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Exhibit 10.17
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HOMEMAX, INC.
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$12,000,000
CREDIT AGREEMENT
dated as of February 23, 1998
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NATIONSBANK, N.A.,
as Agent
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SCHEDULES
Schedule I Addresses for Notices
Schedule II Commitments and Commitment Percentages
Schedule III Subsidiaries
Schedule IV Indebtedness
Schedule V Liens
Schedule VI Guarantees
Schedule VII Existing Investments
Schedule VIII Acquired Land Parcels
EXHIBITS
Exhibit A Form of Note
Exhibit B Form of Parent Guarantee
Exhibit C Form of Subsidiaries Guarantee
Exhibit D Form of Joinder Agreement
Exhibit E Form of HM Services Subordination Agreement
Exhibit F Form of ZN Net Worth Agreement
Exhibit G Form of Opinion of Frost & ▇▇▇▇▇▇ LLP
Exhibit H Officer's Certificate of Compliance
Exhibit I Form of Assignment and Acceptance
Exhibit J Form of Notice of Borrowing
Exhibit K Form of Mortgage
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SECTION 1. DEFINITIONS..................................................................1
1.1 Defined Terms................................................................1
1.2 Other Definitional Provisions...............................................11
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS.............................................12
2.1 Commitments.................................................................12
2.2 Procedure for Borrowing.....................................................13
2.3 Amortization of Loans.......................................................13
2.4 Use of Proceeds of Loans....................................................13
SECTION 3. PROVISIONS RELATING TO THE EXTENSIONS OF CREDIT; FEES AND PAYMENTS..........13
3.1 Repayment of Loans; Evidence of Indebtedness................................13
3.2 Agent's Fees................................................................14
3.3 Optional Prepayments........................................................14
3.4 Optional Termination or Reduction of Commitments............................14
3.5 Mandatory Reduction of Commitments and Prepayments..........................15
3.6 Application of Prepayments..................................................16
3.7 Prepayment Premium..........................................................17
3.8 Minimum Amounts and Maximum Number of Notes.................................17
3.9 Interest Rates and Payment Dates............................................17
3.10 Computation of Interest and Fees............................................17
3.11 Pro Rata Treatment and Payments.............................................18
SECTION 4. REPRESENTATIONS AND WARRANTIES..............................................19
4.1 Financial Condition.........................................................19
4.2 No Change...................................................................20
4.3 Disclosure..................................................................20
4.4 Corporate Existence; Compliance with Law....................................20
4.5 Corporate Power, Authorization, Enforceable Obligations.....................21
4.6 No Legal Bar................................................................21
4.7 No Material Litigation......................................................21
4.8 No Default..................................................................21
4.9 Ownership of Property; Liens................................................22
4.10 Intellectual Property.......................................................22
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4.11 No Burdensome Restrictions..................................................22
4.12 Taxes.......................................................................22
4.13 Federal Regulations.........................................................23
4.14 ERISA.......................................................................23
4.15 Investment Company Act; Other Regulations...................................23
4.16 Subsidiaries................................................................24
4.17 Acquired Land Parcels.......................................................24
4.18 Environmental Matters.......................................................24
4.19 Solvency....................................................................25
4.20 Guarantees..................................................................25
4.21 Joinder Agreements..........................................................26
4.22 Mortgages...................................................................27
4.23 HM Services Subordination Agreement.........................................27
4.24 ZN Net Worth Agreement......................................................27
SECTION 5. CONDITIONS PRECEDENT........................................................27
5.1 Conditions to Initial Extensions of Credit..................................27
5.2 Conditions to Each Extension of Credit......................................29
SECTION 6. AFFIRMATIVE COVENANTS.......................................................32
6.1 Financial Statements........................................................32
6.2 Certificates; Other Information.............................................32
6.3 Payment of Obligations......................................................34
6.4 Conduct of Business and Maintenance of Existence............................34
6.5 Maintenance of Property; Insurance..........................................34
6.6 Inspection of Property; Books and Records; Discussions......................35
6.7 Notices.....................................................................35
6.8 Environmental Laws..........................................................36
6.9 Further Assurances; Additional Collateral...................................36
6.10 Additional Subsidiaries.....................................................37
SECTION 7. NEGATIVE COVENANTS..........................................................38
7.1 Financial Condition Covenant (Indebtedness to Net Worth)....................38
7.2 Limitation on Indebtedness and Preferred Stock..............................38
7.3 Limitation on Liens.........................................................39
