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EXHIBIT 10.1
CREDIT AGREEMENT
AMONG
NEWMARK HOMES, L.P.
AND
BANK OF AMERICA, N.A.,
AS ADMINISTRATIVE AGENT, SWING LINE LENDER
AND
LETTER OF CREDIT ISSUING LENDER
AND
THE OTHER FINANCIAL
INSTITUTIONS PARTY HERETO
DATED AS OF JUNE 27, ▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ SECURITIES LLC,
AS
SOLE LEAD ARRANGER AND SOLE BOOK MANAGER
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TABLE OF CONTENTS
Section Page
SECTION 1.
DEFINITIONS AND ACCOUNTING TERMS 1
1.01 Defined Terms 1
1.02 Use of Certain Terms 23
1.03 Accounting Terms 23
1.04 Rounding 23
1.05 Exhibits and Schedules 24
1.06 References to Agreements and Laws 24
SECTION 2.
THE COMMITMENTS AND EXTENSIONS OF CREDIT 24
2.01 Committed Loans 24
2.02 Borrowings, Conversions and Continuations of Committed Loans 24
2.03 Purpose of Loans 25
2.04 Letters of Credit 25
2.05 Swing Line 29
2.06 Prepayments 30
2.07 Reduction or Termination of Commitments 30
2.08 Principal and Interest 30
2.09 Fees 31
2.10 Computation of Interest and Fees 31
2.11 Making Payments 31
2.12 Funding Sources 32
2.13 Extension of Maturity Date 32
SECTION 3.
BORROWING BASE, COLLATERAL AND RELEASES 33
3.01 Borrowing Base 33
3.02 Borrowing Base Values 34
3.03 Borrowing Base Inventory Limitations and Requirements 34
3.04 Periodic Establishment of Borrowing Base 36
3.05 Additions to Borrowing Base Inventory 36
3.06 Borrowing Base Reconciliation 40
3.07 Removal/Disapproval of Inventory from Borrowing Base 41
3.08 Collateral 41
3.09 Release of Inventory; Sales Report 41
SECTION 4.
TAXES, YIELD PROTECTION AND ILLEGALITY 42
4.01 Taxes 42
4.02 Capital Adequacy 42
4.03 Matters Applicable to all Requests for Compensation 43
4.04 Survival 43
SECTION 5.
CONDITIONS PRECEDENT TO EXTENSIONS OF CREDIT 43
5.01 Conditions of Initial Extension of Credit 43
5.02 Conditions to all Extensions of Credit 45
5.03 Conditions to Certain Extensions of Credit 45
5.04 Availability of Borrowings for Development Parcels 46
5.05 Order of Allocating Borrowings 46
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SECTION 6.
REPRESENTATIONS AND WARRANTIES 46
6.01 Existence and Qualification; Power; Compliance with Laws 46
6.02 Power; Authorization; Enforceable Obligations 47
6.03 No Legal Bar 47
6.04 Financial Statements; No Material Adverse Effect 47
6.05 Litigation 47
6.06 No Default 48
6.07 Ownership of Property; Liens 48
6.08 Taxes 48
6.09 Margin Regulations; Investment Company Act; Public
Utility Holding Company Act 48
6.10 ERISA Compliance 48
6.11 Intangible Assets 49
6.12 Compliance With Laws 49
6.13 Environmental Compliance 50
6.14 Disclosure 50
SECTION 7.
AFFIRMATIVE COVENANTS 50
7.01 Financial Statements 50
7.02 Certificates, Notices and Other Information 51
7.03 Payment of Taxes 52
7.04 Preservation of Existence 52
7.05 Maintenance of Properties 53
7.06 Insurance 53
7.07 Compliance With Laws 53
7.08 Inspection Rights 53
7.09 Keeping of Records and Books of Account 54
7.10 Compliance with ERISA 54
7.11 Compliance With Agreements 54
7.12 Use of Proceeds 54
7.13 Construction and Development Obligations 54
7.14 Cooperation with Construction Consultants; Limitation
on Payments to Construction Consultants 56
7.15 Advertising by Lenders 56
7.16 Separate Tax parcel and Platting Requirements 56
7.17 Borrower's Receipt of Master Deed of Trust 57
SECTION 8.
NEGATIVE COVENANTS 57
8.01 Indebtedness 57
8.02 Liens and Negative Pledges 57
8.03 Fundamental Changes 58
8.04 Dispositions 58
8.05 Investments 58
8.06 Lease Obligations 58
8.07 Restricted Payments 59
8.08 ERISA 59
8.09 Change in Nature of Business 59
8.10 Transactions with Affiliates 59
8.11 Limitations on Upstreaming 59
8.12 Financial Covenants 59
8.13 Composition and Inventory 60
8.14 Change in Auditors 60
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SECTION 9.
EVENTS OF DEFAULT AND REMEDIES 61
9.01 Events of Default 61
9.02 Remedies Upon Event of Default 62
SECTION 10.
ADMINISTRATIVE AGENT 65
10.01 Appointment and Authorization of Administrative Agent 65
10.02 Delegation of Duties 65
10.03 Liability of Administrative Agent 65
10.04 Reliance by Administrative Agent 66
10.05 Notice of Default 66
10.06 Credit Decision; Disclosure of Information by
Administrative Agent 66
10.07 Indemnification of Administrative Agent 67
10.08 Administrative Agent in Individual Capacity 67
10.09 Successor Administrative Agent 68
SECTION 11.
MISCELLANEOUS 68
11.01 Amendments; Consents; Consents of Guarantors 68
11.02 Transmission and Effectiveness of Notices and Signatures 69
11.03 Attorney Costs, Expenses and Taxes 70
11.04 Binding Effect; Assignment 70
11.05 Set-off 72
11.06 Sharing of Payments 72
11.07 No Waiver; Cumulative Remedies 72
11.08 Usury 73
11.09 Counterparts 73
11.10 Integration 73
11.11 Nature of Lenders' Obligations 73
11.12 Survival of Representations and Warranties 74
11.13 Indemnity by Borrower 74
11.14 Nonliability of Lenders 74
11.15 No Third Parties Benefitted 75
11.16 Severability 75
11.17 Confidentiality 75
11.18 Further Assurances 76
11.19 Headings 76
11.20 Time of the Essence 76
11.21 Foreign Lenders and Participants 76
11.22 Removal and/or Replacement of Lenders 77
11.23 Governing Law 77
11.24 Waiver of Right to Trial by Jury 78
11.25 Electronic Transmission of Data. 78
11.26 ENTIRE AGREEMENT 78
EXHIBITS
A Request for Extension of Credit
B Compliance Certificate
C Committed Loan Note
C-1 Form of Swing Line Note
D Notice of Assignment and Acceptance
E Borrowing Base Report
F Survey and Insurance Requirements
G Letter of Credit Application
H Panel Request for Homes, Model Units and Finished Lots
H-1 Development Parcel Request for Development Parcels
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SCHEDULES
2.01 Commitments and Pro Rata Shares
8.01 Existing Indebtedness, Liens and Negative Pledges
11.02 Domestic Lending Offices, Addresses for Notices
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CREDIT AGREEMENT
This CREDIT AGREEMENT (this "Agreement") is entered into as of June 27,
2000 by and among NEWMARK HOMES, L.P., a Texas limited partnership ("Borrower"),
each lender from time to time party hereto (collectively, "Lenders" and
individually, a "Lender"), and BANK OF AMERICA, N.A., as Administrative Agent
and Issuing Lender.
RECITAL
Borrower has requested that Lenders and Issuing Lender provide a
revolving line of credit, and Lenders, Issuing Lender and Administrative Agent
are willing to do so on the terms and conditions set forth herein.
In consideration of the mutual covenants and agreements herein
contained, the parties hereto covenant and agree as follows:
1. SECTION DEFINITIONS AND ACCOUNTING TERMS
2.01 DEFINED TERMS.
2.2 As used in this Agreement, the following terms shall have the meanings set
forth below:
2.3 "Actual Cost" means with respect to any Borrowing Base Inventory (a)
the actual cost incurred by Borrower in acquiring such Inventory plus (b) with
respect to other costs incurred by Borrower in developing such Inventory, the
sum of Hard Costs and Soft Costs incurred by Borrower related to such Inventory
less Borrower's overhead (other than direct construction overhead), but limited
to the amount for which Borrower is entitled to obtain a Borrowing pursuant to
Section 5.04.
2.4 "Adjusted Leverage Ratio" means, as of any date of determination, for
the Borrower and its Subsidiaries on a consolidated basis, the ratio of (a)
Consolidated Adjusted Indebtedness as of such date to (b) Consolidated Adjusted
Tangible Net Worth as of such date.
2.5 "Administrative Agent" means Bank of America, N.A., in its capacity as
Administrative Agent under any of the Loan Documents, or any successor
administrative agent.
2.6 "Administrative Agent's Office" means Administrative Agent's address
and, as appropriate, account as set forth on Schedule 11.02, or such other
address or account as Administrative Agent hereafter may designate by written
notice to Borrower and Lenders.
2.7 "Administrative Agent-Related Persons" means Administrative Agent
(including any successor agent), together with its Affiliates (including, in the
case of Administrative Agent, the Arranger), and the officers, directors,
employees, agents and attorneys-in-fact of such Persons and Affiliates.
2.8 "Affiliate" means any Person directly or indirectly controlling,
controlled by, or under direct or indirect common control with, another Person.
A Person shall be deemed to be "controlled by" any other Person if such other
Person possesses, directly or indirectly, power (a) to vote 10% or more of the
securities (on a fully diluted
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 1
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basis) having ordinary voting power for the election of directors or managing
general partners; or (b) to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.
2.9 "Agreement" means this Credit Agreement, as amended, restated,
extended, supplemented or otherwise modified in writing from time to time.
2.10 "Applicable Amount" means the following amounts per annum, based upon
the Leverage Ratio as set forth in the most recent Compliance Certificate
received by Administrative Agent pursuant to Section 7.02(b); provided, however,
that, until Administrative Agent receives the first Compliance Certificate after
the Closing Date, such amounts shall be those indicated for pricing level 4 set
forth below:
Applicable Amount (in basis points per annum)
Pricing Level Leverage Ratio Offshore Rate Base Rate +
------------- --------------------- ------------- -----------
1 < or = to 2.00:1 195 0
2 > 2.00:1 but < or = to 2.49:1 205 0
3 > or = to 2.50:1 but < or = to 2.99:1 215 0
4 > or = to 3.00:1 250 0
The Applicable Amount shall be in effect from the date the most recent
Compliance Certificate is received by Administrative Agent to but excluding the
date the next Compliance Certificate is received; provided, however, that if
Borrower fails to timely deliver the next Compliance Certificate, the Applicable
Amount from the date such Compliance Certificate was due to but excluding the
date such Compliance Certificate is received by Administrative Agent shall be
the highest pricing level set forth above, and, thereafter, the pricing level
indicated by such Compliance Certificate when received.
"Applicable Payment Date" means the tenth day of each calendar month
and the Maturity Date; provided, however, that interest accruing at the Default
Rate shall be payable from time to time at any time upon demand of
Administrative Agent.
"Appraisal" means a current market value appraisal or evaluation in
form and content satisfactory to Administrative Agent, ordered by Administrative
Agent (but at Borrower's cost) from an appraiser satisfactory to Administrative
Agent (including, as applicable to the appraiser, the Administrative Agent, the
appraisal and the evaluation, satisfaction of applicable laws for national banks
as in effect from time to time) which appraisal or evaluation with respect to a
Finished Lot, Model Unit or Home shall be on an "as completed, retail value
basis" and with respect to an Approved Land Parcel shall be on a "prospective
value as if completed" basis (a Finished Lot which was formerly part of an
Approved Land Parcel shall retain its "prospective values as if completed"
valuation).
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 2
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"Approved Market Areas" means Atlanta, Georgia; Austin, Texas; Dallas,
Texas; Houston, Texas; Indianapolis, Indiana; North Carolina; Phoenix, Arizona;
San Antonio, Texas; and Tennessee.
"Arranger" means Banc of America Securities LLC, in its capacity as
sole lead arranger and sole book manager.
"Attached Homes" means two to four family residential structures and
related amenities including any such structures under construction (as evidenced
by the existence of a building permit and the election by Borrower to treat such
property as an Attached Home in a Work in Progress Report), completed, unsold or
under contract for sale, but shall not include condominium units, cooperatives
or similar ownership structures.
"Attorney Costs" means and includes all fees and disbursements of any
law firm or other external counsel and the allocated cost of internal legal
services and all disbursements of internal counsel.
"Audited Financial Statements" means the audited consolidated balance
sheet of Borrower and its Subsidiaries for the fiscal year ended December 31,
1999, and the related consolidated statements of income and cash flows for such
fiscal year of Borrower.
"Bank of America" means Bank of America, N.A.
"Base Rate" means a fluctuating rate per annum equal to the rate of
interest in effect for such day as publicly announced from time to time by Bank
of America as its "prime rate." Such rate is a rate set by Bank of America based
upon various factors including Bank of America'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 such rate announced by Bank of America shall take effect at
the opening of business on the day specified in the public announcement of such
change.
"Base Rate Loan" means a Loan which bears interest based on the Base
Rate.
"Borrower" has the meaning set forth in the introductory paragraph
hereto.
"Borrower's Agents" means (a) all Borrower Parties and all Affiliates
thereof, (b) the directors, officers, partners, employees and agents of all
Borrower Parties and Affiliates thereof, (c) the heirs, personal
representatives, successors and assigns of each of the foregoing Persons, and
(d) any contractors, subcontractors, suppliers or anyone else connected to any
Borrower Party in the acquisition, construction or development of any Inventory.
"Borrower Party" means Borrower, Guarantors, or any Person other than
Lenders and any Affiliates of Lenders, Administrative Agent and Issuing Lender
from time to time party to a Loan Document.
"Borrowing Base" means the aggregate amount of the Borrower Base Values
established pursuant to Sections 3.01 and 3.02, but subject to the limitations
contained in Section 3.03, at any applicable time, by the Administrative Agent
which amount may be lesser or greater than the Combined Commitments.
"Borrowing Base Report" means a written report prepared by
Administrative Agent, based on the Budget Report and the Construction Base
Status Report, which report summarizes the Borrowing Base Values for all
Borrowing Base Inventory.
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 3
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"Borrowing Base Value" means the value of each piece of property
comprising the Borrowing Base Inventory for Borrowing Base purposes as set forth
in Section 3.02.
"Borrowing Base Inventory" means Development Parcels, Finished Lots,
Model Units and Homes which have been designated by Borrower and accepted and
approved by Administrative Agent to be utilized in calculating the Borrower
Base.
"Borrowing" and "Borrow" each mean a borrowing hereunder consisting of
Loans of the same type made on the same day.
"Borrowing Date" means the date that a Loan is made, which shall be a
Business Day.
"Budget" for each parcel to be included in the Borrowing Base Inventory
means the budget and cost itemization for the acquisition, development and/or
construction of such parcel (in form and content satisfactory to Administrative
Agent) prepared by Borrower and consented to by Administrative Agent, as amended
from time to time by reallocations approved by Administrative Agent.
"Budget Report" means the report prepared by Administrative Agent,
based on the Development Parcel Cost Report, which establishes the Borrowing
Base Value, and the availability of Borrowings, for the Development Parcels.
"Business Day" means any day other than a Saturday, Sunday, or other
day on which commercial banks are authorized to close under the Laws of, or are
in fact closed in, the state where Administrative Agent's Office is located.
"Change of Control" means any action which would cause (a) Borrower to
no longer be owned by Newmark Home Corporation as 1% general partner and NHC
Homes, Inc. as 99% limited partner, (b) Newmark Home Corporation to own less
than all of the equity interests in NHC Homes, Inc., (c) Newmark Homes Corp. to
own less than 100% of Newmark Home Corporation, (d) Technical Olympic USA, Inc.
to own less than 51% of the equity interests in Newmark Homes Corp., (e)
Technical Olympic USA, Inc. not to be owned in its entirety by Technical Olympic
(UK) PLC, and (f) Technical Olympic (UK) PLC not to be owned in its entirety by
Technical Olympic S.A.
"Change of Management" means that (a) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall cease to
serve as (i) President and Chief Executive Officer of Newmark Homes Corp. and
(ii) President and Chief Executive Officer of Newmark Home Corporation, (b) ▇▇▇▇
Rome shall cease to serve as (i) Executive Vice President of Homebuilding of
Newmark Homes Corp. and (ii) Chief Operating Officer of Newmark Home
Corporation, (c) ▇▇▇▇▇ ▇▇▇▇▇ shall cease to serve as Senior Vice President,
Chief Financial Officer, Treasurer and Secretary of Newmark Homes Corp. and
Newmark Home Corporation, or (d) there shall be designated officers of Borrower
which serve in such capacities similar to those offices described above by
individuals other than the individuals above designated; provided, that, (1) a
change in the title of any such Person shall not cause a Change of Management so
long as the duties and responsibilities such Person has on the Closing Date are
not reduced as a result of such change in title, (2) if any such occurrence is
due to the death or disability of a person serving in such capacity on the date
hereof, then such occurrence shall not be deemed a Change in Management until
the expiration of 180 days after the date of such death or disability without
the position left unoccupied by such death or disability being filled by a
person reasonably acceptable to Lenders, and (3) it shall not be a Change of
Management if any one of such officers shall cease to act in the capacity above
designated for such officer, so long as (i) the remaining two officers assume
the
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 4
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duties and responsibilities of the departing officer, and (ii) if ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
is the departing officer, ▇▇▇▇ Rome assumes the responsibilities and duties
formerly fulfilled by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
"Closing Date" means the date all the conditions precedent in Section
5.01 are satisfied or waived in accordance with Section 5.01.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Combined Commitments" has the meaning set forth in the definition of
"Commitment."
"Collateral" means all Borrowing Base Inventory, all contracts of sale,
permits, construction contracts, architect's contracts and other personal
property related to the Borrowing Base Inventory and proceeds of any of the
forgoing.
"Commitment" means, for each Lender, the obligation of such Lender to
make Extensions of Credit in an aggregate principal amount not exceeding the
amount set forth opposite such Lender's name on Schedule 2.01 at any one time
outstanding, as such amount may be reduced or adjusted from time to time in
accordance with this Agreement (collectively, the "Combined Commitments").
"Committed Loan" means a Loan of any type made to Borrower by Lenders
in accordance with its Pro Rata Share pursuant to Section 2.01, except as
otherwise provided herein.
"Committed Loan Note" means a promissory note made by Borrower in favor
of a Lender evidencing Committed Loans made by such Lender, substantially in the
form of Exhibit C (collectively, the "Committed Loan Notes").
"Completed Speculative Unit" means a Speculative Unit which is 95%
complete as shown in the Construction Base Status Report.
"Compliance Certificate" means a certificate in the form of Exhibit B,
properly completed and signed by a Responsible Officer of Borrower.
"Consolidated Adjusted Indebtedness" means, as of any date of
determination, Consolidated Indebtedness less Indebtedness owed to Related
Parties.
"Consolidated Adjusted Tangible Net Worth" means, as of any date of
determination, Consolidated Tangible Net Worth minus (a) Related Parties'
accounts receivables to the extent included in the computation of Consolidated
Tangible Net Worth plus (b) Related Parties' accounts payable to the extent
included in the computation of Consolidated Tangible New Worth.
"Consolidated Adjusted Working Capital" means (a) Consolidated Working
Capital plus (b) Indebtedness owed to Related Parties (to the extent included in
computing Consolidated Working Capital) minus (c) Indebtedness owed from Related
Parties (to the extent included in computing Consolidated Working Capital).
"Consolidated Current Assets" means, as of any date of determination,
the "Current Assets" shown on the then current financial statements of Borrower
and its Subsidiaries prepared in accordance with GAAP.
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"Consolidated Current Liabilities" means, as of any date of
determination, the "Current Liabilities" shown on the then current financial
statement of Borrower and its Subsidiaries prepared in accordance with GAAP.
"Consolidated EBITDA" means, for any period, for Borrower and its
Subsidiaries on a consolidated basis, an amount equal to the sum of (a)
Consolidated Net Income, (b) Consolidated Interest Charges, (c) the amount of
taxes, based on or measured by income, used or included in the determination of
such Consolidated Net Income, and (d) the amount of depreciation and
amortization expense deducted in determining such Consolidated Net Income.
"Consolidated Indebtedness" means, as of any date of determination, for
Borrower and its Subsidiaries on a consolidated basis, all Indebtedness of such
Persons.
"Consolidated Interest Charges" means, for any period, for Borrower and
its Subsidiaries on a consolidated basis, the sum of (a) all interest, premium
payments, fees, charges and related expenses payable by Borrower and its
Subsidiaries in connection with borrowed money (including capitalized interest)
or in connection with the deferred purchase price of assets, in each case to the
extent treated as interest in accordance with GAAP, and (b) the portion of rent
payable by Borrower and its Subsidiaries with respect to such period under
capital leases that is treated as interest in accordance with GAAP.
"Consolidated Net Income" means, for any period, for Borrower and its
Subsidiaries on a consolidated basis, the net income (after tax) of Borrower and
its Subsidiaries from continuing operations after extraordinary items (excluding
gains or losses from Dispositions of assets) for that period.
"Consolidated Tangible Net Worth" means, as of any date of
determination, for Borrower and its Subsidiaries on a consolidated basis, an
amount equal to (a)(i) the assets of Borrower and its Subsidiaries determined on
a consolidated basis in accordance with GAAP on that date minus (ii) the
Intangible Assets of Borrower and its Subsidiaries determined on a consolidated
basis in accordance with GAAP on that date minus (b) the liabilities of Borrower
and its Subsidiaries determined on a consolidated basis in accordance with GAAP
on that date.
"Consolidated Working Capital" means (a) Consolidated Current Assets
plus the value of Homes, Model Units, Lots and Development Parcels (as
determined in accordance with GAAP) minus (b) Consolidated Current Liabilities
plus any Indebtedness not included in Consolidated Current Liabilities but which
is associated with any Homes, Model Units, Lots and Development Parcels.
"Construction Base Status Report" means the report prepared by
Administrative Agent, based on the Work in Progress Report, which establishes
the Borrowing Base Values for the Borrowing Base Inventory (other than
Development Parcels).
"Construction Consultant" means each Person who may from time to time
at the request of Administrative Agent perform for Lenders (but at Borrower's
cost) consulting services regarding improvements being made to the Collateral,
including but not limited to review of Plans and changes in them, observation of
construction work, and review of Applications for Advances, Budget Reports and
Construction Base Status Reports.
"Construction Contract" means regarding any Loan, each contract
executed by any Borrower Party (an "Original Contract", and the person
contracting with a Borrower Party being an "Original Contractor"), and each
other contract however remote (a "Subcontract") made by any person (a
"Subcontractor") with an Original
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 6
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Contractor or with another Subcontractor to fulfill any part of any Original
Contract, concerning the furnishing of labor, material or services for the
development or construction of any of the Inventory.
"Contingent Obligation" means, as to any Person, any (a) guaranty by
that Person of Indebtedness of, or other obligation payable or performable by,
any other Person or (b) assurance, agreement, letter of responsibility, letter
of awareness, undertaking or arrangement given by that Person to an obligee of
any other Person with respect to the payment or performance of an obligation by,
or the financial condition of, such other Person, whether direct, indirect or
contingent, including any purchase or repurchase agreement covering such
obligation or any collateral security therefor, any agreement to provide funds
(by means of loans, capital contributions or otherwise) to such other Person,
any agreement to support the solvency or level of any balance sheet item of such
other Person or any "keep-well" or other arrangement of whatever nature given
for the purpose of assuring or holding harmless such obligee against loss with
respect to any obligation of such other Person; provided, however, that the term
Contingent Obligation shall not include endorsements of instruments for deposit
or collection in the ordinary course of business. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the related primary obligation, or portion thereof, covered by such
Contingent Obligation or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by the Person in good
faith.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or undertaking to
which such Person is a party or by which it or any of its property is bound.
"Conversion" and "Convert" mean, with respect to any Loan, the
conversion of such Loan from or into another type of Loan.
"Cure Period" means the ten day written notice from Administrative
Agent to Borrower and opportunity to cure for a monetary Default and thirty day
written notice from Administrative Agent to Borrower and opportunity to cure for
a non-monetary Default. Borrower shall be limited to two written notices of
Default and opportunity to cure from Administrative Agent per twelve-month
period.
"Debtor Relief Laws" means the Bankruptcy Code of the United States of
America, and all other liquidation, conservatorship, bankruptcy, assignment for
the benefit of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States of America or
other applicable jurisdictions from time to time in effect affecting the rights
of creditors generally.
"Declining Lender" has the meaning set forth in Section 2.13(b).
"Declining Lender Replacement Period" has the meaning set forth in
Section 2.13(b).
"Default" means any event that, with the giving of any notice, the
passage of time, or both, would be an Event of Default.
"Default Rate" means an interest rate equal to the Base Rate plus the
Applicable Amount, if any, applicable to Base Rate Loans plus 2% per annum, to
the fullest extent permitted by applicable Laws; provided, however, that with
respect to an Offshore Rate Loan, the Default Rate shall be an interest rate
equal to the interest rate (including any Applicable Amount) otherwise
applicable to such Loan plus 2% per annum.
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"Designated Deposit Account" means a deposit account to be maintained
by Borrower with Bank of America, as from time to time designated by Borrower by
written notification to Administrative Agent.
"Detached Single Family Home" means a single family residential
structure and related amenities, including any such structure under construction
(as evidenced by the existence of a building permit and the election by Borrower
to treat such property as a Home in a Work in Progress Report), completed,
unsold or under contract for sale.
"Development Parcel" means a parcel of land (a) on which physical site
work has commenced or is scheduled to commence within thirty (30) days after
such parcel of land becomes part of the Collateral, (b) which, due to such site
work, will be developed into subdivision lots during the twelve calendar month
period commencing with the date such parcel of land becomes part of the
Collateral, (c) for which all requirements of all Governmental Authorities have
been obtained for the development thereof in accordance with the approved plat
and all applicable utilities are available to such parcel, and (d) upon which
the Lenders hold a first lien under a Mortgage insured as such by Title
Insurance.
"Development Parcel Cost Report" means the report prepared by Borrower
in form and substance satisfactory to Administrative Agent and in sufficient
detail for Lenders to determine the Borrowing Base for Development Parcels,
which shows for each of the Development Parcels, the number of Lots completed
therein, and the Actual Costs incurred as of the date thereof.
"Disposition" or "Dispose" means the sale, transfer, license or other
disposition (including any sale and leaseback transaction) of any property by
any Person.
"Dollar" and "$" means lawful money of the United States of America.
"Down Date Waiver" has the meaning set forth in Section 9.02(c).
"Eligible Assignee" means (a) a financial institution 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; (c) a Person that is primarily engaged in the business of
commercial banking and that is (i) a Subsidiary of a Lender, (ii) a Subsidiary
of a Person of which a Lender is a Subsidiary, or (iii) a Person of which a
Lender is a Subsidiary; (d) another Lender; (e) any other entity which is an
"accredited investor" (as defined in Regulation D under the Securities Act of
1933, as amended) which extends credit or buys loans as one of its businesses,
including but not limited to, insurance companies, mutual funds and lease
financing companies; or (f) other lenders or institutional investors consented
to in writing in advance by Administrative Agent and Borrower (provided that
Borrower shall not have any right to approve a potential assignee after and
during the continuance of a Default). No Borrower Party or any Affiliate of a
Borrower Party shall be an Eligible Assignee.
"Environmental Indemnity" means that certain Environmental Indemnity
Agreement executed by Borrower in favor of Administrative Agent and Lenders
related to the Collateral.
