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REVOLVING CREDIT AGREEMENT
Dated as of October 19, 1999
among
THE ▇▇▇▇▇▇ GROUP, INC.,
as the Company,
CERTAIN FINANCIAL INSTITUTIONS,
as the Banks,
BANK OF AMERICA, N.A.,
as the Administrative Agent,
BANK ONE, NA,
as the Syndication Agent,
GUARANTY FEDERAL BANK F.S.B. AND BANK UNITED,
as Co-Agents
BANC OF AMERICA SECURITIES LLC,
Lead Arranger and Lead Book Manager
and
BANC ONE CAPITAL MARKETS, INC.,
as the Co-Lead Arranger and Co-Book Manager
TABLE OF CONTENTS
PAGE
I. RECITALS.................................................................1
ARTICLE 1: DEFINITIONS AND ACCOUNTING TERMS...............................1
1.1 Defined Terms..................................................1
1.2 Use of Defined Terms..........................................23
1.3 Accounting Terms..............................................23
1.4 Exhibits......................................................23
ARTICLE 2: BORROWING PROCEDURES AND LETTER OF CREDIT SUBLIMIT............24
2.1 Disbursement of Loan Proceeds.................................24
2.2 ABR Borrowings................................................26
2.3 LIBOR Borrowing...............................................27
2.4 Redesignation of Borrowings and Continuation of LIBOR
Borrowings....................................................27
2.5 Calculation of Borrowing Base.................................29
2.6 Borrowing Base................................................31
2.7 Payments by the Banks to the Administrative Agent.............31
2.8 Sharing of Payments, Etc......................................32
2.9 Letter of Credit Sublimit.....................................32
2.9.1 Amount and Terms of the Credit.........................32
2.9.2 Letters of Credit......................................32
2.9.3 Request for Credit.....................................33
2.9.4 Other Banks'Participation..............................34
2.9.5 Nature of Reimbursement Obligations....................34
2.9.6 Letter of Credit and Issuance Fees.....................35
2.9.7 Conditions Precedent to Issuance of Letters of
Credit.................................................36
2.10 Increase of Commitments.......................................36
2.11 Voluntary Termination or Reduction of Commitments.............37
ARTICLE 3: PAYMENTS AND FEES.............................................37
3.1 Principal and Interest........................................37
3.2 Nonuse Fee....................................................40
3.3 Facility Fee..................................................40
3.4 Upfront Fee...................................................40
3.5 Late Payments.................................................40
3.6 Taxes.........................................................40
3.7 Illegality....................................................41
3.8 Increased Costs and Reduction of Return.......................41
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3.9 Funding Indemnification.......................................42
3.10 Inability to Determine Rates..................................42
3.11 Certificate of Banks..........................................43
3.12 Substitution of Banks.........................................43
3.13 Survival......................................................43
3.14 Manner and Treatment of Payments..............................43
3.15 Mandatory Prepayment..........................................44
3.16 Agency and Other Fees Payable to the Administrative Agent
and Banc of America Securities................................44
3.17 Maturity Date Extension Option................................45
3.18 Limitation on Additional Amounts, etc.........................46
ARTICLE 4: CONDITIONS....................................................46
4.1 Conditions to First Extension of Credit.......................46
4.2 Conditions for Subsequent Extensions of Credit................47
ARTICLE 5: REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................48
5.1 Incorporation, Qualification, Powers and Capital Stock........48
5.2 Execution, Delivery and Performance of Loan Documents.........48
5.3 Compliance with Laws and Other Requirements...................50
5.4 Subsidiaries..................................................50
5.5 Financial Statements of the Company and its Consolidated
Subsidiaries..................................................51
5.6 No Material Adverse Change....................................51
5.7 Tax Liability.................................................51
5.8 Litigation....................................................52
5.9 ERISA.........................................................52
5.10 Regulations U and X; Investment Company Act...................52
5.11 No Default or Event of Default................................53
5.12 Year 2000 Compliance..........................................53
5.13 Ownership of Property; Liens..................................53
5.14 Environmental Matters.........................................53
5.16 Borrowing Base Components.....................................54
ARTICLE 6: AFFIRMATIVE COVENANTS OF THE COMPANY..........................54
6.1 Financial Statements..........................................54
6.2 Certificates; Other Information...............................55
6.3 Payment of Obligations........................................56
6.4 Conduct of Business and Maintenance of Existence..............57
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6.5 Maintenance of Property; Insurance............................57
6.6 Inspection of Property; Books and Records; Discussions........57
6.7 Notices.......................................................58
6.8 Environmental Laws............................................58
6.9 Guarantees from Future Subsidiaries...........................59
ARTICLE 7: NEGATIVE COVENANTS OF THE COMPANY.............................60
7.1 Consolidated Tangible Net Worth...............................60
7.2 Combined Debt of the Homebuilding Segment to Adjusted
Consolidated Tangible Net Worth Ratio.........................60
7.3 Minimum Fixed Charge Coverage.................................60
7.4 Senior Permitted Debt Plus Third Party L/C Obligations
Not to Exceed Borrowing Base..................................60
7.5 Limitation on Land Inventory..................................60
7.6 Limitation on Housing Inventory...............................61
7.7 Limitation on Indebtedness....................................61
7.8 Limitation on Liens...........................................62
7.9 Limitation on Guarantee Obligations...........................64
7.10 Limitations of Fundamental Changes............................64
7.11 Limitation on Sales of Assets.................................65
7.12 Limitation on Dividends.......................................66
7.13 Limitation on Investments.....................................66
7.14 Limitation on Optional Payments and Modification of Debt
Instruments...................................................67
7.15 Transactions with Affiliates..................................68
7.16 Fiscal Year...................................................68
7.17 Compliance with ERISA.........................................68
7.18 Preferred Stock...............................................69
ARTICLE 8: EVENTS OF DEFAULT AND REMEDIES UPON DEFAULT...................69
8.1 Events of Default.............................................69
8.2 Remedies......................................................71
8.3 Rights Not Exclusive..........................................72
ARTICLE 9: The Administrative Agent......................................72
9.1 Appointment and Authorization.................................72
9.2 Delegation of Duties..........................................72
9.3 Liability of Agent............................................73
9.4 Reliance by Agent.............................................73
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9.5 Notice of Default.............................................74
9.6 Credit Decision...............................................74
9.7 Indemnification...............................................75
9.8 Agent in Individual Capacity..................................75
9.9 Successor Agent...............................................75
9.10 Withholding Tax...............................................76
9.11 Performance by the Administrative Agent.......................77
9.12 Actions.......................................................77
9.13 Syndication Agent and CoAgents................................78
ARTICLE 10: MISCELLANEOUS.................................................78
10.1 Amendments and Waivers........................................78
10.2 Costs, Expenses and Taxes.....................................79
10.3 No Waiver; Cumulative Remedies................................79
10.4 Payments Set Aside............................................79
10.5 Successors and Assigns........................................80
10.6 Assignments, Participations, etc..............................80
10.7 Setoff........................................................83
10.8 Notification of Addresses, Lending Offices, Etc...............83
10.9 Survival of Representations and Warranties....................83
10.10 Notices.......................................................83
10.11 Indemnity by the Company......................................84
10.12 Integration and Severability..................................84
10.13 Counterparts..................................................84
10.14 No Third Parties Benefited....................................84
10.15 Section Headings..............................................84
10.16 Further Acts by the Company...................................84
10.17 Time of the Essence...........................................84
10.18 GOVERNING LAW.................................................84
10.19 Submission to Jurisdiction....................................85
10.20 WAIVER OF JURY TRIAL..........................................85
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LIST OF ANNEXES
Annex I Commitment of the Banks
Annex II Guarantors
Annex III Non-Use Fee Calculation
LIST OF EXHIBITS
Exhibit "A" - Note
Exhibit "B" - Borrowing Base Certificate
Exhibit "C" - Request for Borrowing/Continuation/Redesignation/Letter of
Credit
Exhibit "D" - Continuing Guaranty
Exhibit "E-1" - Form of Legal Opinion of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ for the Company
Exhibit "E-2" - Form of Legal Opinion of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ for the
Guarantors
Exhibit "E-3" - Form of Legal Opinion of Piper and Marbury LLP for
the Company and the Guarantors
Exhibit "F" - Form of Assignment and Acceptance Agreement
Exhibit "G" - Compliance Certificate
LIST OF SCHEDULES
Schedule 1.1 - Existing Investments
Schedule 2.9.1 - Existing Letters of Credit
Schedule 5.4 - Subsidiaries and Homebuilding Joint Ventures
Schedule 5.8 - Litigation
Schedule 6.2(g) - Financial Information
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REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT ("AGREEMENT") is dated as of October 19,
1999, by and among THE ▇▇▇▇▇▇ GROUP, INC., a Maryland corporation (THE
"COMPANY"), the several financial institutions from time to time party TO THIS
AGREEMENT (COLLECTIVELY, THE "BANKS" AND INDIVIDUALLY, A "BANK"), BANK OF
AMERICA, N.A., A NATIONAL BANKING ASSOCIATION ("BOFA"), as ADMINISTRATIVE AGENT
FOR THE BANKS (IN SUCH CAPACITY, THE "ADMINISTRATIVE AGENT"), BANK ONE, NA, a
national banking association, as syndication agent (IN SUCH CAPACITY, THE
"SYNDICATION AGENT"), GUARANTY FEDERAL BANK, F.S.B. a FEDERAL SAVINGS BANK, AS
CO-AGENT (IN SUCH CAPACITY, AS "CO-AGENT") and BANK UNITED, A FEDERAL SAVINGS
BANK, AS CO-AGENT, (IN SUCH CAPACITY, A "CO-AGENT") and is made with reference
to the facts set forth below.
I. RECITALS
1. The Company is primarily engaged in the homebuilding business for
developing residential single-family housing projects.
2. The Company has requested the Banks to make certain extensions of
credit to it (a) to finance or refinance the acquisition of land and the
development and construction of various single-family housing projects, and (b)
for general corporate purposes (including the refinancing of all obligations
under the Existing Credit Agreement).
3. The Banks are willing to make such extensions of credit to the Company
on the terms and conditions set forth in this Agreement and in the other Loan
Documents.
II. AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company, the Banks and the
Administrative Agent hereby agree as follows:
ARTICLE 1: DEFINITIONS AND ACCOUNTING TERMS.
1.1 DEFINED TERMS. As used in this Agreement the following terms shall
have the meaning set forth respectively after each:
"ABR" means, for any day, a rate per annum (rounded upwards, if
necessary to the next 1/100 of 1%) equal to the higher of:
(a) the Reference Rate in effect on such day; and
(b) 0.50% per annum above the Federal Funds Effective Rate in
effect on such day.
"ABR BORROWING" means any Loan or portion thereof which is not
designated or redesignated by the Company as a LIBOR Borrowing pursuant TO
SECTION 2.3 OR 2.4 and which is not a Swing Line Advance.
"ADJUSTED CONSOLIDATED TANGIBLE NET WORTH" means, with respect to
the Company at any date, the Company's Consolidated Tangible Net Worth AT
SUCH DATE LESS the Company's Investments in the Financial Services
Segment, determined in accordance with GAAP.
"ADMINISTRATIVE AGENT" means BofA when acting in its capacity as the
Administrative Agent under any of the Loan Documents, and any successor
administrative agent.
"AFFECTED BANK" HAS THE MEANING SET FORTH IN SECTION 3.13.
"AFFILIATE" means any Person (a) which directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is
under common control with, the Company or any Subsidiary, as the context
may require, or (b) which owns beneficially or of record 25% or more of
the Voting Stock of the Company. The term "control" means the possession,
directly or indirectly, of the power to cause the direction of the
management and policies of a Person, whether through the ownership of
voting securities or partnership interests, by contract, family
relationship or otherwise.
"AGENT-RELATED PERSONS" means the Administrative Agent and any
SUCCESSOR ADMINISTRATIVE AGENT (PURSUANT TO THE TERMS OF SECTION 9.9),
together with their respective Affiliates and the directors, officers,
agents, employees and attorneys-in-fact of such Persons and Affiliates.
"AGGREGATE COMMITMENT" means the aggregate combined Commitments of
the Banks. As of the date of this Agreement, the Aggregate Commitment
currently equals $375,000,000, and may decrease as provided IN SECTION
2.11 or increase as provided in Section 2.10.
"AGREEMENT" means this Revolving Credit Agreement, either as
originally executed or as it may from time to time be supplemented,
modified or amended.
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"ASSIGNEE" SHALL HAVE THE MEANING SET FORTH IN SECTION 10.6.
"ASSIGNMENT AND ACCEPTANCE" shall have the meaning set forth in
SECTION 10.6.
"ATTORNEY COSTS" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the nonduplicative
allocated cost of internal legal services and all disbursements of internal
legal counsel.
"AUTHORIZED OFFICIAL" means Responsible Official or other person
designated in writing by a Responsible Official.
"BANKING DAY" means any Monday, Tuesday, Wednesday, Thursday or
Friday on which banks (including the Banks) are open for business in
Illinois.
"BANKS" means the financial institutions listed on the signature
pages hereof and the additional financial institutions (if any) from time
to time party to this Agreement, any of their successors and assigns
(including any Assignee), or any one or more of them.
"BORROWING" means each of the Loans to be made by the Banks to THE
COMPANY AS PROVIDED IN ARTICLE 2.
"BORROWING BASE" HAS THE MEANING SET FORTH IN SECTION 2.5(B).
"BORROWING BASE CERTIFICATE" means a written calculation of the
BORROWING BASE, SUBSTANTIALLY IN THE FORM OF EXHIBIT "B" attached hereto
and made a part hereof, signed by a Responsible Official of the Company
and properly completed to provide all information required to be included
thereon.
"BUSINESS" HAS THE MEANING SET FORTH IN SECTION 5.14(B).
"CAPITAL ADEQUACY REGULATION" means any guideline, request or
directive of any central bank or other Governmental Authority, or any
other law, rule or regulation, whether or not having the force of law, in
each case, regarding capital adequacy of any bank or of any corporation
controlling a bank.
"CASH EQUIVALENTS" means (a) securities issued or directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality thereof having maturities of not more than 90 days from
the date of acquisition, (b) time deposits and certificates of deposit of
any of the Banks, or of any domestic or foreign commercial bank which has
capital and surplus in excess of $500,000,000 or which has a commercial
paper rating meeting the requirements specified in clause (d) below,
having maturities of not more than 90 days from the date of acquisition,
(c) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clauses (a) and (b) above
entered into with any bank meeting the qualifications specified in clause
(b) above, and (d) commercial paper of any Person rated at least A-2 or
the equivalent thereof by S and P or P-2 or the equivalent thereof b
▇▇▇▇▇'▇ and in either case maturing within 90 days after the date of
acquisition.
"CLOSING DATE" means the date on which the conditions precedent IN
ARTICLE 4 are satisfied in full.
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"CODE" means the Internal Revenue Code of 1986, as amended, reformed
or otherwise modified from time to time.
"COMBINED DEBT" means, with respect to a Person or segment at a
PARTICULAR DATE, WITHOUT DUPLICATION, ALL FUNDED DEBT PLUS all
obligations, contingent or otherwise, in respect of letters of credit
(OTHER THAN PERFORMANCE L/CS) PLUS all Guarantee Obligations guaranteeing
or in effect guaranteeing Funded Debt of another party plus all Guarantee
Obligations guaranteeing or in effect guaranteeing obligations, contingent
or otherwise, in respect of letters of credit (other than Performance
L/Cs), in each case of such Person and its Subsidiaries or such segment as
at such date, determined on a combined basis in accordance with GAAP.
"COMBINED NET INCOME" means, with respect to a Person or segment for
any period, the combined net income (or loss) of such Person and its
Subsidiaries or such segment and Consolidated Joint Ventures for such
period (taken as a cumulative whole), determined on a combined basis in
accordance with GAAP.
"COMMITMENT" means, with respect to the Loans, as to each Bank, the
percentage obligation and aggregate Dollar amount set forth OPPOSITE THE
NAME OF SUCH BANK ON ANNEX I hereto. As Banks are added to this Agreement,
or withdraw from this Agreement, and assignments are MADE BY THE BANKS IN
ACCORDANCE WITH SECTION 10.6, the amount of each Bank's Commitment may
change in accordance with that Bank's Pro Rata Share of the Aggregate
Commitment. The Assignment and Acceptances executed by the added Banks and
the records maintained by the Administrative Agent shall be presumptive
evidence of each such Bank's Commitment, as each such Bank's Commitment
may change from time to time in accordance with the terms of this
Agreement.
"COMMONLY CONTROLLED ENTITY" means an entity, whether or not
incorporated, which is under common control with the Company within the
meaning of Section 4001 of ERISA or is part of a group which includes the
Company and which is treated as a single employer under Section 414 of the
Code.
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"COMMON STOCK" means the Company's common stock, par value $1.00 per
share, as the same exists on the date hereof or any other class of stock
of the Company the right of which to share in distributions of earnings or
assets of the Company is without limit as to amount or percentage.
"COMPANY" means The ▇▇▇▇▇▇ Group, Inc., a Maryland corporation, and
its successors and assigns.
"COMPLETED UNIT" means a Unit as to which either (or both) of the
following has occurred: (a) a notice of completion has been filed or
recorded in the appropriate real estate records, or (b) all necessary
construction has been completed in order to obtain a certificate of
occupancy (whether or not such certificate of occupancy has actually been
obtained).
"CONSOLIDATED INTANGIBLES" means, with respect to any Person at any
date, all amounts, determined in accordance with GAAP, included in the
Consolidated Net Worth of such Person and attributable to intangibles
including without limitation (a) goodwill, including any amounts (however
designated on the balance sheet) representing the cost of acquisitions of
Subsidiaries in excess of underlying tangible assets or (b) patents,
trademarks and copyrights.
"CONSOLIDATED JOINT VENTURES" means, at any time, real estate joint
ventures in which the Company or any of its Subsidiaries has an investment
at such time and which are being consolidated in the Company's
consolidated financial statements.
"CONSOLIDATED NET INCOME" means, with respect to a Person for any
period, the consolidated net income (or loss) of such Person and its
Subsidiaries and Consolidated Joint Ventures for such period (taken as a
cumulative whole), determined in accordance with GAAP.
"CONSOLIDATED NET WORTH" means, with respect to any Person at any
date, all amounts which would, in accordance with GAAP, be included under
shareholders' equity on a consolidated balance sheet of such Person and
its consolidated Subsidiaries and Consolidated Joint Ventures at such
date.
"CONSOLIDATED TANGIBLE NET WORTH" means, with respect to any Person
at any date, such Person's Consolidated Net Worth at such date LESS such
Person's Consolidated Intangibles at such date.
"CONSTRUCTION IN PROGRESS" means Finished Lots (a) for which a final
subdivision map has been recorded and (b) upon which construction has
commenced, as evidenced by the commencement of excavation for foundations,
but has not been completed.
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"CONTRACTUAL OBLIGATION" means, with respect to any Person, any
provision of any security issued by such Person or of any agreement,
instrument or other undertaking to which such Person is a party or by
which it or any of its property is bound.
"CREDIT ADVANCE" means any advance, loan or extension of credit to
any Person or the purchase of any bonds, notes, debentures or other debt
securities of any Person.
"DEFAULT" MEANS ANY OF THE EVENTS SPECIFIED IN SECTION 8.1, whether
or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"DESIGNATED EVENT" means the occurrence of any of the following
events: (a) there shall be consummated any consolidation, share exchange
or merger of the Company in which the Company is not the continuing or
surviving corporation or pursuant to which the Company's Voting Stock
would be converted into cash, securities or other property, other than, in
any case, a merger of the Company in which the holders of Voting Stock
immediately prior to the merger have 70% or more of the ownership,
directly or indirectly, of the Voting Stock of the surviving corporation
immediately after the merger; (b) there is a report filed by any Person,
including Affiliates of the Company (other than the Company, its
Subsidiaries, employee stock ownership plans or employee benefit plans of
the Company or its Subsidiaries) on Schedule 13D or 14D-1 (or any
successor schedule, form or report under the Securities Exchange Act of
1934 (the "Exchange Act") disclosing that such Person (for the purpose of
this definition of "Designated Event" only, the term "Person" shall
include a "person" within the meaning of Section 13(d)(3) and Section
14(d)(2) of the Exchange Act or any successor provision to either of the
foregoing) has become the beneficial owner (as the term "beneficial owner"
is defined under Rule 13d-3, Rule 13d-5 or any successor rule or
regulation promulgated under the Exchange Act) of 30% or more of the
Company's Voting Stock; PROVIDED, HOWEVER, that a Person shall not be
deemed the beneficial owner of, or to own beneficially (i) any securities
tendered pursuant to a tender or exchange offer made on behalf of such
Person or any of such Person's Affiliates until such tendered securities
are accepted for purchase or exchange thereunder or (ii) any securities if
such beneficial ownership (A) arises solely as a result of a revocable
proxy delivered in response to a proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and regulations
under the Exchange Act, and (B) is not also then reportable on Schedule
13D (or any successor schedule, form or report) under the Exchange Act; or
(c) during any period of two consecutive calendar years, individuals who,
at the beginning of such period constituted the board of directors of the
Company cease for any reason to constitute a majority of the directors of
the Company then in office unless such new directors were elected by the
directors of the Company who constituted the board of directors of the
Company at the beginning of such period.
"DOLLARS" OR "$" means United States dollars.
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"EBITDA" means, for any period, without duplication, the sum of the
following amounts attributable to such period: (a) the Combined Net Income
of the Homebuilding Segment, (b) cash distributions received by the
Company from the Financial Services Segment, determined in accordance with
GAAP, (c) federal, state and local income and franchise taxes deducted
from combined revenues in determining such Combined Net Income, (d)
depreciation and amortization deducted from combined revenues in
determining such Combined Net Income, (e) interest expense deducted from
combined revenues in determining such Combined Net Income (including,
without duplication, previously capitalized interest expense which would
be included in "Cost of Goods Sold" and deducted from combined revenues in
determining such Combined Net Income on a combined balance sheet of the
Homebuilding Segment in accordance with GAAP), and (f) other non-recurring
non-cash charges and expenses (including, without limitation, net
realizable value write-down charges) deducted from combined revenues in
determining such Combined NET INCOME, LESS (i) any non-recurring non-cash
credits included in combined revenues in determining such Combined Net
Income and (ii) any non-cash equity interest in earnings received by the
Company from the Financial Services Segment which was included in combined
revenues in determining such Combined Net Income.
"ELIGIBLE ASSIGNEE" means (a) a commercial bank or savings bank
organized under the laws of the United States, or any state thereof, and
having a combined capital and surplus of at least $100,000,000, (b) a
commercial bank organized under the laws of any other country which is a
member of the Organization for Economic Cooperation and Development, or a
political subdivision of any such country, and having A COMBINED CAPITAL
AND SURPLUS OF AT LEAST $100,000,000, PROVIDED that such bank is acting
through a branch or agency located in the United States, and (c) a Person
that is primarily engaged in the business of commercial banking and that
is (i) a Subsidiary of a Bank, (ii) a Subsidiary of a Person of which a
Bank is a Subsidiary, or (iii) a Person of which a Bank is a Subsidiary.
"ENTITLED LAND" means (a) land where all requisite zoning
requirements and land use requirements have been satisfied, and all
requisite approvals have been obtained (on a final and unconditional
basis) from all applicable Governmental Authorities (other than approvals
which are simply ministerial and non-discretionary in nature), in order to
develop the land as a residential housing project and construct Units
thereon, and (b) as to land located in California, land which satisfies
the requirements of clause (a) immediately above, and which is subject to
a currently effective vesting, tentative map (unless a county or city
where the land is located does not grant vesting tentative maps) which has
received all necessary approvals (on a final and unconditional basis) by
all applicable Governmental Authorities.
"ENVIRONMENTAL LAWS" means any and all foreign, Federal, state,
local or municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees, requirements of any Governmental Authority or other
Requirements of Law (including common law) regulating, relating to or
imposing liability or standards of conduct concerning pollution or
protection of the environment, as now or may at any time hereafter be in
effect.
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"ERISA" means the Employee Retirement Income Security Act of 1974,
and any regulations issued pursuant thereto, as now or from time to time
hereafter in effect.
"EVENT OF DEFAULT" means any of the events specified in SECTION 8.1,
PROVIDED that any requirement for the giving of notice, the lapse of time,
or both, or any other condition, has been satisfied.
"EXISTING CREDIT AGREEMENT" has the meaning specified in
Section 4.1(C).
"EXTENSION DATE" has the meaning as set forth for that term in
Section 3.19.
"EXTENSION REQUEST" means a written request from the Company to
extend the maturity date pursuant to Section 3.19.
"FACILITY FEE" has the meaning set forth in Section 3.3.
"FACILITY FEE RATE" means the rate, expressed as a percentage per
annum, to be applied to the amount of the Commitment of each Bank in
determining the Facility Fee payable to such Bank. The Facility Fee Rate
shall be based on the Company's current senior long-term unsecured debt
ratings as published by S and P and Moody's as determined by the
following pricing grid:
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S and P/▇▇▇▇▇'▇ RATING APPLICABLE FACILITY FEE RATE
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Greater than or equal to BBB/Baa2 .10%
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=BBB-/Baa3 .10%
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=BB+/Ba1 .10%
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=BB/Ba2 .10%
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=BB-/Ba3 .125%
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Less than or equal to B+/B1 (or unrated) .15%
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In the event of a difference in rating between S and P and Moody's, the
higher rating shall prevail for purposes of determining the applicable
Facility Fee Rate except that if such ratings differ by more than one
level, the rating one level above the lower rating shall prevail for such
purpose. As of the date of this Agreement, the Company is currently rated
BB/Ba2 by S and P and Moody's, respectively, and the applicable Facility
Fee Rate as of the date of this Agreement is therefore .10%.
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"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, an interest rate
per annum equal to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published for such day (or, if such
day is not a Banking Day, for the immediately preceding Banking Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Banking Day, the average of the quotations at
approximately 10:00 a.m., Chicago time, on such day on such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by the Administrative Agent in its sole
discretion.
"FEE LETTER AGREEMENT" has the meaning set forth in Section 3.16.
"FINANCIAL SERVICES SEGMENT" means the business segment of the
Company and its Subsidiaries engaged in mortgage banking (including the
title and escrow businesses), mortgage servicing, securities issuance,
bond administration and management services and related activities, which
segment on the date of this Agreement consists principally of the
activities of ▇▇▇▇▇▇ Mortgage Company and its Subsidiaries but excludes
the Limited-Purpose Subsidiaries.
"FINANCING LEASE" means any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance
with GAAP to be capitalized on a balance sheet of the lessee.
"FINISHED LOTS" means lots of Entitled Land as to which (a) a final
subdivision map has been recorded, (b) all major offsite construction and
infrastructure has been completed to local government requirements, (c)
utilities have been installed to local government requirements, and (d)
building permits may be pulled and construction commenced without the
satisfaction of any further material conditions.
"FIXED CHARGE COVERAGE RATIO" has the meaning set forth
in SECTION 7.3
"FIXED CHARGES" means, for any period, without duplication, the sum
of the following amounts: (a) interest expense of the Homebuilding Segment
for such period (including such interest expense constituting capitalized
interest for such period), determined in accordance with GAAP, (b)
principal payments (excluding balloon payments) on long-term Indebtedness
scheduled to be made by the Homebuilding Segment during such period, (c)
the principal portion of payments in respect of Financing Leases scheduled
to be made by the Homebuilding Segment during such period, and (d)
dividends on any of the Company's preferred stock paid or payable during
such period.
-9-
"FRB" means the Board of Governors of the Federal Reserve System,
and any Governmental Authority succeeding to any of its principal
functions.
"FUNDED DEBT" of any Person means, at any date, all Indebtedness of
such Person of the nature referred to in clauses (a), (b), (c), (d) AND
(F) of the definition of "indebtedness" at such date.
"GAAP" means generally accepted accounting principles in the United
States of America in effect from time to time.
"GAAP VALUE" means, with respect each property constituting part of
the Real Estate Inventory, the book value for such property or asset
determined in accordance with GAAP.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state
or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions
of or pertaining to government, and any corporation or other entity owned
or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
"GUARANTEE OBLIGATION" MEANS, AS TO ANY PERSON (THE "GUARANTEEING
PERSON"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has issued
a reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, LEASES, DIVIDENDS
OR OTHER OBLIGATIONS (THE "PRIMARY OBLIGATIONS") of ANY THIRD PERSON (THE
"PRIMARY OBLIGOR") in any manner, whether directly or indirectly,
including, without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or
any property constituting direct or indirect security therefor, (ii) to
advance or supply funds (A) for the purchase or payment of any such
primary obligation or (B) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency of
the primary obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of any
such primary OBLIGATION AGAINST LOSS IN RESPECT THEREOF; PROVIDED,
HOWEVER, that the term Guarantee Obligation shall not include endorsements
of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing
person shall be deemed to be the maximum stated amount of the primary
obligation relating to such Guarantee Obligation (or, if less, the maximum
stated liability set forth in the instrument embodying such Guarantee
OBLIGATION), PROVIDED, HOWEVER, that in the absence of any such stated
amount or stated liability, the amount of such Guarantee Obligation shall
be such guaranteeing person's maximum reasonably anticipated liability in
respect thereof as reasonably determined by the Company in good faith.
-10-
"GUARANTORS" means, collectively, the Subsidiaries listed on ANNEX
II hereto, and each other Person that from time to time executes a
Guaranty in favor of the Banks with respect to the Loans and the other
Obligations, and their successors and assigns.
"GUARANTY" means a continuing guaranty, substantially in the form OF
EXHIBIT "D" attached hereto, either as originally executed or as it may
from time to time be supplemented, modified, amended, restated or
extended, to be executed and delivered by the Guarantors to the
Administrative Agent for the benefit of the Banks.
"HOME PROCEEDS RECEIVABLE" means, with respect to the Company or a
wholly-owned Subsidiary in the Homebuilding Segment, funds due to the
Company or such wholly-owned Subsidiary held at an escrow or title company
following the sale and conveyance of title of a Unit to a buyer (including
an escrow or title company which is a Subsidiary of the Company).
"HOMEBUILDING SEGMENT" means the business segment of the Company and
its Subsidiaries and their respective Consolidated Joint Ventures engaged
in the construction and sale of single family attached and unattached
dwellings and related activities.
"IMPROVEMENTS" means on and off-site development work, including but
not limited to filling to grade, main water distribution and sewer
collection systems and drainage system installation, paving, and other
improvements necessary for the use of residential dwelling units and as
required pursuant to development agreements which may have been entered
into with Governmental Authorities.
"INDEBTEDNESS" of any Person means, at any date, without duplication
(a) all indebtedness of such Person for borrowed money, (b) all
indebtedness of such Person for the deferred purchase price of property or
services (other than trade liabilities less than 90 days from invoice and
accrued expenses incurred in the ordinary course of business and payable
in accordance with customary practices), (c) any other indebtedness of
such Person which is evidenced by a note, bond, debenture or similar
instrument, (d) all obligations of such Person under Financing Leases, (e)
all obligations, contingent or otherwise, of such Person in respect of
letters of credit, whether or not drawn, and acceptances issued or created
for the account of such Person, and (f) all liabilities secured by any
Lien on any property owned by such Person even though such Person has not
assumed or otherwise become liable for the payment thereof.
"INSOLVENCY" OR "INSOLVENT" means, with respect to any Multiemployer
Plan, the condition that such Plan is insolvent within the meaning of
Section 4245 of ERISA.
-11-
"INTEREST PAYMENT DATE" means: (a) as to any ABR Borrowing or Swing
Line Advance, the first day of each January, April, July and October to
occur while such Loan is outstanding, (b) as to any LIBOR Loan having a
LIBOR Period of three months or less, the last day of such LIBOR Period,
(c) as to any LIBOR Borrowing having an LIBOR Period longer than three
months, the day which is three months after the first day of such LIBOR
Period and the last day of such LIBOR Period.
"INVESTMENT" means any Credit Advance to, or any contribution to or
purchase of stock or other equity securities of, or any purchase of assets
constituting a business unit of, any Person, excluding investments in
stock or other equity securities existing on the date of this Agreement
and listed on the attached Schedule 1.1, and any investment representing
any interest of the Company or any Subsidiary in the retained or
undistributed earnings of any Person.
"ISSUANCE FEE" has the meaning set forth in Section 2.9.4(B).
"ISSUING BANK" means BofA in its individual capacity as a bank
issuing Letters of Credit under this Agreement.
"LAND UNDER DEVELOPMENT" means Entitled Land upon which a final
subdivision map has been recorded and upon which construction of
Improvements has commenced and is being diligently pursued but has not
been completed.
"LAWS" means, collectively, all international, foreign, federal,
state and local statutes, treaties, rules, regulations, ordinances, codes
and administrative or judicial precedents.
"L/C" means a letter of credit issued for the account of the Company
or a Subsidiary to a party, as beneficiary, to which the Company, or such
Subsidiary owes certain obligations in connection with its ordinary course
of business real estate development and homebuilding activity (for
example, to a municipality, as beneficiary, to support the Company's or a
Subsidiary's obligation to widen public streets in connection with a
residential development project).
"L/C APPLICATION" has the meaning set forth in Section 2.9.3.
"L/C COMMITMENT" has the meaning set forth in Section 2.9.1.
"L/C FEE RATE" means, with respect to any Letter of Credit, the
rate, expressed as a percentage per annum, to be applied to the then
available dollar amount of such Letter of Credit in determining the Letter
of Credit Fee for such Letter of Credit. The L/C Fee Rate shall be based
on the Company's current senior long-term unsecured debt ratings as
published by S and P and Moody's as determined by the following pricing
grid:
-12-
-------------------------------------------------------------------
S and P/▇▇▇▇▇'▇ RATING APPLICABLE L/C FEE RATE
-------------------------------------------------------------------
-------------------------------------------------------------------
>BBB/Baa2 .775%
-
-------------------------------------------------------------------
-------------------------------------------------------------------
=BBB-/Baa3 .875%
-------------------------------------------------------------------
-------------------------------------------------------------------
=BB+/Ba1 1.035%
-------------------------------------------------------------------
-------------------------------------------------------------------
=BB/Ba2 1.125%
-------------------------------------------------------------------
-------------------------------------------------------------------
=BB-/Ba3 1.425%
-------------------------------------------------------------------
-------------------------------------------------------------------
Less than or equal to B+/B1 (or unrated) 1.775%
-------------------------------------------------------------------
In the event of a difference in rating between S and P and Moody's, the
higher rating shall prevail for purposes of determining the applicable L/C
Fee Rate except that if such ratings differ by more than one level, the
rating one level above the lower rating shall prevail for such purpose. As
of the date of this Agreement, the Company is currently rated BB/Ba2 by S
and P and Moody's, respectively, and the applicable L/C Fee Rate as of the
date of this Agreement is therefore 1.125%.