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7.4 Limitation on Guarantee Obligations.........................................39
7.5 Limitation on Fundamental Changes...........................................40
7.6 Limitation on Sale of Assets................................................40
7.7 Limitation on Dividends.....................................................40
7.8 Limitation on Investments, Loans and Advances...............................41
7.9 Limitation on Transactions with Affiliates..................................41
7.10 Limitation on Sales and Leasebacks..........................................42
7.11 Limitation on Changes in Fiscal Year........................................42
7.12 Limitation on Negative Pledge Clauses.......................................42
7.13 Limitation on Lines of Business.............................................42
SECTION 8. EVENTS OF DEFAULT...........................................................43
SECTION 9. THE AGENT...................................................................46
9.1 Appointment.................................................................46
9.2 Delegation of Duties........................................................47
9.3 Exculpatory Provisions......................................................47
9.4 Reliance by Agent...........................................................48
9.5 Notice of Default...........................................................48
9.6 Non-Reliance on Agent and Other Lenders.....................................49
9.7 Indemnification.............................................................49
9.8 Agent in its Individual Capacity............................................50
9.9 Successor Agent.............................................................50
SECTION 10. MISCELLANEOUS...............................................................50
10.1 Amendments and Waivers......................................................50
10.2 Releases of Collateral Security and Guarantee Obligations...................52
10.3 Notices.....................................................................52
10.4 No Waiver; Cumulative Remedies..............................................53
10.5 Survival of Representations and Warranties..................................53
10.6 Payment of Expenses and Taxes...............................................53
10.7 Termination.................................................................54
10.8 Successors and Assigns; Participations and Assignments......................54
10.9 Adjustments; Set-off........................................................57
10.10 Counterparts................................................................58
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10.11 Severability................................................................58
10.12 Integration.................................................................58
10.13 GOVERNING LAW...............................................................58
10.14 Submission to Jurisdiction; Waivers.........................................59
10.15 Acknowledgments.............................................................59
10.16 WAIVERS OF JURY TRIAL.......................................................60
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CREDIT AGREEMENT, dated as of February 23, 1998, among:
HOMEMAX, INC., (the "BORROWER");
the banks and other financial institutions from time to time
parties to this Agreement, (the "LENDERS"); and
NATIONSBANK, N.A. as agent (in such capacity, the "AGENT") for
the Lenders hereunder.
WITNESSETH:
WHEREAS, the Borrower has requested that the Lenders make available to
it credit facilities of up to $12,000,000.00 in the aggregate upon the terms,
and subject to the conditions, set forth herein to finance the acquisition and
development of commercial land parcels as permitted by this Agreement;
WHEREAS, the Agent and the Lenders are willing to provide such
financing to the Borrower only upon the terms and subject to the conditions set
forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto hereby agree as follows:
SECTION I: DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the following terms
shall have the following meanings:
"ABR": for any day, a rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to the greater of (i) the Prime Rate in effect on
such day and (ii) the Federal Funds Effective Rate in effect on such day plus
1/2 of 1%. If for any reason the Agent shall have determined (which
determination shall be conclusive absent manifest error) that the Agent is
unable to ascertain the Federal Funds Effective Rate for any reason, including
the inability or failure of the Agent to obtain sufficient quotations in
accordance with the terms thereof, the ABR shall be determined without regard to
clause (ii) of the first sentence of this definition, until the circumstances
giving rise to such inability no longer exist. Any change in the ABR due to a
change in the Prime Rate or Federal Funds Effective Rate shall be effective on
the effective date of such change in the Prime Rate or Federal Funds Effective
Rate, respectively.
"ACQUIRED LAND PARCEL": all of the interests in the real properties
acquired by the Borrower or a Subsidiary as designated on SCHEDULE VIII and any
interests in real property acquired by the Borrower or any Subsidiary of the
Borrower pursuant to any subsequent acquisition using the proceeds of this
Facility.
"AGENT": as defined in the preamble to this Agreement.
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"AFFILIATE": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with, such Person. For purposes of this definition,
"control" of a Person means the power, directly or indirectly, either to (a)
vote 5% or more of the securities having ordinary voting power for the election
of directors of such Person or (b) direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
"AGGREGATE OUTSTANDING EXTENSIONS OF CREDIT": as to any Lender at any
time, an amount equal to the aggregate principal amount of all Loans made by
such Lender then outstanding.
"AGREEMENT": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"ALTA SURVEY": as described in subsection 5.2(e).
"APPLICABLE MARGIN": for each Loan outstanding, the rate per annum of
1.50%.
"ASSIGNEE": as defined in subsection 10.8(c).
"AVAILABLE COMMITMENT": as to any Lender, an amount equal to the
excess, if any, of (a) the Commitment over (b) the Aggregate Outstanding
Extensions of Credit of such Lender.
