Section 6. AFFIRMATIVE COVENANTS OF THE COMPANY 30
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Section 6.1 Punctual Payment 30
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Section 6.2 Maintenance of Office 31
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Section 6.3 Records and Accounts 31
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Section 6.4 Financial Statements, Certificates and Information 31
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Section 6.5 Notices 32
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Section 6.6 Existence; Maintenance of Properties 33
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Section 6.7 Insurance 33
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Section 6.8 Taxes 33
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Section 6.9 Further Assurances 34
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Section 6.10 Compliance with Laws, Contracts, Licenses, and Permits 34
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Section 6.11 ERISA Compliances 34
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Section 6.12 Consolidated Tangible Net Worth 34
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Section 6.13 Transfer of Note; Rating 34
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Section 6.14 Interest Cap 35
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Section 7. NEGATIVE COVENANTS OF THE COMPANY 35
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Section 7.1 Restrictions on Indebtedness 35
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Section 7.2 Restrictions on Liens, Etc. 36
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Section 7.3 Restrictions on Contingent Obligations 37
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Section 7.4 Restrictions on Investments 39
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Section 7.5 Restrictions on Uncommitted Land 39
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Section 7.6 Restriction on Distributions 40
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Section 7.7 Restriction on Fundamental Changes 40
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Section 7.8 Transactions with Affiliates and Officers 40
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Section 7.9 Restrictions on Negative Pledges 41
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Section 8. CLOSING CONDITIONS 41
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Section 8.1 Execution of Agreement 41
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Section 8.2 Certified Copies of Organizational Documents 41
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Section 8.3 Bylaws; Resolutions 42
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Section 8.4 Incumbency Certificate; Authorized Signers 42
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Section 8.5 Opinion of Counsel 42
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Section 8.6 Payment of Fees 42
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Section 8.7 Performance; No Default 42
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Section 8.8 Representations and Warranties 42
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Section 8.9 Proceedings and Documents 42
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Section 8.10 Compliance Certificate 43
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Section 8.11 Senior Debt Consents 43
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Section 8.12 No Legal Impediment 43
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Section 9. CONDITIONS TO FUNDING DATE 43
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Section 9.1 Funding Date 43
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Section 9.2 Satisfaction of Existing Subordinated Notes 43
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Section 9.3 Material Adverse Effect 44
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Section 9.4 Prior Conditions Satisfied 44
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Section 9.5 Representations True; No Default 44
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Section 9.6 Proceedings and Documents 44
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Section 9.7 Delivery of Note 44
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Section 9.8 Delivery of Updated Resolutions, Legal Opinions, Etc. 44
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Section 9.9 Acquisition of Interest Rate Cap 44
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Section 9.10 Capital Stock 44
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Section 9.11 Waiver of Conditions 44
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Section 10. EVENTS OF DEFAULT; ACCELERATION; ETC. 45
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Section 10.1 Events of Default and Acceleration 45
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Section 10.2 Cure Periods 47
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Section 10.3 Remedies 47
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Section 11. SUBORDINATION OF THE NOTE 48
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Section 11.1 Certain Definitions 48
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Section 11.2 Subordinated Indebtedness Subordinated to Superior Indebtedness 48
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Section 11.3 Dissolution, Liquidation, Reorganization, Etc. 48
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Section 11.4 No Payment With Respect to Subordinated Indebtedness
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in Certain Circumstances 49
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Section 11.5 Payments and Distributions Received 51
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Section 11.6 Subrogation 52
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Section 11.7 Obligations Unimpaired 52
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Section 11.8 Holders of Subordinated Indebtedness Entitled to Assume
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Payments Not Prohibited in Absence of Notice 52
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Section 11.9 Section 11 Not to Prevent Events of Default 53
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Section 12. EXPENSES 53
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Section 13. MISCELLANEOUS 54
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Section 13.1 Registered Notes 54
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Section 13.2 Exchange of Notes 54
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Section 13.3 Loss, Theft, Etc. of Notes 54
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Section 13.4 Survival of Covenants 55
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Section 13.5 Waiver of Stay, Extension or Usury 55
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Section 13.6 Notices 55
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Section 13.7 Governing Law 56
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Section 13.8 Headings 56
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Section 13.9 Counterparts 56
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Section 13.10 Entire Agreement, Etc. 57
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Section 13.11 Consents, Amendments, Waivers, Etc. 57
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Section 13.12 Severability 57
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Section 13.13 Successors and Assigns 57
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Section 13.14 Waiver of Jury Trial. 57
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Section 13.15 Multiple Holders of the Note 58
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Section 13.16 Relationship 58
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Section 13.17 Time of the Essence 58
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SCHEDULE 5.15(a) - Subsidiaries of the Company
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SCHEDULE 5.15(b) - Schedule of Partnerships and Joint Ventures
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SCHEDULE OF EXHIBITS
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Exhibit A - Variable Rate Senior Subordinated Note
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Exhibit B - Form of Request for Extension of Note
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NOTE PURCHASE AGREEMENT
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THIS NOTE PURCHASE AGREEMENT is made this 30th day of September, 1996,
by and between M/I SCHOTTENSTEIN HOMES, INC., an Ohio corporation having its
principal place of business at ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇ (the "Company"), and THE FIRST NATIONAL BANK OF BOSTON, a national banking
association (the "Purchaser").
SECTION 1. DEFINITIONS AND RULES OF INTERPRETATION.
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Section 1.1 DEFINITIONS. The following terms shall have the
meanings set forth in this Section l or elsewhere in the provisions of this
Agreement referred to below:
ADDITIONAL PERMITTED SENIOR DEBT. See Section 7.1(g).
AFFILIATE. Affiliate shall mean (a) any Person (other than a Subsidiary
of the Company) which, directly or indirectly, controls, is controlled by or is
under common control with the Company, or (b) any Person who is a director,
officer or key employee of Company, any Subsidiary of the Company or any Person
described in clause (a) of this definition. For purposes of this definition,
"control" of a Person means the power, direct or indirect, to vote twenty
percent (20%) or more of the securities having voting power for the election of
directors of such Person or otherwise to direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
AGREEMENT. This Note Purchase Agreement, including the SCHEDULES and
EXHIBITS hereto.
BALANCE SHEET DATE. June 30, 1996.
BANKRUPTCY CODE. See Section 11.1(a).
BASE RATE. The annual rate of interest announced from time to time by
Reference Bank at Reference Bank's Office as its "base rate". The base rate is
not necessarily the best interest rate offered by Reference Bank. Any change in
the rate of interest payable hereunder resulting from a change in the Base Rate
shall become effective as of the opening of business on the day on which such
change in the Base Rate becomes effective.
BASE RATE OBLIGATION. The principal balance of the Note bearing
interest calculated by reference to the Base Rate.
BUSINESS DAY. Any day on which banking institutions in Boston,
Massachusetts are open for the transaction of banking business and, in the case
of a LIBOR Rate Obligation, which also is a LIBOR Business Day.
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CAPITAL STOCK. Any shares, interests, participations or other
equivalents (however designated) in or of the equity of a Person (including,
without limitation, common stock, preferred stock, any other class of stock, and
joint venture and partnership interests).
CASH EQUIVALENTS. Securities with maturities of 180 days or less from
the date of acquisition issued or fully guaranteed or insured by the United
States Government or any agency thereof, certificates of deposit and bankers'
acceptances, each issued by any bank a party to the Credit Agreement and each
with a maturity of 180 days or less from the date of acquisition, and commercial
paper of a domestic issuer rated at least A-1 by Standard & Poor's Corporation
or P-1 by ▇▇▇▇▇'▇ Investors Service, Inc. with a maturity of not more than 180
days.
CAPITALIZED LEASE. A lease under which a Person is the lessee or
obligor, the discounted future rental payment obligations under which are
required to be capitalized on the balance sheet of the lessee or obligor in
accordance with GAAP.
CHANGE OF CONTROL. A Change of Control shall be deemed to occur upon
the occurrence of any of the following events: (a) any Person or group of
related Persons (other than ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇ and the Estate of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇▇▇▇ and the immediate families of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇ or trusts for the benefit of their respective children and
grandchildren) owns or controls more than thirty-three and 1/3 percent (33.33%)
of the outstanding voting capital stock of the Company; or (b) ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇▇▇▇ or trusts for the benefit of his children and grandchildren, or
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ or their immediate families or
trusts for the benefit of their respective children and grandchildren, shall in
the aggregate own or control less than eighty percent (80%) of the amount of the
outstanding voting capital stock of the Company owned or controlled by such
Persons as of the Funding Date; or (c) none of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ shall be Chairman of the Board or
President of the Company.
CHANGE OF CONTROL OFFER. See Section 3.7.
CHANGE OF CONTROL PAYMENT DATE. See Section 3.7.
CLOSING DATE. The date on which all of the conditions set forth in
Section 8 shall have been satisfied by the Company.
CODE. The Internal Revenue Code of 1986, as amended.
COMMONLY CONTROLLED ENTITY. An entity, whether or not incorporated,
which is under common control with the Company within the meaning of Section
414(b) or (c) of the Code.
COMPANY. As defined in the preamble hereto.
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CONSOLIDATED EARNINGS. At any date, the amount which would be set forth
opposite the caption "net income" (or any like caption) in a consolidated
statement of income or operations of the Company and its Subsidiaries at such
date prepared in accordance with GAAP.
CONSOLIDATED INTEREST EXPENSE. For any period, interest expense on
Indebtedness of the Company and its Subsidiaries for such period, in each case
determined on a consolidated basis in accordance with GAAP.
CONSOLIDATED INTEREST INCURRED. For any rolling 12 month period, all
interest incurred during such period on outstanding Indebtedness of the Company
and its Subsidiaries irrespective of whether such interest is expensed or
capitalized by the Company or its Subsidiaries, in each case determined on a
consolidated basis.
CONSOLIDATED TANGIBLE NET WORTH. At any date Consolidated Tangible Net
Worth shall be the excess, if any, of the total amount of assets over the total
amount of liabilities, deferred credits and minority interests, as the same
would appear in a consolidated balance sheet of the Company and its Subsidiaries
at such date prepared in accordance with GAAP, less the book value of all
intangible assets, determined in accordance with GAAP.
CONSTRUCTION BONDS. Bonds issued by surety bond companies for the
benefit of, and as required by, municipalities or other political subdivisions
to secure the Company's performance of its obligations relating to lot
improvements and subdivision development and completion.
CONTINGENT OBLIGATION. As to any Person, any reimbursement obligation
(including obligations to reimburse the banks under the Credit Agreement for
draws on letters of credit) of such Person in respect of drafts that may be
drawn under letters of credit, any reimbursement obligations of such Person in
respect of surety bonds (including reimbursement obligations in respect of
Construction Bonds), and any obligation of such Person guaranteeing or in effect
guaranteeing any Indebtedness, leases, dividends or other obligations primarily
to pay money ("primary obligations") of any other Person (the "primary obligor")
in any manner, whether directly or indirectly, including without limitation any
obligation of such Person, whether or not contingent, (a) to purchase any such
primary obligation or any property constituting direct or indirect security
therefor, (b) to advance or supply funds (i) for the purchase or payment of any
such primary obligation, or (ii) to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (c) to purchase property, securities or services primarily for
the purpose of assuring the obligee under any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation, or
(d) otherwise to assure or hold harmless the obligee under such primary
obligation against loss in respect thereof; provided, however, that the term
"Contingent Obligation" shall not include (A) endorsements of instruments for
deposit or collection in the ordinary course of business, (B) Mortgage Loan
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Repurchase Obligations, or (C) obligations under lot purchase contracts entered
into in the ordinary course of business.
CONVERSION REQUEST. A notice given by the Company to the Purchaser of
its election to convert or continue the principal balance of the Note in
accordance with Section 4.1.
CREDIT AGREEMENT. The Restated Revolving Credit Loan, Seasonal Loan and
Standby Letter of Credit Agreement effective as of September 29, 1995 by and
among the Company, Bank One, Columbus, N.A., individually and as agent, The
Huntington National Bank, NBD Bank, National City Bank, Columbus and The First
National Bank of Boston, as amended by that certain First Amendment to, and
consent to Assignment to The First National Bank of Chicago by NBD Bank of Its
Rights and Interests Under, Restated Revolving Credit Loan, Seasonal Loan and
Standby Letter of Credit Agreement dated as of May 7, 1996, as the same may be
extended, renewed or replaced from time to time.
DEFAULT. See Section 10.1.
DEVELOPED LOTS. Developed Lots shall mean (a) all residential lots with
respect to which (i) development has been completed to such an extent that
permits that allow use and construction, including building, sanitary sewer and
water, could be obtained for a detached or attached single family house
(including a townhouse condominium building or condominium building) on each
such lot, and (ii) Start of Construction has not occurred; and (b) all lots
zoned for commercial use that have sewer and water available for use at such
lots. The value of Developed Lots shall be calculated in accordance with GAAP
and shall include all associated costs required to be capitalized under GAAP;
provided, however, that the total value (calculated in accordance with GAAP) of
commercial lots constituting Developed Lots shall not exceed $1,000,000 at any
one time.
DISTRIBUTION. With respect to any Person, the declaration or payment of
any cash, property securities, dividend or distribution on or in respect of any
Capital Stock or in respect of any warrants, options or other rights other than
dividends or distributions payable solely in common stock of such Person; the
purchase, redemption, exchange or other acquisition or retirement of any Capital
Stock, whether now or hereafter outstanding, directly or indirectly through a
Subsidiary or Affiliate of such Person or otherwise, whether in cash, property,
securities or in obligations of such Person; the return of capital by such
Person to its shareholders or partners as such; the setting aside of any of the
assets of a Person to accomplish any of the foregoing; or any other distribution
on or in respect of any shares of any Capital Stock.
DOLLARS or $. Dollars in lawful currency of the United States of
America.
EBITDA. For any rolling 12 month period, on a consolidated basis for
the Company and its Subsidiaries, the sum of the amounts for such period of (a)
Consolidated Earnings, PLUS (b) charges against income for federal, state and
local income taxes, PLUS
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(c) Consolidated Interest Expense, PLUS (d) depreciation and amortization
expense, PLUS (e) extraordinary losses EXCLUSIVE of any such losses that are
attributable to the write-down or other downward revaluation of assets
(including the establishment of reserves), MINUS (x) interest income, MINUS (y)
all extraordinary gains.
ELIGIBLE DEVELOPED LOTS SOLD. Eligible Developed Lots Sold shall mean
all Developed Lots which the Company has recorded as sold in accordance with its
usual accounting practices to any Person other than an Affiliate or Subsidiary
of the Company. The value of Eligible Developed Lots Sold shall be calculated in
accordance with GAAP and shall include all associated costs required to be
capitalized under GAAP, but shall be reduced by the then outstanding aggregate
amount of Indebtedness secured by Eligible Developed Lots Sold and which is
Permitted Secured Indebtedness.
ELIGIBLE DEVELOPED LOTS UNSOLD. Eligible Developed Lots Unsold shall
mean all Developed Lots which the Company has not recorded as sold in accordance
with its usual accounting practices, or which the Company has recorded as sold
to an Affiliate or Subsidiary of the Company. The value of Eligible Developed
Lots Unsold shall be calculated in accordance with GAAP and shall include all
associated costs required to be capitalized under GAAP, but shall be reduced by
the then outstanding aggregate amount of Indebtedness secured by Eligible
Developed Lots Unsold and which is Permitted Secured Indebtedness.
ELIGIBLE MODEL HOUSES. Eligible Model Houses shall mean (a) all
completed detached or attached single family houses (including townhouse
condominiums and condominiums) which are being used by the Company as sales
models, and the lots on which such houses are located, and (b) detached or
attached (including townhouse condominiums and condominiums) single family
houses for which there has been a Start of Construction which upon completion
will be used by Company as sales models, and the lots on which such houses are
located. The value of Eligible Model Houses shall be calculated in accordance
with GAAP and shall include all associated costs required to be capitalized
under GAAP except for the costs of any furnishings, but shall be reduced by the
then outstanding aggregate amount of Indebtedness secured by any Eligible Model
Houses and which is Permitted Secured Indebtedness; provided, however, that (x)
the aggregate value of attached (including townhouse condominiums and
condominiums) single family homes constituting Eligible Model Houses shall not
exceed $6,000,000, and (y) the aggregate value of all Eligible Model Houses
shall not exceed $50,000,000.
ELIGIBLE MORTGAGE LOAN. At any date an original (not a rewritten or
renewed) loan evidenced by a note and secured by a first mortgage on residential
real property which (a) M/I Financial Corp. has made to enable a natural person
or persons to purchase a home from the Company or another Person that is
substantially completed, (b) is not more than 60 days old as determined by the
date of the note which evidences such loan, and (c) is subject, or M/I Financial
Corp. reasonably believes is subject, to a Purchase Commitment; provided,
however, that the amount of Eligible Mortgage Loans consisting of loans made by
M/I Financial Corp. for the purchase of homes from any Person other
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than the Company shall not, in the aggregate at any one time outstanding, exceed
the amount of $7,000,000.00.
ELIGIBLE PRODUCTION INVENTORY. Eligible Production Inventory shall mean
all detached or attached (including townhouse condominiums and condominiums)
single family houses which are completed (including Speculative Houses but
excluding Eligible Model Houses and Rental Houses, if any) or for which there
has been a Start of Construction (including Speculative Houses but excluding
Eligible Model Houses and Rental Houses, if any), and the lots on which such
houses are located. The value of Eligible Production Inventory shall be
calculated in accordance with GAAP and shall include all associated costs
required to be capitalized under GAAP, but shall be reduced by the then
outstanding aggregate amount of Indebtedness secured by any Eligible Production
Inventory and which is Permitted Secured Indebtedness; provided that the cost of
obtaining commitments for financing terms to be provided to the buyers of
Eligible Production Inventory shall be excluded.
ELIGIBLE RAW LAND AND LAND UNDER DEVELOPMENT. Eligible Raw Land and
Land Under Development shall mean all land other than land included in the
definition of Eligible Model Houses, Rental Houses (if any), Eligible Production
Inventory, Eligible Developed Lots Sold or Eligible Developed Lots Unsold. The
value of Eligible Raw Land and Land Under Development shall be calculated in
accordance with GAAP and shall include all associated costs required to be
capitalized in accordance with GAAP, but shall be reduced by the then
outstanding aggregate amount of Indebtedness secured by any Eligible Raw Land
and Land Under Development and which is Permitted Secured Indebtedness.
ENVIRONMENTAL LAWS. At any date, all provisions of law, statutes,
ordinances, rules, regulations, judgments, writs, injunctions, decrees, orders,
awards and standards promulgated by the government of the United States of
America or by any state or municipality thereof or by any court, agency,
instrumentality, regulatory authority or commission of any of the foregoing
concerning the protection of the environment, the air, the waters and ground
water contamination.
ERISA. The Employee Retirement Income Security Act of 1974, as amended
and in effect from time to time.
EVENT OF DEFAULT. See Section 10.1.
EXISTING SUBORDINATED NOTES. Each of the "Original Notes" and "Exchange
Notes" now or hereafter issued pursuant to the Indenture.
▇▇▇▇▇▇ ▇▇▇. The Federal National Mortgage Association, or any successor
thereto.
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FUNDING DATE. The date on which the conditions set forth in Section 9
are satisfied by the Company; provided, however, that in no event shall the
Funding Date occur prior to December 1, 1996 or later than December 31, 1996.
GAAP. Generally accepted accounting principles in the United States of
America as in effect at the time any determination is made or financial
statement is required hereunder as promulgated by the American Institute of
Certified Public Accountants, the Accounting Principles Board, the Financial
Accounting Standards Board or any other body existing from time to time which is
authorized to establish or interpret such principles, applied on a consistent
basis throughout any applicable period, subject to any change required by a
change in GAAP; provided, however, that if any change in generally accepted
accounting principles from those applied in preparing the financial statements
referred to in Section 5.3 hereof affects the calculation of any financial
covenant contained herein, the Company and the Purchaser hereby agree to amend
this Agreement to the effect that each such financial covenant is not more or
less restrictive than such covenant as in effect on the date hereof using
generally accepted accounting principles consistent with those reflected in such
financial statements.
