1
Exhibit 10.11
$72,500,000 REVOLVING CREDIT
$15,000,000 TERM LOAN
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
by and among
▇▇▇▇▇▇ HOMES, INC.
and
▇▇▇▇▇▇ HOLDINGS, INC.
and
HEARTHSIDE HOMES, LLC, as Borrowers and Guarantors
and
▇▇▇▇▇▇ NATIONAL CORPORATION
and
▇▇▇▇▇▇ HOMES OF INDIANA, L.L.C.
and
▇▇▇▇▇▇ HOMES KENTUCKY, LLC, as Guarantors
and
THE BANKS PARTY HERETO
and
PNC BANK, NATIONAL ASSOCIATION, as Agent
and
2
BANK OF AMERICA NT&SA
and
BANK ONE, MICHIGAN, as Co-Agents
Dated as of June 28, 1999
- 2 -
3
TABLE OF CONTENTS
Page
----
1. CERTAIN DEFINITIONS......................................................................................2
1.1. Certain Definitions.............................................................................2
1.2. Construction...................................................................................20
1.3. Accounting Principles..........................................................................21
2. REVOLVING CREDIT AND SWING LOAN FACILITIES..............................................................21
2.1. The Commitments................................................................................21
(a) Revolving Credit Commitments..........................................................21
(b) Swing Loan Commitment.................................................................21
2.2. Nature of the Banks' and the Borrowers' Obligations............................................22
2.3. Certain Fees...................................................................................22
(a) Facility Fees; Extension Fee..........................................................22
(b) Commitment Fee........................................................................22
2.4. Permanent Reductions of Commitments............................................................23
(a) Voluntary Reductions..................................................................23
(b) Effect of Reductions..................................................................23
2.5. Loan Requests..................................................................................23
(a) Revolving Credit Loan Requests........................................................23
(b) Swing Loan Requests...................................................................24
2.6. Making Loans...................................................................................24
(a) Revolving Credit Loans................................................................24
(b) Swing Loans...........................................................................25
2.7. Borrowings to Repay Swing Loans................................................................25
2.8. Notes..........................................................................................26
(a) Revolving Credit Notes................................................................26
(b) Swing Note............................................................................26
2.9. Letter of Credit Subfacility...................................................................26
(a) Issuance of Letters of Credit.........................................................26
(b) Participations........................................................................27
(c) Letter of Credit Fees.................................................................27
(d) Disbursements, Reimbursement..........................................................27
(e) Documentation.........................................................................28
(f) Determinations to Honor Drawing Requests..............................................28
(g) Nature of Participation and Reimbursement Obligations.................................28
(h) Indemnity.............................................................................29
(i) Liability for Acts and Omissions......................................................30
2.10. Extension by Banks of the Revolving Credit Expiration Date.....................................30
2.11. Use of Proceeds................................................................................31
3. TERM LOANS..............................................................................................31
3.1. Term Loan Commitments..........................................................................31
3.2. Nature of Banks' Obligations With Respect to Term Loans........................................31
3.3. Term Loan Facility Fee.........................................................................31
3.4. Term Loan Notes................................................................................31
3.5. Use of Proceeds................................................................................31
4. INTEREST RATES..........................................................................................32
- 3 -
4
4.1. Interest Rate Options..........................................................................32
(a) Revolving Credit Interest Rate Options................................................32
(b) Term Loan Interest Rate Options.......................................................33
(c) Interest Rate Margins.................................................................33
(d) Rate Quotations.......................................................................34
4.2. Euro-Rate Interest Periods.....................................................................34
4.3. Interest After Default.........................................................................35
4.4. Euro-Rate Unascertainable......................................................................36
4.5. Selection of Interest Rate Options.............................................................37
5. PAYMENTS................................................................................................37
5.1. Payments.......................................................................................37
5.2. Pro Rata Treatment of the Banks................................................................38
5.3. Interest Payment Dates.........................................................................38
5.4. Prepayments....................................................................................38
5.5. Additional Compensation in Certain Circumstances...............................................40
(a) Increased Costs or Reduced Return Resulting From Taxes, Reserves, Capital Adequacy
Requirements, Expenses, Etc...........................................................40
(b) Indemnity.............................................................................41
5.6. Settlement Date Procedures.....................................................................42
6. REPRESENTATIONS AND WARRANTIES..........................................................................42
6.1. Representations and Warranties.................................................................42
(a) Organization and Qualification........................................................42
(b) Capitalization and Ownership..........................................................42
(c) Subsidiaries..........................................................................43
(d) Power and Authority...................................................................43
(e) Validity and Binding Effect...........................................................43
(f) No Conflict...........................................................................44
(g) Litigation............................................................................44
(h) Title to Properties...................................................................44
(i) Financial Statements..................................................................44
(j) Margin Stock..........................................................................45
(k) Full Disclosure.......................................................................45
(l) Taxes.................................................................................45
(m) Consents and Approvals................................................................46
(n) No Event of Default; Compliance With Instruments......................................46
(o) Patents, Trademarks, Copyrights, Licenses, Etc........................................46
(p) Insurance.............................................................................46
(q) Compliance With Laws..................................................................46
(r) Material Contracts....................................................................47
(s) Investment Companies..................................................................47
(t) Plans and Benefit Arrangements........................................................47
(u) Employment Matters....................................................................48
(v) Environmental Matters.................................................................48
(w) Senior Debt Status....................................................................50
(x) Restricted Transactions...............................................................50
6.2. Updates to Schedules...........................................................................50
7. CONDITIONS OF LENDING...................................................................................50
- 4 -
5
7.1. Loans After the Closing Date...................................................................50
7.2. Each Additional Loan...........................................................................53
8. COVENANTS...............................................................................................53
8.1. Affirmative Covenants..........................................................................53
(a) Preservation of Existence, Etc........................................................53
(b) Payment of Liabilities, Including Taxes, Etc..........................................53
(c) Maintenance of Insurance..............................................................54
(d) Maintenance of Properties and Leases..................................................55
(e) Maintenance of Patents, Trademarks, Etc...............................................55
(f) Visitation Rights.....................................................................55
(g) Keeping of Records and Books of Account...............................................55
(h) Plans and Benefit Arrangements........................................................56
(i) Compliance With Laws..................................................................56
(j) Use of Proceeds.......................................................................56
(k) Subordination of Intercompany Loans, Other Loans and Advances to the Borrowers........56
8.2. Negative Covenants.............................................................................56
(a) Indebtedness..........................................................................56
(b) Liens.................................................................................57
(c) Guaranties............................................................................57
(d) Loans and Investments; Certain Dividends and Distributions............................57
(e) Changes in the Senior Notes...........................................................58
(f) Liquidations, Mergers, Consolidations, Acquisitions...................................58
(g) Dispositions of Assets or Subsidiaries................................................59
(h) Affiliate Transactions................................................................59
(i) Subsidiary, Partnerships and Joint Ventures...........................................59
(j) Continuation of or Change in Business; Geographic Expansion...........................59
(k) Plans and Benefit Arrangements........................................................60
(l) Fiscal Year...........................................................................61
(m) Changes in Organizational Documents...................................................61
(n) Minimum Fixed Charge Coverage Ratio...................................................61
(o) Minimum Tangible Net Worth............................................................61
(p) Maximum Leverage Ratio................................................................61
(q) Speculative Units.....................................................................62
(r) Model Units...........................................................................62
(s) Land Ownership or Acquisition.........................................................62
(t) ▇▇▇▇▇▇ National Leverage Ratio........................................................62
(u) ▇▇▇▇▇▇ National Fixed Charge Coverage Ratio...........................................62
(v) Off Balance Sheet Financing...........................................................63
(w) Limitation on Interest Rate...........................................................63
8.3. Reporting Requirements.........................................................................63
(a) Monthly Financial Statements and Reports..............................................63
(b) Quarterly Financial Statements........................................................64
(c) Annual Financial Statements...........................................................64
(d) Quarterly Compliance Certificate of the Loan Parties; Updates to Schedules............64
(e) Borrowing Base Certificate............................................................65
(f) Notice of Default.....................................................................65
(g) Notice of Litigation..................................................................65
(h) Budgets, Forecasts, Deliveries Under the Senior Notes, Other Reports and Information..65
- 5 -
6
(i) Notices Regarding Plans and Benefit Arrangements......................................66
9. DEFAULT.................................................................................................67
9.1. Events of Default..............................................................................67
9.2. Consequences of Event of Default...............................................................70
10. THE AGENT...............................................................................................72
10.1. Appointment....................................................................................72
10.2. Delegation of Duties...........................................................................72
10.3. Nature of Duties; Independent Credit Investigation.............................................72
10.4. Actions in Discretion of Agent; Instructions From the Banks....................................73
10.5. Reimbursement and Indemnification of Agent by the Borrowers....................................73
10.6. Exculpatory Provisions.........................................................................74
10.7. Reimbursement and Indemnification of Agent by Banks............................................74
10.8. Reliance by Agent..............................................................................74
10.9. Notice of Default..............................................................................75
10.10. Notices........................................................................................75
10.11. Banks in Their Individual Capacities...........................................................75
10.12. Holders of Notes...............................................................................75
10.13. Equalization of Banks..........................................................................75
10.14. Successor Agent................................................................................76
10.15. Agent's Fee....................................................................................76
10.16. Availability of Funds..........................................................................76
10.17. Calculations...................................................................................77
10.18. Beneficiaries..................................................................................77
11. MISCELLANEOUS...........................................................................................77
11.1. Modifications, Amendments or Waivers...........................................................77
11.2. No Implied Waivers; Cumulative Remedies; Writing Required......................................78
11.3. Reimbursement and Indemnification of Banks by the Borrowers; Taxes.............................78
11.4. Holidays.......................................................................................79
11.5. Funding by Branch, Subsidiary or Affiliate.....................................................79
(a) Notional Funding......................................................................79
(b) Actual Funding........................................................................79
11.6. Notices........................................................................................80
11.7. Severability...................................................................................80
11.8. Governing Law..................................................................................80
11.9. Prior Understanding............................................................................81
11.10. Duration; Survival.............................................................................81
11.11. Successors and Assigns.........................................................................81
11.12. Confidentiality................................................................................82
11.13. Counterparts...................................................................................82
11.14. Agent's or Bank's Consent......................................................................82
11.15. Exceptions.....................................................................................83
11.16. Consent to Forum; Waiver of Jury Trial.........................................................83
11.17. Tax Withholding Clause.........................................................................83
11.18. Joinder of Guarantors..........................................................................84
11.19. Limitation of Liability........................................................................84
11.20. Co-Agents......................................................................................84
- 6 -
7
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
SCHEDULE 1.1(B) - COMMITMENT OF BANKS
SCHEDULE 2.9(a) - ROLLOVER LCS
SCHEDULE 6.1(a) - QUALIFICATIONS TO DO BUSINESS
SCHEDULE 6.1(b) - CAPITALIZATION AND OWNERSHIP
SCHEDULE 6.1(c) - SUBSIDIARIES
SCHEDULE 6.1(m) - CONSENTS AND APPROVALS
SCHEDULE 6.1(o) - PATENTS, TRADEMARKS, COPYRIGHTS, LICENSES, ETC.
SCHEDULE 6.1(p) - INSURANCE POLICIES
SCHEDULE 6.1(v) - ENVIRONMENTAL DISCLOSURES
SCHEDULE 6.1(x) - RESTRICTED TRANSACTIONS
EXHIBITS
EXHIBIT 1.1(A) - FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT 1.1(G)(1) - FORM OF GUARANTOR JOINDER
EXHIBIT 1.1(G)(2) - FORM OF GUARANTY AGREEMENT
EXHIBIT 1.1(I)(1) - FORM OF INTERCOMPANY SUBORDINATION AGREEMENT
EXHIBIT 1.1(I)(2) - FORM OF INTERCOMPANY SUBORDINATION JOINDER
EXHIBIT 1.1(R) - FORM OF REVOLVING CREDIT NOTE
EXHIBIT 1.1(S) - FORM OF SWING NOTE
EXHIBIT 1.1(T) - FORM OF TERM NOTE
EXHIBIT 2.5(a) - FORM OF REVOLVING CREDIT OR TERM LOAN REQUEST
EXHIBIT 2.5(b) - FORM OF SWING LOAN REQUEST
EXHIBIT 7.1(d) - REQUIREMENTS OF OPINION OF COUNSEL
EXHIBIT 8.3(d) - FORM OF QUARTERLY COMPLIANCE CERTIFICATE
EXHIBIT 8.3(e) - FORM OF BORROWING BASE CERTIFICATE
- 7 -
8
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT is dated as
of June 28, 1999, and is made by and among ▇▇▇▇▇▇ HOMES, INC., an Ohio
corporation ("▇▇▇▇▇▇ Homes"), ▇▇▇▇▇▇ HOLDINGS, INC., an Ohio corporation
("▇▇▇▇▇▇ Holdings"), HEARTHSIDE HOMES, LLC, an Indiana limited liability company
("Hearthside," and together with ▇▇▇▇▇▇ Homes and ▇▇▇▇▇▇ Holdings, collectively,
the "Borrowers"), ▇▇▇▇▇▇ NATIONAL CORPORATION, an Ohio corporation ("▇▇▇▇▇▇
National"), ▇▇▇▇▇▇ HOMES OF INDIANA, L.L.C., an Indiana limited liability
company ("▇▇▇▇▇▇ Indiana"), ▇▇▇▇▇▇ HOMES KENTUCKY, LLC, a Kentucky limited
liability company ("▇▇▇▇▇▇ Homes Kentucky"), the BANKS (as hereinafter defined),
PNC BANK, NATIONAL ASSOCIATION, successor by merger to PNC Bank, Ohio, National
Association, in its capacity as agent for the Banks under this Agreement
(hereinafter referred to in such capacity as the "Agent"), and BANK OF AMERICA
NT&SA (formerly NationsBank, N.A.) and BANK ONE, MICHIGAN (formerly The First
National Bank of Chicago), as co-agents (hereinafter referred to in such
capacity, collectively, as the "Co-Agents").
WITNESSETH:
WHEREAS, ▇▇▇▇▇▇ Homes, as borrower, ▇▇▇▇▇▇ Holdings, ▇▇▇▇▇▇
Indiana and ▇▇▇▇▇▇ Homes Kentucky, as guarantors, the Banks, the Agent and the
Co-Agents are parties to that Credit Agreement (the "Original Credit Agreement")
dated as of May 13, 1996 pursuant to which the Banks provided to ▇▇▇▇▇▇ Homes a
revolving credit facility in an aggregate principal amount not to exceed
$72,500,000 and a term loan facility in an aggregate principal amount not to
exceed $15,000,000, with outstanding indebtedness under the term facility as of
the date hereof in an aggregate amount of $6,000,000; and
WHEREAS, the Original Credit Agreement was amended and
restated pursuant to that certain Amended and Restated Credit Agreement dated as
of February 23, 1998 (the "Amended and Restated Credit Agreement") by and among
▇▇▇▇▇▇ Homes, ▇▇▇▇▇▇ Holdings and Hearthside, as Borrowers and Guarantors,
▇▇▇▇▇▇ National, ▇▇▇▇▇▇ Indiana and ▇▇▇▇▇▇ Homes Kentucky, as Guarantors, PNC,
as Agent, and the Co-Agents and the Banks set forth therein;
WHEREAS, the revolving credit facility shall be used for
general corporate purposes and the term loan facility was used to refinance
existing indebtedness; and
WHEREAS, the parties hereto wish to amend and restate the
Amended and Restated Credit Agreement upon the terms and conditions hereinafter
set forth.
NOW, THEREFORE, the parties hereto, in consideration of their
mutual covenants and agreements hereinafter set forth and intending to be
legally bound hereby, covenant and agree to amend and restate the Amended and
Restated Credit Agreement as follows:
- 8 -
9
1. CERTAIN DEFINITIONS
1.1. Certain Definitions.
In addition to words and terms defined elsewhere in
this Agreement, the following words and terms shall have the following
meanings, respectively, unless the context hereof clearly requires
otherwise:
Accounts Payable shall mean, as of any date of
determination, the accounts payable of the Loan Parties determined and
consolidated in accordance with GAAP.
Active Community shall mean, as of any date of
determination, any community of geographically contiguous residential
housing units which any Loan Party is developing for sale or has sold
to buyers; provided that (A) such Loan Party has acquired or has an
option to acquire in fee simple the lots comprising such community (or
the lots comprising the applicable phase of the Loan Party's planned
development of such community if such Loan Party is developing such
lots in separate phases), and either (i) the site improvements have
been completed on all such lots, or (ii) such Loan Party has, (a) to
the extent required, posted bonds and provided any other security
required in connection with the completion of such site improvements
and (b) received Regulatory Approval for the construction of at least
one residential unit within such Active Community (such Regulatory
Approval may be subject in some instances to completion of certain
improvements which are a condition to the issuance of a building permit
with respect to such unit) on such date; and (B) such Loan Party is
then actively soliciting for sale (or has sold all of) such lots or the
residential units on such lots with delivery to the buyer or buyers of
such units or lots contemplated within nine (9) months of the contract
date.
Active Unit shall mean any residential building owned
in fee simple by a Loan Party which is under development or completed
by a Loan Party in an Active Community with respect to which (i)
construction has progressed beyond completion of the foundation and
(ii) only one residential unit is or shall be contained therein after
completion of such building.
Affiliate, as to any person, shall mean any other
person (i) which directly or indirectly controls, is controlled by or
is under common control with any Loan Party, (ii) which beneficially
owns or holds 10% or more of any class of the voting stock of any Loan
Party, or (iii) 10% or more of the voting stock (or in the case of a
person which is not a corporation, 10% or more of the equity interest)
of which is beneficially owned or held, directly or indirectly, by any
Loan Party. "Control," as used herein, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction
of the management or policies of a person, whether through the
ownership of voting securities, by contract or otherwise, including the
power to elect a majority of the directors or trustees of a corporation
or trust, as the case may be.
Agent shall mean PNC Bank, National Association and
its successors.
Agent's Fee shall have the meaning assigned to that
term in Section 10.15 hereof.
- 9 -
10
Agreement shall mean this Credit Agreement, as the
same may be supplemented, amended, restated or modified from time to
time, including all schedules and exhibits hereto.
Agreement of Sale shall mean a written agreement with
a person, which is not an Affiliate or Subsidiary of any Co-Borrower,
for the sale of a residential housing unit to such person, fully
executed by all parties to such agreement, which shall be in form and
substance satisfactory to the Agent, which shall be accompanied by a
cash deposit equal to the lesser of (x) the customary percentage in any
geographic area (but in no event less than two percent (2%)) of the
purchase price of the unit sold or (y) the difference between the
purchase price set forth in such agreement and the amount of the
mortgage contingency set forth in such agreement, and which shall
provide that (i) the purchase price shall be paid in cash or by title
company check, certified or bank check or attorney trust account check
at or before the closing of the sale, the date of which shall be set
forth in the agreement, and (ii) the deposit may not be refunded except
upon a breach by the seller. The Co-Borrowers shall deliver to the
Agent the form of Agreement of Sale which they propose to use for
Agent's review prior to the Closing Date and from time to time
thereafter upon Agent's request. The Co-Borrowers shall not modify such
form in any material and adverse respect without the Agent's prior
approval. The Agent may at any time request to review executed
Agreements of Sale. The Co-Borrowers shall promptly deliver to the
Agent copies of such Agreements of Sale or make such Agreements of Sale
available to the Banks for their review, as the Agent may elect.
Approved Developed Lots Inventory shall mean, on any
date of determination, the aggregate book value, determined in
accordance with GAAP, of the acquisition and development costs of
parcels of land which are owned in fee simple by the Loan Parties
(excluding the acquisition and development costs of lots under Active
Units), provided that with respect to each such parcel the applicable
Loan Party has received Regulatory Approval, has completed construction
relating to any sewers, streets, water and other utilities, and each
such parcel satisfies the requirements for the issuance of a building
permit, but no home construction has been commenced. Any asset which is
either Sold Inventory, Model Inventory, Approved Land Under Development
Inventory or Approved Land Inventory is excluded from Approved
Developed Lots Inventory.
Approved Land Inventory shall mean, on any date of
determination, the aggregate book value, determined in accordance with
GAAP, of the acquisition and development costs of parcels of land which
are owned in fee simple by the Loan Parties (excluding the acquisition
and development costs of lots under Active Units), provided that with
respect to each such parcel, the applicable Loan Party has received
Regulatory Approval, provided further, parcels of land not owned in fee
simple but for which purchase price deposits in amounts not exceeding
$1,500,000 in the aggregate have been made ("Permitted Land Deposits")
but which otherwise fit within this definition may also be included as
Approved Land Inventory and provided further, parcels of land, which
have not received Regulatory Approval but which otherwise fit within
this definition which together with Permitted Land Deposits, do not
exceed $2,000,000 in the aggregate at any time, may also be included as
Approved Land Inventory. Any asset which is either Sold Inventory,
Model Inventory, Unsold Building Inventory, Approved
- 10 -
11
Land Under Development Inventory or Approved Developed Lots Inventory
is excluded from Approved Land Inventory.
Approved Land Under Development Inventory shall mean,
on any date of determination, the aggregate book value determined in
accordance with GAAP, of the acquisition and development costs of
parcels of land which are owned in fee simple by the Loan Parties
(excluding the acquisition and development costs of lots under Active
Units), provided that with respect to each such parcel, the applicable
Loan Party has received Regulatory Approval and has entered into a
contract for the construction of sewers, streets, water or utilities.
Any asset which is either Sold Inventory, Model Inventory, Unsold
Building Inventory, Approved Developed Lots Inventory or Approved Land
Inventory is excluded from Approved Land Under Development Inventory.
Assignment and Assumption Agreement shall mean an
Assignment and Assumption Agreement by and among a Purchasing Bank, the
Transferor Bank and the Agent, as Agent and on behalf of the remaining
Banks, substantially in the form of Exhibit 1.1(A).
Authorized Officer shall mean those persons,
designated by written notice to the Agent from the Borrowers,
authorized on behalf of the Borrowers to execute notices, reports and
other documents required hereunder. The Borrowers may amend such list
of persons from time to time, provided that the Borrowers give written
notice of such amendment to the Agent.
Banks shall mean the financial institutions named on
Schedule 1.1(B) and their respective successors and assigns as
permitted hereunder, each of which is referred to herein as a Bank.
Base Net Worth shall mean the sum of (i) $40,000,000
plus (ii) 75% of net income of the Borrowers and their Subsidiaries
determined and consolidated in accordance with GAAP for each fiscal
quarter in which net income is earned (as opposed to a net loss) after
December 31, 1995 through (and including) the date of determination
plus (iii) 75% of the net cash proceeds received from the sale of
shares of capital stock of any Borrower or any of its Subsidiaries
during the period from December 31, 1995 through (and including) the
date of determination minus (iv) goodwill resulting from any
acquisition or acquisitions permitted pursuant to Section 8.2(f)(ii),
not to exceed $5,000,000 in the aggregate, minus (v) 100% of any
dividends paid with respect to any Borrower's preferred stock to the
extent such dividends are actually paid in cash, provided in no event
shall Base Net Worth in any fiscal quarter for which net income is
earned (as opposed to a net loss) be increased by less than 60% of such
net income as a result of any deduction under this clause (v).
Base Rate shall mean the greater of (i) the interest
rate per annum announced from time to time by the Agent at its
Principal Office as its then prime rate, which rate may not be the
lowest rate then being charged commercial borrowers by the Agent, or
(ii) the Federal Funds Effective Rate plus one-half of one percent
(1/2%) per annum.
Base Rate Option shall mean the Revolving Credit Base
Rate Option or
- 11 -
12
the Term Loan Base Rate Option.
Benefit Arrangement shall mean at any time an
"employee benefit plan," within the meaning of Section 3(3) of ERISA,
which is neither a Plan nor a Multiemployer Plan and which is
maintained, sponsored or otherwise contributed to by any member of the
ERISA Group.
Borrowers shall mean the Co-Borrowers, with respect
to the Revolving Credit Loans, and ▇▇▇▇▇▇ Homes, with respect to the
Term Loans.
Borrowing Base shall be determined based on the most
recent Borrowing Base Certificate delivered pursuant to Section 8.3(e)
and shall mean the sum of clauses (A) through (F) minus the sum of
clauses (G) through (H), as follows:
(A) 100% of Sold Inventory; plus
(B) 80% of Model Inventory; plus
(C) 70% of Unsold Building Inventory; plus
(D) 55% of Approved Developed Lots Inventory;
plus
(E) 55% of Approved Land Under Development
Inventory; plus
(F) 50% of the Approved Land Inventory; minus
(G) the principal amount outstanding of the Term
Loans; minus
(H) the principal amount outstanding of the
Senior Notes;
provided, in no event shall the sum of clauses (D) - (F) exceed 45% of
the sum of clauses (A)-(F); and provided, further, that no property
subject to a Nonrecourse Purchase Money Security Interest shall be
included in clauses (A)- (F) above; and provided, further, any "reserve
to complete" is expressly excluded as an asset in calculating the
Borrowing Base. Notwithstanding any other provision to the contrary,
the parties expressly acknowledge that, for purposes of calculating the
Borrowing Base, clauses (A)- (F) include only such inventory owned by
the Loan Parties expressly excluding ▇▇▇▇▇▇ National from the
definition of Loan Parties.
Borrowing Base Certificate shall have the meaning
given to such term in Section 8.3(e).
Borrowing Date shall mean, with respect to any Loan,
the date for the making thereof or the renewal or conversion thereof to
the same or a different Interest Rate Option, which shall be a Business
Day.
Borrowing Tranche shall mean specified portions of
Loans outstanding as follows: (i) with respect to outstanding Loans to
which the Euro-Rate Option applies, each
- 12 -
13
portion of such Loans which becomes subject to such option under the
same election by any Borrower and which has the same Euro-Rate Interest
Period shall constitute one Borrowing Tranche, and (ii) all Loans to
which the Base Rate Option applies shall constitute one Borrowing
Tranche.
Business Day shall mean, (i) with respect to matters
relating to the Euro-Rate Option, a day on which banks in the London
interbank market are dealing in U.S. Dollar deposits and on which
commercial banks are open for domestic and international business in
Cincinnati, Ohio and, (ii) with respect to any other matter, a day on
which commercial banks are open for business in Cincinnati, Ohio.
Change of Control shall mean any transaction or group
of transactions after which (i) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III and ▇▇▇▇ ▇. ▇▇▇▇▇▇
(together with their respective executors, administrators or heirs in
the event of the death of either of them) shall directly or indirectly
own less than twenty-five percent (25%) of ▇▇▇▇▇▇ National's issued and
outstanding common stock, (ii) another partnership, limited
partnership, syndicate or other group which is deemed a "person" within
the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934
owns more of ▇▇▇▇▇▇ National's issued and outstanding common stock than
is owned directly or indirectly in the aggregate by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
III and ▇▇▇▇ ▇. ▇▇▇▇▇▇ (together with their executors, administrators
or heirs in the event of the death of either of them), or (iii) ▇▇▇▇▇▇
National, by itself or together with one or more of the Co-Borrowers,
ceases to own all of the issued and outstanding capital stock and have
full voting control of ▇▇▇▇▇▇ Homes, ▇▇▇▇▇▇ Holdings and Hearthside.
Closing Date shall mean June 30, 1999.
Co-Agents shall mean Bank of America NT&SA and Bank
One, Michigan and their respective successors.
Co-Borrowers shall mean ▇▇▇▇▇▇ Homes, ▇▇▇▇▇▇ Holdings
and Hearthside, which are jointly and severally liable with respect to
the Revolving Credit Loans.
Commitment Fee shall have the meaning assigned to
that term in Section 2.3(b).
Commitments shall mean collectively the Revolving
Credit Commitments, the Swing Loan Commitment and the Term Loan
Commitments.
Consolidated Cash Flow From Operations shall mean,
for any period of determination, the following with respect to the
Borrowers and their Subsidiaries for each item for such period
determined and consolidated in accordance with GAAP: (i) the sum of net
income, depreciation, amortization, other noncash charges to net
income, interest expense and income tax expense minus (ii) noncash
credits to net income.