"BANK DEFAULT": means (i) the refusal (which has not been retracted) of
a Lender to make available an amount equal to its Lender's Commitment Percentage
of any borrowing or (ii) a Lender having notified the Agent and or the Borrower
that such Lender does not intend to comply with the obligations under subsection
2.1 in the case of either (i) or (ii) above including as a result of the
appointment of a receiver or conservator with respect to such Lender at the
direction or request of any regulatory agency or authority.
"BORROWING DATE": for each Loan, the date of a requested borrowing
PROVIDED that if such date is not a Business Day then the next succeeding
Business Day.
"BUSINESS": as defined in subsection 4.18(b).
"BUSINESS DAY": a day other than a Saturday, Sunday or other day on
which commercial banks in Charlotte, North Carolina are authorized or required
by law to close; PROVIDED that, with respect to matters relating to Eurodollar
Loans, the term "BUSINESS DAY" shall mean a day other than a Saturday, Sunday or
other day on which commercial banks in Charlotte, North Carolina or London,
England, are authorized or required by law to close.
"CAPITAL STOCK": any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation) and any
and all warrants or options to purchase any of the foregoing.
"CASH EQUIVALENTS": (a) securities with maturities of one year or less
from the date of acquisition issued or fully guaranteed or insured by the United
States Government or any agency
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thereof, (b) certificates of deposit and eurodollar time deposits with
maturities of one year or less from the date of acquisition and overnight bank
deposits of any Lender or of any commercial bank having capital and surplus in
excess of $100,000,000, (c) repurchase obligations of any Lender or of any
commercial bank or investment bank satisfying the requirements of clause (b) of
this definition, having a term of not more than thirty (30) days with respect to
securities issued or fully guaranteed or insured by the United States Government
or any agency thereof, (d) commercial paper issued in the United States which is
rated at least A-1 by S&P or P-1 by ▇▇▇▇▇'▇, (e) securities with maturities of
one year or less from the date of acquisition issued or fully guaranteed by any
state, commonwealth or territory of the United States, by any political
subdivision or taxing authority of any such state, commonwealth or territory or
by any foreign government, the securities of which state, commonwealth,
territory, political subdivision, taxing authority or foreign government are
rated at least A by S&P or A by ▇▇▇▇▇'▇, (f) securities with maturities of one
year or less from the date of acquisition backed by standby letters of credit
issued by any Lender or any commercial bank satisfying the requirements of
clause (b) of this definition or (g) shares of money market mutual or similar
funds which invest substantially exclusively in assets satisfying the
requirements of clauses (a) through (f) of this definition.
"CHANGE IN CONTROL": any transaction or group of transactions after
which (A) (i) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III (together with his executors, administrators
or heirs in the event of his death) shall directly or indirectly own less than
twenty-five percent (25%) of ▇▇▇▇▇▇ National's issued and outstanding common
stock, or (ii) another Person has acquired beneficial ownership of ▇▇▇▇▇▇
National's issued and outstanding common stock in an amount greater than the
amount owned directly or indirectly in the aggregate by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
(together with his executors, administrators or heirs in the event of his death)
or (B) ▇▇▇▇▇▇ National Corporation shall cease to own ninety-five percent (95%)
of all classes of voting stock of the Borrower.
"CLOSING DATE": the date on which the conditions precedent set forth in
subsection 5.1 shall be satisfied.
"CODE": the Internal Revenue Code of 1986, as amended from time to
time.
"COLLATERAL": all Acquired Land Parcels and improvement thereon as more
fully described in the Security Documents.
"COMMITMENT": as to any Lender, the obligation of such Lender to make
Loans to the Borrower hereunder in an aggregate principal amount at any one time
outstanding not to exceed the amount set forth opposite such Lender's name on
SCHEDULE II, as the same may be reduced from time to time pursuant to
subsections 3.4 and 3.5; as to all Lenders collectively, the "COMMITMENTS."
"COMMITMENT PERCENTAGE": as to any Lender at any date, the percentage
which such Lender's Commitment then constitutes of the aggregate Commitments
(or, at any time after the Commitments shall have expired or terminated, the
percentage which the Aggregate Outstanding Extensions of Credit of such Lender
then constitutes of the Aggregate Outstanding Extensions of Credit of all
Lenders.).
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"COMMITMENT PERIOD": the period from and including the date hereof to
but not including the Commitment Termination Date or such earlier date on which
the Commitments shall terminate as provided herein.
"COMMITMENT TERMINATION DATE": the last Business Day of the calendar
month in the month that is twenty-four (24) months following the Closing Date.
"COMMONLY CONTROLLED ENTITY": an entity, whether or not incorporated,
which is under common control with the Borrower within the meaning of Section
4001 of ERISA or is part of a group which includes the Borrower and which is
treated as a single employer under Section 414 of the Code.