"Environmental Laws" means all foreign, federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directed duties, requests, licenses,
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 8
14
authorizations and permits of, and agreements with, any Governmental Authority,
in each case relating to environmental, health, safety and land use matters
applicable to any property.
"Environmental Report" means an Environmental Site Assessment by an
engineering firm approved by Administrative Agent, demonstrating to
Administrative Agent's satisfaction that there is no hazardous or toxic material
or substance which has been generated, treated, stored, released or disposed of
on the applicable Inventory, and there is no evidence of any violation of any
Environmental Law, which report shall be based, at a minimum, on (a) an on-site
inspection of the applicable property, (b) a review of a twenty year use history
from available title and business records, (c) an investigation for underground
storage tanks, (d) an inventory of existing state and federal CERCLA sites,
landfills and chemical storage areas in reasonable proximity to such property,
(e) if appropriate, a surface waterflow analysis of the site, (f) all other
procedures then customary for Phase I Environmental Site Assessments, and (g) if
the firm performing such work discovers any evidence during such Phase I
Environmental Site Assessment which would ordinarily require further
investigation among prudent, careful environmental engineering firms, such
additional investigations as would normally be recommended in such
circumstances.
"ERISA" means the Employee Retirement Income Security Act of 1974 and
any regulations issued pursuant thereto, as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with Borrower within the meaning of Sections
414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes
of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by Borrower or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by Borrower or any ERISA Affiliate
from a Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate, the treatment
of a ERISA Plan amendment as a termination under Sections 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan or
Multiemployer Plan; or (f) the imposition of any liability under Title IV of
ERISA, other than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon Borrower or any ERISA Affiliate.
"ERISA Plan" means any employee benefit plan maintained or contributed
to by a Borrower Party or by any trade or business (whether or not incorporated)
under common control with a Borrower Party as defined in Section 4001(b) of
ERISA and insured by the PBGC under Title IV of ERISA.
"Event of Default" means any of the events specified in Section 9.
"Excusable Delays" means unusually adverse weather conditions which
have not been taken into account in the construction schedule, fire or other
casualty, labor disputes (exclusive, however, of offensive lockouts or strikes
resulting from the failure of Borrower, any Original Contractor, or any
Subcontractor to bargain in good faith), or other unforeseen circumstances or
events (except financial circumstances or events or matters which may be
resolved by the payment of money) beyond the control of Borrower.
"Extension Effective Date" has the meaning set forth in Section
2.13(c).
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 9
15
"Extension of Credit" means (a) the Borrowing of Loans, (b) the
Conversion of any Loans, or (c) any Letter of Credit Action which has the effect
of increasing the amount of any Letter of Credit, extending the maturity of any
Letter of Credit or making any material modification to any Letter of Credit or
the reimbursement of drawings thereunder (collectively, the "Extensions of
Credit").
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards to the nearest 1/100 of 1%) 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 by the
Federal Reserve Bank on the Business Day next succeeding such day; provided that
(a) if such day is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (b) if no such rate is so
published on such next succeeding Business Day, the Federal Funds Rate for such
day shall be the average rate charged to Bank of America on such day on such
transactions as determined by Administrative Agent.
"Finished Lot" means any Lot (a) for which all requirements of the
applicable Governmental Authorities have been satisfied, or can be satisfied,
for construction of a Home thereon, (b) for which Borrower has received
confirmation that all utilities are available to the site in the capacities
needed, and all roads and streets contemplated by the approved plat related
thereto have been, or will be, completed on a timely basis, (c) for which all
major infrastructure has been completed, and (d) which is not located in any
Development Parcel which has failed to be completed within the twelve month
period commencing on the date such land parcel became part of the Collateral.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or such other principles as may be
approved by a significant segment of the accounting profession, that are
applicable to the circumstances as of the date of determination, consistently
applied. If at any time any change in GAAP would affect the computation of any
financial ratio or requirement set forth in any Loan Document, and either
Borrower or the Requisite Lenders shall so request, Administrative Agent,
Lenders and Borrower shall negotiate in good faith to amend such ratio or
requirement to preserve the original intent thereof in light of such change in
GAAP (subject to the approval of the Requisite Lenders), provided that, until so
amended, (a) such ratio or requirement shall continue to be computed in
accordance with GAAP prior to such change therein and (b) Borrower shall provide
to Administrative Agent and Lenders financial statements and other documents
required under this Agreement or as reasonably requested hereunder setting forth
a reconciliation between calculations of such ratio or requirement made before
and after giving effect to such change in GAAP.
"Governing State" means the State of Texas.
"Governmental Authority" means (a) any international, foreign, federal,
state, county or municipal government, or political subdivision thereof, (b) any
governmental or quasi-governmental agency, authority, board, bureau, commission,
department, instrumentality, central bank or public body, or (c) any court,
administrative tribunal or public utility.
"Guarantors" means, collectively, Newmark Homes Corp., Newmark Home
Corporation and NHC Homes, Inc., and "Guarantor" means any one of the
Guarantors.
"Guaranty" means one or more guaranty agreements in form and substance
acceptable to Lenders executed by Guarantors by which Guarantors guaranty
payment and performance of the Obligations.
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 10
16
"Hard Costs" means the direct costs of constructing the applicable
Inventory, as identified as "Hard Costs" in the Unit or Plan Type Budget (for
Model Units, Homes and Finished Lots) and the Development Parcel Cost Reports
(for Development Parcels).
"Home" means a Detached Single Family Home or an Attached Home.
"Indebtedness" means as to any Person at a particular time, all items
which would, in conformity with GAAP, be classified as liabilities on a balance
sheet of such Person as at such time (excluding trade and other accounts payable
in the ordinary course of business in accordance with customary trade terms and
which are not overdue for a period of more than 60 days and excluding deferred
taxes), but in any event including:
(a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments;
(b) any direct or contingent obligations of such Person
arising under letters of credit (including standby and commercial),
banker's acceptances, bank guaranties, surety bonds and similar
instruments;
(c) net obligations under any Swap Contract in an amount equal
to (i) if such Swap Contract has been closed out, the termination value
thereof, or (ii) if such Swap Contract has not been closed out, the
▇▇▇▇-to-market value thereof determined on the basis of readily
available quotations provided by any recognized dealer in such Swap
Contract;
(d) whether or not so included as liabilities in accordance
with GAAP, all obligations of such Person to pay the deferred purchase
price of property or services, and indebtedness (excluding prepaid
interest thereon) secured by a Lien on property owned or being
purchased by such Person (including indebtedness arising under
conditional sales or other title retention agreements), whether or not
such indebtedness shall have been assumed by such Person or is limited
in recourse;
(e) lease payment obligations under capital leases or
Synthetic Lease Obligations; and
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 11
17
(f) all Contingent Obligations of such Person in respect of
any of the foregoing.
For all purposes of this Agreement, the Indebtedness of any Person
shall include the Indebtedness of any partnership or joint venture in which such
Person is a general partner or a joint venturer, unless such Indebtedness is
expressly made non-recourse to such Person except for customary exceptions to
the non-recourse provision acceptable to the Requisite Lenders.
"Intangible Assets" means assets that are considered to be intangible
assets under GAAP, including goodwill, computer software, copyrights, trade
names, trade marks, patents, unamortized deferred charges, and unamortized debt
discount.
"Interest Coverage Ratio" means, as of any date of determination, the
ratio of (a) the sum of (i) Consolidated EBITDA for the period of the four prior
fiscal quarters ending on such date and (ii) lease and rental expense of
Borrower and its Subsidiaries on a consolidated basis for such period to (b) the
sum of (i) Consolidated Interest Charges during such period and (ii) lease and
rental expense during such period.
"Indemnified Liabilities" has the meaning set forth in Section 11.13.
"Inventory" means all (a) real property and improvements and
(b) personal property and fixtures which are or shall be located in or on,
attached to, or otherwise incorporated into a subdivision, subdivision lot or
dwelling and for which Borrower or any Borrower Party has good and indefeasible
title as to the real property and good and marketable title as to personal
property, including but not limited to Development Parcels, Finished Lots, Model
Units and Homes.
"Inventory Addition Request" means a written request
substantially in the form of Exhibit H (a Panel Request for Homes, Model Units
and Finished Lots) or H-1 (a Development Parcel Request for Development
Parcels), duly completed and signed by a Responsible Officer.
"Investment" means, as to any Person, any acquisition or any investment
by such Person, whether by means of the purchase or other acquisition of stock
or other securities of any other Person or by means of a loan, creating a debt,
capital contribution, guaranty or other debt or equity participation or interest
in any other Person, including any partnership and joint venture interests in
such other Person. For purposes of covenant compliance, the amount of any
Investment shall be the amount actually invested, without adjustment for
subsequent increases or decreases in the value of such Investment.
"IRS" means the Internal Revenue Service.
"Issuing Lender" means Bank of America, or any successor issuing lender
hereunder.
"Laws" or "Law" means, collectively, all international, foreign,
federal, state and local statutes, treaties, rules, guidelines, regulations,
ordinances, codes and administrative or judicial precedents or authorities,
including the interpretation or administration thereof by any Governmental
Authority charged with the enforcement, interpretation or administration
thereof, in each case whether or not having the force of law.
"Lender" means each lender from time to time party hereto and Issuing
Lender.
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 12
18
"Lending Office" means, as to any Lender, the office or offices of such
Lender described as such on Schedule 11.02, or such other office or offices as
such Lender may from time to time notify Borrower and Administrative Agent.
"Letter of Credit" means any letter of credit issued or outstanding
hereunder.
"Letter of Credit Action" means the issuance, supplement, amendment,
renewal, extension, modification or other action relating to a Letter of Credit.
"Letter of Credit Application" means an application for a Letter of
Credit Action as shall at any time be in use by Issuing Lender and shall
initially be in the form as attached hereto as Exhibit G.
"Letter of Credit Cash Collateral Account" means a blocked deposit
account at Bank of America with respect to which Borrower hereby grants a
security interest in such account to Administrative Agent for and on behalf of
Lenders as security for Letter of Credit Usage and with respect to which
Borrower agrees to execute and deliver from time to time such documentation as
Administrative Agent may reasonably request to further assure and confirm such
security interest.
"Letter of Credit Commitment" means an amount equal to the lesser of
the Combined Commitments and $12,000,000.
"Letter of Credit Expiration Date" means the Maturity Date.
"Letter of Credit Usage" means, as at any date of determination, the
aggregate undrawn face amount of outstanding Letters of Credit plus the
aggregate amount of all drawings under the Letters of Credit honored by Issuing
Lender and not reimbursed to Issuing Lender by Borrower or converted into
Committed Loans.
"Leverage Ratio" means, as of any date of determination, for the
Borrower and its Subsidiaries on a consolidated basis, the ratio of (a)
Consolidated Indebtedness as of such date to (b) Consolidated Tangible Net Worth
as of such date.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement (in the nature of compensating balances, cash collateral accounts or
security interests), encumbrance, lien (statutory or other), charge, or
preference, priority or other security interest or preferential arrangement of
any kind or nature whatsoever (including 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 or comparable Laws of any jurisdiction), including
the interest of a purchaser of accounts receivable.
"Loan" means any advance made by any Lender to Borrower as provided in
Section 2.01 (collectively, the "Loans").
"Loan Deed of Trust" means a Deed of Trust, Security Agreement and
Financing Statement in form and content approved by Administrative Agent, to be
executed by Borrower with respect to the Borrowing Base Inventory located in the
State of Texas incorporating the provisions of the Master Deed of Trust pursuant
to Section 12.009 of the Texas Property Code. In the event of a conflict between
the terms and provisions of the Master Deed of Trust and the Loan Deed of Trust,
the terms and conditions of the Loan Deed of Trust shall control in all
respects.
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 13
19
"Loan Documents" means this Agreement, any Letter of Credit
Application, any Request for Extension of Credit, any Note, any Mortgage, any
other Security Document, any certificate, any fee letter, and other instruments,
documents or agreements from time to time delivered in connection with this
Agreement.
"Lot" means an entire, unimproved but fully developed single family
residential lot.
"Major Subcontractor" means any Subcontractor which is to provide
labor, material or services with an aggregate value in excess of $250,000.
"Market Value" means the value for each parcel of property included in
the Borrowing Base Inventory as determined by Administrative Agent, in its
reasonable discretion, provided that, when making such determination,
Administrative Agent shall consider the market value assigned to such parcel of
property in the most recent Appraisal therefor ordered by Administrative Agent.
If Borrower disagrees with any Appraisal received by Administrative Agent,
Borrower shall be entitled to so notify Administrative Agent, and Administrative
Agent may, in its reasonable determination, elect to obtain another Appraisal to
assist Administrative Agent in establishing the Market Value of such parcel of
property.
"Master Deed of Trust" means each Master Deed of Trust, in form and
content approved by Administrative Agent and filed or to be filed by
Administrative Agent in each county within the State of Texas in which any of
the Collateral is located pursuant to Section 12.009 of the Texas Property Code,
as from time to time amended or supplemented.
"Material Adverse Effect" means any set of circumstances or events
which (a) has any material adverse effect whatsoever upon the ability of
Administrative Agent or any Lender to enforce any material provision of any Loan
Document, (b) is or could reasonably be expected to be material and adverse to
the condition (financial or otherwise), business, assets, operations or
prospects of Borrower or any Guarantor, or (c) materially impairs or could
reasonably be expected to materially impair the ability of Borrower or any
Guarantor to perform the Obligations.
"Maturity Date" means June 27, 2003, as it may be earlier terminated or
extended in accordance with the terms hereof.
"Minimum Amount" means, with respect to each of the following actions,
the minimum amount and any multiples in excess thereof set forth opposite such
action:
MULTIPLES IN EXCESS
TYPE OF ACTION MINIMUM AMOUNT THEREOF
-------------- -------------- -------------------
Borrowing under Swing Line Loans $ 250,000 None
(or such lesser amount
in connection with the
funding of Borrowings
related to the
addition of new
Borrowing Base
Inventory)
Other Borrowings or Prepayments $ 1,000,000 None
(except for Borrowings
to clear Swing Line)
Letter of Credit Action $ 100,000 None
Reduction in Commitments $ 1,000,000 $500,000
Assignments and Hold Amount $10,000,000 None
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 14
20
"Model Unit" means any Unit owned by Borrower or any Subsidiary which
(a) is to be fully completed, decorated, and furnished for use as a Model for
display to prospective purchasers of Homes built by Borrower or any Subsidiary
in the particular subdivision in which such Model Unit is located and (b) in
which such Borrower or Subsidiary maintains a sales office which is open to the
public and staffed by that Borrower's or Subsidiary's sales personnel during
normal business hours or which is located on a Lot or Lots adjacent and attached
to a Lot or Lots upon which that Borrower or Subsidiary maintains such sales
office.
"Mortgage" means any mortgage, deed of trust, or other Lien document
covering part of the Collateral executed by Borrower or a Borrower Party, in
favor of Administrative Agent, for the benefit of the Lenders, to secure
repayment of the Obligations complying with all Laws of the applicable
jurisdiction for creating a valid lien on the subject Collateral and for
recording in such jurisdiction, substantially in the form approved by
Administrative Agent, and all renewals, extensions, modifications, amendments or
supplements thereto, including, without limitation, all Master Deeds of Trust
and Loan Deeds of Trust.
"Multiemployer Plan" means any employee benefit plan of the type
described in Section 4001(a)(3) of ERISA.
"Negative Pledge" means a Contractual Obligation that restricts Liens
on property.
"Notes" means the Committed Loan Notes.
"Notice of Assignment and Acceptance" means a Notice of Assignment and
Acceptance substantially in the form of Exhibit D.
"Obligations" means all advances to, and debts, liabilities,
obligations, covenants and duties of, any Borrower Party arising under any Loan
Document, whether direct or indirect (including those acquired by assignment),
absolute or contingent, due or to become due, now existing or hereafter arising
and including interest that accrues after the commencement of any proceeding
under any Debtor Relief Laws by or against any Borrower Party.
"Offshore Rate" means a rate per annum determined by Administrative
Agent equal to the London Interbank Offered Rate (Libor) for one month quoted in
the most recently published issue of the Interactive Edition of The Wall Street
Journal in the "Money Rates" column, which rate shall be effective as provided
in Section 2.02(c). If the Wall Street Journal London Interbank Offered Rate
ceases to be made available by the publisher, or any successor to the publisher
of The Wall Street Journal, the interest rate will be determined by
Administrative Agent using a comparable index. If more than one Wall Street
Journal London Interbank Offered Rate for one month is quoted, the higher rate
shall apply. Any change in the Offshore Rate under outstanding Offshore Rate
Loans shall take effect at the opening of business on the second Business Day
after the date such change is first published in The Wall Street Journal or
comparable service.
"Offshore Rate Loan" means a Committed Loan bearing interest
based on the Offshore Rate.
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 15
21
"Ordinary Course Indebtedness" means:
(a) Indebtedness under the Loan Documents;
(b) Intercompany Contingent Obligations of Borrower or any of
its Subsidiaries guarantying Indebtedness otherwise permitted hereunder
of Borrower or any wholly-owned Subsidiary of Borrower;
(c) Indebtedness arising from the honoring of a check, draft
or similar instrument against insufficient funds; and
(d) Ordinary Course Swap Obligations.
"Ordinary Course Investments" means:
(a) Investments consisting of cash and cash equivalents;
(b) Investments consisting of advances to officers, directors
and employees of Borrower and its Subsidiaries for travel,
entertainment, relocation and analogous ordinary business purposes;
(c) Investments of Borrower in any of its Subsidiaries and
Investments of any Subsidiary of Borrower in Borrower or another
Subsidiary of Borrower;
(d) Investments consisting of or evidencing the extension of
credit to customers or suppliers of Borrower and its Subsidiaries in
the ordinary course of business and any Investments received in
satisfaction or partial satisfaction thereof; and
(e) Investments consisting of Contingent Obligations permitted
by Section 8.01.
"Ordinary Course Liens" means:
(a) Liens pursuant to any Loan Document;
(b) Liens for taxes not yet due or which are being contested
in good faith and by appropriate proceedings, if adequate reserves with
respect thereto are maintained on the books of the applicable Person in
accordance with GAAP;
(c) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 30 days or
which are being contested in good faith and by appropriate proceedings,
if, as elected by Administrative Agent, either adequate reserves with
respect thereto are maintained on the books of the applicable Person or
Borrower has caused the applicable Title Insurer to "insure around" any
such lien to Administrative Agent's satisfaction;
(d) pledges or deposits in connection with worker's
compensation, unemployment insurance and other social security
legislation;
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 16
22
(e) 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;
(f) blanket Liens filed in the ordinary course of business by
the manufacturers of appliances installed in Homes; and
(g) attachment, judgment or other similar Liens arising in
connection with litigation or other legal proceedings (and not
otherwise a Default hereunder) in the ordinary course of business that
is currently being contested in good faith by appropriate proceedings,
adequate reserves have been set aside and no Collateral or other
material property is subject to a material risk of loss or forfeiture
and the claims in respect of such Liens are fully covered by insurance
(subject to ordinary and customary deductibles).
"Ordinary Course Swap Obligations" means all obligations (contingent or
otherwise) of Borrower or any Subsidiary existing or arising under any Swap
Contract, provided that each of the following criteria is satisfied: (a) such
obligations are (or were) entered into by such Person in the ordinary course of
business for the purpose of directly mitigating risks associated with
liabilities, commitments or property held or reasonably anticipated by such
Person, or changes in the value of securities issued by such Person in
conjunction with a securities repurchase program not otherwise prohibited
hereunder, and not for purposes of speculation or taking a "market view;" and
(b) such Swap Contracts do not contain (i) any provision ("walk-away" provision)
exonerating the non-defaulting party from its obligation to make payments on
outstanding transactions to the defaulting party, or (ii) any provision creating
or permitting the declaration of an event of default, termination event or
similar event upon the occurrence of an Event of Default hereunder (other than
an Event of Default under Section 9.01(f)(iii)).
"Organization Documents" means, (a) with respect to any corporation,
the certificate or articles of incorporation and the bylaws; (b) with respect to
any limited liability company, the articles of formation and operating
agreement; and (c) with respect to any partnership, joint venture or other form
of business entity, the partnership agreement and any agreement, filing or
notice with respect thereto filed with the secretary of state of the state of
its formation, in each case as amended from time to time.
"Original Contract" has the meaning set forth in the definition of
Construction Contract.
"Original Contractor" has the meaning set forth in the definition of
Construction Contract.
"Outstanding Obligations" means, as of any date, and giving effect to
making any Extensions of Credit requested on such date and all payments,
repayments and prepayments made on such date, (a) when reference is made to all
Lenders, the sum of (i) the aggregate outstanding principal amount of all Loans,
and (ii) all Letter of Credit Usage, and (b) when reference is made to one
Lender the sum of (i) the aggregate outstanding principal amount of all Loans
(excluding, in the case of the Swing Line Lender, Swing Line Loans) made by such
Lender, (ii) such Lender's ratable participation in all Letter of Credit Usage,
and (iii) such Lender's ratable participation in all outstanding Swing Line
Loans.
"Panel" means one or more units in a subdivision within the same
county, the acquisition and development of which is financed by a Loan.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto established under ERISA.
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 17
23
"Pension Plan" means any "employee pension benefit plan" (as
such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan,
that is subject to Title IV of ERISA and is sponsored or maintained by Borrower
or any ERISA Affiliates or to which Borrower or any ERISA Affiliate contributes
or has an obligation to contribute, or in the case of a multiple employer plan
(as described in Section 4064(a) of ERISA) has made contributions at any time
during the immediately preceding five plan years.
"Percentage of Completion" means the percentages (a) certified
by Borrower through a Work in Progress Report, and/or (b) verified by the
Construction Consultant, and (c) approved in writing by Administrative Agent.
"Person" means any 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.
"Plans" means the plans and specifications, including site
plans (as modified or supplemented from time to time in accordance with this
Agreement) for the construction of a Home or the development of a Development
Parcel or Lot, prepared by or for Borrower's designer or architect, when and as
approved by Administrative Agent and all applicable Governmental Authorities.
"Pro Rata Share" means, with respect to each Lender, the
percentage of the combined Commitments set forth opposite the name of that
Lender on Schedule 2.01.
"Related Parties" means Guarantors, The ▇▇▇▇▇ Companies, Inc.,
Westbrooke Communities, Inc., and any and all Affiliates of any of such Persons.
"Release Request" has the meaning set forth in Section 3.09.
"Reportable Event" means any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder, a withdrawal from a
ERISA Plan described in Section 4063 of ERISA, or a cessation of operations
described in Section 4062(e) of ERISA.
"Request for Extension of Credit" means a written request
substantially in the form of Exhibit A, duly completed and signed by a
Responsible Officer, or a telephonic request followed by such a written request,
in each case delivered to Administrative Agent by Requisite Notice. In the case
of a request for a new or amended Letter of Credit, the written Letter of Credit
Application shall be deemed to be the Request for Extension of Credit.
"Requisite Lenders" means (a) as of any date of determination
if the Commitments are then in effect, Lenders (excluding any Lenders not
funding when required to do so hereunder) having in the aggregate 51% or more of
the Combined Commitments then in effect and (b) as of any date of determination
if the Commitments have then been terminated and there are Loans and/or Letter
of Credit Usage outstanding, Lenders holding Loans and Letter of Credit Usage
aggregating 51% or more of the aggregate outstanding principal amount of the
Loans and Letter of Credit Usage.
"Requisite Notice" means, unless otherwise provided herein,
(a) irrevocable written notice to the intended recipient or (b) except with
respect to Letter of Credit Actions (which must be in writing), irrevocable
telephonic notice to the intended recipient, promptly followed by a written
notice to such recipient. Such notices shall be (i) delivered to such recipient
at the address or telephone number specified on Schedule 11.02 or as
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 18
24
otherwise designated by such recipient by Requisite Notice to each other party
hereto, and (ii) if made by any Borrower Party, given or made by a Responsible
Officer of such Borrower Party. Any written notice delivered in connection with
any Loan Document shall be in the form, if any, prescribed in the applicable
section hereof or thereof and may be delivered as provided in Section 11.02. Any
notice sent by other than hardcopy shall be promptly confirmed by a telephone
call to the recipient and, by a manually-signed hardcopy thereof.
"Requisite Time" means, with respect to any of the actions
listed below, the time and date set forth below opposite such action (all times
are local time (standard or daylight) as observed in the state where
Administrative Agent's Office is located):
TYPE OF ACTION DEADLINE DATE OF ACTION
-------------- -------- --------------
Delivery of Request for Extension of
Credit for, or notice for:
o Borrowing or prepayment of, Swing 11:00 a.m. Same date as such
Line Loans Borrowing or prepayment
except as provided below
for weekly clean up of
Swing Line
o Weekly Borrowings to (a) reduce 2:00 p.m. on Wednesday of By 3:00 p.m. on Thursday,
Swing Line to zero and (b) provide each week, Borrower each Lender funds its Pro
Borrower with additional Loans as notifies Administrative Rata Share of applicable
permitted by this Agreement Agent of requested Loans Loans or receives a
(minimum amounts of $1,000,000), or prepayments prepayment
and prepayments 10:00 a.m. on Thursday of
each week, Administrative
Agent notifies Lenders of
Pro Rata Share of Loans
to be funded or prepaid
o Conversion of Loans 11:00 a.m. As permitted by Section
2.02(c)
o Letter of Credit Action 10:00 a.m. 3 Business Days prior to
such action (or such
lesser time which is
acceptable to Issuing
Lender)
o Voluntary reduction in or 10:00 a.m. 2 Business Days prior to
termination of Commitments such reduction or
termination
Payments by Lenders or Borrower to 11:00 a.m. On date payment is due
Administrative Agent
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 19
25
"Responsible Officer" means the chairman of the board of directors,
president, chief financial officer, treasurer or assistant treasurer of a
Borrower Party. Any document or certificate hereunder that is signed by a
Responsible Officer of a Borrower Party shall be conclusively presumed to have
been authorized by all necessary corporate, partnership and/or other action on
the part of such Borrower Party and such Responsible Officer shall be
conclusively presumed to have acted on behalf of such Borrower Party.
"Restricted Payment" means:
(a) the declaration or payment of any dividend or distribution
by Borrower or any of its Subsidiaries, either in cash or property, on
any shares of the capital stock of any class of Borrower or any of its
Subsidiaries (except dividends or other distributions payable solely in
shares of capital stock of Borrower or any of its Subsidiaries or
payable by a Subsidiary to Borrower or another wholly-owned Subsidiary
of Borrower) or if applicable, with respect to any partnership interest
of Borrower or any of its Subsidiaries;
(b) the purchase, redemption or retirement by Borrower or any
of its Subsidiaries of any shares of its capital stock of any class or
any warrants, rights or options to purchase or acquire any shares of
its capital stock, whether directly or indirectly or, if applicable,
the purchase, redemption or retirement of any partnership interests of
Borrower or any of its Subsidiaries;
(c) any other payment or distribution by Borrower or any of
its Subsidiaries in respect of its capital stock or partnership
interest, either directly or indirectly;
(d) any Investment other than an Investment otherwise
permitted under any Loan Document; and
(e) the prepayment, repayment, redemption, defeasance or other
acquisition or retirement for value prior to any scheduled maturity,
scheduled repayment or scheduled sinking fund payment, of any
Indebtedness not otherwise permitted under any Loan Document to be so
paid.
"Sales Agreement" means, with respect to any Unit, an ▇▇▇▇▇▇▇ money
contract executed between Borrower and the prospective purchaser of that Unit.
"Sales Report" has the meaning set forth in Section 3.09.