Consolidated Fixed Charges shall mean, for any period
of determination, the sum of interest incurred (capitalized and
expensed) plus scheduled principal installments of
- 13 -
14
Indebtedness plus dividends (to the extend paid in cash), in each case
of the Borrowers and their Subsidiaries for such period determined and
consolidated in accordance with GAAP.
Consolidated Tangible Net Worth shall mean, as of any
date of determination, total stockholders' equity minus intangible
assets, in each case of the Borrowers and their Subsidiaries as of such
date determined and consolidated in accordance with GAAP.
Consolidated Total Liabilities shall mean, for any
fiscal quarter for the fiscal quarter then ended, the sum of (i) all
Indebtedness and, without duplication, all other liabilities of the
Borrowers and their Subsidiaries, determined and consolidated in
accordance with GAAP, excluding Indebtedness secured by Nonrecourse
Purchase Money Security Interests not to exceed, in the aggregate at
any time, 15% of Consolidated Tangible Net Worth minus (ii) Eligible
Development Costs.
Dollar, Dollars, U.S. Dollars and the symbol $ shall
mean lawful money of the United States of America.
Eligible Development Costs shall mean expenses, to
the extent paid in cash for site development costs which are included
in Approved Land Inventory, Approved Developed Lots Inventory or
Approved Land Under Development Inventory, in connection with sites for
which undrawn Letters of Credit are outstanding to support such site
development costs.
Environmental Complaint shall mean any written
complaint setting forth a cause of action for personal or property
damage or natural resource damage or equitable relief, order, notice of
violation, citation, request for information issued pursuant to any
Environmental Laws by an Official Body, subpoena or other written
notice of any type relating to, arising out of or issued pursuant to
any Environmental Laws or any Environmental Conditions, as the case may
be.
Environmental Conditions shall mean any conditions of
the environment, including, without limitation, the workplace, the
ocean, natural resources (including flora or fauna), soil, surface
water, groundwater, any actual drinking water supply sources or water
sources which could reasonably be expected to be used to supply
drinking water, substrata or the ambient air, relating to, or arising
out of or caused by the use, handling, storage, treatment, recycling,
generation, transportation, release, spilling, leaking, pumping,
emptying, discharging, injecting, escaping, leaching, disposal,
dumping, threatened release or other management or mismanagement of
Regulated Substances resulting from the use of, or operations on, the
Property.
Environmental Laws shall mean all federal, state,
local and foreign Laws and regulations, including, without limitation,
permits, licenses, authorizations, bonds, orders, judgments and consent
decrees issued or entered into pursuant thereto, relating to pollution
or protection of human health or the environment or employee safety in
the workplace or the operation of the activities of the Borrowers and
their Subsidiaries.
ERISA shall mean the Employee Retirement Income
Security Act of 1974,
- 14 -
15
as the same may be amended or supplemented from time to time, and any
successor statute of similar import, and the rules and regulations
thereunder, as from time to time in effect.
ERISA Group shall mean, at any time, the Borrowers
and all members of a controlled group of corporations and all trades or
businesses (whether or not incorporated) under common control and all
other entities which, together with the Borrower, are treated as a
single employer under Section 414 of the Internal Revenue Code.
Euro-Rate shall mean, with respect to the Loans
comprising any Borrowing Tranche to which the Euro-Rate Option applies
for any Euro-Rate Interest Period, the interest rate per annum
determined by the Agent by dividing (the resulting quotient rounded
upward to the nearest 1/16 of 1% per annum) (i) the rate of interest
determined by the Agent in accordance with its usual procedures (which
determination shall be conclusive absent manifest error) to be the
average of the rates of interest per annum for deposits in U.S. Dollars
offered by banks in the London interbank market to major money center
banks at approximately 11:00 a.m., London time, two (2) Business Days
prior to the first day of such Euro-Rate Interest Period for delivery
on the first day of such Euro-Rate Interest Period in amounts
comparable to such Borrowing Tranche and having maturities comparable
to such Euro-Rate Interest Period by (ii) a number equal to 1.00 minus
the Euro-Rate Reserve Percentage. The Euro-Rate may also be expressed
by the following formula:
average of rates offered to major money
Euro-Rate = center banks in the London interbank market
as determined by Agent
-------------------------------------------
1.00 - Euro-Rate Reserve Percentage
The Euro-Rate shall be adjusted with respect to any Euro-Rate Option
outstanding on the effective date of any change in the Euro-Rate
Reserve Percentage as of such effective date. The Agent shall give
prompt notice to the Borrowers of the Euro-Rate as determined or
adjusted in accordance herewith, which determination shall be
conclusive absent manifest error.
Euro-Rate Interest Periods shall have the meaning
assigned to that term in Section 4.2.
Euro-Rate Option shall mean the Revolving Credit
Euro-Rate Option or the Term Loan Euro-Rate Option.
Euro-Rate Portion shall mean, collectively, the
Revolving Credit Euro-Rate Portion and the Term Loan Euro-Rate Portion.
Euro-Rate Reserve Percentage shall mean the maximum
percentage (expressed as a decimal rounded upward to the nearest 1/16
of 1%) as determined by the Agent (which determination shall be
conclusive absent manifest error) which is in effect during any
relevant period, as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the reserve
requirements (including, without limitation, supplemental, marginal and
emergency reserve requirements) with respect to eurocurrency funding
(currently
- 15 -
16
referred to as "Eurocurrency Liabilities") of a member bank in such
System.
Event of Default shall mean any of the Events of
Default described in Section 9.1.
Facility Fees shall mean the fees referred to in
Sections 2.3(a) and 3.3.
Federal Funds Effective Rate for any day shall mean
the rate per annum (based on a year of 360 days and actual days elapsed
and rounded upward to the nearest 1/100 of 1%) announced by the Federal
Reserve Bank of New York (or any successor) on such day as being the
weighted average of the rates on overnight federal funds transactions
arranged by federal funds brokers on the previous trading day, as
computed and announced by such Federal Reserve Bank (or any successor)
in substantially the same manner as such Federal Reserve Bank computes
and announces the weighted average it refers to as the "Federal Funds
Effective Rate" as of the date of this Agreement; provided, if such
Federal Reserve Bank (or its successor) does not announce such rate on
any day, the "Federal Funds Effective Rate" for such day shall be the
Federal Funds Effective Rate for the last day for which such rate was
announced.
GAAP shall mean generally accepted accounting
principles as are in effect from time to time, subject to the
provisions of Section 1.3 hereof, and applied on a consistent basis
(except for changes in application in which the Borrowers' independent
certified public accountants concur) both as to classification of items
and amounts.
Governmental Acts shall have the meaning given to
such term in Section 2.9(h).
Guarantor shall mean each of the parties to this
Agreement which is designated as a "Guarantor" on the signature page
hereof and each other Person which joins this Agreement as a Guarantor
after the date hereof pursuant to Section 11.18.
Guarantor Joinder shall mean a joinder by a person as
a Guarantor under this Agreement, the Guaranty Agreement and the other
Loan Documents in the form of Exhibit 1.1(G)(1).
Guaranty of any person shall mean any obligation of
such person guaranteeing or in effect guaranteeing any liability or
obligation of any other person in any manner, whether directly or
indirectly, including, without limiting the generality of the
foregoing, any agreement to indemnify or hold harmless any other
person, any performance bond or other suretyship arrangement and any
other form of assurance against loss, except endorsement of negotiable
or other instruments for deposit or collection in the ordinary course
of business.
Guaranty Agreement shall mean the Guaranty and
Suretyship Agreement in substantially the form attached hereto as
Exhibit 1.1(G)(2) executed and delivered by the Guarantors to the Agent
for the benefit of the Banks.
- 16 -
17
Hearthside shall mean, Hearthside Homes, LLC, a
limited liability company organized and existing under the laws of the
State of Indiana.
Indebtedness shall mean, as to any person at any
time, any and all indebtedness, obligations or liabilities (whether
matured or unmatured, liquidated or unliquidated, direct or indirect,
absolute or contingent, or joint or several) of such person for or in
respect of: (i) borrowed money, (ii) amounts raised under or
liabilities in respect of any note purchase or acceptance credit
facility, (iii) reimbursement obligations under any letter of credit,
currency swap agreement, interest rate swap, cap, collar or floor
agreement or other interest rate management device, (iv) any other
transaction (including without limitation forward sale or purchase
agreements, capitalized leases, conditional sales agreements and
undrawn and outstanding letters of credit) having the commercial effect
of a borrowing of money entered into by such person to finance its
operations or capital requirements (but not including trade payables
and accrued expenses incurred in the ordinary course of business which
are not represented by a promissory note or other evidence of
indebtedness and which are not more than thirty (30) days past due), or
(v) any Guaranty of any of the foregoing.
Intercompany Subordination Agreement shall mean an
Intercompany Subordination Agreement among the Loan Parties in the form
attached hereto as Exhibit 1.1(I)(1).
Intercompany Subordination Joinder shall mean a
joinder to the Intercompany Subordination Agreement by each Person who
becomes a Guarantor under this Agreement after the date hereof, such
joinder to be substantially in the form of Exhibit 1.1(I)(2).
Interest Payment Date shall mean each date specified
for the payment of interest in Section 5.3.
Interest Rate Option shall mean a Euro-Rate Option or
a Base Rate Option.
Internal Revenue Code shall mean the Internal Revenue
Code of 1986, as the same may be amended or supplemented from time to
time, and any successor statute of similar import, and the rules and
regulations thereunder, as from time to time in effect.
Issuing Letter of Credit Bank shall mean, with
respect to a Letter of Credit, the Bank which issued that Letter of
Credit pursuant to Section 2.9.
Labor Contracts shall have the meaning assigned to
that term in Section 6.1(r).
Law or law shall mean any law (including common law),
constitution, statute, treaty, regulation, rule, ordinance, opinion,
release, ruling, order, injunction, writ, decree or award of any
Official Body.
Letter of Credit shall have the meaning assigned to
that term in
- 17 -
18
Section 2.9(a).
Letter of Credit Fee shall have the meaning assigned
to that term in Section 2.9(c).
Letter of Credit Outstandings shall mean at any time
the sum of (i) the aggregate undrawn face amount of outstanding Letters
of Credit and (ii) the aggregate amount of all unpaid and outstanding
Reimbursement Obligations.
Leverage Ratio shall mean the ratio of Consolidated
Total Liabilities to Consolidated Tangible Net Worth.
Lien shall mean any mortgage, deed of trust, pledge,
lien, security interest, charge or other encumbrance or security
arrangement of any nature whatsoever, whether voluntarily or
involuntarily given, including but not limited to any conditional sale
or title retention arrangement, and any assignment, deposit arrangement
or lease intended as, or having the effect of, security and any filed
financing statement or other notice of any of the foregoing (whether or
not a lien or other encumbrance is created or exists at the time of the
filing).
Loan Documents shall mean this Agreement, the Notes,
the Guaranty Agreement, the Intercompany Subordination Agreement and
any other instruments, certificates, agreements or documents delivered
or contemplated to be delivered hereunder or thereunder or in
connection herewith or therewith, as the same may be supplemented,
amended or restated from time to time in accordance herewith or
therewith, and Loan Document shall mean any of the Loan Documents.
Loan Parties shall mean the Borrowers and the
Guarantors; provided, however, with respect to Section 8.2 and as used
in the definition of Restricted Transactions and in calculating the
Borrowing Base, ▇▇▇▇▇▇ National Corporation is expressly excluded from
the definition of "Loan Parties."
Loan Request shall mean a request for a Revolving
Credit Loan, Swing Loan or Term Loan made in accordance with Section
2.5(a) or 2.5(b) or, with respect to a Revolving Credit Loan or Term
Loan, a request to select, convert to or renew a Euro-Rate Option in
accordance with Section 4.2.
Loans shall mean collectively, and Loan shall mean
separately, all Revolving Credit Loans, Swing Loans and Term Loans or
any Revolving Credit Loan, Swing Loan or Term Loan.
Material Adverse Change shall mean any set of
circumstances or events which (a) has or could reasonably be expected
to have any material adverse effect whatsoever upon the validity or
enforceability of this Agreement or any other Loan Document, (b) is or
could reasonably be expected to be material and adverse to the
business, properties, assets, financial condition, results of
operations or prospects of the Borrowers and their Subsidiaries taken
as a whole, (c) impairs materially or could reasonably be expected to
impair materially the
- 18 -
19
ability of the Borrowers and their Subsidiaries taken as a whole to
duly and punctually pay or perform their Indebtedness, or (d) impairs
materially or could reasonably be expected to impair materially the
ability of the Agent or any of the Banks, to the extent permitted, to
enforce their legal remedies against the Loan Parties pursuant to this
Agreement or any other Loan Document.
Model Inventory shall mean, on any date of
determination, the aggregate book value, determined in accordance with
GAAP (excluding capitalized interest), of Model Units. Any asset which
is Sold Inventory, Unsold Building Inventory, Approved Developed Lots
Inventory, Approved Land Under Development or Approved Land Inventory
is excluded from Model Inventory.
Model Unit shall mean an Active Unit on which
construction has been completed which is not subject to an Agreement of
Sale and which a Loan Party has designated and is using or plans to use
as a model for exhibition.
Money Management Arrangements shall mean the various
deposit accounts, sweep accounts and other accounts and arrangements
between any of the Loan Parties, their Subsidiaries and the Agent
relating to the management and investment of any of the Loan Parties'
and their Subsidiaries' cash assets.
Multiemployer Plan shall mean any employee benefit
plan which is a "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA and to which the Borrowers or any member of the
ERISA Group is then making or accruing an obligation to make
contributions or, within the preceding five plan years, has made or had
an obligation to make such contributions.
Multiple Employer Plan shall mean a Plan which has
two or more contributing sponsors (including the Borrowers or any
member of the ERISA Group), at least two of whom are not under common
control, as such a Plan is described in Sections 4063 and 4064 of
ERISA.
Nonrecourse Purchase Money Security Interest shall
mean Liens upon property securing loans to a Loan Party or deferred
payments by a Loan Party for the purchase of such property, provided
that the recourse of the creditor for repayment is limited to such
property and does not extend to any Loan Party.
Notes shall mean collectively, and Note shall mean
separately, the Revolving Credit Notes, the Swing Note and the Term
Notes or any Revolving Credit Note, Swing Note or Term Note.
Official Body shall mean any national, federal,
state, local or other government or political subdivision or any
agency, authority, bureau, central bank, commission, department or
instrumentality of either, or any court, tribunal, grand jury or
arbitrator, in each case whether foreign or domestic.
Original Closing Date shall mean the Business Day on
which the first
- 19 -
20
Loan was made, which was May 17, 1996.
PBGC shall mean the Pension Benefit Guaranty
Corporation established pursuant to Subtitle A of Title IV of ERISA or
any successor.
Partnership Interests shall have the meaning given to
such term in Section 6.1(c).
Permitted Investments shall mean:
(i) direct obligations of the United States
of America or any agency or instrumentality thereof or obligations
backed by the full faith and credit of the United States of America
maturing in twelve months or less from the date of acquisition;
(ii) commercial paper maturing in 180 days
or less rated not lower than A-1 by Standard & Poor's Corporation or
P-1 by ▇▇▇▇▇'▇ Investors Service on the date of acquisition;
(iii) demand deposits, time deposits or
certificates of deposit maturing within one year in commercial banks
whose obligations are rated A-1, A or the equivalent or better by
Standard & Poor's Corporation or ▇▇▇▇▇'▇ Investors Service on the date
of acquisition; and
(iv) capital stock of publicly traded
companies not to exceed $100,000 in the aggregate on a cost basis.
Permitted Liens shall mean:
(i) Liens for taxes, assessments or similar
charges incurred in the ordinary course of business and which are not
yet due and payable;
(ii) Pledges or deposits made in the
ordinary course of business to secure payment of workmen's
compensation, or to participate in any fund in connection with
workmen's compensation, unemployment insurance, old-age pensions or
other social security programs;
(iii) Liens of mechanics, materialmen,
warehousemen or carriers, or other like Liens, securing obligations
incurred in the ordinary course of business that are not yet due and
payable and Liens of landlords securing obligations to pay lease
payments that are not yet due and payable or in default;
(iv) Good-faith pledges or deposits made in
the ordinary course of business to secure performance of bids, tenders,
contracts (other than for the repayment of borrowed money) or leases,
not in excess of the aggregate amount due thereunder, or to secure
statutory obligations or surety, appeal, indemnity, performance or
other similar bonds required in the ordinary course of business;
- 20 -
21
(v) Encumbrances consisting of zoning
restrictions, easements or other restrictions on the use of real
property, none of which materially impairs the use of such property for
the purpose contemplated by the Loan Party or the value thereof, and
none of which is violated in any material respect by existing
structures or land use;
(vi) Liens in favor of lessors or sellers on
personal property being leased or sold under leases or agreements of
sale as and to the extent permitted in Section 8.2(a)(iii);
(vii) Nonrecourse Purchase Money Security
Interests, provided that the aggregate amount of loans and deferred
payments secured by such Nonrecourse Purchase Money Security Interests
shall not exceed 15% of Consolidated Tangible Net Worth; and
(viii) The following, if the validity or
amount thereof is being contested in good faith by appropriate and
lawful proceedings diligently conducted so long as either no action to
levy or execute thereon has been commenced or, if such action has
commenced, it has been stayed and shall continue to be stayed:
(1) Claims or Liens for taxes, assessments or charges
due and payable and subject to interest or penalty, provided
that the applicable Loan Party maintains such reserves or
other appropriate provisions as shall be required by GAAP and
pays all such taxes, assessments or charges forthwith upon the
commencement of proceedings to foreclose any such Lien;
(2) Claims, Liens or encumbrances upon, and defects
of title to, real or personal property, including any
attachment of personal or real property or other legal process
prior to adjudication of a dispute on the merits; or
(3) Claims or Liens of mechanics, materialmen,
warehousemen or carriers, or other statutory nonconsensual
Liens.
Person or person shall mean any individual,
corporation, partnership, association, joint-stock company, trust,
unincorporated organization, joint venture, government or political
subdivision or agency thereof, or any other entity.
Plan shall mean at any time an employee pension
benefit plan (including a Multiple Employer Plan but not a
Multiemployer Plan) which is covered by Title IV of ERISA or is subject
to the minimum funding standards under Section 412 of the Internal
Revenue Code and either (i) is maintained by any member of the ERISA
Group for employees of any member of the ERISA Group or (ii) has at any
time within the preceding five years been maintained by any entity
which was at such time a member of the ERISA Group for employees of any
entity which was at such time a member of the ERISA Group.
PNC shall mean PNC Bank, National Association, its
successors and assigns.
- 21 -
22
Potential Default shall mean any event or condition
which with notice, passage of time or a determination by the Agent or
the Required Banks, or any combination of the foregoing, would
constitute an Event of Default.
Principal Office shall mean the main banking office
of the Agent in Cincinnati, Ohio.
Prohibited Transaction shall mean any prohibited
transaction as defined in Section 4975 of the Internal Revenue Code or
Section 406 of ERISA for which neither an individual nor a class
exemption has been issued by the United States Department of Labor.
Property shall mean all real property, both owned and
leased, of the Loan Parties.
Provident Guaranty shall mean that certain
Unconditional Guaranty dated March 31, 1999 by ▇▇▇▇▇▇ Homes in favor of
The Provident Bank issued in connection with Provident Loan Agreement.
Provident Loan Agreement shall mean that certain Loan
and Security Agreement dated as of March 31, 1999 between The Provident
Bank and ▇▇▇▇▇▇ National.
Purchasing Bank shall mean a Bank which becomes a
party to this Agreement by executing an Assignment and Assumption
Agreement.
Quarterly Compliance Certificate shall have the
meaning given to such term in Section 8.3(d).
Ratable Share shall mean the proportion that a Bank's
Commitment bears to the Commitments of all of the Banks.
Regulated Substances shall mean any substance,
including without limitation any solid, liquid, semisolid, gaseous,
thermal, thoriated or radioactive material, refuse, garbage, wastes,
chemicals, petroleum products, byproducts, coproducts, impurities,
dust, scrap, heavy metals, any substance defined as a "hazardous
substance," "pollutant," "pollution," "contaminant," "hazardous or
toxic substance," "extremely hazardous substance," "toxic chemical,"
"toxic waste," "hazardous waste," "industrial waste," "residual waste,"
"solid waste," "municipal waste," "mixed waste," "infectious waste,"
"chemotherapeutic waste," "medical waste," "regulated substance" or any
related materials, substances or wastes as now or hereafter defined
pursuant to any Environmental Laws, ordinances, rules, regulations or
other directives of any Official Body, the generation, manufacture,
extraction, processing, distribution, treatment, storage, disposal,
transport, recycling, reclamation, use, reuse, spilling, leaking,
dumping, injection, pumping, leaching, emptying, discharge, escape,
release or other management or mismanagement of which is regulated by
the Environmental Laws.
Regulation U shall mean Regulation U, T, G or X as
promulgated by the Board of Governors of the Federal Reserve System, as
amended from time to time.
- 22 -
23
Regulatory Approval shall mean with respect to any
land held by a Loan Party that all preliminary approvals, permits,
licenses or other authorizations under applicable Laws, including those
which relate to zoning, developmental restrictions and Environmental
Laws, from required state and local governmental authorities and
agencies or otherwise under Law with respect to the Loan Party's
development plan have been obtained such that there is vested in such
Loan Party the right to develop such real estate for primarily
residential purposes in accordance with the intentions of such Loan
Party, subject only to nonsubstantive conditions which may remain for
final approval of such development.
Reimbursement Obligations shall have the meaning
assigned to such term in Section 2.9(d).
Reportable Event means a reportable event described
in Section 4043 of ERISA and regulations thereunder with respect to a
Plan or Multiemployer Plan.
Required Banks shall mean (i) if there are no Loans
outstanding, Banks whose Commitments aggregate at least 66-2/3% of the
Commitments of all of the Banks; or (ii) if there are Loans
outstanding, Banks whose Loans outstanding aggregate at least 66-2/3%
of the total principal amount of the Loans outstanding hereunder.
Restricted Transactions shall mean all of the
following with respect to the Loan Parties in an aggregate amount not
to exceed, at any time during which the Provident Guaranty is in
existence, five percent (5%) of Consolidated Tangible Net Worth and, at
any time after the Provident Guaranty has been terminated and released,
twenty percent (20%) of Consolidated Tangible Net Worth: (i) loans by
any of the Loan Parties directly or indirectly to any other person
(excluding any other Loan Party); (ii) guaranties by any of the Loan
Parties directly or indirectly of the obligations of any other person
(including any other Loan Party); (iii) investments, contributions,
dividends or other distributions by any of the Loan Parties directly or
indirectly in or to the capital of, or other payments directly or
indirectly to or for the benefit of, any other person (excluding any
other Loan Party), provided, acquisitions permitted pursuant to Section
8.2(f)(ii) shall not constitute Restricted Transactions; or (iv) other
obligations, contingent or otherwise, of any of the Loan Parties to or
for the benefit of any other person (including any other Loan Party).
The definition of Loan Party and Loan Parties, as used in this
definition of Restricted Transactions, expressly does not include
▇▇▇▇▇▇ National and it is expressly acknowledged that the ▇▇▇▇▇▇ Homes
Receivable is not a Restricted Transaction.
Revolving Credit Base Rate Margin shall have the
meaning assigned to that term in Section 4.1(c).
Revolving Credit Base Rate Option shall mean the
option of the Co-Borrowers to have Revolving Credit Loans bear interest
at the rate and under the terms and conditions set forth in Section
4.1(a)(i).
Revolving Credit Base Rate Portion shall mean the
portion of the Revolving Credit Loans bearing interest at any time
under the Revolving Credit Base Rate Option.
- 23 -
24
Revolving Credit Commitment shall mean, as to any
Bank at any time, the amount initially set forth opposite its name on
Schedule 1.1(B) in the column labeled "Amount of Commitment for
Revolving Credit Loans," and thereafter on Schedule I to the most
recent Assignment and Assumption Agreement, and Revolving Credit
Commitments shall mean the aggregate Revolving Credit Commitments of
all of the Banks.
Revolving Credit Euro-Rate Margin shall have the
meaning specified in Section 4.1(c).
Revolving Credit Euro-Rate Option shall mean the
option of the Co-Borrowers to have Revolving Credit Loans bear interest
at the rate and under the terms and conditions set forth in Section
4.1(a)(ii).
Revolving Credit Euro-Rate Portion shall mean the
portion of the Revolving Credit Loans bearing interest at any time
under the Revolving Credit Euro-Rate Option.
Revolving Credit Expiration Date shall mean, with
respect to the Revolving Credit Commitments, July 1, 2001.
Revolving Credit Loans shall mean collectively, and
Revolving Credit Loan shall mean separately, all Revolving Credit Loans
or any Revolving Credit Loan made by the Banks or one of the Banks to
the Co-Borrowers pursuant to Section 2.1(a) and Section 2.6(a).
Revolving Credit Notes shall mean collectively, and
Revolving Credit Note shall mean separately, all the Revolving Credit
Notes of the Co-Borrowers in the form of Exhibit 1.1(R) evidencing the
Revolving Credit Loans, together with all amendments, extensions,
renewals, replacements, refinancings or refundings thereof in whole or
in part.
Revolving Facility Usage shall mean at any time the
sum of the Revolving Credit Loans and Swing Loans outstanding and the
Letter of Credit Outstandings.
Rollover LCs shall mean those letters of credit
identified on Schedule 2.9(a) which were issued by an Issuing Letter of
Credit Bank prior to the date of the Original Credit Agreement upon the
application of ▇▇▇▇▇▇ Homes.
Senior Notes shall mean those three (3) term notes,
each bearing interest at the rate of 7.95% per annum and each dated May
18, 1994, issued by ▇▇▇▇▇▇ Homes in favor of PNC, The Fifth Third Bank
and The Provident Bank, respectively, in the respective principal
amounts of $2,097,956, $1,400,386 and $1,746,548.
Settlement Date shall mean the Thursday of each week
(if such day is a Business Day, and if not, the next succeeding
Business Day) and any other Business Day on which the Agent elects to
effect settlement pursuant to Section 5.6.
Side Letters shall mean that certain letter dated
February 6, 1996 between
- 24 -
25
PNC Securities Corp. and ▇▇▇▇▇▇ Homes, that certain letter dated
February 4, 1998 between PNC and ▇▇▇▇▇▇ Homes and that certain letter
between PNC and ▇▇▇▇▇▇ Homes dated June 11, 1999.
Sold Inventory shall mean, on any date of
determination, the aggregate book value, determined in accordance with
GAAP (excluding capitalized interest), of all Active Units which are
subject to an Agreement of Sale and the lots (and related site
improvements and development costs) under such Active Units to be sold
therewith, provided that with respect to each such Active Unit and
related parcel of land, if any, the applicable Loan Party has received
Regulatory Approval. Any asset which is Model Inventory, Unsold
Building Inventory, Approved Developed Lots Inventory, Approved Land
Under Development Inventory or Approved Land Inventory is excluded from
Sold Inventory.
Speculative Unit shall mean any Active Unit which is
(i) not subject to an Agreement of Sale and (ii) not a Model Unit.
Subsidiary of any person at any time shall mean (i)
any corporation or trust of which more than 50% (by number of shares or
number of votes) of the outstanding capital stock or shares of
beneficial interest normally entitled to vote for the election of one
or more directors or trustees (regardless of any contingency which does
or may suspend or dilute the voting rights) is at such time owned
directly or indirectly by such person or one or more of such person's
Subsidiaries, or any partnership of which such person is a general
partner, or of which more than 50% of the partnership interests are at
the time directly or indirectly owned by such person or one or more of
such person's Subsidiaries, and (ii) any corporation, trust,
partnership or other entity which is controlled or capable of being
controlled by such person or one or more of such person's Subsidiaries.
Subsidiary Shares shall have the meaning assigned to
such term in Section 6.1(c).
Swing Loan Commitment shall mean PNC's commitment to
make Swing Loans to the Co-Borrowers pursuant to Section 2.1(b) in an
aggregate principal amount up to $5,000,000.
Swing Loan Request shall mean a request for Swing
Loans made in accordance with Section 2.5(b).