GUARANTEED HNB JOINT VENTURES LETTERS OF CREDIT. That portion of the
standby letters of credit (including joint venture letters of credit) issued by
The Huntington National Bank for the account of joint ventures of which the
Company is a partner pursuant to the HNB Joint Ventures Letter of Credit
Agreement that the Company has guaranteed in accordance with the terms of the
HNB Joint Ventures Letter of Credit Agreement.
HAZARDOUS SUBSTANCES. Hazardous Substances shall mean any hazardous
waste, hazardous substances, pollutant, contaminant, toxic substance, oil,
hazardous material or other chemical or substance regulated by any Environmental
Law.
HNB JOINT VENTURES LETTER OF CREDIT AGREEMENT. The Agreement to Issue
Letters of Credit dated as of June 8, 1994 between The Huntington National Bank
and the Company, as amended by that certain First Amendment to the Agreement to
Issue Letters of Credit dated September 29, 1995.
INDEBTEDNESS. As to any Person, at a particular time, (a) indebtedness
for borrowed money or for the deferred purchase price of property or services
(including without limitation any such indebtedness which is non-recourse to the
credit of such Person but is secured by assets of such Person) other than
current (due and payable within 12 months or less), unsecured obligations for
operating expense items incurred in the ordinary course of business, (b) any
other indebtedness evidenced by promissory notes or other debt instruments, (c)
obligations under material leases which shall have been or should be, in
accordance with GAAP, recorded as capitalized leases, (d) indebtedness arising
under acceptance facilities, (e) indebtedness arising under unpaid reimbursement
obligations (including obligations to reimburse the banks under the Credit
Agreement for draws made under letters of credit) in respect of all drafts
actually drawn under letters of
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credit (including letters of credit issued pursuant to or contemplated by the
Credit Agreement) issued for the account of such Person, (f) indebtedness
arising under unpaid reimbursement obligations in respect of all payments
actually made under surety bonds (including payments actually made under
Construction Bonds), and (g) the incurrence of withdrawal liability under Title
IV of ERISA by such Person or a Commonly Controlled Entity to a Plan.
INDENTURE. The Indenture dated as of December 1, 1991 between the
Company and Ameritrust Company National Association, as Trustee, as amended by a
Supplemental Indenture dated April 22, 1992.
INTEREST CAP. See Section 9.9.
INTEREST PAYMENT DATE. Each March 15, June 15, September 15 and
December 15 during the term of the Note, with the first Interest Payment Date
being March 15, 1997.
INTEREST PERIOD. With respect to the LIBOR Rate Obligation (a)
initially, the period commencing on the Reference Date of such Obligation and
ending three (3) months thereafter, and (b) thereafter, each period commencing
on the day following the last day of the next preceding Interest Period
applicable to such obligation and ending three (3) months thereafter; PROVIDED
that all of the foregoing provisions relating to the Interest Period are subject
to the following:
(A) if any Interest Period with respect to the LIBOR Rate
Obligation would otherwise end on a day that is not a LIBOR Business
Day, that Interest Period shall end on, and the next Interest Period
shall commence on, the next preceding or succeeding LIBOR Business Day
as determined conclusively by the Purchaser in accordance with the then
current bank practice in the London Interbank Market;
(B) if the Company shall fail to give notice as provided in
Section 4.1, the Company shall be deemed to have requested to continue
the LIBOR Rate Obligation as a LIBOR Rate Obligation on the last day of
the then current Interest Period with respect thereto;
(C) no Interest Period relating to the LIBOR Rate Obligation
shall extend beyond the Maturity Date or the next Interest Payment
Date; and
(D) in the event that the Funding Date shall be on a date
other than December 15, 1996, then the first Interest Period shall
commence on the Funding Date and end on the first Interest Payment Date
(subject to clause (A) above).
Notwithstanding the foregoing, at all times that the Purchaser shall have
selected option (b) under the definition of "LIBOR Rate", each Interest Period
shall commence on the day
14
immediately following the last Interest Payment Date and end on the date of the
next succeeding Interest Payment Date.
INVESTMENTS. With respect to any Person, all shares of Capital Stock,
evidences of Indebtedness and other securities issued by any other Person, all
loans, advances, or extensions of credit to, or contributions to the capital of,
any other Person, all purchases of the securities or business or integral part
of the business or assets of any other Person and commitments and options to
make such purchases, all interests in real property other than land and lots
acquired in the ordinary course of business, and all other investments;
PROVIDED, HOWEVER, that the term "Investment" shall not include (i) equipment,
inventory and other tangible personal property acquired in the ordinary course
of business, or (ii) current trade and customer accounts receivable for services
rendered in the ordinary course of business and payable in accordance with
customary trade terms. In determining the aggregate amount of Investments
outstanding at any particular time: (a) the amount of any investment represented
as a guaranty shall be taken at not less than the principal amount of the
obligations guaranteed and still outstanding; (b) there shall be included as an
Investment all interest accrued with respect to Indebtedness constituting an
Investment unless and until such interest is paid; (c) there shall be deducted
in respect of each such Investment any amount received as a return of capital
(but only by repurchase, redemption, retirement, repayment, liquidating dividend
or liquidating distribution); (d) there shall not be deducted in respect of any
Investment any amounts received as earnings on such Investment, whether as
dividends, interest or otherwise, except that accrued interest included as
provided in the foregoing clause (b) may be deducted when paid; and (e) there
shall not be deducted from the aggregate amount of Investments any decrease in
the value thereof.
INVESTMENTS IN JOINT VENTURES. Investments in Joint Ventures shall mean
Investments in joint ventures that are general partnerships, limited
partnerships, limited liability companies, corporations or any other business
association formed for the purpose of acquiring land, the majority of which land
is zoned residential and is to be developed into residential lots for attached
or detached single family housing (including a townhouse condominium building or
condominium building), and/or performing such development. The value of
Investments in Joint Ventures shall be calculated in accordance with GAAP.
JUDICIAL PROCEEDINGS. See Section 11.1(b).
LIBOR BUSINESS DAY. Any day on which commercial banks are open for
international business (including dealings in Dollar deposits) in London.
15
LIBOR RATE. For any Interest Period with respect to the LIBOR Rate
Obligation, the rate per annum reported at approximately 11:00 a.m. Boston time
two LIBOR Business Days prior to the beginning of such Interest Period on
Telerate Access Service Page 3750 (British Bankers Association Settlement Rate)
as the London Interbank Offered Rate for U. S. dollar deposits for the number of
days comprised in such Interest Period (or with respect to the initial Interest
Period commencing on the Funding Date, for a period approximating such initial
Interest Period as determined by Purchaser in its sole discretion) and in an
amount comparable to the amount of the LIBOR Rate Obligation to which such
Interest Period applies. If such page shall cease to be publicly available, then
the Purchaser may utilize any other publicly available source of similar market
data as selected by the Purchaser to determine such rate.
LIBOR RATE OBLIGATION. The principal amount of the Note bearing
interest calculated by reference to a LIBOR Rate.
LIEN. Any mortgage, deed of trust, pledge, hypothecation, assignment,
deposit arrangement, charge, encumbrance, lien (statutory or other), preference,
priority or other security agreement or similar preferential arrangement of any
kind or nature whatsoever (including without limitation any conditional sale or
other title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing, and the authorized filing by or
against a Person of any financing statement as debtor under the Uniform
Commercial Code or comparable law of any jurisdiction). A restriction, covenant,
easement, right of way, or similar encumbrance affecting any interest in real
property owned by the Company and which does not secure an obligation to pay
money is not a Lien.
MATERIAL ADVERSE EFFECT. Material adverse effect on (a) the business,
properties, operations, income, assets or conditions, financial or otherwise, of
the Company and its Subsidiaries, or (b) the ability of the Company to perform
or (as a result of action taken by the Company or any Subsidiary) the ability of
the Purchaser to enforce any obligation or liability under the Note Documents or
any of them.
MATURITY DATE. December 15, 2001, subject to extension as provided in
Section 3.2.
M/I ANCILLARY BUSINESSES. Businesses that are corporations, limited
partnerships, limited liability partnerships or limited liability companies
which are engaged solely in activities reasonably related to the sale and
closing of single family housing and the residential mortgage banking business
and in which the Company or any Subsidiary has an investment or other interest,
provided that such investment or other interest shall be as (a) a shareholder if
the business is a corporation, (b) a limited partner if the business is a
limited partnership, (c) a limited liability partner if the business is a
limited liability partnership, or (d) a limited liability member if the business
is a limited liability company.
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M/I FINANCIAL CORP. M/I Financial Corp., an Ohio corporation, and, as
of the date of this Agreement, the only Subsidiary of the Company.
M/I FINANCIAL CORP. LOAN AGREEMENT. The Revolving Credit Agreement
dated July 19, 1996, by and among M/I Financial Corp., the Company and Bank One,
Columbus, N.A., as the same may be extended, renewed or replaced from time to
time.
MORTGAGE LOAN REPURCHASE OBLIGATIONS. Those obligations (as more
particularly described in this definition) of M/I Financial Corp. under a
Purchase Commitment to repurchase (a) Eligible Mortgage Loans, (b) first
mortgage loans that are not Eligible Mortgage Loans solely because either (i)
the mortgagor did not purchase from the Company the home subject to such
mortgage loan, or (ii) such mortgage loan is more than 60 days old as determined
by the date of the note which evidences such loan, (c) those second mortgage
loans permitted by paragraph (f) of the definition of Permitted Investments, and
(d) those first mortgage refinancing loans permitted by paragraph (g) of the
definition of Permitted Investments; provided, the obligations to repurchase the
mortgage loans described in clauses (a) through (d) of this definition shall
exist only if (A) such mortgage loans do not meet for any reason the investor
guidelines and underwriting criteria for such Purchase Commitment, (B) M/I
Financial Corp. or its employees engage in any fraudulent conduct or
misrepresentation, (C) the mortgagor fails to make timely payment of any of the
first, second, third or fourth installments due under such mortgage loan, and
such delinquency remains uncured for a period of more than 90 days or results in
a foreclosure action, (D) the mortgagor fails to make timely payment of two or
more monthly installments within six months from the date such mortgage loan is
purchased by such secondary market lender, (E) the mortgagor engages in
fraudulent conduct or misrepresentation, or (F) with respect to mortgage loans
issued pursuant to the North Carolina Housing Finance Authority bond programs,
the mortgagor fails to make timely payment of the first installment due under
such mortgage loans.
NOTE. The Variable Rate Senior Subordinated Note, to be dated the
Funding Date, made by the Company to the order of Purchaser in the principal
face amount of $25,000,000.00.
NOTE DOCUMENTS. This Agreement and the Note.
NOTE REGISTER. See Section 13.1.
OFFICE BUILDING. The office building to be constructed by the Office
Building Limited Liability Company on ▇▇▇▇▇ Road in Columbus, Ohio in which the
Company will be a tenant.
OFFICE BUILDING LIMITED LIABILITY COMPANY. Northeast Office Venture,
Limited Liability Company, formed under Delaware law, the ownership interest of
which is 33 % in the Company, 33 % in Limited Oval Office I, Inc., a Delaware
corporation, and 33 %
17
in The Georgetown Company, a New York general partnership, the purpose of which
limited liability company is for the construction and operation of the Office
Building.
OFFICE BUILDING LOAN OBLIGATIONS. The joint and several obligations of
the Company, as a guarantor or as a direct borrower or direct co-borrower, on
the construction loan from Bank One, Columbus, N.A. for the construction of the
Office Building, provided that the principal amount of such loan and the
Company's obligations thereunder shall not at any time exceed $8,500,000, and
further provided that the maturity date of such loan shall not be later than
June 30, 1997.
PBGC. The Pension Benefit Guaranty Corporation created by Section 4002
of ERISA and any successor entity or entities having similar responsibilities.
PERMISSIBLE SECURITIES. See Section 11.1(c).
PERMITTED INVESTMENTS. The making or commitment to make any advance,
loan, extension of credit or capital contribution to, or purchase of stock,
bonds, note, debenture or other security of, or make any other Investment in,
any Person, in any or all of the following:
(a) Investments in Cash Equivalents;
(b) extensions of credit in connection with the sale of land,
secured by land sold, which do not exceed in the aggregate $7,500,000
at any one time outstanding and which have a maximum maturity of five
years;
(c) loans and advances to officers and employees of the
Company or its Subsidiaries, to other Persons in the ordinary course of
business or as permitted by the internal rules of the Company, which do
not exceed in the aggregate $2,000,000 at any one time outstanding;
(d) any Investments in M/I Financial Corp. or any other
Subsidiary now in existence or hereafter created which is wholly-owned
and controlled by the Company;
(e) first mortgage loans made in the ordinary course of M/I
Financial Corp.'s business to natural persons for the purchase of
residential real property;
(f) second mortgage loans made in the ordinary course of M/I
Financial Corp.'s business to natural persons for the purchase of
residential real property, provided that such second mortgage loans
shall be made only in connection with a specific financing program to
natural persons who have a first mortgage loan from M/I Financial Corp.
with respect to the same real property;
18
(g) first mortgage loans made in the ordinary course of M/I
Financial Corp.'s business to natural persons for the purpose of
refinancing an existing first mortgage loan;
(h) Investments by M/I Financial Corp. made in the ordinary
course of business in the stock of ▇▇▇▇▇▇ ▇▇▇ to the extent required
for M/I Financial Corp. to sell mortgages to ▇▇▇▇▇▇ Mae;
(i) Investments by M/I Financial Corp. in the ordinary course
of its business in standard instruments hedging against interest rate
risk incurred in the origination and sale of mortgage loans, in each
case matching a hedging instrument or instruments to specific mortgages
or groups of mortgages, but in no event including investments in future
contracts, options contracts or other derivative investment vehicles
acquired as independent investments;
(j) Investments in the Office Building Limited Liability
Company specifically for the purpose of constructing, owning and
operating the Office Building; and
(k) investments in, advances to, and contingent obligations
related to the obligations of, the M/I Ancillary Businesses in an
amount not to exceed $100,000 in the aggregate.
PERMITTED SECURED INDEBTEDNESS. Secured Indebtedness in respect of
capitalized lease obligations and purchase money obligations, provided that (a)
the Liens securing such Indebtedness do not at any time encumber any property
other than the property financed by such secured Indebtedness, and (b) the
Indebtedness secured thereby shall not exceed the cost or fair market value,
whichever is lower, of the property being acquired on the date of acquisition;
and provided further that the aggregate amount of any such secured Indebtedness
at any one time outstanding by the Company and its Subsidiaries shall not exceed
$15,000,000.00 on a consolidated basis.
PERSON. Any individual, corporation, partnership, trust, unincorporated
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
PLAN. Any pension plan which is covered by Title IV of ERISA and in
respect of which the Company or a Commonly Controlled Entity is an "employer" as
defined in Section 3(5) of ERISA.
PURCHASE COMMITMENT. A commitment from a secondary market lender,
pursuant to an agreement with M/I Financial Corp., either with respect to a
particular mortgage loan or with respect to mortgage loans meeting specified
criteria, to purchase such mortgage loan or loans without recourse (except for
Mortgage Loan Repurchase Obligations) for an amount not less than the difference
of (a) the face amount of the note
19
evidencing such mortgage loan(s), minus (b) the sum of (i) the points agreed
upon between M/I Financial Corp. and such secondary market lender, and (ii) the
amount of funds (for example, without limitation, escrow funds and origination
fees), other than points received by M/I Financial Corp. at the loan closing
from the mortgagor.
PURCHASER. The First National Bank of Boston, and its successors and
assigns.
PURCHASER'S HEAD OFFICE. The Purchaser's head office located at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other location as the
Purchaser may designate from time to time by notice to the Company.
REFERENCE BANK. The First National Bank of Boston or its successors.
REFERENCE DATE. The Funding Date and the date on which the outstanding
principal balance of the Note is converted or combined in accordance with
Section 4.1.
RENTAL HOUSES. Rental Houses shall mean (a) all completed detached or
attached (including townhouse condominiums and condominiums) single family
houses which are rented to third parties or held for rental by the Company or
which were previously so held and are currently held for sale, and (b) detached
or attached (including townhouse condominiums and condominiums) single family
houses for which there as been a Start of Construction which upon completion
will be rented to third parties or will be held for rental by the Company. The
value of Rental Houses shall be calculated in accordance with GAAP and shall
include all associated costs required to be capitalized under GAAP.
REPORTABLE EVENT. Any of the events set forth in Section 4043(b) of
ERISA or the regulations thereunder.
SEC. The federal Securities and Exchange Commission.
SENIOR DEBT. Senior Debt shall mean all Indebtedness for money borrowed
by the Company, before or after the date of the Note, created or evidenced by
notes or similar instruments executed and delivered pursuant to (a) the Credit
Agreement up to the sum of (i) an aggregate principal Indebtedness thereunder,
excluding reimbursement obligations relating to drawn letters of credit issued
or outstanding pursuant thereto (and excluding any obligations with respect to
letters of credit issued or outstanding pursuant thereto but which are undrawn,
not exceeding $200,000,000.00, plus (ii) an aggregate principal Indebtedness
thereunder arising solely from reimbursement obligations relating to drawn
letters of credit that were issued or outstanding pursuant to the Credit
Agreement (but excluding any obligations with respect to letters of credit
issued or outstanding pursuant thereto but which are undrawn), not exceeding
$21,000,000.00, (b) the M/I Financial Corp. Loan Agreement up to an aggregate
principal Indebtedness thereunder not exceeding $30,000,000.00, (c) Indebtedness
incurred solely with respect to Construction Bonds or completion guaranties
delivered to municipalities or other political subdivisions to secure the
Company's performance of obligations related to lot improvements and subdivision
development and completion and which are not obligations for borrowed
20
money, and (d) any other Indebtedness for money borrowed by the Company, before
or after the date of the Note, created or evidenced by notes, bonds, debentures
or other similar instruments or by loan agreement under which the Indebtedness
is reflected in a loan account (but excluding any trade debt) in an aggregate
principal amount not to exceed $15,000,000.00, and amendments, renewals,
modifications, extensions and refundings (but specifically excluding any
increases over the limits set forth above) of any such Indebtedness; provided,
however, that in no event shall any of such Indebtedness be considered as
"Senior Debt" hereunder if in any instrument or instruments evidencing or
securing the same or pursuant to which the same are outstanding, or under any
such amendment, renewal, extension or refunding, it is provided that such
Indebtedness is not superior in right of payment to the Note or that such
Indebtedness is PARI PASSU with or junior in right of payment to the Note.
Senior Debt shall not include any Indebtedness that is payable to any Subsidiary
or Affiliate of the Company, any director, officer or employee of any thereof,
or pursuant to or in connection with any Investments in Joint Ventures; provided
that Senior Debt may, subject to the limits set forth above, include
Indebtedness of the Company to lenders that have extended credit or financing to
joint ventures, partnerships or other permitted entities in which the Company
has made Investments in Joint Ventures as permitted by this Agreement (including
Indebtedness with respect to Guaranteed HNB Joint Ventures Letters of Credit).
SHAREHOLDER'S EQUITY. At any date, the amount which would be set forth
opposite the caption "Shareholders Equity" or "Stockholders Equity" (or any like
caption) in a consolidated balance sheet of the Company and its Subsidiaries at
any such date prepared in accordance with GAAP.
SINGLE EMPLOYER PLAN. Any Plan which is not a Multiemployer Plan (as
defined in ERISA).