"L/C OBLIGATIONS" has the meaning set forth in Section 2.9.1.
"LENDING OFFICE" means, as to each Bank, the office located at the
address for notices specified for such Bank on the signature pages hereof.
"LETTER OF CREDIT" OR "LETTERS OF CREDIT" has the meaning set
FORTH IN SECTION 2.9.1.
"LETTER OF CREDIT FEE" has the meaning set forth in
SECTION 2.9.4(A).
"LIBOR BANKING DAY" means any Banking Day on which banks are open
for business in London, England and New York, New York and BofA is open
for business in Chicago, Illinois.
"LIBOR BASE RATE" means, with respect to a LIBOR Borrowing for the
relevant LIBOR Period, the per annum rate of interest, rounded upward, if
necessary, to the nearest 1/16th of one percent (0.0625%), determined by
the Administrative Agent to be the rate at which deposits in immediately
available funds in Dollars would be offered by BofA's London branch (or at
a time when BofA is no longer the Administrative Agent or a Bank, by the
London branch of any Bank selected by the Majority Banks) to banks in the
London inter-bank eurodollar market at approximately 11:00 a.m., London
time, two LIBOR Banking Days prior to the first day of such LIBOR Period,
in the approximate amount of the relevant LIBOR Borrowing and having a
maturity approximately equal to such LIBOR Period.
-13-
"LIBOR BORROWING" means any Loan or portion thereof designated,
redesignated or continued by the Company as a LIBOR Borrowing pursuant TO
SECTION 2.3 OR 2.4.
"LIBOR LENDING OFFICE" means the office or branch of each Bank so
designated on the signature pages of this Agreement, or such other office
or branch of each Bank as it may hereafter designate, by written notice to
the Company and the Administrative Agent, as its LIBOR Lending Office.
"LIBOR PERIOD" means, as to each LIBOR Borrowing, the period
commencing on the date specified in the applicable Request for Borrowing,
Request for Redesignation or Request for Continuation by the COMPANY
PURSUANT TO SECTION 2.3 OR 2.4 and ending one month, two months, three
months or six months thereafter, as designated by the Company in the
applicable Request for Borrowing, Request for REDESIGNATION OR REQUEST FOR
CONTINUATION, PROVIDED, in each case, that:
(a) the first day in any LIBOR Period shall be a LIBOR
Banking Day;
(b) any LIBOR Period that would otherwise end on a day that is
not a LIBOR Banking Day shall be extended to the next SUCCEEDING
LIBOR BANKING DAY UNLESS such LIBOR Banking Day falls in another
calendar month, in which case such LIBOR Period shall end on the
next preceding LIBOR Banking Day; and
(c) No LIBOR Period shall extend beyond the Maturity Date.
"LIBOR RATE" means, for any LIBOR Period for any LIBOR Borrowing,
the rate (rounded upward, if necessary, to the next 1/100 of 1%) obtained
by dividing (a) the LIBOR Base Rate for such LIBOR Period, by (b) a
percentage equal to 100% minus the Reserve Requirement for such LIBOR
Period.
"LIBOR RATE SPREAD" means the additional component of interest,
expressed as a percentage per annum, to be added to the LIBOR Rate in
determining the applicable rate of interest for LIBOR Borrowings. The
applicable LIBOR Rate Spread shall be based on the Company's current
senior long-term unsecured debt ratings as published by S and P and
Moody's as determined by the following pricing grid:
-------------------------------------------------------------------
S and P/▇▇▇▇▇'▇ RATING APPLICABLE LIBOR RATE SPREAD
-------------------------------------------------------------------
-------------------------------------------------------------------
>BBB/Baa2 .900%
-
-------------------------------------------------------------------
-------------------------------------------------------------------
=BBB-/Baa3 1.000%
-------------------------------------------------------------------
-------------------------------------------------------------------
=BB+/Ba1 1.150%
-------------------------------------------------------------------
-------------------------------------------------------------------
=BB/Ba2 1.250%
-------------------------------------------------------------------
-------------------------------------------------------------------
=BB-/Ba3 1.550%
-------------------------------------------------------------------
-------------------------------------------------------------------
less than or equal to B+-/B1 (or unrated) 1.900%
-------------------------------------------------------------------
-14-
In the event of a difference in rating between S and P and Moody's, the
higher rating shall prevail for purposes of determining the applicable
LIBOR Rate Spread except that if such ratings differ by more than one
level, the rating one level above the lower rating shall prevail for such
purpose. As of the date of this Agreement, the Company is currently rated
BB/Ba2 by S and P and Moody's, respectively, and the applicable LIBOR Rate
Spread for the Loans as of the date of this Agreement is therefore 1.250%.
"LIEN" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), or
preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever, including, without
limitation, any conditional sale or other title retention agreement, any
Financing Lease having substantially the same economic effect as any of
the foregoing, and the filing of any financing statement under the Uniform
Commercial Code (other than precautionary notification of operating
leases) or comparable law of any jurisdiction in respect of any of the
foregoing.
"LIMITED-PURPOSE SUBSIDIARIES" means Subsidiaries included within
the Limited-Purpose Subsidiaries Segment.
"LIMITED-PURPOSE SUBSIDIARIES SEGMENT" means the business segment of
the Company and its Subsidiaries which facilitates, through
special-purpose entities created or existing solely for such purpose, the
financing of mortgage loans and mortgage backed securities and the
securitization of mortgage loans and other related activities.
"LOAN" OR "LOANS" means each of the loans under this Agreement,
including, without limitation, the Swing Line Advances.
"LOAN DOCUMENTS" means, collectively, this Agreement, each Note,
each L/C Application, the Fee Letter Agreement and the Guaranty.
"MAJORITY BANKS" means, at any time, Banks then having in excess of
66-2/3% of the Aggregate Commitment or, if the Commitments have been
terminated, Banks then holding in excess of 66% of the then aggregate
unpaid principal amount of the Loans (or participation interests in the
Swing Advances) and interests (or participation interests) in the
reimbursement obligations of the Company with respect to Letters of
Credit.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business or financial condition of the Company and its Restricted
Subsidiaries taken as a whole, (b) the ability of the Company to perform
its obligations under this Agreement and the other Loan Documents to which
the Company is a party, or (c) the validity or enforceability of this
Agreement or any of the other Loan Documents or the rights or remedies of
the Administrative Agent or the Banks hereunder or thereunder.
-15-
"MATERIALS OF ENVIRONMENTAL CONCERN" means any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated
as such in or under any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"MATURITY DATE" means October 20, 2003, subject to possible
EXTENSION PURSUANT TO THE TERMS OF SECTION 3.17 (other than with respect
to a Note held by a Bank which does not extend the maturity DATE OF SUCH
NOTE PURSUANT TO SECTION 3.17, in which case the applicable Maturity Date
for such Note held by such non-renewing Bank shall be the Non-Renewing
Bank Loan Maturity Date).
"MEASUREMENT PERIOD" has the meaning set forth in Section 7.3.
"MODEL UNIT" means a Completed Unit to be used as a model home in
connection with the sale of Units in a residential housing project.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc.
"MULTIEMPLOYER PLAN" means a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"1992 SUBORDINATED DEBT INDENTURE" means the Indenture, dated as of
July 15, 1992, between the Company and First Union National Bank,
successor to Security Trust Company, N.A., as Trustee, pursuant to which
the Company's 8-1/4% Senior Subordinated Notes due April, 2008, and the
Company's 9-5/8% Senior Subordinated Notes due June, 2004 were issued.
"NON-RENEWING BANK LOAN MATURITY DATE" means the maturity date of
the Note held by a Bank which does not extend such maturity date in
response to a request for such extension by the Company pursuant to
SECTION 3.19.
"NON-USE FEE" has the meaning set forth in Section 3.2.
"NON-USE FEE RATE `A'" means the rate, expressed as a percentage per
annum, to be applied to the average daily difference, if positive, between
(a) 50% of the Aggregate Commitment and (b) the total principal balance
outstanding under the Notes plus the L/C Obligations. The Non-use Fee Rate
"A" shall be based on the Company's current senior long-term unsecured
debt ratings as published by S and P and Moody's as determined
by the following pricing grid:
-16-
-----------------------------------------------------------------
S and P/▇▇▇▇▇'▇ RATING APPLICABLE NON-USE FEE
RATE"A"
-----------------------------------------------------------------
-----------------------------------------------------------------
>BBB/Baa2 .10%
-
-----------------------------------------------------------------
-----------------------------------------------------------------
=BBB-/Baa3 .10%
-----------------------------------------------------------------
-----------------------------------------------------------------
=BB+/Ba1 .125%
-----------------------------------------------------------------
-----------------------------------------------------------------
=BB/Ba2 .15%
-----------------------------------------------------------------
-----------------------------------------------------------------
=BB-/Ba3 .20%
-----------------------------------------------------------------
-----------------------------------------------------------------
Less than or equal to B+/B1 (or unrated) .25%
-----------------------------------------------------------------
In the event of a difference in rating between S and P and ▇▇▇▇▇'▇, the
higher rating shall prevail for purposes of determining the applicable
Non-use Fee Rate "A" except that if such ratings differ by more than one
level, the rating one level above the lower rating shall prevail for such
purpose. As of the date of this Agreement, the Company is currently rated
BB/Ba2 by S and P and ▇▇▇▇▇'▇, respectively, and the applicable Non-use Fee
Rate "A" as of the date of this Agreement is therefore .15%.
"NON-USE FEE RATE `B'" means the rate, expressed as a percentage per
annum, to be applied to the average daily difference between (a) the
Aggregate Commitment and (b) the greater of (i) the total principal
balance outstanding under the Notes plus the L/C Obligations or (ii) 50%
of the Aggregate Commitment. The Non-use Fee Rate "B" shall be based on
the Company's current senior long-term unsecured debt ratings as published
by S and P and ▇▇▇▇▇'▇ as determined by the following pricing grid:
-------------------------------------------------------------------
S and P/▇▇▇▇▇'▇ RATING APPLICABLE NON-USE FEE RATE "B"
-------------------------------------------------------------------
-------------------------------------------------------------------
>BBB/Baa2 .10%
-
-------------------------------------------------------------------
-------------------------------------------------------------------
=BBB-/Baa3 .10%
-------------------------------------------------------------------
-------------------------------------------------------------------
=BB+/Ba1 .10%
-------------------------------------------------------------------
-------------------------------------------------------------------
=BB/Ba2 .10%
-------------------------------------------------------------------
-------------------------------------------------------------------
=BB-/Ba3 .15%
-------------------------------------------------------------------
-------------------------------------------------------------------
less than or equal to B+/B1 (or unrated) .175%
-------------------------------------------------------------------
In the event of a difference in rating between S and P and ▇▇▇▇▇'▇, the
higher rating shall prevail for purposes of determining the applicable
Non-use Fee Rate "B" except that if such ratings differ by more than one
level, the rating one level above the lower rating shall prevail for such
purpose. As of the date of this Agreement, the Company is currently rated
BB/Ba2 by S and P and ▇▇▇▇▇'▇, respectively, and the applicable Non-use Fee
Rate "B" as of the date of this Agreement is therefore .10%.
-17-
"NOTE" means each of the promissory notes, substantially in the FORM
OF EXHIBIT "A" attached hereto and made a part hereof, executed by the
Company in favor of the Banks, each to the order of the applicable Bank as
payee to evidence such Bank's share of the Loans, and each in the original
principal amount of the applicable Bank's Commitment such that the
aggregate original principal amount of all Notes is initially $375,000,000
which may be increased to up to $400,000,000 pursuant to Section 2.10; as
originally executed or as the same may from time to time be supplemented,
modified, amended, renewed, extended or refinanced (and any promissory
note that may be issued in substitution or exchange therefor).
"OBLIGATIONS" means all obligations of every nature of the Company
from time to time owed to the Administrative Agent and the Banks under the
Loan Documents.
"OPINION OF COUNSEL" means the favorable written legal opinions of
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., general counsel to the Company and Piper and
Marbury LLP, as counsel to the Company and the Subsidiaries, with respect
to this agreement, substantially in the form of EXHIBITS "E-1" AND "E-2"
attached hereto, together with copies of all factual certificates upon
which such counsel has relied.
"OTHER TAXES" means any present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any other
Loan Documents.
"PARTICIPANT" shall have the meaning set forth in Section 10.6.
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"PERFORMANCE L/C" means a letter of credit issued for the account of
the Company or a Subsidiary to a party, as beneficiary, to which the
Company, or such Subsidiary owes certain performance obligations in
connection with its ordinary course of business real estate development
and homebuilding activity (for example, to a municipality, as beneficiary,
to support the Company's or a Subsidiary's obligation to widen public
streets in connection with a residential development project).
"PERMITTED DEBT" means, with respect to a Person or segment at a
particular date, all Combined Debt of such Person and its Subsidiaries or
such segment as at such date, determined on a combined basis in ACCORDANCE
WITH GAAP, LESS (a) any portion of such Combined Debt that is secured by
any asset that would have been included in the Borrowing Base as at such
date if such asset were not subject to or encumbered by a Lien and (b) any
portion of such Combined Debt consisting of Guarantee Obligations
guaranteeing or in effect guaranteeing Funded Debt of unconsolidated
Affiliates of the Company.
-18-
"PERSON" means any entity, whether an individual, trustee,
corporation, general partnership, limited partnership, limited liability
company, joint stock company, trust, unincorporated organization, bank,
business association, firm, joint venture, Governmental Authority or
otherwise.
"PLAN" means, at a particular time, any employee benefit plan which
is covered by ERISA and in respect of which the Company or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"PROPERTIES" shall have the meaning set forth in Section 5.14(A).
"PRO RATA SHARE" means, as to any Bank at any time, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal place as
determined by the Administrative Agent) at such time of such Bank's
Commitment divided by the Aggregate Commitment.
"RAW LAND" means Raw Land - Entitled and Raw Land - Unentitled.
"RAW LAND - ENTITLED" means land not under development which is
Entitled Land.
"RAW LAND - UNENTITLED" means land not under development which is
not Entitled Land but which the Company in its reasonable commercial
judgment believes it will be able to develop as residential property for
its own use and not to be held speculatively.
"REAL ESTATE INVENTORY" means Construction in Progress, Completed
Units (including Model Units), Finished Lots, Land Under Development,
Raw Land - Entitled, and Raw Land - Unentitled.
"REFERENCE RATE" means the rate of interest publicly announced from
time to time by BofA in Charlotte, North Carolina as its reference rate. It
is a rate set by BofA based upon various factors including BofA's costs and
desired return, general economic conditions, and other factors, and is used
as a reference point for pricing some loans, which may be priced at, above,
or below such announced rate. Any change in the Reference Rate shall take
effect on the day specified in the public announcement of such change.
"REGULATION D" means Regulation D of the FRB as now or from time to
time hereafter in effect and any other regulation issued in substitution
therefor.
-19-
"REORGANIZATION" means, with respect to any Multiemployer Plan, the
condition that such Plan is in reorganization within the meaning of
Section 4241 of ERISA.
"REPLACEMENT BANK" HAS THE MEANING SET FORTH IN SECTION 3.12.
"REPORTABLE EVENT" means any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day
notice period is waived under subsections .13, .14, .16, .18, .19 or .20
of PBGC Reg. ss.2615.
"REQUEST FOR BORROWING" means a written request for a Borrowing
SUBSTANTIALLY IN THE FORM OF EXHIBIT "C" attached hereto, signed by a
Authorized Official of the Company and properly completed to provide all
information required to be included thereon.
"REQUEST FOR CONTINUATION" means a written request for continuation
of a LIBOR Borrowing from the current LIBOR Period for such LIBOR
Borrowing into a subsequent LIBOR Period substantially in THE FORM OF
EXHIBIT "C" attached hereto, signed by a Authorized Official of the
Company and properly completed to provide all information required to be
included thereon.
"REQUEST FOR LETTER OF CREDIT" means a written request for a letter
of credit substantially in the form of EXHIBIT "C" attached hereto, signed
by an Authorized Official of the Company and properly completed to provide
all information required to be included thereon.
"REQUEST FOR REDESIGNATION" means a written request for
redesignation of borrowing substantially in the form of Exhibit "C"
attached hereto, signed by an Authorized Official of the Company and
properly completed to provide all information required to be included
thereon.
"REQUIREMENT OF LAW" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or
of a Governmental Authority, in each case applicable to or binding upon
such Person or any of its property or to which such Person or any of its
property is subject.
"RESERVE REQUIREMENT" means, with respect to a LIBOR Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on
Eurocurrency liabilities.
"RESPONSIBLE OFFICIAL" means any of the chief executive officer and
the president of the Company or, with respect to financial matters, the
chief financial officer, the chief accounting officer or the treasurer of
the Company.
"RESTRICTED PAYMENTS" has the meaning set forth in Section 7.12.
-20-
"RESTRICTED SUBSIDIARY" means any Subsidiary of the Company other
than (a) the Limited-Purpose Subsidiaries and (b) any Subsidiary that the
Majority Banks agree in writing is not to be deemed a Restricted
Subsidiary.
"▇▇▇▇▇▇ FINANCIAL DIVISION" means all subsidiaries and operations of
the Company and its Subsidiaries other than the Homebuilding Segment.
"▇▇▇▇▇▇ MORTGAGE COMPANY" means ▇▇▇▇▇▇ Mortgage Company, an Ohio
corporation.
"S and P" means Standard and Poor's Ratings Group.
"SENIOR PERMITTED DEBT" means, at any time of determination thereof,
the Loans, the L/C Obligations and all Permitted Debt senior to or ranking
in equal priority to the Obligations other than Indebtedness which is
non-recourse to the Company and its Subsidiaries and, with respect to
purchase money Indebtedness, such Indebtedness for which recourse is
limited solely to the assets financed with the proceeds of such
Indebtedness.
"SINGLE EMPLOYER PLAN" means any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"SOLD" means, with respect to any item of Real Estate Inventory,
that (a) a third party purchase contract has been executed for such item
of Real Estate Inventory, (b) the third party purchaser of such item of
Real Estate Inventory has made a cash deposit for such item (except that
up to 1% of Real Estate Inventory at any time may be deemed "Sold" even if
such deposit has not been made), and (c) such third party purchaser's
obligation to purchase such item of Real Estate Inventory pursuant to such
third party purchase contract is not subject to any contingencies other
than the contingency that it shall have obtained mortgage financing or
that it shall have sold other identified property.
"SPECIAL CIRCUMSTANCE" means the adoption of any Law or
interpretation, or any change therein or thereof, or any change in the
interpretation, administration or application thereof by any Governmental
Authority, central bank or comparable authority, or compliance by the
Banks or their LIBOR Lending Offices with any request or directive
(whether or not having the force of Law) of any Governmental Authority,
central bank or comparable authority, or the occurrence of circumstances
affecting the London interbank eurodollar market generally which are
beyond the reasonable control of the Banks, in each case which has
occurred after the date of this Agreement.
-21-
"SPECIFIED DEBT" means the Company's Senior Debt Securities issued
pursuant to the Company's Registration Statements on Form S-3
(Registration Nos. 33-50933 and 333-03791) or any successor registration
statement and outstanding on the date of this Agreement.
"SUBORDINATED DEBT" means (a) Indebtedness of the Company
outstanding on the date hereof issued pursuant to the 1992 Subordinated
Debt Indenture and (b) any other unsecured Indebtedness of the Company
that is contractually subordinated in right of payment and otherwise to
the Indebtedness hereunder upon terms and conditions consistent with those
set forth in the 1992 Subordinated Debt Indenture or upon other terms and
conditions reasonably satisfactory to the Majority Banks.
"SUBSIDIARY" means (a) any corporation of which at least a majority
of the outstanding securities of any class or classes (however designated)
having ordinary voting power to elect directors of the corporation is
owned by the Company and/or by one or more than one other Subsidiary, and
(b) any partnership, joint venture or limited liability company in which
the Company and/or any Subsidiary owns at least a majority interest.
Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or
Subsidiaries of the Company and shall exclude any Consolidated Joint
Venture.
"SWING LINE ADVANCES" means Borrowings initially funded by BofA in
the manner provided in Section 2.1(H).
"SWING LINE RATE" means, with respect to any Swing Line Advance for
any day, a rate per annum (rounded upwards, if necessary to the next 1/100
of 1%) equal to the higher of:
(a) the Reference Rate in effect on such day; and
(b) the Federal Funds Effective Rate in effect on such DAY
PLUS the applicable Swing Line Rate Spread.
"SWING LINE RATE SPREAD" means the additional component of interest,
expressed as a percentage per annum, to be added to the Federal Funds
Effective Rate in determining the applicable rate of interest for Swing
Line Advances. The applicable Swing Line Rate Spread shall be based on the
Company's current senior long-term unsecured debt ratings as published by
S and P and ▇▇▇▇▇'▇ as determined by the following pricing grid:
-------------------------------------------------------------------
S and P/▇▇▇▇▇'▇ RATING APPLICABLE SWING LINE RATE
SPREAD
-------------------------------------------------------------------
-------------------------------------------------------------------
>BBB/Baa2 .900%
-
-------------------------------------------------------------------
-------------------------------------------------------------------
=BBB-/Baa3 1.000%
-------------------------------------------------------------------
-------------------------------------------------------------------
=BB+/Ba1 1.150%
-------------------------------------------------------------------
-------------------------------------------------------------------
=BB/Ba2 1.250%
-------------------------------------------------------------------
-------------------------------------------------------------------
=BB-/Ba3 1.550%
-------------------------------------------------------------------
-------------------------------------------------------------------
Less than or equal to B+-/B1 (or unrated) 1.900%
-------------------------------------------------------------------
-22-
In the event of a difference in rating between S and P and ▇▇▇▇▇'▇, the
higher rating shall prevail for purposes of determining the applicable
Swing Line Rate Spread except that if such ratings differ by more than one
level, the rating one level above the lower rating shall prevail for such
purpose. As of the date of this Agreement, the Company is currently rated
BB/Ba2 by S and P and ▇▇▇▇▇'▇, respectively, and the applicable Swing Line
Rate Spread for the Swing Line Advances as of the date of this Agreement is
therefore 1.250%.
"SYNDICATION AGENT" means Bank One, NA in its capacity as the
Syndication Agent under this Agreement, and any successor syndication
AGENT (SUBJECT TO SECTION 9.13).
"TAXES" means any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Bank and the Administrative Agent,
such taxes (including income taxes or franchise taxes) as are imposed on
or measured by each Bank's net income.
"THIRD PARTY L/C OBLIGATIONS" means, at any time, the sum of (a) the
maximum aggregate principal amount which at such time remains undrawn
under all L/Cs issued outside of this Agreement for the account of the
company or any other member of the homebuilding segment plus (b) the
aggregate drawn and unreimbursed amount in respect of such L/Cs at such
time.
"UNENCUMBERED REAL ESTATE INVENTORY" means Real Estate Inventory
which is not subject to or encumbered by any deed of trust, mortgage,
judgment Lien, attachment Lien or any other Lien (other than Liens which
have been bonded around so as to remove such Liens as encumbrances against
the Real Estate Inventory or Liens which are PERMITTED UNDER SUBSECTION
(A), (B) OR (E) OF SECTION 7.8).
"UNIT" means a single family residential housing unit available
for sale.
"UNSOLD" means, with respect to any item of Real Estate Inventory,
that such item of Real Estate Inventory is not Sold.
"UNSOLD HOUSING INVENTORY" means, collectively, Unsold
Construction in Progress, Unsold Completed Units and Unsold Model Units.
"VOTING STOCK" means shares of stock of the Company entitling the
holder thereof to vote generally for the election of directors of the
Company.
-23-
1.2 USE OF DEFINED TERMS. Any defined term used in the plural shall refer
to all members of the relevant class, and any defined term used in the singular
shall refer to any of the members of the relevant class.
1.3 ACCOUNTING TERMS. All accounting terms not specifically defined in
this Agreement shall be construed in conformity with, and all financial data
required to be submitted by this Agreement shall be prepared in conformity with,
GAAP applied on a consistent basis.
1.4 EXHIBITS. All exhibits to this Agreement, either as now existing or as
the same may from time to time be supplemented, modified or amended, are
incorporated herein by this reference.
1.5 CROSS-REFERENCES. Unless otherwise specified, references in this
Agreement and in each other Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such other Loan
Document, as the case may be, and, unless otherwise specified, references in any
Article, Section or definition to any clause are references to such clause of
such Article, Section or definition.
ARTICLE 2: BORROWING PROCEDURES AND LETTER OF CREDIT SUBLIMIT.
2.1 DISBURSEMENT OF LOAN PROCEEDS.
(a) Subject to the terms and conditions set forth in this Agreement,
at any time and from time to time from the Closing Date through the
Banking Day immediately preceding the Maturity Date (or, in THE CASE OF A
NON-RENEWING BANK UNDER SECTION 3.19, the Non-Renewing Bank Loan Maturity
Date), each Bank shall, according to its Pro Rata Share, make Loans to the
Company in such amounts as the Company may request that do not exceed in
the aggregate at any one time OUTSTANDING, THE COMMITMENT OF SUCH BANK
(LESS the Pro Rata Share of such Bank's L/C Obligations, if any). Subject
to the limitations set forth herein, the Company may borrow, repay and
reborrow under each Bank's Commitment without premium or penalty. In no
event shall the Banks be obligated to make Loans to the Company at any
time if, after giving effect to such loans, the provisions of Section 2.6
would be violated.
(b) Unless the Administrative Agent otherwise consents, the
aggregate amount of each Borrowing (whether a LIBOR Borrowing or an ABR
Borrowing or Swing Line Advance) shall be in an integral multiple of
$100,000, but not less than $1,000,000.
(c) The Loans made by the Banks pursuant to this Agreement shall be
evidenced by each Note.
-24-
(d) A Request for Borrowing shall be irrevocable upon receipt by the
Administrative Agent. The Administrative Agent shall not be bound by any
preliminary information that it may give the Company concerning a
particular LIBOR Rate before it delivers the binding LIBOR rate notice in
accordance with Section 2.3(B) below.
(e) No more than ten (10) LIBOR Borrowings in the aggregate shall be
outstanding at any one time.
(f) The Administrative Agent will notify each Bank of its receipt of
a Request for Borrowing by the Company and of the amount of such Bank's
Pro Rata Share of that Borrowing promptly upon receipt of such Request for
Borrowing.
(g) Each Bank will make the amount of its Pro Rata Share of each
Borrowing available to the Administrative Agent for the account of the
Company at such location as is specified by the Administrative Agent by
11:00 a.m., Chicago time, on the date of such Borrowing requested by the
Company in funds immediately available to the ADMINISTRATIVE AGENT.
SUBJECT TO THE PROVISIONS OF SECTION 2.7, the proceeds of all such Loans
will then be made available to the Company by the Administrative Agent by
wire transfer in accordance with written instructions provided to the
Administrative Agent by the Company of like funds as received by the
Administrative Agent.
(h) The following procedures shall apply to Swing Line Advances:
(i) Not later than 1:00 p.m., Chicago time, on the Banking Day
on which a proposed Swing Line Advance is to be made, BofA must have
received a Request for Borrowing requesting that a Swing Line
Advance be made on that Banking Day, stating that such Borrowing
shall be a Swing Line Advance, and specifying the amount of the
requested Swing Line Advance. Each Swing Line Advance shall mature
on the date which is five (5) Banking Days after the date such Swing
Line Advance is made, and in any event on the Maturity Date.
(ii) Upon fulfillment of each of the applicable conditions IN
ARTICLE 4 and the condition that the aggregate amount of outstanding
Swing Line Advances at no time exceeds the amounts SPECIFIED IN
SECTION 2.1(H)(IV), BofA shall then make available to the Company by
wire transfer in accordance with written instructions provided to
BofA by the Company, from BofA's funds, the amount of the requested
Swing Line Advance.
-25-
(iii) Upon the occurrence of any Event of Default, BofA shall
have the option, which shall be exercisable by BofA in its sole
discretion, to sell and transfer to each Bank, pursuant to the terms
and conditions set forth herein, an undivided interest and
participation, to the extent of such Bank's Pro Rata Share, in all
outstanding Swing Line Advances. Forthwith upon notice from BofA to
the Banks that BofA has elected to exercise the option set forth in
the immediately preceding sentence, BofA shall be deemed irrevocably
and unconditionally to have sold and transferred to each Bank
without recourse and, each Bank shall have deemed to have
irrevocably and unconditionally purchased and received, an undivided
interest and participation, to the extent of such Bank's Pro Rata
Share, in all outstanding Swing Line Advances. Each Bank shall
promptly (and in any event within two Banking Days) pay to the
Administrative Agent (for the benefit of BofA) in immediately
available funds an amount equal to such Bank's Pro Rata Share of the
outstanding principal amount of such Swing Line Advances. The
Administrative Agent shall pay all amounts received to BofA, which
shall apply such amounts to the purchase price of such
participations in such Swing Line Advances. Any amount payable to
the Administrative Agent (for THE BENEFIT OF BOFA) PURSUANT TO THIS
SECTION 2.1(H)(III) and not paid within two Banking Days of the day
on which notice of such payment received from the Administrative
Agent shall bear interest, payable by such defaulting Bank, until
paid at the Reference Rate. If the Banks make any payment in respect
of SWING LINE ADVANCES AS CONTEMPLATED BY THIS SECTION 2.1(H)(III)
and thereafter the Administrative Agent or BofA receives a payment
on account of any such Advance, the Administrative Agent or BofA, as
appropriate, shall promptly pay to each Bank which funded its
participation therein an amount equal to such Bank's Pro Rata Share
thereof. The obligation of each Bank to make PAYMENTS UNDER THIS
SECTION 2.1(H)(III) shall be unconditional and irrevocable and shall
be made under all circumstances. If any payment received on account
of any Swing Line Advance and distributed to a Bank as a participant
under this SECTION 2.1(H)(III) is thereafter recovered from the
Administrative Agent or BofA in connection with any bankruptcy or
insolvency proceeding relating to the Company or otherwise, each
Bank which received such distribution shall, upon demand by the
Administrative Agent, repay to the Administrative Agent or BofA, as
applicable, such Bank's Pro Rata Share of the amount so recovered
together with an amount equal to such Bank's Pro Rata Share
(according to the proportion of (A) the total of such Bank's
required repayment to (B) the total amount so recovered) of any
interest or other amount paid or payable by the Administrative Agent
or BofA in respect of the total amount so recovered.
(iv) BofA shall not be obligated to make any Swing Line
ADVANCE PURSUANT TO THIS SECTION 2.1(H) if (A) the making of such
Swing Line Advance would result in an aggregate amount of Swing Line
Advances which are outstanding in excess of $30,000,000, or (B) the
result of funding such Swing Line Advance would be that the total
amount of Borrowings (including Swing Line Advances) FUNDED BY BOFA
PLUS BofA's Pro Rata Share of the L/C Obligations would be in excess
of BofA's Commitment. Swing Line Advances shall be considered
Borrowings for all purposes hereunder (including conditions to
disbursement but excluding the notice REQUIREMENT OF SECTION 2.2)
subject only to the special REIMBURSEMENT OBLIGATIONS OF THE BANKS
PURSUANT TO THIS SECTION 2.1(H). If BofA is excused from its
obligation to make a REQUESTED SWING LINE ADVANCE BY THIS SECTION
2.1(H)(IV), the Company shall still be entitled to obtain the
requested Borrowing PURSUANT TO THE OTHER PROVISIONS OF ARTICLE 2,
subject to the conditions applicable to such Borrowings.
-26-
2.2 ABR BORROWINGS. All Loans shall at all times constitute ABR Borrowings
unless properly designated or redesignated as LIBOR Borrowings PURSUANT TO
SECTION 2.3 OR 2.4 OR AS A SWING LINE ADVANCE PURSUANT TO SECTION 2.1(H). Each
request by the Company for a new ABR Borrowing (except for Swing Line Advances)
shall be made pursuant to a Request for Borrowing received by the Administrative
Agent, at the Administrative Agent's office, not later than 9:30 a.m., Chicago
time, on the date the proposed ABR Borrowing is to be funded to the Company. The
Administrative Agent will promptly notify each Bank of its receipt of a Request
for Borrowing in accordance with SECTION 2.1(F).
2.3 LIBOR BORROWING.
(a) Each request by the Company for a LIBOR Borrowing shall be made
pursuant to a Request for Borrowing received by the Administrative Agent,
at the Administrative Agent's office, not later than 11:00 a.m., Chicago
time, at least three (3) LIBOR Banking Days before the first day of the
applicable LIBOR Period. The Administrative Agent will promptly notify
each Bank of its receipt of a Request for Borrowing in accordance with
Section 2.1(F).
(b) At or about 11:00 a.m., Chicago time, one (1) LIBOR Banking Day
after the LIBOR Banking Day on which Agent receives the Company's Request
for Borrowing, the Administrative Agent shall determine the applicable
LIBOR Rate (which determination shall be conclusive in the absence of
manifest error) and shall promptly give notice of the same to the Company
and the Banks by telephone or telecopier.
(c) Upon fulfillment of the applicable conditions set forth in
ARTICLE 4, a LIBOR Borrowing shall become effective on the first day of
the applicable LIBOR Period.
2.4 REDESIGNATION OF BORROWINGS AND CONTINUATION OF LIBOR BORROWINGS.
(a) If any LIBOR Borrowing is not repaid on the last day of the
applicable LIBOR Period or continued on such date into a subsequent LIBOR
Period, such Borrowing automatically shall be redesignated as an ABR
Borrowing on such date.
-27-
(b) Subject to the terms and conditions set forth in this Agreement,
at any time and from time to time from the Closing Date until one month
preceding the Maturity Date, the Company may request that all or a portion
of outstanding ABR Borrowings be redesignated as a LIBOR Borrowing or that
any outstanding LIBOR Borrowing be continued from the current LIBOR Period
for such LIBOR Borrowing into a subsequent LIBOR Period to begin on the
last day of such current LIBOR PERIOD, PROVIDED that, in the case of
either a redesignation of ABR Borrowings as a LIBOR Borrowing or a
continuation of a LIBOR Borrowing, the LIBOR Period for such LIBOR
Borrowing shall end on or before the Maturity Date.