Swing Loans shall mean collectively, and Swing Loan
shall mean separately, all swing loans or any swing loan made by PNC to
the Co-Borrowers pursuant to Sections 2.1(b) and 2.6(b).
Swing Note shall mean the Swing Note of the
Co-Borrowers in the form of Exhibit 1.1(S) evidencing the Swing Loans,
together with all amendments, extensions, renewals, restatements,
refinancings or refundings thereof in whole or in part.
Term Loan Base Rate Margin shall have the meaning
specified in Section 4.1(c).
- 25 -
26
Term Loan Base Rate Option shall mean the option of
▇▇▇▇▇▇ Homes to have Term Loans bear interest at the rate and under the
terms and conditions set forth in Section 4.1(b)(i).
Term Loan Base Rate Portion shall mean the portion of
the Term Loans bearing interest at any time under the Term Loan Base
Rate Option.
Term Loan Commitment shall mean, as to any Bank at
any time, the amount initially set forth opposite its name on Schedule
1.1(B) in the column labeled "Amount of Commitment for Term Loans," and
thereafter on Schedule I to the most recent Assignment and Assumption
Agreement, and Term Loan Commitments shall mean the aggregate Term Loan
Commitments of all of the Banks.
Term Loan Euro-Rate Option shall mean the option of
▇▇▇▇▇▇ Homes to have Term Loans bear interest at the rate and under the
terms and conditions set forth in Section 4.1(b)(ii).
Term Loan Euro-Rate Portion shall mean the portion of
the Term Loans bearing interest at any time under the Term Loan
Euro-Rate Option.
Term Loan Maturity Date shall mean April 1, 2001.
Term Loans shall mean collectively, and Term Loan
shall mean separately, all term loans or any term loan made by the
Banks or one of the Banks to ▇▇▇▇▇▇ Homes pursuant to Section 3.1.
Term Notes shall mean collectively, and Term Note
shall mean separately, all of the Term Notes of ▇▇▇▇▇▇ Homes in the
form of Exhibit 1.1(T) evidencing the Term Loans, together with all
amendments, extensions, renewals, restatements, replacements,
refinancings or refunds thereof in whole or in part.
Transferor Bank shall mean the selling Bank pursuant
to an Assignment and Assumption Agreement.
Unsold Building Inventory shall mean, on any date of
determination, the aggregate book value, determined in accordance with
GAAP (excluding capitalized interest) of all Active Units which are not
subject to an Agreement of Sale and the lots (and related site
improvements and development costs) under such Active Units to be sold
therewith, provided that with respect to each such Active Unit, the
applicable Loan Party has received Regulatory Approval. Any asset which
is Sold Inventory, Model Inventory, Approved Developed Lots Inventory,
Approved Land Under Development Inventory or Approved Land Inventory is
excluded from Unsold Building Inventory.
▇▇▇▇▇▇ Holdings shall mean ▇▇▇▇▇▇ Holdings, Inc., a
corporation organized and existing under the laws of the State of Ohio.
- 26 -
27
▇▇▇▇▇▇ Homes shall mean ▇▇▇▇▇▇ Homes, Inc., a
corporation organized and existing under the laws of the State of Ohio.
▇▇▇▇▇▇ Homes Receivable shall have the meaning set
forth in Section 8.2(d)(vi).
▇▇▇▇▇▇ Indiana shall mean ▇▇▇▇▇▇ Homes of Indiana,
L.L.C., a limited liability company organized and existing under the
laws of the State of Indiana.
▇▇▇▇▇▇ Kentucky shall mean ▇▇▇▇▇▇ Homes Kentucky,
LLC, a limited liability company organized and existing under the laws
of the Commonwealth of Kentucky.
▇▇▇▇▇▇ National shall mean ▇▇▇▇▇▇ National
Corporation, a corporation organized and existing under the laws of the
State of Ohio.
▇▇▇▇▇▇ National Cash Flow From Operations shall mean,
for any period of determination, the following with respect to ▇▇▇▇▇▇
National and its Subsidiaries for each item for such period determined
and consolidated in accordance with GAAP: (i) the sum of net income,
depreciation, amortization, other noncash charges to net income,
interest expense and income tax expense minus (ii) noncash credits to
net income.
▇▇▇▇▇▇ National Fixed Charges shall mean, for any
period of determination, the sum of interest incurred (capitalized and
expensed) plus scheduled principal installments of Indebtedness plus
dividends (to the extent paid in cash), in each case of ▇▇▇▇▇▇ National
and its Subsidiaries and First Cincinnati Land LLC and First Cincinnati
Leasing LLC, for such period determined and consolidated in accordance
with GAAP.
▇▇▇▇▇▇ National Tangible Net Worth shall mean, as of
any date of determination, total stockholders' equity minus intangible
assets, in each case of ▇▇▇▇▇▇ National and its Subsidiaries as of such
date determined and consolidated in accordance with GAAP (excluding
First Cincinnati Land LLC and First Cincinnati Leasing LLC).
▇▇▇▇▇▇ National Total Liabilities shall mean, for the
fiscal quarter then ended, all Indebtedness and, without duplication,
all other liabilities including minority interests of ▇▇▇▇▇▇ National
and its Subsidiaries, determined and consolidated in accordance with
GAAP (excluding First Cincinnati Land LLC and First Cincinnati Leasing
LLC).
1.2. Construction.
Unless the context of this Agreement otherwise clearly
requires, references to the plural include the singular, the singular
the plural, and the part the whole, "or" has the inclusive meaning
represented by the phrase "and/or," and "including" has the meaning
represented by the phrase "including without limitation." References in
this Agreement to "determination" of or by the Agent or the Banks shall
be deemed to include good-faith estimates by the Agent or the Banks (in
the case of quantitative determinations) and good-faith beliefs by the
Agent or the Banks (in the case of qualitative determinations).
Whenever the Agent or the Banks are granted
- 27 -
28
the right herein to act in its or their sole discretion, or to grant or
withhold consent, such right shall be exercised in good faith. The
words "hereof," "herein," "hereunder" and similar terms in this
Agreement refer to this Agreement as a whole and not to any particular
provision of this Agreement. The section and other headings contained
in this Agreement and the Table of Contents preceding this Agreement
are for reference purposes only and shall not control or affect the
construction of this Agreement or the interpretation thereof in any
respect. Section, subsection, schedule and exhibit references are to
this Agreement unless otherwise specified.
1.3. Accounting Principles.
Except as otherwise provided in this Agreement, all
computations and determinations as to accounting or financial matters
and all financial statements to be delivered pursuant to this Agreement
shall be made and prepared in accordance with GAAP (including
principles of consolidation where appropriate), and all accounting or
financial terms shall have the meanings ascribed to such terms by GAAP.
2. REVOLVING CREDIT AND SWING LOAN FACILITIES
2.1. The Commitments.
(a) Revolving Credit Commitments.
Subject to the terms and conditions hereof and
relying upon the representations and warranties herein set forth, each
Bank severally agrees to make Revolving Credit Loans to the
Co-Borrowers at any time or from time to time on or after the date
hereof to, but not including, the Revolving Credit Expiration Date;
provided that, after giving effect to such Revolving Credit Loans, (i)
the aggregate principal amount of each Bank's Revolving Credit Loans
outstanding hereunder shall not exceed, at any one time, such Bank's
Revolving Credit Commitment minus such Bank's Ratable Share of the
Letter of Credit Outstandings, and (ii) the aggregate of the Revolving
Facility Usage minus Eligible Development Costs shall not exceed the
Borrowing Base. Within such limits of time and amount and subject to
the other provisions of this Agreement, the Co-Borrowers may borrow,
repay and reborrow pursuant to this Section 2.1(a).
(b) Swing Loan Commitment.
Subject to the terms and conditions hereof and
relying upon the representations and warranties herein set forth, and
in order to facilitate loans and repayments between Settlement Dates,
PNC may make, at its option, cancelable at any time for any reason
whatsoever, swing loans (the "Swing Loans") to the Co-Borrowers at any
time or from time to time after the date hereof to, but not including,
the Revolving Credit Expiration Date in an aggregate principal amount
up to $5,000,000 (the "Swing Loan Commitment"), provided that the
aggregate principal amount of PNC's Swing Loans and the Revolving
Credit Loans of all the Banks at any one time outstanding shall not
exceed the Revolving Credit Commitments of all the Banks. Within such
limits of time and amount and subject to the other provisions of this
- 28 -
29
Agreement, the Co-Borrowers may borrow, repay and reborrow pursuant to
this Section 2.1(b).
2.2. Nature of the Banks' and the Borrowers' Obligations.
Each Bank shall be obligated to participate in each request
for Revolving Credit Loans pursuant to Section 2.6 in accordance with
its Ratable Share. The aggregate of each Bank's Revolving Credit Loans
outstanding hereunder to the Co-Borrowers at any time shall never
exceed its Revolving Credit Commitment minus its Ratable Share of the
Letter of Credit Outstandings at such time. The obligations of each
Bank hereunder are several. The failure of any Bank to perform its
obligations hereunder shall not affect the obligations of the
Co-Borrowers to any other party, nor shall any other party be liable
for the failure of such Bank to perform its obligations hereunder. The
Banks shall have no obligation to make Revolving Credit Loans hereunder
on or after the Revolving Credit Expiration Date.
2.3. Certain Fees.
(a) Facility Fees; Extension Fee.
As consideration for each Bank's Revolving Credit
Commitment, a nonrefundable facility fee equal to 0.125% of such Bank's
Revolving Credit Commitment was paid to the Agent for the account of
each Bank on the Original Closing Date. The Co-Borrowers paid to the
Agent for the account of each Bank, as consideration for the extension
of the Revolving Credit Expiration Date pursuant to the Amended and
Restated Credit Agreement, a nonrefundable facility fee equal to 0.03%
of each Bank's Revolving Credit Commitment on the closing date for the
Amended and Restated Credit Agreement. The Co-Borrowers hereby agree to
pay to the Agent for the account of each Bank, as consideration for the
extension of the Revolving Credit Expiration Date pursuant to this
Agreement, a nonrefundable facility fee equal to 0.25% of each Bank's
Revolving Credit Commitment on the Closing Date.
(b) Commitment Fee.
Accruing from the Original Closing Date until the
Revolving Credit Expiration Date, the Co-Borrowers agree to pay to the
Agent for the account of each Bank, as consideration for such Bank's
Revolving Credit Commitment hereunder, a commitment fee (the
"Commitment Fee") equal to a percentage per annum (computed on the
basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed) which shall be based upon the Leverage Ratio for the
immediately preceding fiscal quarter, as shown on the Co-Borrowers'
most recently delivered financial statements pursuant to Section 8.3(0)
or 8.3(c), as follows, and subject to adjustment as set forth in
Section 4.1(c)(ii), on the average daily unborrowed amount of such
Bank's Revolving Credit Commitment as the same may be constituted from
time to time (for purposes of this computation, PNC's Swing Loans shall
be deemed to be borrowed amounts under its Revolving Credit Commitment,
Letter of Credit Outstandings shall be deemed to be borrowed amounts
under each Bank's Revolving Credit Commitments in accordance with its
Ratable Share, and the amount of any Revolving Credit Loans that any
Bank wrongfully fails to fund shall not be deemed to be an unborrowed
amount under such Bank's Revolving Credit Commitment):
- 29 -
30
Leverage Ratio Commitment Fee
-------------- --------------
Equal to or greater than 2.00 to 1.00 .40%
Less than 1.99 to 1.00 but greater than or equal to 1.75 to 1.00 .35%
Less than 1.74 to 1.00 but greater than 1.50 to 1.00 .30%
Less than 1.49 to 1.00 but greater than 1.25 .25%
Equal to or less than 1.24 to 1.00 .20%
All Commitment Fees shall be payable in arrears on the first Business
Day of each July, October, January and April after the date hereof, on
the Revolving Credit Expiration Date and upon any acceleration of the
Notes.
2.4. Permanent Reductions of Commitments.
(a) Voluntary Reductions.
The Co-Borrowers shall be permitted, without premium
or penalty, at any time upon five (5) Business Days' notice to the
Agent, to reduce permanently the Revolving Credit Commitments in an
aggregate amount of not less than $1,000,000 and in integral multiples
thereof for amounts in excess of $1,000,000, and each Bank's Revolving
Credit Commitments shall be reduced in accordance with its Ratable
Share; provided, however, the principal amount of all Revolving Credit
Loans outstanding at any time shall not be permitted to exceed the
Revolving Credit Commitments of all the Banks at such time.
(b) Effect of Reductions.
After each such reduction, the Commitment Fee shall
be calculated upon the Revolving Credit Commitments of the Banks as so
reduced, and the amount of the reduction of the Revolving Credit
Commitments may not be reinstated.
2.5. Loan Requests.
(a) Revolving Credit Loan Requests.
Except as otherwise provided herein, the Co-Borrowers
may from time to time prior to the Revolving Credit Expiration Date
request the Banks to make Revolving Credit Loans, or renew or convert
the Interest Rate Option applicable to existing Revolving Credit Loans,
by the delivery to the Agent, not later than 2:00 p.m., Cincinnati
time, (i) three (3) Business Days prior to the proposed Borrowing Date
with respect to the making of Revolving Credit Loans to which the
Euro-Rate Option applies or the conversion to or the renewal of the
Euro-Rate Option for any Revolving Credit Loans, and (ii) not later
than 11:00 a.m., Cincinnati time, on the proposed Borrowing Date with
respect to the making of a Revolving Credit Loan to which the Base Rate
Option applies or the last day of the preceding Euro-Rate Interest
Period
- 30 -
31
with respect to the conversion to the Base Rate Option for any
Revolving Credit Loan, of a duly completed request therefor
substantially in the form of Exhibit 2.5(a) or a request by telephone
immediately confirmed in writing by letter, facsimile or telex (each, a
"Revolving Credit Loan Request" or "Loan Request"), it being understood
that the Agent may rely on the authority of any person making such a
telephonic request without the necessity of receipt of such written
confirmation. Each Revolving Credit Loan Request shall be irrevocable
and shall specify (i) the proposed Borrowing Date; (ii) the aggregate
principal amount of the proposed Revolving Credit Loans comprising the
Borrowing Tranche, which shall be in integral multiples of $250,000 and
not less than $750,000 for Revolving Credit Loans to which the
Euro-Rate Option applies and not less than the lesser of $500,000 or
the maximum amount available under the Revolving Credit Commitments for
Revolving Credit Loans to which the Base Rate Option applies; (iii)
whether the Euro-Rate Option or the Base Rate Option shall apply to the
proposed Revolving Credit Loans comprising the Borrowing Tranche; and
(iv) in the case of Revolving Credit Loans to which the Euro-Rate
Option applies, an appropriate Euro-Rate Interest Period for the
proposed Revolving Credit Loans comprising the Borrowing Tranche. If no
such notice is given at least three (3) Business Days prior to the
expiration of any Euro-Rate Interest Period for any Revolving Credit
Loan or portion thereof, the Co-Borrowers shall be deemed to have
converted such Revolving Credit Loan or portion thereof to the Base
Rate Option commencing upon the last day of that Euro-Rate Interest
Period.
(b) Swing Loan Requests.
Except as otherwise provided herein, the Co-Borrowers
may from time to time prior to the Revolving Credit Expiration Date
request PNC to make Swing Loans by delivery to PNC, not later than
11:00 a.m., Cincinnati time, on the proposed Borrowing Date, of a duly
completed request therefor substantially in the form of Exhibit 2.5(b)
or a request by telephone immediately confirmed in writing by letter,
facsimile or telex (each, a "Swing Loan Request" or "Loan Request"), it
being understood that the Agent may rely on the authority of any person
making such a telephonic request without the necessity of receipt of
such written confirmation. Each Swing Loan Request shall be irrevocable
and shall specify the proposed Borrowing Date and the principal amount
of such Swing Loan, which shall not be less than $100,000.
2.6. Making Loans.
(a) Revolving Credit Loans.
The Agent shall, promptly after receipt by it of a
Revolving Credit Loan Request pursuant to Section 2.5(a), notify the
Banks of its receipt of such Revolving Credit Loan Request, specifying:
(i) the proposed Borrowing Date and the time and method of disbursement
of such Revolving Credit Loan; (ii) the amount and type of such
Revolving Credit Loan and the applicable Euro-Rate Interest Period (if
any); and (iii) the apportionment among the Banks of the Revolving
Credit Loans as determined by the Agent in accordance with Section 2.2.
Each Bank shall remit the principal amount of each Revolving Credit
Loan to the Agent such that the Agent is able to, and the Agent shall,
to the extent the Banks have made funds available to it for such
- 31 -
32
purpose, fund such Revolving Credit Loan to the Co-Borrowers in U.S.
Dollars and immediately available funds at the Principal Office prior
to 3:00 p.m., Cincinnati time, on the Borrowing Date; provided that if
any Bank fails to remit such funds to the Agent in a timely manner, the
Agent may elect in its sole discretion to fund with its own funds the
Revolving Credit Loan of such Bank on the Borrowing Date; and provided,
further, that such funding by the Agent shall not be deemed to increase
the Revolving Credit Commitment of the Agent or to reduce the Revolving
Credit Commitment of such Bank.
(b) Swing Loans.
(i) Swing Loans Pursuant to Swing Loan Requests. So
long as PNC elects to make Swing Loans, PNC shall, after receipt by it
of a Swing Loan Request pursuant to Section 2.5(b), fund such Swing
Loan to the Co-Borrowers in U.S. Dollars and immediately available
funds at the Principal Office prior to 5:00 p.m., Cincinnati time, on
the Borrowing Date; provided that after PNC receives notice of default
as set forth in Section 10.9, PNC shall not make any Swing Loans under
Section 2.6(b)(i) or (ii).
(ii) Swing Loans Pursuant to Money Management
Arrangements. So long as PNC elects to make Swing Loans, on any
Business Day in which there is an aggregate negative balance in respect
of the accounts relating to the Money Management Arrangements, PNC
shall, on behalf of the Co-Borrowers and without the requirement that
the Co-Borrowers deliver a Swing Loan Request pursuant to Section
2.5(b), make a Swing Loan to the Co-Borrowers in an amount equal to the
lesser of (a) the amount of the negative balance or (b) $2,500,000, but
in no event more than the amount, if any, available under the Swing
Loan Commitment, which amount shall be deposited in an account related
to the Money Management Arrangements.
2.7. Borrowings to Repay Swing Loans.
Any aggregate positive balance in the accounts related to the
Money Management Arrangements shall, to the extent available at the end
of a Business Day, be automatically applied to the repayment of the
outstanding balance of the Swing Loans. In addition, PNC may, at its
option, exercisable at any time for any reason whatsoever, demand
repayment of the Swing Loans, and each Bank shall make a Revolving
Credit Loan in an amount equal to such Bank's Ratable Share of the
aggregate principal amount of the outstanding Swing Loans, plus, if PNC
so requests, accrued interest thereon, provided that no Bank shall be
obligated in any event to make Revolving Credit Loans in excess of its
Revolving Credit Commitment. Revolving Credit Loans made pursuant to
the preceding sentence shall bear interest at the Base Rate Option and
shall be deemed to have been properly requested in accordance with
Section 2.5(a) without regard to any of the requirements of that
provision. PNC shall provide notice to the Banks (which may be
telephonic or written notice by letter, facsimile or telex) that such
Revolving Credit Loans are to be made under this Section 2.7 and of the
apportionment among the Banks, and the Banks shall be unconditionally
obligated to fund such Revolving Credit Loans (whether or not the
conditions specified in Section 7.2 are then satisfied) by the time PNC
so requests, which shall not be earlier than 3:00 p.m., Cincinnati
time, on the Business Day next succeeding the date the Banks receive
- 32 -
33
such notice from PNC.
2.8. Notes.
(a) Revolving Credit Notes.
The obligation of the Co-Borrowers to repay the
aggregate unpaid principal amount of the Revolving Credit Loans made to
it by each Bank, together with interest thereon, shall be evidenced by
a promissory note of the Co-Borrowers dated the date hereof in the form
of Exhibit 1.1(R) payable to the order of each Bank in a face amount
equal to the Revolving Credit Commitment of such Bank. The Revolving
Credit Notes shall be payable in full on the Revolving Credit
Expiration Date or earlier acceleration of the Notes.
(b) Swing Note.
The obligation of the Co-Borrowers to repay the
unpaid principal amount of the Swing Loans made to it by PNC, together
with interest thereon, shall be evidenced by a demand promissory note
of the Co-Borrowers dated the date hereof in the form of Exhibit 1.1(S)
payable to the order of PNC in a face amount equal to the Swing Loan
Commitment.
2.9. Letter of Credit Subfacility.
(a) Issuance of Letters of Credit.
The Co-Borrowers may request the issuance of a letter
of credit (each a "Letter of Credit") on behalf of any Co-Borrower or a
Guarantor by delivering to the applicable Issuing Letter of Credit Bank
with a copy to the Agent a completed application and agreement for
letters of credit in such form as the applicable Issuing Letter of
Credit Bank may specify from time to time by no later than 11:00 a.m.,
Cincinnati time, at least three (3) Business Days, or such shorter
period as may be agreed to by the applicable Issuing Letter of Credit
Bank, in advance of the proposed date of issuance. Subject to the terms
and conditions hereof and in reliance on the agreements of the other
Banks set forth in this Section 2.9, such Issuing Letter of Credit Bank
will issue a Letter of Credit; provided that each Letter of Credit
shall (A) have a maximum maturity of twenty-four (24) months from the
date of issuance and (B) in no event expire later than five (5)
Business Days prior to the Revolving Credit Expiration Date; and
provided, further, that in no event shall (i) the Letter of Credit
Outstandings exceed, at any one time, $15,000,000, (ii) the Revolving
Facility Usage exceed, at any one time, the Revolving Credit
Commitments, or (iii) the Revolving Facility Usage exceed the Borrowing
Base. Each of the Rollover LCs listed on Schedule 2.9(a) has been
deemed to have been issued hereunder on the Original Closing Date by
the applicable Issuing Letter of Credit Bank and shall be deemed to be
a Letter of Credit for all purposes of this Agreement.
(b) Participations.
Immediately upon issuance of each Letter of Credit,
and without further action, each Bank shall be deemed to, and hereby
agrees that it shall, have irrevocably purchased
- 33 -
34
for such Bank's own account and risk from the applicable Issuing Letter
of Credit Bank an individual participation interest in such Letter of
Credit and drawings thereunder in an amount equal to such Bank's
Ratable Share of the maximum amount which is or at any time may become
available to be drawn thereunder, and each such Bank shall be
responsible to reimburse such Issuing Letter of Credit Bank immediately
for its Ratable Share of any disbursement under any Letter of Credit
which has not been reimbursed by the Co-Borrowers in accordance with
Section 2.9(d).
(c) Letter of Credit Fees.
The Co-Borrowers shall pay to the Agent for the
ratable account of the Banks a fee (the "Letter of Credit Fee") equal
to one and one-eighth percent (1-1/8%) per annum (computed on the basis
of a year of 360 days and actual days elapsed), which fee shall be
computed on the daily average Letter of Credit Outstandings. The Letter
of Credit Fee shall be payable quarterly in arrears commencing with the
first Business Day of each July, October, January and April following
issuance of each Letter of Credit and on the Revolving Credit
Expiration Date and any earlier acceleration of the Notes. The
Co-Borrowers shall pay to the applicable Issuing Letter of Credit Bank
for its own account a fronting fee as determined by such Issuing Letter
of Credit Bank and the Co-Borrowers. The Co-Borrowers shall also pay to
the applicable Issuing Letter of Credit Bank for its sole account the
Issuing Letter of Credit Bank's then-in-effect customary fees and
administrative expenses payable with respect to the Letters of Credit
as such Issuing Letter of Credit Bank may generally charge or incur
from time to time in connection with the issuance, maintenance,
modification (if any), assignment or transfer (if any), negotiation and
administration of Letters of Credit.
(d) Disbursements, Reimbursement.
The Co-Borrowers shall be obligated immediately to
reimburse the applicable Issuing Letter of Credit Bank for all amounts
which such Issuing Letter of Credit Bank is required to advance
pursuant to the Letters of Credit (collectively, the "Reimbursement
Obligations"). The applicable Issuing Letter of Credit Bank will
promptly notify (A) the Co-Borrowers of each demand or presentment for
payment or other drawing under each Letter of Credit issued by such
Issuing Letter of Credit Bank, and (B) the Agent of the amount required
to be paid by such Issuing Letter of Credit Bank pursuant to each such
Letter of Credit. The Agent shall promptly notify each Bank of the
amount required to be paid by such Bank as a result of a drawing upon
such Letter of Credit if the applicable Issuing Letter of Credit Bank
shall have notified the Agent that the Co-Borrowers have not timely
reimbursed such Issuing Letter of Credit Bank for such draw. If such
notice is received by a Bank before 10:00 a.m., Cincinnati time, such
Bank shall deliver such Bank's Ratable Share of such payment in
immediately available funds to the Agent on that Business Day. If such
notice is received by a Bank after 10:00 a.m., Cincinnati time, such
Bank shall, before 10:00 a.m., Cincinnati time, on the next succeeding
Business Day, deliver to the Agent such Bank's Ratable Share of such
payment as a Revolving Credit Loan from such Bank in immediately
available funds. Upon receipt of each Bank's Ratable Share of such
payment, the Agent shall immediately deliver such Bank's Ratable Share
of such payment to the applicable Issuing Letter of Credit Bank. Such
amounts advanced
- 34 -
35
shall become, at the time the amounts are advanced, Revolving Credit
Loans from the Banks. Such Revolving Credit Loans shall bear interest
at the rate applicable under the Base Rate Option unless the
Co-Borrowers elect to have a different Interest Rate Option apply to
such Revolving Credit Loans pursuant to and in accordance with the
provisions contained in Section 4.1.
(e) Documentation.
The Co-Borrowers agree to be bound by the terms of
each Issuing Letter of Credit Bank's application and agreement for
Letters of Credit and each Issuing Letter of Credit Bank's written
regulations and customary practices relating to Letters of Credit,
though such interpretation may be different from the Co-Borrowers' own.
In the event of a conflict between such application or agreement and
this Agreement, this Agreement shall govern. It is understood and
agreed that, except in the case of gross negligence or willful
misconduct, the Issuing Letter of Credit Bank shall not be liable for
any error, negligence and/or mistakes, whether of omission or
commission, in following the Co-Borrowers' instructions or those
contained in the Letters of Credit or any modifications, amendments or
supplements thereto.
(f) Determinations to Honor Drawing Requests.
In determining whether to honor any request for
drawing under any Letter of Credit by the beneficiary thereof, the
applicable Issuing Letter of Credit Bank shall be responsible only to
determine that the documents and certificates required to be delivered
under such Letter of Credit have been delivered and that they comply on
their face with the requirements of such Letter of Credit.
(g) Nature of Participation and Reimbursement Obligations.
The obligation of the Banks to participate in Letters
of Credit pursuant to Section 2.9(b), the obligation of the Banks
pursuant to Section 2.9(d) to fund Revolving Credit Loans upon a draw
under a Letter of Credit and the obligation of the Co-Borrowers to
reimburse the applicable Issuing Letter of Credit Bank upon a draw
under a Letter of Credit pursuant to Section 2.9(d) shall be absolute,
unconditional and irrevocable and shall be performed strictly in
accordance with the terms of such Sections under all circumstances,
including the following circumstances:
(i) the failure of the Co-Borrowers or any
other Person to comply with the conditions set forth in Section 2.1,
2.5, 2.6 or 7.2 or as otherwise set forth in this Agreement for the
making of a Revolving Credit Loan, it being acknowledged that such
conditions are not required for the making of a Revolving Credit Loan
under Section 2.9(d);
(ii) any lack of validity or enforceability
of any Letter of Credit;
(iii) the existence of any claim, set-off,
defense or other right which the Co-Borrowers, any other Loan Party or
any Bank may have at any time against a beneficiary or any transferee
of any Letter of Credit (or any Person for whom any such transferee may
be acting), the Agent or other Bank or any other Person or, whether in
connection with this
- 35 -
36
Agreement, the transactions contemplated herein or any unrelated
transaction (including any underlying transaction between the
Co-Borrowers or Subsidiaries of the Co-Borrowers and the beneficiary
for which any Letter of Credit was procured);
(iv) any draft, demand, certificate or other
document presented under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;
(v) payment by the applicable Issuing Letter
of Credit Bank under any Letter of Credit against presentation of a
demand, draft or certificate or other document which does not comply
with the terms of such Letter of Credit;
(vi) any adverse change in the business,
operations, properties, assets, condition (financial or otherwise) or
prospects of the Co-Borrowers or Subsidiaries of the Co-Borrowers;
(vii) any breach of this Agreement or any
other Loan Document by any party thereto;
(viii) any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing;
(ix) the fact that an Event of Default or a
Potential Default shall have occurred and be continuing; or
(x) the Revolving Credit Expiration Date
shall have passed or this Agreement or the Revolving Credit Commitments
hereunder shall have been terminated.