SPECULATIVE HOUSES. The aggregate value (which value shall be reduced
by the then outstanding aggregate amount of Indebtedness secured by any
Speculative Houses and which is Permitted Secured Indebtedness) as determined in
accordance with GAAP of: (a) all uncompleted houses for which there has been a
Start of Construction except (i) Eligible Model Houses, (ii) Rental Houses, if
any, and (iii) those which are less than nine months old as measured from the
date on which construction was begun and are subject to valid noncontingent,
except for financing, contracts of sale (A) to persons who are not Affiliates or
Subsidiaries of the Company, and (B) that provide for closing within 30 days
after completion; and (b) all completed houses except (i) Eligible Model Houses,
(ii) Rental Houses, if any, and (iii) those subject to valid noncontingent,
except for financing, contracts of sale (A) to Persons who are not Affiliates or
Subsidiaries of the Company, and (B) that provide for closing on or before the
later of 60 days after the date of the contract or 30 days after completion of
construction.
START OF CONSTRUCTION. The commencement of the digging of the
foundation or footer for a detached or attached single family house (including a
townhouse condominium building or condominium building).
21
SUBORDINATED INDEBTEDNESS. See Section 11.1(d).
SUBSIDIARY. As to any Person, a corporation of which shares of stock
having ordinary voting power (other than stock having such power only by reason
of the happening of a contingency) to elect a majority of the board of directors
or other managers of such corporation are at the time owned, or the management
of which is otherwise controlled, directly or indirectly through one or more
intermediaries, or both, by such Person, and with respect to the Company shall
include all Subsidiaries of Subsidiaries of the Company.
SUPERIOR INDEBTEDNESS. See Section 11.1(e).
TYPE. As to the principal balance of the Note, its nature as a Base
Rate Obligation or a LIBOR Rate Obligation.
UNCOMMITTED LAND. The aggregate value as determined in accordance with
GAAP of: (a) Eligible Raw Land and Land Under Development, (b) Eligible
Developed Lots Unsold, (c) the Company's pro rata share of land that constitutes
part of Investments in Joint Ventures which is not subject to an agreement for
sale, and (d) deposits for land purchases and purchase options.
Section 1.2 RULES OF INTERPRETATION.
(a) A reference to any Note Document or agreement
shall include such document or agreement as amended, modified or supplemented
from time to time in accordance with its terms and the terms of this Agreement.
(b) The singular includes the plural and the plural
includes the singular.
(c) A reference to any law includes any amendment or
modification to such law.
(d) A reference to any Person includes its permitted
successors and permitted assigns.
(e) Accounting terms not otherwise defined herein
have the meanings assigned to them by GAAP.
(f) The words "include", "includes" and "including"
are not limiting.
(g) Reference to a particular "section" refers to
that section of this Agreement unless otherwise indicated.
22
(h) The words "herein", "hereof", "hereunder" and
words of like import shall refer to this Agreement as a whole and not to any
particular section or subdivision of this Agreement.
SECTION 2. PURCHASE AND SALE OF NOTE; REDEMPTION.
-------------------------------------------------
Section 2.1 ISSUE OF NOTE. Subject to the terms hereof, the
Company shall authorize and issue the Note, which shall be in the form of
EXHIBIT A hereto, dated as of the Funding Date and completed with appropriate
insertions. The Note shall be payable to the order of Purchaser or its designee
in accordance with the terms of the Note and this Agreement.
Section 2.2 PURCHASE OF NOTE. The Company agrees to sell to
the Purchaser, and the Purchaser agrees to purchase from the Company, subject to
and in accordance with the terms of the Agreement, the Note. The closing of the
purchase of the Note shall be held at 10:00 a.m. on the Funding Date at the
offices of the Purchaser's counsel in Atlanta, Georgia. On the Funding Date, the
Company will deliver to the Purchaser the Note dated the Funding Date and
payable to the Purchaser, against payment of 100% of the principal amount
thereof in immediately available funds.
Section 2.3 PURCHASE FOR INVESTMENT. The Purchaser represents
to the Company that it is purchasing the Note to be acquired for investment for
its own account with no present intention of distributing or reselling the Note
or any part thereof, but without prejudice, however to the Purchaser's right at
all times to sell or otherwise dispose of all or any part of the Note under a
registration under the Securities Act of 1933, as amended, or under an available
exemption from the registration requirements of that Act.
Section 2.4 COMMITMENT FEE. In consideration of the Purchaser
entering into this Agreement, the Company agrees to pay to the Purchaser on the
Closing Date a commitment fee in the amount $500,000.00, which fee shall be
fully earned and, subject to the terms of this Section 2.4, nonrefundable when
paid. Notwithstanding the foregoing, in the event that the Company shall, on or
before the Funding Date, satisfy the requirements set forth in Section 9 to the
obligations of the Purchaser to purchase the Note, and the Purchaser shall fail
to purchase the Note within fifteen (15) days following the receipt by the
Purchaser of written notice from the Company of such failure, then the Purchaser
shall refund to the Company the commitment fee in the amount of $500,000.
23
Section 2.5 USE OF PROCEEDS. The Company will use the proceeds
from the sale of the Note solely to satisfy the Indebtedness evidenced by the
Existing Subordinated Notes. In the event that the proceeds from the sale of the
Note are insufficient to satisfy in full the Indebtedness evidenced by the
Existing Subordinated Notes, the Company shall use so much of its own funds as
is necessary to fully satisfy such Indebtedness. In the event that the proceeds
from the sale of the Note exceed the amount necessary to satisfy the
Indebtedness evidenced by the Existing Subordinated Notes, then such excess
proceeds may be used by the Company for general working capital purposes.
Section 2.6 NOTICE OF TRANSFER OF NOTE. In the event that the
Purchaser desires to transfer all or any portion of the Note, the Purchaser
shall provide not less than sixty (60) days prior written notice of such intent
to the Company; provided that nothing herein shall create any right on the part
of the Company to consent to any such sale. Upon receipt of such notice, the
Company may submit to Purchaser a request for any amendment or modification of
the Note Documents that the Company proposes that the Purchaser approve prior to
such transfer. The Purchaser agrees to promptly consider any request so
submitted by the Company, provided, however, that the Purchaser may withhold its
approval of any requested amendment or modification in its sole and absolute
discretion. In the event of any such sale, the Purchaser shall promptly notify
the Company of such sale and the identity of the holder or holders of the Note.
The terms of this Section 2.6 shall only be applicable to The First National
Bank of Boston as the original purchaser of the Note.
SECTION 3. PAYMENT OF THE NOTE.
-------------------------------
Section 3.1 STATED MATURITY. The Company promises to pay on
the Maturity Date and there shall become absolutely due and payable on the
Maturity Date all of the principal balance of the Note, outstanding on such
date, together with any and all accrued and unpaid interest thereon.
Section 3.2 EXTENSION OF MATURITY DATE.
(a) Provided that no Default or Event of Default
shall have occurred and be continuing, the Company shall have the option, to be
exercised by giving written notice to the Purchaser in the form of EXHIBIT B
hereto at least 90 days prior to the Maturity Date, subject to the terms and
conditions set forth in this Agreement, to extend the Maturity Date by two (2)
years. The request by the Company for extension of the Maturity Date shall
constitute a representation and warranty by the Company that all of the
conditions set forth in this Section shall have been satisfied on the date of
such request or shall be satisfied prior to the then existing Maturity Date.
(b) The obligations of the Purchaser to extend the
Maturity Date shall be subject to the satisfaction of the following conditions
precedent on or prior to the Maturity Date (without regard to such extension
request):
24
(i) PAYMENT OF EXTENSION FEE. The Company shall pay
to the Purchaser an extension fee equal to $250,000.00, which
fee shall, when paid, be fully earned and non-refundable under
any circumstances.
(ii) NO DEFAULT. On the date the extension request is
given and on the Maturity Date (as determined without regard
to such extension) there shall exist no Default or Event of
Default.
(iii) REPRESENTATIONS AND WARRANTIES. The
representations and warranties made by the Company in the Note
Documents or otherwise made by or on behalf of the Company or
any of its Subsidiaries in connection therewith or after the
date thereof shall have been true and correct in all material
respects when made and shall also be true and correct in all
material respects on the Maturity Date (as determined without
regard to such extension) other than for changes in the
ordinary course of business permitted by this Agreement that
have not had any Material Adverse Effect.
(iv) INTEREST CAP. The Company shall have acquired an
Interest Cap satisfying the requirements of Section 9.9,
provided that the term of such Interest Cap shall not be
required to be greater than two (2) years from the date on
which the Maturity Date is to be extended and the amount of
the Interest Cap shall only be for the principal amount of the
Note then outstanding. The Company shall upon the request of
the Purchaser provide to the Purchaser evidence that the
Interest Cap is in effect.
Section 3.3 INTEREST ON NOTE.
(a) The Base Rate Obligation shall bear interest for
the period commencing with the Reference Date thereof and ending on the date on
which such Base Rate Obligation is converted to a LIBOR Rate Obligation at the
rate of one percent (1.0%) per annum above the Base Rate.
(b) The LIBOR Rate Obligation shall bear interest for
the period commencing with the Reference Date thereof and ending on the last day
of the Interest Period with respect thereto at the rate per annum equal to the
sum of three and one-half percent (3.5%) plus the LIBOR Rate determined for such
Interest Period.
(c) The Company promises to pay interest on the Note
in arrears on each Interest Payment Date with respect thereto.
(d) The Base Rate Obligation and the LIBOR Rate
Obligation may be converted to the other Type as provided in Section 4.1
25
Section 3.4 MANDATORY PREPAYMENTS. In the event that the
Maturity Date of the Note is extended as provided in Section 3.2, then the
Company shall pay to the Purchaser on the fifteenth day of each June and
December (beginning June 15, 2002) after the effectiveness of such extension and
prior to the Maturity Date, as extended, a prepayment of principal in the amount
of $2,500,000.00 on each payment date.
Section 3.5 OPTIONAL PREPAYMENTS.
(a) The Company shall have the right, at its
election, to prepay the outstanding principal amount of the Note, in whole or in
part, and all accrued and unpaid interest on the principal amount so prepaid at
any time without penalty or premium; PROVIDED, that the full or partial
prepayment of the outstanding amount of the LIBOR Rate Obligation pursuant to
this Section 3.5 may be made only on the last day of the Interest Period
relating thereto except as otherwise required pursuant to Section 4.5 (unless
such prepayment is accompanied by the payment of all amounts that may be due
under Section 4.6). The Company shall give the Purchaser, not less than thirty
(30) and not more than sixty (60) days prior written notice of any prepayment
pursuant to this Section 3.5, specifying the proposed date of payment of the
Note and the amount to be prepaid. Each partial payment of the Note shall be in
the minimum amount of $5,000,000.00 or in any multiple of $100,000 in excess
thereof (unless the Note is being prepaid in full) and shall be accompanied by
the payment of accrued interest on the principal prepaid to the date of payment.
(b) Notwithstanding anything herein to the contrary,
the Purchaser shall not be obligated to accept any prepayment of the outstanding
principal balance of the Note which is made prior to the date which is one (1)
year following the date of issuance of the Note unless it is accompanied by the
premium due in connection therewith. The premium shall be an amount equal to one
percent (1%) of the principal amount of the Note being so prepaid. The Company
acknowledges that such premium is a bargained for consideration and not a
penalty, and the Company recognizes that the Purchaser would incur substantial
additional costs and expenses in the event of a prepayment of the Note and that
the premium compensates the Purchaser for such costs and expenses. The Company
agrees that the Purchaser shall not, as a condition to receiving such premium,
be obligated to actually reinvest the amounts prepaid in any manner whatsoever.
If following the occurrence of any Default or Event of Default, the Company
shall tender payment of amounts sufficient to satisfy the Note, such tender by
the Company shall be deemed to be a voluntary prepayment under the Note in the
amount tendered and in such case the Company shall also pay the Purchaser the
applicable premium, if any, which premium shall be immediately due and payable.
Section 3.6 APPLICATION OF PAYMENTS. Except as otherwise
expressly provided herein, all payments shall first be applied to accrued but
unpaid interest, next to premium, if any, and then to principal.
26
Section 3.7 REDEMPTION UPON CHANGE OF CONTROL.
(a) In the event that there shall occur a Change of
Control of the Company, the Company shall offer to redeem (a "Change of Control
Offer"), at the option of the Purchaser, all of the Note on the date specified
in such notice that is no earlier than fifteen (15) days and no later than
thirty (30) days after the date the notice pursuant to this section is mailed to
the Purchaser (such specified date is hereinafter referred to as the "Change of
Control Payment Date"), at a redemption price equal to 100% of the principal
amount of the Note, plus accrued and unpaid interest to the Change of Control
Payment Date. Such notice shall be provided to the Purchaser no later than
fifteen (15) days after the occurrence of a Change of Control. The Company shall
also deliver with the Change of Control Offer (i) a statement that if the Note
is not tendered the Note will continue to accrue interest, (ii) a statement that
the Note tendered for payment pursuant to the Change of Control Offer shall
cease to accrue interest after the Change of Control Payment Date, and (iii) the
names of the Persons who have acquired an interest in the Company or become
directors of the Company which has caused the Change of Control to occur,
together with such further information concerning such Persons or circumstances
as may be reasonably requested by the Purchaser.
(b) To reject a Change of Control Offer, the
Purchaser shall deliver to the Company, on or before the tenth (10th) calendar
day prior to the Change of Control Payment Date, written notice of the
Purchaser's rejection of such Change of Control Offer. Such written notice from
the Purchaser shall be irrevocable. A failure by the Purchaser to reject the
Change of Control Offer as provided herein shall be deemed an acceptance of the
Change of Control Offer. In the event a Change of Control Offer shall be
accepted in accordance with the terms hereof, the Company shall pay to the
Purchaser the price payable with respect to the Note on the applicable Change of
Control Payment Date. Upon any such purchase, the Purchaser shall return the
Note to the Company.
(c) The provisions of this Section 3.7 shall apply to
each and every circumstance in which a Change of Control may occur within the
meaning of such term.
SECTION 4. CERTAIN GENERAL PROVISIONS.
--------------------------------------
Section 4.1 CONVERSION OPTIONS.
(a) The Company may elect from time to time to
convert the Base Rate Obligation or the LIBOR Rate Obligation to the other Type
and the outstanding principal balance of the Note shall thereafter bear interest
as a Base Rate Obligation or a LIBOR Rate Obligation, as applicable; PROVIDED
that (i) with respect to any such conversion of the LIBOR Rate Obligation to a
Base Rate Obligation, the Company shall give the Purchaser at least three
Business Days'
27
prior written notice of such election, and such conversion shall only be made on
the last day of the Interest Period with respect to such LIBOR Rate Obligation;
(ii) with respect to any such conversion of the Base Rate Obligation to a LIBOR
Rate Obligation, the Company shall give the Purchaser at least four LIBOR
Business Days' prior written notice of such election; and (iii) the outstanding
principal balance of the Note may not be converted into a LIBOR Rate Obligation
when any Default or Event of Default has occurred and is continuing. The entire
outstanding principal balance of the Note shall either be a Base Rate Obligation
or a LIBOR Rate Obligation. There shall be no more than one (1) Interest Period
for the LIBOR Rate Obligation. Each Conversion Request relating to the
conversion of a Base Rate Obligation to a LIBOR Rate Obligation shall be
irrevocable by the Company.
(b) A Base Rate Obligation or a LIBOR Rate Obligation
may be continued as such Type upon the expiration of an Interest Period with
respect thereto by compliance by the Company with the terms of Section 4.1;
PROVIDED that no LIBOR Rate Obligation may be continued as such when any Default
or Event of Default has occurred and is continuing, but shall be automatically
converted to a Base Rate Obligation on the last day of the Interest Period
relating thereto ending during the continuance of any Default or Event of
Default.
(c) In the event that the Company does not notify the
Purchaser of its election hereunder with respect to an existing LIBOR Rate
Obligation within the time period specified in Section 4.1, then subject to the
terms of this Agreement, the principal balance of the Note shall be
automatically continued as a LIBOR Rate Obligation at the end of the applicable
Interest Period.
Section 4.2 FUNDS FOR PAYMENTS.
(a) All payments of principal, premium, if any,
interest, commitment fees, extension fees, closing fees and any other amounts
due hereunder or under any of the other Note Documents shall be made to the
Purchaser, at the Purchaser's Head Office, not later than 12:00 p.m. (Boston
time) on the day when due, in each case in immediately available funds.
(b) All payments by the Company hereunder and under
any of the other Note Documents shall be made without setoff or counterclaim and
free and clear of and without deduction for any taxes, levies, imposts, duties,
charges, fees, deductions, withholdings, compulsory loans, restrictions or
conditions of any nature now or hereafter imposed or levied by any jurisdiction
or any political subdivision thereof or taxing or other authority therein unless
the Company is compelled by law to make such deduction or withholding. If any
such obligation is imposed upon the Company with respect to any amount payable
by it hereunder or under any of the other Note Documents, the Company will pay
to the Purchaser on the date on which such amount is due and payable hereunder
or under such other Note Documents, such additional amount in Dollars as shall
be necessary to enable Purchaser to receive the same net amount which
28
the Purchaser would have received on such due date had no such obligation been
imposed upon the Company. The Company will deliver promptly to the Purchaser
certificates or other valid
29
vouchers for all taxes or other charges deducted from or paid with respect to
payments made by the Company hereunder or under such other Note Documents.
Section 4.3 COMPUTATIONS. All computations of interest on the
Note shall be based on a 360-day year and paid for the actual number of days
elapsed. Except as otherwise provided in the definition of the term "Interest
Period" with respect to the LIBOR Rate Obligation, whenever a payment hereunder
or under any of the other Note Documents becomes due on a day that is not a
Business Day, the due date for such payment shall be extended to the next
succeeding Business Day, and interest shall accrue during such extension.
Section 4.4 INABILITY TO DETERMINE LIBOR RATE. In the event
that, prior to the commencement of any Interest Period relating to the LIBOR
Rate Obligation, the Purchaser shall determine that adequate and reasonable
methods do not exist for ascertaining the LIBOR Rate for such Interest Period,
the Purchaser shall forthwith give notice of such determination (which shall be
conclusive and binding on the Company) to the Company. In such event (a) any
notice of conversion or continuation or any automatic continuation with respect
to the LIBOR Rate Obligation shall be automatically withdrawn and shall be
deemed a request for a Base Rate Obligation and (b) the LIBOR Rate Obligation
will automatically, on the last day of the then current Interest Period thereof,
become a Base Rate Obligation, and the right of the Company to have the Note
bear interest at the LIBOR Rate shall be suspended until the Purchaser in good
faith determines that the circumstances giving rise to such suspension no longer
exist, whereupon the Purchaser shall so notify the Company.
Section 4.5 ILLEGALITY. Notwithstanding any other provisions
herein, if any present or future law, regulation, treaty or directive or the
interpretation or application thereof shall make it unlawful, or any central
bank or other governmental authority having jurisdiction over Purchaser shall
assert that it is unlawful, for Purchaser to make or maintain the LIBOR Rate
Obligation, Purchaser shall forthwith give notice of such circumstances to the
Company and thereupon (a) the right of the Company to have the LIBOR Rate
Obligation or convert a Base Rate Obligation to a LIBOR Rate Obligation shall
forthwith be suspended and (b) the LIBOR Rate Obligation then outstanding shall
be converted automatically to a Base Rate Obligation on the last day of the
Interest Period applicable to such LIBOR Rate Obligation or within such earlier
period as may be required by law. At such time as the Purchaser in good faith
determines that the circumstances described in this Section 4.5 no longer exist,
the Purchaser shall notify the Company and the Company's right to have the LIBOR
Rate Obligation or convert a Base Rate Obligation to a LIBOR Rate Obligation
shall resume until such time that such conditions may again exist.