(c) Each redesignation of all or a portion of outstanding ABR
Borrowings as a LIBOR Borrowing shall be made pursuant to a written
Request for Redesignation. Not later than 11:00 a.m., Chicago time, at
least three (3) LIBOR Banking Days prior to the first day of the
applicable LIBOR Period, the Administrative Agent shall have received, at
the Administrative Agent's office, a properly completed Request for
Redesignation specifying (i) the requested date of redesignation, (ii) the
requested amount of ABR Borrowings to be redesignated as a LIBOR
Borrowing, and (iii) the requested LIBOR Period. The Administrative Agent
may, in its sole and absolute discretion, permit a Request for
Redesignation to be made by telephone (with confirmation sent promptly by
telecopier) by the Company.
(d) Each continuation of an outstanding LIBOR Borrowing from the
current LIBOR Period for such LIBOR Borrowing into a subsequent LIBOR
Period to begin on the last day of such current LIBOR Period shall be made
pursuant to a written Request for Continuation. Not later than 11:00 a.m.,
Chicago time, at least three (3) LIBOR Banking Days prior to the last day
of the current LIBOR Period, the Administrative Agent shall have received,
at the Administrative Agent's office, a properly completed Request for
Continuation specifying (i) the LIBOR Borrowing to be continued and (ii)
the subsequent LIBOR Period requested. The Administrative Agent may, in
its sole and absolute discretion, permit a Request for Continuation to be
made by telephone (with confirmation sent promptly by telecopier) by the
Company.
(e) The Administrative Agent will promptly notify each Bank of its
receipt of a Request for Redesignation or a Request for Continuation on
the date of timely receipt of a Request for Redesignation or Request for
Continuation from the Company. All redesignations shall be made ratably
according to the respective outstanding principal amount of the Loans with
respect to which the Request for Redesignation was given then held by each
Bank.
(f) Unless all of the Banks otherwise agree, during the existence of
an Event of Default, the Company may not elect to have a Loan continued as
or converted into a LIBOR Borrowing.
-28-
(g) The amount of ABR Borrowings to be redesignated as a LIBOR
Borrowing, and the amount of any outstanding LIBOR Borrowing to be
continued into a subsequent LIBOR Period, shall be an integral multiple of
$100,000, but not less than $1,000,000.
(h) With respect to any redesignation of an ABR Borrowing as a LIBOR
Borrowing or any continuation of an outstanding LIBOR Borrowing into a
subsequent LIBOR Period, no later than 11:00 a.m., Chicago time, one (1)
LIBOR Banking Day after the LIBOR Banking Day on which the Administrative
Agent receives the Company's Request for Redesignation or Request for
Continuation, as the case may be, the Administrative Agent shall determine
the applicable LIBOR Rate (which determination shall be conclusive in the
absence of manifest error) and shall promptly give notice of the same to
the Company and the Banks by telephone or telecopier.
(i) Upon fulfillment of the applicable conditions set forth in this
Agreement, the redesignation of all or a portion of outstanding ABR
Borrowings as a LIBOR Borrowing shall become effective on the first day of
the applicable LIBOR Period and the continuation of an outstanding LIBOR
Borrowing into a subsequent LIBOR Period shall become effective on the
last day of the current LIBOR Period for such LIBOR Borrowing.
(j) A Request for Redesignation or a Request for Continuation shall
be irrevocable upon receipt by the Administrative Agent.
2.5 CALCULATION OF BORROWING BASE.
(a) Within fifty-five (55) days after the end of each calendar
quarter, and at such other times as the Majority Banks may reasonably
require or as the Company may determine (but in each case no more often
than monthly), the Company shall provide the Administrative Agent with a
Borrowing Base Certificate in a form satisfactory to the Administrative
Agent showing the Company's calculations of the components of the
Borrowing Base and such data supporting such calculations per Exhibit B or
in another form as the Majority Banks may reasonably require. Any change
in the Borrowing Base shall be effective upon receipt of a Borrowing Base
Certificate. The Majority Banks shall then have a period of thirty (30)
days following receipt of a Borrowing Base Certificate to notify the
Company of the determination that the Borrowing Base Certificate, as
calculated in accordance with the provisions hereof, is incorrect in the
Majority Banks' reasonable judgment. If the Majority Banks fail to so
notify the Company within such thirty (30) day period, the Borrowing Base
Certificate shall be deemed to be correct. If the Majority Banks so
determine, the Borrowing Base shall be recalculated as determined by the
Majority Banks as of the date of such determination based upon the
reasonable judgment of the Majority Banks.
-29-
(B) AMOUNT OF BORROWING BASE. As used in this Agreement, the TERM
"BORROWING BASE" shall have the meaning set forth in this SECTION 2.5(B):
(i) EXCEPT AS SET FORTH IN SECTIONS 2.5(B)(II) AND (III)
below, the Borrowing Base shall consist of the Dollar amount equal
to the sum of the following Unencumbered Real Estate Inventory owned
by the Company or any wholly-owned Subsidiary in the Homebuilding
Segment and Home Proceeds Receivable owned by the Company or any
wholly-owned Subsidiary in the Homebuilding Segment:
(A) HOME PROCEEDS RECEIVABLE. 90% of the amount of
home proceeds receivable; plus
(B) SOLD CONSTRUCTION IN PROGRESS AND SOLD
COMPLETED UNITS. 90% of the aggregate GAAP Value of Sold
construction in progress and sold completed units; plus
(C) UNSOLD CONSTRUCTION IN PROGRESS AND COMPLETED
UNITS.
(1) 75% of the aggregate GAAP Value of Unsold
Construction in Progress and Unsold Completed Units
which have been in an Unsold status for less than 180
days; plus
(2) 50% of the aggregate GAAP Value of Unsold
Construction in Progress and Unsold Completed Units
which have been in an Unsold status for 180 days or more
but not more than 270 days (for purposes of the
Borrowing Base, no value (i.e., a 0% advance rate) shall
be attributed to Unsold Construction in Progress and
Unsold Completed Units which have been in an unsold
status for more than 270 days); plus
(D) FINISHED LOTS. 70% of the GAAP Value of
finished lots; plus
(E) LAND UNDER DEVELOPMENT. 50% of the GAAP Value
of the land under development; plus
(F) RAW LAND - ENTITLED. 25% of the GAAP Value of
Raw Land - Entitled;
-30-
provided, however, that the amount set forth in clause (F) shall not
exceed 10% of the Aggregate Commitment; and provided further that
the sum of 70% of Finished Lots, 50% of Land Under Development and
25% of Raw Land Entitled shall not exceed 40% of the Borrowing Base.
(ii) In calculating the GAAP Value of the classes of
unencumbered real estate inventory listed in Section 2.5(B)(I)
above, all of the Unencumbered Real Estate Inventory of the Company
or any wholly-owned Subsidiary in the Homebuilding Segment qualifies
for inclusion in the Borrowing Base but shall specifically exclude
the cost of or investment in any land upon which the Company or such
wholly-owned Subsidiary holds a purchase option until such time as
the Company or such wholly-owned Subsidiary exercises the option and
takes title to such land.
(iii) Only Real Estate Inventory which is Unencumbered Real
Estate Inventory may be added to the Borrowing Base. Any Real Estate
Inventory that is not Unencumbered Real Estate Inventory shall have
no value for purposes of the Borrowing Base (i.e., a 0% advance
rate). Furthermore, land in the Real Estate Inventory which is not
Entitled Land shall have no value for purposes of the Borrowing Base
(i.e., a 0% advance rate). Once Units or any other Real Estate
Inventory are sold and conveyed to a buyer, or otherwise cease to be
owned by the Company or any wholly-owned Subsidiary that is in the
Homebuilding Segment, the applicable advance rate for such asset
shall decrease to 0%, and the Company shall not be entitled to have
any value for such assets attributed to the Borrowing Base.
2.6 BORROWING BASE. The sum of the aggregate principal amount at any time
outstanding under the loans plus the L/C Obligations shall not at any time
exceed the lesser of (a) the Aggregate Commitment or (b) the Borrowing BASE LESS
the sum of (i) the aggregate principal amount of outstanding Senior Permitted
Debt of the Homebuilding Segment at such time (exclusive of the OUTSTANDING
AMOUNT OF THE LOANS AND L/C OBLIGATIONS) PLUS without duplication (ii) the
aggregate amount of Third Party L/C Obligations of the Homebuilding Segment at
such time.
2.7 PAYMENTS BY THE BANKS TO THE ADMINISTRATIVE AGENT.
(a) Unless the Administrative Agent receives notice from a Bank on
or prior to the Closing Date or, with respect to any Borrowing after the
Closing Date, at least one Banking Day prior to the date of such Borrowing
or in the case of an ABR Borrowing upon notice to such Bank of such ABR
Borrowing, that such Bank will not make available as and when required
hereunder to the Administrative Agent for the account of the Company the
amount of that Bank's Pro Rata Share of the Borrowing, the Administrative
Agent may assume that each Bank has made such amount available to the
Administrative Agent in immediately available funds on the date of
Borrowing and the Administrative Agent may (but shall not be so required),
in reliance upon such assumption, make available to the Company on such
date a corresponding amount. If and to the extent any Bank shall not have
made its full amount available to the Administrative Agent in immediately
available funds and the Administrative Agent in such circumstances has
made available to the Company such amount, that Bank shall on the Banking
Day following such date of Borrowing make such amount available to the
Administrative Agent, together with interest at the Reference Rate for
each day during such period. A notice of the Administrative Agent
submitted to any Bank with respect to amounts owing under this subsection
(a) shall be conclusive, absent manifest error. If such amount is so made
available, such payment to the Administrative Agent shall constitute such
Bank's Loan on the date of Borrowing for all purposes of this Agreement.
If such amount is not made available to the Administrative Agent on the
Banking Day following the date of Borrowing, the Administrative Agent will
notify the Company of such failure to fund and, upon demand by the
Administrative Agent, the Company shall pay such amount to the
Administrative Agent for the Administrative Agent's account, together with
accrued interest thereon for each day elapsed since the date of such
Borrowing, at a rate per annum equal to the interest rate applicable at
the time to the Loans comprising such Borrowing. Nothing herein shall
prejudice the rights of the Company against such non-funding Bank.
-31-
(b) The failure of any Bank to make any Loan on any date of
Borrowing shall not relieve any other Bank of any obligation hereunder to
make a Loan on such date of Borrowing, but no Bank shall be responsible
for the failure of any other Bank to make the Loan to be made by such
other Bank on any date of Borrowing.
2.8 SHARING OF PAYMENTS, ETC. If, other than as expressly provided
elsewhere herein, any Bank shall obtain on account of the Loans made by it any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) in excess of its Pro Rata Share, such Bank shall
immediately (a) notify the Administrative Agent of such fact, and (b) purchase
from the other Banks such participations in the Loans made by them as shall be
necessary to cause such purchasing Bank to share the excess payment pro rata
with each of them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from the purchasing Bank, such purchase shall to
that extent be rescinded and each other Bank shall repay to the purchasing Bank
the purchase price paid therefor, together with an amount equal to such paying
Bank's ratable share (according to the proportion of (i) the amount of such
paying Bank's required repayment to (ii) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The Company agrees
that any Bank so purchasing a participation from another Bank may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off, but subject to section 10.7) with respect to such
participation as fully as if such Bank were the direct creditor of the Company
in the amount of such participation. The Administrative Agent will keep records
(which shall be conclusive and binding in the absence of manifest error) of
participations purchased under this Section and will in each case notify the
Banks following any such purchases or repayments.
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2.9 LETTER OF CREDIT SUBLIMIT.
2.9.1 AMOUNT AND TERMS OF THE CREDIT. Subject to the terms and upon
the conditions of this Agreement, the Issuing Bank shall issue STANDBY OR
COMMERCIAL LETTERS OF CREDIT (EACH, A "LETTER OF CREDIT," AND
COLLECTIVELY, THE "LETTERS OF CREDIT") for the account of the Company from
time to time up to but not including the Maturity Date. The maximum
aggregate principal amount which remains undrawn under all outstanding
Letters of Credit issued pursuant to this Agreement, when combined with
the maximum aggregate principal amount which remains undrawn under the
existing letters of credit issued by BofA for the ACCOUNT OF THE COMPANY
LISTED ON SCHEDULE 2.9.1 hereto (which existing letters of credit shall be
Letters of Credit for purposes of this Agreement and the other Loan
Documents, shall be deemed to be outstanding hereunder and shall be
subject to the terms and conditions hereof), shall not exceed at any one
time outstanding the aggregate PRINCIPAL SUM OF $75,000,000 (THE "L/C
COMMITMENT"). The maximum aggregate principal amount which remains undrawn
under all outstanding Letters of Credit under this Agreement (including,
without limitation, THE LETTERS OF CREDIT LISTED ON SCHEDULE 2.9.1 hereto)
is referred to HEREIN AS THE "L/C OBLIGATIONS."
2.9.2 LETTERS OF CREDIT.
(A) AMOUNTS AND TERMS OF LETTERS OF CREDIT. During the period
from the date of this Agreement to but excluding the Maturity Date,
and subject to the terms and conditions of this AGREEMENT, UPON
COMPANY'S REQUEST PURSUANT TO SECTION 2.9.3, the Issuing Bank shall
issue one or more Letters of Credit for the ACCOUNT OF COMPANY,
PROVIDED that the Issuing Bank shall not be obligated to issue any
Letter of Credit if, after giving effect thereto, (i) the L/C
Obligations would exceed the L/C Commitment, OR (II) THE TOTAL
AGGREGATE OUTSTANDING LOANS PLUS the L/C Obligations would exceed
the Aggregate Commitment (such Aggregate Commitment calculated
taking into account any reduction in the Aggregate Commitment prior
to the expiration date of the proposed LETTER OF CREDIT PURSUANT TO
SECTION 3.17 hereof), or (iii) the sum of (A) the aggregate
principal amount of outstanding Senior Permitted Debt of the
Homebuilding Segment (including Loans and THE L/C OBLIGATIONS) PLUS
(B) the aggregate amount of Third Party L/C Obligations of the
Homebuilding Segment would exceed the Borrowing Base. All Letters of
Credit shall be on Issuing Bank's standard forms of letters of
credit at the time of issuance. No Letter of Credit shall have an
expiration date (unless the Banks otherwise consent in writing)
later than the Maturity Date. The Issuing Bank shall not be required
to issue any Letter of Credit hereunder unless such Letter of Credit
is for the benefit of a party to which the Company owes certain
performance obligations in connection with its ordinary course of
business activity (for example, for the benefit of a municipality to
support Company's obligation to widen public streets in connection
with a residential development project). The Issuing Bank shall not
issue any Letter of Credit for the benefit of creditors to which the
Company is obligated in respect of obligations for borrowed money.
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(B) LETTER OF CREDIT DRAWS ARE LOANS UNDER THIS Agreement. The
Company and each Bank agree that any draws under any Letters of
Credit shall constitute ABR Loans under this Agreement for all
purposes except that the minimum amounts and notice provisions and
conditions shall not be applicable thereto. To the extent the
Company is not permitted to borrow at such time, the Company shall
immediately reimburse the Issuing Bank in full the amount of such
draw. Without limiting the foregoing, (i) all draws under any Letter
of Credit shall bear interest and be repaid as ABR Loans outstanding
under this Agreement, and (ii) if, at the time any draw is made
under any Letter of Credit, an Event of Default has occurred or the
Maturity Date has passed or the Loans have been accelerated or are
otherwise due and payable, such draw under such Letter of Credit
shall be immediately due and payable in full. Promptly upon being
notified by the Administrative Agent (after the Administrative Agent
has received notice from the Issuing Bank) that a draw has occurred
under any Letter of Credit and not been reimbursed by the Company,
each Bank shall reimburse the Administrative Agent, for the benefit
of the Issuing Bank, for that Bank's Pro Rata Share of such draw.
2.9.3 REQUEST FOR CREDIT. The Company, on or after the date of this
Agreement, shall give the Issuing Bank notice of its request for the
issuance of a Letter of Credit by delivering to the Issuing Bank (with a
copy to the Administrative Agent) (a) a duly executed and completed
application for such Letter of Credit on the Issuing Bank's THEN CURRENT
FORM (HEREIN, AN "L/C APPLICATION") specifying, among other things, (i)
the beneficiary, (ii) the amount, (iii) the requested date of issuance
(which shall be a Banking Day), and (iv) the term of the proposed Letter
of Credit; and (b) a duly executed and completed REQUEST FOR LETTER OF
CREDIT (IN THE FORM ATTACHED HERETO AS EXHIBIT "C"). Subject to the
conditions herein, the Issuing Bank will issue the Letter of Credit, but
in no event shall the Issuing Bank be required to issue the Letter of
Credit earlier than three (3) Banking days after its receipt of all
documents required by this Section 2.9.3 and Section 2.9.7.
2.9.4 OTHER BANKS' PARTICIPATION. Each Letter of Credit issued
PURSUANT TO SECTION 2.9 shall, effective upon its issuance and without
further action, be issued on behalf of all Banks (including the Issuing
BANK THEREOF) PRO RATA according to their respective Pro Rata Shares. Each
Bank shall, to the extent of its Pro Rata Share, be deemed irrevocably to
have participated in the issuance of such Letter of Credit and shall be
responsible to reimburse promptly the Issuing Bank for reimbursement
obligations which have not been reimbursed by the Company. In the event
that the Company shall fail to reimburse, or if for any reason Loans shall
not be made to fund any reimbursement obligation, or in the event the
Issuing Bank must for any reason return or disgorge such reimbursement,
the Issuing Bank shall promptly notify each Bank of the unreimbursed
amount of such drawing and of such Bank's respective participation
therein. Each Bank shall make available to such Issuing Bank, whether or
not any Default or Event of Default shall have occurred an amount equal to
its participation in same day or immediately available funds at the office
of the Issuing Bank specified in such notice not later than 11:00 a.m.,
Chicago time, on the Banking Day after the date notified by the Issuing
Bank. In the event that any Bank fails to make available to the Issuing
Bank the amount of such Bank's participation in such Letter of Credit as
provided herein, the Issuing Bank shall be entitled to recover such amount
on demand from such Bank together with interest at the daily average
Federal Funds Effective Rate for three Banking Days (together with such
other compensatory amounts as may be required to be paid by such Bank to
the Administrative Agent pursuant to the Rules for Interbank Compensation
of the Council on International Banking or the Clearinghouse Compensation
Committee, as the case may be, as in effect from time to time) and
thereafter at the ABR. The Issuing Bank shall distribute to each other
Bank which has paid all amounts payable by it under this Section with
respect to any Letter of Credit issued by the Issuing Bank such other
Bank's Pro Rata Share of all payments received by the Issuing Bank from
the Company in reimbursement of drawings honored by the Issuing Bank under
such Letter of Credit when such payments are received.
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2.9.5 NATURE OF REIMBURSEMENT OBLIGATIONS. The Company shall assume
all risks of the acts, omissions, or misuse of any Letter of Credit by the
beneficiary thereof. Neither the Issuing Bank nor any Bank (except, in
each case, to the extent of its own gross negligence or wilful misconduct)
shall be responsible for:
(a) the form, validity, sufficiency, accuracy, genuineness, or
legal effect of any Letter of Credit or any document submitted by
any party in connection with the application for and issuance of a
Letter of Credit, even if it should in fact prove to be in any or
all respects invalid, insufficient, inaccurate, fraudulent, or
forged;
(b) the form, validity, sufficiency, accuracy, genuineness, or
legal effect of any instrument transferring or assigning or
purporting to transfer or assign a 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;
(c) failure of the beneficiary to comply fully with conditions
required in order to demand payment under a Letter of Credit;
(d) errors, omission, interruptions, or delays in transmission
or delivery of any messages, by mail, cable, telegraph, telex, or
otherwise; or
(e) any loss or delay in the transmission or otherwise of any
document or draft required in order to make a disbursement under a
Letter of Credit or of the proceeds thereof.
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None of the foregoing shall affect, impair, or prevent the vesting of any of the
rights or powers granted the Issuing Bank or any Bank hereunder. In furtherance
and extension, and not in limitation or derogation, of any of the foregoing, any
action taken or omitted to be taken by the Issuing Bank in good faith shall be
binding upon the Company and shall not put such Issuing Bank under any resulting
liability to the Company, except for gross negligence or wilful misconduct of
the Issuing Bank.
2.9.6 LETTER OF CREDIT AND ISSUANCE FEES.
(a) LETTER OF CREDIT FEE. The Company agrees to pay to the
Administrative Agent, for the account of each Bank in ACCORDANCE
WITH ITS PRO RATA SHARE, A FEE (THE "LETTER OF CREDIT FEE") computed
at the applicable L/C Fee Rate on the average daily face amount of
all Letters of Credit outstanding hereunder from time to time. The
Letter of Credit Fee shall commence to accrue on the date of this
Agreement and shall be payable in arrears on the first day of
January, April, July and October of each year, beginning with the
first of such dates to occur after the date of this Agreement, on
the Maturity Date and upon payment in full of the Obligations.
(b) ISSUANCE FEE. The Company agrees to pay to the
Administrative Agent, for the account of the Issuing Bank, a fee
(THE "ISSUANCE FEE"), for the issuance or renewal of each Letter of
Credit, at the rate of .125% per annum on the average daily amount
of all Letters of Credit outstanding hereunder from time to time.
The Issuance Fee shall commence to accrue on the date of this
Agreement and shall be payable in arrears on the first day of
January, April, July and October of each year, beginning with the
first of such dates to occur after the date of this Agreement, on
the Maturity Date and upon payment in full of the Obligations.
2.9.7 CONDITIONS PRECEDENT TO ISSUANCE OF LETTERS OF CREDIT. The
obligation of the Issuing Bank to issue any Letter of Credit requested by
the Company is subject to satisfaction of the following conditions
precedent:
(a) ARTICLE 4 CONDITIONS SHALL BE SATISFIED. Each of the
CONDITIONS SPECIFIED IN SECTIONS 4.1 AND 4.2(A) to the issuance of
any Letter of Credit shall have been satisfied.
(b) L/C APPLICATION, ETC. The Issuing Bank shall have received
from the Company, in form and substance satisfactory to the Issuing
Bank, the duly executed and completed L/C Application AND REQUEST
FOR LETTER OF CREDIT REFERRED TO IN SECTION 2.9.3 and such other
certificates, documents and other papers and information as the
Issuing Bank may reasonably request.
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(c) ISSUING BANK APPROVAL. The Issuing Bank shall have
determined that the amount of any requested Letter of Credit, the
beneficiary thereof and the other terms contained in the documents
pertaining to such Letter of Credit are satisfactory to the Issuing
Bank in the exercise of its reasonable discretion.
(d) PAYMENT OF FEES. The Company shall have paid, to the
extent then due and payable, any fees and costs (other than the
Issuance Fee) described in the documents pertaining to such Letter
of Credit.
2.10 INCREASE OF COMMITMENTS. The Company may from time to time, by notice
to the Administrative Agent request that the Aggregate Commitment be increased
by an amount that will not result in the Aggregate Commitment under this
Agreement exceeding $400,000,000. Each such notice shall set forth the requested
amount of the increase in the Aggregate Commitment and the date on which such
increase is to become effective. The increase in the Aggregate Commitment may be
assumed by any Bank or any other financial institution agreed to by the Company
and the Administrative Agent (consent to which shall not be unreasonably
withheld) (any such Bank or other financial institution being called an
"Augmenting Bank") and shall be effective upon the consent of the Company and
the Augmenting Bank (consent to which shall not be unreasonably withheld).
Upon the effectiveness of any increase pursuant to this Section 2.10 of
the Aggregate Commitment and any resulting adjustment in a Pro Rata Share, the
Banks and the Augmenting Banks will purchase from each other and sell to each
other outstanding Loans sufficient to cause the outstanding Loans (other than
Swing Line Advances) of each Bank and Augmenting Bank to equal its Pro Rata
Share (as so adjusted) of the aggregate outstanding Loans. Such PURCHASE AND
SALE SHALL BE MADE PURSUANT TO SECTION 10.6 except that no minimum amount shall
be required, no processing fee shall be charged and, if any Bank shall suffer a
loss or incur an expense as a result of the effectiveness of such purchase or
sale being during a LIBOR Period, the Company shall reimburse such Bank the
amount of such loss or expense. Each such Bank shall furnish the Company with a
certificate setting forth the basis for determining the amount to be paid to it
hereunder.
2.11 VOLUNTARY TERMINATION OR REDUCTION OF COMMITMENTS. The Company may,
upon not less than five Banking Days' prior notice to the Administrative Agent,
terminate the Commitments, or permanently reduce the Commitments by an aggregate
minimum amount of $10,000,000 or any multiple of $1,000,000 in EXCESS THEREOF;
UNLESS, after giving effect thereto and to any prepayments of Loans made on the
effective date thereof, the then-outstanding amount of the Loans plus the L/C
Obligations would exceed the amount of the combined Commitments then in effect.
Once reduced in accordance with this Section 2.11, the Commitments may not be
increased. Any reduction of the Commitments shall be applied to each Bank
according to its Pro Rata Share. All accrued commitment fees to, but not
including the effective date of any reduction or termination of Commitments,
shall be paid on the effective date of such reduction or termination.
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ARTICLE 3: PAYMENTS AND FEES.
3.1 PRINCIPAL AND INTEREST.
(a) Interest shall be payable on the outstanding daily unpaid
principal amount of each Borrowing from the date thereof until payment in
full is made and shall accrue and be payable at the rates set forth herein
both before and after default and before and after maturity and judgment.
Upon any partial prepayment or redesignation of outstanding ABR
Borrowings, interest accrued through the date of such prepayment or
redesignation shall be payable on the next following Interest Payment
Date. Upon any partial prepayment or payment in full or redesignation or
conversion of any LIBOR Borrowing, or upon any payment or redesignation in
full of all outstanding ABR Borrowings, interest accrued through the date
of such prepayment, payment, redesignation or conversion shall be payable
on the next following Interest Payment Date.
(b) Interest on each ABR Borrowing shall be computed on the basis of
a year of 365 or 366 days and the actual number of days ELAPSED, AT THE
ABR TIMES the total principal balance outstanding under each Note.
Interest accrued on each ABR Borrowing shall be payable on each Interest
Payment Date, commencing with the first such date to occur after the
Closing Date. The Administrative Agent shall use its best efforts to
notify the Company of the amount of interest due on each Interest Payment
Date, but failure of the Administrative Agent to DO SO SHALL NOT EXCUSE
PAYMENT OF SUCH INTEREST WHEN PAYABLE. EXCEPT AS OTHERWISE PROVIDED IN
SECTION 3.4, the unpaid principal amount of any ABR Borrowing shall bear
interest at a fluctuating rate per annum equal to the ABR. Each change in
the interest rate shall take effect simultaneously with the corresponding
change in the ABR.
(c) Interest on each LIBOR Borrowing shall be computed on the basis
of a year of 360 days and the actual number of days elapsed. Interest
accrued on each LIBOR Borrowing shall be payable on each Interest Payment
Date. The Administrative Agent shall use its best efforts to notify the
Company of the amount of interest so payable prior to each such date, but
failure of the Administrative Agent to do so shall not excuse payment of
such interest when payable. The unpaid principal amount of any LIBOR
Borrowing shall bear interest at a rate PER ANNUM EQUAL TO THE LIBOR RATE
FOR THAT LIBOR BORROWING PLUS the applicable LIBOR Rate Spread.
(d) Interest on each Swing Line Advance shall be computed on the
basis of a year of 365 or 366 days and the actual number of days elapsed.
Interest accrued on each Swing Line Advance shall be payable on each
Interest Payment Date. The Administrative Agent shall use its best efforts
to notify the Company of the amount of interest so payable prior to each
such date, but failure of the Administrative Agent to do so shall not
excuse payment of such interest when payable. The unpaid principal amount
of any Swing Line Advance shall bear interest at a rate per annum equal to
the Swing Line Rate for that Swing Line Advance.
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(e) If not sooner paid, the principal indebtedness evidenced by each
Note shall be payable as follows:
(i) subject to the applicable provisions of Section 2.4 of
this Agreement providing for automatic redesignation of Borrowings
and the continuation of LIBOR Borrowings into a subsequent LIBOR
period upon compliance with Section 2.4, the principal amount of
each LIBOR Borrowing shall be payable on the last day of the LIBOR
Period for such LIBOR Borrowing if such LIBOR Borrowing is not
redesignated or continued pursuant to SECTION 2.4;
(ii) the amount, if any, by which the principal indebtedness
evidenced by each Note at any time exceeds the applicable Bank's
Commitment shall be payable immediately;
(iii) the amount of each payment required pursuant to SECTION
3.15 shall be payable immediately, except that if no Default or
Event of Default has occurred and is continuing, such payment may be
held as cash collateral, at the request of the Company, and applied
to the Loans at the end of any LIBOR Period with respect thereto;
(iv) all outstanding Loans (other than as specified in
subparagraph (v) below) shall be payable on the Maturity Date;
(v) the principal of any Note held by a Bank which refuses to
extend the maturity date pursuant to Section 3.17, if not sooner
paid, shall be payable on such Bank's Non-Renewing Bank Loan
Maturity Date; and
(vi) the principal amount of each Swing Line Advance shall be
payable on the fifth Banking Day after the date such Swing Line
Advance was made, and in any event on the Maturity Date. In the
event that any Swing Line Advance is not repaid by the Company
(including a repayment made with the proceeds of an ABR Borrowing or
a LIBOR Borrowing obtained by the Company under the terms of this
Agreement) in immediately available funds prior to 9:30 a.m.,
Chicago time, on such fifth Banking Day, the Administrative Agent
shall, on behalf of the Company (which hereby irrevocably directs
the Administrative Agent to act on its behalf), promptly request the
Banks to make an ABR Borrowing on the such Banking Day in an amount
equal to the unpaid principal amount of such Swing Line Advance.
Unless any Event of Default shall have occurred (in which case the
provisions of Section 2.1(H)(III) shall apply), each Bank shall make
the amount of its Pro Rata Share of such ABR Borrowing available to
the Administrative Agent for the account of BofA at the office of
the Administrative Agent set forth below its signature hereto by
2:00 p.m., Chicago time, on such Banking Day in funds immediately
available to the Administrative Agent. The proceeds of such ABR
Borrowing shall be immediately applied to the payment of such Swing
Line Advance.
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(f) Each Note may, at any time and from time to time, be paid OR
PREPAID IN WHOLE OR IN PART, PROVIDED that (i) any partial prepayment
shall be an integral multiple of $100,000, (ii) any partial prepayment
shall be in an amount not less than $1,000,000, and (iii) any payment or
prepayment of all or any part of any LIBOR Borrowing on a day other than
the last day of the applicable LIBOR Period shall be made on a LIBOR
Banking Day, shall be preceded by at least five (5) LIBOR Banking Days
written notice to the Administrative Agent of the date and amount of such
payment or payments, and shall be SUBJECT TO THE INDEMNIFICATION
REQUIREMENTS OF SECTION 3.9. In addition, if at any time the amount of any
LIBOR Borrowing is reduced (by payment, prepayment or conversion of a part
thereof) to an amount less than $1,000,000, such LIBOR Borrowing shall
automatically convert into an ABR Borrowing, and on and after such date
the right of the Company to continue such Borrowing as a LIBOR Borrowing
shall terminate.
3.2 NON-USE FEE. For the period commencing on the date of this Agreement
and ending on the Maturity Date, the Company shall pay to the Administrative
Agent for the account of each Bank in accordance with its Pro RATA SHARE A
NON-USE FEE (THE "NON-USE FEE"), computed on the basis of a year of 365 or 366
days and the actual number of days elapsed, at the rate of (a) THE APPLICABLE
NON-USE FEE RATE "A" TIMES the average daily difference, if positive, between
(i) 50% of the Aggregate Commitment, and (ii) the total PRINCIPAL BALANCE
OUTSTANDING UNDER THE NOTES PLUS THE L/C OBLIGATIONS, PLUS (B) THE APPLICABLE
NON-USE FEE RATE "B" TIMES the average daily difference between (i) the
Aggregate Commitment, and (ii) the greater of (A) the total principal balance
outstanding under the Notes plus the L/C Obligations, or (B) 50% of the
Aggregate Commitment. The Non-use Fee shall be payable in arrears on the first
day of each April, July, October and January, RESPECTIVELY, EXCEPT that upon
payment of each Note in full, the Non-use Fee accrued to the date of payment
shall be payable on the date of payment. EXAMPLES OF THE CALCULATION OF THE
NON-USE FEE ARE SET FORTH ON ANNEX III hereto.
3.3 FACILITY FEE. For the period commencing on the date of this Agreement
and ending on the Maturity Date, the Company shall pay to the Administrative
Agent for the account of each Bank a facility fee (the "FACILITY FEE"), computed
on the basis of a year of 360 days and the actual NUMBER OF DAYS, PAYABLE AT THE
FACILITY FEE RATE TIMES the amount of the Commitment (whether used or unused) of
such Bank. The Facility Fee owing to EACH BANK UNDER THIS SECTION 3.3 shall be
payable quarterly in arrears on the first day of each January, April, July and
October of each year.
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3.4 UP-FRONT FEE. The Company shall pay to each Bank an up-front fee in
the amount agreed upon by the Company, the Administrative Agent and such Bank.
Such up-front fee shall be payable in full on the Closing Date.
3.5 LATE PAYMENTS. Should any amount of principal or other amount payable
under any Loan Document to the Banks not be paid when due, it shall thereafter
bear interest at a fluctuating interest rate per annum at all times equal to the
sum of the Reference Rate plus 3.00% per annum, to the fullest extent permitted
by applicable Law.
3.6 TAXES. All payments payable to the Banks hereunder or with respect to
the Loan Documents shall be made to the Banks without deductions for any Taxes
or Other Taxes except to the extent the Company is required by any Law or
Governmental Authority to withhold and except in accordance with SECTION 9.10 to
the extent, if any, that such amounts are required to be withheld by the
Administrative Agent under the laws of the United States of America or any other
applicable taxing authority. In the event of any such withholding then the
Company will pay such amount as shall cause the Banks to receive an amount which
it would have received except for such withholding (and an amount equal to any
tax due on such additional amount).
3.7 ILLEGALITY.
(a) If any Bank determines that the introduction after the date
hereof of any Requirement of Law, or any change after the date hereof in
any Requirement of Law or in the interpretation or administration of any
Requirement of Law, has made it unlawful, or that any central bank or
other Governmental Authority has asserted that it is unlawful, for any
Bank or its applicable Lending Office to make LIBOR Borrowings, then, on
notice thereof by the Bank to the Company through the Administrative
Agent, any obligation of that Bank to make LIBOR Borrowings shall be
suspended until the Bank notifies the Administrative Agent and the Company
that the circumstances giving rise to such determination no longer exist.