(h) Indemnity.
In addition to amounts payable as provided in Section
10.5, the Co-Borrowers hereby agree to protect, indemnify, pay and save
harmless each Issuing Letter of Credit Bank from and against any and
all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable fees, expenses and disbursements of
counsel and allocated costs of internal counsel) which such Issuing
Letter of Credit Bank may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit, other
than as a result of (A) the gross negligence or willful misconduct of
such Issuing Letter of Credit Bank as determined by a final judgment of
a court of competent jurisdiction, or (B) subject to the following
clause (ii), the wrongful dishonor by such Issuing Letter of Credit
Bank of a proper demand for payment made under any Letter of Credit; or
(ii) the failure of such Issuing Letter of Credit Bank to honor a
drawing under any such Letter of Credit as a result of any act or
omission, whether rightful or wrongful, of any present or future de
jure or de facto government or governmental authority (all such acts or
omissions herein called "Governmental Acts").
(i) Liability for Acts and Omissions.
- 36 -
37
As between any Loan Party and each Issuing Letter of
Credit Bank, the Co-Borrowers assume all risks of the acts and
omissions of, or misuse of the Letters of Credit by, the respective
beneficiaries of such Letters of Credit. In furtherance and not in
limitation of the foregoing, the applicable Issuing Letter of Credit
Bank shall not be responsible for: (i) the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document submitted by any
party in connection with the application for an issuance of any such
Letter of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (ii)
the validity or sufficiency of any instrument transferring or assigning
or purporting to transfer or assign any such Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in part,
which may prove to be invalid or ineffective for any reason; (iii)
failure of the beneficiary of any such Letter of Credit to comply fully
with any conditions required in order to draw upon such Letter of
Credit; (iv) errors, omissions, interruptions or delays in transmission
or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (v) errors in
interpretation of technical terms; (vi) any loss or delay in the
transmission or otherwise of any document required in order to make a
drawing under any such Letter of Credit or of the proceeds thereof;
(vii) the misapplication by the beneficiary of any such Letter of
Credit; or (viii) any consequences arising from causes beyond the
control of such Issuing Letter of Credit Bank, including any
Governmental Acts, and none of the above shall affect or impair, or
prevent the vesting of, any of such Issuing Letter of Credit Bank's
rights or powers hereunder.
In furtherance and extension, and not in limitation,
of the specific provisions set forth above, any action taken or omitted
by the applicable Issuing Letter of Credit Bank under or in connection
with the Letters of Credit issued by it or any documents and
certificates delivered thereunder, if taken or omitted in good faith,
shall not put such Issuing Letter of Credit Bank under any resulting
liability to the Co-Borrowers.
The Banks and any Loan Party may not commence a
proceeding against any Issuing Letter of Credit Bank for wrongful
disbursement under a Letter of Credit as a result of acts or omissions
constituting gross negligence or willful misconduct of such Issuing
Letter of Credit Bank until the Banks have made and the Co-Borrowers
have repaid the Revolving Credit Loans described in Section 2.9(d).
2.10. Extension by Banks of the Revolving Credit Expiration Date.
Upon or promptly after delivery by the Co-Borrowers of the
annual financial statements to be provided under Section 8.3(c) for the
fiscal year ending December 31, 1997 or any subsequent fiscal year, the
Co-Borrowers may request a one-year extension of the Revolving Credit
Expiration Date by written notice to the Banks, and the Banks agree to
respond to the Co-Borrowers' request for an extension within sixty (60)
days following receipt of the request; provided, however, that all the
Banks must consent to any extension of the Revolving Credit Expiration
Date, and the failure of the Banks to respond within such time period
shall not in any manner constitute an extension of the Revolving Credit
Expiration Date.
2.11. Use of Proceeds.
- 37 -
38
The proceeds of the Revolving Credit Loans shall be used for
lawful purposes in accordance with the second recital clause above.
3. TERM LOANS
3.1. Term Loan Commitments.
Subject to the terms and conditions hereof and relying upon
the representations and warranties herein set forth, each Bank made a
term loan (the "Term Loan") to ▇▇▇▇▇▇ Homes on the Original Closing
Date in the principal amount of such Bank's Term Loan Commitment.
3.2. Nature of Banks' Obligations With Respect to Term Loans.
The Banks shall have no obligation to make Term Loans
hereunder after the Original Closing Date. The Term Loan Commitments
are not revolving credit commitments, and ▇▇▇▇▇▇ Homes shall not have
the right to borrow, repay or reborrow under Section 3.1.
3.3. Term Loan Facility Fee.
As consideration for such Bank's Term Loan Commitment, a
nonrefundable facility fee equal to 0.125% of such Bank's Term Loan
Commitment was paid to the Agent for the account of each Bank by ▇▇▇▇▇▇
Homes on the Original Closing Date.
3.4. Term Loan Notes.
The obligation of ▇▇▇▇▇▇ Homes to repay the unpaid principal
amount of the Term Loans made to it by each Bank, together with
interest thereon, shall be evidenced by a Term Note dated the Original
Closing Date in the form of Exhibit 1.1(T) payable to the order of each
Bank in a face amount equal to the Term Loan Commitment of such Bank.
The principal amount as provided therein of the Term Notes shall be
payable quarterly in arrears on the first Business Day of each July,
October, January and April after the date hereof in twenty (20) equal
quarterly installments of $750,000, beginning on July 1, 1996, with a
final installment on the Term Loan Maturity Date, or in full upon the
earlier acceleration of the Notes.
3.5. Use of Proceeds.
The proceeds of the Term Loans shall be used for lawful
purposes in accordance with the second recital clause above.
4. INTEREST RATES
4.1. Interest Rate Options.
The Borrowers shall pay interest in respect of the outstanding
unpaid principal amount of the Loans as selected by them from the Base
Rate Option or Euro-Rate Option set
- 38 -
39
forth below applicable to the Loans, it being understood that, subject
to the provisions of this Agreement, the Borrowers may select different
Interest Rate Options and different Euro-Rate Interest Periods to apply
simultaneously to the Loans comprising different Borrowing Tranches and
may convert to or renew one or more Interest Rate Options with respect
to all or any portion of the Loans comprising any Borrowing Tranche;
provided that there shall not be at any one time outstanding more than
six (6) Borrowing Tranches in the aggregate among all the Loans
accruing interest at the Euro-Rate Option, and provided, further, that
only the Revolving Credit Base Rate Option shall be applicable with
respect to the Swing Loans. The Agent's determination of a rate of
interest and any change therein shall, in the absence of manifest
error, be conclusive and binding upon all parties hereto. If at any
time the designated rate applicable to any Loan made by the Bank
exceeds such Bank's highest lawful rate, the rate of interest on such
Bank's Loan shall be limited to such Bank's highest lawful rate;
provided, that the portion of interest which exceeds the amount such
Bank can lawfully receive and, thus, is not paid to such Bank shall be
due and payable upon the following Interest Payment Date(s) to the
extent lawfully permissible.
(a) Revolving Credit Interest Rate Options.
The Co-Borrowers shall have the right to select from
the following Interest Rate Options applicable to the Revolving Credit
Loans:
(i) Revolving Credit Base Rate Option: A
fluctuating rate per annum (computed on the basis of a year of (i) 365
or 366 days, as the case may be, and actual days elapsed for Revolving
Credit Loans based on the Agent's prime rate or (ii) 360 days and
actual days elapsed for Revolving Credit Loans based on the Federal
Funds Effective Rate) equal to the Base Rate plus the Revolving Credit
Base Rate Margin (as set forth in Section 4.1(c)), such interest rate
to change automatically from time to time effective as of the effective
date of each change in the Base Rate or the Revolving Credit Base Rate
Margin.
(ii) Revolving Credit Euro-Rate Option: A
rate per annum (computed on a basis of a year of 360 days and actual
days elapsed) equal to the Euro-Rate plus the Revolving Credit
Euro-Rate Margin (as set forth in Section 4.1(c)). The Euro-Rate shall
be adjusted automatically with respect to any Euro-Rate Portion
outstanding on the effective date of any change in the Euro-Rate
Reserve Percentage notwithstanding that such effective date occurs
during a Euro-Rate Interest Period. The Agent shall give prompt notice
to the Co-Borrowers of the Euro-Rate as determined or adjusted in
accordance herewith, which determination shall be conclusive.
(b) Term Loan Interest Rate Options.
▇▇▇▇▇▇ Homes shall have the right to select from the
following Interest Rate Options applicable to the Term Loans:
(i) Term Loan Base Rate Option: A
fluctuating rate per annum (computed on the basis of a year of (i) 365
or 366 days, as the case may be, and actual days elapsed for Term Loans
based on the Agent's prime rate or (ii) 360 days and actual days
elapsed for Term Loans based on the Federal Funds Effective Rate) equal
to the Base Rate plus the Term
- 39 -
40
Loan Base Rate Margin (as set forth in Section 4.1(c)), such interest
rate to change automatically from time to time effective as of the
effective date of each change in the Base Rate or the Term Loan Base
Rate Margin.
(ii) Term Loan Euro-Rate Option: A rate per
annum (computed on a basis of a year of 360 days and actual days
elapsed) equal to the Euro-Rate plus the Term Loan Euro-Rate Margin (as
set forth in Section 4.1(c)). The Euro-Rate shall be adjusted
automatically with respect to any Euro-Rate Portion outstanding on the
effective date of any change in the Euro-Rate Reserve Percentage
notwithstanding that such effective date occurs during a Euro-Rate
Interest Period. The Agent shall give prompt notice to ▇▇▇▇▇▇ Homes of
the Euro-Rate as determined or adjusted in accordance herewith, which
determination shall be conclusive.
(c) Interest Rate Margins.
(i) The base rate margin applicable to
Revolving Credit Loans (the "Revolving Credit Base Rate Margin") on the
Closing Date shall equal one hundred twenty-five thousandths percent
(0.125%). The base rate margin applicable to Term Loans (the "Term Loan
Base Rate Margin") on the Closing Date shall equal one hundred
twenty-five thousandths percent (0.125%). The Euro-Rate margin
applicable to Revolving Credit Loans (the "Revolving Credit Euro-Rate
Margin") on the Closing Date shall equal two and thirty hundredths
percent (2.30%). The Euro-Rate margin applicable to Term Loans (the
"Term Loan Euro-Rate Margin") on the Closing Date shall equal two and
thirty hundredths percent (2.30%). After the Closing Date, the
Revolving Credit and Term Loan Base Rate Margins and the Revolving
Credit and Term Loan Euro-Rate Margins shall be based upon the Leverage
Ratio for the Borrower's immediately preceding fiscal quarter, as shown
on the Borrowers' most recently delivered financial statements pursuant
to Section 8.3(b) or 8.3(c), as follows:
Revolving Term Loan Revolving Term Loan
Credit Euro-Rate Credit Base Base Rate
Leverage Ratio Euro-Rate Margin Margin Rate Margin Margin
-------------- ---------------- ------ ----------- ------
Equal to or greater than 2.00 to 1.00 2.30% 2.30% 0.125% 0.125%
Less than 1.99 to 1.00 but greater than
or equal to 1.75 to 1.00 2.10% 2.10% 0% 0%
Less than 1.74 to 1.00 but greater than 1.90% 1.90% 0% 0%
1.50 to 1.00
Less than 1.49 to 1.00 but greater than 1.25 1.70% 1.70% 0% 0%
Equal to or less than 1.24 to 1.00 1.50% 1.50% 0% 0%
(ii) Except as noted above, in the event the
Leverage Ratio has changed such that a different rate is applicable,
the rate shall be effective as of the first
- 40 -
41
Settlement Date following receipt by the Agent of the financial
statements, notwithstanding that such effective date occurs during a
Euro-Rate Interest Period. In the event the financial statements of the
Borrowers with respect to any fiscal quarter or fiscal year are not
delivered as required under Sections 8.3(b) and 8.3(c), any rate
reduction then in effect shall continue until the first Settlement Date
following receipt by the Agent of financial statements reflecting that
a different Base Rate Margin, Euro-Rate Margin or Commitment Fee is
applicable as a result of a change in the Leverage Ratio; provided,
that if such financial statements indicate that the Euro-Rate Margin,
Base Rate Margin or Commitment Fee should have been higher than the
margins or fee which was in effect, as a result of the Borrowers'
failure to deliver such financial statements in a timely manner, the
Euro-Rate Margin, the Base Rate Margin and Commitment Fee shall be
retroactively adjusted, and the Borrowers shall immediately, upon
written notice from the Agent, pay to the Agent, for the ratable
benefit of the Banks, the additional interest to which the Banks are
entitled.
(d) Rate Quotations.
The Borrowers may call the Agent on or before the
date on which a Loan Request is to be delivered to receive an
indication of the rates then in effect, but it is acknowledged that
such indication shall not be binding on the Agent or the Banks or
affect the rate of interest which thereafter is actually in effect when
the election is made.
4.2. Euro-Rate Interest Periods.
At any time when the Borrowers shall select, convert to or
renew the Euro-Rate Option to apply to any Revolving Credit Loan or
Term Loan, the Borrowers shall notify the Agent thereof at least three
(3) Business Days prior to the effective date of such Euro-Rate Option
by delivering a Loan Request. The notice shall select a Euro-Rate
interest period during which such Interest Rate Option shall apply,
such periods to be one (1), two (2), three (3) or six (6) months (the
"Euro-Rate Interest Periods"); provided that:
(a) any Euro-Rate Interest Period which would otherwise end on a date which
is not a Business Day shall be extended to the next succeeding Business
Day, unless such Business Day falls in the next calendar month, in
which case such Euro-Rate Interest Period shall end on the next
preceding Business Day;
(b) any Euro-Rate Interest Period which begins on the last Business Day of
a calendar month for which there is no numerically corresponding
Business Day in the subsequent calendar month during which such
Interest Period is to end shall end on the last Business Day of such
subsequent month;
(c) the Euro-Rate Portion for each Euro-Rate Interest Period shall be in
integral multiples of $250,000 and not less than $750,000;
(d) the Borrowers shall not select, convert to or renew a Euro-Rate
Interest Period for any portion of the Revolving Credit Loans that
would end after the Revolving Credit Expiration Date or any portion of
the Term Loans that would end after the Term Loan Maturity Date; and
- 41 -
42
(e) in the case of the renewal of the Euro-Rate Option at the end of a
Euro-Rate Interest Period, the first day of the new Euro-Rate Interest
Period shall be the last day of the preceding Euro-Rate Interest
Period, without duplication in payment of interest for such day.
4.3. Interest After Default.
To the extent permitted by Law, upon the occurrence and during
the continuance of an Event of Default, and after expiration of any
applicable grace period, (a) the Letter of Credit Fee applicable
pursuant to Section 2.9(c) shall be increased by 2% per annum until
paid in full (before and after judgment), (b) each Loan shall
thereafter bear interest at a rate per annum equal to 2% above the
applicable Base Rate Option until paid in full (before and after
judgment), and (c) each other obligation hereunder, if not paid when
due, shall bear interest at a rate per annum equal to the sum of the
rate of interest applicable under the Revolving Credit Base Rate Option
plus an additional 2% per annum from the time such obligation becomes
due and payable until paid in full (before and after judgment), payable
on demand. The Borrowers acknowledge that such increased interest rate
reflects, among other things, the fact that such Loans or other amounts
have become a substantially greater risk given their default status and
that the Banks are entitled to additional compensation for such risk.
4.4. Euro-Rate Unascertainable.
If:
(a) on any date on which a Euro-Rate would otherwise be determined, the
Agent shall have determined (which determination shall be conclusive
absent manifest error) that:
(i) adequate and reasonable means do not exist for
ascertaining such Euro-Rate, or
(ii) a contingency has occurred which materially and
adversely affects the London interbank market; or
(b) at any time any Bank shall have determined (which determination shall
be conclusive absent manifest error) that:
(i) the making, maintenance or funding of any Loan to
which the Euro-Rate Option applies has been made impracticable or
unlawful by compliance by such Bank in good faith with any Law or any
interpretation or application thereof by any Official Body or with any
request or directive of any such Official Body (whether or not having
the force of Law), or
(ii) the Euro-Rate Option will not adequately and
fairly reflect the cost to such Bank of the establishment or
maintenance of any Loan, or if any Bank determines after making all
reasonable efforts that deposits of the relevant amount in Dollars for
the relevant Euro-Rate Interest Period for a Loan to which the
Euro-Rate Option applies are not available to such Bank in the London
interbank market,
- 42 -
43
then, in the case of any event specified in subsection (a) above, the
Agent shall promptly so notify the Banks and the Borrowers thereof; and
in the case of an event specified in subsection (b) above, such Bank
shall promptly so notify the Agent and attach a certificate to such
notice as to the specific circumstances of such notice, and the Agent
shall promptly send copies of such notice and certificate to the other
Banks and the Borrowers. Upon such date as shall be specified in such
notice (which shall not be earlier than the date such notice is given),
the obligation of (A) the Banks, in the case of such notice given by
the Agent, or (B) such Bank, in the case of such notice given by such
Bank, to allow the Borrowers to select, convert to or renew the
Euro-Rate Option shall be suspended until the Agent shall have later
notified the Borrowers, or such Bank shall have later notified the
Agent, of the Agent's or such Bank's, as the case may be, determination
(which determination shall be conclusive absent manifest error) that
the circumstances giving rise to such previous determination no longer
exist. If at any time the Agent makes a determination under subsection
(a) of this Section 4.4 or any Bank notifies the Agent of a
determination under subsection (b) of this Section 4.4 and, in either
case, the Borrowers have previously notified the Agent of their
selection of, conversion to or renewal of the Euro-Rate Option and such
Euro-Rate Option has not yet gone into effect, such notification shall
be deemed to provide for selection of, conversion to or renewal of the
Base Rate Option otherwise available with respect to such Loans. If any
Bank notifies the Agent of a determination under subsection (b) of this
Section 4.4, the Borrowers shall, subject to the Borrowers'
indemnification obligations under Section 5.5(b), as to any Loan of the
Bank to which the Euro-Rate Option applies, on the date specified in
such notice either convert such Loan to the Base Rate Option otherwise
available with respect to such Loan or prepay such Loan in accordance
with Section 5.4. Absent due notice from the Borrowers of conversion or
prepayment, such Loan shall automatically be converted to the Base Rate
Option otherwise available with respect to such Loan upon such
specified date.
4.5. Selection of Interest Rate Options
If the Borrowers fail to select a Euro-Rate Interest Period in
accordance with the provisions of Section 4.2 in the case of renewal of
the Euro-Rate Portion, the Borrowers shall be deemed to have converted
such Loan or option thereof to the Base Rate Option otherwise available
with respect to such Loans, commencing upon the last day of that
Euro-Rate Interest Period. If an Event of Default shall occur and be
continuing, the Agent shall limit the Borrowers to the Base Rate Option
hereunder; provided, however, that, unless the Loans have been
accelerated hereunder, such limitation with respect to the Euro-Rate
Portion shall not be effective until the expiration of any applicable
Euro-Rate Interest Period.
5. PAYMENTS
5.1. Payments.
All payments and prepayments to be made in respect of
principal, interest, Commitment Fees, Letter of Credit Fees, Agent's
Fees or other amounts due from the Borrowers hereunder (other than the
fees and expenses referenced in Section 2.9(c) which are to be paid to
the Issuing Letter of Credit Bank as provided in such Section) shall be
payable prior to
- 43 -
44
11:00 a.m., Cincinnati time (or 3:00 p.m., Cincinnati time, in the
event payments are to be made using the proceeds of Loans to be made on
such date), on the date when due without presentment, demand, protest
or notice of any kind, all of which are hereby expressly waived by the
Borrowers, and without set-off, counterclaim or other deduction of any
nature, and an action therefor shall immediately accrue. Such payments
shall be made to the Agent at the Principal Office for the account of
PNC with respect to the Swing Loans and the ratable accounts of the
Banks with respect to the Revolving Credit Loans and Term Loans in U.S.
Dollars and in immediately available funds, and the Agent shall
promptly distribute such amounts to the Banks in immediately available
funds, subject to the provisions of Section 5.6; provided that in the
event payments are received by 11:00 a.m., Cincinnati time, by the
Agent with respect to the Revolving Credit Loans on the Settlement Date
and such payments are not distributed to the Banks on the same day
received by the Agent, the Agent shall pay the Banks the Federal Funds
Effective Rate with respect to the amount of such payments for each day
held by the Agent and not distributed to the Banks. The Agent's and
each Bank's statement of account, ledger or other relevant record
shall, in the absence of manifest error, be conclusive as the statement
of the amount of principal of and interest on the Loans and other
amounts owing under this Agreement and shall be deemed an "account
stated."
The Loan Parties hereby authorize the Agent to charge any
account designated by the Loan Parties related to the Money Management
Arrangements or any deposit account maintained by the Loan Parties,
individually or jointly with others, with PNC for any payment when due
under this Agreement or the other Loan Documents. Payments received
will be applied to charges, fees and expenses (including attorneys'
fees), accrued interest and principal in such order as the Agent may
elect in its sole discretion. In the event there are insufficient
balances in the designated accounts related to the Money Management
Arrangements to pay any charges, fees and expenses (including
attorneys' fees), accrued interest and principal, as any of the same
shall become due, PNC may advance funds as provided in Section
2.6(b)(ii) to the extent there is availability under the Swing Loan
Commitment. Otherwise, any such amounts shall be immediately due and
payable by the Borrowers.
5.2. Pro Rata Treatment of the Banks.
Each borrowing, and each selection of, conversion to or
renewal of any Interest Rate Option and each payment or prepayment by
the Borrowers with respect to principal, interest, Commitment Fees,
Letter of Credit Fees or other fees (except for the Agent's Fees or any
Issuing Letter of Credit Bank's fees) or amounts due from the Borrowers
hereunder to the Banks with respect to the Revolving Credit Loans and
Term Loans, shall (except as provided in Section 4.4(b), 5.4 or 5.5) be
made in proportion to the Revolving Credit Loans and Term Loans
outstanding from each Bank and, if no Revolving Credit Loans or Term
Loans are then outstanding, in proportion to the Ratable Share of each
Bank.
5.3. Interest Payment Dates.
Interest on Loans to which the Base Rate Option applies shall
be due and payable in arrears on the first Business Day of each July,
October, January and April after the date hereof,
- 44 -
45
on the Revolving Credit Expiration Date (with respect to Revolving
Credit Loans and Swing Loans), on the Term Loan Maturity Date (with
respect to Term Loans) and upon any earlier acceleration of the Notes.
Interest on the Euro-Rate Portion shall be due and payable on the last
day of each Euro-Rate Interest Period and, if any such Euro-Rate
Interest Period is longer than three (3) months, also on the ninetieth
(90th) day of such Euro-Rate Interest Period, on the Revolving Credit
Expiration Date (with respect to Revolving Credit Loans), on the Term
Loan Maturity Date (with respect to Term Loans) and upon any earlier
acceleration of the Notes.
5.4. Prepayments.
(a) The Borrowers shall have the right at their option from time to time to
prepay the Loans in whole or part without premium or penalty (except as
provided in subsection (b) below or in Section 5.5):
(i) at any time with respect to any Swing Loan or any
other Loan to which the Base Rate Option applies;
(ii) on the last day of the applicable Euro-Rate
Interest Period with respect to Revolving Credit Loans or Term Loans to
which the Euro-Rate Option applies; and
(iii) on the date specified in a notice by any Bank
pursuant to Section 4.4(b) with respect to any Revolving Credit Loan or
Term Loan to which the Euro-Rate Option applies.
Whenever the Borrowers desire to prepay any part of the Loans,
they shall provide a prepayment notice to the Agent, at least one (1)
Business Day prior to the date of prepayment of Revolving Credit Loans
or Term Loans or no later than 3:00 p.m., Cincinnati time, on the date
of prepayment of Swing Loans, setting forth the following information:
(x) the date, which shall be a Business
Day, on which the proposed
prepayment is to be made; and
(y) the total principal amount of such
prepayment, which shall not be less
than $100,000 for any Swing Loan or
$1,000,000 for any Revolving Credit
Loan or Term Loan.
All prepayment notices shall be irrevocable. The principal
amount of the Loans to which the Euro-Rate Option applies for which a
prepayment notice is given, together with interest on such principal
amount and any related fees, shall be due and payable on the date
specified in such prepayment notice as the date on which the proposed
prepayment is to be made. The principal amount of the Loans to which
the Base Rate Option applies for which a prepayment notice is given
shall be due and payable on the date specified in such prepayment
notice as the date on which the proposed prepayment is made; but
interest on such principal amount and any related fees shall be due and
payable on the next scheduled Interest Payment Date. All prepayments
permitted pursuant to this Section 5.4(a) shall be applied to the
unpaid installments of principal of the Loans in the inverse order of
scheduled maturities. Unless
- 45 -
46
otherwise specified by the Borrowers with respect to prepayments of the
Euro-Rate Portion permitted under this Section 5.4(a)(ii) or (iii)
above, all prepayments shall be applied first to the Base Rate Portion
and then to the Euro-Rate Portion, subject to Section 5.5(b).
(b) In the event any Bank (i) gives notice under Section 4.4(b) or Section
5.5(a), (ii) does not fund Loans because the making of such Loans would
contravene any Law applicable to such Bank pursuant to Section 7.2, or
(iii) becomes subject to the control of an Official Body (other than
normal and customary supervision), then the Borrowers shall have the
right at their option, with the consent of the Agent, which shall not
be unreasonably withheld, to prepay the Loans of such Bank in whole,
together with all interest accrued thereon, within ninety (90) days
after (w) receipt of such Bank's notice under Section 4.4(b) or 5.5(a),
(x) the date such Bank has failed to fund Loans pursuant to Section 7.2
because the making of such Loans would contravene Law applicable to
such Bank, (y) the date of obtaining the consent which such Bank has
not approved, or (z) the date such Bank became subject to the control
of an Official Body, as applicable; provided that the Borrowers shall
also pay to such Bank at the time of such prepayment any amounts
required under Section 5.4(a) and Section 5.5 and any accrued interest
due on such amount and any related fees; provided, however, that the
Revolving Credit Commitment of such Bank shall be provided by one or
more of the remaining Banks or a replacement bank acceptable to the
Agent and the Borrowers in the exercise of their reasonable discretion;
and provided, further, the remaining Banks shall have no obligation
hereunder to increase their Revolving Credit Commitments.
Notwithstanding the foregoing, the Agent may be replaced only in
accordance with Section 10.14, and the Agent must at all times be a
Bank hereunder.
(c) Whenever the Revolving Facility Usage minus the Eligible Development
Costs exceeds the Borrowing Base, the Co-Borrowers shall make, within
three (3) Business Days after the Co-Borrowers learn of such excess and
whether or not the Agent has given notice to such effect, a mandatory
prepayment of principal equal to the excess of the Revolving Facility
Usage minus the Eligible Development Costs over the Borrowing Base,
together with accrued interest on such principal amount at the default
rate set forth in Section 4.3.
5.5. Additional Compensation in Certain Circumstances.
(a) Increased Costs or Reduced Return Resulting From Taxes, Reserves,
Capital Adequacy Requirements, Expenses, Etc.