Section 4.6 ADDITIONAL INTEREST. If the LIBOR Rate Obligation
is repaid or is converted to a Base Rate Obligation for any reason on a date
which is prior to the last day of the Interest Period applicable to such LIBOR
Rate Obligation, the Company will pay to the Purchaser upon demand, in addition
to any amounts of interest otherwise
30
payable hereunder, any amounts required to compensate the Purchaser for any
losses, costs or expenses which may reasonably be incurred as a result of such
payment or conversion, including, without limitation, an amount equal to daily
interest for the unexpired portion of such Interest Period on the LIBOR Rate
Obligation so repaid or converted at a per annum rate equal to the excess, if
any, of (a) the interest rate calculated on the basis of the LIBOR Rate
applicable to the LIBOR Rate Obligation MINUS (b) the amount of interest (as
reasonably determined by the Purchaser) which would have accrued to the
Purchaser on such amount by placing such amount on deposit for a period
approximating the period from the date of repayment or conversion to the last
day of such Interest Period as determined by the Purchaser with leading banks in
the interbank Eurodollar market (it being understood that such deposit shall not
be required in order for such amounts to be payable).
Section 4.7 ADDITIONAL COSTS, ETC. Notwithstanding anything
herein to the contrary, if any present or future applicable law, which
expression, as used herein, includes statutes, rules and regulations thereunder
and legally binding interpretations thereof by any competent court or by any
governmental or other regulatory body or official with appropriate jurisdiction
charged with the administration or the interpretation thereof and requests,
directives, instructions and notices at any time or from time to time hereafter
made upon or otherwise issued to the Purchaser by any central bank or other
fiscal, monetary or other authority (whether or not having the force of law),
shall with respect to the Purchaser's commitment to allow the principal balance
of the Note to bear interest at the LIBOR Rate or the principal balance of the
Note bearing interest at the LIBOR Rate:
(a) subject the Purchaser to any tax, levy, impost,
duty, charge, fee, deduction or withholding of any nature (other than taxes
based upon or measured by the income or profits the Purchaser), or
(b) materially change the basis of taxation (except
for changes in taxes on income or profits) of payments to the Purchaser of the
principal of or the interest on the Note or any other amounts payable to the
Purchaser under this Agreement or the other Note Documents, or
(c) impose or increase or render applicable any
special deposit, reserve, assessment, liquidity, capital adequacy or other
similar requirement (whether or not having the force of law) against assets held
by, or deposits in or for the account of, or loans by, or commitments of an
office of the Purchaser, or
(d) impose on the Purchaser any other conditions or
requirements; and the result of any of the foregoing is
(i) to increase the cost to the Purchaser of
permitting, funding, issuing, renewing, extending or
maintaining the principal balance of the Note bearing interest
at the LIBOR Rate, or
31
(ii) to reduce the amount of principal, interest or
other amounts payable to the Purchaser hereunder on account of
the principal balance of the Note bearing interest at the
LIBOR Rate, or
(iii) to require the Purchaser to make any payment or
to forego any interest or other sum payable hereunder, the
amount of which payment or foregone interest or other sum is
calculated by reference to the gross amount of any sum
receivable or deemed received by the Purchaser from the
Company hereunder,
then, and in each such case, the Company will, within fifteen (15) days of
demand made by the Purchaser at any time and from time to time and as often as
the occasion therefor may arise, pay to the Purchaser such additional amounts as
the Purchaser shall determine in good faith to be sufficient to compensate the
Purchaser for such additional cost, reduction, payment or foregone interest or
other sum. The Purchaser in determining such amounts may use any reasonable
averaging and attribution methods generally applied in good faith by the
Purchaser.
Section 4.8 CAPITAL ADEQUACY. If after the date hereof the
Purchaser determines that (a) the adoption of or change in any law, rule,
regulation or guideline regarding capital requirements for the Purchaser or the
Purchaser's holding company or any change in the interpretation or application
thereof by any governmental authority charged with the administration thereof,
or (b) compliance by the Purchaser or its parent holding company with any
guideline, request or directive of any such entity regarding capital adequacy
(whether or not having the force of law), has the effect of reducing the return
on the Purchaser's or such holding company's capital as a consequence of the
Purchaser's commitment to purchase the Note hereunder to a level below that
which the Purchaser or its parent holding company could have achieved but for
such adoption, change or compliance (taking into consideration the Purchaser's
or such holding company's then existing policies with respect to capital
adequacy and assuming the full utilization of such entity's capital) by any
amount deemed by the Purchaser to be material, then the Purchaser may notify the
Company thereof. The Company agrees to pay to the Purchaser the amount of such
reduction in the return on capital as and when such reduction is determined,
upon presentation by the Purchaser of a statement of the amount setting forth
the Purchaser's calculation thereof. In determining such amount, the Purchaser
may use any reasonable averaging and attribution methods.
Section 4.9 INDEMNITY OF COMPANY. The Company agrees to
indemnify the Purchaser and to hold the Purchaser harmless from and against any
loss, cost or expense that the Purchaser may sustain or incur as a consequence
of (a) default by the Company in payment of the principal amount of or any
interest on the LIBOR Rate Obligation as and when due and payable, including any
such loss or expense arising from interest or fees payable by the Purchaser to
lenders of funds obtained by it in order to
32
maintain the LIBOR Rate Obligation, or (b) default by the Company in issuing the
Note or conversion after the Company has given (or is deemed to have given) a
notice of the Funding Date or a Conversion Request.
Section 4.10 INTEREST ON OVERDUE AMOUNTS; LATE CHARGE. Overdue
principal and (to the extent permitted by applicable law) interest on the
principal balance of the Note and all other overdue amounts payable hereunder or
under any of the other Note Documents shall bear interest payable on demand at a
rate per annum equal to five percent (5.0%) above the Base Rate until such
amount shall be paid in full (after as well as before judgment). In addition,
the Company shall pay a late charge equal to three percent (3%) of any amount of
interest and/or principal payable on the principal balance of the Note or any
other amounts payable hereunder or under the Note Documents, which is not paid
by such Company within ten days of the date when due.
Section 4.11 CERTIFICATE. A certificate setting forth any
amounts payable pursuant to Section 4.6, Section 4.7, Section 4.8, Section 4.9
or Section 4.10 and a brief explanation of such amounts which are due, submitted
by the Purchaser to the Company, shall be conclusive in the absence of manifest
error.
Section 4.12 LIMITATION ON INTEREST. Notwithstanding anything
in this Agreement or the other Note Documents to the contrary, all agreements
between the Company and the Purchaser, whether now existing or hereafter arising
and whether written or oral, are hereby limited so that in no contingency,
whether by reason of acceleration of the maturity of the Note or otherwise,
shall the interest contracted for, charged or received by the Purchaser exceed
the maximum amount permissible under applicable law. If, from any circumstance
whatsoever, interest would otherwise be payable to the Purchaser in excess of
the maximum lawful amount, the interest payable to the Purchaser shall be
reduced to the maximum amount permitted under applicable law; and if from any
circumstance the Purchaser shall ever receive anything of value deemed interest
by applicable law in excess of the maximum lawful amount, an amount equal to any
excessive interest shall be applied to the reduction of the principal balance of
the Note and to the payment of interest or, if such excessive interest exceeds
the unpaid balance of principal of the Note, such excess shall be refunded to
the Company. All interest paid or agreed to be paid to the Purchaser shall, to
the extent permitted by applicable law, be amortized, prorated, allocated and
spread throughout the full period until payment in full of the principal of the
Note (including the period of any renewal or extension thereof) so that the
interest thereon for such full period shall not exceed the maximum amount
permitted by applicable law. This section shall control all agreements between
the Company and the Purchaser.
SECTION 5. REPRESENTATIONS AND WARRANTIES.
-----------------------------------------
The Company represents and warrants to the Purchaser as follows:
Section 5.1 CORPORATE AUTHORITY; ETC.
33
(a) INCORPORATION; STANDING. The Company (i) is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Ohio, (ii) has all requisite power to own its properties and
conduct its business as now conducted and as presently contemplated and to
perform all of its obligations under agreements to which it is a party,
including this Agreement, and (iii) is in good standing as a foreign entity and
is duly authorized to do business in each jurisdiction where such qualification
is necessary except where a failure to be so qualified in such jurisdiction
would not have a Material Adverse Effect.
(b) SUBSIDIARIES. Each of the Subsidiaries of the
Company (i) is a corporation, limited partnership, limited liability company or
trust duly organized under the laws of its State of organization and is validly
existing and in good standing under the laws thereof, (ii) has all requisite
power to own its property and conduct its business as now conducted and as
presently contemplated and (iii) is in good standing and is duly authorized to
do business in each jurisdiction where a failure to be so qualified could have a
Material Adverse Effect.
(c) AUTHORIZATION. The execution, delivery and
performance of the Note Documents to which the Company is to become a party and
the transactions contemplated hereby and thereby (i) are within the authority of
the Company, (ii) have been duly authorized by all necessary proceedings on the
part of the Company, (iii) do not conflict with or result in any breach or
contravention of any provision of law, statute, rule or regulation to which the
Company is subject or any judgment, order, writ, injunction, license or permit
applicable to the Company, (iv) do not conflict with any provision of the
charter documents or code of regulations, of, or any agreement or other
instrument binding upon, the Company or any of its Subsidiaries, and (v) do not
and will not require the consent or approval of any person or entity or the
authorization, consent, approval of or any license or permit issued by, or any
filing or registration with or the giving of any notice to, or the withholding
of objection by, any court, agency, department, board, commission or other
governmental authority.
(d) ENFORCEABILITY. The execution and delivery of
this Agreement and the other Note Documents to which the Company is to become a
party will result in valid and legally binding obligations of the Company,
enforceable against the Company in accordance with the respective terms and
provisions hereof and thereof, except as enforceability is limited by
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting generally the enforcement of creditors' rights and except to the
extent that availability of the remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding
therefor may be brought.
Section 5.2 TITLE TO PROPERTIES. The Company and its
Subsidiaries own all of the assets reflected in the consolidated balance sheet
of the Company as at the Balance Sheet Date or acquired since that date (except
property and assets sold or
34
otherwise disposed of in the ordinary course of business since that date),
subject to no rights of others, including any mortgages, leases, conditional
sales agreements, title retention agreements, liens or other encumbrances except
as reflected on such balance sheet. Without limiting the foregoing, each of the
Company and its Subsidiaries have good marketable fee simple title to all real
property reasonably necessary for the operation of its business, free from all
liens or encumbrances of any nature whatsoever except for Liens permitted by
this Agreement. Notwithstanding the foregoing, the Company may make investments
in construction on real property that is not then owned by the Company;
provided, however, that the Company may make investments in the construction on
such real property only if the contract price for the land plus the costs of
investment of construction with respect to all such real property does not in
the aggregate exceed $500,000.00 at any one time outstanding. Each of the
Company or its Subsidiaries is the insured under owner's policies of title
insurance covering all real property owned by it, in each case in an amount not
less than the purchase price for such real property. The Company is the legal
and beneficial owner of all of the shares of stock it purports to own of each
Subsidiary, free and clear in each case of any Lien. All such shares have duly
issued and are fully paid and non-assessable.
Section 5.3 FINANCIAL STATEMENTS. The Company has furnished to
the Purchaser the consolidated balance sheet of the Company and its Subsidiaries
as of the Balance Sheet Date and certain other financial information concerning
the Company and its Subsidiaries. Such balance sheet and statements have been
prepared in accordance with GAAP, are true, correct and complete and fairly
present the financial condition of the Company and its Subsidiaries as of such
dates and the results of the operations of the Company and its Subsidiaries for
such periods. There are no liabilities, contingent or otherwise, of the Company
or any of its Subsidiaries involving material amounts not disclosed in said
financial statements and the related notes thereto.
Section 5.4 NO MATERIAL CHANGES, ETC. Since the Balance Sheet
Date, there has occurred no material adverse change in the financial condition
or business of the Company or its Subsidiaries as shown on or reflected in the
consolidated balance sheet of the Company and its Subsidiaries as at the Balance
Sheet Date, or the statement of income for the fiscal year then ended, other
than changes in the ordinary course of business that have not had any Material
Adverse Effect.
Section 5.5 FRANCHISES, PATENTS, COPYRIGHTS, ETC. The Company
and its Subsidiaries possess all franchises, patents, copyrights, trademarks,
trade names, licenses and permits, and rights in respect of the foregoing,
adequate for the conduct of their business substantially as now conducted
without known conflict with any rights of others.
Section 5.6 LITIGATION. There are no actions, suits,
proceedings or investigations of any kind pending or threatened against the
Company or any of its Subsidiaries before any court, tribunal, administrative
agency, board or arbitration or other alternative dispute resolution forum that,
if adversely determined, might, either in any case or in the aggregate, have a
Material Adverse Effect or materially impair the right
35
of such Person to carry on business substantially as now conducted by it, or
result in any substantial liability not adequately covered by insurance, or for
which adequate reserves are not maintained on the balance sheet of such Person,
or which question the validity of this Agreement or any of the other Note
Documents, or any action taken or to be taken pursuant hereto or thereto.
Section 5.7 NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the
Company nor any of its Subsidiaries is subject to any charter, corporate or
other legal restriction, or any judgment, decree, order, rule or regulation that
has or is expected in the future to have a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries is a party to any contract or agreement that
has or is expected, in the judgment of the officers, partners or members of such
Person, as applicable, to have any Material Adverse Effect.
Section 5.8 COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC.
Neither the Company nor any of its Subsidiaries is in violation of any provision
of its by-laws or any agreement or instrument to which it may be subject or by
which it or any of its properties may be bound or any decree, order, judgment,
statute, license, rule or regulation, in any of the foregoing cases in a manner
that could result in the imposition of substantial penalties or have a Material
Adverse Effect.
Section 5.9 TAX STATUS. The Company and its Subsidiaries (a)
have made or filed all federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which each is subject,
(b) have paid all taxes and other governmental assessments and charges shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and by appropriate proceedings, and (c) have set
aside on their respective books provisions reasonably adequate for the payment
of all taxes for periods subsequent to the periods to which such returns,
reports or declarations apply. There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the officers,
partners and members, as applicable, of the Company and its Subsidiaries know of
no basis for any such claim. The Company shall not consent to, or permit the
filing of, or be a party to any consolidated tax return on behalf of itself and
its Subsidiaries with any other Person.
Section 5.10 NO EVENT OF DEFAULT. No Default or Event of
Default has occurred and is continuing.
Section 5.11 HOLDING COMPANY AND INVESTMENT COMPANY ACTS.
Neither the Company nor any of its Subsidiaries is a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a "holding
company", as such terms are defined in the Public Utility Holding Company Act of
1935, nor is either of them an "investment company", or an "affiliated company"
or a "principal underwriter" of an "investment company" as such terms are
defined in the Investment Company Act of 1940.
36
Section 5.12 ERISA. The Company and its Subsidiaries are in
compliance in all material respects with ERISA. There has been no Reportable
Event with respect to any Plan. There has been no institution of proceedings or
any other action by PBGC or the Company or any Commonly Controlled Entity to
terminate or withdraw or partially withdraw from any Plan under any
circumstances which could lead to material liabilities to PBGC or, with respect
to a "Multiemployer Plan", the "Reorganization" or "Insolvency" (as each such
term is defined in ERISA) of any Plan. No "prohibited transaction" (within the
meaning of Section 406 of ERISA or Section 4975 of the Code) has occurred with
respect to any Plan, and the consummation of the transactions provided for in
this Agreement and compliance by the Company with the provisions hereof and the
Note to be issued hereunder will not involve any prohibited transaction. No Plan
maintained by the Company or any Commonly Controlled Entity, nor any trust
created thereunder, have incurred any "accumulated funding deficiency" as
defined in ERISA, whether or not waived. Neither the Company nor any Commonly
Controlled Entity has (a) sought a waiver of the minimum funding standard under
Section 412 of the Code in respect of any Plan, or (b) failed to make any
contribution or payment to any Plan, or made any amendment to any Plan which has
resulted or could result in the imposition of a Lien or the posting of a bond or
other security under ERISA or the Code, or (c) incurred any liability under
Title 4 of ERISA other than a liability to the PBGC for premiums under Section
4007 of ERISA.
Section 5.13 REGULATIONS U AND X. Neither the Company nor its
Subsidiaries is engaged, nor will any of them engage, principally or as one of
their important activities, in the business of extending credit for the purpose
of "purchasing" or carrying any "margin security" or "margin stock" as such
terms are used in Regulations U and X of the Board of Governors of the Federal
Reserve System, 12 C.F.R. Parts 221 and 224. No part of the proceeds from the
sale of the Note is to be used for the purpose of purchasing or carrying any
"margin security" or "margin stock". None of the proceeds from the sale of the
Note will be used to purchase, or refinance any borrowing the proceeds of which
were used to purchase, any "security" within the meaning of the Securities
Exchange Act of 1934, as amended.
Section 5.14 FULL DISCLOSURE. None of the representations and
warranties of the Company and its Subsidiaries made in this Agreement and the
other Note Documents or any financial statement, document or instrument
delivered to the Purchaser pursuant to or in connection with any of such Note
Documents contain any untrue statement of a fact, nor will they omit to state
any fact necessary to make the statements herein or therein not misleading.
There is no agreement, restriction or other factual matter which the Company has
not disclosed to the Purchaser in writing which has or could have a Material
Adverse Effect.
Section 5.15 SUBSIDIARIES. SCHEDULE 5.15(a) sets forth all of
the Subsidiaries of the Company, the form and jurisdiction of organization of
each of the Subsidiaries and the Company's ownership interest therein. Neither
the Company nor any
37
of its Subsidiaries has any interest in any other partnership, joint venture,
corporation, limited liability company except as set forth in SCHEDULE 5.15(b).
No shares of Capital Stock of any Subsidiary, whether issued and outstanding or
authorized but unissued, or any treasury shares, are subject to any
subscription, warrant, option, call, commitment or other agreement of any
nature. There are no agreements regulating, controlling or otherwise affecting
the voting or other disposition of shares of the Company's Subsidiaries or the
management thereof.
Section 5.16 PRIVATE OFFERING. Neither the Company nor any
Person acting on behalf of the Company has, directly or indirectly, offered the
Note or any similar security of the Company for sale to, or solicited offers to
buy any thereof from, or otherwise approached or negotiated with respect thereto
with, any prospective purchaser, other than Purchaser such that the same may
violate any federal or state securities or blue sky laws or regulations. Neither
the Company nor any Person acting on its behalf shall offer the Note or any part
thereof or any similar security of the Company for issue or sale to, or solicit
any offer to acquire any of the same from, any Persons so as to bring the
issuance and sale of the Note within the provisions of Section 5 of the
Securities Act of 1933, as amended.
Section 5.17 BROKERS. The Company has not engaged or otherwise
dealt with any broker, finder or similar entity in connection with this
Agreement or the issuance and sale of the Note.
Section 5.18 OTHER DEBT. Neither the Company nor any of its
Subsidiaries is in default in the payment of any other Indebtedness or with
respect to any Contingent Obligation or under any agreement, mortgage, deed of
trust, security agreement, financing agreement, indenture, lease or other
agreement to which any of them is a party. The Company is not a party to or
bound by any agreement, instrument or indenture that may require the
subordination in right or time of payment of the Note to any other Indebtedness
or Contingent Indebtedness of the Company, other than the agreements relating to
the Senior Debt and the Existing Subordinated Notes.
Section 5.19 ENVIRONMENTAL COMPLIANCE. The Company and its
Subsidiaries are in compliance in all material respects with all Environmental
Laws. Neither the Company nor any of its Subsidiaries has received notice from
any Person that it has been identified as a potentially responsible party for
any Hazardous Substances, or that it is or shall be named a party to any claim,
action, cause of action, complaint, legal or administrative proceeding,
investigation or remediation action whatsoever in connection therewith. No
portion of the real property of the Company or its Subsidiaries is affected by
any Hazardous Substances in any manner which would have a Material Adverse
Effect.