"Security Documents" means, collectively, (a) all Mortgages and all
other documents or instruments granting a Lien in favor of the Lenders (or
Administrative Agent for the benefit of or on behalf of the Lenders) as
collateral for the Obligations, and all financing statements and other filings,
certificates and instruments related thereto, and all supplements,
modifications, renewals or extensions thereof, and any documents executed in
modification, renewal, extension or replacement thereof, and (b) the Guaranty
executed by the Guarantors.
"Soft Costs" means all costs identified as "Soft Costs" in the Unit or
Plan Type Budget (for Model Units, Homes and Finished Lots) and the Development
Parcel Cost Report (for Development Parcels).
"Sold Unit" means a Unit with respect to which Borrower and a
purchaser, other than Borrower or any relative or Affiliate of Borrower, have
executed a bona fide, valid and enforceable Sales Agreement under which there is
a ▇▇▇▇ ▇▇▇▇▇▇▇ money deposit by the purchaser; provided, however, that if for
any reason such a Sales
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 20
26
Agreement fails to close in accordance with its terms or is terminated, the Unit
shall no longer be a Sold Unit and shall become a Speculative Unit for purposes
hereof; and provided further that Administrative Agent's approval of a purchaser
in one transaction shall not constitute Administrative Agent's approval of that
purchaser or any other purchaser having comparable credit and ability relative
to other transactions.
"Speculative Unit" means a Unit which is not a Sold Unit or a Model
Unit.
"Stage" means the defined Stages in the development of a Unit for
purposes of determining the Percentage of Completion (as shown in the applicable
Inspection Report) and the value of that Unit as approved in writing by Borrower
and Administrative Agent from time to time.
"Subcontract" has the meaning set forth in the definition of
Construction Contract.
"Subcontractor" has the meaning set forth in the definition of
Construction Contract.
"Subsidiary" means a corporation, partnership, joint venture, limited
liability company or other business entity of which a majority of the shares of
securities or other interests having ordinary voting power for the election of
directors or other governing body (other than securities or interests having
such power only by reason of the happening of a contingency) are at the time
beneficially owned, or the management of which is otherwise controlled,
directly, or indirectly through one or more intermediaries, or both, by
Borrower.
"Super Majority Lenders" means (a) as of any date of determination if
the Commitments are then in effect, Lenders (excluding any Lenders not funding
when required to do so hereunder) having in the aggregate 66 2/3% or more of the
Combined Commitments then in effect and (b) as of any date of determination if
the Commitments have then been terminated and there are Loans and/or Letter of
Credit Usage outstanding, Lenders holding Loans and Letter of Credit Usage
aggregating 66 2/3% or more of the aggregate outstanding principal amount of the
Loans and Letter of Credit Usage.
"Survey" means a current certified survey of a Lot or Development
Parcel, as applicable, and any improvements thereon satisfying the requirements
set forth in Exhibit F, showing that there is no encroachment on any boundary
line, easement, building setback line or other restricted area.
"Swap Contract" means (a) any and all rate swap transactions, basis
swaps, forward rate transactions, commodity swaps, commodity options, forward
commodity contracts, equity or equity index swaps or options, bond or bond price
or bond index swaps or options or forward bond or forward bond price or forward
bond index transactions, interest rate options, forward foreign exchange
transactions, cap transactions, floor transactions, collar transactions,
currency swap transactions, cross-currency rate swap transactions, currency
options, or any other similar transactions or any combination of any of the
foregoing (including any options to enter into any of the foregoing), whether or
not any such transaction is governed by or subject to any master agreement, or
(b) any and all transactions of any kind, and the related confirmations, which
are subject to the terms and conditions of, or governed by, any form of master
agreement published by the International Swaps and Derivatives Association,
Inc., or any other master agreement (any such master agreement, together with
any related schedules, as amended, restated, extended, supplemented or otherwise
modified in writing from time to time, a "Master Agreement"), including any such
obligations or liabilities under any Master Agreement.
"Swing Line" means the revolving line of credit established by Swing
Line Lender in favor of Borrower pursuant to Section 2.05.
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 21
27
"Swing Line Commitment" means an amount equal to the lesser of (a)
$5,000,000 and (b) the combined Commitments.
"Swing Line Lender" means Bank of America, or any successor Swing Line
Lender hereunder.
"Swing Line Loan" means a loan which bears interest at a rate per annum
equal to interest payable on a Base Rate Loan (plus the Applicable Amount, if
any) and made by Swing Line Lender to Borrower under the Swing Line.
"Swing Line Note" means a promissory note made by Borrower in favor of
Swing Line Lender evidencing the Swing Line Loan, substantially in the form of
Exhibit C-1.
"Synthetic Lease Obligations" means all monetary obligations of a
Person under (a) a so-called synthetic, off-balance sheet or tax retention
lease, or (b) an agreement for the use or possession of property creating
obligations which do not appear on the balance sheet of such Person but which,
upon the insolvency or bankruptcy of such Person, would be characterized as the
Indebtedness of such Person (without regard to accounting treatment).
"Tangible Assets" means the total amount of assets reflected on
Borrower's Financial Statements prepared in accordance with GAAP less the
aggregate amount of all Intangible Assets included in such totals.
"Threshold Amount" means $1,000,000.00.
"Title Binder", "Title Company", "Title Insurer" and "Title Policy"
each has the meaning set forth in the definition of "Title Insurance."
"Title Insurance" means a Mortgagee Title Policy Binder on Interim
Construction Loan ("Title Binder") (as to Homes and Lots where available) and a
Mortgagee Title Policy ("Title Policy") (as to all Borrowing Base Inventory
other than Homes and Lots covered by a Title Binder) each issued by a title
insurer ("Title Insurer") through a title company ("Title Company"), such Title
Insurer and Title Company to be selected by Borrower and acceptable to
Administrative Agent (with ▇▇▇▇▇▇▇ Title Company and Pacific Title Company being
acceptable to Administrative Agent as of the Closing Date, but subject to
Administrative Agent's right to disapprove such title companies at any time), in
the amount of the Combined Commitments, or if approved by Administrative Agent
to reduce the cost thereof, the maximum amount of the Loans to be funded with
respect to the Unit, panel of Units or Development Parcel, as applicable,
committing to insure that the Mortgage constitutes the valid first lien covering
the Lot(s) or Development Parcel and all improvements thereon (if any), subject
only to those exceptions and encumbrances which Administrative Agent may approve
in writing, and committing to insure that indefeasible fee simple title to the
subject Lot(s) or Development Parcel and the improvements thereon (if any) is
vested in Borrower, together with complete and legible copies of all documents
referred to therein as conditions or exceptions to title to each Lot(s) or
Development Parcel;
"to the best knowledge of" means, when modifying a representation,
warranty or other statement of any Person, that the fact or situation described
therein is known by such Person (or, in the case of a Person other than a
natural Person, known by any officer of such Person) making the representation,
warranty or other statement, or with the exercise of reasonable due diligence
under the circumstances (in accordance with the standard of what a reasonable
Person in similar circumstances would have done) would have been known by such
Person (or, in the case of a Person other than a natural Person, would have been
known by an officer of such Person).
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 22
28
"Type" means each of the various Types or styles of Home being
constructed by Borrower for which the Plans have been approved by Administrative
Agent, which may be referenced as between Administrative Agent and Borrower by a
name or number to be agreed upon as a description for each type of Home.
"type" of Loan means (a) a Base Rate Loan, (b) an Offshore Rate Loan,
and (c) a Swing Line Loan.
"Unfunded Pension Liability" means the excess of a Pension Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the current value
of that Pension Plan's assets, determined in accordance with the assumptions
used for funding the Pension Plan pursuant to Section 412 of the Code for the
applicable plan year.
"Unit" means any Lot together with the Home and other improvements
located on or to be located thereon, and all rights, estates and benefits
appurtenant thereto.
"Work in Progress Report" means for each reporting period a report in
form and substance acceptable to Administrative Agent and in sufficient detail
for Administrative Agent to determine the Borrowing Base, which shows by each
subdivision, the number of Units included in the Borrowing Base Inventory by the
various Percentages of Completion, the Borrowing Base Values for such Units, and
the address for each Unit and identifies those Homes which are Sold Units, Model
Units, Speculative Units and Lots and also separately provides the same
information by subdivision for Borrower for Inventory other than Borrowing Base
Inventory.
1.02 USE OF CERTAIN TERMS.
(a) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
or thereto, unless otherwise defined therein.
(b) As used herein, unless the context requires otherwise, the
masculine, feminine and neuter genders and the singular and plural include one
another.
(c) The words "herein" and "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. The term "including" is by way of
example and not limitation. References herein to a Section, subsection or clause
shall refer to the appropriate Section, subsection or clause in this Agreement.
(d) Masculine terms also apply to females; feminine terms also apply to
males.
1.03 ACCOUNTING TERMS.
All accounting terms not specifically or completely 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, as in effect from time to time, applied in a
manner consistent with that used in preparing the Audited Financial Statements,
except as otherwise specifically prescribed herein.
1.04 ROUNDING.
Any financial ratios required to be maintained by Borrower pursuant to
this Agreement shall be calculated by dividing the appropriate component by the
other component, carrying the result to one place more than the
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 23
29
number of places by which such ratio is expressed in this Agreement and rounding
the result up or down to the nearest number (with a round-up if there is no
nearest number) to the number of places by which such ratio is expressed in this
Agreement.
1.05 EXHIBITS AND SCHEDULES.
All exhibits and schedules to this Agreement, either as originally
existing or as the same may from time to time be supplemented, modified or
amended, are incorporated herein by this reference. A matter disclosed on any
Schedule shall be deemed disclosed on all Schedules.
1.06 REFERENCES TO AGREEMENTS AND LAWS.
Unless otherwise expressly provided herein, (a) references to
agreements (including the Loan Documents) and other contractual instruments
shall include all amendments and other modifications thereto (unless prohibited
by any Loan Document), and (b) references to any statute or regulation shall
include all statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting the statute or regulation.
2. SECTION THE COMMITMENTS AND EXTENSIONS OF CREDIT.
2.01 COMMITTED LOANS.
(a) Subject to the terms and conditions set forth in this Agreement,
each Lender severally agrees to make and Convert Committed Loans until the
Maturity Date as Borrower may from time to time request; provided, however, that
the Outstanding Obligations of each Lender shall not exceed such Lender's
Commitment, and the Outstanding Obligations of all Lenders shall not exceed the
lesser of (i) Combined Commitments and (ii) the Borrowing Base, at any time. The
Combined Commitments shall not exceed $130,000,000 prior to June 27, 2001;
$140,000,000 from June 27, 2001 to June 27, 2002; and $150,000,000 from June 27,
2002, to the Maturity Date. Subject to the foregoing and the other terms and
conditions hereof, Borrower may borrow, Convert, prepay and reborrow Committed
Loans as set forth herein without premium or penalty.
(b) Each Lender's Loans shall be evidenced by a Note. Each such Lender
may attach schedules to its Note and endorse thereon the date, amount and
maturity of its Committed Loans and payments with respect thereto. The schedule
attached to any Note shall be conclusive absent manifest error of the amount of
such Loans and payments thereon. Any failure so to record or any error in doing
so shall not, however, limit or otherwise affect the obligation of Borrower to
pay any amount owing with respect to the Loans.
2.02 BORROWINGS, CONVERSIONS AND CONTINUATIONS OF COMMITTED LOANS.
(a) Borrower shall be entitled to request Committed Loans in a Minimum
Amount by delivering a Request for Extension of Credit therefor by Requisite
Notice to Administrative Agent not later than the Requisite Time therefor. All
Borrowings and Conversions shall constitute Offshore Rate Loans unless properly
and timely otherwise designated as set forth in clause (c) below (other than
Swing Line Loans, which shall always be Base Rate Loans).
(b) Following receipt of a Request for Extension of Credit for a
Borrowing (other than a Borrowing under the Swing Line), Administrative Agent
shall promptly notify each Lender of its Pro Rata Share thereof by Requisite
Notice. In the case of a Borrowing of Loans, each Lender shall make the funds
for its Loan available to Administrative Agent at Administrative Agent's Office
not later than the Requisite Time therefor on the Business
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 24
30
Day specified in such Request for Extension of Credit. Upon satisfaction of the
applicable conditions set forth in Section 5, all funds so received shall be
made available to Borrower in like funds received.
(c) On the Closing Date, Borrower shall make an election to have either
the Base Rate or the Offshore Rate to be the effective rate applicable to the
Loans (other than Swing Line Loans, which shall always be Base Rate Loans).
Borrower shall be entitled on the first day of each calendar quarter, commencing
October 1, 2000, to change all Base Rate Loans to Offshore Rate Loans, or all
Offshore Rate Loans to Base Rate Loans, as applicable, which change shall be
effective beginning on the first day of the calendar month succeeding the month
the written notice of change in interest rate designation is delivered to
Administrative Agent.
(d) If a Loan is to be made on the same date that another Loan is due
and payable, Borrower or Lenders, as the case may be, shall, unless
Administrative Agent otherwise requests, make available to Administrative Agent
the net amount of funds giving effect to both such Loans and the effect for
purposes of this Agreement shall be the same as if separate transfers of funds
had been made with respect to each such Loan.
(e) The failure of any Lender to make any Loan on any date shall not
relieve any other Lender of any obligation to make a Loan on such date, but no
Lender shall be responsible for the failure of any other Lender to so make its
Loan.
2.03 PURPOSE OF LOANS.
The proceeds of the Loans shall be used solely for the acquisition and
development of Development Parcels, purchase of Lots and construction of Units,
and related costs and expenses.
2.04 LETTERS OF CREDIT.
(a) The Letter of Credit Commitment. Subject to the terms and
conditions hereof, at any time and from time to time from the Closing Date
through the Letter of Credit Expiration Date, Issuing Lender shall take such
Letter of Credit Actions under the Commitments as Borrower may request;
provided, however, that (i) the Outstanding Obligations of each Lender shall not
exceed such Lender's Commitments and the Outstanding Obligations of all Lenders
shall not exceed the lesser of the Combined Commitment and the Borrowing Base at
any time, (ii) the aggregate outstanding Letter of Credit Usage shall not exceed
the Letter of Credit Commitment at any time, (iii) any such Letter of Credit
shall be for the purpose of assuring the performance by Borrower or its
Subsidiaries of actions related to the Collateral; and (iv) unless otherwise
approved by Administrative Agent, only stand-by letters of credit shall be
issued under this Agreement. Each Letter of Credit Action shall be in a form
acceptable to Issuing Lender and shall not violate any policies of Issuing
Lender. No Letter of Credit shall expire after the Letter of Credit Expiration
Date. If any Letter of Credit Usage remains outstanding after the Letter of
Credit Expiration Date, Borrower shall, not later than the Letter of Credit
Expiration Date, deposit cash in an amount equal to such Letter of Credit Usage
in a Letter of Credit Cash Collateral Account.
(b) Requesting Letter of Credit Actions. Borrower may irrevocably
request a Letter of Credit Action in a Minimum Amount therefor by delivering a
Letter of Credit Application to Issuing Lender, with a copy to Administrative
Agent (who shall notify Lenders), by Requisite Notice not later than the
Requisite Time therefor. Unless Administrative Agent notifies Issuing Lender
that such Letter of Credit Action is not permitted hereunder or Issuing Lender
determines that such Letter of Credit Action is contrary to any Laws or policies
of Issuing Lender or does not otherwise conform to the requirements of this
Agreement, Issuing Lender shall effect such Letter of Credit Action. This
Agreement shall control in the event of any conflict with any Letter of Credit
Application. Upon the
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 25
31
issuance of a Letter of Credit, each Lender shall be deemed to have purchased a
pro rata participation in such Letter of Credit from Issuing Lender in an amount
equal to that Lender's Pro Rata Share.
(c) Reimbursement of Payments Under Letters of Credit. Borrower shall
reimburse Issuing Lender through Administrative Agent for any payment that
Issuing Lender makes under a Letter of Credit on or before the date of such
payment; provided, however, that if the conditions precedent set forth in
Section 5 can be satisfied, Borrower may request a Borrowing of Committed Loans
to reimburse Issuing Lender for such payment on or before the date thereof by
complying with Section 2.02, or Borrower may allow a deemed Borrowing of
Committed Loans which are Base Rate Loans or Offshore Rate Loans, whichever is
then being used, to take place on such payment date pursuant to subsection (e)
below.
(d) Funding by Lenders When Issuing Lender Not Reimbursed. Upon any
drawing under a Letter of Credit, Issuing Lender shall notify Administrative
Agent and Borrower. If Borrower fails to timely make the payment required
pursuant to subsection (c) above, Issuing Lender shall notify Administrative
Agent of such fact and the amount of such unreimbursed payment. Administrative
Agent shall promptly notify each Lender of its Pro Rata Share of such amount by
Requisite Notice. Each Lender shall make funds in an amount equal to its Pro
Rata Share of such amount available to Administrative Agent at Administrative
Agent's Office not later than the Requisite Time on the Business Day specified
by Administrative Agent, and Administrative Agent shall remit the funds so
received to reimburse Issuing Lender. The obligation of each Lender to so
reimburse Issuing Lender shall be absolute and unconditional and shall not be
affected by the occurrence of an Event of Default or any other occurrence or
event. Any such reimbursement shall not relieve or otherwise impair the
obligation of Borrower to reimburse Issuing Lender for the amount of any payment
made by Issuing Lender under any Letter of Credit, together with interest as
provided herein.
(e) Nature of Lenders' Funding. If the conditions precedent set forth
in Section 5 can be satisfied (except for the giving of a Request for Extension
of Credit) on the date Borrower is obligated to make, but fails to make, a
reimbursement of a payment under a Letter of Credit, the funding by Lenders
pursuant to subsection (d) above shall be deemed to be part of a Borrowing of
Committed Loans which are Base Rate Loans (without regard to the Minimum Amount
therefor) requested by Borrower. If the conditions precedent set forth in
Section 5 cannot be satisfied on the date Borrower is obligated to make, but
fails to make, a reimbursement of a payment under a Letter of Credit, the
funding by Lenders pursuant to subsection (d) above shall be deemed to be a
funding by each Lender of its participation in such Letter of Credit, and such
funds shall be payable by Borrower upon demand and shall bear interest at the
Default Rate payable on demand, and each Lender making such funding shall
thereupon acquire a pro rata participation, to the extent of such reimbursement,
in the claim of Issuing Lender against Borrower in respect of such payment and
shall share, in accordance with that pro rata participation, in any payment made
by Borrower with respect to such claim. If Administrative Agent or Issuing
Lender is required at any time to return to Borrower, or to a trustee, receiver,
liquidator, custodian, or any official under any proceeding under Debtor Relief
Laws, any portion of the payments made by Borrower to Administrative Agent for
the account of Issuing Lender pursuant to this subsection in reimbursement of a
payment made under a Letter of Credit or interest or fee thereon, each Lender
shall, on demand of Administrative Agent, forthwith return to Administrative
Agent or Issuing Lender the amount of its Pro Rata Share of any amounts so
returned by Administrative Agent or Issuing Lender plus interest thereon from
the date such demand is made to the date such amounts are returned by such
Lender to Administrative Agent or Issuing Lender, at a rate per annum equal to
the daily Federal Funds Rate.
(f) Special Provisions Relating to Evergreen Letters of Credit.
Borrower may request Letters of Credit that have automatic extension or renewal
provisions ("evergreen" Letters of Credit) so long as Issuing Lender has the
right to not permit any such extension or renewal at least annually within a
notice period to be agreed upon at the time each such Letter of Credit is
issued. Once an evergreen Letter of Credit is issued, unless Administrative
Agent
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 26
32
has notified Issuing Lender that all Lenders have elected not to permit such
extension or renewal, the Borrower Parties, Administrative Agent and Lenders
shall be deemed to authorize (but may not require) Issuing Lender to, in its
sole and absolute discretion, permit the renewal of such evergreen Letter of
Credit at any time to a date not later than the Letter of Credit Expiration
Date, and, unless directed by Issuing Lender, Borrower shall not be required to
request such extension or renewal. Notwithstanding the foregoing, Issuing Lender
may, in its sole and absolute discretion elect not to permit an evergreen Letter
of Credit to be extended or renewed at any time.
(g) Obligations Absolute. The obligation of Borrower to pay to Issuing
Lender the amount of any payment made by Issuing Lender under any Letter of
Credit shall be absolute, unconditional, and irrevocable. Without limiting the
foregoing, Borrower's obligation shall not be affected by any of the following
circumstances:
(i) any lack of validity or enforceability of the Letter of
Credit, this Agreement, or any other agreement or instrument relating
thereto;
(ii) any amendment or waiver of or any consent to departure
from the Letter of Credit, this Agreement, or any other agreement or
instrument relating thereto;
(iii) the existence of any claim, setoff, defense, or other
rights which Borrower may have at any time against Issuing Lender,
Administrative Agent or any Lender, any beneficiary of the Letter of
Credit (or any persons or entities for whom any such beneficiary may be
acting) or any other Person, whether in connection with the Letter of
Credit, this Agreement, or any other agreement or instrument relating
thereto, or any unrelated transactions;
(iv) any demand, statement, or any other document presented
under the Letter of Credit proving to be forged, fraudulent, invalid,
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever so long as any such document
appeared to comply with the terms of the Letter of Credit;
(v) any payment made by Issuing Lender under any Letter of
Credit to any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors,
liquidator, receiver or other representative of or successor to any
beneficiary or any transferee of any Letter of Credit, including any
arising in connection with any proceeding under any Debtor Relief Laws;
(vi) the solvency or financial responsibility of any party
issuing any documents in connection with a Letter of Credit;
(vii) any error in the transmission of any message relating to
a Letter of Credit not caused by Issuing Lender, or any delay or
interruption in any such message;
(viii) any error, neglect or default of any correspondent of
Issuing Lender in connection with a Letter of Credit;
(ix) any consequence arising from acts of God, wars,
insurrections, civil unrest, disturbances, labor disputes, emergency
conditions or other causes beyond the control of Issuing Lender;
(x) the surrender or impairment of any security for the
performance or observance of any of the terms of the Loan Documents;
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 27
33
(xi) so long as Issuing Lender in good faith determines that
the document appears to comply with the terms of the Letter of Credit,
the form, accuracy, genuineness or legal effect of any contract or
document referred to in any document submitted to Issuing Lender in
connection with a Letter of Credit; and
(xii) where Issuing Lender has acted in good faith under any
other circumstances whatsoever.
In addition, Borrower will promptly examine a copy of each Letter of
Credit and amendments thereto delivered to it and, in the event of any claim of
noncompliance with Borrower's instructions or other irregularity, Borrower will
immediately notify Issuing Lender in writing. Borrower shall be conclusively
deemed to have waived any such claim against Issuing Lender and its
correspondents unless such notice is given as aforesaid.
(a) Role of Issuing Lender. Each Lender and Borrower Party agree that,
in paying any drawing under a Letter of Credit, Issuing Lender shall not have
any responsibility to obtain any document (other than any sight draft,
certificates and documents expressly required by the Letter of Credit) or to
ascertain or inquire as to the validity or accuracy of any such document or the
authority of the Person executing or delivering any such document. No
Administrative Agent-Related Person nor any of the respective correspondents,
participants or assignees of Issuing Lender shall be liable to any Lender for
any action taken or omitted in connection herewith at the request or with the
approval of Lenders or the Requisite Lenders, as applicable; any action taken or
omitted in the absence of gross negligence or willful misconduct; or the due
execution, effectiveness, validity or enforceability of any document or
instrument related to any Letter of Credit. Borrower hereby assumes all risks of
the acts or omissions of any beneficiary or transferee with respect to its use
of any Letter of Credit; provided, however, that this assumption is not intended
to, and shall not, preclude Borrower's pursuing such rights and remedies as it
may have against the beneficiary or transferee at law or under any other
agreement. No Administrative Agent-Related Person, nor any of the respective
correspondents, participants or assignees of Issuing Lender, shall be liable or
responsible for any of the matters described in subsection (g) above. In
furtherance and not in limitation of the foregoing, Issuing Lender may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary,
and Issuing Lender shall not be responsible for the validity or sufficiency 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.
(b) Applicability of ISP98. Unless otherwise expressly agreed by the
Issuing Lender and Borrower when a Letter of Credit is issued, performance under
Letters of Credit by the Issuing Lender, its correspondents, and beneficiaries
will be governed by with respect to standby Letters of Credit, the rules of the
"International Standby Practices 1998" (ISP98) or such later revision as may be
published by the International Chamber of Commerce (the "ICC").
(c) Letter of Credit Fee. On each Applicable Payment Date, Borrower
shall pay to Administrative Agent in arrears, for the account of each Lender in
accordance with its Pro Rata Share, a Letter of Credit fee as set forth in a
separate fee letter executed by Borrower or Administrative Agent with such
Lender.
(d) Issuance Fee and Documentary and Processing Charges Payable to
Issuing Lender. Concurrently with the issuance of each Letter of Credit,
Borrower shall pay a letter of credit issuance fee to Issuing Lender, for the
sole account of Issuing Lender, in an amount set forth in a separate letter
agreement between Borrower and Issuing Lender. In addition, Borrower shall pay
directly to Issuing Lender for its sole account its customary documentary and
processing charges in accordance with its standard schedule, as from time to
time in effect, for any amendment, transfer, or other occurrence relating to a
Letter of Credit. Such fee and charges are nonrefundable.
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(e) Notwithstanding the provisions set forth in Section 2.04(g) or
otherwise in this section, Issuing Lender shall require strict compliance by the
beneficiary thereof with the terms of each Letter of Credit.
2.05 SWING LINE.
(a) Subject to the terms and conditions set forth in this Agreement,
Swing Line Lender agrees to make Swing Line Loans until the Maturity Date in
such amounts as Borrower may from time to time request; provided, however, that
(i) the aggregate principal amount of all Swing Line Loans shall not exceed the
Swing Line Commitment, and (ii) the Outstanding Obligations of each Lender shall
not exceed such Lender's Commitment and the Outstanding Obligations of all
Lenders shall not exceed the lesser of the Combined Commitments or the Borrowing
Base at any time. Swing Line Lender may terminate or suspend the Swing Line at
any time and from time to time in its sole discretion upon at least 24 hours
prior notice to Borrower. Without the consent of all of Requisite Lenders and
Swing Line Lender, no Swing Line Loan shall be made during the continuation of a
Default or an Event of Default. Borrower may borrow, repay and reborrow under
this Section. Unless notified to the contrary by Swing Line Lender, Borrowings
under the Swing Line shall be more than the Minimum Amount and after Requisite
Notice has been given to Swing Line Lender. Each such request for a Swing Line
Loan shall constitute a representation and warranty by Borrower that the
conditions set forth in Sections 5.02 (a) and (b) are satisfied. Promptly after
receipt of such request, Swing Line Lender shall obtain telephonic verification
from the Administrative Agent that there is availability for such Swing Line
Loan under the Commitments. Unless notified to the contrary by the Swing Line
Lender, each repayment of a Swing Line Loan shall be made directly to Swing Line
Lender by payment or debit at a demand deposit account at the Swing Line Lender
or by other means of payment as is acceptable to Swing Line Lender. All payments
received after the Requisite Notice time shall be deemed received on the next
succeeding Business Day. Swing Line Lender shall promptly notify the
Administrative Agent of the Swing Loan Outstandings each time there is a change
therein. Upon the making of a Swing Line Loan, each Lender shall be deemed to
have purchased from Swing Line Lender a risk participation therein in an amount
equal to that Lender's Pro Rata Share times the amount of the Swing Line Loan
(except with respect to any Advance under the Swing Line Loan made by Swing Line
Lender with actual knowledge that (i) a Default or an Event of Default had
occurred prior to such Advance, and (ii) Swing Line Lender was not authorized by
Lenders to make said Advance pursuant to this Section 2.05(a)).