If any Law, guideline or interpretation, or any
change in any Law, guideline or interpretation or the application
thereof by any Official Body charged with the interpretation or
administration thereof, or compliance with any request or directive
(whether or not having the force of Law) of any central bank or other
Official Body:
(i) subjects any Bank to any tax or changes
the basis of taxation with respect to this Agreement, the Notes, the
Loans or payments by the Borrowers of principal, interest, Commitment
Fees, Letter of Credit Fees, Agent's Fees or other amounts due from the
Borrowers hereunder or under the Notes (except for taxes on the overall
net income of such Bank),
- 46 -
47
(ii) imposes, modifies or deems applicable
any reserve, special deposit or similar requirement against credits or
commitments to extend credit extended by, or assets (funded or
contingent) of, deposits with or for the account of, or other
acquisitions of funds by, any Bank, or
(iii) imposes, modifies or deems applicable
any capital adequacy or similar requirement (A) against assets (funded
or contingent) of, or credits or commitments to extend credit extended
by, any Bank, or (B) otherwise applicable to the obligations of any
Bank under this Agreement,
and the result of any of the foregoing is to increase the cost to,
reduce the income receivable by or impose any expense (including loss
of margin) upon any Bank with respect to this Agreement, the Notes or
the making, maintenance or funding of any part of the Loans (or, in the
case of any capital adequacy or similar requirement, to have the effect
of reducing the rate of return on the capital of such Bank or such
Bank's parent, taking into consideration the customary policies of such
Bank or such Bank's parent with respect to capital adequacy) by an
amount which such Bank in its sole discretion deems to be material,
such Bank shall from time to time notify in writing the Borrowers and
the Agent of the amount determined in good faith (using any averaging
and attribution methods employed in good faith) by such Bank (which
determination shall be conclusive absent manifest error) to be
necessary to compensate such Bank for such increase in cost, reduction
of income or additional expense, provided that a Bank shall not give
the Borrowers notice hereunder unless the Bank is generally imposing
such increased costs on its similarly situated customers. Such notice
shall set forth in reasonable detail the basis for such determination.
Such amount shall be due and payable by the Borrowers to such Bank
within thirty (30) calendar days after such notice is given.
(b) Indemnity.
In addition to the compensation required by
subsection (a) of this Section 5.5, the Borrowers shall indemnify each
Bank against all liabilities, losses or expenses (including loss of
margin and any loss or expense incurred in liquidating or employing
deposits from third parties, including any loss or expense incurred in
connection with funds acquired by a Bank to fund or maintain Loans
subject to the Euro-Rate Option) which such Bank sustains or incurs
hereunder as a result of any:
(i) payment, prepayment, conversion or
renewal of any Loan to which the Euro-Rate Option applies on a day
other than the last day of the corresponding Euro-Rate Interest Period
(whether or not such payment, prepayment, conversion or renewal is
mandatory, voluntary or automatic and whether or not such payment or
prepayment is then due);
(ii) attempt by the Borrowers to revoke
(expressly, by later inconsistent notices or otherwise) in whole or
part any notice relating to Loan Requests under Section 2.5 or
voluntary prepayments under Section 5.4; or
(iii) default by the Borrowers in the
performance or observance of any covenant or condition contained in
this Agreement or any other Loan Document, including any
- 47 -
48
failure of the Borrowers to pay when due (by acceleration or otherwise)
any principal, interest, Commitment Fees, Letter of Credit Fees,
Agent's Fees or any other amount due hereunder.
Notwithstanding the foregoing, nothing in the foregoing
Section 5.5(b)(i), (ii) or (iii) shall be construed to permit the
Borrowers to engage in any action otherwise prohibited hereunder. If
any Bank sustains or incurs any such loss or expense, it shall from
time to time notify the Borrowers of the amount determined in good
faith by such Bank (which determination shall be conclusive absent
manifest error and may include such assumptions, allocations of costs
and expenses and averaging or attribution methods as such Bank shall
deem reasonable) to be necessary to indemnify such Bank for such loss
or expense. Such notice shall set forth in writing in reasonable detail
the basis for such determination. Such amount shall be due and payable
by the Borrowers to such Bank ten (10) Business Days after such notice
is given.
5.6. Settlement Date Procedures.
In order to minimize the transfer of funds between the Banks
and the Agent, the Co-Borrowers may borrow, repay and reborrow Swing
Loans, and PNC may make Swing Loans, as provided in Section 2.1(b)
during the period between Settlement Dates. Not later than noon,
Cincinnati time, on each Settlement Date, the Agent shall notify each
Bank of its Ratable Share of the Loans (including both the Swing Loans
made by the Agent and the Revolving Credit Loans made by the Banks).
Prior to 3:00 p.m., Cincinnati time, on such Settlement Date, each Bank
shall pay to the Agent the amount equal to the positive difference, if
any, between its Ratable Share of the Revolving Credit Loans and Swing
Loans and its Revolving Credit Loans, and the Agent shall pay to each
Bank its Ratable Share of all payments made by the Co-Borrowers to the
Agent with respect to the Revolving Credit Loans. The Agent shall also
effect settlement in accordance with the foregoing sentence on the
proposed Borrowing Dates for Revolving Credit Loans and may at its
option effect settlement on any other Business Day. These settlement
procedures are established solely as a matter of administrative
convenience, and nothing contained in this Section 5.6 shall relieve
the Banks of their obligation to fund Revolving Credit Loans on dates
other than a Settlement Date pursuant to Section 2.7. The Agent may at
any time at its option, for any reason whatsoever, require each Bank to
pay immediately to the Agent such Bank's Ratable Share of the
outstanding Revolving Credit Loans and Swing Loans (provided the
principal amount of such Bank's Revolving Credit Loans shall not exceed
its Revolving Credit Commitment), and each Bank may at any time require
the Agent to pay immediately to such Bank its Ratable Share of all
payments made by the Co-Borrowers to the Agent with respect to the
Revolving Credit Loans.
6. REPRESENTATIONS AND WARRANTIES
6.1. Representations and Warranties.
The Loan Parties jointly and severally represent and warrant
to the Agent and each of the Banks as follows:
(a) Organization and Qualification.
- 48 -
49
Each of the Loan Parties is a corporation or
partnership duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization. Each Loan Party has the
lawful power to own or lease its properties and to engage in the
business it presently conducts or proposes to conduct. Each Loan Party
is duly licensed or qualified and in good standing in each jurisdiction
listed on Schedule 6.1(a) hereto. Schedule 6.1(a) lists all of the
jurisdictions where the property owned or leased by it or the nature of
the business transacted by it or both make such licensing or
qualification necessary.
(b) Capitalization and Ownership.
The authorized capital stock of ▇▇▇▇▇▇ Homes consists
of 18,000,000 shares of common stock, 1,000,000 shares of voting
preferred stock and 1,000,000 shares of nonvoting preferred stock. As
of the date hereof, the number of issued and outstanding shares of
preferred stock is set forth on Schedule 6.1(b). The authorized capital
stock of ▇▇▇▇▇▇ Holdings consists of 850 shares of common stock. As of
the date hereof, the number of issued and outstanding shares of common
and preferred stock is set forth on Schedule 6.1(b). As of the date
hereof, Hearthside has 100 units outstanding; 99 units are owned by
▇▇▇▇▇▇ National and 1 unit is owned by ▇▇▇▇▇▇ Holding. All of the
issued and outstanding capital stock of ▇▇▇▇▇▇ Homes and ▇▇▇▇▇▇
Holdings is owned by ▇▇▇▇▇▇ National. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III and ▇▇▇▇ ▇.
▇▇▇▇▇▇, directly or indirectly, own the issued and outstanding shares
of common stock of ▇▇▇▇▇▇ National set forth on Schedule 6.1(b). There
are no options, warrants or other rights outstanding to purchase any
such shares except as indicated on Schedule 6.1(b).
(c) Subsidiaries.
Schedule 6.1(c) states the name of each of the
Borrowers' Subsidiaries, its jurisdiction of incorporation, its
authorized capital stock, the issued and outstanding shares (referred
to herein as the "Subsidiary Shares") and the owners thereof if it is a
corporation and its outstanding partnership interests (the "Partnership
Interests") if it is a partnership. Each Borrower and each Subsidiary
of each Borrower has good and marketable title to all of the Subsidiary
Shares and Partnership Interests it purports to own, free and clear in
each case of any Lien. All Subsidiary Shares and Partnership Interests
have been validly issued, and all Subsidiary Shares are fully paid and
nonassessable. All capital contributions in connection with the
issuance of the Partnership Interests have been made or paid, as the
case may be. There are no options, warrants or other rights outstanding
to purchase any such Subsidiary Shares or Partnership Interests except
as indicated on Schedule 6.1(c).
(d) Power and Authority.
Each Loan Party has full corporate or partnership or
other power to enter into, execute, deliver and carry out this
Agreement and the other Loan Documents to which it is a party, to incur
the Indebtedness contemplated by the Loan Documents and to perform its
obligations under the Loan Documents to which it is a party, and all
such actions have been duly authorized by all necessary proceedings on
its part.
(e) Validity and Binding Effect.
- 49 -
50
This Agreement on the date hereof has been, and each
other Loan Document to which it is a party on the date on which it is
required to be executed and delivered pursuant hereto shall have been,
duly and validly executed and delivered by each of the Loan Parties.
This Agreement and each of the other Loan Documents delivered by the
Loan Parties pursuant to the provisions hereof will constitute legal,
valid and binding obligations of each of the Loan Parties, enforceable
against each of the Loan Parties in accordance with their respective
terms, except to the extent that enforceability of any of the foregoing
Loan Documents may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforceability of creditors' rights generally or limiting the right of
specific performance.
(f) No Conflict.
Neither the execution and delivery of this Agreement
or the other Loan Documents by the Loan Parties nor the consummation of
the transactions herein or therein contemplated or compliance with the
terms and provisions hereof or thereof by them will conflict with,
constitute a default under or result in any breach of (i) the terms and
conditions of the certificate of incorporation, bylaws or other
organizational documents of any of the Loan Parties or (ii) any Law or
any material agreement or instrument or order, writ, judgment,
injunction or decree to which any of the Loan Parties is a party or by
which it is bound or to which it is subject, or result in the creation
or enforcement of any Lien, charge or encumbrance whatsoever upon any
property (now or hereafter acquired) of any of the Loan Parties.
(g) Litigation.
There are no actions, suits, proceedings or
investigations pending or, to the knowledge of any of the Loan Parties,
threatened against any of the Loan Parties at law or equity before any
Official Body which individually or in the aggregate could reasonably
be expected to result in any Material Adverse Change. None of the Loan
Parties is in violation of any order, writ, injunction or decree of any
Official Body which may result in any Material Adverse Change.
(h) Title to Properties.
Each of the Loan Parties has good and marketable
title to or valid leasehold interest in all properties, assets and
other rights which it purports to own or lease or which are reflected
as owned or leased on its books and records, free and clear of all
Liens and encumbrances except Permitted Liens, and subject to the terms
and conditions of the applicable leases. All leases of property are in
full force and effect. Promptly upon request by the Agent, the
Borrowers will provide to the Agent and the Banks a list of all real
property owned or leased by each of the Loan Parties.
(i) Financial Statements.
(A) Historical Statements. ▇▇▇▇▇▇ Homes has
delivered to the Agent copies of its audited year-end financial
statements for and as of the end of the three (3) fiscal years ended
December 31, 1994 - 1996 and ▇▇▇▇▇▇ National has delivered to the Agent
- 50 -
51
copies of its audited year-end financial statements for and as of the
end of the two (2) fiscal years ended December 31, 1997 - 1998
(collectively, the "Historical Statements"). The Historical Statements
were compiled from the books and records maintained by ▇▇▇▇▇▇ Homes' or
▇▇▇▇▇▇ National's, as applicable, management, are correct and complete
in all material respects and fairly represent the consolidated
financial condition of ▇▇▇▇▇▇ Homes or ▇▇▇▇▇▇ National, as applicable,
as of their dates and the results of operations for the fiscal periods
then ended, and have been prepared in accordance with GAAP consistently
applied.
(B) Financial Projections. The Co-Borrowers
(with respect to the Co-Borrowers and their Subsidiaries) have
delivered to the Agent financial projections for the fiscal year ending
December 31, 1999 derived from assumptions of the Co-Borrowers'
management (collectively, the "Financial Projections"). The Financial
Projections represent a reasonable range of possible results (predicted
to be within such range and not at an exact numerical level) in light
of the history of the business, present and foreseeable conditions and
the intentions of the Co-Borrowers' management. The Financial
Projections with respect to the Co-Borrowers accurately reflect the
liabilities of the Co-Borrowers upon the consummation of the
transactions contemplated hereby as of the Closing Date.
(C) Accuracy of Financial Statements.
Neither ▇▇▇▇▇▇ Homes nor ▇▇▇▇▇▇ National has any material liabilities,
contingent or otherwise, or forward or long-term material commitments
that are not disclosed in the Historical Statements or in the notes
thereto, and except as disclosed therein, there are no unrealized or
anticipated losses from any commitments of ▇▇▇▇▇▇ Homes or ▇▇▇▇▇▇
National which may cause a Material Adverse Change. Since December 31,
1998, no Material Adverse Change has occurred.
(j) Margin Stock.
None of the Loan Parties engages or intends to engage
principally, or as one of its important activities, in the business of
extending credit for the purpose, immediately, incidentally or
ultimately, of purchasing or carrying margin stock (within the meaning
of Regulation U). No part of the proceeds of any Loan has been or will
be used, immediately, incidentally or ultimately, to purchase or carry
any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock or to refund Indebtedness
originally incurred for such purpose, or for any purpose which entails
a violation of or which is inconsistent with the provisions of the
regulations of the Board of Governors of the Federal Reserve System.
None of the Loan Parties holds or intends to hold margin stock in such
amounts that more than 25% of the reasonable value of the assets of
such Loan Party are or will be represented by margin stock.
(k) Full Disclosure.
Neither this Agreement nor any other Loan Document,
nor any certificate, statement, agreement or other document furnished
to the Agent or any Bank by the Loan Parties in connection herewith or
therewith, contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements of the
Loan Parties contained herein and therein, in light of the
circumstances under which they were made, not misleading.
- 51 -
52
(l) Taxes.
All federal, state, local and other tax returns
required to have been filed with respect to each Loan Party have been
filed, and payment or adequate provision for the payment of all taxes,
fees, assessments and other governmental charges which have or may
become due pursuant to said returns or to assessments received has been
made, except to the extent that such taxes, fees, assessments and other
charges are being contested in good faith by appropriate proceedings
diligently conducted and for which such reserves or other appropriate
provisions, if any, as shall be required by GAAP shall have been made.
There are no agreements or waivers extending the statutory period of
limitations applicable to any federal income tax return of any Loan
Party for any period.
(m) Consents and Approvals.
No consent, approval, exemption, order or
authorization of, or a registration or filing with, any Official Body
or any other person is required by any Law or any agreement in
connection with, the execution, delivery and carrying out of this
Agreement and the other Loan Documents by the Loan Parties, except as
listed on Schedule 6.1(m) attached hereto, all of which shall have been
obtained or made on or prior to the Closing Date.
(n) No Event of Default; Compliance With Instruments.
No event has occurred and is continuing and no
condition exists or will exist after giving effect to the borrowings to
be made on the Closing Date under the Loan Documents which constitutes
an Event of Default or Potential Default. None of the Loan Parties is
in violation of (i) any term of its certificate of incorporation,
bylaws or other organizational documents or (ii) any material agreement
or instrument to which it is a party or by which it or any of its
properties may be subject or bound where such violation would
constitute a Material Adverse Change.
(o) Patents, Trademarks, Copyrights, Licenses, Etc.
Each Loan Party owns or possesses all the material
patents, trademarks, service marks, trade names, copyrights, licenses,
registrations, franchises, permits and rights necessary to own and
operate its properties and to carry on its business as presently
conducted and planned to be conducted by such Loan Party, without known
conflict with the rights of others. All material patents, trademarks,
service marks, trade names, copyrights, licenses, registrations,
franchises and permits of each Loan Party are listed and described on
Schedule 6.1(o) hereto.
(p) Insurance.
Schedule 6.1(p) hereto lists all insurance policies
and other bonds to which any of the Loan Parties is a party, all of
which are valid and in full force and effect. No notice has been given
or claim made and no grounds exist to cancel or avoid any of such
policies or bonds or to reduce the coverage provided thereby. Such
policies and bonds provide coverage in
- 52 -
53
amounts sufficient to insure the assets and risks of each of the Loan
Parties in accordance with prudent business practice in the industry of
such Loan Parties.
(q) Compliance With Laws.
Each of the Loan Parties is in compliance in all
material respects with all applicable Laws (other than Environmental
Laws, which are specifically addressed in subsection (v)) in all
jurisdictions in which such Loan Party is presently or will be doing
business, except where the failure to do so would not constitute a
Material Adverse Change.
(r) Material Contracts.
Promptly upon request by the Agent, the Borrowers
will provide to the Agent and the Banks a list of all material
contracts relating to the business operations of the Loan Parties,
including, without limitation, all employee benefit plans, employment
agreements, collective bargaining agreements and labor contracts (the
"Labor Contracts"). Each material contract to which a Loan Party is a
party is valid, binding and enforceable upon each of the Loan Parties
and other persons which is a party thereto in accordance with its
respective terms, and there is no default thereunder, to any of the
Loan Parties' knowledge, with respect to parties other than the Loan
Parties, except to the extent that any such default does not impair the
practical realization by the Loan Parties of the benefits from such
contract.
(s) Investment Companies.
None of the Loan Parties is an "investment company"
registered or required to be registered under the Investment Company
Act of 1940, as such term is defined in the Investment Company Act of
1940, and shall not become such an "investment company."
(t) Plans and Benefit Arrangements.
(i) The Borrowers and each member of the
ERISA Group are in compliance in all material respects with any
applicable provisions of ERISA with respect to all Benefit
Arrangements, Plans and Multiemployer Plans. There has been no
Prohibited Transaction with respect to any Benefit Arrangement or any
Plan or, to the best knowledge of the Borrowers, with respect to any
Multiemployer Plan or Multiple Employer Plan which could result in any
material liability of the Borrowers or any other member of the ERISA
Group. The Borrowers and all members of the ERISA Group have made when
due any and all payments required to be made under any agreement
relating to a Multiemployer Plan or a Multiple Employer Plan or any Law
pertaining thereto. With respect to each Plan and Multiemployer Plan,
the Borrowers and each member of the ERISA Group (i) have fulfilled in
all material respects their obligations under the minimum funding
standards of ERISA, (ii) have not incurred any liability to the PBGC,
and (iii) have not had asserted against them any penalty for failure to
fulfill the minimum funding requirements of ERISA.
(ii) To the best of each Borrower's
knowledge, each Multiemployer Plan and Multiple Employer Plan is able
to pay benefits thereunder when due.
- 53 -
54
(iii) No Borrower or any other member of the
ERISA Group has instituted or intends to institute proceedings to
terminate any Plan.
(iv) No event requiring notice to the PBGC
under Section 302(f)(4)(A) of ERISA has occurred or is reasonably
expected to occur with respect to any Plan, and no amendment with
respect to which security is required under Section 307 of ERISA has
been made or is reasonably expected to be made to any Plan.
(v) The aggregate actuarial present value of
all benefit liabilities (whether or not vested) under each Plan,
determined on a plan termination basis, as disclosed in, and as of the
date of, the most recent actuarial report for such Plan, does not
exceed the aggregate fair market value of the assets of such Plan.
(vi) No Borrower or any other member of the
ERISA Group has incurred or reasonably expects to incur any material
withdrawal liability under ERISA with respect to any Multiemployer Plan
or Multiple Employer Plan. No Borrower or any other member of the ERISA
Group has been notified by any Multiemployer Plan or Multiple Employer
Plan that such Multiemployer Plan or Multiple Employer Plan has been
terminated, within the meaning of Title IV of ERISA, and to the best
knowledge of each Borrower, no Multiemployer Plan or Multiple Employer
Plan is reasonably expected to be reorganized or terminated, within the
meaning of Title IV of ERISA.
(vii) To the extent that any Benefit
Arrangement is insured, the Borrowers and all members of the ERISA
Group have paid when due all premiums required to be paid for all
periods through and including the Closing Date. To the extent that any
Benefit Arrangement is funded other than with insurance, the Borrowers
and all members of the ERISA Group have made when due all contributions
required to be paid for all periods through and including the Closing
Date.
(viii) All Plans, Benefit Arrangements and
Multiemployer Plans have been administered in accordance with their
terms and applicable Law in all material respects.
(u) Employment Matters.
Each of the Loan Parties is in compliance with the
Labor Contracts and all applicable federal, state and local labor and
employment Laws, including, but not limited to, those related to equal
employment opportunity and affirmative action, labor relations, minimum
wage, overtime, child labor, medical insurance continuation, worker
adjustment and relocation notices, immigration controls and worker and
unemployment compensation, where the failure to comply would constitute
a Material Adverse Change. There are no outstanding grievances,
arbitration awards or appeals therefrom arising out of the Labor
Contracts or current or threatened strikes, picketing, handbilling or
other work stoppages or slowdowns at facilities of any Loan Party which
in any case would constitute a Material Adverse Change. The Borrowers
have delivered to the Agent true and correct copies of each of the
Labor Contracts.
(v) Environmental Matters.
- 54 -
55
Except as disclosed on Schedule 6.1(v) hereto:
(i) None of the Loan Parties has received
any Environmental Complaint from any Official Body or private person
alleging that any Loan Party or any prior or subsequent owner of the
Property is a potentially responsible party under the Comprehensive
Environmental Response, Cleanup, and Liability Act, 42 U.S.C. Section
9601 et seq., and each Loan Party has no reason to believe that such an
Environmental Complaint might be received. There are no pending or, to
any Loan Party's knowledge, threatened Environmental Complaints
relating to any Loan Party or, to any Loan Party's knowledge, any prior
or subsequent owner of the Property pertaining to, or arising out of,
any Environmental Conditions, except for Environmental Complaints which
are not reasonably likely to result in a Material Adverse Change.
(ii) Except for conditions, violations or
failures which individually or in the aggregate are not reasonably
likely to result in a Material Adverse Change, to the knowledge of the
Loan Parties, there are no circumstances at, on or under the Property
that constitute a breach of or noncompliance with any of the
Environmental Laws, and there are no past or present Environmental
Conditions at, on or under the Property or, to any Loan Party's
knowledge, at, on or under adjacent property that prevent compliance
with the Environmental Laws at the Property.
(iii) Neither the Property nor any
structures, improvements, equipment, fixtures, activities or facilities
thereon or thereunder contain or use Regulated Substances except in
compliance with Environmental Laws. There are no processes, facilities,
operations, equipment or any other activities at, on or under the
Property or, to any Loan Party's knowledge, at, on or under adjacent
property that currently result in the release or threatened release of
Regulated Substances onto the Property, except to the extent that such
releases or threatened releases are not a breach of or otherwise not a
violation of the Environmental Laws or are not likely to result in a
Material Adverse Change.
(iv) There are no aboveground storage tanks,
underground storage tanks or underground piping associated with such
tanks used for the management of Regulated Substances at, on or under
the Property that (a) do not have, to the extent required by
Environmental Laws, a full operational secondary containment system in
place and (b) are not otherwise in compliance with all Environmental
Laws. There are no abandoned underground storage tanks or underground
piping associated with such tanks previously used for the management of
Regulated Substances at, on or under the Property that have not either
been closed in place in accordance with Environmental Laws or removed
in compliance with all applicable Environmental Laws, and no
contamination associated with the use of such tanks exists on the
Property that is not in compliance with Environmental Laws.
(v) Each Loan Party has all material
permits, licenses, authorizations, plans and approvals necessary under
the Environmental Laws for the conduct of the business of such Loan
Party as presently conducted. Each Loan Party has submitted all
material notices, reports and other filings required by the
Environmental Laws to be submitted to an Official Body
- 55 -
56
which pertain to past and current operations on the Property.
(vi) Except for violations which
individually or in the aggregate are not likely to result in a Material
Adverse Change, all present and, to the knowledge of the Loan Parties,
past on-site generation, storage, processing, treatment, recycling,
reclamation, disposal or other use or management of Regulated
Substances at, on or, to the knowledge of the Loan Parties, under the
Property and all off-site transportation, storage, processing,
treatment, recycling, reclamation, disposal or other use or management
of Regulated Substances has been done in accordance with the
Environmental Laws.
(w) Senior Debt Status.
The obligations of each Loan Party under this
Agreement, the Notes and the Guaranty Agreement, as applicable, to the
Banks or Agent do rank and will rank at least pari passu in priority of
payment and all other rights to all other Indebtedness of such Loan
Party, except Indebtedness of any Loan Party secured by Permitted
Liens. There is no lien upon or with respect to any of the properties
or income of any Loan Party which secures Indebtedness or other
obligations of any Person except for Permitted Liens.
(x) Restricted Transactions.
Schedule 6.1(x) sets forth, as of the Closing Date,
all Restricted Transactions, including a brief description and the
amount of each Restricted Transaction.
6.2. Updates to Schedules.
Should any of the information or disclosures provided on any
of the Schedules attached hereto become outdated or incorrect in any
material respect, the Borrowers shall promptly provide the Agent in
writing with such revisions or updates to such Schedule as may be
necessary or appropriate to update or correct the same; provided,
unless any such Schedules have become outdated or incorrect in any
material and adverse respect, the Borrowers may provide such revisions
or updates on a quarterly basis at the same time as the Borrowers
deliver their quarterly compliance certificate in accordance with
Section 8.3(d); and provided, further, that no Schedule that has become
outdated or incorrect in any material and adverse respect shall be
deemed to have been amended, modified or superseded by any such
correction or update, nor shall any breach of warranty or
representation resulting from the inaccuracy or incompleteness of any
such Schedule be deemed to have been cured thereby.
7. CONDITIONS OF LENDING
The obligation of the Agent and each Bank to make Loans or
issue Letters of Credit hereunder on and after the Closing Date is
subject to the performance by each of the Loan Parties of its
obligations to be performed hereunder at or prior to the making of any
such Loans and to the satisfaction of the following further conditions:
- 56 -
57
7.1. Loans After the Closing Date.
On the Closing Date:
(a) The representations and warranties of each of the Loan Parties
contained in Article 6 hereof shall be true and accurate on and as of
the Closing Date with the same effect as though such representations
and warranties had been made on and as of such date (except
representations and warranties which relate solely to an earlier date
or time, which representations and warranties shall be true and correct
on and as of the specific dates or times referred to therein), and each
of the Loan Parties shall have performed and complied with all
covenants and conditions hereof; no Event of Default or Potential
Default under this Agreement shall have occurred and be continuing or
shall exist; and there shall be delivered to the Agent for the benefit
of each Bank a certificate of the Loan Parties, dated the Closing Date
and signed by the Chief Executive Officer, President or Chief Financial
Officer of each of the Loan Parties, to each such effect.
(b) There shall be delivered to the Agent for the benefit of each Bank a
certificate dated the Closing Date and signed by the Secretary or an
Assistant Secretary of each of the Loan Parties, certifying as
appropriate as to:
(i) all corporate or partnership action taken by such
Loan Party in connection with this Agreement and the other Loan
Documents;
(ii) the names of the officer or officers authorized
to sign this Agreement and the other Loan Documents and the true
signatures of such officer or officers, and specifying the Authorized
Officers permitted to act on behalf of each Loan Party for purposes of
this Agreement and the true signatures of such officers, on which the
Agent and each Bank may conclusively rely; and
(iii) copies of its organizational documents,
including its certificate of incorporation, bylaws or certificate of
partnership or partnership agreement, as applicable, as in effect on
the Closing Date certified by the appropriate state official where such
documents are filed in a state office, together with certificates from
the appropriate state officials as to the continued existence and good
standing of each Loan Party in each state where organized or qualified
to do business.