Section 5.20 LOAN DOCUMENTS. The Company has delivered to the
Purchaser true, correct and complete copies of all indentures, loan agreements
or similar documents relating to the indebtedness evidenced by the Senior Debt
and the Existing
38
Subordinated Notes. As of the date hereof, the outstanding principal balance of
the Existing Subordinated Notes is $24,513,000.
Section 5.21 SOLVENCY. As of the date hereof and after giving
effect to the transactions contemplated by this Agreement and the other Note
Documents, including the sale of the Note, the Company is not insolvent on a
balance sheet basis such that the sum of the Company's assets exceeds the sum of
the Company's liabilities, the Company is able to pay its debts as they become
due, and the Company has sufficient capital to carry on its business.
SECTION 6. AFFIRMATIVE COVENANTS OF THE COMPANY.
------------------------------------------------
The Company covenants and agrees that, so long as the Note is
outstanding or the Purchaser has any obligation to purchase the Note:
Section 6.1 PUNCTUAL PAYMENT. The Company will duly and
punctually pay or cause to be paid the principal, premium, if any, and interest
on the Note and all interest and fees provided for in this Agreement, all in
accordance with the terms of this Agreement and the Note as well as all other
sums owing pursuant to the Note Documents.
Section 6.2 MAINTENANCE OF OFFICE. The Company will maintain
its chief executive offices at ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, or at such other place in
the United States of America as the Company shall designate upon prior written
notice to the Purchaser, where notices, presentations and demands to or upon the
Company in respect of the Note Documents may be given or made.
Section 6.3 RECORDS AND ACCOUNTS. The Company will (a) keep,
and cause each of its Subsidiaries to keep, true and accurate records and books
of account in which full, true and correct entries will be made in accordance
with GAAP and (b) maintain adequate accounts and reserves for all taxes
(including income taxes), depreciation and amortization of its properties and
the properties of its Subsidiaries, contingencies and other reserves.
Section 6.4 FINANCIAL STATEMENTS, CERTIFICATES AND
INFORMATION. The Company will deliver to the Purchaser:
(a) as soon as available, but in any event within 90
days after the end of each fiscal year of the Company, a copy of the audited
consolidated balance sheet of the Company and its consolidated Subsidiaries as
of the end of the year and the related audited consolidated statements of
income, of stockholders' equity and of cash flows for such year, setting forth
in each case in comparative form the figures for the previous year, together
with the opinion of independent certified public accountants of nationally
recognized standing, which opinion shall not contain a "going concern" or like
qualification or exception, or qualification arising out of the scope of the
audit or
39
qualification which would affect the computation of financial covenants
contained herein other than a qualification of consistency due to a change in
the application of GAAP with which the Company's independent certified public
accountants concur;
(b) as soon as available but in any event not later
than 45 days after the end of each quarterly accounting period (including the
quarterly accounting period for the last quarter of each fiscal year), the
unaudited consolidated balance sheet of the Company and its consolidated
Subsidiaries as of the end of each such month and the related unaudited
consolidated statements of income and of stockholders' equity of the Company and
its consolidated Subsidiaries for such month and the portion of the fiscal year
through such date setting forth in each case in comparative form the figures for
the previous year, and including in each case (i) the relevant figures broken
down with respect to each division of the Company and its Subsidiaries, and (ii)
a listing of all residential and commercial lots, land under development and
unsold lots, all of the foregoing certified by the principal financial or
accounting officer of the Company being fairly stated in all material respects,
subject to year-end audit adjustments;
(c) concurrently with the delivery of each financial
statement referred to in Section 6.4(a) above and each financial statement
referred to in Section 6.4(b) above, a certificate of the principal financial or
accounting officer of the Company in form and substance satisfactory to the
Purchaser and stated to have been made after due examination by such officer (i)
stating that, to the best of such officer's knowledge, the Company and each of
its Subsidiaries during such period has observed or performed in all material
respects all of its covenants and other agreements, and satisfied every
condition contained in this Agreement and the Note to be observed, performed or
satisfied by it, and that such officer has obtained no knowledge of any Default
or Event of Default except as specified in such certificate, (ii) showing in
detail the calculations supporting such statement in respect of the covenants
set forth in Section 6.12, Section 7.1, Section 7.3, Section 7.4, Section 7.5
and Section 7.6, and (iii) showing in detail the outstanding voting capital
stock of the Company owned or controlled by the Persons described in clause (b)
of the definition of the term "Change of Control" as of the Funding Date and as
of the date of such financial statement, and indicating the percentage
reduction, if any, in the amount of shares owned or controlled by such Persons
as of the date of such statement from the amount of shares owned or controlled
as of the Funding Date; and
(d) promptly after the same are sent, copies of all
financial statements, reports and notices which the Company or any of its
Subsidiaries sends to its stockholders as stockholders and, so long as the
Company is a reporting company under the Securities Exchange Act of 1934,
promptly after the same are filed, copies of all financial statements which the
Company may make to, or file with, and copies of all material notices the
Company receives from, the SEC or any public body succeeding to any or all of
the functions of the SEC.
The financial statements described in Section 6.4(a) and (b) shall be
complete and correct in all material respects and prepared in reasonable detail
and in accordance with GAAP
40
(except, in the case of the financial statements referred to in Section 6.4(b),
that such financial statements need not contain footnotes and may be subject to
year-end adjustments). The Company will permit any person designated by the
Purchaser, at the Purchaser's expense, to visit and inspect the properties and
the books and records of the Company and its Subsidiaries, to examine the
Company's and its Subsidiaries' records (and to make copies thereof and extracts
therefrom), and to discuss the affairs and finances of the Company and its
Subsidiaries, all at such reasonable times and intervals as the Purchaser may
reasonably request.
Section 6.5 NOTICES.
(a) DEFAULTS. The Company will promptly notify the
Purchaser in writing of the occurrence of any Default or Event of Default. If
any Person shall give any notice or take any other action in respect of a
claimed default (whether or not constituting an Event of Default) under this
Agreement or under any evidence of Indebtedness or Contingent Obligation to
which or with respect to which the Company or any of its Subsidiaries is a party
or obligor, whether as principal or surety, and such default would permit the
holder of such note or obligation or other evidence of Indebtedness or
Contingent Obligation to accelerate the maturity thereof, the Company shall
forthwith give written notice thereof to the Purchaser, describing the notice or
action and the nature of the claimed default.
(b) NOTICE OF LITIGATION AND JUDGMENTS. The Company
will give notice to the Purchaser in writing within fifteen (15) days of
becoming aware of any litigation or proceedings threatened in writing or any
pending litigation and proceedings affecting the Company or any of its
Subsidiaries or to which the Company or any of its Subsidiaries is or is to
become a party involving an uninsured claim against the Company or any of its
Subsidiaries that could reasonably be expected to have a Material Adverse Effect
and stating the nature and status of such litigation or proceedings. The Company
will give notice to the Purchaser, in writing, in form and detail satisfactory
to the Purchaser, within ten (10) days of any judgment not covered by insurance,
final or otherwise, against the Company or any of its Subsidiaries in an amount
in excess of $500,000.00.
(c) MATERIAL ADVERSE EFFECT. The Company will
promptly notify the Purchaser of the occurrence or existence of any fact,
circumstance or condition which might have a Material Adverse Effect.
Section 6.6 EXISTENCE; MAINTENANCE OF PROPERTIES.
(a) The Company and its Subsidiaries will do or cause
to be done all things necessary to preserve and keep in full force and effect
their respective existence as a corporation. The Company and its Subsidiaries
will do or cause to be done all things necessary to preserve and keep in full
force all of their respective rights and franchises. The Company will, and will
cause each of its Subsidiaries to,
41
continue to engage primarily in the businesses now conducted by it and in
related businesses, unless otherwise consented to by the Purchaser.
(b) The Company (i) will cause all of its properties
and those of its Subsidiaries used or useful in the conduct of its business or
of its Subsidiaries to be maintained and kept in good condition, repair and
working order (ordinary wear and tear excepted) and supplied with all necessary
equipment, and (ii) will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof in all cases in which the
failure so to do would have a Material Adverse Effect.
Section 6.7 INSURANCE. The Company will, at its expense,
procure and maintain or cause to be procured and maintained insurance covering
the Company and its Subsidiaries and their respective properties in such amounts
and against such risks and casualties as are customary for properties of similar
character and location, due regard being given to the type of improvements
thereon, their construction, location, use and occupancy.
Section 6.8 TAXES. The Company and each Subsidiary will duly
pay and discharge, or cause to be paid and discharged, before the same shall
become overdue, all taxes, assessments and other governmental charges imposed
upon it and upon its assets, sales and activities, or any part thereof, or upon
the income or profits therefrom, as well as all claims for labor, materials or
supplies that if unpaid might by law become a lien or charge upon any of its
property; provided that any such tax, assessment, charge, levy or claim need not
be paid if the validity or amount thereof shall currently be contested in good
faith by appropriate proceedings and if the Company or such Subsidiary shall set
aside on its books reasonably adequate reserves with respect thereto; and
provided, further, that forthwith upon the commencement of proceedings to
foreclose any lien that may have attached as security therefor, the Company and
each Subsidiary (i) will provide a bond issued by a surety reasonably acceptable
to the Purchaser and sufficient to stay all such proceedings or (ii) if no such
bond is provided, will pay each such tax, assessment, charge, levy or claim.
Section 6.9 FURTHER ASSURANCES. The Company will cooperate
with, and will cause each of its Subsidiaries to cooperate with, the Purchaser
and execute such further instruments and documents as the Purchaser shall
reasonably request to carry out to its satisfaction the transactions
contemplated by this Agreement and the other Note Documents.
Section 6.10 COMPLIANCE WITH LAWS, CONTRACTS, LICENSES, AND
PERMITS. The Company will comply with, and will cause each of its Subsidiaries
to comply in all respects with, (i) all applicable laws and regulations now or
hereafter in effect wherever its business is conducted, (ii) the provisions of
its corporate charter, partnership agreement or declaration of trust, as the
case may be, and other charter documents and code of regulations or bylaws, as
applicable, (iii) all agreements and instruments to which it is a party or by
which it or any of its properties may be bound, (iv) all applicable
42
decrees, orders, and judgments, and (v) all licenses and permits required by
applicable laws and regulations for the conduct of its business or the
ownership, use or operation of its properties. If at any time while the Note is
outstanding or the Purchaser has any obligation to purchase the Note, any
authorization, consent, approval, permit or license from any officer, agency or
instrumentality of any government shall become necessary or required in order
that the Company may fulfill any of its obligations hereunder, the Company will
immediately take or cause to be taken all steps necessary to obtain such
authorization, consent, approval, permit or license and furnish the Purchaser
with evidence thereof.
Section 6.11 ERISA COMPLIANCES. The Company will not permit
the present value of all employee benefits vested in all Plans maintained by the
Company and any Commonly Controlled Entity to exceed the present value of the
assets allocable to such vested benefits by an amount greater than $500,000.00
in the aggregate. Neither the Company nor any Commonly Controlled Entity will at
any time permit any Plan maintained by it to engage in any "prohibited
transaction" as such term is defined in Section 4975 of the Code or Section 406
of ERISA, incur any "accumulated funding deficiency" as such term is defined in
Section 302 of ERISA, whether or not waived, or terminate any Plan in any manner
which could result in the imposition of a Lien on the property of the Company or
any of its Subsidiaries pursuant to Section 4068 of ERISA.
Section 6.12 CONSOLIDATED TANGIBLE NET WORTH. The Company will
not at any time permit its Consolidated Tangible Net Worth to be less than
$75,000,000.00.
Section 6.13 TRANSFER OF NOTE; RATING.
(a) The Company will cause or cause to be taken such
action as the Purchaser may reasonably request from time to time to facilitate
the sale or disposition by the Purchaser without registration under the
Securities Act of 1933, as amended, or any regulations promulgated pursuant
thereto, and/or any applicable securities laws within the limitation of the
exemptions provided by any rule or regulation thereunder, including without
limitation, Rule 144A under the Securities Act of 1933.
(b) The Purchaser shall have, at its expense, the
option to obtain a rating on the Note from Standard & Poor's Corporation or such
other rating agency as the Purchaser may select, and the Company hereby consents
thereto. The Company shall not be responsible for the payment of fees to obtain
such rating. In connection therewith, the Company consents to the filing of the
Note Documents and such other information concerning the Company with such
rating agency as may be necessary or appropriate to obtain such rating. The
Company shall be entitled to participate with the Purchaser in any such request
for a rating of the Note. The Company agrees to provide such information or
other materials as may be necessary or appropriate to obtain such rating or to
maintain a rating once obtained.
Section 6.14 INTEREST CAP. From and after the Funding Date,
the Company shall at all times own and maintain in full force and effect the
Interest Cap as required by this
43
Agreement. In the event that the outstanding principal balance of the Note and
all accrued interest is not paid on or before the date which is three (3) years
after the Funding Date, then the Company shall acquire before the date which is
three (3) years after the Funding Date an Interest Cap satisfying the
requirements of Section 9.9, provided that the Interest Cap shall have a term
which is not less than December 15, 2001 and the amount of the Interest Cap
shall only be for the principal amount of the Note then outstanding. The Company
shall upon the request of the Purchaser provide to the Purchaser evidence that
the Interest Cap is in effect.
SECTION 7. NEGATIVE COVENANTS OF THE COMPANY.
---------------------------------------------
The Company covenants and agrees that, so long as the Note is
outstanding or the Purchaser has any obligation to purchase the Note:
Section 7.1 RESTRICTIONS ON INDEBTEDNESS. The Company will
not, and will not permit any of its Subsidiaries to, create, incur, assume,
guarantee or be or remain liable with respect to any Indebtedness other than:
(a) Indebtedness to the Purchaser arising under the
Note;
(b) Prior to the purchase of the Note, Indebtedness
under the Existing Subordinated Notes;
(c) current liabilities (due and payable within
twelve months or less) of the Company or its Subsidiaries incurred in the
ordinary course of business but not incurred through (i) the borrowing of money,
or (ii) the obtaining of credit except for credit on an open account basis
customarily extended and in fact extended in connection with normal purchases of
goods and services;
(d) Indebtedness in respect of taxes, assessments,
governmental charges or levies and claims for labor, materials and supplies to
the extent that payment therefor shall not at the time be required to be made in
accordance with the provisions of Section 6.8;
(e) endorsements for collection, deposit or
negotiation and warranties of products or services, in each case incurred in the
ordinary course of business;
(f) Senior Debt of the Company; and
(g) Other Indebtedness of the Company and its
Subsidiaries for borrowed money from an institutional lender or in connection
with a public or privately placed debt offering created or evidenced by notes,
bonds, indentures or similar agreements or by loan agreement under which the
Indebtedness is reflected in a loan account (it being agreed that such
Indebtedness may not include trade debt); PROVIDED that
44
neither the Company nor any of its Subsidiaries shall incur any such
Indebtedness pursuant to this Section 7.1(g) unless the ratio of the Company's
EBITDA to Consolidated Interest Incurred for the previous four (4) fiscal
quarters of the Company is greater than 2.0 to 1.0 (such permitted Indebtedness
is hereafter referred to as "Additional Permitted Senior Debt"). For the
purposes of performing such test, Consolidated Interest Incurred shall include
the interest expense that would have been incurred on such Indebtedness on a pro
forma basis for a four (4) quarter period. In no event shall any of such
Indebtedness be considered as Additional Permitted Senior Debt hereunder if in
any instrument or instruments evidencing or securing the same or pursuant to
which the same are outstanding, or under any amendment, renewal, extension or
refunding thereof, it is provided that such Indebtedness is not superior in
right of payment to the Note or that such Indebtedness is PARI PASSU with or
junior in right of payment to the Note. Notwithstanding the foregoing, neither
the Company nor any of its Subsidiaries shall incur any such Indebtedness
pursuant to this Section 7.1(g) unless the Company shall have provided the
Purchaser a statement certified by the principal financial or accounting officer
of the Company that no Default or Event of Default exists or will exist after
the incurrence of such Indebtedness, which statement shall include a calculation
demonstrating that the Company will be in compliance with the foregoing ratio
after giving effect to such incurrence. Additional Permitted Senior Debt shall
not include any Indebtedness that is payable to any Subsidiary or Affiliate of
the Company, any director, officer or employee of any thereof, or pursuant to or
in connection with any Investments in Joint Ventures.
Section 7.2 RESTRICTIONS ON LIENS, ETC. The Company will not,
and will not permit any of its Subsidiaries to create, incur, assume or suffer
to be created or incurred or to exist any Lien upon any of its property, assets
or revenues, whether now owned or hereafter acquired, except:
(a) Liens in favor of the agent under the Credit
Agreement, for the ratable benefit of the banks thereunder, including without
limitation Liens in favor of such agent on the Company's real property inventory
situated in the State of Indiana to secure the Indebtedness to the banks under
the Credit Agreement, which Liens secure Indebtedness under the Credit Agreement
not in excess of the limits set forth in clause (a) of the definition of the
term "Senior Debt";
(b) Liens granted by M/I Financial Corp. on mortgage
note receivables, which Liens secure Indebtedness under the M/I Financial Corp.
Loan Agreement not in excess of $30,000,000;
(c) Liens securing any other permitted Senior Debt or
Additional Permitted Senior Debt; provided, however, that (i) such Liens do not
at any time encumber any property other than the property financed by such
secured Indebtedness, and (ii) the Indebtedness secured thereby shall not exceed
the cost or fair market value whichever is lower, of the property being acquired
on the date of acquisition, and (iii) the Indebtedness secured thereby shall not
exceed any limits in this
45
Agreement on the amount of such Indebtedness (including, without limitation,
limits on Permitted Secured Indebtedness);
(d) Liens for taxes and special assessments not yet
due or which are being contested in good faith and by appropriate proceedings if
adequate reserves with respect thereto are maintained on the books of the
Company and its Subsidiaries in accordance with GAAP;
(e) carriers', warehousemen's, mechanics',
materialmen's, repairmen's, or other like Liens arising in the ordinary course
of business which are not overdue for a period of more than 30 days or which are
being contested in good faith and by appropriate proceedings if adequate
reserves with respect thereto are maintained on the books of the Company and its
Subsidiaries in accordance with GAAP;
(f) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security legislation;
(g) deposits to secure the performance of: bids;
trade contracts (other than for borrowed money or the purchase price of property
or services); leases; statutory and other obligations required by law; surety,
appeal and performance bonds (including Construction Bonds); and other
obligations of a like nature incurred in the ordinary course of business; and
(ii) Liens in favor of surety bond companies pursuant to indemnity agreements to
secure the Company's reimbursement obligations on Construction Bonds, provided
(A) the Liens securing Construction Bonds shall be limited to the Company's
assets at, and the Company's rights arising out of, the projects that are the
subject of the Construction Bonds, (B) the Liens shall not attach to any real
estate, and (C) the aggregate amount of such Liens at any time shall not exceed
the dollar amount of Construction Bonds then outstanding, and in any event shall
not exceed the amount of reimbursement obligations on Construction Bonds;
(h) Liens of landlords, arising solely by operation
of law, on fixtures and moveable property located on premises leased in the
ordinary course of business; provided, however, that the rental payments secured
thereby are not yet due; and
(i) Liens arising as a result of a judgment or
judgments against the Company or any of its Subsidiaries which do not in the
aggregate exceed $1,000,000 at any one time outstanding, which are being
diligently contested in good faith, which are not the subject of any attachment,
levy or enforcement proceeding, and as to which appropriate reserves have been
established in accordance with GAAP.
Section 7.3 RESTRICTIONS ON CONTINGENT OBLIGATIONS.