"CONSOLIDATED NET INCOME" or "CONSOLIDATED NET LOSS": for any fiscal
period, the amount which, in conformity with GAAP, would be set forth opposite
the caption "net income" (or any like caption) or "net loss" (or any like
caption, as the case may be, on a consolidated statement of earnings of the
Borrower and its Subsidiaries for such fiscal period.
"CONSOLIDATED NET WORTH": for any fiscal period, the sum of (a) Capital
Stock and additional paid-in capital plus (b) retained earnings (or minus
accumulated deficits) of the Borrower and its Subsidiaries determined on a
consolidated basis.
"CONSOLIDATED TANGIBLE NET WORTH": for any fiscal period, the sum of
(a) Consolidated Net Worth MINUS (b) any amounts which would be considered
intangible assets on a consolidated balance sheet of the Borrower and its
Subsidiaries at such date (including without limitation, copyrights, patents,
trademarks, contract rights, development costs and goodwill).
"CONTRACTUAL OBLIGATION": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"DEFAULT": any of the events specified in Section 8, whether or not any
requirement for the giving of notice, the lapse of time, or both, or any other
condition, has been satisfied.
"DEFAULTING LENDER": any Lender with respect to which a Bank Default is
in effect.
"DOLLARS" and "$": dollars in lawful currency of the United States of
America.
"EBITDA": for any fiscal period for any Person, the Consolidated Net
Income or Consolidated Net Loss, as the case may be, for such fiscal period,
after excluding therefrom the amount of extraordinary gain and restoring thereto
(a) depreciation and amortization, (b) the amount of interest expense of such
Person, determined on a consolidated basis, for such period on the aggregate
principal amount of their consolidated Indebtedness and any fees (including
commitment and administrative fees) with respect to such Indebtedness, (c) the
amount of tax expense of such Person, determined on a consolidated basis for
such period and (d) the aggregate amount of fixed and contingent rentals payable
by the Borrower and its Subsidiaries, determined on a consolidated basis for
such period, with respect to leases of real and personal property.
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"ENVIRONMENTAL LAWS": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees
or other Requirements of Law (including common law) regulating, relating to or
imposing liability or standards of conduct concerning pollution or protection of
the environment (including protection of human health from environmental
hazards), as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"EVENT OF DEFAULT": any of the events specified in Section 8, PROVIDED
that any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"FACILITY": as provided for in Section 2 hereof.
"FEDERAL FUNDS EFFECTIVE RATE": for any day, the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Agent from three
Federal funds brokers of recognized standing selected by it.
"FINANCING LEASE": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
"FLOOR PLAN FACILITY": the $33,920,000 facility described in the floor
plan agreement dated as of February 19, 1998 (as amended, supplemented, or
otherwise modified from time to time, the "FLOOR PLAN AGREEMENT") by and among,
the Borrower and its Subsidiaries, the lenders from time to time party thereto
and NationsBank, N.A. Dealer Financial Services Division.
"GAAP": generally accepted accounting principles in the United States
of America as in effect from time to time.
"GOVERNMENTAL AUTHORITY": any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"GUARANTEE": the collective reference to the Subsidiaries Guarantee,
the Parent Guarantee and each other guarantee from time to time made in favor of
the Agent to secure all or any part of the obligations of the Borrower hereunder
as amended, supplemented or otherwise modified from time to time; collectively,
the "GUARANTEES."
"GUARANTEE OBLIGATION": as to any Person (the "GUARANTEEING PERSON"),
any obligation of the guaranteeing person or another Person (including, without
limitation, any bank under any letter of credit) to induce the creation of which
the guaranteeing person has issued a
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reimbursement, counter indemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or
other obligations (the "PRIMARY OBLIGATIONS") of any other third Person (the
"PRIMARY OBLIGOR") in any manner, whether directly or indirectly, including,
without limitation, any obligation of the guaranteeing person incurred for the
purpose of providing credit support, whether or not contingent, including,
without limiting the generality of the foregoing, any agreement to indemnify or
hold harmless any other Person, any performance bond or other suretyship
arrangement and any other form of assurance against loss, except endorsement of
negotiable instruments or other instruments for deposit or collection in the
ordinary course of business.
"GUARANTOR": any Person delivering a Guarantee.
"HM SERVICES SUBORDINATION AGREEMENT": the Subordination Agreement,
dated as of the date hereof, by and among HomeMax, Inc. and its Subsidiaries and
NationsBank, N.A., substantially in the form of EXHIBIT E, as the same may be
amended, modified or otherwise supplemented from time to time.