(b) If a Bank determines that it is unlawful to maintain any LIBOR
Borrowing, the Company shall, upon its receipt of notice of such fact and
demand from such Bank (with a copy to the Administrative Agent), prepay in
full such LIBOR Borrowings of that Bank then outstanding, together with
interest accrued thereon and amounts REQUIRED UNDER SECTION 3.9, either on
the last day of the LIBOR Period thereof, if the Bank may lawfully
continue to maintain such LIBOR Borrowings to such day, or immediately, if
the Bank may not lawfully continue to maintain such LIBOR Borrowing. If
the Company is required to so prepay any LIBOR Borrowing, then
concurrently with such prepayment, the Company may, at its option, borrow
from the affected Bank, in the amount of such repayment, a ABR Borrowing.
(c) If the obligation of any Bank to make or maintain LIBOR
Borrowings has been so terminated or suspended, the Company may elect, by
giving notice to the Bank through the Administrative Agent, that all Loans
which would otherwise be made by the Bank as LIBOR Borrowings shall be
instead ABR Borrowings.
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(d) Before giving any notice to the Administrative Agent under this
Section, the affected Bank shall designate a different Lending Office with
respect to its LIBOR Borrowings if such designation will avoid the need
for giving such notice or making such demand and will not, in the judgment
of the Bank, be illegal or otherwise disadvantageous to the Bank.
3.8 INCREASED COSTS AND REDUCTION OF RETURN.
(a) If any Bank determines that, due to either (i) the introduction
after the date hereof of or any change (other than any change by way of
imposition of or increase in reserve requirements included in the
calculation of the LIBOR Rate or in respect of the assessment rate payable
by any Bank to the FDIC for insuring U.S. deposits) in or in the
interpretation after the date hereof of any law or regulation or (ii) the
compliance by that Bank with any guideline imposed or request made by any
central bank or other Governmental Authority after the date hereof
(whether or not having the force of law), there shall be any increase in
the cost to such Bank of agreeing to make or making, funding or
maintaining any LIBOR Borrowings, then the Company shall be liable for,
and shall from time to time, upon demand (with a copy of such demand to be
sent to the Administrative Agent), pay to the Administrative Agent for the
account of such Bank, additional amounts as are sufficient to compensate
such Bank for such increased costs.
(b) If any Bank shall have determined that (i) the introduction
after the date hereof of any Capital Adequacy Regulation, (ii) any change
after the date hereof in any Capital Adequacy Regulation, (iii) any change
after the date hereof in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental
Authority charged with the interpretation or administration thereof, or
(iv) compliance by the Bank (or its Lending Office) or any corporation
controlling the Bank with any Capital Adequacy Regulation described in
clauses (i) through (iii) above, affects or would affect the amount of
capital required or expected to be maintained by the Bank or any
corporation controlling the Bank and (taking into consideration such
Bank's or such corporation's policies with respect to capital adequacy and
such Bank's desired return on capital) determines that the amount of such
capital is increased as a consequence of its Commitment, Loans, credits or
obligations under this Agreement, then, upon demand of such Bank to the
Company through the Administrative Agent, the Company shall pay to the
Bank, from time to time as specified by the Bank, additional amounts
sufficient to compensate the Bank for such increase.
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3.9 FUNDING INDEMNIFICATION. If any payment of a LIBOR Borrowing occurs on
a date which is not the last day of the LIBOR Period, whether because of
acceleration, prepayment or otherwise, or if, for any reason other than default
by one or more of the Banks, a LIBOR Borrowing is requested and subsequently
cancelled or is otherwise not made or continued as a LIBOR Borrowing, or an ABR
Borrowing is not redesignated as a LIBOR Borrowing on the date specified by the
Company, the Company will indemnify and hold harmless each Bank from and against
any loss, damage, expense or cost incurred by such Bank resulting therefrom,
including, without limitation, any loss, damage, expense or cost in liquidating
or employing deposits acquired to fund or maintain the LIBOR Borrowing. The
Company shall pay to the Administrative Agent for the account of each Bank the
amount required to indemnify such Bank within 15 days after written
certification by such Bank of such loss, damage, expense or cost (which
certification shall be delivered by such Bank to the Administrative Agent for
delivery to the Company). Determination of amounts payable under this Section in
connection with a LIBOR Borrowing shall be calculated as though each Bank funded
its LIBOR Borrowing through the purchase of a deposit of the type and maturity
corresponding to the deposit used as a reference in determining the LIBOR Rate
applicable to such LIBOR Borrowing, whether in fact that is the case or not.
3.10 INABILITY TO DETERMINE RATES. If the Administrative Agent determines
that for any reason adequate and reasonable means do not exist for determining
the LIBOR Rate for any requested LIBOR Period with respect to a proposed LIBOR
Borrowing, or that the LIBOR Rate applicable pursuant to SECTION 3.1(C) for any
requested LIBOR Period with respect to a proposed LIBOR Borrowing does not
adequately and fairly reflect the cost to the Banks of funding such Borrowing,
the Administrative Agent will promptly so notify the Company and each Bank.
Thereafter, the obligation of the Banks to make or maintain LIBOR Borrowings, as
the case may be, hereunder shall be suspended until the Administrative Agent
revokes such notice in writing. Upon receipt of such notice, the Company may
revoke any Request for Borrowing or Request for Redesignation of Borrowing then
submitted by it. If the Company does not revoke such Request, the Banks shall
make, convert or continue the Loans, as proposed by the Company, in the amount
specified in the applicable notice submitted by the Company, but such Loans
shall be made, converted or continued as ABR Borrowings instead of LIBOR
Borrowings. As of the date of this Agreement, no Bank has made the determination
or is aware of the conditions referenced in the first sentence of this Section
3.10.
3.11 CERTIFICATE OF BANKS. Any Bank claiming reimbursement or COMPENSATION
UNDER THIS ARTICLE 3 shall deliver to the Company (with a copy to the
Administrative Agent) a certificate setting forth in reasonable detail the
amount payable to the Bank hereunder and the basis for such calculation and
claim, and such certificate shall be conclusive and binding on the Company in
the absence of manifest error.
3.12 SUBSTITUTION OF BANKS. Upon the receipt by the Company from any BANK
(AN "AFFECTED BANK") OF A CLAIM FOR COMPENSATION UNDER SECTION 3.8 or, to the
extent such problem affects less than the Majority Banks, notice of a bank's
inability to fund LIBOR borrowings under section 3.7 or determine LIBOR rates
under Section 3.10, the Company may: (a) request the Administrative Agent to use
its best efforts to obtain a replacement bank or financial institution
satisfactory to the Company to acquire and assume all or a ratable part of all
of such Affected Bank's Loans and Commitment (a "REPLACEMENT BANK"); or (b)
request one or more of the other Banks to acquire and assume all or part of such
Affected Bank's Loans and Commitment; or (c) designate a Replacement Bank. Any
such designation of a Replacement Bank under clause (a) or (c) shall be subject
to the prior written consent of the Administrative Agent (which consent shall
not be unreasonably withheld or delayed).
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3.13 SURVIVAL. The agreements and obligations of the Company in this
ARTICLE 3 shall survive the payment in full of all Obligations and the
termination of this Agreement.
3.14 MANNER AND TREATMENT OF PAYMENTS. The amount of each payment
hereunder or on each Note shall be made to the Administrative Agent for the
account of each applicable Bank in immediately available funds on the day of
payment (which must be a Banking Day). Any payment received after 2:00 p.m.,
Chicago time, on any Banking Day, shall be deemed received on the next
succeeding Banking Day. The amount of all payments received by the
Administrative Agent for the account of each Bank shall be promptly paid by the
Administrative Agent to the applicable Bank(s) in immediately available funds
(and any such payment not remitted on the same Banking Day that it is deemed
received by the Administrative Agent shall thereafter be payable by the
Administrative Agent to the applicable Bank(s) together with interest at the
overnight Federal Funds Effective Rate, as such rate is reasonably determined by
the Administrative Agent). Whenever any payment to be made hereunder or on each
Note is due on a day that is not a Banking Day, payment SHALL BE MADE ON THE
NEXT SUCCEEDING BANKING DAY, PROVIDED that the extension shall be included in
the computation of interest owing on the next following Interest Payment Date.
Any payment of the principal of any LIBOR Borrowing shall be made on a LIBOR
Banking Day, as applicable.
3.15 MANDATORY PREPAYMENT. In the event that the aggregate principal
amount of the outstanding loans plus the L/C Obligations at any time exceeds the
limitations specified in Section 2.6 (whether because of the outstanding
principal amount of the Loans or L/C Obligations, or because of the other
outstanding Senior Permitted Debt or Third Party L/C Obligations), the Company
shall immediately make a prepayment of the Loans in such amount as is necessary
to cause the amount of outstanding loans plus l/c obligations to comply with the
limitations of Section 2.6. in the event that the l/c obligations at any time
exceed the borrowing base less the sum of (a) the aggregate principal amount of
outstanding Senior Permitted Debt of the Homebuilding Segment (including the
aggregate principal amount of outstanding loans, but exclusive of the l/c
obligations) PLUS (b) the aggregate amount of Third Party L/C Obligations of the
Homebuilding Segment, the Company shall immediately upon demand by the
Administrative Agent deposit with the Administrative Agent, for the benefit of
the Banks, an amount in cash equal to such excess. Such cash shall be deposited
in an interest bearing account with the Administrative Agent as to which the
Company shall have no right of withdrawal except as provided below. At such time
as the borrowing base less the sum of (a) the aggregate principal amount of
outstanding Senior Permitted Debt of the Homebuilding Segment (including the
aggregate principal amount of outstanding loans, but exclusive of the l/c
obligations) plus (b) the aggregate amount of Third Party L/C Obligations of the
Homebuilding Segment once again equals or exceeds the outstanding L/C
Obligations, and provided no other Event of Default has occurred and is
continuing and the Company is otherwise in compliance with this Agreement, the
amount so deposited by the Company in such restricted account with the
Administrative Agent, together with any interest accrued thereon, shall be
immediately remitted to the Company.
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3.16 AGENCY AND OTHER FEES PAYABLE TO THE ADMINISTRATIVE AGENT AND BANC OF
AMERICA SECURITIES. The Banks acknowledge that pursuant to a fee letter
agreement of even date herewith between the Administrative Agent, BOFA, BANC OF
AMERICA SECURITIES AND THE COMPANY (THE "FEE LETTER Agreement"), the Company has
agreed to pay BofA and Banc of America Securities certain agency and other fees,
as more fully set forth in the Fee Letter Agreement. The Company covenants and
agrees to pay such agency and other fees at the times and in the manner set
forth in the Fee Letter Agreement. The respective agency and other fees payable
to BofA and Banc of America Securities under the Fee Letter Agreement shall
belong solely to BofA and Banc of America Securities in accordance with their
respective interests in such fees, and neither BofA nor Banc of America
Securities shall be required to share any such fee specified in the Fee Letter
Agreement with any of the other Banks or other parties to this Agreement.
3.17 MATURITY DATE EXTENSION OPTION.
(a) The Maturity Date may be extended, at the sole discretion of
each of the Banks, on each successive anniversary of the date of THIS
AGREEMENT (EACH SUCH DATE, AN "EXTENSION DATE"), in each case to the date
one year from the Maturity Date in effect at such time. If the Company
wishes to request an extension of the Maturity Date on any Extension Date,
it shall deliver an Extension Request to the Administrative Agent not
earlier than ninety (90) days and not later than sixty (60) days prior to
such Extension Date. No such extension shall be effective as to a
particular Bank without the approval of such extension by such Bank.
Approval or disapproval of each such extension shall be in the sole and
absolute discretion of each Bank. Each Bank shall notify the
Administrative Agent and the Company, in writing and within 30 days of
receipt of an Extension Request, whether it will extend the Maturity Date.
If at least 90% of the Banks (based on their Pro Rata Shares) approve such
extension, the Maturity Date shall be extended to the date one year from
the then effective Maturity Date. If such extension is not approved by at
least such 90% of the Banks, the Maturity Date then in effect will be
retained, unless such non-consenting Banks are repaid or replaced as set
forth below.
(b) If any Bank elects not to extend the Maturity Date, or does not
give notice of its election to extend the Maturity Date on or before the
date which is thirty (30) days before the applicable Extension Date, the
Company may, at its option to be exercised its sole discretion, by
delivery of written notice to all of the Banks at any time prior to the
previously applicable Maturity Date, either:
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(i) Repay all Loans from the non-renewing Bank(s), reduce the
Aggregate Commitment by an amount equal to the Pro Rata Share of the
Commitment of the non-renewing Bank(s) effective on the date of
repayment of the non-renewing Bank(s) (which date must be on or
before the Non-Renewing Bank Loan Maturity Date), amend the
Commitments of the renewing Banks to reflect a ratable allocation of
the Aggregate Commitment as thus reduced, effective as of the date
of repayment of the non-renewing Bank(s), and extend the Maturity
Date by one year as to the renewing Banks; or
(ii) Reduce the Aggregate Commitment by an amount equal to the
Pro Rata Share of the Loans of the non-renewing Bank(s) effective on
a date specified by the Company (which date must be on or before the
Non-Renewing Bank Loan Maturity Date), amend the Pro Rata Shares of
the renewing Banks to reflect a ratable allocation of the Aggregate
Commitment as thus reduced, effective as of the date specified by
the Company as provided above, extend the Maturity Date by one year
as to the renewing Banks and retain the Non-Renewing Bank Loan
Maturity Date as the date of maturity of principal of the Pro Rata
Share of Loan proceeds disbursed by the non-renewing Bank(s); or
(iii) Identify an Eligible Assignee to purchase, without
recourse, at par, all or the remaining portion of the non-renewing
Bank's Commitment on or before the Non-Renewing Bank Loan Maturity
Date for such Bank. Such Eligible Assignee must agree to a Maturity
Date which is coterminous with the extended Maturity Date for all of
the renewing Banks and must be approved by the Administrative Agent,
which approval shall not be unreasonably withheld or delayed.
(c) In connection with each extension of the Maturity Date, the
Company shall pay to the Administrative Agent for the account of each
renewing Bank an extension fee in an amount to be negotiated by the
Administrative Agent and the Company at the time the Company delivers the
applicable Extension Request to the Administrative Agent, which extension
fee shall be payable in full on the applicable Extension Date.
3.18 LIMITATION ON ADDITIONAL AMOUNTS, ETC. Notwithstanding anything to
the contrary contained in Section 3.6 OR 3.8, unless a Bank gives notice to the
Company that the Company is obligated to pay an amount under any such Section
within 180 days after the later of (x) the date such Bank incurs the respective
increased costs, Taxes, loss, expense or liability, reduction in amounts
received or receivable or reduction in return on capital or (y) the date such
Bank has actual knowledge of its incurrence of the respective increased costs,
Taxes, loss, expense, or liability, reductions in amounts received or receivable
or reduction in return on capital, then such Bank shall only be entitled to be
compensated for such amount by the Company PURSUANT TO SAID SECTION 3.6 OR 3.8,
as the case may be, to the extent the costs, Taxes, loss, expense or liability,
reduction in amounts received or receivable or reduction in return on capital
are incurred or suffered on or after the date which occurs 180 days prior to
such Bank giving notice to the Company that the Company is obligated to pay the
respective amounts pursuant TO SECTION 3.6 OR 3.8, as the case may be.
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ARTICLE 4: CONDITIONS.
4.1 CONDITIONS TO FIRST EXTENSION OF CREDIT. The obligation of the Banks
to make the first extension of credit hereunder, whether in the form of a
Borrowing or the issuance of a Letter of Credit by the Issuing Bank, is subject
to the following conditions precedent (any one or more of which the Banks may
waive in their sole discretion):
(a) The Administrative Agent shall have received the following
original executed documents (in form and substance satisfactory to the
Administrative Agent and legal counsel for the Administrative Agent in
sufficient number for the Administrative Agent and each Bank):
(i) this Agreement;
(ii) each Note;
(iii) the Guaranty;
(iv) the Opinion of Counsel;
(v) a certified copy of resolutions of the board of directors
of the Company authorizing the execution of the Loan Documents,
together with an incumbency certificate executed by the corporate
secretary of the Company;
(vi) a certified copy of resolutions of the board of directors
of each Guarantor authorizing the execution of the Guaranty,
together with an incumbency certificate executed by the corporate
secretary of each Guarantor;
(vii) a Borrowing Base Certificate calculated as of September
30, 1999, showing the Company to be in compliance with SECTIONS 2.6
AND 7.4; and
(viii) such other agreements, instruments and documents as any
Bank shall reasonably request.
(b) The Administrative Agent shall have received evidence
satisfactory to the Administrative Agent and legal counsel to the
Administrative Agent that the Company has been duly incorporated, validly
exists and is in good standing under the laws of the State of Maryland, is
duly qualified to do business as, and is in good standing as, a foreign
corporation in each jurisdiction in which the conduct of its business or
the ownership or leasing of its properties makes such qualification
necessary, and has all requisite power and authority to conduct its
business and to own and lease its properties.
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(c) The Administrative Agent shall have received evidence
satisfactory to the Administrative Agent that all Indebtedness under the
Second Amended and Restated Credit Agreement among the Company, certain
lenders, certain co-agents, certain documentation and syndication agents
and NationsBank, N.A., as administrative agent, dated as of June 24, 1997
(the "Existing Credit Agreement") shall have been simultaneously paid in
full and such agreement shall have been terminated.
(d) The Company shall have paid all fees due hereunder which have
been invoiced.
4.2 CONDITIONS FOR SUBSEQUENT EXTENSIONS OF CREDIT. The obligation of the
Banks to make any extension of credit hereunder (including the first and any
subsequent extension of credit), whether in the form of a Borrowing or the
issuance of a Letter of Credit by the Issuing Bank, or is subject to the
following conditions precedent:
(a) the representations and warranties contained in Sections 5.1
through 5.14, inclusive, and Sections 5.15 AND 5.16, inclusive, as of the
latest reporting required under this Agreement, shall be correct in all
material respects on and as of the date of the Borrowing, or the issuance
of the Letter of Credit, as the case may be, as though made on and as of
that date (except with respect to representations and warranties which
expressly relate to an earlier date), and no Default or Event of Default
shall have occurred and be continuing; and
(b) in the case of a Borrowing, or redesignation or continuation
thereof, the Company shall, at its sole expense, deliver or cause to be
delivered to the Administrative Agent, in form and substance satisfactory
to the Administrative Agent, a Request for Borrowing, a Request for
Redesignation or a Request for Continuation, as applicable.
ARTICLE 5: REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each Bank that:
5.1 INCORPORATION, QUALIFICATION, POWERS AND CAPITAL STOCK. The Company is
a corporation duly incorporated, validly existing and in good standing under the
laws of the State of Maryland, is duly qualified to do business as, and is in
good standing as, a foreign corporation in each jurisdiction in which the
conduct of its business or the ownership or leasing of its properties makes such
qualification necessary, and has all requisite power and authority to conduct
its business and to own and lease its properties except where the failure to do
so would not reasonably be expected to have a Material Adverse Effect. All
outstanding shares of capital stock of the Company are duly authorized, validly
issued, fully paid, nonassessable, and issued in compliance with all applicable
state and federal securities and other Laws.
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5.2 EXECUTION, DELIVERY AND PERFORMANCE OF LOAN DOCUMENTS.
(a) The Company has all requisite power and authority to execute and
deliver, and to perform all of its obligations under, the Loan Documents.
(b) Each Guarantor has all requisite power and authority to execute
and deliver, and to perform all of its obligations under, the Guaranty.
(c) The execution and delivery by the Company of, and the
performance by the Company of each of its obligations under, each Loan
Document to which it is a party, and the execution and delivery by each
Guarantor of, and the performance by each Guarantor of each of its
obligations under, the Guaranty, have been duly authorized by all
necessary action and do not and will not:
(i) require any consent or approval not heretofore obtained of
any stockholder, security holder or creditor of the Company, any
Subsidiary or any Guarantor;
(ii) violate any provision of the certificate of incorporation
or bylaws of the Company or any Guarantor or any provision of the
articles or certificate of incorporation, bylaws or partnership
agreement of any Subsidiary;
(iii) result in or require the creation or imposition of any
Lien, claim or encumbrance (except to the extent that any Lien is
created under this Agreement) upon or with respect to any property
now owned or leased or hereafter acquired by the Company, any
Subsidiary or any Guarantor;
(iv) violate any provision of any Law, order, writ, judgment,
injunction, decree, determination or award presently in effect
having applicability to the Company, any Subsidiary or any
Guarantor; or
(v) result in a breach of or constitute a default under, or
cause or permit the acceleration of any obligation owed under, any
indenture or loan or credit agreement or any other material
Contractual Obligation of the Company, any Subsidiary or any
Guarantor.
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(d) The Company, each Subsidiary and each Guarantor is not in
default under any Law, order, writ, judgment, injunction, decree,
determination, award, indenture, agreement, lease or instrument described
in Section 5.2(C)(IV) OR 5.2(C)(V) above, in any respect that is
materially adverse to the interests of any Bank, or that could materially
impair the ability of the Company, its Subsidiaries and each Guarantor
taken as a whole to perform its obligation under the Loan Documents, as
applicable, or that has a Material Adverse Effect.
(e) No authorization, consent, approval, order, license, permit or
exemption from, or filing, registration or qualification with, any
Governmental Authority not heretofore obtained is or will be required
under applicable Law to authorize or permit the execution and delivery by
the Company or any Guarantor of, and the performance by the Company or any
Guarantor of all of its obligations under, the Loan Documents.
(f) Each of the Loan Documents to which the Company is a party, when
executed and delivered, will constitute the legal, valid and binding
obligations of the Company, and the Guaranty, when executed and delivered,
will constitute the legal, valid and binding obligations of each
Guarantor, enforceable against it in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
arrangement, moratorium or other similar laws relating to or affecting
creditors' rights generally or equitable principles relating to the
granting of specific performance or other equitable remedies as a matter
of judicial discretion.
5.3 COMPLIANCE WITH LAWS AND OTHER REQUIREMENTS. The Company is in
compliance in all material respects with all Laws and other requirements
applicable to its business and has obtained all material authorizations,
consents, approvals, orders, licenses, permits and exemptions from, and has
accomplished all material filings, registrations or qualifications with, any
Governmental Authority that is necessary for the transaction of its business
except where such noncompliance would not reasonably be expected to have a
Material Adverse Effect.
5.4 SUBSIDIARIES.
(a) SCHEDULE 5.4 hereto correctly sets forth the names and
jurisdictions of incorporation or formation of all present Subsidiaries,
and the Subsidiaries that, as of the date of this Agreement, are
Significant Subsidiaries are designated as such on Schedule 5.4. except as
described in Schedule 5.4, the Company does not own any capital stock or
ownership interest in any Person other than the Subsidiaries and real
estate joint ventures (including limited liability companies and
partnerships) in which the Company or any Subsidiary within the
Homebuilding Segment participates. All outstanding shares of capital stock
or ownership interests, as the case may be, of each Subsidiary and each
such real estate joint venture that are owned by the Company or any
Subsidiary are (i) owned of record and beneficially by the Company and/or
by one or more Subsidiaries, free and clear of all Liens, claims,
encumbrances and rights of others, and are (ii) duly authorized, validly
issued, fully paid, nonassessable (except for capital calls or
contribution requirements in connection with ownership interests in such
real estate joint ventures), and issued in compliance with all applicable
state and federal securities and other laws. the company may update
Schedule 5.4 from time to time by sending written notice to the
Administrative Agent.
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(b) Each Restricted Subsidiary is a corporation, partnership or
limited liability company duly incorporated or formed, validly existing
and in good standing under the laws of its respective jurisdiction of
incorporation or formation, is duly qualified to do business as, and is in
good standing as, a foreign corporation, partnership or limited liability
company in each jurisdiction in which the conduct of its business or the
ownership or leasing of its properties makes such qualification necessary,
and has all requisite power and authority to conduct its business and to
own and lease its properties, except where the failure to do so would not
reasonably be expected to result in a Material Adverse Effect.
(c) Each Restricted Subsidiary is in compliance in all material
respects with all Laws and other requirements applicable to its business
and has obtained all material authorizations, consents, approvals, orders,
licenses, permits and exemptions from, and has accomplished all material
filings, registrations or qualifications with, any Governmental Authority
that are necessary for the transaction of its business, except where the
failure to do so would not reasonably be expected to result in a Material
Adverse Effect.
5.5 FINANCIAL STATEMENTS OF THE COMPANY AND ITS CONSOLIDATED SUBSIDIARIES.
The consolidated balance sheets of the Company and its consolidated Subsidiaries
as at December 31, 1998 and the related consolidated statements of income and
cash flows for the fiscal year ended on such date, reported on by Ernst and
Young, copies of which have heretofore been furnished to each Bank, present
fairly the consolidated financial condition of the Company and its consolidated
Subsidiaries as at such date, and the consolidated results of their operations
and changes in cash flows for the fiscal year then ended. The unaudited
consolidated balance sheet of the Company and its consolidated Subsidiaries as
at June 30, 1999 and the related unaudited consolidated statements of income and
of cash flows for the six-month period ended on such date, certified by a
Responsible Official, copies of which have heretofore been furnished to each
Bank, present fairly the consolidated financial condition of the Company and its
consolidated Subsidiaries as at such date, and the consolidated results of their
operations and changes in cash flows for the six-month period then ended
(subject to normal year-end audit adjustments). All such financial statements,
including the related schedules and notes thereto, have been prepared in
accordance with GAAP applied consistently throughout the periods involved
(except as approved by such accountants or Responsible Official, as the case may
be, and as disclosed therein and except the quarterly statements are unaudited
and do not include footnotes as would be required for audited financial
statements).
5.6 NO MATERIAL ADVERSE CHANGE. There has been no material adverse change
in the condition, financial or otherwise, of the Company and the Subsidiaries,
taken as a whole, from the financial condition of the Company and the
Subsidiaries, taken as a whole, since December 31, 1998 which would reasonably
be expected to have a Material Adverse Effect, and the Company and the
Subsidiaries, taken as a whole, do not have any material liability incurred
outside of the ordinary course of business or, to the best knowledge of the
Company, material contingent liability not reflected or disclosed in the
financial statements or notes thereto described in Section 5.5 (or, to the
extent that financial statements have been delivered pursuant to Section 6.1, in
the most recently delivered financial statements), or otherwise disclosed to the
Administrative Agent in writing.
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5.7 TAX LIABILITY. The Company and each Subsidiary have filed all tax
returns (federal, state and local) required to be filed by them and have paid
all material taxes shown thereon to be due and all property taxes due, including
interest and penalties, if any. To the best knowledge of the Company, there does
not exist any substantial likelihood that any Governmental Authority will
successfully assert a tax deficiency against the Company or any Subsidiary that
is material to the Company and the Subsidiaries, taken as a whole, that has not
been adequately reserved against in the financial statements described in
Section 5.5 (or, to the extent that financial statements have been delivered
pursuant to Section 6.1, in the most recently delivered financial statements).
The Company and each Subsidiary have established and is maintaining adequate
reserves for tax liabilities, if any, sufficient to comply with GAAP.
5.8 LITIGATION. SCHEDULE 5.8 sets forth information with respect to
certain litigation, investigations or proceedings pending against the Company
and its Subsidiaries. Subject to the matters set forth on such Schedule, there
are no actions, suits or proceedings pending or, to the best knowledge of the
Company, threatened against or affecting the Company or any Restricted
Subsidiary, or any property of the Company or any Restricted Subsidiary, before
any Governmental Authority which, if determined adversely to the Company or the
Restricted Subsidiary, could reasonably be expected to have a Material Adverse
Effect.
5.9 ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no Lien
in favor of the PBGC or a Plan has arisen, during such five-year period. The
present value of all accrued benefits under each Single Employer Plan (based on
those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits to an extent which could reasonably be expected to have a Material
Adverse Effect. Neither the Company nor any Commonly Controlled Entity has had a
complete or partial withdrawal from any Multiemployer Plan which could
reasonably be expected to have a Material Adverse Effect, and neither the
Company nor any Commonly Controlled Entity would become subject to any liability
under ERISA in an amount which could reasonably be expected to have a Material
Adverse Effect if the Company or any such Commonly Controlled Entity were to
withdraw completely from all Multiemployer Plans as of the valuation date most
closely preceding the date on which this representation is made or deemed made.
To the knowledge of the Company or any Commonly Controlled Entity, no such
Multiemployer Plan for which the Company or any Subsidiary could reasonably be
expected to have a material liability is in Reorganization or Insolvent. The
present value (determined using actuarial and other assumptions which are
reasonable in respect of the benefits provided and the employees participating)
of the liability of the Company and each Commonly Controlled Entity for post
retirement benefits to be provided to their current and former employees under
Plans which are welfare benefit plans (as defined in Section 3(1) of ERISA) does
not, in the aggregate, exceed the assets under all such Plans allocable to such
benefits by an amount in excess of $5,000,000.
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5.10 REGULATIONS U AND X; INVESTMENT COMPANY ACT. Neither the Company nor
any Subsidiary is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of "purchasing" or "carrying"
any "margin stock" within the meanings of Regulation U of the FRB. No part of
the Loans or the Letters of Credit will be used to purchase or carry any margin
stock, or to extend credit to others for that purpose, or for any purpose that
violates the provisions of Regulations U or X of the FRB. Neither the Company
nor any Subsidiary is or is required to be registered under the Investment
Company Act of 1940.
5.11 NO DEFAULT OR EVENT OF DEFAULT. No Default or Event of Default has
occurred and is continuing.
5.12 YEAR 2000 COMPLIANCE. The Company has conducted, and is presently
conducting, a review and assessment of the Company's computer applications with
respect to the "year 2000 problem" (that is, the risk that computer applications
may not be able to properly perform date-sensitive functions after December 31,
1999) and, based on the review to date, the Company does not believe the year
2000 problem will result in a Material Adverse Effect.
5.13 OWNERSHIP OF PROPERTY; LIENS. Each of the Company and its Restricted
Subsidiaries has good record and marketable title in fee simple to, or a valid
leasehold interest in, all its real property, and good title to all its other
property, except for defects in title that do not interfere in any material
respect with its ability to conduct its business as currently conducted or to
utilize such properties for their intended purposes, and none of such property
is subject to any lien except as permitted by Section 7.8. Each of the Company
and its Restricted Subsidiaries has good record and marketable title in fee
simple to all Real Estate Inventory included in the Borrowing Base, except for
defects in title that do not interfere in any material respect with its ability
to conduct its business as currently conducted or to utilize such properties for
their intended purposes.
5.14 ENVIRONMENTAL MATTERS. Except to the extent that all of the
following, in the aggregate, would not reasonably be expected to have a Material
Adverse Effect:
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(a) To the knowledge of the Company, the facilities and properties
owned, leased or operated by the Company or any of its subsidiaries (THE
"PROPERTIES") do not contain, and have not previously contained, any
Materials of Environmental Concern in amounts or concentrations which (i)
constitute or constituted a violation of, or (ii) could reasonably be
expected to give rise to liability under, any Environmental Law.
(b) To the knowledge of the Company, the Properties and all
operations at the Properties are in compliance, and, to the extent of the
Company's and its Subsidiaries' involvement with the Properties, have in
the last five years been in compliance, in all material respects with all
applicable Environmental Laws, and there is no contamination at, under or
about the Properties or violation of any Environmental Law with respect to
the Properties or the business operated by the company or any of its
subsidiaries (THE "BUSINESS").
(c) Neither the Company nor any of its Subsidiaries has received any
notice of violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Properties or the Business,
nor does the Company have knowledge or reason to believe that any such
notice will be received or is being threatened.
(d) To the knowledge of the Company, Materials of Environmental
Concern have not been transported or disposed of from the Properties while
owned or operated by the Company or any of its Subsidiaries in violation
of, or in a manner or to a location which could reasonably be expected to
give rise to liability under, any Environmental Law, nor have any
Materials of Environmental Concern been generated, treated, stored or
disposed of at, on or under any of the Properties in violation of, or in a
manner that could reasonably be expected to give rise to liability under,
any applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative action
is pending or, to the knowledge of the Company, threatened, under any
Environmental Law to which the Company or any Subsidiary is or will be
named as a party with respect to the Properties or the Business, nor are
there any consent decrees or other decrees, consent orders, administrative
orders or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to the Properties or
the Business.
(f) To the knowledge of the Company, there has been no release or
threat of release of Materials of Environmental Concern at or from the
Properties, or arising from or related to the operations of the Borrower
or any Subsidiary in connection with the Properties or otherwise in
connection with the Business, in violation of, or in amounts or in a
manner that could reasonably give rise to liability under, Environmental
Laws.
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5.15 BORROWING BASE. The sum of (a) the aggregate principal amount of
outstanding senior permitted debt of the homebuilding segment plus without
duplication (b) the aggregate amount of Third Party L/C Obligations of the
Homebuilding Segment does not exceed the Borrowing Base.
5.16 BORROWING BASE COMPONENTS. At any time of determination thereof, the
value of any component of Real Estate Inventory used to calculate the Borrowing
Base does not exceed the GAAP Value of such component of Real Estate Inventory.
5.17 PURPOSE OF LOANS. The proceeds of the Loans shall be used by the
Company for working capital purposes, to make purchases and investments
permitted hereunder and to repay indebtedness under the Second Amended and
Restated Credit Agreement dated as of June 24, 1997 among the Company, certain
banks, certain co-agents, The Chase Manhattan Bank, as syndication and
documentation agent and NationsBank, N.A., as administrative agent.
ARTICLE 6: AFFIRMATIVE COVENANTS OF THE COMPANY.
As long as any Note remains unpaid or any other Obligation remains
outstanding or any Commitment or any Letter of Credit remains in effect, unless
the Majority Banks otherwise consent in writing:
6.1 FINANCIAL STATEMENTS. The Company shall cause to be delivered to the
Administrative Agent, in form and detail satisfactory to the Administrative
Agent (for prompt distribution by the Administrative Agent to the Banks):
(a) as soon as available, but in any event within 100 days after the
end of each fiscal year of the Company, copies of the consolidated balance
sheets of the Company and its consolidated Subsidiaries as at the end of
such year and the related consolidated statements of income and retained
earnings and changes in cash flows for such year, setting forth in each
case in comparative form the figures for the previous year, reported on
without a "going concern" or like qualification or exception, or
qualification arising out of the scope of the audit (other than
qualifications related to the incorporation of reports by other independent
certified public accountants), by Ernst and Young or other independent
certified public accountants of nationally recognized standing reasonably
acceptable to the Majority Banks; and
(b) as soon as available, but in any event not later than 55 days
after the end of each of the first three quarterly periods of each fiscal
year of the Company, the unaudited consolidated balance sheets of the
Company and its consolidated Subsidiaries as at the end of such quarter
and the related unaudited consolidated statements of income and retained
earnings and changes in cash flows of the Company and its consolidated
Subsidiaries for such quarter and the portion of the fiscal year through
the end of such quarter, setting forth in each case in comparative form
the figures for the previous year, certified by a Responsible Official as
being fairly stated in all material respects when considered in relation
to the consolidated financial position of the Company and its consolidated
Subsidiaries (subject to normal year-end audit adjustments);
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all such financial statements to be prepared in accordance with GAAP applied
consistently throughout the periods reflected therein and with prior periods
(except as approved by such accountants or officer, as the case may be, and
disclosed therein).