(b) Swing Line Loans shall be evidenced by the Swing Line Note and bear
interest at a fluctuating rate per annum equal to the rate of interest payable
on Base Rate Loans (plus the Applicable Amount, if any). Interest on Swing Line
Loans shall be payable on the same dates as interest is paid under the Notes
during the term hereof (and on the Maturity Date) and Swing Line Lender shall be
responsible for invoicing Borrower for such interest. The interest payable on
Swing Line Loans is solely for the account of Swing Line Lender.
(c) The Swing Line Loans shall be payable on the earlier of (i)
Thursday of each week during the term hereof, or (ii) the Maturity Date.
(d) If Borrower fails to timely make any principal or interest payment
required pursuant to subsections (b) or (c) above, Swing Line Lender shall
notify the Administrative Agent of such fact and the unpaid amount. The
Administrative Agent shall promptly notify each Lender of its Pro Rata Share of
such amount by Requisite Notice. Each Lender shall make funds in an amount equal
its Pro Rata Share of such amount available to the Administrative Agent at the
Administrative Agent's Office not later than the Requisite Time for payments
hereunder on the following Business Day. The obligation of each Lender to make
such payment shall be absolute and unconditional and shall not be affected by
the occurrence of an Event of Default or any other occurrence or event. Any such
payment shall not relieve or otherwise impair the obligation of Borrower to
repay Swing Line Lender for any amount of Swing Line Loans, together with
interest as provided herein.
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35
(e) If the conditions precedent set forth in Section 5 can be satisfied
(except for the giving of a Request for Extension of Credit) on any date
Borrower is obligated to make, but fails to make, a repayment of Swing Line
Loans, the funding by the Lenders pursuant to subsection (d) above shall be
deemed to be part of a Borrowing of Committed Loans (without regard to the
Minimum Amount therefor) requested by Borrower accruing interest at the rate
then in effect under the Committed Loans. If the conditions precedent set forth
in Section 5 cannot be satisfied on the date Borrower is obligated to make, but
fails to make, such payment, the funding by the Lenders pursuant to subsection
(d) above shall be deemed to be a funding by each Lender of its participation in
such Swing Line Loans, and such funds shall be payable by Borrower upon demand
and shall bear interest at the Default Rate, and each Lender making such funding
shall thereupon acquire a pro rata participation, to the extent of such payment,
in the claim of Swing Line Lender against Borrower in respect of such payment
and shall share, in accordance with that pro rata participation, in any payment
made by Borrower with respect to such claim.
2.06 PREPAYMENTS.
(a) Upon Requisite Notice to Administrative Agent not later than the
Requisite Time therefor, Borrower may at any time and from time to time
voluntarily prepay Committed Loans in part in the Minimum Amount therefor or in
full without premium or penalty. Administrative Agent will promptly notify each
Lender thereof and of such Lender's Pro Rata Share of such prepayment.
(b) If for any reason the Outstanding Obligations exceed the lesser of
(i) the Combined Commitments or (ii) the Borrowing Base as in effect or as
reduced or because of any limitation set forth in this Agreement or otherwise,
Borrower shall prepay Loans (as provided in Section 3.06) and/or deposit cash in
a Letter of Credit Cash Collateral Account in an aggregate amount equal to such
excess.
2.07 REDUCTION OR TERMINATION OF COMMITMENTS.
Upon Requisite Notice to Administrative Agent not later than the
Requisite Time therefor, Borrower may at any time and from time to time, without
premium or penalty, permanently and irrevocably reduce the Commitments in a
Minimum Amount therefor to an amount not less than the Outstanding Obligations
at such time or terminate the Commitments. Any such reduction or termination
shall be accompanied by payment of all accrued and unpaid fees with respect to
the portion of the Commitments being reduced or terminated. Administrative Agent
shall promptly notify Lenders of any such request for reduction or termination
of the Commitments. Each Lender's Commitment shall be reduced by an amount equal
to such Lender's Pro Rata Share times the amount of such reduction.
2.08 PRINCIPAL AND INTEREST.
(a) If not sooner paid, Borrower agrees to pay the outstanding
principal amount of each Committed Loan on the Maturity Date.
(b) Subject to subsection (c) below, Borrower shall pay interest on the
unpaid principal amount of each Loan (before and after default, before and after
maturity, before and after judgment, and before and after the commencement of
any proceeding under any Debtor Relief Laws) from the date borrowed until paid
in full (whether by acceleration or otherwise) on each Applicable Payment Date
at a rate per annum equal to the interest rate determined in accordance with the
definition of such type of Loan, plus, to the extent applicable in each case,
the Applicable Amount.
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 30
36
(c) If any amount payable by any Borrower Party under any Loan Document
is not paid when due (without regard to any applicable grace periods), it shall
thereafter bear interest (after as well as before entry of judgment thereon to
the extent permitted by law) at a fluctuating interest rate per annum at all
times equal to the Default Rate to the fullest extent permitted by applicable
Law. Accrued and unpaid interest on past due amounts (including interest on past
due interest) shall be payable upon demand.
2.09 FEES.
(a) Non-Usage Fee. Borrower shall pay to Administrative Agent for the
account of each Lender pro rata according to its Pro Rata Share, a non-usage fee
equal to .125% per annum times the actual daily amount by which the Combined
Commitments exceed the Outstanding Obligations (excluding Swing Line Loans and
Letter of Credit Usage). The non-usage fee shall accrue at all times from the
Closing Date until the Maturity Date and shall be payable quarterly in arrears
on the first day of each January, April, July, and October, commencing on
October 1, 2000. The non-usage fee shall accrue at all times, including at any
time during which one or more conditions in Section 5 are not met.
(b) Facility Fee. Borrower shall pay to Administrative Agent for the
account of each Lender a facility fee in such amount and at such times as set
forth in a separate letter agreement between Borrower and Administrative Agent.
(c) Agency Fees. Borrower shall pay to Administrative Agent an agency
fee in such amounts and at such times as set forth in a separate letter
agreement between Borrower and Administrative Agent. The agency fee is for the
services to be performed by Administrative Agent in acting as Administrative
Agent and is fully earned on the date paid. The agency fee paid to
Administrative Agent is solely for its own account and is nonrefundable.
(d) Arrangement Fee. On the Closing Date, Borrower shall pay to the
Arranger an arrangement fee in the amount set forth in a separate letter
agreement between Borrower and the Arranger. Such arrangement fee is for the
services of the Arranger in arranging the credit facilities under this Agreement
and is fully earned on the date paid. The arrangement fee paid to the Arranger
is solely for its own account and is nonrefundable.
(e) Inspection Fee. Borrower shall pay to Administrative Agent an
inspection fee in an amount and at such times as set forth in a separate letter
agreement between Borrower and Administrative Agent.
2.10 COMPUTATION OF INTEREST AND FEES.
Computation of interest and other fees shall be calculated on the basis
of a year of 365 or 366 days, as the case may be, and the actual number of days
elapsed. Interest shall accrue on each Loan for the day on which the Loan is
made, and shall not accrue on a Loan, or any portion thereof, for the day on
which the Loan or such portion is paid, provided that any Loan that is repaid on
the same day on which it is made shall bear interest for one day.
2.11 MAKING PAYMENTS.
(a) Except as otherwise provided herein, all payments by Borrower or
any Lender shall be made to Administrative Agent at Administrative Agent's
Office not later than the Requisite Time for such type of payment. All payments
received after such Requisite Time shall be deemed received on the next
succeeding Business Day. All payments shall be made in immediately available
funds in lawful money of the United States of America. All
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 31
37
payments by Borrower shall be made without condition or deduction for any
counterclaim, defense, recoupment or setoff.
(b) Upon satisfaction of any applicable terms and conditions set forth
herein, Administrative Agent shall promptly make any amounts received in
accordance with the prior subsection available in like funds received as
follows: (i) if payable to Borrower, by crediting the Designated Deposit
Account, and (ii) if payable to any Lender, by wire transfer to such Lender at
the address specified in Schedule 11.02.
(c) If any payment to be made by any Borrower Party shall come due on a
day other than a Business Day, payment shall instead be considered due on the
next succeeding Business Day, and such extension of time shall be reflected in
computing interest and fees.
(d) Except as otherwise provided in Section 2.04(c) with respect to
Borrower reimbursing drawings under Letters of Credit, unless Borrower or any
Lender has notified Administrative Agent prior to the date any payment to be
made by Borrower is due, that it does not intend to remit such payment,
Administrative Agent may, in its sole and absolute discretion, assume that
Borrower or Lender, as the case may be, has timely remitted such payment and
may, in its sole and absolute discretion and in reliance thereon, make available
such payment to the Person entitled thereto. If such payment was not in fact
remitted to Administrative Agent in immediately available funds, then:
(i) if Borrower failed to make such payment, each Lender shall
forthwith on demand repay to Administrative Agent the amount of such
assumed payment made available to such Lender, together with interest
thereon in respect of each day from and including the date such amount
was made available by Administrative Agent to such Lender to the date
such amount is repaid to Administrative Agent at the Federal Funds
Rate; and
(ii) if any Lender failed to make such payment, Administrative Agent
shall be entitled to recover such corresponding amount on demand from
such Lender. If such Lender does not pay such corresponding amount
forth-with upon Administrative Agent's demand therefor, Administrative
Agent promptly shall notify Borrower, and Borrower shall pay such
corresponding amount to Administrative Agent. Administrative Agent also
shall be entitled to recover interest on such corresponding amount in
respect of each day from the date such corresponding amount was made
available by Administrative Agent to Borrower to the date such
corresponding amount is recovered by Administrative Agent, (A) from
such Lender at a rate per annum equal to the daily Federal Funds Rate.
and (B) from Borrower, at a rate per annum equal to the interest rate
applicable to such Borrowing. Nothing herein shall be deemed to relieve
any Lender from its obligation to fulfill its Commitment or to
prejudice any rights which Administrative Agent or Borrower may have
against any Lender as a result of any default by such Lender hereunder.
2.12 FUNDING SOURCES.
Nothing in this Agreement shall be deemed to obligate any Lender to
obtain the funds for any Loan in any particular place or manner or to constitute
a representation by any Lender that it has obtained or will obtain the funds for
any Loan in any particular place or manner.
2.13 EXTENSION OF MATURITY DATE.
(a) Not earlier than 120 days prior to, nor later than 90 days prior
to, each anniversary of the Closing Date (other than an anniversary date which
is the Maturity Date), Borrower may request by Requisite Notice made to
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 32
38
Administrative Agent (who shall promptly notify Lenders) a one year extension of
the Maturity Date. Such request shall include a certificate signed by a
Responsible Officer stating that (i) the representations and warranties
contained in Section 6 are true and correct on and as of the date of such
certificate and (ii) no Default or Event of Default exists. Each Lender shall
notify Administrative Agent by Requisite Notice whether it consents to or
declines such request within 45 days of such notice. Any Lender not responding
within the above time period shall be deemed to have not consented to extending
the Maturity Date. Administrative Agent shall, after receiving the notifications
from all of the Lenders or the expiration of such period, whichever is earlier,
notify Borrower and Lenders of the results thereof.
(b) If any Lender declines, or is deemed to have declined, to consent
to such request for extension (a "Declining Lender"), Borrower may, within 120
days after such applicable anniversary date (the "Declining Lender Replacement
Period"), cause any Declining Lender to be removed and/or replaced as a Lender
pursuant to Section 11.22. If Borrower is not able to replace the Declining
Lender's Commitment within the Declining Lender Replacement Period, then the
Maturity Date then in effect shall continue to be the Maturity Date hereunder
and the following covenants and conditions will apply: (i) Units and Model Units
can be added to the Borrowing Base only for a period of twelve additional months
beyond the expiration of the Declining Lender Replacement Period; (ii) Finished
Lots can be added to the Borrowing Base only prior to the expiration of the nine
month period following the Declining Lender Replacement Period; (iii)
Development Parcels can be added to the Borrowing Base only prior to the six
month period following the Declining Lender Replacement Period; and (iv) no new
Letters of Credit can be issued under this Agreement after the Declining Lender
Replacement Period.
(c) If, after giving effect to any removals or replacements of Lenders
pursuant to the prior subsection, all Lenders have consented to extending the
Maturity Date, it shall be extended for one year, and Administrative Agent shall
promptly notify Lenders thereof (the "Extension Effective Date"). As a condition
precedent to such extension, Borrower shall deliver to Administrative Agent on
or prior to the Extension Effective Date, in form and substance satisfactory to
Administrative Agent: (i) corporate resolutions and incumbency certificates of
each Borrower Party dated as of the Extension Effective Date approving such
extension in sufficient copies for each Lender, (ii) a certificate signed by a
Responsible Officer of Borrower of the type referred to in Section 5.01 (a)(vi)
and (iii) new or amended Notes, if requested by any new or affected Lender,
evidencing such new or revised Commitments. Administrative Agent shall
distribute an amended Schedule 2.01 (which shall thereafter be incorporated into
this Agreement), to reflect any changes in Lenders, the Commitments and each
Lender's Pro Rata Share thereof.
3. SECTION BORROWING BASE, COLLATERAL AND RELEASES
3.01 BORROWING BASE
The Obligations shall be secured, without limitation, by a
first-in-priority security interest in certain of the Inventory as accepted and
approved by the Administrative Agent as being included in determining the
Borrowing Base. If, at any time after the Closing Date and prior to the Maturity
Date, Borrower acquires additional Inventory which Borrower desires to be
designated as part of the Borrowing Base Inventory, Borrower shall notify the
Administrative Agent as provided in this Section 3 and provide information to
the Administrative Agent with respect to such Inventory as the Administrative
Agent may require. Borrower shall not be required to notify the Administrative
Agent of the acquisition of any other Inventory, except that if additional
Inventory is acquired and such Inventory is not encumbered by a security
interest in favor of a lender as permitted by this Agreement, Borrower shall, on
written request of the Administrative Agent, not more frequently than quarterly,
notify the Administrative Agent and provide information to the Administrative
Agent with respect to such real property as the Administrative Agent may
require. Any Inventory designated by Borrower and accepted and approved by the
Administrative Agent to be part of the Borrowing Base Inventory may not be
included at the same time in more than one category of Inventory which is part
of the Borrowing Base Inventory. The Borrowing Base may be revised at any time
if Administrative Agent determines in its reasonable discretion that a
significant change has occurred in the Borrowing Base Values, and Administrative
Agent shall be entitled to obtain an Appraisal, at Borrower's expense,
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 33
39
to determine any such change in the Borrowing Base Values (provided that
Borrower shall not be required to pay for more than one Appraisal for each
Development Parcel, Finished Lot or Unit included in the Borrowing Base
Inventory in any calendar year).
3.02 BORROWING BASE VALUES.
Each Development Parcel, Finished Lot, Model Unit and Home shall have a
Borrowing Base Value as follows:
(a) The Borrowing Base Value for each Development Parcel shall be the
lesser of (i) 75% of the Market Value thereof and (ii) an amount equal to the
Actual Cost related thereto minus the up-front equity required to be invested in
such Development Parcel pursuant to Section 3.03(j).
(b) The Borrowing Base Value for each Finished Lot shall be the lesser
of (i) 75% of the Market Value thereof for the first twelve months such Finished
Lot is included in the Borrowing Base; 65% of the Market Value thereof for the
second twelve month period such Finished Lot is included in the Borrowing Base;
55% of the Market Value thereof for the third twelve month period such Finished
Lot is included in the Borrowing Base; and no value after the Finished Lot has
been included in the Borrowing Base for more than 36 months; and (ii) 75% of the
Actual Cost thereof.
(c) The Borrowing Base Value for each Model Unit shall be the lesser of
(i) an amount equal to (1) the Percentage of Completion times an amount equal to
(x) 75% of the Market Value thereof for the first twenty-four months such Model
Unit is included in the Borrowing Base; and 65% of the Market Value thereof for
the third twelve month period such Model Unit is included in the Borrowing Base
less (y) the initial Borrowing made with respect to such Model Unit plus (2) the
initial Borrowing made with respect to such Model Unit; or (ii) 90% of the
Actual Cost thereof; provided, that, such Model Unit shall be assigned no
Borrowing Base Value if such Model Unit remains in the Borrowing Base for more
than 36 months.
(d) The Borrowing Base Value for each Home shall be the lesser of (i)
an amount equal to (1) the Percentage of Completion times an amount equal to (x)
75% of the Market Value thereof for the first twelve month period such Home is
included in the Borrowing Base, and 65% of the Market Value thereof for the
second twelve month period such Home is included in the Borrowing Base; less (y)
the initial Borrowing made with respect to such Home plus (2) the initial
Borrowing made with respect to such Home, or (ii) 90% of the Actual Cost
thereof; provided, that, such Home shall be assigned no Borrowing Base Value if
such Home remains in the Borrowing Base for more than 24 months.
3.03 BORROWING BASE INVENTORY LIMITATIONS AND REQUIREMENTS.
(a) No Inventory shall be included as Borrowing Base Inventory unless
it is located in an Approved Market Area.
(b) In no event shall the number of Speculative Units in the Borrowing
Base Inventory exceed (i) from April 1 to September 30 of each year, 60% of all
Homes and Model Units included in determining the Borrowing Base, and (ii) from
October 1 to March 31 of each year, 65% of all Homes and Model Units included in
determining the Borrowing Base. In no event shall the number of Completed
Speculative Units included in the Borrowing Base Inventory exceed 20% of all
Homes and Model Units included in the Borrowing Base Inventory.
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40
(c) In no event shall more than three Model Units per subdivision be
included in computing the Borrowing Base.
(d) In no event shall the number of Model Units included in computing
the Borrowing Base exceed 15% of the total number of Homes and Model Units
included in computing the Borrowing Base.
(e) In no event shall the Borrowing Base Value of any Model Unit or
Home included in the Borrowing Base exceed $300,000, except that (i) forty Model
Units or Homes may have a Borrowing Base Value up to $400,000 at any time and
(ii) in addition, twenty Model Units or Homes may have a Borrowing Base Value up
to $600,000 at any time.
(f) In no event shall the Borrowing Base Value of Development Parcels
and Finished Lots included in computing the Borrowing Base exceed the lesser of
$40,000,000 or 20% of the total Borrowing Base.
(g) In no event shall the Borrowing Base Value of Development Parcels
included in computing the Borrowing Base exceed the lesser of $20,000,000 or 10%
of the total Borrowing Base.
(h) In no event shall more than 150 Finished Lots per phase of a
development, be included in computing the Borrowing Base.
(i) In no event shall Finished Lots in (i) the "▇▇▇▇▇▇▇ ▇▇▇▇▇▇" project
have a Borrowing Base Value which exceeds $120,000 per Lot, and (ii) all other
projects have a Borrowing Base Value which exceeds $75,000 per Lot.
(j) In order to be included in Borrowing Base Collateral, a Development
Parcel must meet the following requirements: (i) the Borrowing Base Value
therefor must not exceed the limitation set forth in Section 3.02(a), (ii)
Borrower or one of its Subsidiaries must have invested no less than 25% of the
Actual Cost which has been budgeted for acquisition and development of such
Development Parcel, (iii) all of the Lots to be developed in such Development
Parcel must be projected to be sold within thirty-six months from the date it is
included, based on the estimated absorption rate included in the Appraisal
obtained by Administrative Agent for such Development Parcel, (iv) the maximum
retail price for each Lot included in such Development Parcel must not exceed
$80,000, and (v) the number of Lots per phase of development of such Development
Parcel must not exceed 150.
(k) Each Development Parcel must be completed within twelve months
following the date on which such Development Parcel is included as Collateral.
After such period, all Finished Lots developed in such Development Parcel will
be included as Finished Lots in computing the Borrowing Base (subject to the
other requirements and conditions related to the Finished Lot component of the
Borrowing Base as set forth in this Agreement), but will be deemed to have been
included in the Borrowing Base Inventory as Finished Lots for twelve months. Any
portion of a Development Parcel which is not included in another component of
the Borrowing Base after the aforementioned twelve month period shall be
excluded in calculating the Borrowing Base.
(l) A Finished Lot will be considered to be a Model Unit or Home for
Borrowing Base purposes when a Title Binder with respect thereto from the Title
Insurer is received by Administrative Agent and all other conditions contained
in this Agreement for the commencement of construction of a Home are satisfied.
(m) In no event shall the aggregate Borrowing Base Values for all
Borrowing Base Inventory exceed $260,000,000 prior to June 27, 2001;
$280,000,000 from June 27, 2001 to June 27, 2002; and $300,000,000
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 35
41
thereafter; provided, that, in the event the total Combined Commitments are
reduced, the aggregate Borrowing Base Values shall be reduced by two times such
reduction.
(n) In no event shall the Borrowing Base Value of Attached Homes exceed
the lesser of (i) $15,000,000 or (ii) five percent (5%) of the total Borrowing
Base Values from time to time.
3.04 PERIODIC ESTABLISHMENT OF BORROWING BASE.
On the tenth and twenty-fifth day of each calendar month (or the next
Business Day if the tenth or twenty-fifth day of any calendar month is not a
Business Day), the Borrower shall deliver to the Administrative Agent the Work
in Progress Report and Development Parcel Cost Report, which forms shall have
been completed and signed by the Borrower (such reports shall be based on
calculations obtained by Borrower on the Monday immediately preceding the tenth
and twenty-fifth day of each month, as applicable). Such reports shall include
information with respect to the Borrowing Base Inventory which is needed by the
Administrative Agent in the calculation of the Borrowing Base. Within five (5)
Business Days of the Administrative Agent's receipt of both the Work in Progress
Report and the Development Parcel Cost Report, the Administrative Agent shall
prepare the Budget Report, the Construction Base Status Report and the Borrowing
Base Report which shall establish the Borrowing Base. In the event Borrower does
not submit the Work in Progress Report or the Development Parcel Cost Report in
the time and manner set forth above or furnish sufficient information to the
Administrative Agent, as required hereunder, to enable the Administrative Agent
to establish the Borrowing Base, the Administrative Agent will establish a
Borrowing Base based on some or all of the previous information submitted to the
Administrative Agent by Borrower in the immediately preceding Work in Progress
Report or the Development Parcel Cost Report or the information compiled by the
Administrative Agent in connection therewith, as the case may be, or other
information available to the Administrative Agent.
3.05 ADDITIONS TO BORROWING BASE INVENTORY.
If Borrower desires to include any Inventory as Borrowing Base
Inventory, Borrower shall deliver to Administrative Agent an Inventory Addition
Request and, as applicable, all of the following information:
(a) Units (Homes, Finished Lots or Model Homes).
(b) Borrower or a third party shall have provided to Administrative
Agent, as applicable for a Unit or a Panel of Units:
(i) a legal description and [if required by Administrative
Agent a separate Survey of the individual Lot or Panel of Lots and, if
not previously provided to Administrative Agent, a complete legible
copy of the recorded plat of each subdivision in which each Lot is
located;
(ii) the Plans, or Type of Home if Plans have already been
approved by Administrative Agent for such Type;
(iii) a proposed Unit Budget for each Home, unless a Budget
for the Type of Home has been previously approved by Administrative
Agent;
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42
(iv) a commitment for the applicable Title Insurance, and, if
requested by Administrative Agent, complete and legible copies of all
documents referred to therein as conditions or exceptions to title to
each Lot;
(v) on a quarter-annual basis, access to any and all
outstanding Sales Agreements so that Administrative Agent can perform
an audit thereof;
(vi) each insurance policy (or if acceptable to Administrative
Agent, evidence of such insurance) described in EXHIBIT "F" to this
Agreement or, if Borrower maintains blanket policies with respect to
any of the required insurance coverages, a copy of Borrower's notice to
the issuer under such blanket policy evidencing coverages under that
blanket policy relative to the Unit or Units;
(vii) an Appraisal, ordered by Administrative Agent, unless an
Appraisal for the Type of Home in an Approved Subdivision is approved
by Administrative Agent;
(viii) for each Finished Lot acquired by Borrower, a copy of
the purchase agreement evidencing such acquisition;
(ix) an Environmental Report;
(x) designation of Homes, as being Speculative Units, Model
Units or Sold Units (including the sales price for each Sold Unit); and
(xi) such other items as Administrative Agent may reasonably
require.
(c) Development Parcels.
(d) Borrower or a third party shall have provided to Administrative
Agent, as applicable, for a Development Parcel:
(i) a Survey and a copy of the preliminary or final plat
approved by the applicable Governmental Authorities;
(ii) the applicable engineering/architect drawings,
engineering/architect contracts, construction contracts and
subcontracts, collateral assignment of engineers'/architects' drawings
and contracts and collateral assignment of construction contracts and
subcontracts in form and substance acceptable to Administrative Agent
and consented to by the applicable engineer, architect, contractor or
subcontractor;
(iii) a proposed Budget for the development thereof;
(iv) evidence satisfactory to Administrative Agent that the
proposed development complies with applicable zoning and other Laws;
(v) evidence satisfactory to Administrative Agent that all
applicable utilities are available to the site or can be brought onto
the site at a cost not more than that contained on the Budget;
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 37
43
(vi) copies of all existing and proposed restrictive covenants
related to the Development Parcel, which covenants shall be subject to
Administrative Agent's approval;
(vii) a soils report in form and substance acceptable to
Administrative Agent;
(viii) a commitment for Title Insurance (with the Title
Insurance to follow in due course);
(ix) an Environmental Report dated within twelve months of
Borrower's request for inclusion in the Borrowing Base; and
(x) such other items as Administrative Agent may reasonably
require.
In addition, Administrative Agent shall have received the applicable
Appraisal, cost review by a third party consultant ordered by Administrative
Agent, and an engineering review from an independent engineering firm as ordered
by Administrative Agent.
(a) Review by Administrative Agent.
(b) Upon the Administrative Agent's receipt of the items referred to in
clauses (a) and (b) above, the Administrative Agent shall review all information
included therewith related to such proposed additions to the Borrowing Base
Inventory and shall conduct any inspections or reviews of the subject parcel or
lot that the Administrative Agent deems appropriate. Other than inspections of
Units (the cost of which shall be agreed to by Borrower in a separate letter
with Administrative Agent), all Appraisals, inspections and reviews shall be at
the Borrowers' cost and expense. Based upon such information, the Administrative
Agent shall determine, in its sole discretion, whether such new parcel of land
or subdivision lot shall be designated part of the Borrowing Base Inventory, and
the Borrowing Base Value thereof, for purposes of computing the Borrowing Base.
The Administrative Agent shall notify the Borrower of its determination as soon
as reasonably possible. If the proposed addition to Borrowing Base Inventory is
approved by Administrative Agent, Administrative Agent shall have the applicable
Loan Documents prepared and, upon completion of the applicable Loan Documents,
shall have those Loan Documents delivered to the Title Company or Borrower for
execution by Borrower. Borrower shall execute the applicable Loan Documents, and
the Title Company shall then comply with Administrative Agent's closing
instructions prior to Lenders funding any Loan related to the applicable
property. If the request for inclusion in the Borrowing Base Inventory relates
to a Panel of Units, Administrative Agent may approve that request with respect
to some Units and disapprove that request with respect to other Units.
(c) Appraisals, Plans and Budgets.