"INDEBTEDNESS": of any Person, at any date, without duplication, (a)
all indebtedness of such Person for borrowed money, (b) the deferred purchase
price of property or services (payable more than six months after the original
purchase date of such property or services), (c) any other indebtedness of such
Person which is evidenced by a note, bond, debenture or similar instrument, (d)
all obligations of such Person under Financing Leases, (e) all obligations of
such Person in respect of letters of credit and acceptances and letters of
credit issued or created for the account of such Person, (f) all liabilities
secured by any Lien on any property owned by such Person even though such Person
has not assumed or otherwise become liable for the payment thereof, and (g) all
Indebtedness of the types referred to in clauses (a) through (g) above which is
guaranteed directly or indirectly by such Person.
"INSOLVENCY": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"INSOLVENT": pertaining to a condition of Insolvency.
"INTEREST PAYMENT DATE": the last Business Day of each calendar month.
"JOINDER AGREEMENT": the joinder agreement to be executed and delivered
by each Person that subsequent to the Closing Date becomes a Subsidiary,
substantially in the form of EXHIBIT D, as the same may be amended, supplemented
or otherwise modified from time to time.
"LIEN": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), mechanic's lien or
materialman's lien, charge or other security interest or any preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, any conditional sale or other
title retention agreement and any Financing Lease having substantially the same
economic effect as any of the foregoing).
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"LOANS": as defined in subsection 2.1.
"LOAN DOCUMENTS": this Agreement, the Notes, the Guarantees, the HM
Services Subordination Agreement and the Security Documents, and any other
instruments, certificates, agreements or documents delivered or contemplated to
be delivered hereunder or thereunder or in connection herewith or therewith, as
the same may be amended, supplemented or otherwise modified from time to time.
"LOAN PARTIES": the Borrower and any of its Subsidiaries and ▇▇▇▇▇▇
National Corporation.
"M.A.I. APPRAISAL": as described in subsection 5.2(g).
"MAJORITY LENDERS": at any time Lenders having Commitments (or if
Commitments have terminated, Aggregate Outstanding Extensions of Credit) which
aggregate more than 51% of the sum of the amount of the Commitments of the
Non-Defaulting Lenders (or Aggregate Outstanding Extensions of Credit of the
Non-Defaulting Lenders as the case may be) then in effect, PROVIDED THAT
Majority Lenders shall in no way consist of less than two (2) Lenders.
"MATERIAL ADVERSE AMOUNT": an amount payable by the Borrower and/or its
Subsidiaries in excess of $100,000 for remedial costs, non-routine compliance
costs, compensatory damages, punitive damages, fines, penalties or any
combination thereof.
"MATERIAL ADVERSE EFFECT": a material adverse effect on (a) the
business, operations, property, financial condition or prospects of the Borrower
and its Subsidiaries taken as a whole, (b) the validity or enforceability of
this or any of the other Loan Documents or (c) the rights or remedies of the
Agent or the Lenders hereunder or under any of the other Loan Documents.
"MATERIALS OF ENVIRONMENTAL CONCERN": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Law, including, without limitation, asbestos,
polychlorinated biphenyls and urea-formaldehyde insulation.
"MATURITY DATE": for each Loan, the date that is five (5) years from
the Borrowing Date of such Loan, or if such date is not a Business Day then the
next succeeding Business Day.
"MOODY'S": ▇▇▇▇▇'▇ Investors Service, Inc.
"MORTGAGE": each mortgage or deed of trust to be executed and delivered
by the Borrower or a Subsidiary, with respect to an Acquired Land Parcel,
substantially in the form of EXHIBIT K as the same may be amended, supplemented
or otherwise modified from time to time.
"MULTIEMPLOYER PLAN": a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"NOTE": as defined in subsection 3.1(e), collectively the "Notes".
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"NOTICE OF BORROWING": means with respect to a request for a borrowing
hereunder, a request in the form of EXHIBIT J hereto, delivered to the Agent by
a Responsible Officer of the Borrower.
"PARENT GUARANTEE": the Guarantee to be executed and delivered by
▇▇▇▇▇▇ National Corporation, substantially in the form of EXHIBIT B, as the same
may be amended, supplemented or otherwise modified from time to time.
"PARTICIPANTS": as defined in subsection 10.8(b).
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.
"PERSON": an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other legal entity.
"PHASE I ENVIRONMENTAL ASSESSMENT": as described in subsection 5.2(f).
"PLAN": at a particular time, any employee benefit plan or other plan
established, maintained or contributed to by the Borrower or a Commonly
Controlled Entity that is covered by Title IV of ERISA.