6.2 CERTIFICATES; OTHER INFORMATION. The Company shall cause to be
delivered to the Administrative Agent, in form and detail satisfactory to the
Administrative Agent (for prompt distribution by the Administrative Agent to the
Banks):
(a) concurrently with the delivery of the financial statements
REFERRED TO IN SECTION 6.1(A), a certificate of the independent certified
public accountants reporting on such financial statements stating that in
making the examination necessary therefor no knowledge was obtained of any
Default or Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements
REFERRED TO IN SECTIONS 6.1(A) AND 6.1(B), a compliance certificate of A
RESPONSIBLE OFFICIAL, SUBSTANTIALLY IN THE FORM OF EXHIBIT "G", stating
that, to the best of such officer's knowledge, the Company during such
period has observed or performed all of its covenants and other
agreements, and satisfied every condition, contained in this Agreement and
in the Notes to be observed, performed or satisfied by it (AND CONTAINING
CALCULATIONS DEMONSTRATING COMPLIANCE WITH SECTIONS 7.1 THROUGH 7.6 and
such other financial information as requested by the Administrative
Agent), and that such officer has obtained no knowledge of any Default or
Event of Default except as specified in such certificate;
(c) not later than 100 days after the end of each fiscal year of the
Company, a copy of the projections by the Company of the operating budget
and cash flow budget of the Company and its Subsidiaries for the
succeeding two fiscal years and the projected consolidated balance sheet
of the Company and its Subsidiaries as at the end of such succeeding
fiscal years, such projections to be accompanied by a certificate of a
Responsible Official to the effect that while such officer has no reason
to believe such projections are incorrect or misleading in any material
respect, such projections are based upon assumptions that may not
materialize or may change adversely due to factors related to the
Company's business or industry, and unanticipated events and circumstances
may occur subsequent to the date of such projections, such that the actual
results achieved may vary from such projections, and such variations may
be material, and that the Company is under no obligation to update such
projections;
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(d) promptly upon their becoming available, but in any event no
later than ten days after the same are sent, copies of all financial
statements, reports, notices and proxy statements sent or made available
generally by the Company to its stockholders, or by any Restricted
Subsidiary of the Company to its stockholders (other than the Company or
any Subsidiary of the Company), of all regular and periodic reports and
all registration statements (excluding exhibits thereto and Registration
Statements on Form S-8) and prospectuses, if any, filed by the Company or
any of its Restricted Subsidiaries with any securities exchange or with
the Securities and Exchange Commission or any successor or analogous
Governmental Authority; and all press releases and other statements made
available generally by the Company or any of its Restricted Subsidiaries
to the public concerning material developments in the business of the
Company and any of its Restricted Subsidiaries;
(e) promptly, such additional financial and other information as any
Bank may from time to time reasonably request;
(f) as soon as practicable, but in no event later than 55 days after
the end of each fiscal quarter, a Borrowing Base Certificate certifying in
reasonable detail the Borrowing Base as of the last day of such fiscal
quarter, which certificate shall be complete and correct as of the date
thereof; and
(g) concurrently with the delivery of the financial statements
REFERRED TO IN SECTIONS 6.1(A) AND 6.1(B), the financial information SET
FORTH ON SCHEDULE 6.2(G) hereto.
6.3 PAYMENT OF OBLIGATIONS. The Company and each Restricted Subsidiary
will pay, discharge or otherwise satisfy at or before maturity or before they
become delinquent, as the case may be, all obligations of whatever nature which
if not so paid could reasonably be expected to have a Material Adverse Effect,
except where the amount or validity thereof is currently being contested in good
faith by appropriate proceedings and reserves in conformity with GAAP with
respect thereto have been provided on the books of the Company or its
Subsidiaries, as the case may be.
6.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. The Company and the
Restricted Subsidiaries, taken as a whole, will at all times remain principally
engaged in the business currently being conducted by the Company and the
Restricted Subsidiaries, and in all respects material to the business of the
Company and the Restricted Subsidiaries taken as a whole, the Company shall, and
will cause each of the Restricted Subsidiaries to, preserve, renew and keep in
full force and effect its corporate existence and take all reasonable action to
maintain all rights, privileges and franchises required for the normal conduct
of such business, except (i) as otherwise permitted pursuant to Section 7.10 and
(ii) the Company shall not be required to preserve any such right, privilege or
franchise if the Company shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company or any Subsidiary
and that the loss thereof could not reasonably be expected to have a Material
Adverse Effect. The Company shall, and will cause each Restricted Subsidiary to,
comply with all Contractual Obligations and Requirements of Law except to the
extent that failure to comply therewith could not reasonably be expected to have
a Material Adverse Effect.
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6.5 MAINTENANCE OF PROPERTY; INSURANCE. The Company and each Restricted
Subsidiary will keep in all material respects all property useful AND NECESSARY
IN ITS BUSINESS IN GOOD WORKING ORDER AND CONDITION (PROVIDED, HOWEVER, THAT
NOTHING IN THIS SECTION 6.5 shall prevent the Company from discontinuing the
operation or maintenance, or both the operation and maintenance, of any of such
properties if such discontinuance is, in the judgment of the Company, desirable
in the conduct of its business or the business of any Subsidiary and could not
reasonably be expected to have a Material Adverse Effect); maintain with
financially sound and reputable insurance companies insurance on all its
property in at least such amounts and against at least such risks (but including
in any event public liability, product liability and business interruption) as
are usually insured against in the same general area by companies engaged in the
same or a similar business; and furnish to each Bank, upon written request,
reasonable information as to the insurance carried.
6.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. The Company
and each Restricted Subsidiary will in all material respects keep proper books
of records and account in which full, true and correct entries in conformity
with GAAP and all Requirements of Law shall be made of all dealings and
transactions in relation to its business and activities; and permit
representatives of any Bank, at such Bank's expense, to visit and inspect as
reasonably requested any of its properties and the properties of the real estate
joint ventures in which the Company or any Subsidiary within the Homebuilding
Segment participates or manages and examine and make abstracts from any of its
books and records at any reasonable time and as often as may reasonably be
desired and to discuss the business, operations, properties and financial and
other condition of the Company and its Subsidiaries and such real estate joint
ventures in which the Company or any Subsidiary within the Homebuilding Segment
participates or manages, as reasonably requested with officers and employees of
the Company and its Subsidiaries and with its independent certified public
accountants.
6.7 NOTICES. The Company will promptly give notice to the Administrative
Agent and each Bank of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Company or any of its Restricted Subsidiaries or (ii)
litigation, investigation or proceeding which may exist at any time
between the Company or any of its Restricted Subsidiaries and any
Governmental Authority, which, in either case, reasonably could be
expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Company or any of its
Restricted Subsidiaries (i) in which the amount involved and not covered
by insurance is $10,000,000 or more or (ii) in which injunctive or similar
relief is sought which reasonably could be expected to have a Material
Adverse Effect;
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(d) the following events, as soon as possible and in any event
within 30 days after the Company knows or has reason to know thereof: (i)
the occurrence of any Reportable Event with respect to any Plan which must
be reported to the applicable governmental authorities, or any withdrawal
from, or the termination, Reorganization or Insolvency of any
Multiemployer Plan or (ii) the institution of proceedings or the taking of
any other action by the PBGC or the Company or any Commonly Controlled
Entity or any Multiemployer Plan with respect to the withdrawal from, or
the terminating, Reorganization or Insolvency of, any Plan;
(e) any change in the rating of the Company's senior long term
unsecured debt ratings by either S and P or ▇▇▇▇▇'▇; and
(f) any event or occurrence which has a Material Adverse Effect.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Official setting forth details of the occurrence referred to therein
and stating what action the Company proposes to take with respect thereto.
6.8 ENVIRONMENTAL LAWS.
(a) The Company, each Restricted Subsidiary and each joint venture
in which the Company or any Restricted Subsidiary participates or manages
will comply and insure compliance by all tenants and subtenants, if any,
with all Environmental Laws and obtain and comply in all material respects
with and maintain, and insure that all tenants and subtenants obtain and
comply with and maintain, any and all licenses, approvals, registrations
or permits required by Environmental Laws, except in each case to the
extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect.
(b) The Company, each Restricted Subsidiary and each such joint
venture will conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all
lawful orders and directives of all Governmental Authorities respecting
Environmental Laws, except to the extent that the same are being contested
in good faith by appropriate proceedings and the pendency of such
proceedings could not reasonably be expected to have a Material Adverse
Effect.
(c) The Company will defend, indemnify and hold harmless the
Administrative Agent and the Banks, and their respective employees,
agents, officers and directors, from and against any claims, demands,
penalties, fines, liabilities, settlements, damages, costs and expenses of
whatever kind or nature known or unknown, contingent or otherwise, arising
out of, or in any way relating to the violation of or noncompliance with,
any Environmental Laws, or any orders, requirements or demand of
Governmental Authorities related thereto, including, without limitation,
reasonable attorney and consultant fees, investigation and laboratory
fees, court costs and litigation expenses, except to the extent that any
of the foregoing arise out of the gross negligence or willful misconduct
of the party seeking indemnification therefor. The agreements contained in
this subsection (c) shall survive the termination of this Agreement and
the payment of the Notes and all other amounts payable hereunder or under
any other Loan Document.
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6.9 GUARANTEES FROM FUTURE SUBSIDIARIES. The Company will promptly secure
the execution and delivery of the Guaranty to the Administrative Agent on behalf
of the Banks from each Subsidiary, whether now existing or formed and organized
after the date hereof, if such Subsidiary (a) is included in the Homebuilding
Segment and (b) either (i) has assets with an aggregate book value equal to or
greater than $10,000,000, or (ii) has assets with an aggregate book value of
less than $10,000,000 and the aggregate book value of the assets of all
Subsidiaries of the Company in the Homebuilding Segment which individually have
assets with an aggregate book value of less than $10,000,000 each and which has
not provided a Guaranty then exceeds $15,000,000. Each such Subsidiary which
hereafter meets the criteria set forth in the preceding sentence shall execute
and deliver a counterpart of the Guaranty within 30 days after it meets such
criteria. Concurrently with the execution and delivery by such a Subsidiary of a
counterpart of the Guaranty, the Company will deliver to the Administrative
Agent such legal opinions and evidence of corporate action and authority in
respect thereof as shall be reasonably requested by the Administrative Agent.
ARTICLE 7: NEGATIVE COVENANTS OF THE COMPANY
As long as any Note remains unpaid or any other Obligation remains
outstanding or any Commitment or any Letter of Credit remains in effect, unless
the Majority Banks otherwise consent in writing:
7.1 CONSOLIDATED TANGIBLE NET WORTH. The Company shall not permit its
Consolidated Tangible Net Worth at any time to be less than the sum of (A)
$265,000,000 PLUS (b) 50% of the Consolidated Net Income (without deduction for
losses sustained during any fiscal quarter) of the Company for each fiscal
quarter subsequent to the fiscal quarter ended March 31, 1999, PLUS (c) 90% of
the net proceeds from any equity offerings of the Company from and after March
31, 1999.
7.2 COMBINED DEBT OF THE HOMEBUILDING SEGMENT TO ADJUSTED CONSOLIDATED
TANGIBLE NET WORTH RATIO. The Company shall not permit the ratio of (a) Combined
Debt of the Homebuilding Segment to (b) Adjusted Consolidated Tangible Net Worth
at any time to exceed 2.50 to 1.0.
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7.3 MINIMUM FIXED CHARGE COVERAGE. The Company shall not permit the ratio
(the "fixed charge coverage ratio") of (a) EBITDA to (b) Fixed Charges, for any
period consisting of the preceding four (4) fiscal quarters (each, a
"measurement period"), to be less than 1.25 to 1.0 at any time, and shall not
permit the Fixed Charge Coverage Ratio to be less than 1.75 to 1.0 as at the end
of two consecutive fiscal quarter ends measured for the applicable Measurement
Periods.
7.4 SENIOR PERMITTED DEBT PLUS THIRD PARTY L/C OBLIGATIONS NOT TO EXCEED
BORROWING BASE. The Company shall not permit the sum of (a) Senior PERMITTED
DEBT OF THE HOMEBUILDING SEGMENT PLUS without duplication (b) the aggregate
amount of Third Party L/C Obligations of the Homebuilding Segment to at any time
exceed the Borrowing Base.
7.5 LIMITATION ON LAND INVENTORY. The Company shall not permit:
(a) the ratio of (i) the sum of the GAAP Value of (A) Unsold
Finished Lots, (B) Unsold Land Under Development, and (C) Unsold Raw Land
of the Homebuilding Segment on a combined basis to (ii) Adjusted
Consolidated Tangible Net Worth at any time to exceed 1.50 to 1.0; or
(b) the ratio of (i) the sum of the book value of (A) Unsold Raw
Land - Entitled and (B) Unsold Raw Land - Unentitled of the Homebuilding
Segment on a combined basis to (ii) Adjusted Consolidated Tangible Net
Worth at any time to exceed 0.20 to 1.0.
7.6 LIMITATION ON HOUSING INVENTORY. The Company shall not permit the
aggregate unit number of Unsold Housing Inventory of the Homebuilding Segment on
a combined basis at any time to exceed the greater of (a) 50% of homes delivered
by the Homebuilding Segment during the immediately preceding 12 months or (b)
70% of the homes delivered by the Homebuilding Segment during the immediately
preceding six months.
7.7 LIMITATION ON INDEBTEDNESS. Neither the Company nor any Restricted
Subsidiary will create, incur, assume or suffer to exist any Indebtedness,
except:
(a) Indebtedness in respect of the Loans, the Notes, and the
other Obligations;
(b) Indebtedness of the Company to any Subsidiary and of any
subsidiary to the company or any other subsidiary, provided, in each case,
that such Indebtedness be permitted as an Investment pursuant to SECTION
7.13;
(c) Indebtedness of the Company or any of its Subsidiaries in
respect of purchase money mortgage financing for Real Estate Inventory,
PROVIDED that the holder of such Indebtedness shall have no recourse
against the Company or any Subsidiary in respect of such Indebtedness,
such recourse being limited solely to the assets financed with the
proceeds of such Indebtedness;
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(d) Subordinated Debt;
(e) Indebtedness constituting, or constituting the primary
obligations guaranteed by, the Guarantee Obligations permitted pursuant TO
SUBSECTIONS (A), (B) OR (C) OF SECTION 7.9;
(f) Indebtedness of the Company or any other entity in the
Homebuilding Segment in the form of reimbursement obligations in respect
of letters of credit issued for the account of the Company or such other
entity other than Letters of Credit issued hereunder, PROVIDED that such
Indebtedness shall not include any letters of credit supporting
obligations under any Indebtedness having a final maturity of more than
one year from the date of incurrence of such Indebtedness;
(g) Indebtedness of a corporation which becomes a Subsidiary or
which is merged into the Company or any Subsidiary after the date HEREOF,
PROVIDED that (i) such Indebtedness existed at the time such corporation
became a Subsidiary or was so merged and was not created in anticipation
thereof and (ii) immediately after giving effect to the acquisition of
such corporation by the Company no Default or Event of Default shall have
occurred and be continuing;
(h) refinancing of existing Indebtedness of the Company or any
Restricted Subsidiary or other Indebtedness permitted under this SECTION
7.7 on terms and conditions (other than the rate) no less favorable to the
Company and not resulting in an Event of Default or DEFAULT HEREUNDER,
PROVIDED that the provisions of the applicable CLAUSE (OTHER THAN THIS
CLAUSE (H)) OF THIS SECTION 7.7 under which such Indebtedness is permitted
are satisfied after giving effect thereto;
(i) additional Indebtedness of the Company or any of its
Subsidiaries in the Homebuilding Segment (other than the Indebtedness
DESCRIBED IN THE SUBSECTIONS OF THIS SECTION 7.7 other than this
subsection) (i) having restrictive covenants no more restrictive or less
favorable to the Company than the terms and provisions hereof, or, if such
restrictive covenants are more restrictive or less favorable to the
Company (such covenants, the "More Restrictive Covenants") than the terms
and provisions hereof, then the Banks shall be entitled to the benefit of
the More Restrictive Covenants pursuant to an amendment to this Agreement,
(ii) having a final maturity of greater than one year from the date of
incurrence of such Indebtedness, and (iii) having no revolving credit or
other provisions for short-term repayment and REBORROWING, PROVIDED that
no more than an aggregate of $20,000,000 in principal of such Indebtedness
matures prior to the Maturity Date;
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(j) Indebtedness of any entity within the ▇▇▇▇▇▇ Financial Division
so long as there is no recourse in respect thereof to the Company or any
entity in the Homebuilding Segment or so long as any such recourse to the
Company or any entity within the Homebuilding segment is permitted
pursuant to Section 7.9;
(k) Indebtedness of the Company and any of its Subsidiaries incurred
to finance the acquisition of fixed or capital assets (whether pursuant to
a loan, a financing lease or otherwise), provided that such Indebtedness
shall be secured solely by the assets financed with the proceeds of such
Indebtedness;
(l) Indebtedness of the Company or any other entity in the
Homebuilding Segment in the form of reimbursement obligations in respect
of completion bonds issued for the account of the Company or such other
entity in the ordinary course of business of the Homebuilding Segment in
respect of construction projects undertaken by it; and
(m) Indebtedness of the Company or any other entity in the
Homebuilding Segment in the form of reimbursement obligations in respect
of letters of credit issued for the account of the Company or such other
entity for the benefit of employee benefit or employee insurance programs
of the Company or any of its Subsidiaries.
(n) Specified Debt.
7.8 LIMITATION ON LIENS. Neither the Company nor any Restricted Subsidiary
will create, incur, assume or suffer to exist any Lien of any nature upon any of
its property, assets or revenues, whether now owned or hereafter acquired,
except for:
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the Company or its
Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
which are not overdue for a period of more than 60 days or which are being
contested in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements;
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(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
Company or such Subsidiary;
(f) Liens securing Indebtedness of the Company and its subsidiaries
permitted by Section 7.7(C) OR 7.7(K) incurred to finance the acquisition
of Real Estate Inventory or fixed or capital assets or a refinancing
thereof pursuant to Section 7.7(G), provided that (i) such Liens shall be
created substantially simultaneously with the acquisition of such Real
Estate Inventory or fixed or capital assets (OR, in the case of a
refinancing pursuant to Section 7.7(H), such Liens shall be renewals or
replacements of Liens created substantially simultaneously with the
acquisition of such Real Estate Inventory or fixed or capital assets) and
(ii) such Liens do not at any time encumber any property other than the
property financed by such Indebtedness;
(g) Liens on the property or assets of a corporation which becomes a
Subsidiary or which is merged into the Company or a Subsidiary after the
date hereof securing Indebtedness permitted by Section 7.7(g) (or Section
7.7(h) in respect of such indebtedness), provided that (i) such Liens
existed at the time such corporation became a Subsidiary or was so merged
and were not created in anticipation thereof, (ii) any such Lien is not
spread to cover any additional property or assets of such corporation
after the time such corporation becomes a Subsidiary or is so merged, and
(iii) the amount of Indebtedness secured thereby is not increased;
(h) Liens on assets of the Financial Services Segment securing
indebtedness of the financial services segment permitted by Section 7.7(E)
OR 7.7(J); and
(i) judgment and other similar Liens arising in connection with
court proceedings, provided that (i) the execution or other enforcement
thereof is effectively stayed and the claims secured thereby are being
actively contested in good faith by appropriate proceedings and (ii) no
Default or Event of Default shall have occurred and be continuing.
7.9 LIMITATION ON GUARANTEE OBLIGATIONS. Neither the Company nor any
Restricted Subsidiary will create, incur, assume or suffer to exist any
Guarantee Obligation except:
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(a) the Company and other entities within the Homebuilding Segment
may incur Guarantee Obligations for the benefit of the ▇▇▇▇▇▇ Financial
Division;
(b) the entities within the Financial Services Segment may incur
other Guarantee Obligations;
(c) the Company and other entities within the Homebuilding Segment
may incur Guarantee Obligations in respect of letters of credit and
completion bonds permitted pursuant to subsection (l) or (m) of SECTION
7.7;
(d) Subsidiaries of the Company may incur Guarantee Obligations IN
RESPECT OF THE SPECIFIED DEBT, PROVIDED that simultaneously with the
execution and delivery of any guaranty in respect thereof by any
Subsidiary, such Subsidiary shall execute and deliver a substantially
identical guaranty in respect of all obligations of the Company under this
Agreement and the other Loan Documents; and
(e) the Company may incur Guarantee Obligations for the benefit of
Subsidiaries, Consolidated Joint Ventures and other joint ventures in each
case in the Homebuilding Segment.
7.10 LIMITATIONS OF FUNDAMENTAL CHANGES. Neither the Company nor any
Restricted Subsidiary will enter into any merger, consolidation or amalgamation,
or liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease, assign, transfer or otherwise dispose of,
all or substantially all of its property, business or assets, except:
(a) any Restricted Subsidiary of the Company may be merged or
consolidated with or into the company, provided that the company shall be
the continuing or surviving corporation, or with or into any one or more
wholly-owned restricted subsidiaries of the company, provided that the
wholly owned Restricted Subsidiary or Subsidiaries shall be the continuing
or surviving corporation;
(b) any wholly-owned Restricted Subsidiary may sell, lease, transfer
or otherwise dispose of any or all of its assets (upon voluntary
liquidation or otherwise) to the Company or any other wholly-owned
Restricted Subsidiary of the Company;
(c) the Company or any Restricted Subsidiary may sell, lease,
transfer or otherwise dispose of any or all of its assets to the Company
or any Restricted Subsidiary of the Company, whether existing on or
created after the date of this agreement, provided that if the transferor
is the Company or a Guarantor, the transferee shall be the Company or a
Guarantor; and
(d) sales, conveyances, leases, assignments, transfers or other
dispositions of property, business or assets permitted under Section 7.11.
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7.11 LIMITATION ON SALES OF ASSETS. Neither the Company nor any Restricted
Subsidiary will convey, sell, lease, assign, transfer or otherwise dispose of
any of its property, business or assets (including, without limitation, stock of
Subsidiaries, receivables and leasehold interests and, with respect to the
Financial Services Segment, its loan servicing portfolios), whether now owned or
hereafter acquired, except:
(a) obsolete or worn out property disposed of in the ordinary
course of business;
(b) the sale of inventory in the ordinary course of business;
(c) the sale or discount of accounts receivable arising in the
ordinary course of business in connection with the compromise or
collection thereof;
(d) the sale or discount without recourse of mortgage loan
receivables;
(e) the sale by the Financial Services Segment of its rights under
loan servicing portfolios;
(f) as permitted by Section 7.10 (other than pursuant to subsection
(d) thereof);
(g) the sale of mortgages and mortgage-backed or other securities by
the Financial Services Segment;
(h) the sale, transfer or other disposition of any stock, property
or assets of the Limited-Purpose Subsidiaries;
(i) the sale, transfer or other disposition of Cash Equivalents; and
(j) any other sale or disposition of property or assets (INCLUDING
STOCK OR ASSETS OF SUBSIDIARIES), PROVIDED that the aggregate book value
of all assets so sold or disposed of in any period of twelve consecutive
months shall not exceed 10% of the book value of the consolidated total
assets of the Company (excluding the assets of the Limited Purpose
Subsidiaries) as at the beginning of such twelve-month period.
7.12 LIMITATION ON DIVIDENDS. The Company will not declare or pay any
dividend (other than dividends payable solely in common stock of the Company)
on, or make any payment on account of, or set apart assets for a sinking or
other analogous fund for, the purchase, redemption, defeasance, retirement or
other acquisition of, any shares of any class of stock of the Company or any
warrants or options to purchase any such stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of the Company or
any Subsidiary (such declarations, payments, setting apart, purchases,
redemptions, defeasances, retirements, acquisitions and distributions being
herein called "restricted payments"), except that (a) the Company may make any
Restricted Payment so long as, after giving effect thereto, no Default or Event
of Default will be in existence and (b) the Company may in any event pay
dividends in respect of the Company's Series A ESOP Convertible Preferred Stock
for any period in any amount not exceeding the amount of principal and interest
payable to the Company for such period by the recipient of such dividends.
7.13 LIMITATION ON INVESTMENTS. Neither the Company nor any Restricted
Subsidiary will make any Investments, except:
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(a) extensions of trade credit and other payables in the ordinary
course of business and extensions of non-material advances for
Improvements to property not then owned by the Company in the ordinary
course of business provided that the Company shall give notice to the
Banks of any such non-material advances aggregating in excess of
$10,000,000 in any fiscal quarter;
(b) Investments in Cash Equivalents;
(c) acquisitions by the Company or any of its Restricted
Subsidiaries within the Homebuilding Segment of assets constituting a
BUSINESS UNIT OR THE CAPITAL STOCK OF ANY PERSON, PROVIDED that such
business unit or Person is engaged in the same general type of business as
conducted by the Company or one of its Restricted Subsidiaries and
PROVIDED, FURTHER, that before any such acquisition and after giving
effect thereto, no Default or Event of Default shall be in existence and
the Company shall, at its sole expense, have delivered to the
Administrative Agent not less than 10 days prior to the date of such
acquisition a certificate to such effect, in form and substance
satisfactory to the Administrative Agent, signed by a Responsible
Official;
(d) acquisitions by the Company or any of its Restricted
Subsidiaries other than acquisitions permitted under subsection (c) or (H)
OF THIS SECTION 7.13 of, or investments in, assets constituting a BUSINESS
UNIT OR THE CAPITAL STOCK OF ANY PERSON; PROVIDED, that the aggregate
amount of consideration paid by the Company and its Restricted
Subsidiaries for all such acquisitions of assets or capital stock
(including as a part of such consideration any Indebtedness assumed as a
part thereof) does not exceed an aggregate amount equal to $25,000,000;
AND PROVIDED, FURTHER, that after giving effect thereto, no Default or
Event of Default shall be in existence;
(e) (i) Investments by the Company or any of its Subsidiaries within
the Homebuilding Segment in joint ventures in an aggregate amount for all
such Investments not exceeding at any date an amount equal to the greater
of (A) 15% of the Company's Consolidated Tangible NET WORTH LESS the
aggregate amount of Investments (if any) by the Company or any of its
Subsidiaries within the Homebuilding Segment in joint ventures which are
in default in the payment of principal of or interest on non-recourse
Indebtedness or in the observance or performance of any other agreement or
condition relating to such non-recourse Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, the
effect of which default in observance or performance is to cause, or
permit the holder or holders of such non-recourse Indebtedness to cause,
with the giving of notice if required, such non-recourse Indebtedness to
become due prior to its stated maturity, or (B) $45,000,000;
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(f) Investments by the Company in any Subsidiary within the
Homebuilding Segment or by any Subsidiary within the Homebuilding Segment
in the Company or in any other Subsidiary within the Homebuilding Segment;
(g) Investments by the Company or any other entity within the
Homebuilding Segment in the Financial Services Segment;
(h) Investments by entities within the Financial Services Segment in
any Person and acquisitions of assets constituting a business unit or the
capital stock of any Person by entities within the Financial Services
Segment;
(i) loans and advances to employees of the Company or its
Subsidiaries for travel, entertainment and relocation expenses in the
ordinary course of business; and
(j) other loans and advances to employees of the Company in
connection with incentive or stock purchase plans or arrangements in an
aggregate amount not to exceed $3,000,000 at any time outstanding.
7.14 LIMITATION ON OPTIONAL PAYMENTS AND MODIFICATION OF DEBT
INSTRUMENTS.
(a) Neither the Company nor any Restricted Subsidiary will (i) make
any optional payment or prepayment on or redemption of any Subordinated
Debt or (ii) amend, modify or change, or consent or agree to any
amendment, modification or change to, any of the terms (including, without
limitation, the subordination terms) of any Subordinated Debt (other than
any such amendment, modification or change in form reasonably satisfactory
to the majority banks), provided that so long as no Default is in
existence or would result therefrom, the Company may prepay Subordinated
Debt to the extent that the aggregate face amount of the Subordinated Debt
so prepaid after the date of this Agreement does not exceed $25,000,000.
(b) No Restricted Subsidiary within the Financial Services Segment
will amend, modify or change, or consent or agree to any amendment,
modification or change to, any of the terms of any debt instrument to
which it is a party the effect of which would be to (i) impose
restrictions on the payment of dividends, directly or indirectly, to or
for the benefit of the Company which would limit such dividends to an
aggregate amount for all Restricted Subsidiaries in the Financial Services
Segment in any fiscal year which is less than the Combined Net Income of
the Financial Services Segment for the current fiscal year or (ii) impose
restrictions on the making by such Restricted Subsidiaries of Credit
Advances, directly or indirectly, to or for the benefit of the Company
which would limit such Credit Advances to an aggregate amount for all
Restricted Subsidiaries in the Financial Services Segment which is less
than $25,000,000 at any time OUTSTANDING, PROVIDED that provisions which
by their terms would impose such restrictions only in the event of a
default under such debt instrument and solely as a result of such default
shall not be deemed to be included in the restrictions described in the
foregoing clauses (i) or (ii).
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7.15 TRANSACTIONS WITH AFFILIATES. Neither the Company nor any Restricted
Subsidiary will enter into any transaction, including, without limitation, any
purchase, sale, lease or exchange of property or the rendering of any service,
with any Affiliate unless such transaction is otherwise permitted under this
Agreement, or is upon fair and reasonable terms no less favorable to the Company
or such Subsidiary, as the case may be, than it would obtain in a comparable
arm's-length transaction with a Person not an Affiliate.
7.16 FISCAL YEAR. The Company will not permit the fiscal year of the
Company to end on a day other than December 31.
7.17 COMPLIANCE WITH ERISA. Neither the Company nor any Restricted
Subsidiary will (a) terminate any Plan so as to result in any material liability
to the PBGC, (b) engage in any "prohibited transaction" (as defined in Section
4975 of the Code or Section 406 of ERISA) involving any Plan which would result
in a material liability for an excise tax or civil penalty in connection
therewith, (c) incur or suffer to exist any material "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not waived,
involving any Plan, or (d) allow or suffer to exist any event or condition which
presents a material risk of incurring a material liability to the PBGC by reason
of termination of any such Plan.
7.18 PREFERRED STOCK. The Company will not permit any Restricted
Subsidiary within the Homebuilding Segment to issue preferred stock to any
Person other than the Company.
ARTICLE 8: EVENTS OF DEFAULT AND REMEDIES UPON DEFAULT.
8.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following
events shall constitute an Event of Default hereunder:
(a) The Company shall fail to pay any principal of any Note when due
in accordance with the terms thereof or hereof; or the Company shall fail
to pay any interest on any Note, or any other amount payable hereunder,
within two days (or 15 days in the case of the Letter of Credit Fee or the
Issuance Fee or 5 days in the case of any other fee) after any such
interest or other amount becomes due in accordance with the terms thereof
or hereof; or
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(b) Any representation or warranty made or deemed made by the
Company or any Guarantor herein or in any other Loan Document or which is
contained in any certificate or document furnished at any time under or in
connection with this Agreement shall prove to have been incorrect in any
material respect on or as of the date made or deemed made; or
(c) The Company shall default in the observance or performance of
any agreement contained in article 7 (other than the Sections 7.5 and
7.6); or
(d) The Company shall default in the observance or performance of
any other agreement contained in this Agreement (other than as PROVIDED IN
PARAGRAPHS (A) THROUGH (C) OF THIS SECTION 8), and such default shall
continue unremedied (i) for a period of 90 days in the CASE OF SECTION 7.5
OR 7.6, or (ii) for a period of 30 days in the case of any other
provision; or
(e) The Company or any of its Restricted Subsidiaries shall (i)
default in any payment of principal of or interest on any Indebtedness
having an aggregate principal balance of $10,000,000 or more (other than
the Notes) or in the payment of any Guarantee Obligation of $10,000,000 or
more in the aggregate, beyond the period of grace (not to exceed 15 days),
if any, provided in the instrument or agreement under which such
Indebtedness or Guarantee Obligation was created; or (ii) default in the
observance or performance of any other agreement or condition relating to
any such Indebtedness or Guarantee Obligation or contained in any
instrument or agreement evidencing, securing or relating thereto, or any
other event shall occur or condition exist, the effect of which default or
other event or condition is to cause, or to permit the holder or holders
of such Indebtedness or beneficiary or beneficiaries of such Guarantee
Obligation (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, with the giving of notice if
required, such Indebtedness to become due prior to its stated maturity or
such Guarantee Obligation to become payable, provided that the failure by
Ryland Mortgage Company or any of its Subsidiaries to pay any such
Indebtedness or Guarantee Obligation in the form of reimbursement
obligations in respect of letters of credit issued for the account of
Ryland Mortgage Company or any of its Subsidiaries backing obligations
under master servicing agreements shall not constitute an Event of Default
under this subsection (e) until the date which is 90 days after the date
on which such reimbursement obligations become due and payable; or
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(f) (i) The Company or any of its Restricted Subsidiaries shall
commence any case, proceeding or other action (A) under any existing or
future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to
have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (B) seeking
appointment of a receiver, trustee, custodian, conservator or other
similar official for it or for all or any substantial part of its assets,
or the Company or any of its Restricted Subsidiaries shall make a general
assignment for the benefit of its creditors; or (ii) there shall be
commenced against the Company or any of its Restricted Subsidiaries any
case, proceeding or other action of a nature referred to in clause (i)
above which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced
against the Company or any of its Restricted Subsidiaries any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial
part of its assets which results in the entry of an order for any such
relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within 60 days from the entry thereof; or (iv) the Company
or any of its Restricted Subsidiaries shall take any action in furtherance
of, or indicating its consent to, approval of, or acquiescence in, any of
the acts set forth in clause (i), (ii), or (iii) above; or (v) the Company
or any of its Restricted Subsidiaries shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as
they become due; or
(g) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Company or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of
the Majority Banks, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Company or any
Commonly Controlled Entity shall, or in the reasonable opinion of the
Majority Banks is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan, or (vi) any other event or condition shall occur or exist with
respect to a Plan; and in each case in clauses (i) through (vi) above,
such event or condition, together with all other such events or
conditions, if any, could reasonably be expected to have a Material
Adverse Effect; or
(h) One or more judgments or decrees shall be entered against the
Company or any of its Restricted Subsidiaries involving in the aggregate a
liability (not paid or fully covered by insurance) of $10,000,000 or more
and all such judgments or decrees shall not have been vacated, discharged,
stayed or bonded pending appeal within 60 days from the entry thereof; or
(i) A Designated Event shall occur;
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(j) The Company shall cease to own, directly or indirectly and free
and clear of any Lien, 100% of the issued and outstanding capital stock of
▇▇▇▇▇▇ Homes of California, Inc. and Ryland Mortgage Company; or
(k) The Guaranty shall cease, for any reason, to be in full force
and effect, or the Company or any Guarantor shall so assert in writing.