(c) The Notes, the Guaranty Agreement and the Intercompany Subordination
Agreement shall have been duly executed and delivered to the Agent for
the benefit of the Banks. The parties expressly acknowledge that the
Term Notes, the Revolving Credit Notes, the Guaranty Agreement and the
Intercompany Subordination Agreement were executed and delivered in
connection with the Original Credit Agreement (in the case of the Term
Notes) or the Amended and Restated Credit Agreement (in the case of the
Revolving Credit Notes, the Guaranty Agreement and the Intercompany
Subordination Agreement) and that all such agreements remain in full
force and effect without modification. On and after the Closing Date,
without the need for any further actions or amendments, all references
in the Term Notes, the Revolving Credit Notes, the Guaranty Agreement
and the Intercompany Subordination Agreement to the Credit Agreement
shall be deemed to refer to this Agreement, as it may be further
amended, restated, supplemented
- 57 -
58
or modified from time to time.
(d) There shall be delivered to the Agent for the benefit of each Bank a
written opinion of Frost & ▇▇▇▇▇▇, counsel for the Loan Parties (who
may rely on the opinions of such other counsel as may be acceptable to
the Agent), dated the Closing Date and in form and substance
satisfactory to the Agent and its counsel:
(i) as to the matters set forth in Exhibit 7.1(d)
hereto; and
(ii) as to such other matters incident to the
transactions contemplated herein as the Agent may reasonably request.
(e) All legal details and proceedings in connection with the transactions
contemplated by the Agreement and the other Loan Documents shall be in
form and substance satisfactory to the Agent and counsel for the Agent,
and the Agent shall have received all such other counterpart originals
or certified or other copies of such documents and proceedings in
connection with such transactions, in form and substance reasonably
satisfactory to the Agent and said counsel, as the Agent or said
counsel may reasonably request.
(f) The Borrowers shall pay, or cause to be paid, to the Agent for itself
or for the account of the Banks, as applicable, to the extent not
previously paid, the Facility Fees, any other fees payable on or before
the Closing Date, as set forth in the Side Letters, and all other costs
and expenses accrued through the Closing Date for which the Agent and
the Banks are entitled to be reimbursed.
(g) All material consents, including without limitation the consent of the
holders of the Senior Notes, required to effectuate the transactions
contemplated hereby as set forth on Schedule 6.1(m) shall have been
obtained.
(h) There shall be no Material Adverse Change in the Historical Statements
or the Financial Projections (as defined in Section 6.1(i)) since their
respective dates; since December 31, 1998, no Material Adverse Change
in any of the Loan Parties shall have occurred; prior to the Closing
Date, there shall be no material change in the management of the Loan
Parties; and there shall be delivered, to the Agent for the benefit of
each Bank, a certificate dated the Closing Date and signed by the Chief
Executive Officer, President or Chief Financial Officer of the Loan
Parties to each such effect.
(i) The making of the Loans shall not contravene any Law applicable to the
Loan Parties or any of the Banks.
(j) No action, proceeding, investigation, regulation or legislation shall
have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or
prohibit, or to obtain damages in respect of, this Agreement or the
consummation of the transactions contemplated hereby.
(k) The Loan Parties shall deliver evidence acceptable to the Agent that
adequate insurance in
- 58 -
59
compliance with Section 8.1(c) is in full force and effect and that all
premiums then due thereon have been paid, with additional insured and
lender loss payable endorsements in form and substance satisfactory to
the Agent and its counsel naming the Agent as additional insured and
lender loss payee.
(l) The Borrowers shall have delivered to the Agent for the benefit of the
Banks a Borrowing Base Certificate for the calendar month of May and a
Quarterly Compliance Certificate for the calendar quarter ending March
31, 1999, certified by the Chief Executive Officer, President or Chief
Financial Officer of the Borrowers in a form acceptable to the Agent.
7.2. Each Additional Loan.
At the time of making any Loans or issuing any Letters of
Credit other than Loans made or Letters of Credit issued on the Closing
Date hereunder and after giving effect to the proposed borrowings: the
representations and warranties of the Loan Parties contained in Article
6 hereof shall be true on and as of the date of such additional Loan or
Letter of Credit with the same effect as though such representations
and warranties had been made on and as of such date (except
representations and warranties which expressly relate solely to an
earlier date or time, which representations and warranties shall be
true and correct on and as of the specific dates or times referred to
therein), and the Loan Parties shall have performed and complied with
all covenants and conditions hereof; no Event of Default or Potential
Default shall have occurred and be continuing or shall exist; the
making of such Loan or the issuance of such Letter of Credit shall not
contravene any Law applicable to the Loan Parties or any of the Banks;
and the Borrowers shall have delivered to the Agent and, if applicable,
the Issuing Letter of Credit Bank a duly executed and completed Loan
Request or request for Letters of Credit, as applicable.
8. COVENANTS
8.1. Affirmative Covenants.
The Loan Parties, jointly and severally, covenant and agree
that until payment in full of the Loans and interest thereon,
termination or expiration of all of the Letters of Credit, satisfaction
of all of the Loan Parties' other obligations hereunder and termination
of the Revolving Credit Commitments, the Loan Parties shall comply at
all times with the following affirmative covenants:
(a) Preservation of Existence, Etc.
Each of the Loan Parties shall maintain its corporate
or partnership existence and its license or qualification and good
standing in each jurisdiction in which its ownership or lease of
property or the nature of its business makes such license or
qualification necessary.
(b) Payment of Liabilities, Including Taxes, Etc.
- 59 -
60
Each of the Loan Parties shall duly pay and discharge
all liabilities to which it is subject or which are asserted against
it, promptly as and when the same shall become due and payable,
including all taxes, assessments and governmental charges upon it or
any of its properties, assets, income or profits, prior to the date on
which penalties attach thereto, except to the extent that such
liabilities, including taxes, assessments or charges, are being
contested in good faith and by appropriate and lawful proceedings
diligently conducted and for which such reserve or other appropriate
provisions, if any, as shall be required by GAAP shall have been made,
but only to the extent that failure to discharge any such liabilities
would not result in any additional liability which would adversely
affect to a material extent the financial condition of any Loan Party,
provided that each Loan Party will pay all such liabilities forthwith
upon the commencement of proceedings to foreclose any Lien which may
have attached as security therefor.
(c) Maintenance of Insurance.
Each Loan Party shall insure its properties and
assets against loss or damage by fire and such other insurable hazards
against which such assets are commonly insured (including fire,
extended coverage, property damage, worker's compensation, public
liability and business interruption insurance) and against other risks
(including errors and omissions) in such amounts as similar properties
and assets are insured by prudent companies in similar circumstances
carrying on similar businesses, and with reputable and financially
sound insurers, including self-insurance to the extent customary, all
as reasonably determined by the Agent. At the request of the Agent, the
Loan Parties shall deliver (x) on the Closing Date and annually
thereafter an original certificate of insurance signed by the Loan
Parties' independent insurance broker describing and certifying as to
the existence of the insurance on the Collateral required to be
maintained by this Agreement and the other Loan Documents, together
with a copy of the endorsement described in the next sentence attached
to such certificate, and (y) from time to time a summary schedule
indicating all insurance then in force with respect to each of the Loan
Parties. Such policies of insurance shall contain special endorsements,
in form and substance acceptable to the Agent, which shall (i) specify
the Agent as an additional insured and lender loss payee as its
interests may appear, with the understanding that any obligation
imposed upon the insured (including the liability to pay premiums)
shall be the sole obligation of the applicable Loan Parties and not
that of the insured, (ii) provide that the interest of the Banks shall
be insured regardless of any breach or violation by the applicable Loan
Parties of any warranties, declarations or conditions contained in such
policies or any action or inaction of the applicable Loan Parties or
others insured under such policies, (iii) provide a waiver of any right
of the insurers to set-off or counterclaim or any other deduction,
whether by attachment or otherwise, (iv) provide that any and all
rights of subrogation which the insurers may have or acquire shall be,
at all times and in all respects, junior and subordinate to the prior
payment in full of the Indebtedness hereunder and that no insurer shall
exercise or assert any right of subrogation until such time as the
Indebtedness hereunder has been paid in full and the Revolving Credit
Commitments have terminated, (v) provide, except in the case of public
liability insurance and workmen's compensation insurance, that all
insurance proceeds for losses of less than $2,000,000 shall be adjusted
with and payable to the applicable Loan Parties and that all insurance
proceeds for losses of $2,000,000 or more shall be adjusted with and
payable to the Agent, (vi) include
- 60 -
61
effective waivers by the insurer of all claims for insurance premiums
against the Agent, (vii) provide that no cancellation of such policies
for any reason (including nonpayment of premium) or any change therein
shall be effective until at least thirty (30) days after receipt by the
Agent of written notice of such cancellation or change, (viii) be
primary without right of contribution of any other insurance carried by
or on behalf of any additional insureds, and (ix) provide that inasmuch
as the policy covers more than one insured, all terms, conditions,
insuring agreements and endorsements (except limits of liability) shall
operate as if there were a separate policy covering each insured. The
applicable Loan Parties shall notify the Agent promptly of any
occurrence causing a material loss or decline in value of its
properties and the estimated (or actual, if available) amount of such
loss or decline. Any monies received by the Agent constituting
insurance proceeds may, at the option of the Agent, (i) be applied by
the Agent to the payment of the Loans in such manner as the Agent may
reasonably determine or (ii) be disbursed to the applicable Loan
Parties on such terms as are deemed appropriate by the Agent for the
repair, restoration and/or replacement of property in respect of which
such proceeds were received.
(d) Maintenance of Properties and Leases.
Each Loan Party shall maintain in good repair,
working order and condition (ordinary wear and tear excepted), in
accordance with the general practice of other businesses of similar
character and size, all of those properties useful or necessary to its
business, and from time to time, such Loan Party will make or cause to
be made all appropriate repairs, renewals or replacements thereof.
(e) Maintenance of Patents, Trademarks, Etc.
Each Loan Party shall maintain in full force and
effect all patents, trademarks, trade names, copyrights, licenses,
franchises, permits and other authorizations necessary for the
ownership and operation of its properties and business if the failure
so to maintain the same would constitute a Material Adverse Change.
(f) Visitation Rights.
Each Loan Party shall permit any of the officers or
authorized employees or representatives of the Agent or any of the
Banks to visit and inspect any of its properties and to examine and
make excerpts from its books and records and discuss its business
affairs, finances and accounts with its officers, all in such detail
and at such times and as often as any of the Banks may reasonably
request, provided that each Bank shall provide the Borrowers and the
Agent with reasonable notice prior to any visit or inspection.
(g) Keeping of Records and Books of Account.
Each Loan Party shall maintain and keep proper books
of record and account which enable the Loan Parties to issue financial
statements in accordance with GAAP and as otherwise required by
applicable Laws of any Official Body having jurisdiction over the Loan
Parties, and in which full, true and correct entries shall be made in
all material respects of
- 61 -
62
all its dealings and business and financial affairs.
(h) Plans and Benefit Arrangements.
The Borrowers shall, and shall cause each member of
the ERISA Group to, comply with ERISA, the Internal Revenue Code and
other applicable Laws applicable to Plans and Benefit Arrangements,
except where such failure, alone or in conjunction with any other
failure, would not result in a Material Adverse Change. Without
limiting the generality of the foregoing, the Borrowers shall cause all
of their Plans and all Plans maintained by any member of the ERISA
Group to be funded in accordance with the minimum funding requirements
of ERISA and shall make, and cause each member of the ERISA Group to
make, in a timely manner, all contributions due to Plans, Benefit
Arrangements and Multiemployer Plans.
(i) Compliance With Laws.
Each Loan Party shall comply with all applicable
Laws, including all Environmental Laws, in all respects, provided that
it shall not be deemed to be a violation of this Section 8.1(i) if any
failure to comply with any Law would not result in fines, penalties,
remediation costs, other similar liabilities or injunctive relief which
in the aggregate would constitute a Material Adverse Change.
(j) Use of Proceeds.
The Borrowers will use the proceeds of the Loans only
for lawful purposes in accordance with Sections 2.11 and 3.5 hereof, as
applicable, and such uses shall not contravene any applicable Law or
any other provision hereof.
(k) Subordination of Intercompany Loans, Other Loans and Advances to the
Borrowers.
The Loan Parties shall cause any intercompany
Indebtedness, loans or advances owed by any of the Loan Parties to any
other Loan Party to be subordinated pursuant to the terms of the
Intercompany Subordination Agreement.
8.2. Negative Covenants.
The Loan Parties, jointly and severally, covenant and agree
that until payment in full of the Loans and interest thereon,
termination or expiration of all of the Letters of Credit, satisfaction
of all of the Loan Parties' other obligations hereunder and termination
of the Revolving Credit Commitments, the Loan Parties shall comply with
the following negative covenants:
(a) Indebtedness.
Each of the Loan Parties shall not at any time
create, incur, assume or suffer to exist any Indebtedness, except:
(i) Indebtedness under the Loan Documents;
- 62 -
63
(ii) Unsecured leases of equipment in the
ordinary course of business;
(iii) Indebtedness under capitalized leases
or secured by purchase money security interests (other than Nonrecourse
Purchase Money Security Interests) which shall not exceed 2% of
Consolidated Tangible Net Worth in the aggregate at any time;
(iv) Indebtedness secured by Nonrecourse
Purchase Money Security Interests not exceeding 15% of Consolidated
Tangible Net Worth in the aggregate at any time;
(v) Indebtedness under the Senior Notes;
(vi) Indebtedness constituting a Restricted
Transaction;
(vii) Indebtedness of a Loan Party to
another Loan Party;
(viii) the Provident Guaranty in an amount
not to exceed $10,000,000 in principal in the aggregate; and
(ix) Indebtedness not included in clauses
(i) - (viii) above in an amount not to exceed $500,000 in the aggregate
at any time.
(b) Liens.
Each of the Loan Parties shall not at any time
create, incur, assume or suffer to exist any Lien on any of its
property or assets, tangible or intangible, now owned or hereafter
acquired, or agree or become liable to do so, except Permitted Liens.
(c) Guaranties.
Each of the Loan Parties shall not at any time,
directly or indirectly, become or be liable in respect of any Guaranty,
or assume, guarantee, become surety for, endorse or otherwise agree,
become or remain directly or contingently liable upon or with respect
to any obligation or liability of any other person, except for
Guaranties under the Loan Documents, Guaranties constituting a
Restricted Transaction or Guaranties permitted under Section
8.2(a)(viii).
(d) Loans and Investments; Certain Dividends and Distributions.
Each of the Loan Parties shall not at any time make
or suffer to remain outstanding any loan or advance to, or purchase,
acquire or own any stock, bonds, notes or securities of, or any
partnership interest (whether general or limited) in or any other
investment or interest in, or make any capital contribution to, any
other person, or agree, become or remain liable to do any of the
foregoing, or to make or pay, or agree to become liable to make or pay,
any dividend or other distribution of any nature (whether in cash,
property, securities or otherwise) on account of or in respect of its
shares of capital stock, partnership interests or limited liability
company interests on account of the purchase, redemption, retirement or
acquisition of its shares of capital stock (or warrants, options or
rights therefor), partnership
- 63 -
64
interests or limited liability company interests (except dividends or
other distributions payable to another Loan Party), except:
(i) trade credit extended on usual and
customary terms in the ordinary course of business;
(ii) advances to employees to meet expenses
incurred by such employees in the ordinary course of business;
(iii) Permitted Investments;
(iv) loans, advances, investments, dividends
or distributions constituting a Restricted Transaction;
(v) loans, advances and investments in other
Loan Parties; and
(vi) the net intercompany receivable owing
from ▇▇▇▇▇▇ National to ▇▇▇▇▇▇ Homes in an amount not greater than
$16,000,000 as of the date hereof, in an amount not greater than
$14,500,000 at September 30, 1999 and in an amount not greater than
$13,000,000 at December 31, 1999, as further reduced from time to time
as a result of any payments but in no event increased (the "▇▇▇▇▇▇
Homes Receivable").
(e) Changes in the Senior Notes.
▇▇▇▇▇▇ Homes shall not amend or modify any provisions
of the Senior Notes or any related documents without the consent of the
Required Banks.
(f) Liquidations, Mergers, Consolidations, Acquisitions.
Each of the Loan Parties shall not dissolve,
liquidate or wind up its affairs, or become a party to any merger or
consolidation, or acquire by purchase, lease or otherwise all or
substantially all of the assets or capital stock of any other person;
provided that (i) any Loan Party other than the Borrowers may
consolidate or merge into another Loan Party, and (ii) the Loan Parties
may acquire all or substantially all of the assets or all of the
capital stock of other persons engaged in the same business as the
business of the Loan Parties, so long as after giving effect to such
acquisition, no Event of Default or Potential Default shall exist or be
continuing, and prior to the consummation of such acquisition, the
Borrowers shall have provided to the Agent and the Banks pro forma
financial statements for the Borrowers and their Subsidiaries, after
giving effect to such acquisition, demonstrating such compliance;
provided, that the purchase price (including liabilities assumed) for
any such acquisition shall not exceed $6,000,000 for any single
transaction or $12,000,000 in the aggregate during the term of this
Agreement.
(g) Dispositions of Assets or Subsidiaries.
Each of the Loan Parties shall not sell, convey,
assign, lease, abandon or otherwise transfer or dispose of, voluntarily
or involuntarily, any of its properties or assets,
- 64 -
65
tangible or intangible (including but not limited to sale, assignment,
discount or other disposition of accounts, contract rights, chattel
paper, equipment or general intangibles, with or without recourse, or
of capital stock, shares of beneficial interest or partnership
interests of a Subsidiary), except:
(i) transactions involving the sale of land
and building inventory in the ordinary course of business;
(ii) any sale, transfer, lease, abandonment
or other disposition of assets in the ordinary course of business which
are no longer necessary or required in the conduct of the Loan Party's
business; and
(iii) any sale, transfer or lease of assets
in the ordinary course of business which are replaced by substitute
assets acquired.
(h) Affiliate Transactions.
Each of the Loan Parties shall not enter into or
carry out any transaction (including, without limitation, purchasing
property or services from or selling property or services to any
Affiliate or other person) unless such transaction is not otherwise
prohibited by this Agreement, is entered into in the ordinary course of
business upon fair and reasonable arm's length terms and conditions
which are fully disclosed to the Agent and is in accordance with all
applicable Law.
(i) Subsidiary, Partnerships and Joint Ventures.
Each of the Loan Parties shall not own or create,
directly or indirectly, any Subsidiaries other than Subsidiaries which
join this Agreement as Guarantors pursuant to Section 11.18. None of
the Loan Parties shall become or agree to become a general or limited
partner in any general or limited partnership or a joint venturer in
any joint venture except for limited partnerships and joint ventures
which constitute Restricted Transactions; provided if any Loan Party
makes a loan or advance in excess of $500,000 to any such limited
partnership or joint venture, then such limited partnership or joint
venture shall join this Agreement as a Guarantor pursuant to Section
11.18.
(j) Continuation of or Change in Business; Geographic Expansion.
Each of the Loan Parties shall not engage in any
business other than the development of residential homes, the provision
of title insurance and the ownership of commercial real estate
incidental to residential real estate development (to the extent such
ownership is permitted hereunder), in each instance as such business
has been conducted and operated by the Loan Parties during the present
fiscal year, and the Borrowers shall not permit any material change in
such business. The Loan Parties shall not, without the consent of the
Required Banks, which consent shall not be unreasonably withheld,
acquire land, develop homes or conduct business in any states other
than Ohio, Kentucky, Indiana, Tennessee, North Carolina and South
Carolina.
- 65 -
66
(k) Plans and Benefit Arrangements.
Each of the Loan Parties shall not:
(i) fail to satisfy the minimum funding
requirements of ERISA and the Internal Revenue Code with respect to any
Plan;
(ii) request a minimum funding waiver from
the Internal Revenue Service with respect to any Plan;
(iii) engage in a Prohibited Transaction
with any Plan, Benefit Arrangement or Multiemployer Plan which, alone
or in conjunction with any other circumstances or set of circumstances
resulting in liability under ERISA, would constitute a Material Adverse
Change;
(iv) permit the aggregate actuarial present
value of all benefit liabilities (whether or not vested) under each
Plan, determined on a plan termination basis, as disclosed in the most
recent actuarial report completed with respect to such Plan, to exceed,
as of any actuarial valuation date, the fair market value of the assets
of such Plan;
(v) fail to make when due any contribution
to any Multiemployer Plan that the Borrowers or any member of the ERISA
Group may be required to make under any agreement relating to such
Multiemployer Plan or any Law pertaining thereto;
(vi) withdraw (completely or partially) from
any Multiemployer Plan or withdraw (or be deemed under Section 4062(e)
of ERISA to withdraw) from any Multiple Employer Plan, where any such
withdrawal is likely to result in a material liability of Borrowers or
any member of the ERISA Group;
(vii) terminate, or institute proceedings to
terminate, any Plan, where such termination is likely to result in a
material liability to the Borrowers or any member of the ERISA Group;
(viii) make any amendment to any Plan with
respect to which security is required under Section 307 of ERISA; or
(ix) fail to give any and all notices or
make all disclosures and governmental filings required under ERISA or
the Internal Revenue Code, where such failure is likely to result in a
Material Adverse Change.
(l) Fiscal Year.
None of the Loan Parties shall change its fiscal year
from the twelve-month period beginning January 1 and ending December
31.
(m) Changes in Organizational Documents.
- 66 -
67
Each of the Loan Parties shall not amend in any
respect its certificate of incorporation (including any provisions or
resolutions relating to capital stock) without providing at least
fifteen (15) calendar days' prior written notice to the Agent and the
Banks and, in the event such change would be adverse to the Banks as
determined by the Agent in its sole discretion, obtaining the prior
written consent of the Required Banks.
(n) Minimum Fixed Charge Coverage Ratio.
The Loan Parties shall not permit the ratio of
Consolidated Cash Flow From Operations to Consolidated Fixed Charges,
calculated as of the end of each fiscal quarter for the four (4) fiscal
quarters then ending, to be less than the ratio set forth below for the
periods specified below:
Period Ratio
------ -----
Fiscal quarters ending 3/31/99, 6/30/99 and 9/30/99 1.10 to 1.0
Fiscal quarters ending 12/31/99 and thereafter 1.20 to 1.0
(o) Minimum Tangible Net Worth.
The Loan Parties shall not at any time permit
Consolidated Tangible Net Worth to be less than the Base Net Worth.
(p) Maximum Leverage Ratio.
The Loan Parties shall not permit the Leverage Ratio,
for each fiscal quarter for the quarter then ending, to exceed the
ratio set forth below for the periods specified below:
Period Ratio
------ -----
Fiscal quarters ending 3/31/99, 6/30/99 and 9/30/99 2.50 to 1.0
Fiscal quarters ending 12/31/99 and thereafter 2.25 to 1.0
(q) Speculative Units.
The Loan Parties shall not at any time permit (i) the
number of Speculative Units in any Active Community to exceed eight (8)
or (ii) the number of Speculative Units in all Active Communities to
exceed 30% of the aggregate number of Active Units sold during the
previous twelve (12) month period.
(r) Model Units.
- 67 -
68
The Loan Parties shall not at any time permit the
number of Model Units owned or leased including without limitation
Model Units leased from First Cincinnati Leasing, LLC (i) in any Active
Community to exceed four (4) in each distinctive price point, as
determined by the Borrowers and acceptable to the Agent, but in no
event more than eight (8) in the aggregate, or (ii) in all Active
Communities of a Loan Party to exceed one hundred fifty percent (150%)
of the number of such Active Communities.
(s) Land Ownership or Acquisition.
The Loan Parties shall not acquire, own, purchase,
lease or otherwise invest in, directly or indirectly, any land or other
real estate other than:
(i) real estate held or acquired by a Loan
Party for construction and sale of Active Units, provided that
Regulatory Approval has been received therefor; and
(ii) real estate which does not fall under
clause (i) above in an amount not to exceed $2,000,000 in the aggregate
at any time.
(t) ▇▇▇▇▇▇ National Leverage Ratio.
▇▇▇▇▇▇ National shall not at any time permit the
ratio of ▇▇▇▇▇▇ National Total Liabilities to ▇▇▇▇▇▇ National Tangible
Net Worth, for each fiscal quarter for the quarter then ending, to
exceed the ratio set forth below for the periods specified below:
Period Ratio
------ -----
Fiscal quarters ending 3/31/99, 6/30/99 and 9/30/99 3.50 to 1.0
Fiscal quarters ending 12/31/99 and thereafter 3.00 to 1.0
(u) ▇▇▇▇▇▇ National Fixed Charge Coverage Ratio.
Beginning with the fiscal quarter ending December 31,
1999, ▇▇▇▇▇▇ National shall not permit the ratio of ▇▇▇▇▇▇ National
Cash Flow From Operations to ▇▇▇▇▇▇ National Fixed Charges to be less
than 1.50 to 1.0 as of the end of each fiscal quarter for the four (4)
fiscal quarters then ended.
(v) Off Balance Sheet Financing.
Each of the Loan Parties shall not permit the
aggregate amount of off balance sheet financing provided by or to
parties under common control with ▇▇▇▇▇▇ National, any Loan Party or
any Affiliate of any Loan Parties (including without limitation First
Cincinnati Land, LLC and First Cincinnati Leasing, LLC) related to
Model Units and Approved Land Inventory to exceed $30,000,000.
(w) Limitation on Interest Rate.
- 68 -
69
▇▇▇▇▇▇ National shall not charge any of its
Subsidiaries or Affiliates (including without limitation any Loan
Party, First Cincinnati Land, LLC and First Cincinnati Leasing, LLC) in
excess of the Base Rate plus one percent (1%) for the use of its
investment capital.
8.3. Reporting Requirements.
The Loan Parties jointly and severally covenant and agree that
until payment in full of the Loans and interest thereon, termination or
expiration of all Letters of Credit, satisfaction of all of the Loan
Parties' other obligations hereunder and termination of the Revolving
Credit Commitments, the Loan Parties will furnish or cause to be
furnished to the Agent and each of the Banks:
(a) Monthly Financial Statements and Reports.
(i) As soon as available and in any event
within thirty (30) calendar days after the end of each calendar month,
the Borrowers' combining balance sheet as of the end of such month and
combining income statement for the month then ended and for the year to
date, all in reasonable detail (and in similar format to the December
31, 1998 financial statements) and certified (subject to normal
year-end audit adjustments) by the Chief Executive Officer, President
or Chief Financial Officer of the Borrowers as having been prepared in
accordance with GAAP, consistently applied.
(ii) As soon as available and in any event
within thirty (30) calendar days after the end of each calendar month,
▇▇▇▇▇▇ National's consolidating balance sheet as of the end of such
month and consolidating income statement for the month then ended and
for the year to date, all in reasonable detail and certified (subject
to normal year-end audit adjustments) by the Chief Executive Officer,
President or Chief Financial Officer of ▇▇▇▇▇▇ National as having been
prepared in accordance with GAAP, consistently applied.
(iii) As soon as available and in any event
within thirty (30) calendar days after the end of each calendar month,
a reconciliation of balances presented in the financial statements
delivered pursuant to Sections 8.3(a)(i) and (ii).
(iv) As soon as available and in any event
within fifteen (15) calendar days after the end of each calendar month,
the Borrowers' sales and closing reports as of the end of such month in
form and in such detail as is reasonably acceptable to the Agent.
(b) Quarterly Financial Statements.
As soon as available and in any event within
forty-five (45) calendar days after the end of each of the first three
(3) fiscal quarters in each fiscal year, financial statements of ▇▇▇▇▇▇
National and its Subsidiaries, consisting of (i) a consolidated balance
sheet as of the end of such fiscal quarter; (ii) related consolidated
statements of income together with comparisons to the prior year for
the fiscal quarter then ended and the fiscal year through that date;
and (iii) the consolidated statements of retained earnings and cash
flow (in comparative
- 69 -
70
form) for the fiscal year through that date, all in reasonable detail
and certified (subject to normal year-end audit adjustments) by the
Chief Executive Officer, President or Chief Financial Officer of ▇▇▇▇▇▇
National as having been prepared in accordance with GAAP, consistently
applied, and setting forth in comparative form the respective financial
statements for the corresponding date and period in the previous fiscal
year. As soon as available and in any event within forty-five (45)
calendar days after the end of each of the first three (3) fiscal
quarters in each fiscal year, Form 10-Q filed by ▇▇▇▇▇▇ National with
the Securities and Exchange Commission.
(c) Annual Financial Statements.