(a) The Company will not, and will not permit any of
its Subsidiaries to, agree to or assume, guarantee, indorse or otherwise in any
way be or
46
become responsible or liable for, directly or indirectly, any Contingent
Obligation, including but not limited to Contingent Obligations incurred as a
general partner in any limited partnership or general partnership, except:
(i) (A) reimbursement and other obligations under standby
letters of credit (including letters of credit issued for the
purpose of satisfying bonding requirements) issued by Persons
other than the banks under the Credit Agreement; (B)
Contingent Obligations of the Company as the guarantor of
letters of credit issued for the account of joint ventures in
which the Company is a partner (including Guaranteed HNB Joint
Ventures Letters of Credit), provided that the Company's
Contingent Obligation on any such guaranty shall be limited to
a percentage of the amount of that joint venture's letters of
credit equal to the Company's pro rata equitable ownership
interest in such joint venture, provided further that the sum
of the obligations permitted by clauses (i)(A) and (i)(B)
shall not exceed the aggregate amount of $10,000,000.00 at any
one time outstanding on a consolidated basis, which
$10,000,000.00 limitation shall not include any obligations in
connection with letters of credit issued pursuant to the
Credit Agreement; and (C) reimbursement obligations under
Construction Bonds;
(ii) Contingent Obligations consisting of (A) guaranties
by the Company of M/I Financial Corp.'s lease obligations in
an amount not to exceed $1,000,000.00 in any period of 12
consecutive months, (B) the Company's obligations under the
M/I Financial Corp. Loan Agreement in a principal amount not
to exceed $30,000,000.00, and (C) guaranties by any Subsidiary
of the obligations of the Company (including without
limitation any guaranty by M/I Financial Corp. of any
obligation of the Company to the banks under the Credit
Agreement);
(iii) Contingent Obligations related to Indebtedness of
joint ventures in which the Company has made Investments in
Joint Ventures and in which the Company is a partner, member
or shareholder (including obligations with respect to the
Guaranteed HNB Joint Venture Letters of Credit); provided,
however, that the aggregate amount of such Contingent
Obligations at any one time outstanding pursuant to this
Section 7.3(a)(iii) shall not exceed (A) $15,000,000.00 less
(B) the aggregate amount of Permitted Secured Indebtedness;
47
(iv) Contingent Obligations for Office Building Loan
Obligations, provided that the sum of the amount of such
Contingent Obligations and the amount of the Company's
Indebtedness for Office Building Loan Obligations shall at no
time exceed the principal amount of $8,500,000.00 in the
aggregate;
(v) other Contingent Obligations of the Company which do
not in the aggregate at any one time outstanding exceed
$3,000,000.00, subject to the limitations of subparagraph (k)
of the definition of the term "Permitted Investments"; and
(vi) Contingent Obligations with respect to letters of
credit issued or outstanding pursuant to the Credit Agreement
but which are undrawn, provided that the sum of (A) such
letters of credit issued or outstanding pursuant to the Credit
Agreement but which are undrawn and (B) reimbursement
obligations relating to drawn letters of credit that were
issued or outstanding pursuant to the Credit Agreement, shall
not exceed $21,000,000.00.
(a) Notwithstanding anything herein to the contrary,
nothing in this Section 7.3 is intended to, nor shall it be deemed to, increase,
alter or expand the Indebtedness permitted by Section 7.1 or the definitions of
the terms Senior Debt or Additional Permitted Senior Debt; it being acknowledged
and agreed that any Contingent Obligation that becomes liquidated or is no
longer contingent (including, without limitation, any obligation to reimburse a
draw actually made under a letter of credit or with respect to a Construction
Bond or pursuant to any claim which may be made pursuant to a guaranty or
indemnity), such obligation shall no longer be a Contingent Obligation and must
satisfy the requirements and/or limits of this Agreement with respect to
Indebtedness, Senior Debt and/or Additional Permitted Senior Debt, as
applicable.
Section 7.4 RESTRICTIONS ON INVESTMENTS. The Company will not,
and will not permit any of its Subsidiaries to, make or permit to exist or to
remain outstanding at any time any Investments, valued at book cost basis
(excluding Investments in Permitted Investments), that individually or in the
aggregate exceed thirty percent (30%) of the Company's Consolidated Tangible Net
Worth.
Section 7.5 RESTRICTIONS ON UNCOMMITTED LAND. Neither the
Company nor its Subsidiaries will at any time purchase or own, directly or
indirectly, any Uncommitted Land if the value of such Uncommitted Land, when
added to the value of all other Uncommitted Land of the Company and its
Subsidiaries, would cause the ratio of (a) Uncommitted Land of the Company and
its Subsidiaries to (b) the sum of (i) the Company's Shareholder's Equity, and
(ii) the principal balance of the Note (or until the issuance of the Note, the
principal balance evidenced by the Existing Subordinated Notes) to exceed 1.5 to
1.
48
Section 7.6 RESTRICTION ON DISTRIBUTIONS. The Company shall
not make any Distributions; PROVIDED that so long as no Default or Event of
Default has occurred, the Company may make distributions in an amount that, when
added to the amount of all other Distributions paid on or after September 30,
1996, does not exceed the sum of (i) $2,000,000.00 plus (ii) fifty percent (50%)
of the cumulative Consolidated Earnings of the Company subsequent to September
30, 1996.
Section 7.7 RESTRICTION ON FUNDAMENTAL CHANGES.
(a) The Company will not, and will not permit any of
its Subsidiaries to, enter into any transaction of merger, consolidation,
amalgamation or reorganization (including without limitation any election to be
taxed as an S Corporation), or liquidate, wind up or dissolve itself (or suffer
any liquidation or dissolution), or, except for the sale of land, lots and
houses from inventory in the ordinary course of business, convey, sell, lease,
transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of such Person's business or assets, whether now
owned or hereafter acquired, or make any material change in the method by which
such Person conducts business. Notwithstanding the foregoing, the Company or its
Subsidiaries may transfer not more than twenty percent (20%) in the aggregate
(on a consolidated basis) of such assets (valued at net book value) in a single
transaction not in the ordinary course of business for fair value in a cash
transaction provided that no Default or Event of Default exists, or would exist
after the consummation of such transaction.
(b) Any Subsidiary of the Company may be (i) merged,
amalgamated or consolidated with or into the Company or any wholly-owned
Subsidiary of the Company, or (ii) liquidated, wound up or dissolved into, or
all or substantially all of its business, property or assets may be conveyed,
sold, leased, transferred or other disposed of, in one transaction or a series
of transactions, to the Company or any wholly-owned Subsidiary of the Company;
provided, however, that in the case of such a merger, amalgamation, liquidation
or consolidation, the Company or such wholly-owned Subsidiary, as the case may
be, shall be the continuing or surviving corporation.
(c) The Company shall not change its present
accounting principles or practices in any material respect, except as may be
required by GAAP or by law.
Section 7.8 TRANSACTIONS WITH AFFILIATES AND OFFICERS. The
Company will not, and will not permiT any of its Subsidiaries to:
(a) Except for (i) any consulting agreements or
employment agreements to which the Company is a party and which were in effect
as of ▇▇▇▇▇ ▇, ▇▇▇▇, (▇▇) any agreements entered into in connection with the
construction of the Office Building by the Office Building Limited Liability
Company and/or with the Company's leasehold improvements to, the Office
Building, and (iii) compensation arrangements in
49
the ordinary course of business with the officers, directors, and employees of
the Company and its Subsidiaries, enter into any transaction, including without
limitation the purchase, sale or exchange of property or the rendering of any
services, with any Affiliate or any officer or director thereof, or enter into,
assume or suffer to exist any employment or consulting contract with any
Affiliate or an officer or director thereof, except any transaction or contract
which is in the ordinary course of the Company's or any of its Subsidiaries'
business and which is upon fair and reasonable terms no less favorable to the
Company or its Subsidiaries than it would obtain in a comparable arm's length
transaction with a Person not an Affiliate;
(b) make any advance or loan to any Affiliate or any
director or officer thereof or of the Company or to any trust of which any of
the foregoing is a beneficiary, or to any Person on the guarantee of any of the
foregoing, except as expressly permitted by paragraph (c) of the definition of
Permitted Investments; or
(c) pay any fees or expenses to, or reimburse or
assume any obligation for the reimbursement of any expenses incurred by, any
Affiliate or any officer or director thereof, except as may be permitted in
accordance with clauses (a) and (b) of this Section 7.8, and except as may be
required pursuant to the ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ Family Agreement dated
October 11, 1993, in connection with certain registration rights of certain
shareholders.
Section 7.9 RESTRICTIONS ON NEGATIVE PLEDGES. The Company will
not permit, and will not permit any of its Subsidiaries to, enter into any
agreement other than the Credit Agreement which prohibits or limits the ability
of the Company, any of its Subsidiaries or any of the M/I Ancillary Businesses
to create, incur, assume or suffer to exist any Lien upon any of its assets,
rights, revenues or property, real, personal or mixed, tangible or intangible,
whether now or hereafter acquired.
SECTION 8. CLOSING CONDITIONS.
------------------------------
The obligations of the Purchaser to enter into this Agreement shall be
subject to the satisfaction of the following conditions precedent on or prior to
September 30, 1996:
Section 8.1 EXECUTION OF AGREEMENT. This Agreement shall have
been duly executed and delivered by the Company, shall be in full force and
effect and shall be in form and substance satisfactory to the Purchaser.
Section 8.2 CERTIFIED COPIES OF ORGANIZATIONAL DOCUMENTS. The
Purchaser shall have received from the Company a copy, certified as of a recent
date by the appropriate officer of each State in which the Company and its
Subsidiaries is organized or is doing business, of the corporate charter of the
Company and its Subsidiaries, or its qualification to do business, as
applicable, as in effect on such date of certification.
50
Section 8.3 BYLAWS; RESOLUTIONS. All action on the part of the
Company necessary for the valid execution, delivery and performance of the Note
Documents to which the Company is or is to become a party shall have been duly
and effectively taken, and evidence thereof satisfactory to the Purchaser shall
have been provided to the Purchaser. The Purchaser shall have received from the
Company true copies of its code of regulations and the resolutions adopted by
its board of directors authorizing the transactions described herein, each
certified by its secretary as of a recent date to be true and complete.
Section 8.4 INCUMBENCY CERTIFICATE; AUTHORIZED SIGNERS. The
Purchaser shall have received from the Company an incumbency certificate, dated
as of the Closing Date, signed by a duly authorized officer of the Company and
giving the name and bearing a specimen signature of each individual who shall be
authorized to sign, in the name and on behalf of the Company, each of the Note
Documents to which the Company is or is to become a party. The Purchaser shall
have also received from the Company a certificate, dated as of the Closing Date,
signed by a duly authorized officer of the Company and giving the name and
specimen signature of each individual who shall be authorized to make Conversion
Requests and to give notices and to take other action on behalf of the Company
under the Note Documents.
Section 8.5 OPINION OF COUNSEL. The Purchaser shall have
received a favorable opinion addressed to the Purchaser and dated as of the
Closing Date, in form and substance satisfactory to the Purchaser from counsel
to the Company as to such matters as the Purchaser shall reasonably request.
Section 8.6 PAYMENT OF FEES. The Company shall have paid to
the Purchaser the commitment fee pursuant to Section 2.4.
Section 8.7 PERFORMANCE; NO DEFAULT. The Company shall have
performed and complied with all terms and conditions herein required to be
performed or complied with by it on or prior to the Closing Date, and on the
Closing Date there shall exist no Default or Event of Default.
Section 8.8 REPRESENTATIONS AND WARRANTIES. The
representations and warranties made by the Company in the Note Documents or
otherwise made by or on behalf of the Company or any Subsidiaries thereof in
connection therewith or after the date thereof shall have been true and correct
when made and shall also be true and correct on the Closing Date.
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Section 8.9 PROCEEDINGS AND DOCUMENTS. All proceedings in
connection with the transactions contemplated by this Agreement and the other
Note Documents shall be reasonably satisfactory to the Purchaser and the
Purchaser's counsel in form and substance, and the Purchaser shall have received
all information and such counterpart originals or certified copies of such
documents and such other certificates, opinions, documents, assurances, consents
and approvals as the Purchaser and the Purchaser's counsel may reasonably
require.
Section 8.10 COMPLIANCE CERTIFICATE. A certificate dated as of
the Closing Date executed by the principal financial or accounting officer of
the Company demonstrating compliance with each of the covenants described in
Section 6.12, Section 7.1, Section 7.3, Section 7.4, Section 7.5 and Section 7.6
as of the most recent fiscal quarter end for which the Company has provided
financial statements under Section 5.3 adjusted in the best good faith estimate
of the Company as of the date of the Closing Date shall have been delivered to
the Purchaser.
Section 8.11 SENIOR DEBT CONSENTS. The Purchaser shall have
received evidence satisfactory to the Purchaser that all necessary consents of
the holders of any portion of the Senior Debt required in connection with the
consummation and effectiveness of the transactions contemplated by the Note
Documents have been obtained.
Section 8.12 NO LEGAL IMPEDIMENT. The purchase of the Note by
the Purchaser shall constitute a legal investment under the laws and regulations
of each jurisdiction to which the Purchaser may be subject (without resort to
any "basket" or "leeway" provision which permits the making of an investment
without restriction as to the character of the particular investment being
made), such purchase shall not subject the Purchaser to any tax, penalty,
liability or other onerous condition in or pursuant to any applicable law or
governmental regulation or order, and the offering and sale of the Note under
this Agreement shall comply with all applicable federal and state securities
laws and regulations; and the Purchaser shall receive such certificates or other
evidence satisfactory to the Purchaser of compliance with this condition.
SECTION 9. CONDITIONS TO FUNDING DATE.
--------------------------------------
The obligations of the Purchaser to purchase the Note shall also be
subject to the satisfaction of the following conditions precedent:
Section 9.1 FUNDING DATE. The Company shall have delivered to
the Purchaser not less than five (5) Business Days prior written notice of the
occurrence of the Funding Date in accordance with the terms of this Agreement.
In the event that the Company desires that the principal balance of the Note
bear interest by reference to the LIBOR Rate commencing on the Funding Date, the
Company shall so state in such notice. In the event that the Company shall fail
to indicate its desire to have the principal of the Note bear interest by
reference to the LIBOR Rate, the Company shall be deemed to have elected to have
the principal of the Note bear interest by reference to the Base
52
Rate. Any such election to have the principal of the Note bear interest by
reference to the LIBOR Rate shall be irrevocable.
Section 9.2 SATISFACTION OF EXISTING SUBORDINATED NOTES. The
Company shall have delivered to the Purchaser such evidence as the Purchaser may
require that the Existing Subordinated Notes have been or shall be
contemporaneously with the purchase of the Note paid in full and that all
obligations of the Company under the Indenture have been terminated.
Section 9.3 MATERIAL ADVERSE EFFECT. No fact, circumstance or
condition shall have occurred or exist which may have a Material Adverse Effect.
Section 9.4 PRIOR CONDITIONS SATISFIED. All conditions set
forth in Section 8 shall continue to be satisfied as of the Funding Date.
Section 9.5 REPRESENTATIONS TRUE; NO DEFAULT. Each of the
representations and warranties made by or on behalf of the Company or any of its
Subsidiaries contained in this Agreement, the other Note Documents or in any
document or instrument delivered pursuant to or in connection with this
Agreement shall be true as of the date as of which they were made and shall also
be true at and as of the Funding Date and no Default or Event of Default shall
have occurred and be continuing. The Purchaser shall have received a certificate
of the Company signed by an authorized officer of the Company to such effect.
Section 9.6 PROCEEDINGS AND DOCUMENTS. All proceedings in
connection with the purchase of the Note shall be satisfactory in substance and
in form to the Purchaser, and the Purchaser shall have received all information
and such counterpart originals or certified or other copies of such documents as
the Purchaser may reasonably request.
Section 9.7 DELIVERY OF NOTE. The Note shall have been duly
executed and delivered by the Company to the Purchaser and shall be in full
force and effect.
Section 9.8 DELIVERY OF UPDATED RESOLUTIONS, LEGAL OPINIONS,
ETC. The Purchaser shall have received such of the items under Section 8.2,
Section 8.3, Section 8.4, Section 8.5, and Section 8.10 dated as of the Funding
Date as the Purchaser may require.
Section 9.9 ACQUISITION OF INTEREST RATE CAP. The Company
shall have acquired an interest rate cap providing to the Company an effective
rate of interest on the principal face amount of the Note with respect to LIBOR
Rate Obligations having an Interest Period of three (3) months as provided
herein of not more than nine percent (9.0%) per annum (the "Interest Cap"). The
term of the Interest Cap shall not expire before the date which is three (3)
years after the Funding Date. The Interest Cap shall be provided by any bank
which is a party to the Credit Agreement or a bank or other financial
institution that has unsecured, uninsured and unguaranteed long-term debt
53
which is rated at least A-3 by ▇▇▇▇▇'▇ Investor Service, Inc. or at least A- by
Standard & Poors Corporation.
Section 9.10 CAPITAL STOCK. The Company shall have delivered
to the Purchaser such evidence as the Purchaser may reasonably require of the
amount of outstanding voting capital stock of the Company owned or controlled by
the Persons described in clause (b) of the definition of the term "Change of
Control" as of the Funding Date.
Section 9.11 WAIVER OF CONDITIONS. If the Company fails to
tender the Note to the Purchaser or the conditions specified in Section 9 have
not been fulfilled (the Company hereby agreeing to cause such conditions to be
satisfied), Purchaser may thereupon elect to be relieved of all further
obligations under this Agreement. Nothing in this section shall operate to
relieve the Company from any of its obligations hereunder or to waive any of the
Purchaser's rights against the Company. Any of the conditions in this Section 9
may be waived by the Purchaser in its sole discretion.
SECTION 10. EVENTS OF DEFAULT; ACCELERATION; ETC.