(d) Borrower may:
(i) with a request for inclusion in the Borrowing Base
Inventory, submit the Plans, the legal description (and if required by
Administrative Agent, the Survey) and the Budget relative to that Unit
or Panel of Units, to Administrative Agent for Administrative Agent's
approval. Upon approval and receipt of other information required by
the Appraiser, Administrative Agent shall order an Appraisal (the costs
for which must be reimbursed by Borrower at the time they are billed to
Administrative Agent) for such Unit or Panel of Units; or
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 38
44
(ii) to expedite the approval process, at or prior to the
submission of a request for inclusion in the Borrowing Base Inventory
relative to a Unit or a Panel within a subdivision, submit to
Administrative Agent the Plans for each Type of Home to be developed by
Borrower in that subdivision, together with a Survey plat of such lots
in the subdivision and Borrower's proposed Budget relative to each such
Type of Home. Upon receipt of such Plans, Survey plat and Budgets and
other information required by the Appraiser, Administrative Agent shall
order an Appraisal (the costs for which must be reimbursed by Borrower
at the time and in the amount required by the Appraiser) relative to
each identified Type of Home to be developed by Borrower in that
subdivision and concurrently or thereafter review such items for
Administrative Agent's approval. The selected Appraiser shall thereupon
provide Administrative Agent with such Appraiser's recommendation as to
the Market Value of each identified Type of Home to be developed by
Borrower in that subdivision, based upon a Lot of average size,
dimensions, and location within that subdivision. Administrative Agent
shall then determine the Market Value of each identified Type of Home
to be developed by Borrower in that subdivision, based upon such
recommendations. If such items have been approved by Administrative
Agent and Administrative Agent has determined the Market Value of such
Type of Home in that subdivision, Borrower may thereafter identify the
Units to be developed in that subdivision by reference to the
applicable Type of Home in any request for inclusion in the Borrowing
Base Inventory without the necessity of again submitting those items.
Administrative Agent's approval of those items shall not constitute
Administrative Agent's approval of the same or similar items with
respect to that Type of Home in any other subdivision. Notwithstanding
the foregoing, Administrative Agent may, in Administrative Agent's sole
discretion, require a new Appraisal (at Borrower's cost) relative to
any Type of Home (x) at any time that the sales history for that Type
of Home in a subdivision indicates that the sales price for that Type
of Home is actually ninety-five percent (95%) or less of the previously
determined Market Value (y) annually, or (z) at any other time as
Administrative Agent in the exercise of reasonable discretion, may
determine; and
(iii) receive a copy of the appraisal or other property
evaluation used in conjunction with the request for inclusion in the
Borrowing Base Inventory, provided one was obtained. In order to obtain
a copy the Borrower must notify the Administrative Agent in writing no
later than 90 days after Administrative Agent's approval or disapproval
of the request. Administrative Agent may require payment of the cost of
the appraisal prior to providing it to Borrower.
(e) Loan Documents.
(f) The Loan Documents to be prepared by Administrative Agent as
contemplated in clause (c) above, and/or received by Administrative Agent to
include any Inventory as Borrowing Base Inventory, shall include the following:
(i) Master Deed of Trust recorded in the county in which the
Lot which is the subject of the request is located.
(ii) The Loan Deed of Trust.
(iii) All of the items set forth in Section 5.01 with respect
to the initial Extension of Credit and set forth in Section 5.02 and
5.03 applicable to subsequent Extensions of Credit.
(iv) Financing statements for any security interests granted
in the Loan Documents (Model Units only).
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 39
45
(v) If Administrative Agent requests and if available, (x) a
certificate signed by an authorized representative of the architectural
review committee for the applicable subdivision ("ARC"), (y) evidence
that the "approval" period for ARC approval has expired and that such
expiration constitutes approval under ARC rules, or (z) other
satisfactory evidence that the Unit does or will comply with and the
use for which the Unit is intended is or will be permitted by all
applicable restrictive covenants affecting the Unit without the
necessity of variance and without the Unit being a nonconforming use.
(vi) At Administrative Agent's request tax or assessment
certificates or other similar evidences, if available (x) that the Lot
or Development Parcel is a separate tax lot, and (y) of payment, from
all appropriate Governmental Authorities which have taxing or assessing
authority over the subject property, stating that all taxes and
assessments are current.
(vii) At Administrative Agent's request, an affidavit executed
by a person designated by Administrative Agent, together with
satisfactory photographic evidence, if required by Administrative
Agent, to the effect that immediately prior to and after the recording
of the Mortgage related to such property, none of the prohibitions set
forth in Section 7.13(c) have occurred with respect to such property.
(g) Conditions to Admission of Inventory to the Borrowing Base.
(h) As conditions precedent to admission of any Inventory to the
Borrowing Base, (i) each Loan Document which is required in connection therewith
must (x) be duly executed by the Person whose execution is required, (y) be in
recordable form if such document is to be recorded, and (z) have all blanks
therein completed correctly and in accordance with this Agreement at the time of
delivery, (ii) Borrower must satisfy the conditions required hereby and execute
and deliver to, procure for deposit with, and pay to Administrative Agent and,
if appropriate, file or record in the proper records with all filing and
recording fees paid, the documents, certificates, agreements and other items
listed in Section 5 as Administrative Agent may require, together with such
other documents, certificates, agreements and other items as Administrative
Agent may reasonably require; (iii) all ▇▇▇▇▇▇▇ money or other deposits by the
purchaser of the Inventory shall have been deposited with Administrative Agent
or the Title Insurer or expended by Borrower for actual costs incurred or to be
incurred by Borrower in acquiring and/or developing the Inventory; and (iv) all
covenants and representations and warranties of Borrower contained in this
Agreement shall have been fully satisfied and be true and correct as of the date
of each such admission. Except as otherwise specifically provided herein or
agreed in writing by Administrative Agent, all documents, certificates,
agreements and other items listed in Section 3.05(e) shall be dated within
thirty (30) days of delivery.
3.06 BORROWING BASE RECONCILIATION.
In the event that the Borrowing Base as established pursuant to Section
3.04 is ever determined to be less than the then Outstanding Obligations, the
Administrative Agent shall notify the Borrower thereof. On or before five
Business Days from the date of such notification, Borrower shall pay to the
Administrative Agent a principal payment to be applied to the Outstanding
Obligations sufficient to eliminate the excess of the Outstanding Obligations
over the Borrowing Base.
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 40
46
3.07 REMOVAL/DISAPPROVAL OF INVENTORY FROM BORROWING BASE.
If, at any time, the Administrative Agent determines, in its reasonable
discretion, that any portion of the Borrowing Base Inventory is not acceptable
for inclusion in the calculation of the Borrowing Base, the Administrative Agent
may exclude such portion of the Borrowing Base Inventory from the calculation of
the Borrowing Base, such exclusion to take effect on the ninetieth day following
written notice from Administrative Agent to Borrower. If, after such exclusion,
the Outstanding Obligations exceed the Borrowing Base, Borrower shall pay to the
Administrative Agent within five Business Days following the exclusion, a
principal payment on the Outstanding Obligations in an amount sufficient to
eliminate such excess of the aggregate Outstanding Obligations over the
Borrowing Base. Lenders shall not have a right of first refusal to include in
the Borrowing Base any such unacceptable Borrowing Base Inventory.
3.08 COLLATERAL.
The Obligations shall be guaranteed by the Guarantors and
shall be secured by the Collateral.
3.09 RELEASE OF INVENTORY; SALES REPORT.
Provided that there is no Default, the Administrative Agent
shall, from time to time, at the request of Borrower, release from the Lien
created by the Security Documents any portion of the Borrowing Base Inventory.
Borrower shall not be required to pay a release fee to the Administrative Agent
in connection with the release of such Inventory pursuant to this Section 3.09.
In order to obtain such release, Borrower or the title company closing the sale
of the Borrowing Base Inventory shall deliver a release request (which may be in
the form of a pay-off request) to Administrative Agent (the "Release Request").
Borrower shall pay all costs and expenses incurred by Administrative Agent or
Lenders related to such release. Any such release shall be without
representation or warranty of, or recourse to, the Administrative Agent and the
Lenders. Borrower understands and agrees that from and after the date on which
Administrative Agent receives the Release Request, the value of the Borrowing
Base Inventory described therein shall be excluded in calculating the subsequent
Borrowing Base. Prior to the occurrence of a Default, the pay-off amount for any
such release requested in the ordinary course of Borrower's business shall be
zero, unless Administrative Agent has received since the immediately preceding
Borrowing Base Report Release Requests covering Borrowing Base Inventory with an
aggregate Borrowing Base Value which exceeds $5,000,000 in which event the
pay-off amount for any release requested prior to the next Borrowing Base Report
shall be the Borrowing Base Value of the Borrowing Base Inventory requested to
be released. If the Maturity Date is not extended pursuant to the provisions of
Section 2.13, Administrative Agent shall be entitled at any time after the
Declining Lender Replacement Period to require Borrower to reduce the
Outstanding Obligations by the Borrowing Base Value of any Borrowing Base
Inventory requested to be released as a condition to granting such release. In
no event shall the Administrative Agent be obligated to make a release if there
is a Default. Borrower shall deliver to Administrative Agent monthly an
inventory/sales report (the "Sales Report") in form satisfactory to
Administrative Agent within thirty days after the end of each calendar month for
the immediately preceding calendar month.
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 41
47
4. SECTION TAXES, YIELD PROTECTION AND ILLEGALITY
4.01 TAXES.
(a) Any and all payments by Borrower to or for the account of
Administrative Agent or any Lender under any Loan Document shall be made free
and clear of and without deduction for any and all present or future taxes,
duties, levies, imposts, deductions, assessments, fees, withholdings or similar
charges, and all liabilities with respect thereto, excluding, in the case of
Administrative Agent and any Lender, taxes imposed on or measured by its net
income, and franchise taxes imposed on it (in lieu of net income taxes), by the
jurisdiction (or any political subdivision thereof) under the Laws of which
Administrative Agent or such Lender, as the case may be, is organized or
maintains a lending office (all such non-excluded taxes, duties, levies,
imposts, deductions, assessments, fees, withholdings or similar charges, and
liabilities being hereinafter referred to as "Taxes"). If Borrower shall be
required by any Laws to deduct any Taxes from or in respect of any sum payable
under any Loan Document to Administrative Agent or any Lender, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section), Administrative Agent and such Lender receives an amount equal to
the sum it would have received had no such deductions been made, (ii) Borrower
shall make such deductions, (iii) Borrower shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with applicable
Laws, and (iv) within 30 days after the date of such payment, Borrower shall
furnish to Administrative Agent (who shall forward the same to such Lender) the
original or a certified copy of a receipt evidencing payment thereof.
(b) In addition, Borrower agrees to pay any and all present or future
stamp, mortgage, court or documentary taxes and any other excise or property
taxes or charges or similar levies which arise from any payment made under any
Loan Document or from the execution, delivery, performance, enforcement or
registration of, or otherwise with respect to, any Loan Document (hereinafter
referred to as "Other Taxes").
(c) If Borrower shall be required by the Laws of any jurisdiction
outside the United States to deduct any Taxes from or in respect of any sum
payable under any Loan Document to Administrative Agent or any Lender and
Borrower has given its consent (to the extent required under this Agreement) for
the inclusion of the applicable financial institution as a Lender, Borrower
shall also pay to such Lender or Administrative Agent (for the account of such
Lender), at the time interest is paid, such additional amount that the
respective Lender specifies as necessary to preserve the after-tax yield (after
factoring in United States (federal and state) taxes imposed on or measured by
net income) the Lender would have received if such deductions (including
deductions applicable to additional sums payable under this Section) had not
been made.
(d) Borrower agrees to indemnify Administrative Agent and each Lender
for the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes
imposed or asserted by any jurisdiction on amounts payable under this Section)
paid by Administrative Agent and such Lender and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto.
(e)
4.02 CAPITAL ADEQUACY.
If any Lender determines that any change in or the interpretation of
any Laws (i.e. any Federal banking or bank regulatory Laws) have the effect of
reducing the rate of return on the capital of such Lender or compliance by such
Lender or any corporation controlling such Lender as a consequence of such
Lender's obligations hereunder (taking into consideration its policies with
respect to capital adequacy and such Lender's desired return on capital),
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 42
48
then from time to time upon demand of such Lender (with a copy to Administrative
Agent), Borrower shall pay to such Lender such additional amounts as will
compensate such Lender for such reduction.
4.03 MATTERS APPLICABLE TO ALL REQUESTS FOR COMPENSATION.
(a) A certificate of Administrative Agent or any Lender claiming
compensation under this Section 4 and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive in the absence of clearly
demonstrable error. In determining such amount, Administrative Agent or such
Lender may use any reasonable averaging and attribution methods.
(b) Borrower shall not be obligated to pay any such amount which arose
prior to the date which is 180 days preceding the date of such demand or is
attributable to periods prior to the date which is 180 days preceding the date
of such demand.
(c) Upon any Lender making a claim for compensation under Sections
4.01, Borrower may remove and replace such Lender in accordance with Section
11.22.
4.04 SURVIVAL.
All of Borrower's obligations under this Section 4 shall survive
termination of the Commitments and payment in full of all Obligations.
5. SECTION CONDITIONS PRECEDENT TO EXTENSIONS OF CREDIT
5.01 CONDITIONS OF INITIAL EXTENSION OF CREDIT.
The obligation of each Lender to make the initial Extension of Credit
is subject to satisfaction of the following conditions precedent:
(a) Unless waived by all Lenders (or by the Administrative Agent with
respect to immaterial matters), the Administrative Agent's receipt of the
following, each of which shall be originals unless otherwise specified, each
properly executed by a Responsible Officer, each dated on or about the Closing
Date and each in form and substance satisfactory to the Administrative Agent and
its legal counsel:
(i) executed counterparts of this Agreement, sufficient in
number for distribution to Administrative Agent, Lenders and Borrower;
(ii) the Swing Line Note executed by Borrower in favor of
Swing Line Lender and Committed Loan Notes executed by Borrower in
favor of each Lender requesting a Committed Loan Note, each in a
principal amount equal to that Lender's Commitment;
(iii) such certificates of resolutions or other action,
incumbency certificates and/or other certificates of Responsible
Officers of each Borrower Party as Administrative Agent may require to
establish the identities of and verify the authority and capacity of
each Responsible Officer thereof authorized to act as a Responsible
Officer thereof (provided, that the signatures of Responsible Officers
from NHC Homes, Inc. will be facsimiles thereof with originals to be
delivered as soon as possible after the Closing Date);
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 43
49
(iv) such evidence as Administrative Agent may reasonably
require to verify that each Borrower Party is duly organized or formed,
validly existing, in good standing and qualified to engage in business
in each jurisdiction in which it is required to be qualified to engage
in business, including certified copies of each Borrower Party's
Organization Documents, certificates of good standing and/or
qualification to engage in business, tax clearance certificates, and
the like;
(v) a certificate signed by a Responsible Officer of Borrower
certifying (A) that the conditions specified in Sections 5.01(c) and
5.01(d) have been satisfied ,and (B) that there has been no event or
circumstance since the date of the Audited Financial Statements which
has a Material Adverse Effect;
(vi) an opinion of counsel to Borrower in form and substance
satisfactory to Administrative Agent;
(vii) assignments of indebtedness and security therefor
(and/or with respect to the Collateral in Tennessee, purchase
agreements) in favor of Administrative Agent (on behalf of Lenders)
from existing lenders with Liens on the initial Borrowing Base
Inventory which sell and/or assign their indebtedness and Liens to
Lenders, and evidence that all other Liens on the Borrowing Base
Inventory (other than those in favor of Lenders under this Agreement)
have been or will be concurrently released (as to such acquired and
assigned indebtedness, the indebtedness so acquired or assigned shall
be renewed, extended, amended and restated by this Agreement and the
Notes);
(viii) the Security Documents executed by Borrower or the
applicable Borrower Entity, which documents shall be filed if required
to do so to perfect the Liens therein granted with the appropriate
Governmental Authority;
(ix) the Guaranties executed by the Guarantors (provided, that
the signatures of Responsible Officers from NHC Homes, Inc. will be
facsimiles thereof with originals to be delivered as soon as possible
after the Closing Date);
(x) the Environmental Indemnity executed by Borrower;
(xi) a current Work in Progress Report and Development Parcel
Cost Report and all documents, instruments and certificates required
thereunder and under this Agreement to enable Administrative Agent and
Lenders to establish the initial Borrowing Base Inventory and the
initial Borrowing Base and as required by Section 3.05; and
(xii) such other assurances, certificates, documents, consents
or opinions as Administrative Agent, Issuing Lender or the Requisite
Lenders may reasonably require.
(b) Any fees required to be paid on or before the Closing Date shall
have been paid.
(c) The representations and warranties made by Borrower herein, or
which are contained in any certificate, document or financial or other statement
furnished at any time under or in connection herewith or therewith, shall be
correct on and as of the Closing Date.
(d) Each Borrower Party shall be in compliance with all the terms and
provisions of the Loan Documents to which it is a party, and no Default or Event
of Default shall have occurred and be continuing.
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 44
50
(e) Unless waived by Administrative Agent, Borrower shall have paid all
Attorney Costs of Administrative Agent to the extent invoiced prior to or on the
Closing Date, plus such additional amounts of Attorney Costs as shall constitute
its reasonable estimate of Attorney Costs incurred or to be incurred by it
through the closing proceedings (provided that such estimate shall not
thereafter preclude final settling of accounts between Borrower and
Administrative Agent).
5.02 CONDITIONS TO ALL EXTENSIONS OF CREDIT.
In addition to any applicable conditions precedent set forth elsewhere
in this Section 5 or in Sections 2, 3 and 4, the obligation of each Lender to
honor any Request for Extension of Credit is subject to the following conditions
precedent:
(a) the representations and warranties of Borrower contained in Section
6, or which are contained in any certificate, document or financial or other
statement furnished at any time under or in connection herewith or therewith,
shall be correct on and as of the date of such Extension of Credit, except to
the extent that such representations and warranties specifically refer to any
earlier date.
(b) no Default or Event of Default exists, or would result from such
proposed Extension of Credit.
(c) Administrative Agent shall have timely received a Request for
Extension of Credit by Requisite Notice by the Requisite Time therefor.
(d) Administrative Agent shall have received, in form and substance
satisfactory to it, such other assurances, certificates, documents or consents
related to the foregoing as Administrative Agent or Requisite Lenders reasonably
may require.
(e) if Borrower conducts business under an assumed name or trade name,
a copy of Borrower's Assumed Name Certificate (with recording information
thereon), certified by the county clerk of each county in which an Approved
Subdivision is located.
(f) Each Request for Extension of Credit by Borrower shall be deemed to
be a representation and warranty that the conditions specified in Sections
5.02(a) and 5.02(b) have been satisfied and on and as of the date of such
Extension of Credit.
5.03 CONDITIONS TO CERTAIN EXTENSIONS OF CREDIT.
In addition to any applicable conditions precedent set forth elsewhere
in this Section 5 or in Sections 2, 3 and 4, any Request for Extension of Credit
related to the matters described below will be subject to the following
conditions precedent and limitations:
(a) Extensions of Credit related to Homes and Finished Lots shall be
determined, and governed, by the Construction Base Status Report related
thereto, and Extensions of Credit related to each Development Parcel shall be
determined, and governed, by a Budget Report related thereto, and no Extensions
of Credit for costs and expenses related to the acquisition, development or
construction of any Inventory shall be requested by Borrower unless such costs
or expenses (and the amount thereof) is provided in the applicable Construction
Base Status Report or Budget Report.
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 45
51
(b) Prior to the funding of any Hard Costs for a Development Parcel as
reflected in the Budget Report related thereto, Borrower shall have delivered to
the Administrative Agent (i) copies of all executed Construction Contracts over
$250,000 and Subcontracts for Major Subcontractors related to such Development
Parcel, together with consents and subordinations from such Persons in form
satisfactory to Administrative Agent, and (ii) copies of all grading, building
and other permits necessary to make the improvements contemplated by the Budget
Report related thereto.
5.04 AVAILABILITY OF BORROWINGS FOR DEVELOPMENT PARCELS.
Subject to the general requirements set forth in the other provisions
of this Section 5 and the order for applying Borrowings set forth in Section
5.05, Borrower shall be entitled to apply the proceeds of Borrowings for payment
of costs and expenses related to the acquisition and development of Development
Parcels as Borrower shall determine; provided that:
(a) Each request by Borrower to increase the availability for
Borrowings to cover costs and expenses related to a Development Parcel shall
include (i) a certificate from Borrower certifying as to the amount of
availability increase requested and the aggregate Extensions of Credit which
have been made to the date thereof related to the Development Parcel, and (ii) a
current cost submission schedule related thereto in form satisfactory to
Administrative Agent.
(b) After each request to increase availability of Borrowings for costs
and expenses related to Development Parcels, but prior to the next increase of
such availability, Borrower shall hand deliver to Administrative Agent the
following items related to such costs and expenses last submitted, (i) AIA
Document G702 and G703, or similar document, signed by the applicable
Contractor(s) or Major Subcontractor(s) and supervising engineer(s) in support
of the increase in availability; (ii) copies of invoices for any items with a
cost in excess of $100,000 to the extent not covered in the AIA Documents G702
and G703 delivered pursuant to clause (i) above; (iii) down date endorsements
from all Title Insurers after every two Extensions of Credit which include Hard
Cost advances; and (iv) consents, lien waivers or subordinations from any
Contractor or Major Subcontractor to the extent not previously delivered.
5.05 ORDER OF ALLOCATING BORROWINGS.
Subject to the other provisions of this Section 5, each Borrowing shall
be funded to cover costs and expenses related to Homes and Finished Lots and
then to Development Parcels (for the earliest Development Parcels to the most
recent Development Parcels, based on the date such Development Parcels were
included in the Borrowing Base Inventory) in that order.
6. SECTION REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Administrative Agent and Lenders
that:
6.01 EXISTENCE AND QUALIFICATION; POWER; COMPLIANCE WITH LAWS.
Borrower is a corporation or partnership duly organized or formed,
validly existing and in good standing under the Laws of the state of its
incorporation or organization, has the power and authority and the legal right
to own and operate its properties, to lease the properties it operates and to
conduct its business, is duly qualified and in good standing under the Laws of
each jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification, and is in compliance with
all Laws except to the extent that noncompliance does not have a Material
Adverse Effect.
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6.02 POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.
Borrower has the power and authority and the legal right to make,
deliver and perform each Loan Document to which it is a party and has power and
authority to borrow hereunder and has taken all necessary action to authorize
the borrowings on the terms and conditions of this Agreement and to authorize
the execution, delivery and performance of this Agreement and the other Loan
Documents to which it is a party. No consent or authorization of, filing with,
or other act by or in respect of any Governmental Authority, is required in
connection with the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of this Agreement or any of the other
Loan Documents. The Loan Documents have been duly executed and delivered by
Borrower, and constitute a legal, valid and binding obligation of Borrower,
enforceable against Borrower in accordance with their respective terms.
6.03 NO LEGAL BAR.
The execution, delivery, and performance by Borrower of the Loan
Documents to which it is a party and compliance with the provisions thereof have
been duly authorized by all requisite action on the part of Borrower and do not
and will not (a) violate or conflict with, or result in a breach of, or require
any consent under (i) any Organization Documents of Borrower or any of its
Subsidiaries, (ii) any applicable Laws, rules, or regulations or any order,
writ, injunction, or decree of any Governmental Authority or arbitrator, or
(iii) any Contractual Obligation of Borrower or any of its Subsidiaries or by
which any of them or any of their property is bound or subject, (b) constitute a
default under any such agreement or instrument, or (c) result in, or require,
the creation or imposition of any Lien on any of the properties of Borrower or
any of its Subsidiaries, other than those Liens created by these Loan Documents.
6.04 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE EFFECT.
(a) The Audited Financial Statements (i) were prepared in accordance
with GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; (ii) fairly present the financial condition
of Borrower and its Subsidiaries as of the date thereof and their results of
operations for the period covered thereby in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein; and (iii) show all material indebtedness and other liabilities,
direct or contingent, of Borrower and its Subsidiaries as of the date thereof,
including liabilities for taxes, material commitments and Indebtedness in
accordance with GAAP consistently applied throughout the period covered thereby.
(b) Since the date of the Audited Financial Statements, there has been
no event or circumstance which has a Material Adverse Effect.
6.05 LITIGATION.
No litigation, investigation or proceeding of or before an arbitrator
or Governmental Authority is pending or, to the knowledge of Borrower after due
and diligent investigation, threatened in writing by or against Borrower or any
of its Subsidiaries or against any of their properties or revenues which, if
determined adversely, could have a Material Adverse Effect.
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53
6.06 NO DEFAULT.
Neither Borrower nor any of its Subsidiaries are in default under or
with respect to any Contractual Obligation which could have a Material Adverse
Effect, and no Default or Event of Default has occurred and is continuing or
will result from the consummation of this Agreement or any of the other Loan
Documents, or the making of the Extensions of Credit hereunder.
6.07 OWNERSHIP OF PROPERTY; LIENS.
Borrower and its Subsidiaries have valid fee or leasehold interests in
all real property which they use in their respective businesses, and Borrower
and its Subsidiaries have good and indefeasible title to all their other real
property and good and marketable title to all their other personal property, and
none of such property is subject to any Lien, except as permitted in Section
8.03. Borrower owns in fee simple all of the Inventory and upon execution and
delivery of the Security Documents and the filing thereof with the appropriate
Governmental Authority, Borrower shall have granted to Administrative Agent, on
behalf of the Lenders, a first and prior security interest in the Collateral
covered thereby.
6.08 TAXES.
Borrower and its Subsidiaries have filed all tax returns which are
required to be filed, and have paid, or made provision for the payment of, all
taxes with respect to the periods, property or transactions covered by said
returns, or pursuant to any assessment received by Borrower or its Subsidiaries,
except (a) such taxes, if any, as are being contested in good faith by
appropriate proceedings and as to which adequate reserves have been established
and maintained; (b) immaterial taxes; and (c) to the extent appropriate
extensions have been filed for payment thereof; provided, however, that in each
case no material item or portion of property of Borrower or any of its
Subsidiaries is, to Borrower's knowledge, in jeopardy of being seized, levied
upon or forfeited.
6.09 MARGIN REGULATIONS; INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY
ACT.
(a) Borrower is not engaged and will not engage, principally or as one
of its important activities, in the business of extending credit for the purpose
of "purchasing" or "carrying" "margin stock" within the respective meanings of
each of the quoted terms under Regulation U of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in effect. No part
of the proceeds of any Extensions of Credit hereunder will be used for
"purchasing" or "carrying" "margin stock" as so defined or for any purpose which
violates, or which would be inconsistent with, the provisions of Regulations U
or X of such Board of Governors.
(b) Borrower (i) is not a "subsidiary company" of a "holding company,"
or an "affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company," within the meaning of the Public Utility Holding Company Act
of 1935, or (ii) is not and is not required to be registered as an "investment
company" under the Investment Company Act of 1940.
6.10 ERISA COMPLIANCE.
(a) Each ERISA Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state Laws. Each
ERISA Plan that is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the IRS or an application for
such a letter is currently being processed by the IRS with respect thereto and,
to the best knowledge of Borrower, nothing has occurred which would prevent, or
cause the loss of, such qualification. Borrower and each ERISA Affiliate have
made all required contributions to each ERISA Plan subject to Section 412 of the
Code, and no application for a funding waiver or an
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 48
54
extension of any amortization period pursuant to Section 412 of the Code has
been made with respect to any ERISA Plan.
(b) There are no pending claims, actions or lawsuits, or action by any
Governmental Authority, nor any such claims, actions or lawsuits which have been
threatened in writing, with respect to any ERISA Plan that has a Material
Adverse Effect. There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any ERISA Plan that has a
Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to occur;
(ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither Borrower
nor any ERISA Affiliate has incurred, or reasonably expects to incur, any
liability under Title IV of ERISA with respect to any Pension Plan (other than
premiums due and not delinquent under Section 4007 of ERISA); (iv) neither
Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Sections 4201 or
4243 of ERISA with respect to a Multiemployer Plan; and (v) neither Borrower nor
any ERISA Affiliate has engaged in a transaction that could be subject to
Sections 4069 or 4212(c) of ERISA.