As soon as available and in any event within ninety
(90) days after the end of each fiscal year of ▇▇▇▇▇▇ National,
financial statements of ▇▇▇▇▇▇ National and its Subsidiaries,
consisting of a consolidating and consolidated balance sheet as of the
end of such fiscal year and related consolidating and consolidated
statements of income, retained earnings and cash flows for the fiscal
year then ended, all in reasonable detail and setting forth in
comparative form the financial statements as of the end of and for the
preceding fiscal year, and certified by independent certified public
accountants of nationally recognized standing satisfactory to the
Agent. The certificate or report of accountants shall be free of
qualifications (other than any consistency qualification that may
result from a change in the method used to prepare the financial
statements as to which such accountants concur) and shall not indicate
the occurrence or existence of any event, condition or contingency
which would materially impair the prospect of payment or performance of
any covenant, agreement or duty of any Loan Party under any of the Loan
Documents.
(d) Quarterly Compliance Certificate of the Loan Parties; Updates to
Schedules.
Concurrently with the financial statements of ▇▇▇▇▇▇
National and the Borrowers furnished to the Agent and to the Banks
pursuant to Sections 8.3(b) and 8.3(c) hereof, a certificate of the
Loan Parties signed by the Chief Executive Officer, President or Chief
Financial Officer of the Loan Parties and independent certified public
accountants of nationally recognized standing satisfactory to the
Agent, in the form of Exhibit 8.3(d) hereto (the "Quarterly Compliance
Certificate"), to the effect that, except as described pursuant to
Section 8.3(f) below, (i) the representations and warranties of the
Loan Parties contained in Article 6 hereof are true on and as of the
date of such certificate with the same effect as though such
representations and warranties had been made on and as of such date
(except representations and warranties which expressly relate solely to
an earlier date or time), and the Loan Parties have performed and
complied with all covenants and conditions hereof, (ii) no Event of
Default or Potential Default exists and is continuing on the date of
such certificate, and (iii) containing calculations in sufficient
detail to demonstrate compliance as of the date of the financial
statements with all financial covenants contained in Section 8.2 hereof
and reconciliation with the monthly and quarterly financial statements
provided pursuant to Sections 8.3(a)(i) and 8.3(b). The Loan Parties
shall deliver together with such Quarterly Compliance Certificate the
updated Schedules to the Agreement referred to in Section 6.2.
(e) Borrowing Base Certificate.
- 70 -
71
Within twenty (20) calendar days after the end of
each calendar month, a certificate computing the Borrowing Base and
demonstrating compliance with the covenants set forth in Sections
8.2(q), (r) and (s) as of the end of the preceding calendar month in
the form of Exhibit 8.3(e) (the "Borrowing Base Certificate"),
appropriately completed, executed and delivered by an Authorized
Officer together with reconciliation with the monthly financial
statements provided pursuant to Section 8.3(a)(i) any supporting
information which the Agent may from time to time request.
(f) Notice of Default.
Promptly after any officer of any of the Loan Parties
has learned of the occurrence of an Event of Default or Potential
Default, a certificate signed by the Chief Executive Officer, President
or Chief Financial Officer of such Loan Party setting forth the details
of such Event of Default or Potential Default and the action which the
Loan Party proposes to take with respect thereto.
(g) Notice of Litigation.
Promptly after the commencement thereof, notice of
all actions, suits, proceedings or investigations before or by any
Official Body or any other person against any of the Loan Parties
(other than proceedings in the ordinary course of business in
connection with obtaining Regulatory Approval, provided that the
conduct of those proceedings does not otherwise violate the provisions
of this Agreement) involving a claim or series of claims in excess of
$500,000 or which if adversely determined would constitute a Material
Adverse Change with respect to any of the Loan Parties.
(h) Budgets, Forecasts, Deliveries Under the Senior Notes, Other Reports
and Information.
Promptly upon their becoming available to the
applicable Loan Party:
(i) the annual budget and any forecasts or
projections of such Loan Party, to be supplied not later than ninety
(90) days after the commencement of such fiscal year,
(ii) any reports, including management
letters submitted to such Loan Party by independent accountants in
connection with any annual, interim or special audit,
(iii) any reports, notices or proxy
statements generally distributed by such Loan Party to its
stockholders, on a date no later than the date supplied to the
stockholders,
(iv) regular or periodic reports, including
Forms 10-K, 10-Q and 8-K, registration statements and prospectuses,
filed by such Loan Party with the Securities and Exchange Commission,
(v) copies of notices, reports and other
information sent by any of the Loan Parties to the holders of the
Senior Notes under the Senior Notes or any related documents, at the
same time such Loan Party sends the same to such holders,
- 71 -
72
(vi) a copy of any order in any proceeding
to which any Loan Party is a party issued by any Official Body which
could result in a Material Adverse Change, and
(vii) such other reports and information as
the Banks may from time to time reasonably request.
(i) Notices Regarding Plans and Benefit Arrangements.
(i) Promptly upon becoming aware of the
occurrence thereof, notice (including the nature of the event and, when
known, any action taken or threatened by the Internal Revenue Service
or the PBGC with respect thereto) of:
(A) any Reportable Event with
respect to the Borrowers or any member of the ERISA Group (regardless
of whether the obligation to report said Reportable Event to the PBGC
has been waived),
(B) any Prohibited Transaction
which could subject the Borrowers or any member of the ERISA Group to a
civil penalty assessed pursuant to Section 502(i) of ERISA or a tax
imposed by Section 4975 of the Internal Revenue Code in connection with
any Plan, Benefit Arrangement or any trust created thereunder,
(C) any assertion of material
withdrawal liability with respect to any Multiemployer Plan,
(D) any partial or complete
withdrawal from a Multiemployer Plan by the Borrowers or any member of
the ERISA Group under Title IV of ERISA (or assertion thereof), where
such withdrawal is likely to result in material withdrawal liability,
(E) any cessation of operations (by
the Borrowers or any member of the ERISA Group) at a facility in the
circumstances described in Section 4063(e) of ERISA,
(F) withdrawal by the Borrowers or
any member of the ERISA Group from a Multiple Employer Plan,
(G) a failure by the Borrowers or
any member of the ERISA Group to make a payment to a Plan required to
avoid imposition of a lien under Section 302(f) of ERISA,
(H) the adoption of an amendment to
a Plan requiring the provision of security to such Plan pursuant to
Section 307 of ERISA, or
(I) any change in the actuarial
assumptions or funding methods used for any Plan, where the effect of
such change is to materially increase or materially reduce the unfunded
benefit liability or obligation to make periodic contributions.
(ii) Promptly after receipt thereof, copies
of (a) all notices received by
- 72 -
73
the Borrowers or any member of the ERISA Group of the PBGC's intent to
terminate any Plan administered or maintained by the Borrowers or any
member of the ERISA Group, or to have a trustee appointed to administer
any such Plan; and (b) at the request of the Agent or any Bank, each
annual report (IRS Form 5500 series) and all accompanying schedules,
the most recent actuarial reports, the most recent financial
information concerning the financial status of each Plan administered
or maintained by the Borrowers or any member of the ERISA Group, and
schedules showing the amounts contributed to each such Plan by or on
behalf of the Borrowers or any member of the ERISA Group in which any
of their personnel participate or from which such personnel may derive
a benefit, and each Schedule B (Actuarial Information) to the annual
report filed by the Borrowers or any member of the ERISA Group with the
Internal Revenue Service with respect to each such Plan.
(iii) Promptly upon the filing thereof,
copies of any Form 5310, or any successor or equivalent form to Form
5310, filed with the PBGC in connection with the termination of any
Plan.
9. DEFAULT
9.1. Events of Default.
An Event of Default shall mean the occurrence or existence of
any one or more of the following events or conditions (whatever the
reason therefor and whether voluntary, involuntary or effected by
operation of Law):
(a) The Borrowers shall fail to pay any principal of any Loan (including
scheduled installments, mandatory prepayments or payment due at
maturity) or shall fail to pay any interest on any Loan or any other
amount owing hereunder or under the other Loan Documents after such
principal, interest or other amount becomes due in accordance with the
terms hereof or thereof;
(b) Any representation or warranty made at any time by any of the Loan
Parties herein or by any of the Loan Parties in any other Loan Document
or in any certificate, other instrument or statement furnished pursuant
to the provisions hereof or thereof shall prove to have been false or
misleading in any material respect as of the time it was made or
furnished;
(c) Any of the Loan Parties shall default in the observance or performance
of any covenant contained in Section 8.1(f) or Section 8.2, and with
respect to a default under Section 8.2(q), such default shall continue
unremedied for a period of thirty (30) days;
(d) Any of the Loan Parties shall default in the observance or performance
of any other covenant, condition or provision hereof or of any other
Loan Document, and such default shall continue unremedied for a period
of ten (10) Business Days after any officer of any Loan Party becomes
aware of the occurrence thereof (such grace period to be applicable
only in the event such default can be remedied by corrective action of
the Loan Parties as determined by the Agent in its reasonable
discretion);
- 73 -
74
(e) A default or event of default shall occur at any time under the Senior
Notes or any related documents or under the terms of any other
agreement involving borrowed money or the extension of credit or any
other Indebtedness under which any Loan Party may be obligated as
borrower or guarantor (except for nonrecourse Indebtedness secured by
Nonrecourse Purchase Money Security Interests permitted hereunder) in
excess of $500,000 in the aggregate outstanding at any time, and such
breach, default or event of default consists of the failure to pay
(beyond any period of grace permitted with respect thereto, whether
waived or not) any Indebtedness when due (whether at stated maturity,
by acceleration or otherwise) or if such breach or default permits or
causes the acceleration of any Indebtedness (whether or not such right
shall have been waived) or the termination of any commitment to lend;
(f) Any final judgments or orders for the payment of money (not adequately
covered by insurance) in excess of $500,000 in the aggregate
outstanding at any time shall be entered against any Loan Party by a
court having jurisdiction in the premises, which judgment is not paid
or discharged, vacated, bonded or stayed pending appeal within a period
of thirty (30) days from the date of entry;
(g) Any of the Loan Documents shall cease to be a legal, valid and binding
agreement enforceable against the Loan Parties in accordance with the
respective terms thereof or shall in any way be terminated (except in
accordance with its terms) or become or be declared ineffective or
inoperative or shall in any way be challenged or contested or cease to
give or provide the respective rights, titles, interests, remedies,
powers or privileges intended to be created thereby;
(h) There shall occur any material uninsured damage to or loss, theft or
destruction of any assets of the Loan Parties, or any of the Loan
Parties' assets are attached, seized, levied upon or subjected to a
writ or distress warrant, or such come within the possession of any
receiver, trustee, custodian or assignee for the benefit of creditors
and the same is not cured within thirty (30) days thereafter;
(i) A notice of lien or assessment in excess of $500,000 is filed of record
with respect to all or any part of any of the Loan Parties' assets by
the United States, or any department, agency or instrumentality
thereof, or by any state, county, municipal or other governmental
agency, including, without limitation, the Pension Benefit Guaranty
Corporation, or if any taxes or debts owing at any time or times
hereafter to any one of these become payable and the same are not paid
within thirty (30) days after the same become payable;
(j) Any Loan Party ceases to be solvent or admits in writing its inability
to pay its debts as they mature;
(k) Any of the following occurs: (i) any Reportable Event, which the Agent
determines in good faith constitutes grounds for the termination of any
Plan by the PBGC or the appointment of a trustee to administer or
liquidate any Plan, shall have occurred and be continuing; (ii)
proceedings shall have been instituted or other action taken to
terminate any Plan, or a termination notice shall have been filed with
respect to any Plan; (iii) a trustee shall be appointed to administer
or liquidate any Plan; (iv) the PBGC shall give notice of its intent to
institute proceedings to terminate any Plan or Plans or to appoint a
trustee to administer or liquidate any Plan; and, in the
- 74 -
75
case of the occurrence of (i), (ii), (iii) or (iv) above, the Agent
determines in good faith that the amount of Borrowers' liability is
likely to exceed 10% of their Consolidated Tangible Net Worth; (v) the
Borrowers or any member of the ERISA Group shall fail to make any
contributions when due to a Plan or a Multiemployer Plan; (vi) the
Borrowers or any member of the ERISA Group shall make any amendment to
a Plan with respect to which security is required under Section 307 of
ERISA; (vii) the Borrowers or any member of the ERISA Group shall
withdraw completely or partially from a Multiemployer Plan; (viii) the
Borrowers or any member of the ERISA Group shall withdraw (or shall be
deemed under Section 4062(e) of ERISA to withdraw) from a Multiple
Employer Plan; or (ix) any applicable Law is adopted, changed or
interpreted by any Official Body with respect to or otherwise affecting
one or more Plans, Multiemployer Plans or Benefit Arrangements; and,
with respect to any of the events specified in (v), (vi), (vii), (viii)
or (ix), the Agent determines in good faith that any such occurrence
would be reasonably likely to result in a Material Adverse Change;
(l) Any Loan Party ceases to conduct its business as contemplated or is
enjoined, restrained or in any way prevented by court order from
conducting all or any material part of its business, and such
injunction, restraint or other preventive order is not dismissed within
thirty (30) days after the entry thereof;
(m) A Change of Control occurs;
(n) A proceeding shall have been instituted in a court having jurisdiction
in the premises seeking a decree or order for relief in respect of any
Loan Party in an involuntary case under any applicable bankruptcy,
insolvency, reorganization or other similar Law now or hereafter in
effect, or a receiver, liquidator, assignee, custodian, trustee,
sequestrator or conservator (or similar official) of any Loan Party for
any substantial part of its property, or for the winding-up or
liquidation of its affairs, and such proceeding shall remain
undismissed or unstayed and in effect for a period of thirty (30)
consecutive days or such court shall enter a decree or order granting
any of the relief sought in such proceeding; or
(o) Any Loan Party shall commence a voluntary case under any applicable
bankruptcy, insolvency, reorganization or other similar Law now or
hereafter in effect, shall consent to the entry of an order for relief
in an involuntary case under any such Law, or shall consent to the
appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or conservator (or other
similar official) of itself or for any substantial part of its property
or shall make a general assignment for the benefit of creditors, or
shall fail generally to pay its debts as they become due or shall take
any action in furtherance of any of the foregoing.
9.2. Consequences of Event of Default.
(a) If an Event of Default specified under subsections (a) through (m) of
Section 9.1 hereof shall occur and be continuing, the Agent and the
Banks shall be under no further obligation to make Loans or issue
Letters of Credit hereunder, and the Agent may, and upon the request of
the Required Banks shall, (i) by written notice to the Borrowers,
declare the unpaid principal amount of the Notes then outstanding and
all interest accrued thereon, any unpaid fees and all other
Indebtedness of the Borrowers to the Banks hereunder and thereunder to
be forthwith due and
- 75 -
76
payable, and the same shall thereupon become and be immediately due and
payable to the Agent for the benefit of each Bank without presentment,
demand, protest or any other notice of any kind, all of which are
hereby expressly waived, and (ii) require the Co-Borrowers to, and the
Co-Borrowers shall thereupon, deposit in a non-interest-bearing account
with the Agent, as cash collateral for its obligations under the Loan
Documents, an amount equal to the maximum amount currently or at any
time thereafter available to be drawn on all outstanding Letters of
Credit, and the Co-Borrowers hereby pledge to the Agent and the Banks,
and grant to the Agent and the Banks a security interest in, all such
cash as security for such obligations. Upon the curing of all existing
Events of Default to the satisfaction of the Required Banks, the Agent
shall return such cash collateral to the Co-Borrowers; and
(b) If an Event of Default specified under subsections (n) or (o) of
Section 9.1 hereof shall occur, the Banks shall be under no further
obligation to make Loans hereunder, and the unpaid principal amount of
the Notes then outstanding and all interest accrued thereon, any unpaid
fees and all other Indebtedness of the Borrowers to the Banks hereunder
and thereunder shall be immediately due and payable without
presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived; and the Agent may, and upon the request of the
Required Banks shall, require the Co-Borrowers to provide cash
collateral as set forth in Section 9.2(a)(ii); and
(c) If an Event of Default shall occur and be continuing, any Bank to whom
any obligation is owed by any Loan Party hereunder or under any other
Loan Document or any participant of such Bank which has agreed in
writing to be bound by the provisions of Section 10.13 hereof, and any
branch, subsidiary or affiliate of such Bank or participant anywhere in
the world, shall have the right, in addition to all other rights and
remedies available to it, without notice to Borrowers or such Loan
Party, to set off against and apply to the then unpaid balance of all
the Loans and all other obligations of the Borrowers and the other Loan
Parties hereunder or under any other Loan Document any debt owing to,
and any other funds held in any manner for the account of, the
Borrowers or such other Loan Party by such Bank or participant or by
such branch, subsidiary or affiliate, including, without limitation,
all funds in all deposit accounts (whether time or demand, general or
special, provisionally credited or finally credited, or otherwise) now
or hereafter maintained by the Borrowers or such other Loan Party for
its own account (but not including funds held in custodian or trust
accounts or payroll withholding tax accounts) with such Bank or
participant or such branch, subsidiary or affiliate. Such right shall
exist whether or not any Bank or the Agent shall have made any demand
under this Agreement or any other Loan Document, whether or not such
debt owing to or funds held for the account of the Borrowers or such
other Loan Party is or are matured or unmatured and regardless of the
existence or adequacy of any security, right or remedy available to any
Bank or the Agent; and
(d) If an Event of Default shall occur and be continuing, and whether or
not the Agent shall have accelerated the maturity of Loans of the
Borrowers pursuant to any of the foregoing provisions of this Section
9.2, the Agent or any Bank, if owed any amount with respect to the
Notes, may proceed to protect and enforce its rights by suit in equity,
action at law and/or other appropriate proceeding, whether for the
specific performance of any covenant or agreement contained in this
Agreement or the Notes, including as permitted by applicable Law the
obtaining of the ex parte appointment of a receiver, and, if such
amount shall have become due, by declaration or
- 76 -
77
otherwise, proceed to enforce the payment thereof or any other legal or
equitable right of the Agent or such Bank; and
(e) From and after the date on which the Agent has taken any action
pursuant to this Section 9.2 and until all obligations of the Loan
Parties have been paid in full, any and all proceeds received by the
Agent, or any part thereof, or the exercise of any other remedy by the
Agent, shall be applied as follows:
(i) first, to reimburse the Agent and the
Banks for out-of-pocket costs, expenses and disbursements, including
without limitation reasonable attorneys' fees and legal expenses,
incurred by the Agent or the Banks in connection with collection of any
obligations of any of the Loan Parties under any of the Loan Documents;
(ii) second, to the repayment of all
Indebtedness then due and unpaid of the Loan Parties to the Banks
incurred under this Agreement or any of the Loan Documents, whether of
principal, interest, fees, expenses or otherwise, in such manner as the
Agent may determine in its discretion; and
(iii) the balance, if any, as required by
Law.
(f) In addition to all of the rights and remedies contained in this
Agreement or in any of the other Loan Documents, the Agent shall have
all of the rights and remedies under applicable Law, all of which
rights and remedies shall be cumulative and nonexclusive, to the extent
permitted by Law. The Agent may, and upon the request of the Required
Banks shall, exercise all post-default rights granted to the Agent and
the Banks under the Loan Documents or applicable Law.
10. THE AGENT
10.1. Appointment.
Each Bank hereby irrevocably designates, appoints and
authorizes PNC to act as Agent for such Bank under this Agreement to
execute and deliver or accept on behalf of each of the Banks the other
Loan Documents. Each Bank hereby irrevocably authorizes, and each
holder of any Note by the acceptance of a Note shall be deemed
irrevocably to authorize, the Agent to take such action on its behalf
under the provisions of this Agreement and the other Loan Documents and
any other instruments and agreements referred to herein, and to
exercise such powers and to perform such duties hereunder, as are
specifically delegated to or required of the Agent by the terms hereof,
together with such powers as are reasonably incidental thereto. PNC
agrees to act as the Agent on behalf of the Banks to the extent
provided in this Agreement.
10.2. Delegation of Duties.
The Agent may perform any of its duties hereunder by or
through agents or employees (provided such delegation does not
constitute a relinquishment of its duties as Agent) and, subject to
Sections 10.5 and 10.6 hereof, shall be entitled to engage and pay for
the advice
- 77 -
78
or services of any attorneys, accountants or other experts concerning
all matters pertaining to its duties hereunder and to rely upon any
advice so obtained.
10.3. Nature of Duties; Independent Credit Investigation.
The Agent shall have no duties or responsibilities except
those expressly set forth in this Agreement, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or otherwise exist. The duties of the Agent
shall be mechanical and administrative in nature; the Agent shall not
have, by reason of this Agreement, a fiduciary or trust relationship in
respect of any Bank; and nothing in this Agreement, expressed or
implied, is intended to or shall be so construed as to impose upon the
Agent any obligations in respect of this Agreement except as expressly
set forth herein. Each Bank expressly acknowledges (i) that the Agent
has not made any representations or warranties to it and that no act by
the Agent hereafter taken, including any review of the affairs of any
of the Loan Parties, shall be deemed to constitute any representation
or warranty by the Agent to any Bank; (ii) that it has made and will
continue to make, without reliance upon the Agent, its own independent
investigation of the financial condition and affairs and its own
appraisal of the creditworthiness of each of the Loan Parties in
connection with this Agreement and the making and continuance of the
Loans hereunder; and (iii) except as expressly provided herein, that
the Agent shall have no duty or responsibility, either initially or on
a continuing basis, to provide any Bank with any credit or other
information with respect thereto, whether coming into its possession
before the making of any Loan or at any time or times thereafter.
10.4. Actions in Discretion of Agent; Instructions From the Banks.
The Agent agrees, upon the written request of the Required
Banks, to take or refrain from taking any action of the type specified
as being within the Agent's rights, powers or discretion herein,
provided that the Agent shall not be required to take any action which
exposes the Agent to personal liability or which is contrary to this
Agreement or any other Loan Document or applicable Law. In the absence
of a request by the Required Banks, the Agent shall have authority, in
its sole discretion, to take or not to take any such action, unless
this Agreement specifically requires the consent of the Required Banks
or all of the Banks. Any action taken or failure to act pursuant to
such instructions or discretion shall be binding on the Banks, subject
to Section 10.6 hereof. Subject to the provisions of Section 10.6, no
Bank shall have any right of action whatsoever against the Agent as a
result of the Agent acting or refraining from acting hereunder in
accordance with the instructions of the Required Banks or, in the
absence of such instructions, in the absolute discretion of the Agent.
10.5. Reimbursement and Indemnification of Agent by the Borrowers.
The Borrowers unconditionally agree to pay or reimburse the
Agent and save the Agent harmless against (a) liability for the payment
of all reasonable out-of-pocket costs, expenses and disbursements,
including but not limited to fees and expenses of counsel (subject to
the letter dated June 11, 1999 from PNC to ▇▇▇▇▇▇ Homes with respect to
the fees and expenses of the Agent's counsel in connection with the
initial closing under this Agreement), appraisers and environmental
consultants, incurred by the Agent (i) in connection with the
development,
- 78 -
79
negotiation, preparation, printing, execution, administration,
syndication, interpretation and performance of this Agreement and the
other Loan Documents, (ii) relating to any requested amendments,
waivers or consents pursuant to the provisions hereof, (iii) in
connection with the enforcement of this Agreement or any other Loan
Document or collection of amounts due hereunder or thereunder or the
proof and allowability of any claim arising under this Agreement or any
other Loan Document, whether in bankruptcy or receivership proceedings
or otherwise, and (iv) in any workout, restructuring or in connection
with the protection, preservation, exercise or enforcement of any of
the terms hereof or of any rights hereunder or under any other Loan
Document or in connection with any foreclosure, collection or
bankruptcy proceedings; and (b) all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against the Agent, in its capacity as such, in
any way relating to or arising out of this Agreement or any other Loan
Document or any action taken or omitted by the Agent hereunder or
thereunder, provided that the Borrowers shall not be liable for any
portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements if the same
result from the Agent's gross negligence or willful misconduct, or if
the Borrowers were not given notice of the subject claim and the
opportunity to participate in the defense thereof, at their expense, or
if the same result from a compromise or settlement agreement entered
into without the consent of the Borrowers. In addition, the Borrowers
agree to reimburse and pay all reasonable out-of-pocket expenses of the
Agent's regular employees and agents engaged periodically to perform
audits of the Loan Parties' books, records and business properties.
10.6. Exculpatory Provisions.
Neither the Agent nor any of its directors, officers,
employees, agents, attorneys or affiliates shall (a) be liable to any
Bank or any Loan Party for any action taken or omitted to be taken by
it or them hereunder, or in connection herewith, including without
limitation pursuant to any Loan Document, unless caused by its or their
own gross negligence or willful misconduct, (b) be responsible in any
manner to any of the Banks for the effectiveness, enforceability,
genuineness, validity or due execution of this Agreement or any other
Loan Document or for any recital, representation, warranty, document,
certificate, report or statement herein or made or furnished under or
in connection with this Agreement or any other Loan Document, or (c) be
under any obligation to any of the Banks to ascertain or to inquire as
to the performance or observance of any of the terms, covenants or
conditions hereof or thereof on the part of the Loan Parties, or the
financial condition of the Loan Parties, or the existence or possible
existence of any Event of Default or Potential Default. Neither the
Agent nor any Bank nor any of their respective directors, officers,
employees, agents, attorneys or affiliates shall be liable to any of
the Loan Parties for consequential damages resulting from any breach of
contract, tort or other wrong in connection with the negotiation,
documentation, administration or collection of the Loans or any of the
Loan Documents.
10.7. Reimbursement and Indemnification of Agent by Banks.
Each Bank agrees to reimburse and indemnify the Agent (to the
extent not
- 79 -
80
reimbursed by the Borrowers and without limiting the obligation of the
Borrowers to do so) in proportion to its Ratable Share from and against
all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted
against the Agent, in its capacity as such, in any way relating to or
arising out of this Agreement or any other Loan Document or any action
taken or omitted by the Agent hereunder or thereunder, provided that no
Bank shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
or disbursements (a) if the same result from the Agent's gross
negligence or willful misconduct, or (b) if such Bank was not given
notice of the subject claim and the opportunity to participate in the
defense thereof, at its expense, or (c) if the same result from a
compromise and settlement agreement entered into without the consent of
such Bank.
10.8. Reliance by Agent.
The Agent shall be entitled to rely upon any writing,
telegram, telex or teletype message, resolution, notice, consent,
certificate, letter, cablegram, statement, order or other document or
conversation by telephone or otherwise believed by it to be genuine and
correct and to have been signed, sent or made by the proper person or
persons, and upon the advice and opinions of counsel and other
professional advisors selected by the Agent. The Agent shall be fully
justified in failing or refusing to take any action hereunder unless it
shall first be indemnified to its satisfaction by the Banks against any
and all liability and expense which may be incurred by it by reason of
taking or continuing to take any such action.
10.9. Notice of Default.
The Agent shall not be deemed to have knowledge or notice of
the occurrence of any Potential Default or Event of Default unless the
Agent has received written notice from a Bank or the Borrowers
referring to this Agreement, describing such Potential Default or Event
of Default and stating that such notice is a "notice of default."
10.10. Notices.
The Agent shall promptly send to each Bank a copy of all
notices received from the Borrowers pursuant to the provisions of this
Agreement or the other Loan Documents promptly upon receipt thereof.
The Agent shall promptly notify the Borrowers and the other Banks of
each change in the Base Rate and the effective date thereof.
10.11. Banks in Their Individual Capacities.
With respect to its Revolving Credit Commitments, the Letters
of Credit and advances in respect of drawings thereunder and the
Revolving Credit Loans made by it, the Agent shall have the same rights
and powers hereunder as any other Bank and may exercise the same as
though it were not the Agent, and the term "Banks" shall, unless the
context otherwise indicates, include the Agent in its individual
capacity. PNC and its affiliates and each of the Banks and their
respective affiliates may, without liability to account, except as
prohibited herein, make loans to, accept deposits from, discount drafts
for, act as trustee under indentures of
- 80 -
81
and generally engage in any kind of banking or trust business with the
Borrowers and their Affiliates, in the case of the Agent, as though it
were not acting as Agent hereunder and, in the case of each Bank, as
though such Bank were not a Bank hereunder.