"PRIME RATE": the rate of interest per annum publicly announced from
time to time by the Agent at its principal office as its prime rate on a
particular day in effect for domestic (United States) commercial loans; such
rate is not necessarily intended to be the lowest rate of interest charged by
the Lenders in connection with extensions of credit. Each change in the Prime
Rate shall be effective on the date such change is publicly announced.
"PRINCIPAL REPAYMENT DATE": for each Loan the date that is thirteen
(13) months from the applicable Borrowing Date PROVIDED that if such date is not
a Business Day then the next preceding Business Day.
"PROCEEDS": with respect to any Proceeds Event , (a) the gross cash
consideration, and all cash proceeds (as and when received) of non-cash
consideration (including, without limitation, any such cash proceeds in the
nature of principal and interest payments on account of promissory notes or
similar obligations), received by the Borrower and its Subsidiaries in
connection with such Proceeds Event which is required to be repaid at the time
or as a result of such Proceeds Event out of the proceeds thereof.
"PROCEEDS EVENT": (a) the incurrence by the Borrower or any of its
Subsidiaries of any Indebtedness (other than Indebtedness permitted pursuant to
clauses (a) through (g) of subsection 7.2);
(b) the issuance or sale of equity securities by the Borrower or any of
its Subsidiaries to any Person, other than (i) the issuance or sale of any
equity securities to the Borrower or any of its Subsidiaries, (ii) the issuance
of Capital Stock upon the sale or exercise of stock options, (iii)
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the issuance and sale of Capital Stock under employee stock purchase plans, (iv)
the issuance and sale of Capital Stock and/or stock options under employee stock
ownership and incentive plans and similar programs or individual arrangements;
(c) the sale, transfer or other disposition by the Borrower or any of its
Subsidiaries of any real or personal, tangible or intangible, property
(including, without limitation, any Capital Stock, but other than inventory
sold, transferred or otherwise disposed of in the ordinary course of business)
of the Borrower or such Subsidiary to any Person (other than to the Borrower or
any of its Subsidiaries); and
(d) the recovery by the Borrower of amounts owing to it under property
insurance policies.
"PROPERTIES": as defined in subsection 4.18(a).
"REGULATION G": Regulation G of the Board of Governors of the Federal
Reserve System as in effect from time to time.
"REGULATION U": Regulation U of the Board of Governors of the Federal
Reserve System as in effect from time to time.
"REORGANIZATION": with respect to any Multiemployer Plan, the condition
that such plan is in reorganization within the meaning of Section 4241 of ERISA.
"REPORTABLE EVENT": any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the thirty (30) day notice period is
waived under subsections .22, .25, .27 or .28 of PBGC Reg. Sec.4043.
"REQUIREMENT OF LAW": as to any Person, the Articles or Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"RESPONSIBLE OFFICER": the chief executive officer, the president, any
vice president, the chief financial officer and the treasurer of the Borrower.
"RESTRICTED PAYMENTS": as defined in subsection 7.7.
"S&P": Standard and Poor's Ratings Group, a division of McGraw Hill
Companies Inc.
"SEC": means the United States Securities and Exchange Commission, or
any Governmental Authority succeeding to any of its principal functions.
"SECURED OBLIGATIONS": shall be the collective reference to the unpaid
principal of and interest on the Notes and all other obligations and liabilities
(including, without limitation, interest accruing at the then applicable rate
provided in this Agreement after the maturity of the Loans and interest accruing
at the then applicable rate provided in this Agreement after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like
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proceeding, relating to the Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding), of the
Borrower to the Agent and the Lenders, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, this Agreement, the Notes and
the other Loan Documents or any other document made, delivered or given in
connection therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all reasonable fees and disbursements of counsel
to the Agent or to the Lenders that are required to be paid by the Borrower
pursuant to the terms of this Agreement or any other Loan Document).
"SECURITY DOCUMENTS": the collective reference to the Joinder Agreement
and the Mortgages and all other security documents hereafter delivered to the
Lenders granting a Lien on any asset or assets of any Person to secure the
obligations and liabilities of the Borrower hereunder and under any of the other
Loan Documents or to secure any guarantee of any such obligations and
liabilities.
"SENIOR INDEBTEDNESS": Indebtedness of the Borrower or its Subsidiaries
MINUS Subordinated Indebtedness.
"SINGLE EMPLOYER PLAN": any Plan which is covered by Title IV of ERISA,
but which is not a Multiemployer Plan.
"SUBORDINATED INDEBTEDNESS": any Indebtedness for which the Borrower or
its Subsidiaries are liable that is subordinated to the obligations of the Loan
Parties hereunder on terms and pursuant to documentation containing other terms
(including interest, amortization, covenants and events of default) in form and
substance satisfactory to the Agent.