6.11 INTANGIBLE ASSETS.
Borrower and its Subsidiaries own, or possess the right to use, all
trademarks, trade names, copyrights, patents, patent rights, franchises,
licenses and other intangible assets that are used in the conduct of their
respective businesses as now operated, and none of such items, to the best
knowledge of Borrower, conflicts with the valid trademark, trade name,
copyright, patent, patent right or intangible asset of any other Person to the
extent that such conflict has a Material Adverse Effect.
6.12 COMPLIANCE WITH LAWS.
Borrower and its Subsidiaries are in compliance in all material
respects with all Laws that are applicable to it.
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55
6.13 ENVIRONMENTAL COMPLIANCE.
To the best of Borrower's knowledge and belief, the Inventory has not
been and is not now being used in violation of any Environmental Law, no
proceedings have been commenced, or notice(s) received, concerning any alleged
violation of any such Environmental Law, and the Inventory is free of hazardous
or toxic substances and wastes, contaminants, oil, radioactive or other
materials the removal of which is required or the maintenance of which is
restricted, prohibited or penalized by any Governmental Authority. Borrower
covenants that Borrower shall neither permit any such materials to be brought on
to the Inventory, nor shall Borrower acquire real property to be added to the
Borrowing Base Inventory upon which any such materials exist; and if such
materials are so brought or found located thereon, such materials shall be
immediately removed, with proper disposal, to the extent required by applicable
Environmental Laws, and all required environmental cleanup procedures shall be
diligently undertaken pursuant to all such Environmental Laws. Borrower further
represents and warrants that Borrower will promptly transmit to the
Administrative Agent copies of any citations, orders, notices or other material
governmental or other communications received with respect to any hazardous
materials, substances, wastes or other environmentally regulated substances
affecting the Inventory. Notwithstanding the foregoing, there shall not be a
default of this provision (a) should the Borrower store or use minimal
quantities of the aforesaid materials, provided that: such substances are of a
type and are held only in a quantity normally used in connection with the
construction, occupancy or operation of comparable buildings or residential
developments (such as cleaning fluids and supplies normally used in the day to
day operation of residential developments), and such substances are being held,
stored and used in complete and strict compliance with all applicable
Environmental Laws or (b) if any violation of any Environmental Law does not
cause a Material Adverse Effect or otherwise cause Borrower to be in violation
of this Agreement, and the affected Inventory is not included in computing the
Borrowing Base. Although the existence of any hazardous substances or the
violation of any Environmental Laws may not cause a default of this provision,
the Environmental Indemnity shall always apply to such substances, and it shall
continue to be the responsibility of Borrower to take all remedial actions
required under and in accordance with this Agreement or applicable Environmental
Law in the event of any unlawful release of any such substance.
6.14 DISCLOSURE.
No statement, information, report, representation, or warranty made by
Borrower in any Loan Document or furnished to Administrative Agent or any Lender
in connection with any Loan Document contains any untrue statement of a material
fact or omits to state any material fact necessary to make the statements herein
or therein not misleading.
7. SECTION AFFIRMATIVE COVENANTS
So long as any Obligation remains unpaid or unperformed, or any portion
of the Commitments remains outstanding, Borrower shall, and shall (except in the
case of Borrower's reporting covenants), cause each of Borrower's Subsidiaries,
to:
7.01 FINANCIAL STATEMENTS.
Deliver to Administrative Agent in form and detail satisfactory to
Administrative Agent and the Requisite Lenders, with sufficient copies (other
than the items referred to in clauses (d) and (e) below) for each Lender (to be
distributed by Administrative Agent to each Lender):
(a) as soon as available, but in any event within 120 days after the
end of each fiscal year of Borrower, a consolidated balance sheet of Borrower
and its Subsidiaries as at the end of such fiscal year, and the related
consolidated statements of income and cash flows for such fiscal year, setting
forth in each case in comparative form
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 50
56
the figures for the previous fiscal year, all in reasonable detail, audited and
accompanied by a report and opinion of an independent certified public
accountant of nationally recognized standing reasonably acceptable to the
Requisite Lenders, which report and opinion shall be prepared in accordance with
GAAP and shall not be subject to any qualifications or exceptions as to the
scope of the audit nor to any qualifications and exceptions (including possible
errors generated by financial reporting and related systems due to the Year 2000
Problem) not reasonably acceptable to the Requisite Lenders;
(b) as soon as available, but in any event within 45 days after the end
of each of the first three fiscal quarters of each fiscal year of Borrower (and
90 days after the end of the fourth fiscal quarter of each fiscal year of
Borrower), a consolidated balance sheet of Borrower and its Subsidiaries as at
the end of such fiscal quarter, and the related consolidated statements of
income and cash flows for such fiscal quarter and for the portion of Borrower's
fiscal year then ended, all in reasonable detail and certified by a Responsible
Officer of Borrower as fairly presenting the financial condition, results of
operations and cash flows of Borrower and its Subsidiaries in accordance with
GAAP, subject only to normal year-end audit adjustments and the absence of
footnotes;
(c) for each calendar month, as soon as reasonably practicable
following the end of such month but in any event within forty-five (45) days
after the end of such month, an inventory status report (by subdivision) for
each Lot and each Home, owned, under construction or held for sale by Borrower,
whether or not financed by Lenders, indicating (i) sales since the last monthly
report, (ii) as to each Home, whether or not that Home is subject to a Sales
Agreement, (iii) as to each Home under construction, the Percentage of
Completion, (iv) the number of Speculative Units, Model Home Units, then owned
by Borrower or any Borrower Party, and (v) such other information as Lender may
reasonably request;
(d) a Work in Progress Report and Development Parcel Cost Report as
required to be delivered pursuant to this Agreement;
(e) the Sales Report as required to be delivered pursuant to this
Agreement; and
(f) as soon as available and in any event simultaneously with the
delivery of the annual financial statements pursuant to clause (a) above,
projections of Borrower's net income and income from operations for the
following three (3) fiscal years of Borrower, in form and substance satisfactory
to Administrative Agent.
7.02 CERTIFICATES, NOTICES AND OTHER INFORMATION.
Deliver to Administrative Agent in form and detail satisfactory to the
Administrative Agent and the Requisite Lenders, with sufficient copies for each
Lender (to be distributed by Administrative Agent to each Lender):
(a) concurrently with the delivery of the financial statements referred
to in Section 7.01(a), a certificate of its independent certified public
accountants certifying such financial statement and stating that in making the
examination necessary therefor no knowledge was obtained of any Default or Event
of Default hereunder or, if any such Default or Event of Default shall exist,
stating the nature and status of such event;
(b) concurrently with the delivery of the financial statements referred
to in Sections 7.01(a) and (b), a duly completed Compliance Certificate signed
by a Responsible Officer of Borrower;
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57
(c) promptly after request by Administrative Agent or any Lender,
copies of any detailed audit reports, management letters or recommendations
submitted to the board of directors (or the audit committee of the board of
directors) of Borrower by independent accountants in connection with the
accounts or books of Borrower or any of its Subsidiaries, or any audit of any of
them;
(d) promptly after the same are available, copies of each annual
report, proxy or financial statement or other report or communication sent to
the stockholders of Borrower, and copies of all annual, regular, periodic and
special reports and registration statements which Borrower may file or be
required to file with the Securities and Exchange Commission under Sections 13
or 15(d) of the Securities Exchange Act of 1934, as amended, and not otherwise
required to be delivered to Administrative Agent pursuant hereto;
(e) promptly after the occurrence thereof, notice of any Default or
Event of Default;
(f) notice of any material change in accounting policies or financial
reporting practices by Borrower or any of its Subsidiaries;
(g) promptly after the commencement thereof, notice of any litigation,
investigation or proceeding affecting any Borrower Party where the amount
involved exceeds the Threshold Amount, or in which injunctive relief or similar
relief is sought, which relief, if granted, has a Material Adverse Effect;
(h) promptly after the occurrence thereof, notice of any Reportable
Event with respect to any ERISA Plan or the intent to terminate any ERISA Plan,
or the institution of proceedings or the taking or expected taking of any other
action to terminate any ERISA Plan or withdraw from any ERISA Plan;
(i) promptly after the occurrence thereof, notice of any Material
Adverse Effect;
(j) promptly, such other data and information as from time to time may
be reasonably requested by Administrative Agent, or, through Administrative
Agent or any Lender.
Each notice pursuant to this Section shall be accompanied by a
statement of a Responsible Officer of Borrower setting forth details of the
occurrence referred to therein and stating what action Borrower has taken and
proposes to take with respect thereto.
7.03 PAYMENT OF TAXES.
Pay and discharge when due all taxes, assessments, and governmental
charges, Ordinary Course Liens or levies imposed on Borrower or its Subsidiaries
or on its income or profits or any of its property, except for any such tax,
assessment, charge, or levy which is an Ordinary Course Lien under subsection
(b) of the definition of such term.
7.04 PRESERVATION OF EXISTENCE.
Preserve and maintain its existence, licenses, permits, rights,
franchises and privileges necessary or desirable in the normal conduct of its
business, except where failure to do so does not have a Material Adverse Effect.
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58
7.05 MAINTENANCE OF PROPERTIES.
Maintain, preserve and protect all of its Inventory and other material
properties and equipment necessary in the operation of its business in good
order and condition, subject to wear and tear in the ordinary course of
business, and not permit any waste of its properties.
7.06 INSURANCE.
Borrower shall keep the Borrowing Base Inventory insured for the
benefit of the Administrative Agent (for itself and on behalf of the Lenders),
with insurance satisfying the requirements set forth on Exhibit F.
7.07 COMPLIANCE WITH LAWS.
(a) Comply with the requirements of all applicable Laws and orders of
any Governmental Authority, noncompliance with which has a Material Adverse
Effect.
(b) Conduct its operations and keep and maintain its property in
compliance with all Environmental Laws.
7.08 INSPECTION RIGHTS.
With regard to any of the Borrowing Base Inventory, Borrower shall
permit Administrative Agent, the Lenders, any authorized person pursuant to Law,
and their agents and representatives, to enter upon the applicable property, and
any location where materials intended to be utilized in the construction or
development of the applicable property are stored, for the purpose of
observation of construction or development of such Borrowing Base Inventory, and
confirmation that such materials exist at all reasonable times; provided, that,
prior to the occurrence of a Default, Administrative Agent and Lenders will, as
to Units included in the Borrowing Base, inspect no more than one-third of such
Units each month and no more than all of such Units in any three month period.
Any observation or audit of any of the Borrowing Base Inventory or the books and
records of Borrower, or the procuring of documents and financial and other
information, by or on behalf of Administrative Agent or Lenders shall be for
Administrative Agent's or Lenders' protection only and shall not (i) constitute
any assumption of responsibility to Borrower or anyone else with regard to the
condition, construction, maintenance or operation of that property, (ii)
constitute Administrative Agent's or any Lender's approval of any certification
given to Administrative Agent or any Lender, or (iii) relieve Borrower of any of
Borrower's obligations. Neither Administrative Agent nor any Lender shall have
any duty to supervise or to inspect or observe the construction or development
of any Borrowing Base Inventory or any duty of care to Borrower or any other
person to protect against, or to inform Borrower or any other person of, the
existence of negligent, faulty, inadequate or defective design or construction
of any Borrowing Base Inventory. In no event shall any observation (whether or
not followed by notice of default) ever be deemed to constitute (i) a waiver of
any Default then existing, (ii) an acknowledgment or representation by
Administrative Agent, any Lender or any Construction Consultant that there has
been or will be compliance with the Plans and Laws or that the construction is
free from defective materials or workmanship, or (iii) a waiver of Lenders'
right thereafter to insist that each piece of property in the Borrowing Base
Inventory be constructed or developed in accordance with the Plans and
applicable Laws. In no event shall Administrative Agent or any Lender's failure
to observe ever constitute a waiver of any of Administrative Agent or any
Lender's rights.
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59
7.09 KEEPING OF RECORDS AND BOOKS OF ACCOUNT.
Keep adequate records and books of account reflecting all financial
transactions in conformity with GAAP, consistently applied, and in material
conformity with all applicable requirements of any Governmental Authority having
regulatory jurisdiction over Borrower or any of its Subsidiaries.
7.10 COMPLIANCE WITH ERISA.
Cause, and cause each of its ERISA Affiliates to: (a) maintain each
ERISA Plan in compliance in all material respects with the applicable provisions
of ERISA, the Code and other federal or state law; (b) cause each ERISA Plan
which is qualified under Section 401(a) of the Code to maintain such
qualification; and (c) make all required contributions to any ERISA Plan subject
to Section 412 of the Code.
7.11 COMPLIANCE WITH AGREEMENTS.
Promptly and fully comply with all Contractual Obligations under all
material agreements, indentures, leases and/or instruments to which any one or
more of them is a party, except for any such Contractual Obligations (a) the
performance of which would cause a Default, (b) then being contested by any of
them in good faith by appropriate proceedings, or (c) if the failure to comply
therewith does not have a Material Adverse Effect.
7.12 USE OF PROCEEDS.
Use the proceeds of Extensions of Credit for lawful general corporate
purposes and for the purposes set forth in this Agreement, and not in
contravention of this Agreement.
7.13 CONSTRUCTION AND DEVELOPMENT OBLIGATIONS.
With regard to the Borrowing Base Inventory:
(a) Construction of a Home or development of a Development Parcel or
Lot included in the Borrowing Base will commence within thirty (30) days after
the date said Home, Development Parcel or Lot is included in the Borrowing Base,
and be prosecuted with diligence and continuity, in a good and workmanlike
manner, with materials of high quality, and in accordance with sound building
and engineering practices, all applicable Laws, the Plans (which shall not be
changed, without Administrative Agent's written consent, except in accordance
with this Agreement), and, if applicable, the requirements of any related Sales
Agreement.
(b) Except for Excusable Delays, Borrower shall not permit cessation of
work related to any Borrowing Base Inventory for a period in excess of ten (10)
Business Days (whether or not consecutive) without the prior written consent of
Administrative Agent. In order to claim an Excusable Delay, Borrower must notify
Administrative Agent within five (5) calendar days after such occurrence. In
such notice, Borrower shall estimate the probable delay in construction or
development of the Borrowing Base Inventory affected thereby. In no event shall
the occurrence of any Excusable Delay suspend or otherwise ▇▇▇▇▇ any obligation
of Borrower or other person to pay any sum of money (including, but not limited
to, the Outstanding Obligations and interest thereon) under the Loan Documents,
or suspend or ▇▇▇▇▇ any other obligation.
(c) Prior to the recordation of a Mortgage or a deed of trust or
mortgage which has been assigned to Administrative Agent (on behalf of Lenders),
no work of any kind (including, without limitation, the destruction or removal
of any existing improvements, site work, clearing, grubbing, draining, utility
pole installation or fencing on any Borrowing Base Inventory) shall have been
commenced or shall have been performed on any such Borrowing
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60
Base Inventory, no equipment or materials shall have been delivered to or upon
any such Borrowing Base Inventory for any purpose whatsoever, no Contractual
Obligation (or memorandum or affidavit relative thereto) for the supplying of
labor, materials, or services for the development of that Borrowing Base
Inventory shall have been recorded by any Person in the mechanic's lien or other
appropriate records in the county in which any such Borrowing Base Inventory is
located, and no specially fabricated materials or equipment shall have been
ordered or received. Borrower shall notify Administrative Agent in writing
within five (5) Business Days of Borrower's discovery and/or knowledge that any
work was started prior to the recordation of any Mortgage. At Administrative
Agent's option, the affected Borrowing Base Inventory may be removed from the
Borrowing Base. Borrower shall notify Administrative Agent in writing within
five (5) Business Days of Borrower's discovery and/or knowledge of any title
defect affecting any Borrowing Base Inventory. At Administrative Agent's sole
and exclusive option, (i) any Borrowing Base Inventory with a title defect or
(ii) any Borrowing Base Inventory that is not Lien free (other than Liens in
favor of Lenders) shall be removed from the Borrowing Base.
(d) Borrower shall commence correction within three (3) days of
becoming aware of and shall thereafter diligently and continuously prosecute
such correction to completion for (i) any defect in any Home; (ii) any departure
in the construction of any such Home from the Plans, the requirements of the
Sales Agreement (if applicable), or any Law; or (iii) any encroachment by any
part of any such Home, or by any structure located on the related Lot, on any
building setback line, easement, property line or restricted area.
(e) Borrower shall not suffer or permit any breach or default to occur
in any of the obligations of Borrower under any Construction Contract or any
other contract of Borrower which is necessary for the continued full ownership,
construction, operation, maintenance and enjoyment of any Borrowing Base
Inventory. Borrower shall not enter into any contract (except Original Contracts
and Sales Agreements) which is not unconditionally terminable without penalty on
no more than sixty (60) days' notice and shall not allow or permit any contract
to terminate by reason of any failure of Borrower to meet any requirements
whatsoever. Without Administrative Agent's prior written consent, Borrower shall
not modify or amend any such contract. Borrower shall execute all documents
reasonably necessary for the consummation of the transactions contemplated
thereby, shall promptly notify Administrative Agent of any material default
thereunder, and shall not terminate or cancel any such contract except in good
faith after default by the other party thereto.
(f) Borrower shall keep the Borrowing Base Inventory free and clear of
any Lien, charge, or claim other than the encumbrances created by the Mortgage,
and other liens, if any, approved in writing by (i) Administrative Agent, if
such other liens are created in the ordinary course of Borrower's business, or
(ii) the Requisite Lenders, if such other liens are not created in the ordinary
course of business. Borrower may contest, to the extent and in the manner
permitted by law, any claim of any Original Contractor, Subcontractor,
consultant, architect or other person providing labor, materials, or services
with respect to any of the Borrowing Base Inventory, or any tax or special
assessment levied pursuant to any Law, and such contest on the part of Borrower
shall not be a default hereunder if and so long as all of the following
conditions are satisfied with respect to such contest: (i) Borrower shall have
notified Administrative Agent of Borrower's intent to contest at least ten (10)
days prior to commencing the contest; (ii) Borrower shall diligently and in good
faith contest the same by appropriate legal proceedings which shall operate to
prevent the enforcement or collection of the same and the sale of the applicable
Borrowing Base Inventory, or any part thereof; (iii) Borrower shall have
furnished to Administrative Agent whichever Administrative Agent may require as
between a cash deposit satisfactory to Administrative Agent or an indemnity bond
in an amount and with a surety, both satisfactory to Administrative Agent, to
assure payment of the matters under contest, to remove (in the case of a
mechanic's or materialman's lien) the lien as an encumbrance against any and all
of such Borrowing Base Inventory and as an exception in the Title Insurance, and
to prevent any sale or forfeiture of such Borrowing Base Inventory or any part
thereof; (iv) Borrower shall promptly upon final determination thereof pay the
amount of any such claim, tax or assessment so determined, together with all
costs, interest and penalties which may be payable in
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61
connection therewith; and (v) the failure to pay the claim, tax or assessment
does not constitute a default under any other deed of trust, mortgage or
security interest covering or affecting any part of Borrower's Inventory and
does not subject Administrative Agent or any Lender to any civil or criminal
liability or to any damage or expenses. Notwithstanding the foregoing, Borrower
shall immediately upon request of Administrative Agent (and if Borrower shall
fail so to do, Administrative Agent may, but shall not be required to) pay or
cause to be discharged or bonded against any such claim, tax or assessment
notwithstanding such contest if in the reasonable opinion of Administrative
Agent, the applicable Borrowing Base Inventory or any part thereof shall be in
jeopardy or in danger of being forfeited or foreclosed. Administrative Agent may
pay over any such cash deposit or part thereof to the claimant entitled thereto
at any time when, in the judgment of Lender, the entitlement of such claimant is
established.
(g) After the completion of construction and prior to the occupancy of
a Home, Borrower shall maintain the builder's risk insurance policy in full
force and effect relative to that Home and shall provide Administrative Agent
with satisfactory evidence thereof. If the Home will be occupied, Borrower shall
obtain and furnish to Administrative Agent a "permission to occupy" endorsement
to the builder's risk insurance policy, if available, satisfactory to
Administrative Agent, or obtain replacement coverage in the form of an all-risk
insurance policy, which will not be impaired by the occupancy of the Home.
7.14 COOPERATION WITH CONSTRUCTION CONSULTANTS; LIMITATION ON PAYMENTS TO
CONSTRUCTION CONSULTANTS.
Borrower shall cooperate with each Construction Consultant and will
cause the Original Contractors and its employees to cooperate with each
Construction Consultant and, upon request, will furnish each Construction
Consultant whatever the Construction Consultant may reasonably consider
necessary or useful in connection with the performance of its duties including
but not limited to permits, subcontracts, purchase orders, lien waivers and
other documents relating to the construction or development of any of the
Borrowing Base Inventory. Borrower acknowledges that the duties of each
Construction Consultant run solely to Administrative Agent and Lenders and that
no Construction Consultant shall have any obligation or responsibility
whatsoever to Borrower, any Original Contractor, any Subcontractor, or to any of
their respective agents or employees. No communication between any Construction
Consultant and Borrower, any Original Contractor, any Subcontractor, or any
other person shall bind Administrative Agent or any Lender or give rise to any
approval or waiver by Administrative Agent or any Lender or create any liability
of Administrative Agent or any Lender whatsoever. Administrative Agent and
Lenders acknowledge and agree that Borrower shall be required to reimburse
Administrative Agent and Lenders only with respect to Construction Consultants
engaged with respect to Development Parcels and in an amount not to exceed, for
Construction Consultant services, $10,000 for each Development Parcel.
7.15 ADVERTISING BY LENDERS.
Lenders may, at Lender's cost, erect and maintain on any property
included in the Borrowing Base Inventory, one or more advertising signs
indicating that the construction or development financing for such property has
been provided by Lenders.
7.16 SEPARATE TAX PARCEL AND PLATTING REQUIREMENTS.
Borrower has obtained a separate tax lot with a separate tax assessment
or assessments for each parcel included in the Borrowing Base Inventory,
independent of any other lands or improvements, and each parcel included in the
Borrowing Base Inventory complies with all subdivision and platting requirements
and would so comply if such parcel were conveyed as a separate parcel.
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 56
62
7.17 BORROWER'S RECEIPT OF MASTER DEED OF TRUST.
Borrower acknowledges that it has received a copy of each Master Deed
of Trust covering any Borrowing Base Inventory.
8. SECTION NEGATIVE COVENANTS
So long as any Obligations remain unpaid or unperformed, or any portion
of the Commitments remains outstanding, Borrower shall not, nor shall it permit
any of its Subsidiaries to, directly or indirectly:
8.01 INDEBTEDNESS.
Create, incur, assume or suffer to exist any Indebtedness, except:
(a) Ordinary Course Indebtedness;
(b) Indebtedness outstanding on the date hereof and listed on Schedule
8.01 (which includes, without limitation, the Indebtedness secured by Borrower's
corporate headquarters) and any refinancings, refundings, renewals or extensions
thereof, provided that the amount of such Indebtedness is not increased at the
time of such refinancing, refunding, renewal or extension except by an amount
equal to the premium or other amount paid, and fees and expenses incurred, in
connection with such refinancing and by an amount equal to any utilized
commitments thereunder.
(c) Indebtedness (excluding, however, unsecured inter-company
Indebtedness permitted by clause (d) below) not exceeding in the aggregate at
any time five percent (5%) of Borrower's Tangible Assets;
(d) unsecured Indebtedness owed by Borrower to an Affiliate of Borrower
so long as such Indebtedness is subordinate to payment of the Obligations in
form and substance satisfactory to Administrative Agent and the payment of any
amounts thereunder will not cause a Default; and
(e) Indebtedness secured by Inventory, other than the Borrowing Base
Inventory, but only so long as such Indebtedness (i) does not cause Borrower to
be in violation of any other covenant contained in this Agreement; (ii) Lenders
have been given the right to include such Inventory in the Borrowing Base
Inventory pursuant to the procedures set forth in Section 3 but have elected not
to include such Inventory in the Borrowing Base Inventory; and (iii) the
aggregate amount of such Indebtedness (together with all other Indebtedness
included under clause (c) above) does not exceed 5% of Tangible Assets at any
time.
8.02 LIENS AND NEGATIVE PLEDGES.
Incur, assume or suffer to exist, any Lien or Negative Pledge upon any
of its property, assets or revenues, whether now owned or hereafter acquired,
except:
(a) Liens and Negative Pledges existing on the date hereof and listed
on Schedule 8.01 and any renewals or extensions thereof; provided that the
obligations secured or benefitted thereby or the property covered thereby are
not increased, except as permitted by Section 8.01(b);
(b) Ordinary Course Liens; and
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 57
63
(c) Liens securing Indebtedness permitted by Section 8.01(e), other
than any Liens expressly prohibited by this Agreement.
8.03 FUNDAMENTAL CHANGES.
Merge or consolidate with or into any Person or liquidate, wind-up or
dissolve itself, or permit or suffer any liquidation or dissolution or sell all
or substantially all of its assets.
8.04 DISPOSITIONS.
Make any Dispositions of the Collateral other than (a) in accordance
with Section 3.09 or (b) Dispositions of furniture and other accessories for use
in Model Units prior to the occurrence of a Default and in the ordinary course
of Borrower's business.
8.05 INVESTMENTS.
Make any Investments, except:
(a) Investments existing on the date hereof;
(b) Ordinary Course Investments;
(c) Investments in Affiliates not exceeding (i) $12,000,000 in the
aggregate from the Closing Date through June 30, 2001; (ii) $10,000,000 from
July 1, 2001 through June 30, 2002; and (iii) $8,000,000 from and after July 1,
2002; and
(d) Investments in joint ventures whose financial statements are not
consolidated with Borrower's financial statements in an aggregate amount not to
exceed at any time ten percent (10%) of Borrower's Consolidated Adjusted
Tangible Net Worth.
8.06 LEASE OBLIGATIONS.
Create or suffer to exist any obligations for the payment of rent for
any property under lease or agreement to lease, except:
(a) leases in existence on the date hereof and any renewal, extension
or refinancing thereof;
(b) leases (other than capital leases) entered into or assumed by
Borrower or any of its Subsidiaries after the date hereof in the ordinary course
of business, including, without limitation, leases of office space for
Borrower's operations; and
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 58
64
(c) sale-leasebacks of model homes so long as the Indebtedness created
thereby is included in calculating the limitation on other Indebtedness pursuant
to Section 8.01(c).
8.07 RESTRICTED PAYMENTS.
Make any Restricted Payments which would cause Borrower to be in
violation of any covenant contained in this Agreement.
8.08 ERISA.
At any time engage in a transaction which could be subject to Sections
4069 or 4212(c) of ERISA, or permit any Pension Plan to (a) engage in any
non-exempt "prohibited transaction" (as defined in Section 4975 of the Code);
(b) fail to comply with ERISA or any other applicable Laws; or (c) incur any
material "accumulated funding deficiency" (as defined in Section 302 of ERISA),
which, with respect to each event listed above, has a Material Adverse Effect.
8.09 CHANGE IN NATURE OF BUSINESS.
Make any change in the nature of the business of any Borrower Party as
conducted and as proposed to be conducted as of the date hereof.
8.10 TRANSACTIONS WITH AFFILIATES.
Enter into any transaction of any kind with any Affiliate of Borrower
other than arm's-length transactions with Affiliates that are otherwise
permitted hereunder, provided, that, any transaction that has been approved by a
Special Committee of the Board of Directors of Newmark Homes Corp. shall be
permitted.
8.11 LIMITATIONS ON UPSTREAMING.
Agree to any restriction or limitation on the making of Restricted
Payments or transferring of assets from any Subsidiary of Borrower to Borrower.