-------------------------------------------------
Section 10.1 EVENTS OF DEFAULT AND ACCELERATION. If any of the
following events ("Events of Default" or, if the giving of notice or the lapse
of time or both is required, then, prior to such notice or lapse of time,
"Defaults") shall occur:
(a) the Company shall fall to pay any principal of,
or premium, if any, on the Note when the same shall become due and payable,
whether at the stated date of maturity or any accelerated date of maturity or at
any other date fixed for payment; or
(b) the Company shall fail to pay any interest on the
Note or any other sums due hereunder or under any of the other Note Documents
when the same shall become due and payable, whether at the stated date of
maturity or any accelerated date of maturity or at any other date fixed for
payment; or
(c) the Company or any of its Subsidiaries shall fail
to comply with any of its other covenants contained in this Agreement or any of
the other Note Documents; or
(d) any representation or warranty of the Company or
its Subsidiaries in this Agreement or any of the other Note Documents or in any
other document or instrument delivered pursuant to or in connection with this
Agreement shall prove to have been false in any respect upon the date when made
or deemed to have been made or repeated; or
(e) the Company or any of its Subsidiaries shall fail
(i) to pay at maturity, or within any applicable period of grace, any obligation
for borrowed
54
money or credit received or other Indebtedness or Contingent Obligations in an
amount equal to or greater than $5,000,000.00.00 in the aggregate for such
period of time as would permit (assuming the giving of appropriate notice if
required) the holder or holders thereof or of any obligations issued thereunder
to accelerate the maturity thereof, or (ii) to observe or perform any term,
covenant or agreement contained in any agreement by which it is bound,
evidencing or securing borrowed money or credit received or other Indebtedness
or Contingent Obligations in an amount equal to or greater than $5,000,000.00 in
the aggregate and such failure shall have resulted in such obligation becoming
or being declared due and payable prior to the date on which it would otherwise
have become due and payable; or
(f) the Company or any of its Subsidiaries, (1) shall
make an assignment for the benefit of creditors, or admit in writing its general
inability to pay or generally fail to pay its debts as they mature or become
due, or shall petition or apply for the appointment of a trustee or other
custodian, liquidator or receiver of the Company or any of its Subsidiaries or
of any substantial part of the assets of any thereof, (2) shall commence any
case or other proceeding relating to the Company or any of its Subsidiaries
under any bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation or similar law of any jurisdiction, now or
hereafter in effect, or (3) shall take any action to authorize or in furtherance
of any of the foregoing;
(g) a petition or application shall be filed for the
appointment of a trustee or other custodian, liquidator or receiver of the
Company or any of its Subsidiaries or any substantial part of the assets of any
thereof, or a case or other proceeding shall be commenced against the Company or
any of its Subsidiaries under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar law of
any jurisdiction, now or hereafter in effect, and the Company or any of its
Subsidiaries shall indicate its approval thereof, consent thereto or
acquiescence therein or such petition, application, case or proceeding shall not
have been dismissed within 60 days following the filing or commencement thereof;
(h) a decree or order is entered appointing any such
trustee, custodian, liquidator or receiver or adjudicating the Company or any of
its Subsidiaries bankrupt or insolvent, or approving a petition in any such case
or other proceeding, or a decree or order for relief is entered in respect of
the Company or any of its Subsidiaries, in an involuntary case under federal
bankruptcy laws as now or hereafter constituted;
(i) there shall remain in force, undischarged,
unsatisfied and unstayed, for more than thirty days, whether or not consecutive,
any uninsured final judgment against the Company or any of its Subsidiaries,
that, with other outstanding uninsured final judgments, undischarged, against
the Company or any of its Subsidiaries exceeds in the aggregate $2,000,000.00;
or
55
(j) except as permitted in this Agreement, any
dissolution, termination, partial or complete liquidation, merger or
consolidation of the Company or any of its Subsidiaries, or any sale, transfer
or other disposition of any of the assets of the Company or any of its
Subsidiaries; or
(k) (i) a Reportable Event shall occur with respect
to, or proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer Plan,
which Reportable Event or institution of proceedings is, in the opinion of the
Purchaser, likely to result in the termination of such Plan for purposes of
Title IV of ERISA, and, in the case of a Reportable Event, the continuance of
such Reportable Event unremedied for 30 days after notice of such Reportable
Event pursuant to Section 4043(a), (c) or (d) of ERISA is given or, in the case
of institution of proceedings, the continuance of such proceedings for 30 days
after commencement thereof, (ii) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, or (iii) any other event or condition shall occur
or exist with respect to a Single Employer Plan and in each case in clauses (i)
through (iii) above, such event or condition, together with all other such
events or conditions, if any, could subject the Company or any of its
Subsidiaries to any tax, penalty or other liabilities in the aggregate material
in relation to the business, operations, property or financial or other
condition of the Company or of the Company and its Subsidiaries taken as a
whole; or
(l) any of the Note Documents shall be canceled,
terminated, revoked or rescinded otherwise than in accordance with the terms
thereof or as permitted by this Agreement or with the express prior written
agreement, consent or approval of the Purchaser, or any action at law, suit or
in equity or other legal proceeding to cancel, terminate, revoke or rescind any
of the Note Documents shall be commenced by or on behalf of the Company or any
of its Subsidiaries or any of their respective stockholders, partners or
beneficiaries, or any court or any other governmental or regulatory authority or
agency of competent jurisdiction shall make a determination that, or issue a
judgment, order, decree or ruling to the effect that, any one or more of the
Note Documents is illegal, invalid or unenforceable in accordance with the terms
thereof;
then, and in any such event, so long as the same may be continuing, the
Purchaser may by notice in writing to the Company declare all amounts owing with
respect to this Agreement, the Note and the other Note Documents to be, and they
shall thereupon forthwith become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Company; PROVIDED that in the event of any Event
of Default specified in Section 10.1(f), Section 10.1(g) or Section 10.1(h), all
such amounts shall become immediately due and payable automatically and without
any requirement of notice from the Purchaser.
Section 10.2 CURE PERIODS. Notwithstanding anything contained
in Section 10.1 to the contrary, (i) no Event of Default shall exist hereunder
upon the occurrence of any failure described in Section 10.1(a) or Section
10.1(b) in the event that the Company cures such default
56
within ten (10) days following receipt of written notice of such default,
provided, however, that Company shall not be entitled to receive more than two
(2) notices in the aggregate pursuant to this clause (i) in any period of 365
days ending on the date of any such occurrence of default, and provided further
that no such cure period shall apply to any payments due upon the maturity of
the Note, and (ii) no Event of Default shall exist hereunder upon the occurrence
of any failure described in Section 10.1(c) in the event that the Company cures
such default with thirty (30) days following receipt of written notice of such
default.
Section 10.3 REMEDIES. In case any one or more Events of
Default shall have occurred and whether or not the Purchaser shall have
accelerated the maturity of the Note pursuant to Section 10.1, the Purchaser, if
owed any amount with respect to the Note, may proceed to protect and enforce its
rights and remedies under this Agreement, the Note or any of the other Note
Documents by suit in equity, action at law or other appropriate proceeding,
whether for the specific performance of any covenant or agreement contained in
this Agreement, the Note or any of the other Note Documents or otherwise and, if
such amount shall have become due, by declaration or otherwise, proceed to
enforce the payment thereof or any other legal or equitable right of the
Purchaser. No remedy herein conferred upon the Purchaser is intended to be
exclusive of any other remedy and each and every remedy shall be cumulative and
shall be in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute or any other provision of law.
SECTION 11. SUBORDINATION OF THE NOTE.
--------------------------------------
Section 11.1 CERTAIN DEFINITIONS. As used in this Section 11,
the following terms have the following respective meanings:
(a) "BANKRUPTCY CODE" shall mean 11 U.S.C. Section
101 ET SEQ., as from time to time hereafter amended, and any successor or
similar statute.
(b) "JUDICIAL PROCEEDING" shall mean one or more
proceedings by one or more holders of Superior Indebtedness aggregating not less
than $15,000,000 before a state or federal court (having jurisdiction with
respect thereto) to collect the entire amount of such Superior Indebtedness
following an acceleration of the maturity thereof as a result of a default.
(c) "PERMISSIBLE SECURITIES" shall mean securities of
the Company as reorganized or readjusted, or securities of the Company or any
other corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated, at least to the extent provided in this
Section 11 with respect to the Note, to the payment of all Superior Indebtedness
at the time outstanding and all securities issued in exchange therefor.
57
(d) "SUBORDINATED INDEBTEDNESS" shall mean the
principal amount of the indebtedness evidenced by the Note, together with
interest and premium, if any, due thereon or payable with respect thereto.
(e) "SUPERIOR INDEBTEDNESS" shall mean the principal
amount of the Senior Debt and the Additional Permitted Senior Debt, together
with interest and premium, if any, due thereon or payable with respect thereto.
Section 11.2 SUBORDINATED INDEBTEDNESS SUBORDINATED TO
SUPERIOR INDEBTEDNESS. The Company for itself and its successors and assigns,
and for its Subsidiaries and the successors and assigns of such Subsidiaries,
covenants and agrees, and each holder of any Subordinated Indebtedness, by its
acceptance thereof, shall be deemed to have agreed, notwithstanding anything to
the contrary in this Agreement, the Note or the Note Documents, that the payment
of the Subordinated Indebtedness shall be subordinated to the extent and in the
manner set forth in this Section 11, to the prior payment, or provision for
payment, in full, of all Superior Indebtedness, and that each holder of Superior
Indebtedness, whether now outstanding or hereafter created, incurred, assumed or
guaranteed, shall be deemed to have acquired Superior Indebtedness in reliance
upon the provisions contained in this Section 11.
Section 11.3 DISSOLUTION, LIQUIDATION, REORGANIZATION, ETC.
Upon any distribution of the assets of the Company (or any of its Subsidiaries)
upon any dissolution, winding-up, liquidation, reorganization, whether voluntary
or involuntary, or in bankruptcy, insolvency, reorganization, liquidation or
receivership proceedings, or any similar proceeding (hereinafter a "Proceeding")
relating to the Company or to its creditors, as such, then and in any such
event:
(a) the holders of the Superior Indebtedness shall be
entitled to receive payment in full of all amounts due or to become due on or in
respect of all Superior Indebtedness, before any payment, whether in cash,
property or securities (other than Permissible Securities), is made on account
of or applied to the Subordinated Indebtedness; and
(b) any payment, whether in cash, property or
securities (other than Permissible Securities), to which the holders of the
Subordinated Indebtedness would be entitled except for the provisions of this
Section 11, shall be paid or delivered, to the extent permitted by law, by any
debtor, custodian, liquidating trustee, agent or other person making such
payment, directly to the holders of the Superior Indebtedness, or their
representative or representatives, ratably according to the aggregate amounts
remaining unpaid on account of such Superior Indebtedness, for application to
the payment thereof, to the extent necessary to pay all such Superior
Indebtedness in full, after giving effect to any concurrent payment or
distribution, or provision therefor, to the holders of such Superior
Indebtedness.
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Upon any payment or distribution of assets referred to in this
Section 11, the holders of the Subordinated Indebtedness shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction in
which any Proceeding is pending, or a certificate of the debtor, custodian,
liquidating trustee, agent or other person making any such payment or
distribution to such holders, for the purpose of ascertaining the persons
entitled to participate therein, the holders of the Superior Indebtedness, the
then outstanding principal amount of the Superior Indebtedness, and any and all
amounts payable thereon, the amount or amounts paid or distributed thereon, and
all other facts pertinent thereto or to this Section 11.
In the event that payment or delivery by the Company of any
cash, property, stock or other obligations to the holders of the Subordinated
Indebtedness is authorized by an order or decree giving effect, and stating in
such order or decree that effect is given, to the provisions of this Section 11,
and made by a court of competent jurisdiction in any Proceeding, no payment or
delivery by the Company of such cash, property, stock, or other obligations
payable or deliverable with respect to the Subordinated Indebtedness shall be
made to the holders of the Superior Indebtedness.
Section 11.4 NO PAYMENT WITH RESPECT TO SUBORDINATED
INDEBTEDNESS IN CERTAIN CIRCUMSTANCES.
(a) The Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly, make or agree to make, and neither
the holder nor any assignee or successor holder of any Subordinated Indebtedness
will accept or receive any payment or distribution in cash, property or
securities (other than Permissible Securities) by set-off or otherwise, direct
or indirect, or by repurchase, redemption or retirement, of or on account of all
or any portion of any Subordinated Indebtedness if, at the time of such payment
or distribution or immediately after giving effect thereto:
(i) all of the following three conditions shall be
satisfied:
(A) a default (a "Payment Default") in the
payment when due of all or any portion of the principal of or premium,
if any, or interest on any Superior Indebtedness shall have occurred;
(B) such Payment Default shall not have been
cured within any applicable cure period or waived in writing by the
requisite holder or holders of such Superior Indebtedness; and
(C) less than 120 days shall have elapsed after
the date on which such Payment Default shall have occurred or, if any
Judicial Proceeding shall have been commenced with respect to the
Superior Indebtedness during said 120 day period, such Judicial
Proceeding shall no longer be pending or shall no longer be pursued
diligently and in good faith (the period during which
59
the restrictions imposed by this subdivision (i) are in effect being
hereafter referred to as a "Payment Default Blockage Period"); or
(ii) all of the following four conditions shall be
satisfied:
(A) a default other than a Payment Default
shall have occurred with respect to any Superior Indebtedness (a
"Covenant Default") which permits the holder or holders thereof to
accelerate the maturity thereof;
(B) the Company and the holder or holders of
the Subordinated Indebtedness shall have received written notice (given
as provided in Section 13.6) (each a "Subordination Notice") of such
Covenant Default from any holder or holders of such Superior
Indebtedness, or their representative or representatives (which notice
shall state that it is a "Subordination Notice" and shall make explicit
reference to the provisions of this Section 11.4);
(C) such Covenant Default shall not have been
cured within any applicable cure period or waived in writing by the
requisite holder or holders of the Superior Indebtedness with respect
to which such Covenant Default shall have occurred; and
(D) less than 120 days shall have elapsed after
the date of receipt by the Company and the holders of the Subordinated
Indebtedness of such Subordination Notice, or if any Judicial
Proceeding shall have been commenced with respect to the Superior
Indebtedness during said 120 day period, any such Judicial Proceeding
shall no longer be pending or shall no longer be pursued diligently and
in good faith (the period during which the restrictions imposed by this
subdivision (ii) are in effect being hereinafter referred to as a
"Covenant Default Blockage Period") (Payment Default Blockage Periods
and Covenant Default Blockage Periods being hereinafter collectively
referred to as the "Blockage Periods" and each as a "Blockage Period");
PROVIDED, however, that, for the purpose of this Section 11.4(a), (x) Blockage
Periods shall not be in effect for more than an aggregate of 120 days during any
period of 360 consecutive days, (y) Blockage Periods shall not be in effect on
more than three occasions, and (z) no facts or circumstances known to the
holders of Superior Indebtedness giving any Subordination Notice and
constituting a Covenant Default on the date any Subordination Notice is given
may be used as a basis for any subsequent Subordination Notice.
(a) The restrictions imposed by Section 11.4(a) shall
cease to apply and the Company may resume payments in respect of the
Subordinated Indebtedness (including any payments which shall not have been made
on account of the provisions of this Section 11, but excluding any payments
which may have become due upon
60
any acceleration of the maturity of the Subordinated Indebtedness) or any
judgment with respect thereto, and may repurchase, redeem or retire the Note:
(i) in the case of a Payment Default, upon the
earlier to occur of (A) the cure or written waiver thereof by the requisite
holder or holders of the Superior Indebtedness with respect to which such
Payment Default shall have occurred or (B) the expiration of the Payment Default
Blockage Period or the earlier termination of such Blockage Period by such
requisite holder or holders of such Superior Indebtedness; or
(ii) in the case of a Covenant Default, upon
the earlier to occur of (A) the cure or written waiver of such Covenant Default
by the requisite holder or holders of the Superior Indebtedness with respect to
which such Covenant Default shall have occurred or (B) the expiration of the
Covenant Default Blockage Period or the earlier termination of such Blockage
Period by such requisite holder or holders of such Superior Indebtedness.
Section 11.5 PAYMENTS AND DISTRIBUTIONS RECEIVED. If any
payment or distribution of any kind or character, whether in cash, property or
securities (other than Permissible Securities), shall be received by any holder
of any of the Subordinated Indebtedness in contravention of this Section 11,
such payment or distribution shall, to the extent permitted by law, be held in
trust for the benefit of, and shall be paid over or delivered and transferred
to, the holders of the Superior Indebtedness, or their representative or
representatives, ratably according to the aggregate amount remaining unpaid on
account of such Superior Indebtedness, for application to the payment thereof,
to the extent necessary to pay all such Superior Indebtedness in full, after
giving effect to any concurrent payment or distribution, or provision therefor,
to the holders of such Superior Indebtedness.
Section 11.6 SUBROGATION. Subject to the payment in full of
all Superior Indebtedness, in case cash, property or securities otherwise
payable or deliverable to the holders of the Subordinated Indebtedness shall
have been applied pursuant to this Section 11 to the payment of Superior
Indebtedness, then and in each such case, the holders of the Subordinated
Indebtedness shall be subrogated to the rights of each holder of Superior
Indebtedness to receive any further payment or distribution in respect of or
applicable to the Superior Indebtedness; and, for the purposes of such
subrogation, no payment or distribution to the holders of Superior Indebtedness
of any cash, property or securities to which any holder of Subordinated
Indebtedness would be entitled except for the provisions of this Section 11
shall, and no payment over pursuant to the provisions of this Section 11 to the
holders of Superior Indebtedness by the holders of the Subordinated Indebtedness
shall as between the Company, its creditors other than the holders of Superior
Indebtedness and the holders of Subordinated Indebtedness, be deemed to be a
payment by the Company to or on account of Superior Indebtedness.
61
Section 11.7 OBLIGATIONS UNIMPAIRED. The provisions of this
Section 11 are solely for the purpose of defining the relative rights of the
holders of Superior Indebtedness on the one hand and the holders of Subordinated
Indebtedness on the other hand, and (a) subject to the rights, if any, under
this Section 11 of the holders of Superior Indebtedness, nothing in this Section
11 shall (i) impair as between the Company and the holder of any Subordinated
Indebtedness the obligation of the Company, which is unconditional and absolute,
to pay to the holder thereof all amounts due thereon in accordance with the
terms thereof or (ii) prevent the holder of any Subordinated Indebtedness from
exercising all remedies otherwise available to such holder, whether arising
under the Note, the Note Documents, applicable law or otherwise, or (iii) affect
the relative rights of the holders of the Subordinated Indebtedness and
creditors of the Company other than the holders of the Superior Indebtedness,
and (b) no Person is entitled to any third party beneficiary rights or other
similar rights on account of or under this Section 11 other than the holders of
the Superior Indebtedness. The failure to make any payment due in respect of the
Subordinated Indebtedness or to comply with any of the terms and conditions of
the Note or the Note Documents by reason of any provision of this Section 11
shall not be construed as preventing the occurrence of any Default or Event of
Default with respect to the Subordinated Indebtedness.
Nothing in this Section 11 or elsewhere in this Agreement, the Note or
the other Note Documents is intended to or shall affect the obligation of the
Company to make, or prevent the Company from making, at any time except during
the pendency of any Proceeding described in Section 11.3, and except during the
continuance of any Blockage Period specified in Section 11.4, payments at any
time of the principal of, interest on, or premium on, the Note or to repurchase,
retire or redeem the Note.
Section 11.8 HOLDERS OF SUBORDINATED INDEBTEDNESS ENTITLED TO
ASSUME PAYMENTS NOT PROHIBITED IN ABSENCE OF NOTICE. The Company shall give
prompt written notice to each holder of Subordinated Indebtedness of any fact
known to the Company which would prohibit the making of any payment in respect
of the Subordinated Indebtedness, and shall provide to each such holder the
names and addresses of the holders of the Superior Indebtedness, or their
representatives. The holders of the Subordinated Indebtedness shall be entitled
to rely on the foregoing list without independent verification. No holder of
Subordinated Indebtedness shall at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to it,
unless and until such holder shall have received written notice thereof (given
as provided in Section 13.6) from the Company or from any holder of Superior
Indebtedness or any agent or representative thereof. Prior to the receipt of any
such notice, each holder of Subordinated Indebtedness shall be entitled to
assume conclusively that no such facts exist, without, however, limiting any
right of any holder of Superior Indebtedness under this Section 11 to recover
from any holder of the Subordinated Indebtedness any payment made in
contravention of this Section 11. Each payment on the Subordinated Indebtedness
or repurchase, retirement or redemption of the Note by the Company shall be
deemed to constitute a representation by the Company that such payment or
62
repurchase, retirement or redemption is permitted to be paid or made by the
Company under this Section 11.
Each holder of Subordinated Indebtedness shall be entitled to rely on
the delivery to it of a written notice by a person representing himself to be a
holder of Superior Indebtedness or to be the agent or representative of any
holder of Superior Indebtedness to establish that such notice has been given by
any such person. In the event that such holder of Subordinated Indebtedness
determines in good faith that further evidence is required with respect to the
right of any such person to participate in any payment or distribution pursuant
to this Section 11, such holder of Subordinated Indebtedness may request such
person to furnish evidence to the reasonable satisfaction of such holder of
Subordinated Indebtedness as to any fact pertinent to the rights of such person
under this Section 11, and if such evidence is not furnished, such holder of
Subordinated Indebtedness may defer any payment to such person pending judicial
determination as to the right of such person to receive such payment.
Section 11.9 SECTION 11 NOT TO PREVENT EVENTS OF DEFAULT. The
failure to make a payment on account of principal or interest, or premium, on
the Note or to repurchase, retire or redeem the Note by reason of any provision
in this Section 11 shall not be construed as preventing the occurrence of an
Event of Default under Section 10.1.
SECTION 12. EXPENSES.