"SUBSIDIARIES GUARANTEE": each Guarantee to be executed and delivered
by one or more Subsidiaries, substantially in the form of EXHIBIT C, as the same
may be amended, supplemented or otherwise modified from time to time.
"SUBSIDIARY": as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise qualified, all references to a "Subsidiary" or
to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries
of the Borrower.
"TITLE INSURANCE": as described in subsection 5.2(d).
"TRANSFEREE": as defined in subsection 10.8(f).
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"UNIFORM CUSTOMS": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No. 500,
as the same may be amended from time to time.
"ZN NET WORTH AGREEMENT": the ZN Net Worth Maintenance Guarantee to be
executed and delivered by ▇▇▇▇▇▇ National, substantially in the form of EXHIBIT
F, as the same may be amended, supplemented or otherwise modified from time to
time.
"ZN FACILITY": the $15,000,000 credit facility described in the credit
agreement dated as of February 23, 1998, (as amended, supplemented, or otherwise
modified from time to time the "ZN CREDIT AGREEMENT") by and among ▇▇▇▇▇▇
National Corporation, as borrower, the banks from time to time party thereto and
NationsBank, N.A., as agent for such banks.
OTHER DEFINITIONAL PROVISIONS
(a) Unless otherwise specified therein, all terms defined in this
Agreement shall have the defined meanings when used in any
Notes or any certificate or other document made or delivered
pursuant hereto.
(b) Unless otherwise specified herein, all accounting terms used
herein (and in any other Loan Document and any certificate or
other document made or delivered pursuant hereto or thereto)
shall be interpreted, all accounting determinations shall be
made, and all financial statements required to be delivered
hereunder shall be prepared, in accordance with GAAP as in
effect from time to time.
(c) The words "hereof," "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, and Section, subsection, Schedule and Exhibit
references are to this Agreement unless otherwise specified.
(d) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and
including" and the words "to" and "until" each mean "to but
excluding". Periods of days referred to in this Agreement
shall be counted in calendar days unless Business Days are
expressly prescribed. Any period determined hereunder by
reference to a month or months or year or years shall end on
the day in the relevant calendar month in the relevant year,
if applicable, immediately preceding the date numerically
corresponding to the first day of such period, PROVIDED, that
if such period commences on the last day of a calendar month
(or on a day for which there is no numerically corresponding
day in the calendar month during which such period is to end),
such period shall, unless otherwise expressly required by the
other provisions of this Agreement, end on the last day of the
calendar month.
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(e) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such
terms.
SECTION 2: AMOUNT AND TERMS OF COMMITMENTS
2.1 Commitments. Subject to the terms and conditions hereof, each
Lender severally agrees to make one or more loans
(individually, a "LOAN" and collectively, the "LOANS")
immediately available to the Borrower from time to time during
the Commitment Period in writing in an aggregate principal
amount at any one time outstanding which does not exceed the
Available Commitment. During the Commitment Period, the
Borrower may use the Commitments by borrowing, prepaying the
Loans, in whole or in part, and reborrowing, all in accordance
with the terms and conditions of this Section. Amounts
borrowed under this Section and repaid or prepaid after the
Commitment Termination Date may not be reborrowed.
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2.2 PROCEDURE FOR BORROWING. The Borrower shall deliver to the Agent
its irrevocable Notice of Borrowing (which notice must be in
writing or by telephone promptly confirmed in writing and must
be received by the Agent prior to 11:00 A.M., Charlotte, North
Carolina time one (1) Business Day prior to the requested
Borrowing Date) requesting that any such Lenders make a Loan
on the requested Borrowing Date and specifying the amount of
such loan. Upon receipt of any such Notice of Borrowing from
the Borrower, the Agent shall promptly notify each Lender
thereof. Each Lender will make the amount of its pro rata
share of each borrowing available to the Agent for the account
of the Borrower at the office of the Agent specified in
subsection 10.3 prior to 1:00 P.M., Charlotte, North Carolina
time on the Borrowing Date, in funds immediately available to
the Agent. Such borrowing will then be made available to the
Borrower by the Agent transferring to an account (which shall
be maintained for such purpose by the Agent) with the
aggregate of the amounts made available to the Agent by the
Lenders and in like funds as received by the Agent.
2.3 AMORTIZATION OF LOANS. The Borrower shall repay the outstanding
principal of each Loan commencing on the applicable Principal
Repayment Date in consecutive installments on the last date of
each month (or, if such date is not a Business Day, on the
immediately preceding Business Day), such installments to be
determined based on a fifteen (15) year straight line basis
with a balloon payment of any then-outstanding principal
amount of each Loan on the Maturity Date of such Loan.