8.2 REMEDIES. If any Event of Default occurs, the Administrative Agent
shall, at the request of, or may, with the consent of, the Majority Banks,
(a) declare the obligation of each Bank to make Loans and the
obligation of the Issuing Bank to issue Letters of Credit to be
terminated, whereupon such obligations shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans,
all interest accrued and unpaid thereon and all other amounts payable
under the Loan Documents to be due and payable forthwith, whereupon the
same shall become immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly
waived by the Company; and
(c) exercise on behalf of itself and the Banks all rights and
remedies available to it and the Banks under the Loan Documents or
applicable law;
PROVIDED, HOWEVER, that upon the occurrence of any event specified in clause (I)
OR (II) OF SUBSECTION (F) OF SECTION 8.1, the obligation of each Bank to make
Loans and the obligation of the Issuing Bank to issue Letters of Credit shall
automatically terminate and the unpaid principal amount of all outstanding Loans
and all interest and other amounts as aforesaid shall automatically become due
and payable without further act of the Administrative Agent or any Bank. Upon
the occurrence of any Event of Default, the Company shall immediately pay to the
Administrative Agent, for the benefit of the banks, an amount (the "l/c
obligations amount") equal to the aggregate outstanding L/C Obligations; and
upon receipt of the payment of the L/C Obligations Amount, the Administrative
Agent shall deposit such funds in an interest-bearing cash account (the "cash
account") in the name of the Company maintained with the Administrative Agent as
to which the Company shall have no right of withdrawal except as provided below.
The Company hereby irrevocably authorizes and directs the Administrative Agent
to apply amounts on deposit in the Cash Account against draws on the outstanding
Letters of Credit as such draws are made. Upon expiration of all Letters of
Credit and payment in full of all draws thereunder and all outstanding Loans and
other Obligations, the amounts then on deposit in the Cash Account and any
interest accrued thereon shall then be returned to the Company (to the extent
any funds remain in the Cash Account after application of such funds as provided
above.)
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8.3 RIGHTS NOT EXCLUSIVE. The rights and remedies of the Administrative
Agent and Banks provided for in this Agreement and the other Loan Documents are
cumulative and are not exclusive of any other rights, powers, privileges or
remedies provided by law or in equity, or under any other instrument, document
or agreement now existing or hereafter arising.
ARTICLE 9: THE ADMINISTRATIVE AGENT.
9.1 APPOINTMENT AND AUTHORIZATION. Each Bank hereby irrevocably appoints,
designates and authorizes the Administrative Agent to take such action in its
behalf under the provisions of this Agreement and each other Loan Document and
to exercise such powers and perform such duties as are expressly delegated to it
by the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary contained elsewhere in this Agreement or in any other Loan
Document, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the
Administrative Agent have or be deemed to have any fiduciary relationship with
any Bank, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against the Administrative Agent.
9.2 DELEGATION OF DUTIES. The Administrative Agent may execute any of its
duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.
9.3 LIABILITY OF AGENT. None of the Administrative Agent-Related
Persons shall:
(a) be liable for any action taken or omitted to be taken by any
of them under or in connection with this Agreement or any other Loan
Document or the transactions contemplated hereby (except for its own gross
negligence or willful misconduct), or
(b) be responsible in any manner to any of the Banks for any
recital, statement representation or warranty made by the Company or any
Subsidiary or Affiliate of the Company, or any officer thereof, contained
in this Agreement or in any other Loan Document, or in any certificate,
report, statement or other document referred to or provided for in, or
received by the Administrative Agent under or in connection with, this
Agreement or any other Loan Document, or for the value of or title to any
collateral, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any
failure of the Company or any other party to any Loan Document to perform
its obligations hereunder or thereunder.
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No Agent-Related Person shall be under any obligation to any Bank to ascertain
or to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books or records of the Company or any of the Company's
Subsidiaries or Affiliates.
9.4 RELIANCE BY AGENT.
(a) The Administrative Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, statement or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons, and upon advice and statements of legal counsel
(including counsel to the Company), independent accountants and other
experts selected by the Administrative Agent. The Administrative Agent
shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive
such advice or concurrence of each Bank as it deems appropriate and, if it
so requests, it shall first be indemnified to its satisfaction by the
Banks against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action. The
Administrative Agent shall in all cases be fully protected in acting, or
in refraining from acting, under this Agreement or any other Loan Document
in accordance with a request or consent of each Bank and such request and
any action taken or failure to act pursuant thereto shall be binding upon
all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Article 4, each Bank that has executed this Agreement shall
be deemed to have consented to, approved or accepted or to be satisfied
with, each document or other matter either sent by the Administrative
Agent to such Bank for consent, approval, acceptance or satisfaction, or
required thereunder to be consented to or approved by or acceptable or
satisfactory to the Bank.
9.5 NOTICE OF DEFAULT. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest and fees
required to be paid to the Administrative Agent for the account of the Banks,
unless the Administrative Agent shall have received written notice from a Bank
or the Company referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". The
Administrative Agent will notify the Banks of its receipt of any such notice.
The Administrative Agent shall take such action with respect to such Default or
Event of Default as may be requested by the majority banks in accordance with
article 8; provided, however, that unless and until the Administrative Agent has
received any such request, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable or in the best
interest of the Banks.
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9.6 CREDIT DECISION. Each Bank acknowledges that none of the
Administrative Agent-Related Persons has made any representation or warranty to
it, and that no act by the Administrative Agent hereinafter taken, including any
review of the affairs of the Company and its Subsidiaries, shall be deemed to
constitute any representation or warranty by any Agent-Related Person to any
Bank. Each Bank represents to the Administrative Agent that it has,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Company and
its Subsidiaries, the value of and title to any collateral, and all applicable
bank regulatory laws relating to the transactions contemplated hereby, and made
its own decision to enter into this Agreement and to extend credit to the
Company hereunder. Each Bank also represents that it will, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the Company.
Except for notices, reports and other documents expressly herein required to be
furnished to the Banks by the Administrative Agent, the Administrative Agent
shall not have any duty or responsibility to provide any Bank with any credit or
other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of the Company which may come
into the possession of any of the Administrative Agent-Related Persons.
9.7 INDEMNIFICATION. Whether or not the transactions contemplated hereby
are consummated, the Banks shall indemnify upon demand the Administrative
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Company and without limiting the obligations of the Company to do so), pro rata,
from and against any and all liabilities covered by any indemnification
hereunder; provided, however, that no Bank shall be liable for the payment to
the Administrative Agent-Related Persons of any portion of such liabilities
resulting solely from such Person's gross negligence or willful misconduct.
Without limitation of the foregoing, each Bank shall reimburse the
Administrative Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the Administrative
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Administrative
Agent is not reimbursed for such expenses by or on behalf of the Company. The
undertaking in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of the Administrative Agent.
9.8 AGENT IN INDIVIDUAL CAPACITY. BofA and its Affiliates may make loans
to, issue letters of credit for the account of, accept deposits from, acquire
equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Company and its
Subsidiaries and Affiliates as though BofA were not the Administrative Agent
hereunder and without notice to or consent of the Banks. Each Bank acknowledges
that, pursuant to such activities, BofA or its Affiliates may receive
information regarding the Company or its Affiliates (including information that
may be subject to confidentiality obligations in favor of the Company or such
Subsidiary) and acknowledges that the Administrative Agent shall be under no
obligation to provide such information to it. With respect to its Loans, BofA
shall have the same rights and powers under this Agreement as any other bank and
may exercise the same as though it were not the Administrative Agent, and the
terms "Bank" and "Banks" include BofA in its individual capacity.
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9.9 SUCCESSOR AGENT. The Administrative Agent may resign as Agent upon 30
days' notice to the Banks. If the Administrative Agent resigns under this
Agreement, the Majority Banks shall appoint from among the Banks a successor
agent for the Banks upon the written consent of the Company and the Banks (which
consents shall not be unreasonably withheld or delayed). If no successor agent
is appointed prior to the effective date of the resignation of the
Administrative Agent, the Administrative Agent may appoint a successor agent
from among the Banks upon the written consent of the Company and the Majority
Banks (which consents shall not be unreasonably withheld or delayed). Upon the
acceptance of its appointment as successor agent hereunder, such successor agent
shall succeed to all the rights, powers and duties of the retiring Agent and the
term "Agent" shall mean such successor agent and the retiring Agent's
appointment, powers and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Article 9 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. If no successor agent has accepted
appointment as Agent by the date which is 30 days following a retiring Agent's
notice of resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and the Banks shall perform all of the duties of the
Administrative Agent hereunder until such time, if any, as the Majority Banks
appoint a successor agent as provided for above.
9.10 WITHHOLDING TAX.
(a) If any Bank is a "foreign corporation, partnership or trust"
within the meaning of the Code and such Bank claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the
Code, such Bank agrees with and in favor of the Administrative Agent, to
deliver to the Administrative Agent and the Company:
(i) if such Bank claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly
completed IRS Forms 1001 and W-8 before the payment of any
interest in the first calendar year and before the payment of any
interest in each third succeeding calendar year during which
interest may be paid under this Agreement;
(ii) if such Bank claims that interest paid under this
Agreement is exempt from United States withholding tax because it
is effectively connected with a United States trade or business of
such Bank, two properly completed and executed copies of IRS Form
4224 before the payment of any interest is due in the first
taxable year of such Bank and in each succeeding taxable year of
such Bank during which interest may be paid under this Agreement,
and IRS Form W-9; and
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(iii) such other form or forms as may be required under the
Code or other laws of the United States as a condition to
exemption from, or reduction of, United States withholding tax.
Such Bank agrees to promptly notify the Administrative Agent of
any change in circumstances which would modify or render invalid any
claimed exemption or reduction.
(b) If any Bank claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form
1001 and such Bank sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of the Company to such bank in
accordance with Section 10.6, such Bank agrees to notify the
Administrative Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of the Company to such Bank. To the extent
of such percentage amount, the Administrative Agent will treat such Bank's
IRS Form 1001 as no longer valid.
(c) If any Bank claiming exemption from United States withholding
tax by filing IRS Form 4224 with the Administrative Agent sells, assigns,
grants a participation in, or otherwise transfers all or part of the
Obligations of the Company to such Bank in accordance with Section 10.6,
such Bank agrees to undertake sole responsibility for complying with the
withholding tax requirements imposed by Sections 1441 and 1442 of the
Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Administrative Agent may withhold from any interest
payment to such Bank an amount equivalent to the applicable withholding
tax after taking into account such reduction. If the forms or other
documentation required by subsection (a) of this Section are not delivered
to the Administrative Agent, then the Administrative Agent may withhold
from any interest payment to such Bank not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Administrative Agent
did not properly withhold tax from amounts paid to or for the account of
any Bank (because the appropriate form was not delivered, was not properly
executed, or because such Bank failed to notify the Administrative Agent
of a change in circumstances which rendered the exemption from, or
reduction of, withholding tax ineffective, or for any other reason) such
Bank shall indemnify the Administrative Agent fully for all amounts paid,
directly or indirectly, by the Administrative Agent as tax or otherwise,
including penalties and interest, and including any taxes imposed by any
jurisdiction on the amounts payable to the Administrative Agent under this
Section, together with all costs and expenses (including Attorney Costs).
The obligation of the Banks under this subsection shall survive the
payment of all Obligations and the resignation or replacement of the
Administrative Agent.
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9.11 PERFORMANCE BY THE ADMINISTRATIVE AGENT. In the event that the
Company shall default in or fail to perform any of its obligations under the
Loan Documents, which default is not cured within any applicable cure period,
the Administrative Agent shall have the right, but not the duty, without
limitation upon any of the Administrative Agent's or the Banks rights pursuant
thereto, to perform the same, and the Company agrees to pay to the
Administrative Agent within five (5) Banking Days after demand, all reasonable
costs and expenses incurred by the Administrative Agent in connection therewith,
including without limitation reasonable Attorney Costs, together with interest
thereon from the date which is five (5) Banking Days after demand until paid at
a rate per annum equal to the reference rate plus 2%.
9.12 ACTIONS. The Administrative Agent shall have the right to commence,
appear in, and defend any action or proceeding purporting to affect the rights
or duties of the Banks hereunder or the payment of any funds, and in connection
therewith the Administrative Agent may pay necessary expenses, employ counsel,
and pay Attorney Costs. The Company agrees to pay to the Administrative Agent,
within five (5) Banking Days after demand, all reasonable costs and expenses
incurred by the Administrative Agent in connection therewith, including without
limitation reasonable Attorney Costs, together with interest thereon from the
date which is 5 Banking Days after demand until paid at a rate per annum equal
to the reference rate plus 2%.
9.13 SYNDICATION AGENT AND CO-AGENTS. Notwithstanding anything contained
herein which may be construed to the contrary, none of the Syndication Agent,
the Co-Agents, the Arranger, the Co-Lead Arranger, the Book Manager and the
Co-Book Manager shall exercise any of the rights or have any of the
responsibilities of the Administrative Agent hereunder, or any other rights or
responsibilities other than their respective rights and responsibilities as
Banks hereunder.
ARTICLE 10: MISCELLANEOUS.
10.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Company therefrom, shall be effective unless the same shall be
in writing and signed by the Majority Banks (or by the Administrative Agent at
the written request of the Majority Banks) and the Company and acknowledged by
the Administrative Agent, and then any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided, however, that no such waiver, amendment, or consent shall, unless in
writing and signed by all the Banks and the Company and acknowledged by the
Administrative Agent, do any of the following:
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(a) increase or extend the Commitment of any Bank, unless such
Bank has consented thereto in writing;
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees or other
amounts due to the Banks (or any of them) hereunder or under any other
Loan Document;
(c) reduce the principal of, or the rate of interest specified
herein on, any Loan, the amount of the L/C Obligations, or any fees or
other amounts payable hereunder or under any other Loan Document;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which is required for the Banks or
any of them to take any action hereunder;
(e) amend the percentages set forth in Section 2.5(b) used in the
calculation of the Borrowing Base;
(f) amend the definition of Majority Banks;
(g) amend this Section or any provision herein providing for
consent or other action by all Banks;
(h) discharge any Guarantor; or
(i) amend, or perform any act pursuant to, any provision herein
expressly requiring the consent of each Bank;
AND, PROVIDED FURTHER, that no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Majority Banks
or all the Banks, as the case may be, affect the rights or duties of the
Administrative Agent under this Agreement or any other Loan Document. Each Bank
shall bear its Pro Rata Share of all costs and expenses incurred in any
amendment, waiver or consent pursuant to this Agreement not reimbursed by the
Company.
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10.2 COSTS, EXPENSES AND TAXES. Subject to the proviso, the Company shall
pay on demand the reasonable costs and expenses of the Administrative Agent and
the Banks in connection with the negotiation, preparation, execution, delivery,
administration, amendment, waiver and enforcement of the Loan Documents and any
matter related thereto and any litigation or dispute with respect thereto
(including any bankruptcy or similar proceedings), including without limitation
attorney's fees and disbursements; provided, however, that the Company shall not
be liable for any expenses of any Bank other than BofA (for itself and as Agent)
in connection with the negotiation, preparation, execution, delivery and
administration of the Loan Documents (provided further, that the immediately
preceding proviso shall not be deemed to limit the right of each Bank to payment
from the Company of all reasonable costs and expenses incurred by each Bank as
aforesaid in connection with any and all future amendments, waivers, enforcement
actions, litigation, negotiations and other actions or matters other than
assignments or participations with respect to which the only amounts payable
shall be the processing fee owing pursuant to Section 10.6(A) relating to the
Loans and Loan Documents). Any amount payable to the Administrative Agent and
the banks under this Section 10.2 shall, from the date of demand for payment,
and any other amount payable to the Administrative Agent under the Loan
Documents which is not paid when due or within any applicable grace period
shall, thereafter, bear interest at the rate in effect under each Note with
respect to ABR Borrowings.
10.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no delay
in exercising, on the part of the Administrative Agent or any Bank, any right,
remedy, power or privilege hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege.
10.4 PAYMENTS SET ASIDE. To the extent that the Company makes a payment to
the Administrative Agent or the Banks, or the Administrative Agent or the Banks
exercise their right of set-off, and such payment or the proceeds of such
set-off or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by the Administrative Agent or such Bank in its
discretion) to be repaid to a trustee, receiver or any other party, in
connection with any bankruptcy, insolvency, reorganization, arrangement,
moratorium or other similar proceeding relating to or affecting creditors'
rights generally or otherwise, then (a) to the extent of such recovery the
obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or
such set-off had not occurred, and (b) each Bank severally agrees to pay to the
Administrative Agent upon demand its Pro Rata Share of any amount so recovered
from or repaid by the Administrative Agent.
10.5 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Company may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of the Administrative Agent and each Bank, and no Bank may assign or
transfer any of its rights or obligations under this Agreement except in
accordance with Section 10.6.
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10.6 ASSIGNMENTS, PARTICIPATIONS, ETC.
(a) Any Bank may, with the written consent of (i) the Company at
all times other than during the existence of an Event of Default (which
consent shall not be unreasonably withheld or delayed) and (ii) the
Administrative Agent (which consent shall not be unreasonably withheld or
delayed), at any time assign and delegate to one or more Eligible
Assignees (provided that no written consent of the Company or the
Administrative Agent shall be required in connection with any assignment
and delegation by a Bank to an Eligible Assignee that is an affiliate of
such Bank) which have not been a party to any material litigation with the
Administrative Agent or the Company (each an "assignee") all, or any
ratable part of all, of the Loans, the Commitments and the other rights
and obligations of such Bank hereunder, in an initial minimum amount of
$10,000,000 in the case of a partial assignment and in increments of
$5,000,000 in excess thereof in the case of a partial assignment;
provided, however, that (A) each Bank (including each Eligible Assignee)
must retain a Commitment of not less than $15,000,000 after giving effect
to such assignment unless its Commitment has been reduced to zero by such
assignment (except for the Banks which act as the Administrative Agent and
Syndication Agent, respectively, which each must retain a Commitment of
not less than $50,000,000, except if such Banks resign as Administrative
Agent or Syndication Agent, as applicable), and (B) the Company and the
Administrative Agent may continue to deal solely and directly with such
Bank in connection with the interest so assigned to an Assignee until (1)
written notice of such assignment, together with payment instructions,
addresses and related information with respect to the Assignee, shall have
been given to the Company and the Administrative Agent by such Bank and
the Assignee; (2) such Bank and its Assignee shall have delivered to the
Company and the Administrative Agent an assignment and acceptance in the
form of exhibit "f" ("assignment and acceptance") together with any Note
or Notes subject to such assignment and (3) the assignor Bank or Assignee
has paid to the Administrative Agent a processing fee in the amount of
$3,500. All costs and expenses incurred by an assigning Bank in such
assignment shall be borne by such Bank.
(b) From and after the date that the Administrative Agent notifies
the assignor Bank that it has received (and provided its consent with
respect to and received the consent of the Company to the extent required
with respect to) an executed Assignment and Acceptance and payment of the
above-referenced processing fee, (i) the Assignee thereunder shall be a
party hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and Acceptance, shall have
the rights and obligations of a Bank under the Loan Documents, and (ii)
the assignor Bank shall, to the extent that rights and obligations
hereunder and under the other Loan Documents have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Loan Documents.
-81-
(c) Within five Banking Days after its receipt of notice by the
Administrative Agent that it has received an executed Assignment and
acceptance and all necessary tax forms under Section 9.10 and payment of
the processing fee (and provided that it consents to such assignment in
accordance with Section 10.6(A)), the Company shall execute and deliver to
the Administrative Agent, new Notes evidencing such Assignee's assigned
Loans and Commitment and, if the assignor Bank has retained a portion of
its Loans and its Commitment, replacement Notes in the principal amount of
the Loans retained by the assignor Bank (such Notes to be in exchange for,
but not in payment of, the Notes held by such Bank). Immediately upon each
Assignee's making its processing fee payment under the Assignment and
Acceptance, this Agreement shall be deemed to be amended to the extent,
but only to the extent, necessary to reflect the addition of the Assignee
and the resulting adjustment of the Commitments arising therefrom. The
Commitment allocated to each Assignee shall reduce such Commitment of THE
assigning bank pro tanto.
(d) Any Bank may, with the written consent of (i) the Company at
all times other than during the existence of an Event of Default (which
consent shall be at the Company's sole and absolute discretion) and (ii)
the Administrative Agent (which consent shall not be unreasonably withheld
or delayed), at any time sell to one or more commercial banks or financial
institutions (a "participant") participating interests in any Loans, the
Commitment of that Bank and the other interests of that bank (the
"originating bank") hereunder and under the other loan documents;
provided, however, that (A) the originating Bank's obligations under this
Agreement shall remain unchanged, (B) the originating Bank shall remain
solely responsible for the performance of such obligations, (C) the
Company and the Administrative Agent shall continue to deal solely and
directly with the originating Bank in connection with the originating
Bank's rights and obligations under this Agreement and the other Loan
Documents, and (D) no Bank shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment
to, or any consent or waiver with respect to, this Agreement or any other
Loan Document, except to the extent such amendment, consent or waiver
would require unanimous consent of the Banks as described in clause (b),
(c) OR (G) of the first proviso to section 10.1. in the case of any such
participation, the participant shall be entitled to the benefit of
Sections 3.5, 3.7 and 10.12 as though it were also a Bank hereunder, and,
if amounts outstanding under this Agreement are due and unpaid, or shall
have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in
amounts owing under this Agreement to the same extent as if the amount of
its participating interest were owing directly to it as a Bank under this
Agreement.
(e) Each Bank agrees to take normal and reasonable precautions and
exercise due care to maintain the confidentiality of all information
identified as "confidential" or "secret" by the Company and provided to it
by the Company or any Subsidiary, or by the Administrative Agent on such
Company's or Subsidiary's behalf, under this Agreement or any other Loan
Document, and neither it nor any of its Affiliates shall use any such
information other than in connection with or in enforcement of this
Agreement and the other Loan Documents; except to the extent such
information (i) was or becomes generally available to the public other
than as a result of disclosure by the Bank, or (ii) was or becomes
available on a non-confidential basis from a source other than the
Company, provided that such source is not bound by a confidentiality
agreement with the Company known to the Bank; provided, however that any
Bank may disclose such information (A) at the request or pursuant to any
requirement of any Governmental Authority to which the Bank is subject or
in connection with an examination of such Bank by any such authority; (B)
pursuant to subpoena or other court process; (C) when required to do so in
accordance with the provisions of any applicable Requirement of Law; (D)
to the extent reasonably required in connection with any litigation or
proceeding to which the Administrative Agent, any Bank or their respective
Affiliates may be party; (E) to the extent reasonably required in
connection with the exercise of any remedy hereunder or under any other
Loan Document; (F) to such Bank's independent auditors and other
professional advisors; (G) to any Participant or Assignee, actual or
potential, provided that such Person agrees in writing to keep such
information confidential to the same extent required of the Banks
hereunder, and (H) as to any Bank, as expressly permitted under the terms
of any other document or agreement regarding confidentiality to which the
Company is party or is deemed party with such Bank.
-82-
(f) Notwithstanding any other provision in this Agreement, any
Bank may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement and the Note
held by it in favor of any Federal Reserve Bank in accordance with
Regulation A of the FRB or U.S. Treasury Regulation 31 CFR ss.203.14, and
such Federal Reserve Bank may enforce such pledge or security interest in
any manner permitted under applicable Law.
10.7 SET-OFF. In addition to any rights and remedies of the Banks provided
by Law, if an Event of Default exists or the Loans have been accelerated, each
Bank is authorized at any time and from time to time, without prior notice to
the Company, any such notice being waived by the Company to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final excluding the Company's customer trust
accounts) at any time held by, and other indebtedness at any time owing by, such
Bank to or for the credit or the account of the Company against any and all
Obligations owing to the Banks, now or hereafter existing, irrespective of
whether or not the Administrative Agent or such Bank shall have made demand
under this Agreement or any Loan Document and although such Obligations may be
contingent or unmatured. Each Bank agrees promptly to notify the Company and the
Administrative Agent after any such set-off and application made by such bank;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application.
-83-
10.8 NOTIFICATION OF ADDRESSES, LENDING OFFICES, ETC. Each Bank shall
notify the Administrative Agent in writing of any changes in the address to
which notices to the Bank should be directed, of addresses of any Lending
Office, of payment instructions in respect of all payments to be made to it
hereunder and of such other administrative information as the Administrative
Agent shall reasonably request.
10.9 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties of the Company contained herein or in any certificate or other
writing delivered by or on behalf of the Company pursuant to any Loan Document
will survive the making and repayment of the Loans and the execution and
delivery of each Note, and have been or will be relied upon by each Bank,
notwithstanding any investigation made by such Bank or on its behalf.
10.10 NOTICES. Except as otherwise provided herein or in each Note:
(a) all notices, requests, demands, directions and other
communications provided for hereunder and under each Note must be in
writing and must be mailed, telecopied, delivered or sent by telex or
cable to the appropriate party at the address set forth on the signature
pages of this Agreement or, as to any party, at any other address as may
be designated by it in a written notice sent to the other party in
accordance with this Section 10.10, and
(b) if any notice, request, demand, direction or other
communication is given by mail it will be effective on the earlier of
receipt or the third calendar day after deposit in the United States mails
with first class or airmail postage prepaid; if given by telecopier, when
received by the recipient; if given by cable, when delivered to the
telegraph company with charges prepaid; if given by telex, when sent; or
if given by personal delivery, when delivered.
10.11 INDEMNITY BY THE COMPANY. The Company agrees to indemnify, save and
hold harmless each Bank, the Administrative Agent and their directors, officers,
agents, attorneys and employees (collectively the "INDEMNITEES") from and
against (a) any and all claims, demands, actions or causes of action that are
asserted against any indemnitee by any Person if the claim, demand, action or
cause of action directly or indirectly relates to a claim, demand, action or
cause of action that the Person has or asserts against the Company or any
officer, director or shareholder of the Company, and (b) any and all
liabilities, losses, costs or expenses (including Attorney Costs) that any
indemnitee suffers or incurs as a result of the assertion of any such claim,
demand, action or cause of action, other than any such liabilities, losses,
costs and expenses arising from the gross negligence or willful misconduct of
the indemnitee.
10.12 INTEGRATION AND SEVERABILITY. This Agreement and the other Loan
Documents comprise the complete and integrated agreement of the parties on the
subject matter hereof and supersede all prior agreements, written or oral, on
the subject matter hereof. Any provision in any Loan Document that is held to be
inoperative, unenforceable or invalid in any jurisdiction shall, as to that
jurisdiction, be inoperative, unenforceable or invalid without affecting the
remaining provisions or the operation, enforceability or validity of that
provision in any other jurisdiction, and to this end the provisions of the Loan
Documents are declared to be severable.
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10.13 COUNTERPARTS. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
10.14 NO THIRD PARTIES BENEFITED. This Agreement is made and entered into
for the sole protection and legal benefit of the Company, the Banks, the
Administrative Agent and the Administrative Agent-Related Persons, and their
permitted successors and assigns, and no other Person shall be a direct or
indirect legal beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any of the other Loan Documents.
10.15 SECTION HEADINGS. Section headings in this Agreement are included
for convenience of reference only and are not part of this Agreement for any
other purpose.
10.16 FURTHER ACTS BY THE COMPANY. The Company agrees, at its own expense,
to do such acts and execute and deliver such documents as any Bank, acting
through the Administrative Agent, from time to time reasonably requires for the
purpose of carrying out the intention or facilitating the performance of the
terms hereof.
10.17 TIME OF THE ESSENCE. Time is of the essence of the Loan Documents.
10.18 GOVERNING LAW. The loan documents shall be governed by, and
construed and enforced in accordance with, the internal laws of the state of
illinois without regard to the conflict of law provisions thereof.
10.19 SUBMISSION TO JURISDICTION. The Company hereby irrevocably and
unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for the recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction of
the courts of the State of Illinois, the courts of the United States of
America for the Northern District of Illinois, and appellate courts
therefrom;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same;
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(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to the Company at its address set forth on the signature page of
this Agreement or at such other address as may be designated by it in a
written notice to the Administrative Agent in accordance with Section
10.11; and
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to ▇▇▇ in any other jurisdiction.
10.20 WAIVER OF JURY TRIAL. THE COMPANY, THE ADMINISTRATIVE AGENT AND THE
BANKS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE NOTES OR ANY OTHER LOAN
DOCUMENT AND FOR COUNTERCLAIMS THEREIN.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
THE COMPANY:
THE ▇▇▇▇▇▇ GROUP, INC., a Maryland
corporation
By: ________________________
[Printed Name and Title]
By: ________________________
[Printed Name and Title]
Address for Notices:
The ▇▇▇▇▇▇ Group, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Treasurer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier:(▇▇▇) ▇▇▇-▇▇▇▇
-87-
THE BANKS:
BANK OF AMERICA, N.A., a national
banking association, as Administrative
Agent and a Bank
By:
[Printed Name and Title]
Address for Notices:
Bank of America, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier:(▇▇▇) ▇▇▇-▇▇▇▇
LIBOR Lending Office:
Bank of America, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier:(▇▇▇) ▇▇▇-▇▇▇▇
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GUARANTY FEDERAL BANK, F.S.B.,
as Co-Agent and a Bank
By: _______________________________
Name: ______________________________
Title:_______________________________
BANK ONE, NA, as Syndication Agent
and a Bank (Main Office Chicago)
By: _____________________________
Name: ____________________________
Title: ____________________________
FIFTH THIRD BANK, as a Bank
By: ______________________________
Name: ____________________________
Title: ____________________________
BANK UNITED, as Co-Agent and a Bank
By: _____________________________
Name: ___________________________
Title: ___________________________
PNC BANK, NATIONAL ASSOCIATION,
as a Bank
By: ______________________________
Name: ____________________________
Title: ____________________________
ALLFIRST BANK, as a Bank
By: _______________________________
Name: ____________________________
Title: ____________________________
COMERICA BANK, as a Bank
By: ______________________________
Name: _____________________________
Title: _____________________________
SUNTRUST BANK, ATLANTA,
as a Bank
By: ________________________________
Name: ______________________________
Title: ______________________________
WACHOVIA BANK, N.A.,
as a Bank
By: ______________________________
Name: ___________________________
Title: ___________________________
ANNEX I
COMMITMENTS OF THE BANKS
BANK GROUP MEMBERS
-------------------------------------------------------------------------------
BANK AMOUNT % SHARE
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Bank of America, N.A. $ 75,000,000.00 20.000000001 %
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Bank One, NA $ 75,000,000.00 20.000000000 %
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Guaranty Federal Bank, $ 50,000,000.00 13.333333333 %
F.S.B.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Bank United $ 50,000,000.00 13.393333333 %
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
PNC Bank, National $ 30,000,000.00 8.000000000 %
Association
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Wachovia Bank $ 25,000,000.00 6.666666667 %
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Fifth Third Bank $ 20,000,000.00 5.333333333 %
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
SunTrust Bank, Atlanta $ 20,000,000.00 5.333333333 %
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Allfirst Bank $ 15,000,000.00 4.000000000 %
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Comerica Bank $ 15,000,000.00 4.000000000 %
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
ANNEX II
GUARANTORS
▇▇▇▇▇▇ Homes of California, Inc.
Ryland Communities, Inc.
▇▇▇▇▇▇ Homes Investment - Texas, Inc.
RH Investment of Indiana, Inc.
ANNEX III
ILLUSTRATION OF UNUSED FEES
NON-USE FEE "A"
-------------------------------------------------------------------------------
Example 1 $200,000,000 outstanding $175,000,000 available
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Non-use Fee "A" =($187,500,000-$200,000,000)*15bps
=-($12,500,000) *15pbs =$0
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Example 2 $100,000,000 outstanding $275,000,000 available
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Non-use Fee "A" =($187,500,000-$100,000,000)*15pbs
= ($ 87,500,000)*15bps = $131,250
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
NON-USE FEE "B"
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Example 1 $200,000,000 outstanding $175,000,000 available
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Non-use Fee "B" =($375,000,000-$200,000,000)*10pb
=($175,000,000)*10bps = $175,000
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Example 2 $100,000,000 outstanding $275,000,000 available
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Non-use Fee "B" =($375,000,000-$187,500,000)*10bps
=($187,500,000)*10bps = $187,500
------------------------------------------------------------------------------
SCHEDULE 2.9.1
EXISTING LETTERS OF CREDIT
--------------------------------------------------------------------------------
THE ▇▇▇▇▇▇ GROUP INC.