8.12 FINANCIAL COVENANTS.
(a) Consolidated Adjusted Tangible Net Worth. Permit Consolidated
Adjusted Tangible Net Worth as of the end of any fiscal quarter of Borrower
(commencing on June 30, 2000) to be less than the sum of (a) $35,000,000, and
(b) based on, and as of the effective date of delivery of, the annual audited
financial statements delivered pursuant to Section 7.01(a), (i) an amount equal
to 70% of the amount that is 60% of the Consolidated Net Income before taxes
earned in the first fiscal year ending after December 31, 1999, (ii) an amount
equal to 50% of the amount that is 60% of the Consolidated Net Income before
taxes earned in the second fiscal year ending after December 31, 1999, and (iii)
an amount equal to 30% of the amount that is 60% of the Consolidated Net Income
before taxes earned in the third fiscal year ending after December 31, 1999
(with no deduction in any such year for a net loss in any such fiscal year).
(b) Leverage Ratio. Permit the Leverage Ratio as of the last day of any
fiscal quarter of Borrower to be greater than 3.50:1.00.
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65
(c) Adjusted Leverage Ratio. Permit the Adjusted Leverage Ratio as of
the last day of any fiscal quarter occurring during the periods set forth below
to be greater than the ratio set forth below opposite such fiscal period:
PERIOD ENDING MAXIMUM LEVERAGE RATIO
------------- ----------------------
From Closing Date through June 30, 2001 4.25 to 1.00
From July 1, 2001, through June 30, 2002 4.00 to 1.00
From July 1, 2002 and thereafter 3.75 to 1.00
(a) Interest Coverage Ratio. Permit the Interest Coverage Ratio as of
the end of any fiscal quarter of Borrower to be less than 2.50 to 1.0.
(b) Minimum Adjusted Working Capital. Permit Consolidated Adjusted
Working Capital as of the end of any fiscal quarter of Borrower to be less than
$25,000,000.
8.13 COMPOSITION AND INVENTORY.
(a) Own any Inventory or other real property other than for-sale
residential projects located in the Approved Market Areas other than the
corporate headquarters of Borrower owned on the Closing Date.
(b) Permit the number of Speculative Units, whether or not included in
the Borrowing Base, to exceed (i) from April 1 to September 30 of each year, 60%
of all Homes and Model Units, and (ii) from October 1 to March 31 of each year,
65% of all Homes and Model Units.
(c) Permit the number of completed Speculative Units to exceed 20% of
all Homes and Model Units.
(d) Permit the number of Model Units to exceed 15% of the total number
of Homes and Model Units.
8.14 CHANGE IN AUDITORS.
Change the certified public accountants auditing the books of Borrower
without the consent of Requisite Lenders, other than a change to one of the
nationally recognized accounting firms commonly known as the "Big Four"
accounting firms.
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66
9. SECTION EVENTS OF DEFAULT AND REMEDIES
9.01 EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an Event of
Default:
(a) Borrower fails to pay any principal on any Outstanding Obligation
(other than fees) as and on the date when due and prior to the expiration of any
applicable Cure Period; or
(b) Borrower fails to pay any interest on any Outstanding Obligation
when due or fails to pay any fees or amount payable to Administrative Agent or
any Lender under any Loan Document and prior to the expiration of any applicable
Cure Period; or
(c) Any default occurs in the observance or performance of any
agreement contained in Sections 7.01, 7.02, 7.08 or 8; or
(d) The occurrence of an Event of Default (as such term is or may
hereafter be specifically defined in any other Loan Document) under any other
Loan Document; or any Borrower Party fails to perform or observe any other
covenant or agreement (not specified in subsections (a), (b) or (c) above)
contained in any Loan Document on its part to be performed or observed and such
failure continues beyond any applicable Cure Period; or
(e) Any representation or warranty in any Loan Document or in any
certificate, agreement, instrument or other document made or delivered by any
Borrower Party pursuant to or in connection with any Loan Document proves to
have been incorrect when made or deemed made; or
(f) (i) any Borrower Party (x) defaults in any payment when due of
principal of or interest on any Indebtedness (other than Indebtedness hereunder)
or (y) defaults in the observance or performance of any other agreement or
condition relating to any Indebtedness (other than Indebtedness hereunder) or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur, the effect of which default or other
event is to cause, or to permit the holder or holders of such Indebtedness (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, after the giving of notice if required, Indebtedness
(as to clauses (x) and (y) above) having an aggregate principal amount in excess
of (1) the Threshold Amount as to Borrower and its Subsidiaries, or (2) as to
any other Borrower Party, any amount owed to any Lender or $10,000,000 owed to
any Person or Persons other than a Lender, to be demanded or become due
(automatically or otherwise) prior to its stated maturity, or any Contingent
Obligation in such amount to become payable or cash collateral in respect
thereof to be demanded, or any Borrower Party is unable or admits in writing its
inability to pay its debts as they mature, and, with respect to any such
cross-default by a Borrower Party (other than Borrower), other than indebtedness
owed to a Lender, such cross-default continues for thirty (30) days after
written notice thereof to Borrower from Administrative Agent; or (ii) the
occurrence under any Swap Contract of an Early Termination Date (as defined in
such Swap Contract) resulting from (x) any event of default under such Swap
Contract as to which Borrower or any Subsidiary is the Defaulting Party (as
defined in such Swap Contract) or (y) any Termination Event occurs under any
Swap Contract (as defined therein) as to which Borrower or any Subsidiary is an
Affected Party (as so defined), which, in either event, the Swap Termination
Value owed by Borrower or such Subsidiary as a result thereof is greater than
the Threshold Amount; or
(g) Any Loan Document, at any time after its execution and delivery and
for any reason other than the agreement of all Lenders or satisfaction in full
of all the Obligations, ceases to be in full force and effect or is declared by
a court of competent jurisdiction to be null and void, invalid or unenforceable
in any respect; or any
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 61
67
Borrower Party denies that it has any or further liability or obligation under
any Loan Document, or purports to revoke, terminate or rescind any Loan
Document; or
(h) A final judgment against any Borrower Party is entered for the
payment of money in excess of the Threshold Amount as to Borrower or its
Subsidiaries, and $10,000,000 as to any other Borrower Party, or any
non-monetary final judgment is entered against any Borrower Party which has a
Material Adverse Effect and, in each case if such judgment remains unsatisfied
without procurement of a stay of execution within 30 calendar days after the
date of entry of judgment or, if earlier, five days prior to the date of any
proposed sale, or any writ or warrant of attachment or execution or similar
process is issued or levied against all or any material part of the Property of
any such Person and is not released, vacated or fully bonded within 30 calendar
days after its issue or levy; or
(i) Borrower, any of Borrower's Subsidiaries or any other Borrower
Party institutes or consents to the institution of any proceeding under Debtor
Relief Laws, or makes an assignment for the benefit of creditors; or applies for
or consents to the appointment of any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer for it or for all or any material
part of its property; or any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer is appointed without the
application or consent of that Person and the appointment continues undischarged
or unstayed for 60 calendar days; or any proceeding under Debtor Relief Laws
relating to any such Person or to all or any part of its property is instituted
without the consent of that Person and continues undismissed or unstayed for 60
calendar days, or an order for relief is entered in any such proceeding; or
(j) (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold
Amount; (ii) the aggregate amount of Unfunded Pension Liability among all
Pension Plans at any time exceeds the Threshold Amount; or (iii) Borrower or any
ERISA Affiliate fails to pay when due, after the expiration of any applicable
grace period, any installment payment with respect to its withdrawal liability
under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in
excess of the Threshold Amount; or
(k) There shall occur a Change of Control or Change of Management; or
(l) Any event occurs which has a Material Adverse Effect.
9.02 REMEDIES UPON EVENT OF DEFAULT.
Without limiting any other rights or remedies of Administrative Agent
or Lenders provided for elsewhere in this Agreement, or the other Loan
Documents, or by applicable Law, or in equity, or otherwise:
(a) Upon the occurrence, and during the continuance, of any Event of
Default other than an Event of Default described in Section 9.01(i):
(i) the Requisite Lenders may request Administrative Agent to,
and Administrative Agent thereupon shall, terminate the Commitments
and/or declare all or any part of the unpaid principal of all Loans,
all interest accrued and unpaid thereon and all other amounts payable
under the Loan Documents to be immediately due and payable, whereupon
the same shall become and be immediately due and payable, without
protest, presentment, notice of dishonor, demand or further notice of
any kind, all of which are expressly waived by Borrower; and
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 62
68
(ii) Issuing Lender may, with the approval of Administrative
Agent on behalf of the Requisite Lenders, demand immediate payment by
Borrower of an amount equal to the aggregate amount of all outstanding
Letters of Credit Usage to be held in a Letter of Credit Cash
Collateral Account.
(b) Upon the occurrence of any Event of Default described in Section
9.01(i):
(i) the Commitments and all other obligations of
Administrative Agent or Lenders shall automatically terminate without
notice to or demand upon Borrower, which are expressly waived by
Borrower;
(ii) the unpaid principal of all Loans, all interest accrued
and unpaid thereon and all other amounts payable under the Loan
Documents shall be immediately due and payable, without protest,
presentment, notice of dishonor, demand or further notice of any kind,
all of which are expressly waived by Borrower; and
(iii) an amount equal to the aggregate amount of all
outstanding Letters of Credit Usage shall be immediately due and
payable to Issuing Lender without notice to or demand upon Borrower,
which are expressly waived by Borrower, to be held in a Letter of
Credit Cash Collateral Account.
(c) Upon the occurrence of any Event of Default, Lenders and
Administrative Agent, or any of them, without notice to (except as expressly
provided for in any Loan Document) or demand upon Borrower, which are expressly
waived by Borrower (except as to notices expressly provided for in any Loan
Document), may (i) proceed to (but only with the consent of the Requisite
Lenders) protect, exercise and enforce their rights and remedies under the Loan
Documents against any Borrower Party and such other rights and remedies as are
provided by Law or equity and (ii) as a condition to any Extension of Credit (A)
require a valid Down Date Waiver and Subordination of Mechanic's Lien Claims
("Down Date Waiver") (on the form supplied by Administrative Agent) from each
Original Contractor and Subcontractor who also performed work or furnished
material during the applicable period described in the Down Date Waiver, (B)
require each Title Binder to be endorsed and down-dated at Borrower's expense in
a manner satisfactory to Administrative Agent to increase the coverage by the
amount of each Extension of Credit through the date of each Extension of Credit
with no additional title change or exception objectionable to Administrative
Agent (including, without limitation, mechanic's or materialman's liens against
any of the Borrowing Base Inventory), (C) require Borrower to procure receipted
bills showing payment of all amounts due to all parties who have furnished
materials or services or performed labor of any kind with respect to any of the
Borrowing Base Inventory, and (D) in addition thereto, and without duplication
of any amounts previously held back for the following items, hold back the
amount of (1) the retainage of ten percent (10%) of the amount of the costs of
construction or development of property in the Borrowing Base Inventory; (2) any
costs covered by the Request for Extension of Credit that are not certified or
verified as provided in this Agreement; (3) any costs covered by a previous
Request for Extension of Credit for which Down Date Waivers have not been
received by Administrative Agent; (4) any costs covered by any previous Request
for Extension of Credit for which Borrower has not delivered to Administrative
Agent copies of paid invoices, cancelled checks, receipts or other proof of
payment satisfactory to Administrative Agent after a request therefor by
Administrative Agent; and (5) any amount authorized to be withheld by an owner
under subchapter D of Chapter 53 of the Texas Property Code. In addition to the
foregoing, with regard to each Extension of Credit, at Requested Lenders'
option, the final Extension of Credit with respect to any Original Contract may
be withheld until thirty (30) days after the later of (i) the actual completion
of the work, including extras or change orders reasonably required or
contemplated under that Original Contract (other than warranty or repair work),
or (ii) the date on which an affidavit of completion has been filed with respect
to that Original Contract in compliance with Section 53.106 of the Texas
Property Code. In the event a mechanic's or materialman's lien is filed on any
of the Borrowing Base Inventory, Requested Lenders may also require a Final
Waiver and Subordination of Mechanic's Lien Claims (in a form approved by
Administrative Agent)
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 63
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by each Original Contractor, and all Subcontractors and other parties who have
supplied labor, materials, or services for the construction of, or who otherwise
might be entitled to claim a contractual, statutory or constitutional lien
against, any of the Borrowing Base Inventory, certifying that each of them and
their respective subcontractors, laborers and materialmen have been paid in full
for all labor, materials and services in connection with construction or
development of the applicable Borrowing Base Inventory.
(d) Upon the occurrence of a Default, Lenders shall have the right
(with the consent of the Super Majority Lenders), in addition to any other right
or remedy of Lenders, but not the obligation, in their name or in the name of
Borrower, to enter into possession of any property included in the Borrowing
Base Inventory or any part thereof; to perform all work necessary to complete
the construction or development of any of the Borrowing Base Inventory
substantially in accordance with the Plans, applicable Laws, and the
requirements of the Sales Agreement, if applicable; and to employ watchmen and
other safeguards to protect any property included in the Borrowing Base
Inventory or any part thereof. Lenders may advance and incur such expenses as
Lenders deem necessary therefore. Such expenses, even though in excess of the
Combined Commitments shall be secured by the Loan Documents and shall be payable
to Lenders on demand. Lenders (with the consent of the Super Majority Lenders)
may disburse any portion of any Extension of Credit at any time, and from time
to time, to persons other than Borrower for the purposes specified in this
Section, irrespective of any of the other provisions contained in this
Agreement. Borrower hereby appoints Administrative Agent as the attorney-in-fact
of Borrower with full power of substitution, and in the name of Borrower, if the
Super Majority Lenders elect to do so, upon the occurrence of a Default, to (i)
use such sums as are necessary, including any proceeds of any Extension of
Credit, make such changes or corrections in the Plans, and employ such
architects, engineers, and contractors as may be required for the purpose of
completing the construction and development of any property included in the
Borrowing Base Inventory substantially in accordance with the Plans, applicable
Laws, and the requirements of any Sales Agreement, if applicable, or as
otherwise may be necessary or desirable for purposes of completing construction
or development; (ii) execute all applications and certificates in the name of
Borrower which may be required for the completion of construction or development
of any property included in the Borrowing Base Inventory; (iii) endorse the name
of Borrower on any checks or drafts representing proceeds of any insurance
policy covering any part of the Collateral, or other checks or instruments
payable to Borrower with respect to the Collateral or any part thereof; (iv) do
every act with respect to the construction of any Home which Borrower may do;
(v) prosecute or defend any action or proceeding incident to the Collateral or
any part thereof; and (vi) pay, settle or compromise charges and claims
regarding any of the Collateral. The power of attorney granted hereby is a power
coupled with an interest, is irrevocable and shall not terminate on disability
of the principal. Neither Administrative Agent nor any Lender shall have any
obligation to undertake any of the foregoing actions, and, if Administrative
Agent should do so, neither Administrative Agent shall have any liability to
Borrower for the sufficiency or adequacy of any such actions taken by
Administrative Agent.
(e) Except as permitted by Section 11.05, no Lender may exercise any
rights or remedies with respect to the Obligations without the consent of the
Requisite Lenders (or the Super Majority Lenders, as applicable) in their sole
and absolute discretion. The order and manner in which Administrative Agent's
and Lenders' rights and remedies are to be exercised shall be determined by the
Requisite Lenders in their sole and absolute discretion. Regardless of how a
Lender may treat payments for the purpose of its own accounting, for the purpose
of computing the Obligations hereunder, payments shall be applied first, to
costs and expenses (including Attorney Costs) incurred by Administrative Agent
and each Lender, second, to the payment of accrued and unpaid interest on the
Loans to and including the date of such application, third, to the payment of
the unpaid principal of the Loans, and fourth, to the payment of all other
amounts (including fees) then owing to Administrative Agent and Lenders under
the Loan Documents, in each case paid pro rata to each Lender in the same
proportions that the aggregate Obligations owed to each Lender under the Loan
Documents bear to the aggregate Obligations owed under the Loan Documents to all
Lenders, without priority or preference among Lenders. No application of
payments will cure any Event of Default, or prevent acceleration, or continued
acceleration, of amounts payable under the Loan Documents, or prevent the
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 64
70
exercise, or continued exercise, of rights or remedies of Administrative Agent
and Lenders hereunder or thereunder or at Law or in equity.
10. SECTION ADMINISTRATIVE AGENT
10.01 APPOINTMENT AND AUTHORIZATION OF ADMINISTRATIVE AGENT.
(a) Each Lender hereby irrevocably (subject to Section 10.09) appoints,
designates and authorizes Administrative Agent to take such action on 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, Administrative Agent shall not have any duties or responsibilities,
except those expressly set forth herein, nor shall Administrative Agent have or
be deemed to have any fiduciary relationship with any Lender, 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 Administrative Agent. Without limiting the generality of the foregoing
sentence, the use of the term "agent" in this Agreement with reference to
Administrative Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties.
(b) Issuing Lender shall act on behalf of Lenders with respect to any
Letters of Credit issued by it and the documents associated therewith until such
time and except for so long as Administrative Agent may agree at the request of
the Requisite Lenders to act for such Issuing Lender with respect thereto;
provided, however, that Issuing Lender shall have all of the benefits and
immunities (i) provided to Administrative Agent in this Section 10 with respect
to any acts taken or omissions suffered by Issuing Lender in connection with
Letters of Credit issued by it or proposed to be issued by it and the
application and agreements for letters of credit pertaining to the Letters of
Credit as fully as if the term "Administrative Agent" as used in this Section 10
included Issuing Lender with respect to such acts or omissions, and (ii) as
additionally provided in this Agreement with respect to Issuing Lender.
10.02 DELEGATION OF DUTIES.
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. Administrative Agent shall not be responsible for the negligence or
misconduct of any agent or attorney-in-fact that it selects with reasonable
care.
10.03 LIABILITY OF ADMINISTRATIVE AGENT.
None of Administrative Agent-Related Persons shall (i) 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 (ii) be
responsible in any manner to any of Lenders for any recital, statement,
representation or warranty made by Borrower or any Subsidiary or Affiliate of
Borrower, or any officer thereof, contained in this Agreement or in any other
Loan Document, or in any certificate, report, statement or other document
referred to or provided for in, or received by Administrative Agent under or in
connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of Borrower or any other party to
any Loan Document to perform its obligations hereunder or thereunder. No
Administrative Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the
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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 Borrower or any of Borrower's Subsidiaries or Affiliates.
10.04 RELIANCE BY ADMINISTRATIVE AGENT.
(a) 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 Borrower),
independent accountants and other experts selected by Administrative Agent.
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Requisite Lenders as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by Lenders against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action.
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement or any other Loan Document in
accordance with a request or consent of the Requisite Lenders or all Lenders, if
required hereunder, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of Lenders. Where this Agreement
expressly permits or prohibits an action unless the Requisite Lenders otherwise
determine, and in all other instances, Administrative Agent may, but shall not
be required to, initiate any solicitation for the consent or a vote of Lenders.
(b) For purposes of determining compliance with the conditions
specified in Section 5.01, each Lender 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 Administrative Agent to such Lender for
consent, approval, acceptance or satisfaction, or required thereunder to be
consented to or approved by or acceptable or satisfactory to such Lender.
10.05 NOTICE OF DEFAULT.
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
Administrative Agent for the account of Lenders, unless Administrative Agent
shall have received written notice from a Lender or Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default". Administrative Agent will notify Lenders of its
receipt of any such notice. Administrative Agent shall take such action with
respect to such Default or Event of Default as may be requested by the Requisite
Lenders in accordance with Section 9; provided, however, that unless and until
Administrative Agent has received any such request, 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 Lenders.
10.06 CREDIT DECISION; DISCLOSURE OF INFORMATION BY ADMINISTRATIVE AGENT.
Each Lender acknowledges that none of the Administrative Agent-Related
Persons has made any representation or warranty to it, and that no act by
Administrative Agent hereinafter taken, including any consent to and acceptance
of any assignment or review of the affairs of Borrower and its Subsidiaries,
shall be deemed to
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constitute any representation or warranty by any Administrative Agent-Related
Person to any Lender as to any matter, including whether Administrative
Agent-Related Persons have disclosed material information in their possession.
Each Lender, including any Lender by assignment, represents to Administrative
Agent that it has, independently and without reliance upon any Administrative
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 Borrower and its Subsidiaries, 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 Borrower
hereunder. Each Lender also represents that it will, independently and without
reliance upon any Administrative 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 Borrower. Except for notices, reports and other documents
expressly required to be furnished to Lenders by Administrative Agent herein,
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of
Borrower or any of its Subsidiaries which may come into the possession of any of
the Administrative Agent-Related Persons.
10.07 INDEMNIFICATION OF ADMINISTRATIVE AGENT.
Whether or not the transactions contemplated hereby are consummated,
Lenders shall indemnify upon demand each Administrative Agent-Related Person (to
the extent not reimbursed by or on behalf of Borrower and without limiting the
obligation of Borrower to do so), pro rata, and hold harmless each
Administrative Agent-Related Person from and against any and all Indemnified
Liabilities incurred by it; provided, however, that no Lender shall be liable
for the payment to any Administrative Agent-Related Person of any portion of
such Indemnified Liabilities resulting from such Person's gross negligence or
willful misconduct; provided, however, that no action taken in accordance with
the directions of the Requisite Lenders shall be deemed to constitute gross
negligence or willful misconduct for purposes of this Section. Without
limitation of the foregoing, each Lender shall reimburse Administrative Agent
upon demand for its ratable share of any costs or out-of-pocket expenses
(including Attorney Costs) incurred by 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 Administrative Agent is not reimbursed for such expenses by
or on behalf of Borrower. The undertaking in this Section shall survive the
payment of all Obligations hereunder and the resignation or replacement of
Administrative Agent.
10.08 ADMINISTRATIVE AGENT IN INDIVIDUAL CAPACITY.
Bank of America 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 Borrower and its Subsidiaries and Affiliates as though
Bank of America were not Administrative Agent or Issuing Lender hereunder and
without notice to or consent of Lenders. Lenders acknowledge that, pursuant to
such activities, Bank of America or its Affiliates may receive information
regarding Borrower or its Affiliates (including information that may be subject
to confidentiality obligations in favor of Borrower or such Affiliate) and
acknowledge that Administrative Agent shall be under no obligation to provide
such information to them. With respect to its Loans, Bank of America shall have
the same rights and powers under this Agreement as any other Lender and may
exercise the same as though it were not Administrative Agent or Issuing Lender.
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10.09 SUCCESSOR ADMINISTRATIVE AGENT.
Administrative Agent may, and at the request of the Requisite Lenders
shall, resign as Administrative Agent upon 30 days' notice to Lenders. If
Administrative Agent resigns under this Agreement, the Requisite Lenders shall
appoint from among Lenders a successor administrative agent for Lenders which
successor administrative agent shall, prior to the occurrence and during the
continuance of a Default, be approved by Borrower. If no successor
administrative agent is appointed prior to the effective date of the resignation
of Administrative Agent, Administrative Agent may appoint, after consulting with
Lenders and Borrower, a successor administrative agent from among Lenders. Upon
the acceptance of its appointment as successor administrative agent hereunder,
such successor administrative agent shall succeed to all the rights, powers and
duties of the retiring Administrative Agent and the term "Administrative Agent"
shall mean such successor administrative agent and the retiring Administrative
Agent's appointment, powers and duties as Administrative Agent shall be
terminated. After any retiring Administrative Agent's resignation hereunder as
Administrative Agent, the provisions of this Section 10 and Sections 11.03 and
11.11 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Agreement. If no successor
administrative agent has accepted appointment as Administrative Agent by the
date which is 30 days following a retiring Administrative Agent's notice of
resignation, the retiring Administrative Agent's resignation shall nevertheless
thereupon become effective and Lenders shall perform all of the duties of
Administrative Agent hereunder until such time, if any, as the Requisite Lenders
appoint a successor agent as provided for above. Notwithstanding the foregoing,
however, Bank of America may not be removed as Administrative Agent at the
request of the Requisite Lenders unless Bank of America shall also
simultaneously be replaced as "Issuing Lender" and "Swing Line Lender" hereunder
pursuant to documentation in form and substance reasonably satisfactory to Bank
of America.
11. SECTION MISCELLANEOUS
11.01 AMENDMENTS; CONSENTS; CONSENTS OF GUARANTORS.
(a) No amendment, modification, supplement, extension, termination or
waiver of any provision of this Agreement or any other Loan Document, no
approval or consent thereunder, and no consent to any departure by any Borrower
Party therefrom shall be effective unless in writing signed by Borrower and the
Requisite Lenders, acknowledged by Administrative Agent, and, if such amendment
(i) increases the total Combined Commitments in excess of the limitations set
forth in Section 2.01(a), (ii) extends the Maturity Date other than pursuant to
Section 2.13, (iii) increases the rate of interest payable on the Loans other
than as expressly provided in this Agreement or the Notes or the Swingline Note,
or (iv) changes the financial covenants contained in Section 8.12 to cause the
same to be more restrictive on Borrower, acknowledged by Guarantors. Any waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given.
(b) Except as expressly provided in clause (d) below, without the
approval in writing of Administrative Agent and all Lenders, no amendment,
modification, supplement, termination, waiver or consent may be effective:
(i) To reduce the amount of principal, principal prepayments
or the rate of interest payable on, any Loan, or the amount of any fee
or other amount payable to any Lender under the Loan Documents (unless
such modification is consented to by each Lender entitled to receive
such fee ) or to waive an Event of Default consisting of the failure of
Borrower to pay when due principal, interest or any fee;
(ii) To postpone any date fixed for any payment of principal
of, prepayment of principal of, or any installment of interest on, any
Loan or any installment of any fee, to extend the term of, or increase
the amount of, any Lender's Commitment (it being understood that a
waiver of an Event of Default shall not
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constitute an extension or increase in the Commitment of any Lender) or
modify the Pro Rata Share of any Lender;
(iii) To amend the advance rates as set forth in Section 3.03;
(iv) To amend the provisions of the definition of "Requisite
Lenders", Section 10, this Section 11.01 or Section 11.06; or
(v) To amend any provision of this Agreement that expressly
requires the consent or approval of all Lenders.
(c) Except without the approval in writing of Super Majority Lenders,
no amendment, modification, supplement, termination, waiver or consent may be
effective:
(i) To add to the list of Approved Market Areas; or
(ii) To approve a Development Parcel which does not meet the
required parameters for a Development Parcel as set forth in this
Agreement.
(d) Notwithstanding the foregoing, (i) no amendment, waiver or consent
shall, unless in writing and signed by Issuing Lender in addition to the
Requisite Lenders or all Lenders, as the case may be, affect the rights or
duties of Issuing Lender under any Loan Document relating to Letters of Credit,
(iii) no amendment, waiver or consent shall, unless in writing and signed by
Swing Line Lender in addition to the Requisite Lenders or all the Lenders, as
the case may be, affect the rights or duties of Swing Line Lender under any Loan
Document, and (iii) any fee letter may be amended, or rights or privileges
thereunder waived, in a writing executed by the parties thereto. Any amendment,
modification, supplement, termination, waiver or consent pursuant to this
Section shall apply equally to, and shall be binding upon, all Lenders and
Administrative Agent.