10.12. Holders of Notes.
The Agent may deem and treat any payee of any Note as the
owner thereof for all purposes hereof unless and until written notice
of the assignment or transfer thereof shall have been filed with the
Agent. Any request, authority or consent of any person who, at the time
of making such request or giving such authority or consent, is the
holder of any Note shall be conclusive and binding on any subsequent
holder, transferee or assignee of such Note or of any Note or Notes
issued in exchange therefor.
10.13. Equalization of Banks.
The Banks and the holders of any participations in any Notes
agree among themselves that, with respect to all amounts received by
any Bank or any such holder for application on any obligation hereunder
or under any Note or under any such participation, whether received by
voluntary payment, by realization upon security, by the exercise of the
right of set-off or banker's lien, by counterclaim or by any other
non-pro rata source, equitable adjustment will be made in the manner
stated in the following sentence, so that, in effect, all such excess
amounts will be shared ratably among the Banks and such holders in
proportion to their interests in payments under the Notes, except as
otherwise provided in Section 4.4(b), 5.4(b) or 5.5 hereof. The Banks,
or any such holder receiving any such amount, shall purchase for cash
from each of the other Banks an interest in such Bank's Loans in such
amount as shall result in a ratable participation by the Banks and each
such holder in the aggregate unpaid amount under the Notes; provided
that if all or any portion of such excess amount is thereafter
recovered from the Bank or the holder making such purchase, such
purchase shall be rescinded and the purchase price restored to the
extent of such recovery, together with interest or other amounts, if
any, required by Law (including court order) to be paid by the Bank or
the holder making such purchase.
10.14. Successor Agent.
The Agent may resign as Agent upon not less than thirty (30)
days' prior written notice to the Borrowers and the Banks. If the Agent
shall resign under this Agreement, then either (a) the Required Banks
shall appoint from among the Banks a successor agent for the Banks, and
such successor shall be subject to the consent of the Borrowers, which
shall not be unreasonably withheld, or (b) if a successor agent shall
not be so appointed and approved within the thirty (30) day period
following the Agent's notice to the Banks of its resignation, then the
Agent shall appoint, with the consent of the Borrowers, such consent
not to be unreasonably withheld, a successor agent who shall serve as
Agent until such time as the Required Banks appoint a successor agent.
Upon its appointment pursuant to either clause (a) or (b) above, such
successor agent shall succeed to the rights, powers and duties of the
Agent, and the term "Agent" shall mean such successor agent, effective
upon its appointment; and the former Agent's rights, powers and duties
as Agent shall be terminated without any other or further act or deed
on the
- 81 -
82
part of such former Agent or any of the parties to this Agreement.
After the resignation of any Agent hereunder, the provisions of this
Article 10 shall inure to the benefit of such former Agent, and such
former Agent shall not by reason of such resignation be deemed to be
released from liability for any actions taken or not taken by it while
it was an Agent under this Agreement.
10.15. Agent's Fee.
▇▇▇▇▇▇ Homes shall pay to the Agent a nonrefundable fee (the
"Agent's Fee") as set forth in the Side Letters.
10.16. Availability of Funds.
Unless the Agent shall have been notified by a Bank prior to
the date upon which a Loan is to be made that such Bank does not intend
to make available to the Agent such Bank's portion of such Loan, the
Agent may assume that such Bank has made or will make such proceeds
available to the Agent on such date, and the Agent may, in reliance
upon such assumption (but shall not be required to), make available to
the Borrowers a corresponding amount. If such corresponding amount is
not in fact made available to the Agent by such Bank, the Agent shall
be entitled to recover such amount on demand from such Bank (or, if
such Bank fails to pay such amount forthwith, upon such demand from the
Borrowers) together with interest thereon, in respect of each day
during the period commencing on the date such amount was made available
to the Borrowers and ending on the date the Agent recovers such amount,
at a rate per annum equal to the Federal Funds Effective Rate.
10.17. Calculations.
In the absence of gross negligence or willful misconduct, the
Agent shall not be liable for any error in computing the amount payable
to any Bank, whether in respect of the Loans, fees or any other amounts
due to the Banks under this Agreement. In the event an error in
computing any amount payable to any Bank is made, the Agent, the
Borrowers and each affected Bank shall, forthwith upon discovery of
such error, make such adjustments as shall be required to correct such
error, and any compensation therefor will be calculated at the Federal
Funds Effective Rate.
10.18. Beneficiaries.
Except as expressly provided herein, the provisions of this
Article 10 are solely for the benefit of the Agent and the Banks, and
the Loan Parties shall not have any rights to rely on or enforce any of
the provisions hereof. In performing its functions and duties under
this Agreement, the Agent shall act solely as agent of the Banks and
does not assume and shall not be deemed to have assumed any obligation
toward or relationship of agency or trust with or for any of the Loan
Parties.
11. MISCELLANEOUS
- 82 -
83
11.1. Modifications, Amendments or Waivers.
With the written consent of the Required Banks, the Agent,
acting on behalf of all the Banks, and the Borrowers, on behalf of the
Loan Parties, may from time to time enter into written agreements
amending or changing any provision of this Agreement or any other Loan
Document or the rights of the Banks or the Loan Parties hereunder or
thereunder, or may grant written waivers or consents to a departure
from the due performance of the obligations of the Loan Parties
hereunder or thereunder. Any such agreement, waiver or consent made
with such written consent shall be effective to bind all the Banks and
the Loan Parties; provided that, without the written consent of all the
Banks, no such agreement, waiver or consent may be made which will:
(a) Reduce the amount of the Commitment Fee or any other fees payable to
any Bank hereunder, or amend Sections 5.2 [Pro Rata Treatment of
Banks], 10.6 [Exculpatory Provisions], 10.13 [Equalization of Banks] or
11.19 [Limitation of Liability] hereof;
(b) Whether or not any Loans are outstanding, extend the time for payment
of principal or interest of any Loan or any fees, or reduce the
principal amount of or the rate of interest borne by any Loan or the
amount of any fees, or otherwise affect the terms of payment of the
principal of or interest on any Loan or any fees or increase the amount
of the commitments or extend the Revolving Credit Expiration Date;
(c) Release any Guarantor from its obligations under the Guaranty
Agreement; or
(d) Amend this Section 11.1, change the definition of Required Banks or
change any requirement providing for the Banks or the Required Banks to
authorize the taking of any action hereunder.
11.2. No Implied Waivers; Cumulative Remedies; Writing Required.
No course of dealing and no delay or failure of the Agent or
any Bank in exercising any right, power, remedy or privilege under this
Agreement or any other Loan Document shall affect any other or future
exercise thereof or operate as a waiver thereof, nor shall any single
or partial exercise thereof or any abandonment or discontinuance of
steps to enforce such a right, power, remedy or privilege preclude any
further exercise thereof or of any other right, power, remedy or
privilege. The rights and remedies of the Agent and the Banks under
this Agreement and any other Loan Document are cumulative and not
exclusive of any rights or remedies which they would otherwise have.
Any waiver, permit, consent or approval of any kind or character on the
part of any Bank of any breach or default under this Agreement or any
such waiver of any provision or condition of this Agreement must be in
writing and shall be effective only to the extent specifically set
forth in such writing.
11.3. Reimbursement and Indemnification of Banks by the Borrowers; Taxes.
The Borrowers jointly and severally agree unconditionally upon
demand to pay or reimburse to each Bank (other than the Agent, as to
which the Borrowers' obligations are set forth in Section 10.5) and to
save such Bank harmless against (i) liability for the payment of all
- 83 -
84
reasonable out-of-pocket costs, expenses and disbursements (including
fees and expenses of counsel for each Bank except with respect to (a)
and (b) below) incurred by such Bank (a) in connection with the
administration and interpretation of this Agreement and other
instruments and documents to be delivered hereunder, (b) relating to
any amendments, waivers or consents pursuant to the provisions hereof,
(c) in connection with the enforcement of this Agreement or any other
Loan Document, or collection of amounts due hereunder or thereunder, or
the proof and allowability of any claim arising under this Agreement or
any other Loan Document, whether in bankruptcy or receivership
proceedings or otherwise, and (d) in any workout, restructuring or in
connection with the protection, preservation, exercise or enforcement
of any of the terms hereof or of any rights hereunder or under any
other Loan Document, or in connection with any foreclosure, collection
or bankruptcy proceedings; or (ii) all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against such Bank, in its capacity as such,
in any way relating to or arising out of this Agreement or any other
Loan Document or any action taken or omitted by such Bank hereunder or
thereunder, provided that the Borrowers shall not be liable for any
portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements to the
extent such portion resulted from (A) such Bank's gross negligence or
willful misconduct, or (B) the failure to provide the Borrowers with
notice of the subject claim and the opportunity to participate in the
defense thereof, at their expense, or (C) a compromise or settlement
agreement entered into without the consent of the Borrowers. The Banks
will attempt to minimize the fees and expenses of legal counsel for the
Banks which are subject to reimbursement by the Borrowers hereunder by
considering the usage of one law firm to represent the Banks and the
Agent if appropriate under the circumstances. The Borrowers jointly and
severally agree unconditionally to pay all stamp, document, transfer,
recording or filing taxes or fees and similar impositions now or
hereafter determined by the Agent or any Bank to be payable in
connection with this Agreement or any other Loan Document, and the
Borrowers jointly and severally agree unconditionally to save the Agent
and the Banks harmless from and against any and all present or future
claims, liabilities or losses with respect to or resulting from any
omission to pay or delay in paying any such taxes, fees or impositions.
11.4. Holidays.
Whenever any payment or action to be made or taken hereunder
shall be stated to be due on a day which is not a Business Day, such
payment or action shall be made or taken on the next following Business
Day (except as provided in Section 4.2 with respect to Euro-Rate
Interest Periods), and such extension of time shall be included in
computing interest or fees, if any, in connection with such payment or
action.
11.5. Funding by Branch, Subsidiary or Affiliate.
(a) Notional Funding.
Each Bank shall have the right from time to time,
without notice to the Borrowers, to deem any branch, subsidiary or
affiliate (which for the purposes of this
- 84 -
85
Section 11.5 shall mean any corporation or association which is
directly or indirectly controlled by or is under direct or indirect
common control with any corporation or association which directly or
indirectly controls such Bank) of such Bank to have made, maintained or
funded any Loan to which the Euro-Rate Option applies at any time,
provided that immediately following (on the assumption that a payment
were then due from the Borrowers to such other office) and as a result
of such change, the Borrowers would not be under any greater obligation
pursuant to Section 5.5 hereof than they would have been in the absence
of such change. Notional funding offices may be selected by each Bank
without regard to the Bank's actual methods of making, maintaining or
funding the Loans or any sources of funding actually used by or
available to such Bank.
(b) Actual Funding.
Each Bank shall have the right from time to time to
make or maintain any Loan by arranging for a branch, subsidiary or
affiliate of such Bank to make or maintain such Loan, subject to the
last sentence of this Section 11.5(b). If any Bank causes a branch,
subsidiary or affiliate to make or maintain any part of the Loans
hereunder, all terms and conditions of this Agreement shall, except
where the context clearly requires otherwise, be applicable to such
part of the Loans to the same extent as if such Loans were made or
maintained by such Bank, but in no event shall any Bank's use of such a
branch, subsidiary or affiliate to make or maintain any part of the
Loans hereunder cause such Bank or such branch, subsidiary or affiliate
to incur any cost or expenses payable by the Borrowers hereunder or
require the Borrowers to pay any other compensation to any Bank
(including, without limitation, any expenses incurred or payable
pursuant to Section 5.5 hereof) which would otherwise not be incurred.
11.6. Notices.
All notices, requests, demands, directions and other
communications (collectively "notices") given to or made upon any party
hereto under the provisions of this Agreement shall be by telephone in
person (as opposed to voice mail or answering machine message) or in
writing (including telex or facsimile communication, provided receipt
of such telex or facsimile communication is confirmed within
twenty-four (24) hours of receipt) unless otherwise expressly permitted
hereunder and shall be delivered or sent by telex or facsimile to the
respective parties at the addresses and numbers set forth under their
respective names on the signature pages hereof or in accordance with
any subsequent unrevoked written direction from any party to the
others. All notices shall, except as otherwise expressly herein
provided, be effective (a) in the case of telex or facsimile, when
received, (b) in the case of hand-delivered notice, when hand
delivered, (c) in the case of telephone, when telephoned, provided,
however, that in order to be effective, telephonic notices must be
confirmed in writing no later than the next day by letter, facsimile or
telex, (d) if given by mail, four (4) days after such communication is
deposited in the mail with first-class postage prepaid, return receipt
requested, and (e) if given by any other means (including by air
courier), when delivered; provided, that notices to the Agent shall not
be effective until received. Any Bank giving any notice to any Loan
Party shall simultaneously send a copy thereof to the Agent, and the
Agent shall promptly notify the other Banks of the receipt by it of any
such notice.
- 85 -
86
11.7. Severability.
The provisions of this Agreement are intended to be severable.
If any provision of this Agreement shall be held invalid or
unenforceable in whole or in part in any jurisdiction, such provision
shall, as to such jurisdiction, be ineffective to the extent of such
invalidity or unenforceability without in any manner affecting the
validity or enforceability thereof in any other jurisdiction or the
remaining provisions hereof in any jurisdiction.
11.8. Governing Law.
This Agreement shall be deemed to be a contract under the laws
of the State of Ohio and for all purposes shall be governed by and
construed and enforced in accordance with the laws of the State of Ohio
without regard to its conflict of laws principles.
11.9. Prior Understanding.
This Agreement supersedes all prior understandings and
agreements, whether written or oral, between the parties hereto and
thereto relating to the transactions provided for herein and therein,
including any prior confidentiality agreements and commitments, except
the Side Letters, which remain in force and effect.
11.10. Duration; Survival.
All representations and warranties of the Loan Parties
contained herein or made in connection herewith shall survive the
making of Loans and shall not be waived by the execution and delivery
of this Agreement, any investigation by the Agent or the Banks, the
making of Loans or payment in full of the Loans. All covenants and
agreements of the Loan Parties contained herein shall continue in full
force and effect from and after the date hereof, so long as the
Borrowers may borrow hereunder and until termination of the Revolving
Credit Commitments, payment in full of the Loans and termination or
expiration of all Letters of Credit. All covenants and agreements of
the Borrowers contained herein relating to the payment of principal,
interest, premiums, additional compensation or expenses and
indemnification, including those set forth in the Notes, Article 5 and
Sections 10.5, 10.7, and 11.3 hereof, shall survive payment in full of
the Loans, termination of the Revolving Credit Commitments and
termination or expiration of all Letters of Credit.
11.11. Successors and Assigns.
This Agreement shall be binding upon and shall inure to the
benefit of the Banks, the Agent, the Borrowers and their respective
successors and assigns, except that the Borrowers may not assign or
transfer any of their rights and obligations hereunder or any interest
herein. Each Bank may, at its own cost and without the Borrowers'
consent, sell participations in all or any part of its Commitments and
the Loans made by it. Each Bank may, at its own cost, make assignments
of all or any part of its Commitment and the Loans made by it, provided
that each of the following conditions is met: (i) the Commitments and
Loans that are assigned to any assignee, in the aggregate, must equal
or exceed $10,000,000, and (ii) the Agent and, except
- 86 -
87
during the continuance of an Event of Default, the Borrowers shall
consent to the assignee, such consent not to be unreasonably withheld.
In the case of an assignment, upon receipt by the
Agent of the Assignment and Assumption Agreement, the assignee shall
have, to the extent of such assignment (unless otherwise provided
therein), the same rights, benefits and obligations as it would have if
it had been a signatory Bank hereunder, the Commitments in Section 2.1
shall be adjusted accordingly, and upon surrender of any Note subject
to such assignment, the Borrowers shall execute and deliver new Notes
to the assignee in an amount equal to the amount of the Commitments
assumed by it and new Notes to the assigning Bank in an amount equal to
the Commitments retained by it hereunder. The assigning Bank shall pay
to the Agent a service fee in the amount of $2,000 for each assignment.
In the case of a participation, the participant shall
have only the rights specified in Section 9.2(c) (the participant's
rights against such Bank in respect of such participation to be those
set forth in the agreement executed by such Bank in favor of the
participant relating thereto and not to include any voting rights
except with respect to changes of the type referenced in clauses (a),
(b) or (c) under Section 11.1 hereof), all of such Bank's obligations
under this Agreement or any other Loan Document shall remain unchanged,
and all amounts payable by any of the Loan Parties hereunder or
thereunder shall be determined as if such Bank had not sold such
participation. Each Bank may furnish any publicly available information
concerning any of the Loan Parties and any other information concerning
any of the Loan Parties in the possession of such Bank from time to
time to assignees and participants (including prospective assignees or
participants), provided such assignees and participants agree to be
bound by the provisions of Section 11.12 hereof.
11.12. Confidentiality.
The Agent and the Banks each agree to keep confidential all
information obtained from the Borrowers which is nonpublic and
confidential or proprietary in nature (including any information the
Borrowers specifically designate as confidential), except as provided
below, and to use such information only in connection with their
respective capacities under this Agreement and for the purposes
contemplated hereby. The Agent and the Banks shall be permitted to
disclose such information (i) to affiliates of the Agent and the Banks
and to outside legal counsel, accountants and other professional
advisors who need to know such information in connection with the
administration and enforcement of this Agreement, subject to agreement
of such persons to maintain the confidentiality, (ii) to assignees and
participants as contemplated by Section 11.11, (iii) to the extent
requested by any bank regulatory authority or, with notice to the
Borrowers, as otherwise required by applicable Law or by any subpoena
or similar legal process, or in connection with any investigation or
proceeding arising out of the transactions contemplated by this
Agreement, (iv) if it becomes publicly available other than as a result
of a breach of this Agreement or becomes available from a source not
subject to confidentiality restrictions, or (v) if the Borrowers shall
have consented to such disclosure.
11.13. Counterparts.
- 87 -
88
This Agreement may be executed by different parties hereto on
any number of separate counterparts, each of which, when so executed
and delivered, shall be an original, and all such counterparts shall
together constitute one and the same instrument.
11.14. Agent's or Bank's Consent.
Whenever the Agent's or any Bank's consent is required to be
obtained under this Agreement or any of the other Loan Documents as a
condition to any action, inaction, condition or event, the Agent and
each Bank shall be authorized to give or withhold such consent in its
sole and absolute discretion and to condition its consent upon the
giving of additional collateral, the payment of money or any other
matter.
11.15. Exceptions.
The representations, warranties and covenants contained herein
shall be independent of each other, and no exception to any
representation, warranty or covenant shall be deemed to be an exception
to any other representation, warranty or covenant contained herein
unless expressly provided, nor shall any such exceptions be deemed to
permit any action or omission that would be in contravention of
applicable Law.
11.16. Consent to Forum; Waiver of Jury Trial.
Each of the Loan Parties hereby irrevocably consents to the
nonexclusive jurisdiction of the Court of Common Pleas of ▇▇▇▇▇▇▇▇
County, Ohio and the United States District Court for the Southern
District of Ohio, and waives personal service of any and all process
upon it and consents that all such service of process be made by
certified or registered mail directed to such Loan Party at the
addresses provided for in Section 11.6 hereof and service so made shall
be deemed to be completed upon actual receipt thereof. Each Loan Party
waives any objection to jurisdiction and venue of any action instituted
against it as provided herein and agrees not to assert any defense
based on lack of jurisdiction or venue. Each Loan Party, the Agent and
the Banks hereby waive trial by jury in any action, suit, proceeding or
counterclaim of any kind arising out of or related to this Agreement or
any other Loan Document to the full extent permitted by Law.
11.17. Tax Withholding Clause.
At least five (5) Business Days prior to the first date on
which interest or fees are payable hereunder for the account of any
Bank, each Bank that is not incorporated under the laws of the United
States of America or a state thereof agrees that it will deliver to
each of the Borrowers and the Agent two (2) duly completed copies of
(i) Internal Revenue Service Form W-9, 4224 or 1001, or other
applicable form prescribed by the Internal Revenue Service, certifying
in either case that such Bank is entitled to receive payments under
this Agreement and the other Loan Documents without deduction or
withholding of any United States federal income taxes or is subject to
such tax at a reduced rate under an applicable tax treaty, or (ii) Form
W-8 or other applicable form or a certificate of the Bank indicating
that no such exemption or reduced rate is allowable with respect to
such payments. Each Bank which so delivers a Form W-8, W-9,
- 88 -
89
4224 or 1001 further undertakes to deliver to each of the Borrowers and
the Agent two (2) additional copies of such form (or a successor form)
on or before the date that such form expires or becomes obsolete or
after the occurrence of any event requiring a change in the most recent
form so delivered by it, and such amendments thereto or extensions or
renewals thereof as may be reasonably requested by the Borrowers or the
Agent, either certifying that such Bank is entitled to receive payments
under this Agreement and the other Loan Documents without deduction or
withholding of any United States federal income taxes or is subject to
such tax at a reduced rate under an applicable tax treaty or stating
that no such exemption or reduced rate is allowable. The Agent shall be
entitled to withhold United States federal income taxes at the full
withholding rate unless the Bank establishes an exemption or at the
applicable reduced rate as established pursuant to the above
provisions.
11.18. Joinder of Guarantors.
(a) Any Subsidiary of the Borrowers which is required to join this
Agreement pursuant to Section 8.2(i) must execute and deliver to Agent
(i) a Guarantor Joinder attached hereto as Exhibit 1.1(G)(1), (ii) an
Intercompany Subordination Joinder attached hereto as Exhibit
1.1(I)(2), and (iii) documents in the forms described in Section 7.1,
modified as appropriate to relate to such Subsidiary. The Loan Parties
shall deliver the foregoing documents specified in the preceding
clauses (i)-(iii) to the Agent within fourteen (14) Business Days after
the date of the filing of the articles of incorporation or certificate
of limited partnership or other equivalent effective date of the
organization of such Subsidiary if such Subsidiary is not a limited
partnership or corporation. Upon execution and delivery of such
documents, a Subsidiary shall be a party hereto and an obligor under
the Guaranty and one of the Loan Parties and Guarantors hereunder and
under each of the other Loan Documents for all purposes.
11.19. Limitation of Liability.
TO THE FULLEST EXTENT PERMITTED BY LAW, NO CLAIM MAY BE MADE
BY THE BORROWERS OR ANY OTHER LOAN PARTY OR ANY OTHER PERSON AGAINST
THE AGENT AND THE BANKS, OR ANY OF THEM, OR ANY AFFILIATE, DIRECTOR,
OFFICER, EMPLOYEE, ATTORNEY OR AGENT OF THE AGENT OR THE BANKS FOR ANY
SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT OF ANY
CLAIM ARISING FROM OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT OR ANY STATEMENT, COURSE OF CONDUCT, ACT, OMISSION OR EVENT
OCCURRING IN CONNECTION HEREWITH OR THEREWITH (WHETHER FOR BREACH OF
CONTRACT, TORT OR ANY OTHER THEORY OF LIABILITY); AND THE BORROWERS
HEREBY WAIVE, RELEASE AND AGREE NOT TO ▇▇▇ UPON ANY CLAIM FOR ANY SUCH
DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED
TO EXIST IN THEIR FAVOR.
11.20. Co-Agents.
The Co-Agents shall have no rights, obligations or duties
under this Agreement
- 89 -
90
other than in their respective capacities as Banks hereunder.
[SIGNATURE PAGE FOLLOWS]
- 90 -
91
[SIGNATURE PAGE 1 OF 6 OF CREDIT AGREEMENT]
IN WITNESS WHEREOF, the parties hereto, by their officers
thereunto duly authorized, have executed this Agreement as of the day and year
first above written.
BORROWERS AND GUARANTORS:
ATTEST: ▇▇▇▇▇▇ HOMES, INC.
_______________________________ By:
[Seal] Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title:Vice President and Chief
Financial Officer
Address for Notices:
▇▇▇▇▇▇ Homes, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
ATTEST: ▇▇▇▇▇▇ HOLDINGS, INC.
_______________________________ By:
[Seal] Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title:Treasurer
Address for Notices:
▇▇▇▇▇▇ Holdings, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
- 91 -
92
[SIGNATURE PAGE 2 OF 6 OF CREDIT AGREEMENT]
HEARTHSIDE HOMES, LLC
By: ▇▇▇▇▇▇ National Corporation,
as member
_______________________________ By:
[Seal] Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Secretary/Treasurer
Address for Notices:
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
GUARANTORS:
▇▇▇▇▇▇ NATIONAL CORPORATION
_______________________________ By:
[Seal] Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Secretary/Treasurer
Address for Notices:
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
- 92 -
93
[SIGNATURE PAGE 3 OF 6 OF CREDIT AGREEMENT]
ATTEST: ▇▇▇▇▇▇ HOMES OF INDIANA, L.L.C.
By: ▇▇▇▇▇▇ Homes, Inc., as member
_______________________________ By:
[Seal] Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President and Chief
Financial Officer
Address for Notices:
▇▇▇▇▇▇ Homes of Indiana, L.L.C.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
ATTEST: ▇▇▇▇▇▇ HOMES KENTUCKY, LLC,
By: ▇▇▇▇▇▇ Holdings, Inc.,
as manager
_______________________________ By:
[Seal] Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Treasurer
Address for Notices:
▇▇▇▇▇▇ Homes Kentucky, LLC
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
- 93 -
94
[SIGNATURE PAGE 4 OF 6 OF CREDIT AGREEMENT]
AGENT:
PNC BANK, NATIONAL ASSOCIATION,
as Agent and as a Bank
By:
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Title: Vice President
Address for Notices:
PNC Bank, National Association
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Commercial Real Estate
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
PNC Bank, National Association
One PNC Plaza - Fourth Floor Annex
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Multi-Bank Loan
Administration
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
- 94 -
95
[SIGNATURE PAGE 5 OF 6 OF CREDIT AGREEMENT]
CO-AGENTS:
ATTEST: BANK OF AMERICA NT&SA
(formerly NationsBank, N.A.),
as a Co-Agent and as a Bank
_______________________________ By:
[Seal] Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
Address for Notices:
Homebuilding Division
▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
ATTEST: BANK ONE, MICHIGAN
(formerly The First National Bank of
Chicago),
as a Co-Agent and as a Bank
_______________________________ By:
[Seal] Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: First Vice President
Address for Notices:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
- 95 -
96
[SIGNATURE PAGE 6 OF 6 OF CREDIT AGREEMENT]
OTHER BANKS:
ATTEST: COMERICA BANK,
_______________________________ By:
[Seal] Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
Address for Notices:
Commercial Real Estate II
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Mail Code 3256
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
ATTEST: THE FIFTH THIRD BANK
_______________________________ By:
[Seal] Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
Address for Notices:
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Mail Drop 109051
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
- 96 -
97
SCHEDULE 1.1(B)
COMMITMENTS OF BANKS
-----------------------------------------------------------------------------------------------------------------------
Amount of Commitment Amount of Amount of Ratable
for Revolving Credit Commitment for Outstanding Term Share (%)
Loans ($US) Term Loans ($US) Loans ($US)
-----------------------------------------------------------------------------------------------------------------------
PNC Bank, National Association $18,639,800 $ 3,860,200 $1,544,492.50 25.71%
-----------------------------------------------------------------------------------------------------------------------
Bank of America NT&SA $16,573,500 $ 3,426,500 $1,370,600.00 22.86%
-----------------------------------------------------------------------------------------------------------------------
Bank One, Michigan $16,573,500 $ 3,426,500 $1,370,600.00 22.86%
-----------------------------------------------------------------------------------------------------------------------
Comerica Bank $12,426,500 $ 2,573,500 $1,029,400.00 17.14%
-----------------------------------------------------------------------------------------------------------------------
The Fifth Third Bank $ 8,286,700 $ 1,713,300 $ 684,907.50 11.43%
----------- ----------- ------------- ------
-----------------------------------------------------------------------------------------------------------------------
TOTAL $72,500,000 $15,000,000 $ 6,000,000 100.00%
=========== =========== ============= =======
----------------------------------------------------------------------------------------------------------------------
- 97 -