OUTSTANDING LETTERS OF CREDIT
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L/C NO. BENEFICIARY NAME AMOUNT EFF. DATE EXP. DATE
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L000870 Loudoun Co Board $26,000.00 5/3/95 04/28/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L000936 City of Crystal Lake $24,005.60 8/23/93 08/22/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L000938 City of Crystal Lake $12,964.75 8/23/93 08/22/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L000945 Bd of County Supervisor $5,000.00 6/12/95 02/09/01
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L001141 Loudoun Co Board $25,000.00 5/9/94 05/03/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L001181 Lake in the hills $23,300.00 6/20/94 06/15/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L041941 Village of Grayslake $937,364.00 9/15/95 09/14/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L041942 Village of Grayslake $725,175.00 9/15/95 09/14/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L041943 Village of Grayslake $486,156.00 9/15/95 09/14/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L042050 Village of West Dundee $269,073.75 10/20/95 10/19/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L906750 Baltimore County, MA $20,000.00 4/4/96 04/03/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L917770 New Wildwood Park $42,300.00 10/24/96 12/31/99
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L919278 ▇▇▇▇▇▇▇▇/▇▇▇▇▇▇▇▇ $40,000.00 11/25/96 11/21/99
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L919279 ▇▇▇▇▇▇▇▇/▇▇▇▇▇▇▇▇ $30,000.00 11/25/96 11/21/99
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L919310 Village of Lake in the $28,350.00 12/11/96 12/11/99
hills
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L920569 ▇▇▇▇▇▇▇ Title Company $148,500.00 5/9/97 05/09/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L920738 City of Maple Grove $10,000.00 7/24/97 07/23/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L920768 Ashburn Village Develop $100,000.00 9/8/97 08/24/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L920771 Farmington Village $45,000.00 8/28/97 08/28/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L920843 Gray,Harris and ▇▇▇▇▇ $245,000.00 10/16/97 10/16/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L920844 First American Title $64,055.00 10/17/97 03/31/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L920851 Village of Arlington $180,530.00 10/23/97 10/01/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L920852 Village of Arlington $275,500.00 10/23/97 10/01/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L920857 Quail Run South $61,600.00 10/28/97 10/28/99
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L920863 Commissioner of Ins $100,000.00 10/30/97 10/29/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L920864 Commissioner of Ins $565,250.00 10/30/97 10/29/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L920865 Commissioner of Ins $150,000.00 10/30/97 10/29/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L920866 Commissioner of Ins $50,000.00 10/30/97 10/29/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L920867 Commissioner of Ins $100,000.00 10/30/97 10/29/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L920868 Commissioner of Ins $5,000.00 10/30/97 10/29/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L920911 ▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc $49,500.00 12/8/97 12/08/99
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L920912 ▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc $83,500.00 12/8/97 12/08/99
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L920928 Village of Lake in the $55,000.00 12/12/97 12/12/99
Hills
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L920937 ▇▇▇▇▇▇▇▇▇ Highland $44,000.00 12/16/97 12/13/99
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L920945 ▇▇▇▇▇▇▇▇ ▇▇▇▇, Inc $250,000.00 12/18/97 12/18/99
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L970587 ▇▇▇▇ Development Corp $50,000.00 1/23/98 01/23/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L970618 Village of Arlington $66,664.43 2/11/98 08/10/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L970626 ▇▇▇▇▇▇-▇▇▇▇▇ Venture $100,000.00 2/13/98 02/13/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L970665 Gray,Harris and ▇▇▇▇▇ $100,000.00 3/4/98 03/04/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L970676 Village of Schaumburg $2,000.00 3/9/98 03/09/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L970697 Commissioner of Ins $300,000.00 3/27/98 03/31/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L970745 Canyon Valley, Ltd $50,000.00 4/22/98 07/15/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L970777 Cornerstone Title Co $300,000.00 5/5/98 05/04/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L970783 ▇▇▇▇▇▇▇▇▇ Highland $26,000.00 5/6/98 05/06/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L970785 Village of Lindenhurst $424,255.00 5/7/98 05/07/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L970805 Escrow Agt:▇▇▇▇▇ ▇▇▇▇▇▇ $100,000.00 5/21/98 05/21/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L970808 Smith,Ronick,▇▇▇▇▇▇ $50,000.00 5/22/98 05/22/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L970809 Smith,Ronick,▇▇▇▇▇▇ $50,000.00 5/22/98 05/22/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L970810 ▇▇▇▇▇▇▇▇▇ Westchase $61,500.00 5/22/98 05/22/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L970852 City of Maple Grove $53,500.00 6/16/98 02/01/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L970853 City of Maple Grove $516,700.00 6/16/98 02/01/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L970867 Fairways of Blackhawk $150,000.00 6/23/98 06/25/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L970875 Cornerstone Title Co $100,000.00 6/25/98 06/25/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000229 Cornerstone Title Co $21,000.00 8/17/98 08/17/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000180 Commonwealth Land Title $300,000.00 7/31/98 03/31/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000108 Multiple Insurance $211,788.00 7/13/98 07/12/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000144 ▇▇▇▇▇▇▇▇/▇▇▇▇▇▇▇▇ $100,000.00 7/23/98 07/23/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000135 Republic Bank $199,900.00 7/20/98 07/20/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000225 Village of Antioch 2,490,040.88 8/14/98 08/13/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000308 City of Maple Grove $478,400.00 9/14/98 02/01/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000318 Vallecitos Water Dist $100,000.00 9/16/98 09/15/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000327 City of Euless $50,000.00 9/18/98 09/30/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000230 ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ Part $150,000.00 8/17/98 12/31/01
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000342 Perfection Partners $202,000.00 9/28/98 09/28/99
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000356 City of Maple Grove $97,000.00 10/5/98 02/01/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000377 Spenceola Belleview $70,000.00 10/14/98 10/15/99
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000460 Cornerstone Title Co $10,000.00 11/13/98 11/12/99
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000525 Cornerstone Title Co $79,000.00 12/3/98 12/03/99
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000546 Cornerstone Title Co $137,500.00 12/9/98 12/09/99
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000582 Village of Lindenhurst $1,000,723.00 12/22/98 12/22/99
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000583 Cornerstone Title Co $10,000.00 12/22/98 12/22/99
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000584 ▇▇▇▇▇▇▇▇/▇▇▇▇▇▇▇▇ $188,000.00 12/22/98 12/22/99
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L523603 Pasco County Board $408,141.44 11/30/98 12/02/99
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L523605 Pasco County Board $292,185.00 11/30/98 12/02/99
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L940847 Pasco County (Iso FA) $6,323.25 11/30/98 01/25/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L940848 Pasco County (Iso FA) $23,827.13 11/30/98 01/25/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L940849 Pasco County (Iso FA) $24,562.50 11/30/98 01/25/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L940850 Pasco County (Iso FA) $11,065.20 11/30/98 01/25/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
L940851 Regency Communities $29,914.82 11/30/98 01/25/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000650 Imperial Partners $199,900.00 1/21/99 01/21/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000651 Lumberman's Investment $138,240.00 1/21/99 01/21/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000685 ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Int $800,000.00 2/1/99 02/01/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000697 ▇▇▇▇▇ Creek Section $348,000.00 2/4/99 12/31/99
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000663 Gray,Harris and ▇▇▇▇▇ $390,000.00 1/27/99 01/27/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000664 Gray,Harris and ▇▇▇▇▇ $874,500.00 1/27/99 01/27/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000671 Cornerstone Title Co $250,000.00 1/27/99 01/27/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000672 Smith,Ronick,▇▇▇▇▇▇ $200,000.00 1/27/99 01/27/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000715 First American Title $467,000.00 2/9/99 02/01/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000717 City of Apopka $4,500.00 2/10/99 02/12/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000763 Mew Haven, Inc $62,000.00 3/2/99 03/05/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000797 Spenceola Belleview $10,000.00 3/15/99 03/15/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000826 SSS Holdings, LLP $100,000.00 3/26/99 12/31/99
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000864 Cornerstone Title Co $132,000.00 4/14/99 04/14/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000867 Thornwood Associates $100,000.00 4/15/99 07/30/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000869 Thornwood Associates $100,000.00 4/15/99 12/31/99
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000878 Pecan 840, LTD. $150,000.00 4/19/99 07/30/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000883 ▇▇▇▇▇▇▇ ▇▇▇▇▇ $40,000.00 4/22/99 04/10/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000887 Encino 219, LTD $20,000.00 4/23/99 04/23/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000888 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ $25,000.00 4/23/99 04/23/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000902 Smith,Ronick,Corb $50,000.00 4/27/99 04/27/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000940 ▇▇▇▇▇▇▇▇▇ Westchase $144,000.00 5/7/99 05/07/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000976 Smith,Ronick,Corb $50,000.00 5/19/99 05/19/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C000999 Prince George's Center $200,000.00 6/1/99 06/01/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001000 Cornerstone Title Co $10,000.00 6/1/99 06/01/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001001 ▇▇▇▇▇▇ Trust and Savings $4,830,000.00 6/2/99 06/04/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001009 First American Title $700,000.00 6/3/99 06/01/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001016 Heritage Renaisance $150,000.00 6/3/99 06/03/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001017 Aurora National Bank $100,000.00 6/3/99 06/03/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001023 Fidelity National Title $10,000.00 6/7/99 06/07/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001062 Horizon Investment $1,200,000.00 6/16/99 06/16/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001076 Village of Streamwood $3,557,156.00 6/22/99 06/22/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001116 Spenceola Belleview $50,000.00 7/6/99 07/06/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001118 Commissioner of Ins $29,750.00 7/7/99 07/07/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001170 City of Mesa $166,031.00 7/20/99 07/20/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001171 ▇▇▇▇▇▇▇▇▇ Greatwood $296,000.00 7/20/99 07/20/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001172 Prince George's Center $150,000.00 7/20/99 07/20/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001181 Elkton-Wolf Limited $475,000.00 7/21/99 07/21/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001182 ▇▇▇▇▇▇▇▇ W, LLC $240,000.00 7/21/99 07/21/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001193 Ashburn Village Develop $180,000.00 7/27/99 07/27/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001203 Linowes and ▇▇▇▇▇▇▇ $150,000.00 7/28/99 07/28/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001224 Corporation of the P $200,000.00 8/3/99 08/03/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001250 Village of South Elgin $700,000.00 8/10/99 08/10/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001260 Pace/▇▇▇▇ Properties $50,000.00 8/18/99 08/18/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001263 Cibolo Deer Creek Pr $24,500.00 8/18/99 05/31/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001284 Village Manager $60,000.00 8/25/99 08/25/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001289 Terra ▇▇▇▇▇, LLC $23,500.00 8/27/99 09/02/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001291 The Estate of ▇▇▇▇▇ $45,150.00 8/27/99 11/30/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001295 Adam's ▇▇▇▇▇▇ and Radi $275,000.00 8/27/99 08/27/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001298 First National Bank $100,000.00 8/30/99 08/30/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001299 ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and $50,000.00 8/30/99 08/30/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001300 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ $10,000.00 8/30/99 08/30/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001301 Cornerstone Title Co $240,000.00 8/30/99 09/30/01
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001216 Village of South Elgin $972,960.00 7/30/99 07/30/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001355 Concord Hills Limited $25,000.00 9/28/99 9/28/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001356 Concord Hills Limited $25,000.00 9/28/99 9/28/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001357 Meadowbrook Limited $25,000.00 9/28/99 9/28/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001358 Meadowbrook Limited $25,000.00 9/28/99 9/28/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001359 Cymill Partners, Limited $100,000.00 9/28/99 9/28/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001290 ▇▇▇▇▇▇ ▇. and ▇▇▇▇▇▇ $4,850.00 8/27/99 11/30/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001305 Cornerstone Title Co. $41,000.00 9/2/99 9/30/01
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001306 Baltimore County, MA $286,388.00 9/2/99 9/2/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001314 Cornerstone Title Co. $150,000.00 9/9/99 9/9/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001320 The Arundel Corporation $10,000.00 9/13/99 9/13/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001388 L-V L.L.P. $25,000.00 10/4/99 10/4/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001389 Meadowbrook Limited $100,000.00 10/4/99 10/4/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
C001390 Baltimore County, MA $181,500.00 10/4/99 10/5/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
7308335 Village of Lisle $488,904.74 9/9/96 07/01/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
7301872 Cigna Insurance Co $2,353,935.00 5/31/96 04/01/00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
7401068 Treasurer, County of Lake $204,700.00 1/15/99 04/01/01
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TOTAL OUTSTANDING $38,434,579.49
--------------------------------------------------------------------------------
SCHEDULE 5.4
SUBSIDIARIES
Associates Mortgage Funding Corp.
Associates, Funding, Inc.
▇▇▇▇▇ Acceptance Corporation
▇▇▇▇▇ Glenfed Associates
▇▇▇▇▇ Glenfed ▇▇▇▇▇▇▇
▇▇▇▇▇ Glenfed San ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ Enterprises
▇▇▇▇▇ Home Cap ▇▇▇▇▇▇▇▇▇ Ranch
▇▇▇▇▇ Home Cap Palmdale
▇▇▇▇▇ HomeFed Communities La Quinta
▇▇▇▇▇ MBK Northern Hills
▇▇▇▇▇ Sand Dollar Placentia
▇▇▇▇▇ Ventures, Inc.
CB Partners
CC Holding Company
Columbia National Risk Retention Group, Inc.
Convest Management Corporation
Cornerstone Residential Title Agency, Ltd.
Cornerstone Title Agency, Inc.
Cornerstone Title Company
Cornerstone Title Insurance Company
Cornerstone Title, L.C.
Dubravy Joint Stock Company
▇▇▇▇▇▇▇ Mortgage Securities Corp.
Heritage Mortgage Company
LPS Holdings Corporation
Maryland Housing Equity Fund
Maryland Housing Equity Fund II
Premier Escrow Company
Princeton Towns General Partnership
RGHI Land, Ltd.
RH Builders of Indiana, Inc.
RH Investment of Indiana, Inc.
RH Mortgage Corp.
RH of Indiana, L.P.
RH of Maryland, LLC
RH of Texas, L.P.
RVH Cascades
RyCom Joint Venture
Ryland Acceptance Corporation Five
Ryland Acceptance Corporation Four
Ryland Communities, Inc.
▇▇▇▇▇▇ Homes at ▇▇▇▇▇▇▇▇▇▇ Station
▇▇▇▇▇▇ Homes Investment Texas, Inc.
▇▇▇▇▇▇ Homes Marketing of Georgia, Inc.
▇▇▇▇▇▇ Homes Midwest Realty, Inc.
▇▇▇▇▇▇ Homes of Arizona, Inc.
▇▇▇▇▇▇ Homes of California, Inc.
▇▇▇▇▇▇ Homes of Florida Realty Corp.
▇▇▇▇▇▇ Homes of Texas, Inc.
Ryland Insurance Services
Ryland Management Corp. Two
Ryland Mortgage Company
Ryland Mortgage Securities Corp. Four
Ryland Real Estate Brokerage of New Jersey, Inc.
Ryland Resource Realty, Inc.
Ryland Trading (Russia), Ltd.
Ryland Trading, Ltd.
▇▇▇▇▇▇ Ventures, Inc.
Ryland/St. Petersburg Joint Stock Company
The Regency Organization, Inc.
Willbrooke Partners, LLC
SCHEDULE 5.8
LITIGATION
AZIZ, HERRERA, et al. v. AHMANSON and ▇.▇. ▇▇▇▇▇ and SONS, INC.
(Lawsuit involving 41 homes in Yorba Linda, California)
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, et al. v. ▇.▇. ▇▇▇▇▇ and SONS, INC.
(Lawsuit involving 61 homes in Riverside, California)
▇▇▇▇▇, ▇▇▇▇▇▇, et al. v. ▇.▇. ▇▇▇▇▇ and SONS, INC.
(Lawsuit involving 22 homes in Simi Valley, California)
CAMPOS, CARLOS, et al. v. ▇.▇. ▇▇▇▇▇ and SONS, INC.
(Lawsuit involving 156 homes in Palmdale, California)
SCHEDULE 6.2(G)
Ryland Quarterly Bank Package
Information to be delivered on a quarterly basis:
1. Quarterly Financial Report
2. Covenant Compliance Certificate
3. Consolidated Balance Sheet and Income Statement
4. a) Unconsolidated Equity Method ▇▇▇▇▇▇ Group, Inc. Balance Sheet
b) Unconsolidated Equity Method ▇▇▇▇▇▇ Group, Inc. Statement of Income
c) Consolidated Balance Sheet and Income Statements of the ▇▇▇▇▇▇
Financial Services Segment (i.e. Ryland Mortgage Company and Limited
Purpose Subsidiary)
5. Consolidated Statement of Cash Flows
6. Quarterly Regional Statements of Income
7. Provide annually:
a) 2 Year Projected Balance Sheet and Income Statement
b) 1 Year Budget, on a Quarterly Basis, for Balance Sheet and Income
Statement With Underlying Assumptions
8. Quarterly Inventory Summary by Division
EXHIBIT "A"
NOTE
$__________________________ _________________________
FOR VALUE RECEIVED, The ▇▇▇▇▇▇ Group, Inc., a Maryland corporation (the
"Company"), promises to pay to the order of__________________________ ("Bank")
the principal amount of and no/100 dollars ($) or such lesser aggregate amount
of Loans as may be made pursuant to Bank's Commitment under the Revolving Credit
Agreement hereinafter described, payable as hereinafter set forth. Company
promises to pay interest on the principal amount hereof remaining unpaid from
time to time from the date hereof until the date of payment in full, payable as
hereinafter set forth.
Reference is made to the Revolving Credit Agreement of even date herewith
among Company and the Banks (the "Agreement"). Terms defined in the Agreement
and not otherwise defined herein are used herein with the meanings defined for
those terms in the Agreement. This is one of the Notes referred to in the
Agreement, and any holder hereof is entitled to all of the rights, remedies,
benefits and privileges provided for in the Agreement as originally executed or
as it may from time to time be supplemented, modified or amended. The Agreement,
among other things, contains provisions for acceleration of the maturity hereof
upon the happening of certain stated events upon the terms and conditions
therein specified.
The principal indebtedness evidenced by this Note shall be payable as
provided in the Agreement and in any event on the Maturity Date.
Interest shall be payable on the outstanding daily unpaid principal amount
of each Loan hereunder from the date thereof until payment in full and shall
accrue and be payable at the rates and on the dates set forth in the Agreement
both before and after default and before and after maturity and judgment.
Company hereby promises to pay all costs and expenses of any holder hereof
incurred in collecting the undersigned's obligations hereunder or in enforcing
or attempting to enforce any of any holder's rights hereunder, including
Attorney Costs, whether or not an action is filed in connection therewith.
Company hereby waives presentment, demand for payment, dishonor, notice of
dishonor, protest, notice of protest and any other notice or formality, to the
fullest extent permitted by applicable laws.
This Note shall be delivered to and accepted by Bank in the State of
Illinois, and shall be governed by, and construed and enforced in accordance
with, the internal Laws thereof without regard to the choice of law provisions
thereof.
THE ▇▇▇▇▇▇ GROUP, INC.
By:______________________________
[Printed Name and Title]
EXHIBIT "B"
BORROWING BASE CERTIFICATE
The undersigned, being the duly elected ______________________ of The
▇▇▇▇▇▇ Group, Inc. hereby certifies that the following is a true and correct
CALCULATION OF THE BORROWING BASE AS OF __________________,_____.
Home Proceeds Receivable $
Sold Construction in Progress
Sold Completed Units
Real Estate Inventory (less than 180 days)
Real Estate Inventory (180 to 270 days)
Finished Lots
Land Under Development
Raw Land - Entitled
Borrowing Base Calculation:
90% of Home Proceeds Receivable
90% of Sold Construction in Progress
90% of Sold Completed Units
75% of Real Estate Inventory (less than 180 days) 50% of Real Estate
Inventory (180 to 270 days) 70% Of Finished Lots* 50% of Land Under
Development* 25% of Raw Land - Entitled**
Total Borrowing Base _______________________
--------------------------------------
*/ The sum of 70% of Finished Lots, 50% of Land Under Development and
25% of Raw Land Entitled shall not exceed 40% of the Borrowing Base.
**/ 25% of Raw Land-Entitled shall not exceed 10% of the Aggregate
Commitment.
Outstanding Loans _______________________
Other Senior Permitted Debt _______________________
Third Party Performance L/C Obligations _______________________
Total Senior Permitted Debt _______________________
Borrowing Base Surplus/(Deficit): _______________________
THE ▇▇▇▇▇▇ GROUP, INC.
By: _____________________________
[Printed Name and Title]
EXHIBIT "C"
REQUEST FOR BORROWING/CONTINUATION/
REDESIGNATION/LETTER OF CREDIT
1. This Request is executed and delivered by The ▇▇▇▇▇▇ Group, Inc. ("the
Company") to the Administrative Agent for the Banks pursuant to the Revolving
Credit Agreement (the "Agreement") dated as of ____________, 1999, entered into
by the Company, the Banks, Bank One, NA, as Syndication Agent, Guaranty Federal
Bank, F.S.B., as Co-Agent, Bank United, as Co-Agent and Bank of America, N.A. as
Administrative Agent. Any terms used herein and not defined herein shall have
the meanings defined in the Agreement.
2. * The Company hereby requests that the Banks make Loans for the account
of the Company pursuant to the Agreement, as follows:
(a) Amount of Loan: $______________.
(b) Date of Loan: _____________, ____.
(c) Type of Loan (check one box only):
* ABR Borrowing.
* LIBOR Borrowing with a ______ [-month]
LIBOR Period ending _____________, ______.
3. * The Company hereby requests that BofA make a Swing Line Advance for
the account of the Company, pursuant to the Agreement, as follows:
(a) Amount of Loan: $__________________.
(b) Date of Loan: ________________, ____.
4. * The Company hereby requests that the Banks redesignate outstanding
ABR Borrowings heretofore made or redesignated for the account of the Company
pursuant to the Agreement, as follows:
(a) Total Amount of Loans to be Redesignated: $________________
(b) Date of Redesignation: ________________, ____.
(c) Type of Loan as so Redesignated: LIBOR Borrowing with a ____
-month LIBOR Period ending ________________, ______.
5. * The Company hereby requests that the Banks continue outstanding LIBOR
Borrowings heretofore made or redesignated for the account of the Company
pursuant to the Agreement, as follows:
(a) Total Amount of Loans to be Continued: $______________.
(b) Date of Continuation: ________________________.
(c) Type of Loan as so Continued: LIBOR. Borrowing with a
_____-month LIBOR Period ending _____________, ____.
6. The Company hereby requests that the Issuing Bank issue a Letter of
Credit in accordance with the L/C Application accompanying this request.
7. [In connection with the Loan or Letter of Credit requested herein, the
Company hereby represents, warrants and certifies to the Banks that, as of the
date of the Loan or Letter of Credit requested herein: Each representation and
warranty made by the Company in Article 5 of the Agreement will be true and
correct, both immediately before and after such Loan is made or Letter of Credit
is issued, as though such representation and warranty was made on and as of the
date of such Loan or issuance (except to the extent such representation and
warranty relates to an earlier date); and no Default or Event of Default will
have occurred and be continuing. (If any of the foregoing statements is not true
and correct, attach a statement specifying in detail the circumstances thereof
and the actions the Company is taking or proposes to take with respect
thereto.)]
7. This Request is executed on _____________,___, by an Authorized
Official of the Company on behalf of the Company. The undersigned, in such
capacity, hereby certifies each and every matter contained herein to be true and
correct.
Dated: _________________
THE ▇▇▇▇▇▇ GROUP, INC.
By: ________________________________
[Printed Name and Title]
EXHIBIT "D"
CONTINUING GUARANTY
TO: BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT, AND TO THE BANKS THAT
ARE, OR MAY BECOME, PARTIES TO THE AGREEMENT
The ▇▇▇▇▇▇ Group, Inc., a Maryland corporation (herein the "Company"), has
entered into a Revolving Credit Agreement dated as of even date herewith (the
"Agreement") with Bank of America, N.A., as Administrative Agent (the
"Administrative Agent"), Bank One, NA, as Syndication Agent, Bank United, as
Co-Agent, Guaranty Federal Bank F.S.B., as Co-Agent and certain financial
institutions (together with any other financial institution from time to time a
party to the Agreement, the "Banks"). Capitalized terms used herein and not
otherwise defined shall have the same meanings as the terms used and defined in
the Agreement. Subject to the terms and provisions set forth in the Agreement,
the Banks have agreed to make Loans to the Company. As a condition to the
obligation of the Banks to make such Loans, _________________________
(collectively, "Guarantor") are required to execute and deliver to the
Administrative Agent this Guaranty. To induce the Banks to make the Loans to the
Company as provided in the Agreement, Guarantor hereby agrees as follows:
1. GUARANTY OF OBLIGATIONS. For valuable consideration, Guarantor
unconditionally guarantees and promises to pay to the Administrative Agent, for
the benefit of the Banks, or order, on demand, when due and payable in lawful
money of the United States of America:
(a) all Obligations of the Company evidenced by each Note; and
(b) all other Obligations of the Company, including without
limitation all amendments, modifications, supplements, renewals, or
extensions of the foregoing, whether such amendments, modifications,
supplements, renewals, or extensions are evidenced by new or additional
instruments, documents, or agreements or change the rate of interest on
any indebtedness or the maturity thereof, or otherwise. All indebtedness
and obligations covered by this Guaranty are hereinafter collectively
referred to as the "indebtedness." The term "indebtedness" shall also
include, without limitation on the foregoing, all interest that accrues on
all or any part of the indebtedness after the filing of any petition or
pleading against the Company or any other Person for a proceeding under
any chapter or provision of any present or future federal bankruptcy
legislation or amendments thereto.
2. NATURE OF GUARANTY. This Guaranty is continuing in nature and relates
to any indebtedness, including indebtedness arising after the date hereof and
any renewals or extensions of any indebtedness. The guaranty contained herein is
a guaranty of payment and not of collection.
3. RIGHTS INDEPENDENT. The obligations of Guarantor hereunder are
independent of the Obligations of the Company or any other Person or any other
guarantor or any security for the indebtedness or Obligations, and the
Administrative Agent may, when the Obligations are due and payable, proceed in
the enforcement hereof independently of any other right or remedy that the
Administrative Agent may at any time hold with respect to the Obligations, the
indebtedness or any security or other guaranty therefor. The Administrative
Agent may file a separate action or actions against Guarantor hereunder, whether
action is brought and prosecuted with respect to any security or against the
Company or any other Guarantor or any other Person, or whether the Company or
any other Guarantor or any other Person is joined in any such action or actions.
Guarantor waives the benefit of any statute of limitations affecting its
liability hereunder or the enforcement of the Obligations. The liability of
Guarantor hereunder shall be reinstated and revived, and the rights of the
Administrative Agent and each Bank shall continue, with respect to any amount at
any time paid on account of the Obligations which shall thereafter be required
to be restored or returned by the Administrative Agent or any Bank upon the
bankruptcy, insolvency, or reorganization of the Company or any other Person, or
otherwise, all as though such amount had not been paid. Guarantor further agrees
that to the extent the Company or Guarantor makes any payment to the
Administrative Agent or any Bank in connection with the Obligations or the
indebtedness and all or any part of such payment is subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid by
the trustee, receiver or any other entity, whether under any bankruptcy act or
otherwise (any such payment is hereinafter referred to as a "Preferential
Payment"), then this Guaranty shall continue to be effective or shall be
reinstated, as the case may be, and, to the extent of such payment or repayment
by Administrative Agent or such Bank, the obligations or the indebtedness or
part thereof intended to be satisfied by such Preferential Payment shall be
revived and continued in full force and effect as if said Preferential Payment
had not been made.
4. AUTHORITY TO MODIFY THE OBLIGATIONS. Guarantor authorizes the
Administrative Agent and each Bank, without notice to or demand on Guarantor and
without affecting its liability hereunder or the enforceability hereof, from
time to time to: (a) supplement, modify, amend, extend, renew, accelerate, or
otherwise change the time for payment or the terms of the Obligations or any
part thereof, including increase or decrease the rates of interest thereon; (b)
supplement, modify, amend, or waive, or enter into or give any agreement,
approval, or consent with respect to, the indebtedness or any part thereof or
any of the Loan Documents or any security or additional guaranties, or any
condition, covenant, default, remedy, right, representation, or term thereof or
thereunder; (c) accept new or additional instruments, documents, or agreements
in exchange for or relative to any of the Loan Documents or the Obligations or
any part thereof; (d) accept partial payments on the Obligations; (e) receive
and hold additional security or guaranties for the Obligations or any part
thereof or this Guaranty; (f) release, reconvey, terminate, waive, abandon,
subordinate, exchange, substitute, transfer, and enforce the Obligations or any
security or any other guaranties, and apply any security and direct the order or
manner of sale thereof as the Administrative Agent or such Bank in its
discretion may determine; (g) release the Company or any other Person or any
other guarantor from any personal liability with respect to the Obligations or
any part thereof; (h) settle, release on terms satisfactory to the
Administrative Agent or such Bank or by operation of law or otherwise, compound,
compromise, collect, or otherwise liquidate or enforce any of the Obligations
and any security or other guaranty in any manner, consent to the transfer of any
security, and bid and purchase at any sale; and (i) consent to the merger or any
other change, restructure, or termination of the corporate existence of the
Company or any other Person and correspondingly restructure the Obligations, and
any such merger, change, restructure, or termination shall not affect the
liability of Guarantor hereunder or the enforceability hereof with respect to
all indebtedness.
Exibit D-2
5. WAIVER OF DEFENSES. Guarantor waives any right to require the
Administrative Agent or any Bank, prior to or as a condition to the enforcement
of this Guaranty, to: (a) proceed against the Company or any other Person or any
other guarantor; (b) proceed against or exhaust any security for the Obligations
or to ▇▇▇▇▇▇▇▇ assets in connection with foreclosing collateral security; (c)
give notice of the terms, time, and place of any public or private sale of any
security for the Obligations; or (d) pursue any other remedy in the
Administrative Agent's or such Bank's power whatsoever. Guarantor waives any
defense arising by reason of (i) any disability or other defense of the Company
or any other Person with respect to the Obligations, (ii) the unenforceability
or invalidity of the Obligations or any security or any other guaranty for the
Obligations or the lack of perfection or failure of priority of any security for
the Obligations, (iii) the cessation from any cause whatsoever of the liability
of the Company or any other Person or any other guarantor (other than by reason
of the full payment and discharge of all indebtedness), or (iv) any act or
omission of the Administrative Agent or any Bank or any other Person which
directly or indirectly results in or aids the discharge or release of the
Company or any other Person or the Obligations or any security or other guaranty
therefor by operation of law or otherwise. Guarantor waives all setoffs and
counterclaims and all presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, and all other
notices of any kind or nature whatsoever with respect to the Obligations, and
notices of acceptance of this Guaranty and of the existence, creation, or
incurring, of new or additional Obligations.
6. WAIVER OF SUBROGATION. Until all Obligations have been paid and
performed in full, Guarantor shall not exercise any rights of subrogation,
contribution or reimbursement against the Company or any other guarantor of the
Obligations (individually an "other Loan Party"), and waives any right to
enforce any right, power or remedy which the Administrative Agent or each Bank
now has or may in the future have against any other Loan Party and any benefit
of, and any right to participate in, any security for this Guaranty or for the
obligations of any other Loan Party now or in the future held by the
Administrative Agent or each Bank. If Guarantor nevertheless receives payment of
any amount on account of any such subrogation, contribution or reimbursement
rights or otherwise in respect of any payment by Guarantor of the Obligations
prior to payment and performance in full of all Obligations, such amount shall
be held in trust for the benefit of the Administrative Agent and immediately
paid to the Administrative Agent for application to the Obligations in such
order and manner as the Administrative Agent may determine.
Exhibit D-3
7. REPRESENTATIONS, WARRANTIES, ETC. Guarantor represents and warrants to
the Administrative Agent, for the benefit of the Banks that: (a) this Guaranty
is executed at the request of the Company; (b) that Guarantor has established
adequate means of obtaining from the Company on a continuing basis financial and
other information pertaining to the business of the Company; and (c) that
Guarantor is now and will be completely familiar with the business, operation,
condition, and assets of the Company. Guarantor hereby waives and relinquishes
any duty on the part of the Administrative Agent or any Bank to disclose to
Guarantor any matter, fact, or thing relating to the business, operation,
condition, or assets of the Company now known or hereafter known by the
Administrative Agent or any Bank during the life of this Guaranty. With respect
to any Obligations, neither the Administrative Agent nor any Bank need inquire
into the powers of the Company or the officers or employees acting or purporting
to act on its behalf, and all Obligations made or created in good faith reliance
upon the professed exercise of such powers shall be guaranteed hereby.
8. AMENDMENTS; WAIVERS. Neither this Guaranty nor any provision hereof may
be amended, modified, waived, discharged, or terminated except by an instrument
in writing duly signed by the Administrative Agent on behalf of the Banks. No
failure or delay on the part of the Administrative Agent or any Bank in
exercising any right power, or remedy may be, or may be deemed to be, a waiver
thereof; nor may any single or partial exercise of any right, power, or remedy
preclude any other or further exercise thereof or the exercise of any other
right, power, or remedy hereunder or under the other Loan Documents. Guarantor
warrants and agrees that each of the waivers set forth in this Guaranty are made
with Guarantor's full knowledge of their significance and consequences, and that
under the circumstances, the waivers are reasonable and not contrary to public
policy or law. If any of such waivers are determined to be contrary to any
applicable law or public policy, such waivers shall be effective only to the
maximum extent permitted by law.
9. COSTS AND EXPENSES IN ENFORCEMENT. Guarantor agrees to pay to the
Administrative Agent all reasonable advances, charges, costs, and expenses,
including reasonable Attorney Costs, incurred or paid by the Administrative
Agent in exercising any right, power, or remedy conferred by this Guaranty, or
in the enforcement of this Guaranty, whether or not an action is filed in
connection therewith.
10. NOTICES. All notices, requests, demands, directions, and other
communications provided for hereunder must be in writing and must be personally
delivered, telecopied or mailed to Guarantor at the address set forth on the
signature page of this Guaranty or at any other address as may be designated by
Guarantor in a written notice sent to the Administrative Agent in accordance
with the Agreement. Any notice, request, demand, direction, or other
communication given by mail will be deemed effective on the third calendar day
after deposited in the United States mails with first class postage prepaid; or
if given by personal delivery or telecopy, when delivered.
Exhibit D-4
11. BINDING AGREEMENT. This Guaranty and the terms, covenants, and
conditions hereof shall be binding upon and inure to the benefit of Guarantor,
the Administrative Agent, each Bank, and their respective successors and
assigns, except that Guarantor shall not be permitted to transfer, convey, or
assign this Guaranty or any interest herein without the prior written consent of
each Bank. Each Bank may assign its interest hereunder in whole or in part in
connection with an assignment of its Loans, Commitments and other rights and
obligations under the Agreement pursuant to SECTION 10.6(A) thereof.
12. SEVERABILITY. In case any right or remedy of the Administrative Agent
shall be held to be invalid, illegal, or unenforceable, such invalidity,
illegality, or unenforceability shall not affect any other right or remedy
granted hereby.
13. MISCELLANEOUS. All words used herein in the plural shall be deemed to
have been used in the singular, and all words used herein in the singular shall
be deemed to have been used in the plural, where the context and construction so
require. Section headings in this Guaranty are included for convenience of
reference only and are not a part of this Guaranty for any other purpose. This
Guaranty is executed in connection with, and is subject to, the terms and
provisions of the Agreement.
14. GOVERNING LAW. This Guaranty shall be governed by, and construed and
enforced in accordance with, the internal laws of the State of Illinois without
regard to the conflict of law provisions thereof.
15. JOINT AND SEVERAL LIABILITY. The liability and obligations of each
corporation, limited liability company, partnership, or other entity (each, an
"Individual Guarantor") executing this Guaranty as a "Guarantor" hereunder shall
be joint and several; and, without limiting the foregoing, each such Individual
Guarantor executing this Guaranty shall individually be liable and responsible
for repayment of the full amount of all Obligations and indebtedness owing to
each and all of the Banks, provided, however, that each Individual Guarantor
shall be liable under this Guaranty for the maximum amount of the liability that
can be hereby incurred without rendering this Guaranty, as it relates to such
Individual Guarantor, voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer, and not for any greater amount.