11.02 TRANSMISSION AND EFFECTIVENESS OF NOTICES AND SIGNATURES.
(a) MODES OF DELIVERY. Except as otherwise provided in any Loan
Document, notices, requests, demands, directions, agreements and documents
delivered in connection with the Loan Documents (collectively, "communications")
shall be transmitted by Requisite Notice to the number and address set forth on
Schedule 11.02, may be delivered by the following modes of delivery, and shall
be effective as follows:
MODE OF DELIVERY EFFECTIVE ON EARLIER OF ACTUAL RECEIPT AND:
---------------- -------------------------------------------
Courier Scheduled delivery date
Facsimile When transmission in legible form complete
Mail Fourth Business Day after deposit in U.S. mail first
class postage pre-paid
Personal delivery When received
Telephone When conversation completed
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provided, however, that communications delivered to Administrative Agent
pursuant to Section 2 shall not be effective until actually received by
Administrative Agent.
(a) RELIANCE BY ADMINISTRATIVE AGENT AND LENDERS. Administrative Agent
and Lenders shall be entitled to rely and act on any communications purportedly
given by or on behalf of any Borrower Party even if such communications (i) were
not made in a manner specified herein, (ii) were incomplete, (iii) were not
preceded or followed by any other notice specified herein, or (iv) the terms
thereof, as understood by the recipient, varied from any subsequent related
communications provided for herein.
(b) EFFECTIVENESS OF FACSIMILE SIGNATURES. Signatures on communications
may be transmitted by facsimile only with the consent of Administrative Agent in
its sole and absolute discretion in each instance. The effectiveness of any such
signatures accepted by Administrative Agent shall, subject to applicable Law,
have the same force and effect as manual signatures and shall be binding on all
Borrower Parties and Administrative Agent and Lenders. Administrative Agent may
also require that any such signature be confirmed by a manually-signed hardcopy
thereof; provided, however, that the failure to request any such manually-signed
hardcopy confirmation shall not effect the effectiveness of any facsimile
signatures.
11.03 ATTORNEY COSTS, EXPENSES AND TAXES.
Borrower agrees (a) to pay or reimburse Administrative Agent for all
reasonable costs and expenses incurred in connection with the development,
preparation, negotiation and execution of the Loan Documents, and the
development, preparation, negotiation and execution of any amendment, waiver,
consent, supplement or modification to, any Loan Documents, and any other
documents prepared in connection herewith or therewith, and the consummation and
administration of the transactions contemplated hereby and thereby, including
all Attorney Costs, and (b) to pay or reimburse Administrative Agent and each
Lender for all costs and expenses incurred in connection with any refinancing,
restructuring, reorganization (including a bankruptcy reorganization) and
enforcement or attempted enforcement, or preservation of any rights under any
Loan Documents, and any other documents prepared in connection herewith or
therewith, or in connection with any refinancing, or restructuring of any such
documents in the nature of a "workout" or of any insolvency or bankruptcy
proceeding, including Attorney Costs. The foregoing costs and expenses shall
include all search, filing, recording, title insurance and appraisal charges and
fees and taxes related thereto, and other out-of-pocket expenses incurred by
Administrative Agent and the cost of independent public accountants and other
outside experts retained by Administrative Agent or any Lender. Such costs and
expenses shall also include administrative costs of Administrative Agent
reasonably attributable to the administration of the Loan Documents. Any amount
payable by Borrower under this Section shall bear interest from the thirtieth
day following the date of demand for payment at the Default Rate, unless waived
by Administrative Agent. The agreements in this Section shall survive repayment
of all Obligations.
11.04 BINDING EFFECT; ASSIGNMENT.
(a) This Agreement and the other Loan Documents to which Borrower is a
party will be binding upon and inure to the benefit of Borrower, Administrative
Agent, Lenders and their respective successors and assigns, except that,
Borrower may not assign its rights hereunder or thereunder or any interest
herein or therein without the prior written consent of all Lenders and any such
attempted assignment shall be void. Any Lender may at any time
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76
pledge its Note or any other instrument evidencing its rights as a Lender under
this Agreement to a Federal Reserve Lender, but no such pledge shall release
that Lender from its obligations hereunder or grant to such Federal Reserve
Lender the rights of a Lender hereunder absent foreclosure of such pledge.
(b) From time to time following the Closing Date, each Lender may
assign to one or more Eligible Assignees all or any portion of its Pro Rata
Share of its Commitment and/or Extensions of Credit; provided that (i) such
assignment, if not to a Lender or an Affiliate of the assigning Lender, shall be
consented to by Borrower (with notice to Guarantor as, and subject to, the
provisions of paragraph 7 of the Guaranty) at all times other than during the
existence of a Default or Event of Default and Administrative Agent and Issuing
Lender (which approval of Borrower shall not be unreasonably withheld or
delayed), (ii) a copy of a duly signed and completed Notice of Assignment and
Acceptance shall be delivered to Administrative Agent, (iii) except in the case
of an assignment to an Affiliate of the assigning Lender, to another Lender or
of the entire remaining Commitment of the assigning Lender, the assignment shall
not assign a Pro Rata Share equivalent to less than the Minimum Amount therefor,
(iv) after giving effect to such assignment, the assigning Lender continues to
hold the Minimum Amount, and (v) the effective date of any such assignment shall
be as specified in the Notice of Assignment and Acceptance, but not earlier than
the date which is five Business Days after the date Administrative Agent has
received the Notice of Assignment and Acceptance. Upon acceptance by
Administrative Agent of such Notice Assignment and Acceptance and consent
thereto by Administrative Agent and Issuing Lender and payment of the requisite
fee described below, the Eligible Assignee named therein shall be a Lender for
all purposes of this Agreement, with the Pro Rata Share therein set forth and,
to the extent of such Pro Rata Share, the assigning Lender shall be released
from its further obligations under this Agreement. Borrower agrees that it shall
execute and deliver upon request (against delivery by the assigning Lender to
Borrower of any Note) to such assignee Lender, one or more Notes evidencing that
assignee Lender's Pro Rata Share, and to the assigning Lender if requested, one
or more Notes evidencing the remaining balance Pro Rata Share retained by the
assigning Lender. Administrative Agent's consent to and acceptance of any
assignment shall not be deemed to constitute any representation or warranty by
any Administrative Agent-Related Person as to any matter.
(c) After receipt of a completed Notice of Assignment and Acceptance,
and receipt of an assignment fee of $3,500 from such Eligible Assignee
(including Affiliates of assigning Lenders), Administrative Agent shall,
promptly following the effective date thereof, provide to Borrower and Lenders a
revised Schedule 11.02 giving effect thereto.
(d) Each Lender may from time to time grant participations to one or
more other Person (including another Lender) all or any portion of its Pro Rata
Share of its Commitment and/or Extensions of Credit; provided, however, that (i)
such Lender's obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the participating banks or other
financial institutions shall not be a Lender hereunder for any purpose except,
if the participation agreement so provides, for the purposes of Section 4 (but
only to the extent that the cost of such benefits to Borrower does not exceed
the cost which Borrower would have incurred in respect of such Lender absent the
participation) and subject to Sections 11.05 and 11.06, (iv) Borrower,
Administrative Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, (v) the participation shall not restrict an
increase in the Commitment or in granting Lender's Pro Rata Share, so long as
the amount of the participation interest is not affected thereby, and (vi) the
consent of the holder of such participation interest shall not be required for
amendments or waivers of provisions of the Loan Documents; provided, however,
that the assigning Lender may, in any agreement with a participant, give such
participant the right to consent to any matter which (A) extends the Maturity
Date as to such participant or any other date upon which any payment of money is
due to such participant, (B) reduces the rate of interest owing to such
participant, any fee or any other
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monetary amount owing to such participant, or (C) reduces the amount of any
installment of principal owing to such participant.
11.05 SET-OFF.
In addition to any rights and remedies of Administrative Agent and
Lenders or any assignee or participant of Lenders or any Affiliates thereof
(each, a "Proceeding Party") provided by law, upon the occurrence and during the
continuance of any Event of Default, each Proceeding Party (with the consent of
the Requisite Lenders) is authorized at any time and from time to time, without
prior notice to Borrower, any such notice being waived by Borrower to the
fullest extent permitted by law, to proceed directly, by right of set-off,
banker's lien, or otherwise, against any assets of the Borrower Parties which
may be in the hands of such Proceeding Party (including all general or special,
time or demand, provisional or other deposits and other indebtedness owing by
such Proceeding Party to or for the credit or the account of Borrower) and apply
such assets against the Obligations, irrespective of whether such Proceeding
Party shall have made any demand therefor and although such Obligations may be
unmatured. Each Lender agrees promptly to notify Borrower and Administrative
Agent after any such set-off and application made by such Lender; provided,
however, that the failure to give such notice shall not affect the validity of
such set-off and application.
11.06 SHARING OF PAYMENTS.
Each Lender severally agrees that if it, through the exercise of any
right of setoff, banker's lien or counterclaim against Borrower, or otherwise,
receives payment of the Obligations held by it that is ratably more than any
other Lender, through any means, receives in payment of the Obligations held by
that Lender, then, subject to applicable Laws: (a) Lender exercising the right
of setoff, banker's lien or counterclaim or otherwise receiving such payment
shall purchase, and shall be deemed to have simultaneously purchased, from the
other Lender a participation in the Obligations held by the other Lender and
shall pay to the other Lender a purchase price in an amount so that the share of
the Obligations held by each Lender after the exercise of the right of setoff,
banker's lien or counterclaim or receipt of payment shall be in the same
proportion that existed prior to the exercise of the right of setoff, banker's
lien or counterclaim or receipt of payment; and (b) such other adjustments and
purchases of participations shall be made from time to time as shall be
equitable to ensure that all of Lenders share any payment obtained in respect of
the Obligations ratably in accordance with each Lender's share of the
Obligations immediately prior to, and without taking into account, the payment;
provided that, if all or any portion of a disproportionate payment obtained as a
result of the exercise of the right of setoff, banker's lien, counterclaim or
otherwise is thereafter recovered from the purchasing Lender by Borrower or any
Person claiming through or succeeding to the rights of Borrower, the purchase of
a participation shall be rescinded and the purchase price thereof shall be
restored to the extent of the recovery, but without interest. Each Lender that
purchases a participation in the Obligations pursuant to this Section shall from
and after the purchase have the right to give all notices, requests, demands,
directions and other communications under this Agreement with respect to the
portion of the Obligations purchased to the same extent as though the purchasing
Lender were the original owner of the Obligations purchased. Borrower expressly
consents to the foregoing arrangements and agrees that any Lender holding a
participation in an Obligation so purchased may exercise any and all rights of
setoff, banker's lien or counterclaim with respect to the participation as fully
as if Lender were the original owner of the Obligation purchased.
11.07 NO WAIVER; CUMULATIVE REMEDIES.
(a) No failure by any Lender or Administrative Agent to exercise, and
no delay by any Lender or Administrative Agent in exercising, any right, remedy,
power or privilege hereunder, shall operate as a waiver
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thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege under any Loan Document preclude any other or further exercise thereof
or the exercise of any other right, remedy, power or privilege.
(b) The rights, remedies, powers and privileges herein or therein
provided are cumulative and not exclusive of any rights, remedies, powers and
privileges provided by Law. Any decision by Administrative Agent or any Lender
not to require payment of any interest (including interest at the Default Rate),
fee, cost or other amount payable under any Loan Document or to calculate any
amount payable by a particular method on any occasion shall in no way limit or
be deemed a waiver of Administrative Agent's or such Lender's right to require
full payment thereof, or to calculate an amount payable by another method that
is not inconsistent with this Agreement, on any other or subsequent occasion.
(c) The terms and conditions of Section 10 are inserted for the sole
benefit of Administrative Agent and Lenders; the same may be waived in whole or
in part, with or without terms or conditions, in respect of any Extension of
Credit without prejudicing Administrative Agent's or Lenders' rights to assert
them in whole or in part in respect of any other Loan.
11.08 USURY.
Notwithstanding anything to the contrary contained in any Loan
Document, the interest and fees paid or agreed to be paid under the Loan
Documents shall not exceed the maximum rate of non-usurious interest permitted
by applicable Law (the "Maximum Rate"). If Administrative Agent or any Lender
shall receive interest or a fee in an amount that exceeds the Maximum Rate, the
excessive interest or fee shall be applied to the principal of the Outstanding
Obligations or, if it exceeds the unpaid principal, refunded to Borrower. In
determining whether the interest or a fee contracted for, charged, or received
by Administrative Agent or a Lender exceeds the Maximum Rate, such Person may,
to the extent permitted by applicable Law, (a) characterize any payment that is
not principal as an expense, fee, or premium rather than interest, (b) exclude
voluntary prepayments and the effects thereof, and (c) amortize, prorate,
allocate, and spread in equal or unequal parts the total amount of interest
throughout the contemplated term of the Obligations.
11.09 COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
11.10 INTEGRATION.
This Agreement, together with the other Loan Documents and any letter
agreements referred to herein, comprises the complete and integrated agreement
of the parties on the subject matter hereof and supersedes all prior agreements,
written or oral, on the subject matter hereof. In the event of any conflict
between the provisions of this Agreement and those of any other Loan Document,
the provisions of this Agreement shall control and govern.
11.11 NATURE OF LENDERS' OBLIGATIONS.
The obligations of Lenders hereunder are several and not joint or joint
and several. Nothing contained in this Agreement or any other Loan Document and
no action taken by Administrative Agent or Lenders or any of them pursuant
hereto or thereto may, or may be deemed to, make Lenders a partnership, an
association, a joint venture or other entity, either among themselves or with
Borrower or any Affiliate of Borrower. Each Lender's
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79
obligation to make any Loan pursuant hereto is several and not joint or joint
and several, and in the case of the initial Loan only is conditioned upon the
performance by all other Lenders of their obligations to make initial Loans. A
default by any Lender will not increase the Pro Rata Share attributable to any
other Lender.
11.12 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All representations and warranties made hereunder and in any Loan
Document, certificate or statement delivered pursuant hereto or thereto or in
connection herewith or therewith shall survive the execution and delivery
thereof but shall terminate the later of (a) when the Commitments are terminated
and (b) when no Obligations remain outstanding under any Loan Document. Such
representations and warranties have been or will be relied upon by
Administrative Agent and each Lender, notwithstanding any investigation made by
Administrative Agent or any Lender or on their behalf.
11.13 INDEMNITY BY BORROWER.
Borrower agrees to indemnify, save and hold harmless each
Administrative Agent-Related Person and each Lender and their respective
Affiliates, 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 (other
than the Administrative Agent or any Lender) relating directly or indirectly to
a claim, demand, action or cause of action that such Person asserts or may
assert against any Borrower Party, any of their Affiliates or any of their
officers or directors; (b) any and all claims, demands, actions or causes of
action arising out of or relating to, the Loan Documents, any predecessor loan
documents, the Commitments, the use or contemplated use of the proceeds of any
Loan, or the relationship of any Borrower Party, the Administrative Agent and
Lenders under this Agreement; (c) any administrative or investigative proceeding
by any Governmental Authority arising out of or related to a claim, demand,
action or cause of action described in subsection (a) or (b) above; and (d) 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 foregoing
claim, demand, action, cause of action or proceeding, or as a result of the
preparation of any defense in connection with any foregoing claim, demand,
action, cause of action or proceeding, in all cases, whether or not an
Indemnitee is a party to such claim, demand, action, cause of action or
proceeding (all the foregoing, collectively, the "Indemnified Liabilities");
provided that (i) no Indemnitee shall be entitled to indemnification for any
loss caused by its own negligence or misconduct or for any loss asserted against
it by another Indemnitee, and (ii) the Indemnified Liabilities shall be limited
to (x) those caused by Borrower, any of Borrower's Agents, the Plans and any use
thereof by or on behalf of Lenders, and the Loan Documents, or (y) if not caused
by Borrower, any of Borrower's Agents, the Plans or the Loan Documents, and
related to claims of third parties, by the amount of insurance available to
Borrower or any of Borrower's Agents related to such claims.
11.14 NONLIABILITY OF LENDERS.
Borrower acknowledges and agrees that:
(a) Any inspections of any property of Borrower made by or through
Administrative Agent or Lenders are for purposes of administration of the Loan
Documents only, and Borrower is not entitled to rely upon the same (whether or
not such inspections are at the expense of Borrower);
(b) By accepting or approving anything required to be observed,
performed, fulfilled or given to Administrative Agent or Lenders pursuant to the
Loan Documents, neither Administrative Agent nor Lenders shall be deemed to have
warranted or represented the sufficiency, legality, effectiveness or legal
effect of the same, or of
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 74
80
any term, provision or condition thereof, and such acceptance or approval
thereof shall not constitute a warranty or representation to anyone with respect
thereto by Administrative Agent or Lenders;
(c) The relationship between Borrower and Administrative Agent and
Lenders is, and shall at all times remain, solely that of borrowers and lenders;
neither Administrative Agent nor Lenders shall under any circumstance be
construed to be partners or joint venturers of Borrower or their Affiliates;
neither Administrative Agent nor Lenders shall under any circumstance be deemed
to be in a relationship of confidence or trust or a fiduciary relationship with
Borrower or their Affiliates, or to owe any fiduciary duty to Borrower or their
Affiliates; neither Administrative Agent nor Lenders undertake or assume any
responsibility or duty to Borrower or their Affiliates to select, review,
inspect, supervise, pass judgment upon or inform Borrower or their Affiliates of
any matter in connection with their property or the operations of Borrower or
their Affiliates; Borrower and their Affiliates shall rely entirely upon their
own judgment with respect to such matters; and any review, inspection,
supervision, exercise of judgment or supply of information undertaken or assumed
by Administrative Agent or Lenders in connection with such matters is solely for
the protection of Administrative Agent and Lenders and neither Borrower nor any
other Person is entitled to rely thereon.
11.15 NO THIRD PARTIES BENEFITTED.
This Agreement is made for the purpose of defining and setting forth
certain obligations, rights and duties of Borrower, Administrative Agent and
Lenders in connection with the Loans, and is made for the sole benefit of
Borrower, Administrative Agent and Lenders, and Administrative Agent's and
Lenders' successors and assigns. Except as provided in Sections 10.04 and 10.13,
no other Person shall have any rights of any nature hereunder or by reason
hereof.
11.16 SEVERABILITY.
Any provision of the Loan Documents that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
11.17 CONFIDENTIALITY.
Administrative Agent and each Lender shall use any confidential
non-public information concerning the Borrower Parties and their Subsidiaries
that is furnished to Administrative Agent or such Lender by or on behalf of the
Borrower Parties and their Subsidiaries in connection with the Loan Documents
(collectively, "Confidential Information") solely for the purpose of evaluating
and providing products and services to them and administering and enforcing the
Loan Documents, and it will hold the Confidential Information in confidence.
Notwithstanding the foregoing, Administrative Agent and each Lender may disclose
Confidential Information (a) to their affiliates or any of their or their
affiliates' directors, officers, employees, advisors, or representatives
(collectively, the "Representatives") whom it determines need to know such
information for the purposes set forth in this Section; (b) to any bank or
financial institution or other entity to which such Lender has assigned or
desires to assign an interest or participation in the Loan Documents or the
Obligations, provided that any such foregoing recipient of such Confidential
Information agrees to keep such Confidential Information confidential as
specified herein; (c) to any governmental agency or regulatory body having or
claiming to have authority to regulate or oversee any aspect of Administrative
Agent's or such Lender's business or that of their Representatives in connection
with the exercise of such authority or claimed authority; (d) to the extent
necessary or appropriate to effect or preserve Administrative Agent's or such
Lender's or any of their Affiliates' security (if any) for any Obligation or to
enforce any right or
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 75
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remedy or in connection with any claims asserted by or against Administrative
Agent or such Lender or any of their Representatives; and (e) pursuant to any
subpoena or any similar legal process. For purposes hereof, the term
"Confidential Information" shall not include information that (x) is in
Administrative Agent's or a Lender's possession prior to its being provided by
or on behalf of the Borrower Parties, provided that such information is not
known by Administrative Agent or such Lender to be subject to another
confidentiality agreement with, or other legal or contractual obligation of
confidentiality to, a Borrower Party, (y) is or becomes publicly available
(other than through a breach hereof by Administrative Agent or such Lender), or
(z) becomes available to Administrative Agent or such Lender on a
nonconfidential basis, provided that the source of such information was not
known by Administrative Agent or such Lender to be bound by a confidentiality
agreement or other legal or contractual obligation of confidentiality with
respect to such information.
11.18 FURTHER ASSURANCES.
Borrower and its Subsidiaries shall, at their expense and without
expense to Lenders or Administrative Agent, do, execute and deliver such further
acts and documents as any Lender or Administrative Agent from time to time
reasonably requires for the assuring and confirming unto Lenders or
Administrative Agent of the rights hereby created or intended now or hereafter
so to be, or for carrying out the intention or facilitating the performance of
the terms of any Loan Document.
11.19 HEADINGS.
Section headings in this Agreement and the other Loan Documents are
included for convenience of reference only and are not part of this Agreement or
the other Loan Documents for any other purpose.
11.20 TIME OF THE ESSENCE.
Time is of the essence of the Loan Documents.
11.21 FOREIGN LENDERS AND PARTICIPANTS.
Each Lender, and each holder of a participation interest herein, that
is a "foreign corporation, partnership or trust" within the meaning of the Code
shall deliver to Administrative Agent, prior to receipt of any payment subject
to withholding (or after accepting an assignment or receiving a participation
interest herein), two duly signed completed copies of either Form W-8BEN or any
successor thereto (relating to such Person and entitling it to a complete
exemption from withholding on all payments to be made to such Person by Borrower
pursuant to this Agreement) or Form W-8ECI or any successor thereto (relating to
all payments to be made to such Person by Borrower pursuant to this Agreement)
of the United States Internal Revenue Service or such other evidence
satisfactory to Borrower and Administrative Agent that no withholding under the
federal income tax laws is required with respect to such Person. Thereafter and
from time to time, each such Person shall (a) promptly submit to Administrative
Agent such additional duly completed and signed copies of one of such forms (or
such successor forms as shall be adopted from time to time by the relevant
United States taxing authorities) as may then be available under then current
United States laws and regulations to avoid, or such evidence as is satisfactory
to Borrower and Administrative Agent of any available exemption from, United
States withholding taxes in respect of all payments to be made to such Person by
Borrower pursuant to this Agreement and (b) take such steps as shall not be
materially disadvantageous to it, in the reasonable judgment of such Lender, and
as may be reasonably necessary (including the re-designation of its Lending
Office, if any) to avoid any requirement of applicable Laws that Borrower make
any deduction or withholding for taxes from amounts payable to such Person. If
such Persons fails
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 76
82
to deliver the above forms or other documentation, then Administrative
Agent may withhold from any interest payment to such Person an amount equivalent
to the applicable withholding tax imposed by Sections 1441 and 1442 of the Code,
without reduction. If any Governmental Authority asserts that Administrative
Agent did not properly withhold any tax or other amount from payments made in
respect of such Person, such Person shall indemnify Administrative Agent
therefor, including all penalties and interest and costs and expenses (including
Attorney Costs) of Administrative Agent. The obligation of Lenders under this
subsection shall survive the payment of all Obligations and the resignation or
replacement of Administrative Agent.
11.22 REMOVAL AND/OR REPLACEMENT OF LENDERS.
(a) Under any circumstances set forth in this Agreement providing that
Borrower shall have the right to remove and/or replace a Lender as a party to
this Agreement, Borrower may, upon notice to such Lender and the Administrative
Agent, remove such Lender, prior to the occurrence of a Default, by (i) non
ratably terminating such Lender's Commitment and/or (ii) causing such Lender to
assign its Commitment to one or more other Lenders or Eligible Assignees
acceptable to Borrower, the Administrative Agent and the Issuing Bank. Any
removed or replaced Lender shall be entitled to (x) payment in full of all
principal, interest and fees owing to such Lender through the date of
termination or assignment (including any amounts payable pursuant to Section
4.05), (y) appropriate assurances and indemnities (which may include letters of
credit) as such Lender may reasonably require with respect to its participation
interest in any Letters of Credit or any Swing Line Loans then outstanding and
(z) a release of such Lender from its obligations under the Loan Documents. Any
Lender being replaced shall execute and deliver a Notice of Assignment and
Acceptance covering that Lender's Commitment. Administrative Agent shall
distribute an amended Schedule 2.01, which shall thereafter be incorporated into
this Agreement, to reflect adjustments to Lenders and their Commitments.
(b) In order to make all Lender's interests in any outstanding
Extensions of Credit ratable in accordance with any revised Pro Rata Shares
after giving effect to the removal or replacement of a Lender, Borrower shall
pay or prepay, if necessary, on the effective date thereof, all outstanding
Extensions of Credit of all Lenders, together with any amounts due under Section
3.04. Borrower may then request Extensions of Credit from Lenders in accordance
with their revised Pro Rata Shares.
11.23 GOVERNING LAW.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE GOVERNING STATE APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT ADMINISTRATIVE AGENT AND
EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF THE
GOVERNING STATE OR OF THE UNITED STATES FOR THE EASTERN DISTRICT OF THE
GOVERNING STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH BORROWER
PARTY, ADMINISTRATIVE AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH
BORROWER PARTY, ADMINISTRATIVE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN
DOCUMENT OR OTHER DOCUMENT RELATED HERETO. EACH BORROWER PARTY, ADMINISTRATIVE
AGENT AND EACH
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 77
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LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH
MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF THE GOVERNING STATE.
11.24 WAIVER OF RIGHT TO TRIAL BY JURY.
EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL
BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN
DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS
OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE
TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
11.25 ELECTRONIC TRANSMISSION OF DATA.
Administrative Agent, Lenders and Borrower agree certain Loan related
data (including confidential information, documents, applications and reports)
may be transmitted electronically, including over the Internet. This data may be
transmitted to, received from or circulated among agents and representatives of
the Borrower, Administrative Agent and/or Lenders and their Affiliates, and
other Persons involved with the subject matter of this Agreement. Each such
Person acknowledges and agrees that (a) there are risks associated with the use
of electronic transmission and that no such Person controls the method of
transmittal or service providers and, (b) no such Person has any obligation or
responsibility whatsoever and assumes no duty or obligation for the security,
receipt, or third party interception of such transmissions.
11.26 ENTIRE AGREEMENT.
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
CREDIT AGREEMENT (NEWMARK HOMES, L.P.) Page 78
84
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
BORROWER:
NEWMARK HOMES, L.P., a Texas limited
partnership
By: Newmark Home Corporation, a Nevada
corporation, its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President
ADMINISTRATIVE AGENT:
BANK OF AMERICA, N.A., as Administrative Agent
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇
Title: Vice President
LENDERS:
BANK OF AMERICA, N.A., AS ISSUING LENDER, A
LENDER AND SWING LINE LENDER
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇
Title: Vice President
BANK UNITED
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Regional Director
GUARANTY FEDERAL BANK, F.S.B
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
CREDIT AGREEMENT (Newmark Homes, L.P.) Page 79
85
BANK ONE, TEXAS, N.A.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
COMERICA BANK - TEXAS
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
MELLON BANK, N.A.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
CREDIT AGREEMENT (Newmark Homes, L.P.) Page 80
86
The following exhibits and schedules have been omitted from the filing of this
Exhibit 10.1. A true and complete copy of the exhibit requested will be provided
to the Commission or to any interested party requesting a copy by contacting
▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary of the Company, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇.
EXHIBITS
A Request for Extension of Credit
B Compliance Certificate
C Committed Loan Note
C-1 Form of Swing Line Note
D Notice of Assignment and Acceptance
E Borrowing Base Report
F Survey and Insurance Requirements
G Letter of Credit Application
H Panel Request for Homes, Model Units and Finished Lots
H-1 Development Parcel Request for Development Parcels
SCHEDULES
2.01 Commitments and Pro Rata Shares
8.01 Existing Indebtedness, Liens and Negative Pledges
11.02 Domestic Lending Offices, Addresses for Notices
CREDIT AGREEMENT (Newmark Homes, L.P.) Page 81