---------------------
The Company agrees to pay (a) the reasonable costs of producing and
reproducing this Agreement, the other Note Documents and the other agreements
and instruments mentioned herein, (b) any stamp or other taxes (including any
interest and penalties in respect thereto) which may be payable or be determined
to be in connection with the execution and delivery of this Agreement and the
Note, whether or not the Note is then outstanding (and the Company shall
indemnify and hold the Purchaser harmless against any liability in respect to
such taxes), (c) the reasonable fees, expenses and disbursements of the
Purchaser's counsel (including an allocation for any in-house counsel) incurred
in connection with the preparation, execution and delivery of this Agreement,
the Note and the other Note Documents and the transactions contemplated hereby,
and any amendments, modifications, approvals, consents or waivers hereto or
hereunder, (d) the cost of delivering to or from Purchaser's office, insured to
the Purchaser's satisfaction, the Note purchased by the Purchaser on the Funding
Date, any Note surrendered by the Purchaser to the Company pursuant to this
Agreement and any Note issued to the Purchaser in substitution or replacement
for a surrendered Note, (e) all reasonable out-of-pocket expenses (including
reasonable attorneys' fees and costs, which attorneys may be employees of the
Purchaser) incurred by the Purchaser in connection with the enforcement of or
preservation of rights under any of the Note Documents against the Company or
the administration thereof after the occurrence of a Default or Event of
Default. The Purchaser shall pay its own legal fees and expenses incurred in
connection with a transfer of the Note or any portion thereof. The covenants of
this Section 12 shall survive payment or satisfaction of payment of amounts
owing with respect to the Note.
63
SECTION 13. MISCELLANEOUS.
--------------------------
Section 13.1 REGISTERED NOTES. The Company shall cause to be
kept at its principal office a register for the registration and transfer of the
Note (hereinafter called the "Note Register"), and the Company will register or
transfer or cause to be registered or transferred the Note as hereinafter
provided. At any time and from time to time the registered holder of the Note
may transfer the Note upon surrender thereof at the principal office of the
Company duly endorsed or accompanied by a written instrument of transfer duly
executed by the registered holder of the Note or its attorney duly authorized in
writing. The Person in whose name the Note shall be registered shall be deemed
and treated as the owner and holder thereof for all purposes of this Agreement,
and the Company shall not be affected by any notice or knowledge to the
contrary. Payment of or on account of the principal, premium, if any, and
interest on the Note shall be made to or upon the written order of such
registered holder.
Section 13.2 EXCHANGE OF NOTES. At any time, and from time to
time, upon not less than ten days' notice to that effect given by the registered
holder of the Note pursuant to Section 13.6, and, upon surrender of the Note at
its office, the Company will deliver in exchange therefor, without expense to
the Purchaser, except as set forth below, a Note for the same aggregate
principal amount as the then unpaid principal amount of the Note so surrendered,
in denominations of $100,000.00 or in any amount in excess thereof as the
Purchaser shall specify dated as of the date to which interest has been paid on
the Note so surrendered or, if such surrender is prior to the payment of any
interest thereon, then dated as of the date of issue, payable to such Person or
Persons, or order, as may be designated by the Purchaser, and otherwise of the
same form and tenor as the Note so surrendered for exchange.
Section 13.3 LOSS, THEFT, ETC. OF NOTES. Upon receipt of
evidence satisfactory to the Company of the loss, theft, mutilation or
destruction of the Note, and in the case of any such loss, theft or destruction
upon delivery of a bond of indemnity in such form and amount as shall be
reasonably satisfactory to the Company, or in the event of such mutilation upon
surrender and cancellation of the Note, the Company will make and deliver
without expense to the Purchaser a new Note, of the same form and tenor, in lieu
of such lost, stolen, destroyed or mutilated Note. If the Purchaser or any
subsequent institutional holder is the owner of any such lost, stolen or
destroyed Note, then the affidavit of an authorized officer of such owner,
setting forth the fact of lost, theft or destruction and of its ownership of the
Note at the time of such loss, theft or destruction shall be accepted as
satisfactory evidence thereof and nothing further shall be required as a
condition to the execution and delivery of a new Note.
Section 13.4 SURVIVAL OF COVENANTS. All covenants, agreements,
representations and warranties made herein, in the Note, in any of the other
Note Documents or in any documents or other papers delivered by or on behalf of
the Company pursuant hereto shall be deemed to have been relied upon by the
Purchaser,
64
notwithstanding any investigation heretofore or hereafter made by it, and shall
survive the execution of this Agreement and the purchase of the Note by
Purchaser, as herein contemplated, and shall continue in full force and effect
so long as any amount due under this Agreement or the Note or any of the other
Note Documents remains outstanding. The indemnification obligations of the
Company provided herein shall survive the full repayment of amounts due and the
termination of the obligations of the Purchaser hereunder and thereunder to the
extent provided herein and therein. All statements contained in any certificate
or other paper delivered to the Purchaser at any time by or on behalf of the
Company or any of the Subsidiaries pursuant hereto or in connection with the
transactions contemplated hereby shall constitute representations and warranties
by the Company hereunder.
Section 13.5 WAIVER OF STAY, EXTENSION OR USURY. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay or extension law or any usury law or other law which
would prohibit or forgive the Company from paying all or any portion of the
principal of, premium, if any, or interest on the Note as contemplated herein,
wherever enacted, now or at any time hereafter enforced, or which may effect the
covenants or the performance of this Agreement or the Note or the other Note
Documents and (to the extent that it may lawfully do so), the Company hereby
expressly waives all benefit or advantage of any such law.
Section 13.6 NOTICES. Each notice, demand, election or request
provided for or permitted to be given pursuant to this Agreement or the Note
(hereinafter in this Section 13.6 referred to as "Notice"), must be in writing
and shall be deemed to have been properly given or served by personal delivery
or by sending same by overnight courier or by depositing same in the United
States Mail, postage prepaid and registered or certified, return receipt
requested, as follows:
If to the Company: M/I Schottenstein Homes, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
With a copy to: M/I Schottenstein Homes, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
65
If to the Purchaser: The First National Bank of Boston
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇
With a copy to: The First National Bank of Boston
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Real Estate Department
Each Notice shall be effective upon being personally delivered or upon being
sent by overnight courier or upon being deposited in the United States Mail as
aforesaid. The time period in which a response to such Notice must be given or
any action taken with respect thereto (if any), however, shall commence to run
from the date of receipt if personally delivered or sent by overnight courier,
or if so deposited in the United States Mail, the earlier of three (3) Business
Days following such deposit or the date of receipt as disclosed on the return
receipt. Rejection or other refusal to accept or the inability to deliver
because of changed address for which no notice was given shall be deemed to be
receipt of the Notice sent. By giving at least fifteen (15) days prior Notice
thereof, the Company or the Purchaser shall have the right from time to time and
at any time during the term of this Agreement to change their respective
addresses and each shall have the right to specify as its address any other
address within the United States of America.
Section 13.7 GOVERNING LAW. THIS AGREEMENT AND THE NOTE ARE
CONTRACTS UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL
PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SUCH
COMMONWEALTH (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE
COMPANY AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS AGREEMENT OR ANY OF THE
OTHER NOTE DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH
SUIT BEING MADE UPON THE COMPANY BY MAIL AT THE ADDRESS SPECIFIED IN Section
13.6 THE COMPANY HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE
TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN
AN INCONVENIENT COURT.
Section 13.8 HEADINGS. The captions in this Agreement are for
convenience of reference only and shall not define or limit the provisions
hereof.
66
Section 13.9 COUNTERPARTS. This Agreement and any amendment
hereof may be executed in several counterparts and by each party on a separate
counterpart, each of which when so executed and delivered shall be an original,
and all of which together shall constitute one instrument. In proving this
Agreement it shall not be necessary to produce or account for more than one such
counterpart signed by the party against whom enforcement is sought.
Section 13.10 ENTIRE AGREEMENT, ETC. The Note Documents and
any other documents executed in connection herewith or therewith express the
entire understanding of the parties with respect to the transactions
contemplated hereby. Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated, except as provided in Section 13.11.
Section 13.11 CONSENTS, AMENDMENTS, WAIVERS, ETC. Except as
otherwise expressly provided in this Agreement, any consent or approval required
or permitted by this Agreement or the other Note Documents may be given, and any
term of this Agreement or the other Note Documents or of any other instrument
related hereto or mentioned herein may be amended, and the performance or
observance by the Company of any terms of this Agreement or the other Note
Documents or such other instrument or the continuance of any Default or Event of
Default may be waived (either generally or in a particular instance and either
retroactively or prospectively) with, but only with, the written consent of the
Purchaser. No waiver shall extend to or affect any obligation not expressly
waived or impair any right consequent thereon. No course of dealing or delay or
omission on the part of the Purchaser in exercising any right shall operate as a
waiver thereof or otherwise be prejudicial thereto. No notice to or demand upon
the Company shall entitle the Company to other or further notice or demand in
similar or other circumstances.
Section 13.12 SEVERABILITY. The provisions of this Agreement
and the other Note Documents are severable, and if any one clause or provision
hereof shall be held invalid or unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall affect only such
clause or provision, or part thereof, in such jurisdiction, and shall not in any
manner affect such clause or provision in any other jurisdiction, or any other
clause or provision of this Agreement and the other Note Documents in any
jurisdiction.
Section 13.13 SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon the Company and its successors and assigns and shall inure to the
benefit of the Purchaser and its successors and assigns, including each
successive holder or holders of the Note. Notwithstanding the foregoing, the
Company may not assign any of its rights or obligations under the Note Documents
without the prior written consent of the Purchaser.
Section 13.14 WAIVER OF JURY TRIAL. EACH OF THE COMPANY AND
THE PURCHASER HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION
OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION
67
WITH THIS AGREEMENT, THE NOTE OR ANY OF THE OTHER NOTE DOCUMENTS, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS. THE COMPANY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY
OF PURCHASER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE PURCHASER WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT THE PURCHASER HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT
AND THE OTHER NOTE DOCUMENTS TO WHICH IT IS A PARTY BY, AMONG OTHER THINGS, THE
WAIVER AND CERTIFICATION CONTAINED IN THIS Section 13.14.
Section 13.15 MULTIPLE HOLDERS OF THE NOTE. In the event that
the Purchaser shall transfer all or any portion of the Note, the effect of which
is that there shall be two or more holders of the Note who shall be the
"Purchaser" hereunder, then such holders and their successors and assigns may by
agreement among themselves determine the number of such holders that must
approve or agree upon the actions that are required or permitted to be taken by
the Purchaser pursuant to this Agreement and the other Note Documents (including
without limitation, the declaration or waiver of defaults, the exercise of
remedies, the approval of amendments or the waiver of covenants of the Company
and its Subsidiaries). Such holders may designate a trustee or agent to act on
their behalf pursuant to this Agreement and the other Note Documents. Such
holders shall disclose to the Company the number of holders whose consent or
approval may be required for any such action or approval. The Company agrees to
enter into such amendments to this Agreement and the other Note Documents as
reasonably may be requested by such holders to effectuate the provisions of this
Section 13.15, provided that no such amendment otherwise alters the obligations
of the Company hereunder.
Section 13.16 RELATIONSHIP. The relationship between the
Purchaser and the Company is solely that of a creditor and debtor, and nothing
contained herein in any of the other Note Documents or elsewhere shall in any
manner be construed as making the parties hereto partners, shareholders, joint
venturers or any other relationship other than creditor and debtor. In addition,
the Company agrees that notwithstanding the Purchaser's participation as a bank
under the Credit Agreement or its capacity now or hereafter as a holder of any
other Senior Debt or Additional Permitted Senior Debt, in any proceeding
relating to the Company or any of its Subsidiaries under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution,
liquidation or similar proceeding, the Company will not challenge the
Purchaser's right to receive payment of the Indebtedness evidenced by the Note
as a creditor of the Company on the grounds of the equitable subordination
principles contained in Section 510 of Bankruptcy Code or any similar provision
under any applicable law. The covenants contained in this Section 13.16 are a
material consideration and inducement to the Purchaser to purchase the Note.
68
Section 13.17 TIME OF THE ESSENCE. Time is of the essence with
respect to each and every covenant, agreement and obligation of the Company
under this Agreement and the other Note Documents.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as a sealed instrument as of the date first set forth above.
COMPANY:
--------
M/I SCHOTTENSTEIN HOMES, INC.,
an Ohio corporation
By:
Name: ________________________________
Title: ________________________________
Attest:____________________________________
Name: __________________________________
Title: _______________________________
[SIGNATURES CONTINUED ON NEXT PAGE]
69
PURCHASER:
----------
THE FIRST NATIONAL BANK OF BOSTON
By: _____________________________
▇▇▇▇▇ ▇. ▇▇▇▇, Director
70
EXHIBIT A
---------
M/I SCHOTTENSTEIN HOMES, INC.
VARIABLE RATE SENIOR SUBORDINATED NOTE
THIS NOTE HAS NOT BEEN REGISTERED
PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED.
THIS NOTE MAY BE OFFERED OR SOLD ONLY IF REGISTERED UNDER SAID
ACT OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
$25,000,000.00 December __, 1996
FOR VALUE RECEIVED, the undersigned M/I SCHOTTENSTEIN HOMES, INC., an
Ohio corporation, hereby promises to pay to ______________________________ or
order, in accordance with the terms of that certain Note Purchase Agreement
dated September 30, 1996 (the "Note Purchase Agreement"), as from time to time
in effect, among the undersigned and The First National Bank of Boston, to the
extent not sooner paid, on or before the Maturity Date the principal sum of
TWENTY-FIVE MILLION AND NO/100 DOLLARS ($25,000,000.00), with daily interest
from the date hereof, computed as provided in the Note Purchase Agreement, on
the principal amount hereof from time to time unpaid, at a rate per annum on
each portion of the principal amount which shall at all times be equal to the
rate of interest applicable to such portion in accordance with the Note Purchase
Agreement, and with interest on overdue principal and, to the extent permitted
by applicable law, on overdue installments of interest and late charges at the
rates provided in the Note Purchase Agreement. Interest shall be payable on the
dates specified in the Note Purchase Agreement, except that all accrued interest
shall be paid at the stated or accelerated maturity hereof or upon the
prepayment in full hereof. Capitalized terms used herein and not otherwise
defined herein shall have the meanings set forth in the Note Purchase Agreement.
Payments hereunder shall be made to the Purchaser's Head Office or such
other address as may be specified by the holder hereof.
This Note is issued under and pursuant to and is entitled to the
benefits of and subject to the provisions of the Note Purchase Agreement. The
principal of this Note may be due and payable in whole or in part prior to the
maturity date stated above and is
71
subject to mandatory prepayment in the amounts and under the circumstances set
forth in the Note Purchase Agreement, and may be prepaid in whole or from time
to time in part, all as set forth in the Note Purchase Agreement.
Notwithstanding anything in this Note to the contrary, all agreements
between the Company and the Purchaser, whether now existing or hereafter arising
and whether written or oral, are hereby limited so that in no contingency,
whether by reason of acceleration of the maturity of any of the Note or
otherwise, shall the interest contracted for, charged or received by the
Purchaser exceed the maximum amount permissible under applicable law. If, from
any circumstance whatsoever, interest would otherwise be payable to the
Purchaser in excess of the maximum lawful amount, the interest payable to the
Purchaser shall be reduced to the maximum amount permitted under applicable law;
and if from any circumstance the Purchaser shall ever receive anything of value
deemed interest by applicable law in excess of the maximum lawful amount, an
amount equal to any excessive interest shall be applied to the reduction of the
principal balance of the Note and to the payment of interest or, if such
excessive interest exceeds the unpaid balance of principal of the Note, such
excess shall be refunded to the Company. All interest paid or agreed to be paid
to the Purchaser shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full period until payment in full
of the principal of the Note (including the period of any renewal or extension
thereof) so that the interest thereon for such full period shall not exceed the
maximum amount permitted by applicable law. This paragraph shall control all
agreements between the Company and the Purchaser.
In case an Event of Default shall occur, the entire principal amount of
this Note may become or be declared due and payable in the manner and with the
effect provided in the Note Purchase Agreement.
This Note shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts (without giving effect to the conflict
of laws rules of any jurisdiction).
The undersigned maker hereby waives presentment, demand, notice,
protest, notice of intention to accelerate the indebtedness evidenced hereby,
notice of acceleration of the indebtedness evidenced hereby and all other
demands and notices in connection with the delivery, acceptance, performance and
enforcement of this Note, except as specifically otherwise provided in the Note
Purchase Agreement, and assents to extensions of time of payment or forbearance
or other indulgence without notice.
This Note and the indebtedness evidenced hereby, including principal,
interest and premium, if any, shall at all times be and remain subordinate to
any and all Superior Indebtedness, as defined in the Note Purchase Agreement,
all on the terms and to the extent set forth in the Note Purchase Agreement.
72
This Note is registered on the books of the Company and is transferable
only by surrender thereof at the principal office of the Company duly endorsed
or accompanied by a written instrument of transfer duly executed by the
registered holder of this Note or its attorney duly authorized in writing.
Payment of or on account of principal, premium, if any, and interest on this
Note shall be made only to or upon the order in writing of the registered
holder.
IN WITNESS WHEREOF the undersigned has executed this Note under seal as
of the day and year first above written.
M/I SCHOTTENSTEIN HOMES, INC.,
an Ohio corporation
By:
Name: ________________________________
Title: ________________________________
Attest:____________________________________
Name: __________________________________
Title: _______________________________
73
EXHIBIT B
---------
FORM OF REQUEST FOR EXTENSION OF NOTE
The First National Bank of Boston
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇
Ladies and Gentlemen:
Pursuant to the provisions of Section 3.2 of the Note Purchase
Agreement dated September 30, 1996, as from time to time in effect (the
"Agreement"), among M/I Schottenstein Homes, Inc. (the "Company") and The First
National Bank of Boston, the Company hereby requests and certifies as follows:
1. EXTENSION REQUEST. The Company hereby irrevocably requests that the
Maturity Date be extended as provided in Section 3.2 of the Agreement.
2. NO DEFAULT. The undersigned chief financial or chief accounting
officer of the Company certifies that the Company is and will be in compliance
with all covenants under the Note Documents after giving effect to the extension
requested hereby. Attached to this Request for Extension of Note is a
certificate prepared using the financial statements of the Company most recently
provided or required to be provided under Section 6.4 of the Agreement, adjusted
in the best good-faith estimate of the Company to give effect to the extension
of the Note requested hereby and demonstrating compliance with each of the
covenants described in Section 6.12, Section 7.1, Section 7.3, Section 7.4,
Section 7.5 and Section 7.6.
3. REPRESENTATIONS TRUE. Each of the representations and warranties
made by or on behalf of the and its Subsidiaries contained in the Agreement or
in any document or instrument delivered pursuant to or in connection with the
Agreement was true as of the date as of which it was made and shall also be true
at and as of the Maturity Date (without regard to such extension request) with
the same effect as if made at and as of the Maturity Date (without regard to
such extension request) (except to the extent of changes resulting from
transactions contemplated or permitted by the Agreement) and no Default or Event
of Default has occurred and is continuing.
4. OTHER CONDITIONS. All other conditions to the extension to the Loan
requested hereby set forth in Section 3.2 of the Agreement have been satisfied,
other than the payment of the fee required by Section 3.2(b)(i), which fee shall
be paid on or prior to the effective date of the extension.
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5. DATE. Except to the extent, if any, specified by notice actually
received by the Purchaser prior to the Maturity Date (without regard to such
extension request) specified above, the foregoing representations and warranties
shall be deemed to have been made by the Company on and as of the Maturity Date
(without regard to such extension request).
6. DEFINITIONS. Terms defined in the Agreement are used herein with the
meanings so defined.
IN WITNESS WHEREOF, I have hereunto set my hand this _____ day of
______________, 199__.
M/I SCHOTTENSTEIN HOMES, INC.,
an Ohio corporation
By:
Chief Financial or Accounting Officer
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SCHEDULE 5.15(a)
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SUBSIDIARIES OF THE COMPANY
1. M/I Financial Corp., an Ohio corporation. M/I Financial Corp. is wholly-owned
by the Company.
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SCHEDULE 5.15(b)
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SCHEDULE OF PARTNERSHIPS AND JOINT VENTURES