Exhibit D-5
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly executed
as of _______________, 1999.
"GUARANTOR":
[Add Names of Guarantors]
Exhibit D-6
EXHIBIT "E"
FORM OF LEGAL OPINION
_______________, 1999
Bank of America, N.A., as Administrative Agent
and to the Banks that are,
or may become, parties to the Agreement
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
RE: THE ▇▇▇▇▇▇ GROUP, INC.
Ladies and Gentlemen:
We have acted as special counsel to The ▇▇▇▇▇▇ Group, Inc., a Maryland
corporation (the "Company"), in connection with the execution and delivery of a
Revolving Credit Agreement, dated as of even date herewith (the "Agreement") by
and among the Company, Bank One, NA, as Syndication Agent, Guaranty Federal
Bank, F.S.B., as Co-Agent, Bank United, as Co-Agent, Bank of America, N.A., as
Administrative Agent, and other Banks that are, or may become, parties to the
agreement and _____________ (the "Guarantors") in connection with the execution
and delivery of the Guaranty (the "Guaranty") as of even date herewith.
Capitalized terms used herein and not otherwise defined shall have the meanings
set forth in the Agreement.
In our capacity as counsel for the Company, we have made such legal and
factual inquiries and examinations as we deemed advisable for purposes of
rendering this opinion, and, in the course thereof, we have examined originals,
or copies of originals certified to our satisfaction, of such agreements,
documents, certificates and other statements of government officials, officers
of the Company and others as we deemed relevant and necessary as a basis for
this opinion. We have relied upon such certificates and documents with respect
to the accuracy of factual matters contained therein, which factual matters were
not independently established or verified by us. In all such examinations, we
have assumed the genuineness of all signatures by each party and the
authenticity of all documents submitted to us as originals and the conformity to
authentic original documents of all documents submitted to us as conformed or
photostatic copies. For the purpose of the opinions hereinafter expressed, we
have assumed the due execution and delivery, pursuant to due authorization, of
each document referred to herein by each party thereto other than the Company
and the Guarantors and that each document constitutes the valid and binding
obligation of each party thereto other than the Company and the Guarantors,
enforceable against such party in accordance with its terms.
On the basis of our inquiries and examinations, and subject to the
qualifications, exceptions, assumptions and limitations contained herein, we are
of the opinion that:
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Maryland and is qualified to do
business in the jurisdictions in which the nature of the property owned or
leased by the Company or the nature of the business transacted by the Company
makes such qualification necessary, except where the failure to be so qualified
would not have a Material adverse effect on the business or financial condition
of the Company and the Subsidiaries taken as a whole.
2. The execution, delivery and performance by the Company of the Agreement
and the Note pursuant thereto are within the Company's corporate powers, have
been duly authorized by all necessary corporate action and do not contravene (a)
the Company's certificate of incorporation or bylaws, (b) any law or (c) any
agreement or instrument identified to us by the Company as being Material to the
business or financial condition of the Company and the Subsidiaries taken as a
whole.
3. The Agreement is, and the Notes when delivered thereunder will be,
valid and binding obligations of the Company enforceable against the Company in
accordance with their respective terms.
4. No action of, or filing with, or approval or other action by, any
governmental or public body or authority which has not been taken, made or
obtained is required to authorize, or is otherwise required in connection with,
the execution, delivery and performance of the Agreement and the Notes.
5. Each of the Guarantors is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Each of the
Guarantors is duly qualified to do business in the jurisdictions in which the
nature of the property owned or leased or the nature of the business transacted
by such Guarantor makes such qualification necessary, except where the failure
to be so qualified would not have a Material adverse effect on the business or
financial condition of the Company and the Subsidiaries taken as a whole.
6. The Guarantors have the requisite corporate power and authority to
execute, deliver and perform their obligations under the terms of the Guaranty,
and the Guaranty constitutes the valid and binding obligation of each of the
Guarantors entities enforceable against it in accordance with its terms.
7. The execution, delivery and performance by each Guarantor of the
Guaranty are within such Guarantor's corporate powers, have been duly authorized
by all necessary corporate action and do not contravene (a) such Guarantor's
certificate of incorporation or bylaws, (b) any law or (c) any agreement or
instrument identified to us by such Guarantor as being Material to the business
or financial condition of such Guarantor.
Exhibit E-2
8. No action of, or filing with, or approval or other action by, any
governmental or public body or authority which has not been taken, made or
obtained is required to authorize, or is otherwise required in connection with,
the execution, delivery and performance of the Guaranty.
9. The Company is not an "investment company" or a company "controlled" by
an "investment company", within the meaning of the Investment Company Act of
1940, as amended.
10. The Company is not a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of a "holding company" or a "subsidiary
company" of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
[11. All principal and unpaid interest of the Company under the Credit
Agreement and the Notes (including interest accruing after the occurrence of any
event described in Section 8(f) of the Credit Agreement, whether or not such
interest constitutes an allowed claim in any proceeding referred to in Section
8.1(f) of the Credit Agreement) constitutes "Senior Debt" as such term is used
in the 1992 Subordinated Debt Indenture.]
12. To our knowledge, there is no litigation, investigation or proceeding
of or before any court or public authority that is pending or threatened by or
against the Company or any of its Subsidiaries or against any of their
properties or revenues (a) with respect to the Credit Agreement, the Notes, the
Guaranty or any of the transactions contemplated thereby, or (b) which, if
adversely determined, would have a Material adverse effect.
[13. To the best of our knowledge, the Company owns all of the
issued and outstanding capital stock of each of the Guarantors].
[Qualifications]
Exhibit E-3
Exhibit E-1
October _____, 1999
Bank of America, N.A., as Administrative Agent
And to the Banks that are, Or may become,
parties to the Agreement
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
I am General Counsel for The ▇▇▇▇▇▇ Group, Inc., a Maryland corporation
(the "Company"), and have acted in such capacity in connection with the
execution and delivery of a Revolving Agreement, dated as of even date herewith
(the "Agreement"), by and among the Company, Bank One, N.A., as Syndication
Agent, Guaranty Federal Bank, F.S.B., as Co-Agent, Bank United, as Co-Agent,
Bank of America, N.A., as Administrative Agent, and other Banks that are, or may
become, parties to the Agreement.
This opinion is delivered to you pursuant to subsection 4.1(a) of the
Agreement. Terms used herein which are defined in the Agreement shall have the
respective meanings set forth in the Agreement, unless otherwise defined herein.
For purposes of this opinion, I have examined the following documents:
(i) the Agreement and Notes;
(ii) the Charter and Bylaws of the Company;
(iii) the records of the corporate proceedings of the Company; and
(iv) such other documents and matters as I have deemed necessary and
appropriate to render the opinions set forth in this letter, subject to the
limitations, assumptions, and qualifications noted below.
In reaching the opinions set forth below, I have assumed, and to my
knowledge there are no facts inconsistent with, the following:
(a) each of the parties thereto (other than the Company) has duly and
validly executed and delivered each instrument, document, and agreement executed
in connection with the Agreement to which such other party is a signatory and
that such party's obligations set forth therein are its legal, valid, and
binding obligations, enforceable in accordance with their respective terms;
(b) each person executing any such instrument, document or agreement on
behalf of any such party (other than the Company) is duly authorized to do so;
(c) each natural person executing any such instrument, document or
agreement is legally competent to do so;
(d) there are no modifications or waivers of or amendments to the
Agreement; and
(e) all documents submitted to me as originals are authentic; all
documents submitted to me as certified or photostatic copies conform to the
original documents; all signatures on all documents submitted to me for
examination are genuine; and all public records reviewed are accurate and
complete.
Based on my review of the foregoing and subject to the assumptions and
qualifications set forth herein, it is my opinion that, as of the date of this
letter:
1. The Company (a) is duly organized, validly existing and in good
standing under the laws of State of Maryland, (b) has the corporate power to own
and operate its property, to lease the property it operates and to conduct the
business in which it is currently engaged, and (c) is qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where it
ownership, lease or operation of property of the conduct of its business
requires such qualification and where the failure to be so qualified could
reasonably be expected to have a Material Adverse Effect.
2. The Company has the corporate power to make, deliver and perform the
Agreement and the Notes and to borrow thereunder and has taken all necessary
corporate action to authorize the borrowings on the terms and conditions of the
Agreement and the Notes and to authorize the execution, delivery and performance
of the Agreement and the Notes. No consent or authorization of, filing with, or
other act by or in respect of any public authority, is required of the Company
in connection with the borrowings thereunder or with the execution or delivery
of the Agreement or the Notes.
3. The Agreement and each of the Notes have been duly executed and
delivered on behalf of the Company.
4. The execution and delivery of the Agreement and the Notes will not
violate any Requirement of Law or, to my knowledge, any material Contractual
Obligation of the Company, and, to my knowledge will not result in, or require,
the creation or imposition of any Lien on any of its properties or revenues
pursuant to any Requirement of Law or any material Contractual Obligation.
Exhibit E-1 -2
5. To my knowledge, there is no litigation, investigation or proceeding of
or before any court or public authority that is pending or threatened by or
against the Company or against any of its properties or revenues (a) with
respect to the Agreement or the Notes or any of the transactions contemplated
thereby, or (b) which, if adversely determined, would have a Material Adverse
Effect, except as described in the financial statements or in the notes thereto
referred to in subsection 5.5 of the Agreement, or the Schedule of Litigation
attached to the Agreement.
I am a member of the bar of the State of Maryland and the opinions set
forth herein are limited solely to Federal law and the laws of the State of
Maryland.
The opinions expressed in this letter are solely for the use of the
Administrative Agent and the Banks, and these opinions may not be relied on by
any other persons without my express prior written approval. The opinions
expressed in this letter are limited to the matters set forth in this letter,
and no other opinions should be inferred beyond the matters expressly stated.
Very truly yours,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
General Counsel
Exhibit ▇-▇ -▇
▇▇▇▇▇▇▇ ▇-▇
October _____, 1999
Bank of America, N.A., as Administrative Agent
And to the Banks that are, Or may become,
parties to the Agreement
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
I am General Counsel to [INSERT NAMES OF GUARANTORS] (the "Guarantors"),
and have acted in such capacity in connection with the execution and delivery of
the Guaranty as of even date herewith.
This opinion is delivered to you pursuant to subsection 4.1(a) of the
Agreement. Terms used herein which are defined in the Agreement and the Guaranty
shall have the respective meanings set forth in the Agreement and the Guaranty,
unless otherwise defined herein.
For purposes of this opinion, I have examined the following documents:
(i) the Agreement;
(ii) the Guaranty;
(iii) the Charter and Bylaws of the Guarantors;
(iv) the records of the corporate proceedings of the Guarantors; and
(v) such other documents and matters as I have deemed necessary and
appropriate to render the opinions set forth in this letter, subject to the
limitations, assumptions, and qualifications noted below.
In reaching the opinions set forth in paragraph 3, I have assumed that at
each time a Guarantor incurs an obligation under the Guaranty, such Guarantor,
after giving effect to such obligation, had the ability to pay its debts as such
debts mature and that such Guarantor was solvent.
Based on and subject to the foregoing, it is my opinion, as of the date of
this letter:
Exhibit ▇-▇ -▇
▇. ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (▇) are duly organized, validly existing and in good
standing under the laws of the state of their incorporation, and (b) have the
corporate power to own and operate their properties, to lease the properties
they operate, and to conduct the business in which they are currently engaged.
2. The Guarantors have the corporate power to make, deliver and perform
the Guaranty and have taken all necessary corporate action to authorize the
execution, delivery and performance of the Guaranty. No consent or authorization
of, filing with, or other act by or in respect of any public authority, is
required of the Guarantors in connection with the execution or delivery of the
Guaranty.
3. The Guaranty has been duly executed and delivered on behalf of the
Guarantors.
4. The execution and delivery of the Guaranty will not violate any
Requirement of Law or, to my knowledge any material Contractual Obligation of
the Guarantors, and, to my knowledge will not result in, or require, the
creation or imposition of any Lien on any of the Guarantors' properties or
revenues pursuant to any Requirement of Law or any material Contractual
Obligation.
5. To my knowledge, there is no litigation, investigation or proceeding of
or before any arbitrator or public authority that is pending or threatened by or
against the Guarantors or against any of their properties or revenues (a) with
respect to the Guaranty or any of the transactions contemplated thereby, or (b)
which, it adversely determined, would have a Material Adverse Effect on the
financial condition of the Guarantors, the ability of the Guarantors to perform
their obligations under the Guaranty, or the validity or enforceability of the
Guaranty or the rights or remedies of the Administrative Agent or the Banks
thereunder, except as described in the financial statements or in the notes
thereto referred to in subsection 5.5 of the Agreement, or the Schedule of
Litigation attached to the Agreement.
I am a member of the bar of the State of Maryland and the opinions set
forth herein are limited solely to Federal law and the laws of the State of
Maryland except that I have examined the corporate laws of the States of [INSERT
STATES OF INCORPORATION OF GUARANTORS] solely for the purpose of rendering the
opinions concerning the organization of the Guarantors, and the due
authorization of the execution and delivery of the Guaranty by the Guarantors.
Exhibit E-2 -2
The opinions expressed in this letter are solely for the use of the
Administrative Agent and the Banks, and these opinions may not be relied on by
any other persons without my express prior written approval. The opinions
expressed in this letter are limited to the matters set forth in this letter,
and no other opinions should be inferred beyond the matters expressly stated.
Very truly yours,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
General Counsel
Exhibit E-2 -3
EXHIBIT "F"
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
THIS ASSIGNMENT AND ACCEPTANCE AGREEMENT (THIS "ASSIGNMENT AND
ACCEPTANCE") dated as of _____________, ______ is made between ________ (the
"ASSIGNOR") and ________________________ (the "Assignee").
RECITALS
WHEREAS, the Assignor is party to that certain Revolving Credit Agreement
dated as of _________________, 1999 (as amended, amended and RESTATED, MODIFIED,
SUPPLEMENTED OR RENEWED, THE "CREDIT AGREEMENT") among THE ▇▇▇▇▇▇ GROUP, INC., A
MARYLAND CORPORATION (THE "COMPANY"), the several financial institutions from
time to time party thereto (including the ASSIGNOR, THE "BANKS"), Bank One, NA,
as Syndication Agent, Guaranty Federal Bank, F.S.B., as Co-Agent, Bank United,
as Co-Agent and Bank of America, N.A., AS ADMINISTRATIVE AGENT FOR THE BANKS
(THE "ADMINISTRATIVE AGENT"). Any terms defined in the Credit Agreement and not
defined in this Assignment and Acceptance are used herein as defined in the
Credit Agreement;
WHEREAS, as provided under the Credit Agreement the Assignor has COMMITTED
TO MAKING LOANS (THE "LOANS") to the Company in an aggregate amount NOT TO
EXCEED $___________________ (THE "COMMITMENT");
WHEREAS, [the Assignor has made Loans in the aggregate principal amount of
$_______ to the Company] [no Loans are outstanding under the Credit Agreement];
and
WHEREAS, the Assignor wishes to assign to the Assignee [part of the] [all]
rights and obligations of the Assignor under the Credit Agreement in respect of
its Commitment, [together with a corresponding portion of each of ITS
OUTSTANDING LOANS, IN AN AMOUNT EQUAL TO $ (THE "ASSIGNED AMOUNT") on the terms
and subject to the conditions set forth herein and the Assignee wishes to accept
assignment of such rights and to assume such obligations from the Assignor on
such terms and subject to such conditions;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
1. ASSIGNMENT AND ACCEPTANCE.
(a) Subject to the terms and conditions of this Assignment and Acceptance,
(i) the Assignor hereby sells, transfers and assigns to the Assignee, and (ii)
the Assignee hereby purchases, assumes and undertakes from the Assignor, without
recourse and without representation or warranty (except AS PROVIDED IN THIS
ASSIGNMENT AND ACCEPTANCE) __% (THE "ASSIGNEE'S PERCENTAGE SHARE") of (A) the
Commitment [and the Loans and L/C Obligations] of the Assignor and (B) all
related rights, benefits, obligations, liabilities and indemnities of the
Assignor under and in connection with the Credit Agreement and the Loan
Documents.
[if appropriate, add paragraph specifying payment to assignor by assignee
of outstanding principal of, accrued interest on, and fees with respect to,
loans and l/c obligations assigned.]
(b) With effect on and after the Effective Date (as defined in Section 5
hereof), the Assignee shall be a party to the Credit Agreement and succeed to
all of the rights and be obligated to perform all of the obligations of a Bank
under the Credit Agreement, including the requirements concerning
confidentiality and the payment of indemnification, with a Commitment in an
amount equal to the Assigned Amount. The Assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Bank. It is the intent
of the parties hereto that the Commitment of the Assignor shall, as of the
Effective Date, be reduced by an amount equal to the Assigned Amount and the
Assignor shall relinquish its rights and be released from its obligations under
the Credit Agreement to the extent such obligations have been assumed by the
Assignee; provided, however, the Assignor shall not relinquish its rights under
Sections 10.2 and 10.11 of the Credit Agreement to the extent such rights relate
to the time prior to the Effective Date.
(c) After giving effect to the assignment and assumption set forth herein,
on the Effective Date the Assignee's Commitment will be $________________.
(d) After giving effect to the assignment and assumption set forth herein,
on the Effective Date the Assignor's Commitment will be $________________.
2. PAYMENTS.
(a) As consideration for the sale, assignment and transfer contemplated in
Section 1 hereof, the Assignee shall pay to the Assignor on the Effective Date
in immediately available funds an amount equal to $____________, representing
the Assignee's Pro Rata Share of the principal amount of all Loans.
(b) The [Assignor] [Assignee] further agrees to pay to the Administrative
Agent a processing fee in the amount specified in Section 10.6 of the Credit
Agreement.
3. REALLOCATION OF PAYMENTS.
Exhibit F-2
Any interest, fees and other payments accrued to the Effective Date with
respect to the Commitment [and the Loans and the L/C Obligations ] shall be for
the account of the Assignor. Any interest, fees and other payments accrued on
and after the Effective Date with respect to the Assigned Amount shall be for
the account of the Assignee. Each of the Assignor and the Assignee agrees that
it will hold in trust for the other party any interest, fees and other amounts
which it may receive to which the other party is entitled pursuant to the
preceding sentence and pay to the other party any such amounts which it may
receive promptly upon receipt.
4. INDEPENDENT CREDIT DECISION.
The Assignee (a) acknowledges that it has received a copy of the Credit
Agreement and the Schedules and Exhibits thereto, together with copies of the
most recent financial statements referred to in Section 6.1 of the Credit
Agreement and such other documents and information as it has deemed appropriate
to make its own credit and legal analysis and decision to enter into this
Assignment and Acceptance; and (b) agrees that it will, independently and
without reliance upon the Assignor, the Administrative Agent or any other Bank
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit and legal decisions in taking or not
taking action under the Credit Agreement.
5. EFFECTIVE DATE; NOTICES.
(a) As between the Assignor and the Assignee, the effective date for THIS
ASSIGNMENT AND ACCEPTANCE SHALL BE , (THE "EFFECTIVE DATE"); PROVIDED that the
following conditions precedent have been satisfied on or before the Effective
Date:
(i) this Assignment and Acceptance shall be executed and
delivered by the Assignor and the Assignee;
(ii) the consent of the Company and the Administrative Agent
required for an effective assignment of the Assigned Amount by the Assignor to
the Assignee under Section 10.6 of the Credit Agreement shall have been duly
obtained and shall be in full force and effect as of the Effective Date;
(iii) the Assignee shall pay to the Assignor all amounts due to the
Assignor under this Assignment and Acceptance;
[(iv) the Assignee shall have complied with Section 10.6 of
the Credit Agreement (if applicable);
(v) the processing fee referred to in Section 2(b) hereof and in
Section 10.6 of the Credit Agreement shall have been paid to the Administrative
Agent; and
Exhibit F-3
(vi) the Assignor shall have assigned and the Assignee shall have
assumed a percentage equal to the Assignee's Percentage Share of the rights and
obligations of the Assignor under the Credit Agreement.
(b) Promptly following the execution of this Assignment and Acceptance,
the Assignor shall deliver to the Company, the Issuing Bank and the
Administrative Agent for acknowledgment by the Administrative Agent, a Notice of
Assignment substantially in the form attached hereto as Schedule 1.
[6. ADMINISTRATIVE AGENT. [INCLUDE ONLY IF ASSIGNOR IS
ADMINISTRATIVE AGENT]
(a) The Assignee hereby appoints and authorizes the Assignor to take such
action as agent on its behalf and to exercise such powers under the Credit
Agreement as are delegated to the Administrative Agent by the Banks pursuant to
the terms of the Credit Agreement.
(b) The Assignee shall assume no duties or obligations held by the
Assignor in its capacity as Administrative Agent under the Credit Agreement.]
7. WITHHOLDING TAX.
The Assignee (a) represents and warrants to the Bank, the Administrative
Agent and the Company that under applicable law and treaties no tax will be
required to be withheld by the Bank with respect to any payments to be made to
the Assignee hereunder, (b) agrees to furnish (if it is organized under the laws
of any jurisdiction other than the United States or any State thereof) to the
Administrative Agent and the Company prior to the time that the Administrative
Agent or Company is required to make any payment of principal, interest or fees
hereunder, duplicate executed originals of either U.S. Internal Revenue Service
Form 4224 or U.S. Internal Revenue Service Form 1001 (wherein the Assignee
claims entitlement to the benefits of a tax treaty that provides for a complete
exemption from U.S. federal income withholding tax on all payments hereunder)
and agrees to provide new Forms 4224 or 1001 upon the expiration of any
previously delivered form or comparable statements in accordance with applicable
U.S. law and regulations and amendments thereto, duly executed and completed by
the Assignee, and (c) agrees to comply with all applicable U.S. laws and
regulations with regard to such withholding tax exemption.
8. REPRESENTATIONS AND WARRANTIES.
(a) The Assignor represents and warrants that (i) it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any Lien or other adverse claim; (ii) it is duly
organized and existing and it has the full power and authority to take, and has
taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance and to fulfill
its obligations hereunder; (iii) no notices to, or consents, authorizations or
approvals of, any Person are required (other than any already given or obtained)
for its due execution, delivery and performance of this Assignment and
Acceptance, and apart from any agreements or undertakings or filings required by
the Credit Agreement, no further action by, or notice to, or filing with, any
Person is required of it for such execution, delivery or performance; and (iv)
this Assignment and Acceptance has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignor, enforceable
against the Assignor in accordance with the terms hereof, subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization and other
laws of general application relating to or affecting creditors' rights and to
general equitable principles.
Exhibit F-4
(b) The Assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other instrument or document furnished pursuant thereto. The
Assignor makes no representation or warranty in connection with, and assumes no
responsibility with respect to, the solvency, financial condition or statements
of the Company, or the performance or observance by the Company, of any of its
respective obligations under the Credit Agreement or any other instrument or
document furnished in connection therewith.
(c) The Assignee represents and warrants that (i) it is duly organized and
existing and it has full power and authority to take, and has taken, all action
necessary to execute and deliver this Assignment and Acceptance and any other
documents required or permitted to be executed or delivered by it in connection
with this Assignment and Acceptance, and to fulfill its obligations hereunder;
(ii) no notices to, or consents, authorizations or approvals of, any Person are
required (other than any already given or obtained) for its due execution,
delivery and performance of this Assignment and Acceptance; and apart from any
agreements or undertakings or filings required by the Credit Agreement, no
further action by, or notice to, or filing with, any Person is required of it
for such execution, delivery or performance; (iii) this Assignment and
Acceptance has been duly executed and delivered by it and constitutes the legal,
valid and binding obligation of the Assignee, enforceable against the Assignee
in accordance with the terms hereof, subject, as to enforcement, to bankruptcy,
insolvency, moratorium, reorganization and other laws of general application
relating to or affecting creditors' rights and to general equitable principles;
and (iv) it is an Eligible Assignee.
9. FURTHER ASSURANCES.
The Assignor and the Assignee each hereby agree to execute and deliver
such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Assignment and Acceptance, including the delivery of any notices or other
documents or instruments to the Company or the Administrative Agent, which may
be required in connection with the assignment and assumption contemplated
hereby.
Exhibit F-5
10. Miscellaneous.
(a) Any amendment or waiver of any provision of this Assignment and
Acceptance shall be in writing and signed by the parties hereto. No failure or
delay by either party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof and any waiver of any breach of the
provisions of this Assignment and Acceptance shall be without prejudice to any
rights with respect to any other or further breach thereof.
(b) All payments made hereunder shall be made without any set-off or
counterclaim.
(c) The Assignor and the Assignee shall each pay its own costs and
expenses incurred in connection with the negotiation, preparation, execution and
performance of this Assignment and Acceptance.
(d) This Assignment and Acceptance may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
(e) this assignment and acceptance shall be governed by and construed in
accordance with the law of the state of illinois. The Assignor and the Assignee
each irrevocably submits to the non-exclusive jurisdiction of any State or
Federal court sitting in Illinois over any suit, action or proceeding, arising
out of or relating to this Assignment and Acceptance and irrevocably agrees that
all claims in respect of such action or proceeding may be heard and determined
in such Illinois State or Federal court. Each party to this Assignment and
Acceptance hereby irrevocably waives, to the fullest extent it may effectively
do so, the defense of an inconvenient forum to the maintenance of such action or
proceeding.
(f) the assignor and the assignee each hereby knowingly, voluntarily and
intentionally waive any rights they may have to a trial by jury in respect of
any litigation based hereon, or arising out of, under, or in connection with
this assignment and acceptance, the credit agreement, any related documents and
agreements or any course of conduct, course of dealing, or statements (whether
oral or written).
[other provisions to be added as may be negotiated between the assignor
and the assignee, provided that such provisions are not inconsistent with the
credit agreement.]
Exhibit F-6
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment and Acceptance to be executed and delivered by their duly authorized
officers as of the date first above written.
[ASSIGNOR]
By: ________________________________
[Printed Name and Title]
[ASSIGNEE]
By: ________________________________
[Printed Name and Title]
Exhibit F-7
SCHEDULE 1
NOTICE OF ASSIGNMENT AND ACCEPTANCE
Bank of America, N.A.
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ________________
The ▇▇▇▇▇▇ Group, Inc.
[Address]
Ladies and Gentlemen:
We refer to the Revolving Credit Agreement dated as of _______, _____ (as
amended, amended and restated, modified, supplemented or renewed from TIME TO
TIME THE "CREDIT AGREEMENT") among The ▇▇▇▇▇▇ Group, Inc., a Maryland
CORPORATION (THE "COMPANY"), the Banks referred to therein , Bank One, NA, as
Syndication Agent, Guaranty Federal Bank, F.S.B., as Co-Agent, Bank United, as
Co-Agent, and Bank of America, N.A., as Administrative Agent for the Banks (THE
"ADMINISTRATIVE AGENT"). Terms defined in the Credit Agreement are used herein
as therein defined.
1. We hereby give you notice of, and request your consent to, the
ASSIGNMENT BY _________ (THE "ASSIGNOR") TO _____________ (THE "ASSIGNEE") of
% of the right, title and interest of the Assignor in and to the Credit
Agreement (including, without limitation, the right, title and interest of the
Assignor in and to the Commitments of the Assignor and all outstanding Loans and
L/C Obligations made by the Assignor) pursuant to the Assignment AND ACCEPTANCE
AGREEMENT ATTACHED HERETO (THE "ASSIGNMENT AND ACCEPTANCE"). Before giving
effect to such assignment, the Assignor's Commitment is $________ and the
aggregate amount of its outstanding Loans is $______________. After giving
effect to such assignment, the Assignor's Commitment shall be $_____________ and
the Assignee's Commitment shall be
$------------.
2. The Assignee agrees that, upon receiving the consent of the
Administrative Agent and, if applicable, the Company to such assignment, the
Assignee will be bound by the terms of the Credit Agreement as fully and to the
same extent as if the Assignee were the Bank originally holding such interest in
the Credit Agreement.
Schedule 1 to Exhibit "F" - Page 1
3. The following administrative details apply to the Assignee:
(A) Notice Address:______________________________
Assignee name: ______________________________
Address: ______________________________
______________________________
Attention: ______________________________
Telephone: (___)__________________________
Telecopier: (___)__________________________
(B) Payment Instructions:
Account No.: ______________________________
At: ______________________________
Reference: ______________________________
Attention: ______________________________
4. You are entitled to rely upon the representations, warranties and
covenants of each of the Assignor and Assignee contained in the Assignment and
Acceptance.
Schedule 1 to Exhibit "F" - Page 2
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Notice
of Assignment and Acceptance to be executed by their respective duly authorized
officials, officers or agents as of the date first above mentioned.
Very truly yours,
[NAME OF ASSIGNOR]
By: ________________________
Title: ________________________
[NAME OF ASSIGNEE]
By: ________________________
Title: ________________________
Schedule 1 to Exhibit "F" Page 3
ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:
THE ▇▇▇▇▇▇ GROUP, INC.
By: ___________________
Title: ___________________
BANK OF AMERICA, N.A.,
as Administrative Agent
By: ___________________
Title: ___________________
Schedule 1 to Exhibit "F" Page 4
EXHIBIT G
FORM OF COMPLIANCE CERTIFICATE
Figures for reporting period ending:
Pursuant to subsection 6.2(b) of the Credit Agreement dated as of _____,
1999 (as amended, supplemented, amended and restated, renewed or otherwise
modified from time to time, the "Credit Agreement"), among The ▇▇▇▇▇▇ Group,
Inc. (the "Company"), the financial institutions party thereto, Guaranty Federal
Bank, F.S.B., as Co-Agent, Bank United as Co-Agent, Bank One, NA, as Syndication
Agent, and Bank of America, N.A., as Administrative Agent, the undersigned, the
duly elected, qualified and acting Responsible Official of the Company, hereby
certifies that:
(a) To the best of such Authorized Official's knowledge, the Company and
each of its Subsidiaries has, during the period or periods referred to above or
with respect to each covenant as set forth below, observed and performed all of
its covenants and other agreements, and satisfied every condition, contained in
the Credit Agreement to be observed, performed or satisfied by such party, and
as of the date hereof such Authorized Official has obtained no knowledge of any
Default of Event of Default except as follows:
(b) The calculations set forth below with respect to the covenants listed
below, the supporting information with respect thereto and the information set
forth in Appendix A hereto, are based upon the financial statements of the
Company and its Subsidiaries for the fiscal quarter of the Company ended.
FINANCIAL CONDITION COVENANTS:
7.1 MAINTENANCE OF CONSOLIDATED TANGIBLE NET WORTH OF THE COMPANY
Covenant-Requirement that the Company maintain a minimum level of
Consolidated Tangible Net Worth. The amount permitted is based upon the
following:
Consolidated Tangible Net Worth shall not be less than:
(i) $265,000,000 on 3/31/99
(ii) or on the last day of any quarter after 3/31/99: $265,000,000 +
50% of positive Consolidated Net Income (without deduction for
losses sustained during any fiscal quarter)
$ ______________________
+ 90% of Equity Proceeds
Consolidated net worth at the end
of the reporting period _____________________
Intangibles _____________________
Consolidated Tangible Net Worth _____________________
Cushion (Violation) _____________________
7.2 RATIO OF COMBINED DEBT TO ADJUSTED CONSOLIDATED TANGIBLE NET WORTH
Covenant Limitation on Combined Debt based on a formula. The formula
limitation is as follows:
Combined Debt of Homebuilding Segment ("CDHS") not to exceed 2.5
times Adjusted Consolidated Tangible Net Worth ("ACTNW") as set
forth below:
ACTNW = _____________________
Permitted CDHS _____________________
Total CDHS _____________________
Cushion (Violation) _____________________
7.3 FIXED CHARGE COVERAGE
MAINTENANCE OF FIXED CHARGE COVERAGE
Covenant - Fixed Charge not to be less than 1.75 to 1 for more than
two consecutive quarters ends for the Measurement Periods then
ending or 1.25 to 1 as at any fiscal quarter end for the Measurement
Period then ending.
Exhibit G-2
Fixed Charge Coverage =
Combined Net Income
+ FSS Distributions
+ Taxes
+ Depr. and Amort.
+ Interest Expense
+ Interest Capitalized
+ Interest Amortized Through Costs of Goods Sold
+ Non-recurring non-cash charges and expenses
- Non-recurring non-cash credits
- Non-cash equity interest in earnings from FSS Segment
Total EBITDA
to
Interest Expense Incurred
+ Principal Payments on long-term Indebtedness
+ Principal Portion of payments on Financing Leases
+ Dividends on Preferred Stock Total Fixed Charges
Resulting Fixed Charge Coverage ________to 1
7.4 SENIOR PERMITTED DEBT TO BORROWING BASE (SEE BORROWING BASE
CERTIFICATE)
7.5 LIMITATION ON LAND INVENTORY
UNSOLD RAW LAND ____________
20% of Adjusted Consolidated Tangible Net Worth
Adjusted Consolidated Tangible Net Worth ____________
Ratio ____________
Cushion (Violation) ____________
Exhibit G-3
(b) Unsold Land is not to exceed an amount equal
to 150% of Adjusted Consolidated Tangible
Net Worth.
Unsold Raw Land ________
Unsold Land Under Development ________
Unsold Finished Lots ________
TOTAL ========
Adjusted Consolidated Tangible Net Worth ____________
Ratio ____________
Cushion (Violation) ____________
7.6 LIMITATION ON HOUSING INVENTORY UNSOLD HOUSING
Aggregate Number of Unsold Housing Units ____________
50% OF HOMES DELIVERED IN LAST 12 MONTH ____________
70% OF HOMES DELIVERED IN LAST SIX MONTHS ____________
Exhibit G-4
7.7 LIMITATION OF INDEBTEDNESS:
(i) LIMITATIONS ON ADDITIONAL INDEBTEDNESS
MATURING PRIOR TO MATURITY DATE $20,000,000
Permitted Debt $__________
7.13 LIMITATION OF INVESTMENTS
(d) LIMITATION ON OTHER ACQUISITIONS $25,000,000
Permitted Other Acquisitions
(e) COVENANT - INVESTMENTS IN JOINT VENTURES
Investments ___________
Limit (greater of (i) $45,000,000 or (ii)
15% of Consolidated Tangible Net Worth
less Investments in Default. ___________
7.14 LIMITATION ON OPTIONAL PAYMENTS AND
MODIFICATION OF DEBT INSTRUMENTS
SUBORDINATED DEBT PREPAID $__________
Permitted $25,000,000
IN WITNESS WHEREOF, I hereto set my name. _________________
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Treasurer
Date:
Exhibit G-5
[Appendix A to be added]
Exhibit G-6