2.4 USE OF PROCEEDS OF LOANS. The proceeds of the Loans shall be
utilized by the Borrower to finance the acquisition and
development of commercial land parcels to display various
types of manufactured housing models for sale.
SECTION 3: PROVISIONS RELATING TO THE EXTENSIONS OF CREDIT;
FEES AND PAYMENTS
3.1 REPAYMENT OF LOANS; EVIDENCE OF INDEBTEDNESS.
(a) The Borrower hereby unconditionally promises to pay to the Agent
for the account of each applicable Lender the principal amount
of the Loans on the dates and in the amounts set forth in
subsection 2.3 (or the then unpaid principal amount of any
such Loan, on the date that any Loan becomes due and payable
pursuant to Section 8). The Borrower hereby further agrees to
pay interest on the unpaid principal amount of each Loan from
time to time outstanding from the date hereof until payment in
full thereof at the rates per annum, and on the dates, set
forth in subsection 3.9.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing Indebtedness of the Borrower
to the Lender resulting
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from each loan of such Lender from time to time, including the
amounts of principal and interest payable and paid to such
Lender from time to time under this Agreement.
(c) The Agent shall maintain the Register pursuant to subsection
10.8(d) and a subaccount therein for each Lender, in which
shall be recorded (i) the amount of each Loan made hereunder,
(ii) the amount of any principal or interest due and payable
or to become due and payable from the Borrower to the Lenders
hereunder and (iii) the amount of any sum received by the
Agent hereunder from the Borrower.
(d) The entries made in the Register and the accounts of each Lender
maintained pursuant to subsection 10.8(d) shall, to the extent
permitted by applicable law, be prima facie evidence of the
existence and amounts of the obligations of the Borrower
therein recorded; PROVIDED, HOWEVER, that the failure of the
Agent or any Lender to maintain the Register or any such
account, or any error therein shall not in any manner affect
the obligation of the Borrower to repay (with applicable
interest) the Loans made to such Borrower by the Lenders in
accordance with the terms of this Agreement.
(e) The Borrower agrees that, upon request of any Lender through the
Agent, the Borrower will execute and deliver to such Lender,
as applicable, one or more promissory notes of the Borrower
evidencing each of the Loans of such Lender, substantially in
the form of EXHIBIT A with appropriate insertions as to date
and principal amount (a "NOTE").
3.2 AGENT'S FEES. The Borrower agrees to pay to the Agent, for its
own account, such fees as may be agreed from time to time
between the Borrower and the Agent, when and as due.
3.3 OPTIONAL PREPAYMENTS. The Borrower may at any time and from time
to time prepay the Loans, in whole or in part, without premium
or penalty, upon at least one (1) Business Day's notice to the
Agent (which notice must be received by the Agent prior to
11:00 A.M., Charlotte, North Carolina time, on the date upon
which such notice is due and shall be irrevocable except in
connection with prepayments that are contingent on sales of
assets to the extent of such contingency), specifying the date
and amount of prepayment. Upon receipt of any such notice the
Agent shall promptly notify each Lender thereof. If any such
notice is given and not withdrawn prior to the date upon which
payment is made, the amount specified in such notice shall be
due and payable on the date specified therein, together with
any accrued interest and fees to such date on the amount
prepaid.
3.4 OPTIONAL TERMINATION OR REDUCTION OF COMMITMENTS. During the
Commitment Period, the Borrower shall have the right, upon not
less than three (3) Business Days' notice to the Agent, to
terminate the Commitments or,
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from time to time, to reduce the amount of the Commitments;
PROVIDED that no such termination or reduction shall be
permitted with respect to the Commitments (i) to the extent
that after giving effect thereto and to any repayments or
prepayments of the Loans made on the effective date thereof,
the aggregate principal amount of the Loans then outstanding
would exceed the Commitments then in effect and (ii) after the
date that is three (3) Business Days prior to the Commitment
Termination Date. Any such reduction shall be in an amount
equal to $500,000 or a whole multiple in excess thereof and
shall reduce permanently the affected Commitments then in
effect.
3.5 MANDATORY REDUCTION OF COMMITMENTS AND PREPAYMENTS.
(a) If at any time during the Commitment Period the Aggregate
Extensions of Credit of any Lender exceeds such Lender's
available Commitment, the Borrower shall immediately repay the
Loans, such repayment to be in an aggregate amount equal to
such excess.
(b) The Borrower shall, as promptly as is practicable (and, in any
event, within one (1) Business Day following the receipt
thereof), repay the Loans and permanently reduce the
Commitments by the amount equal to the aggregate amount of
Proceeds received from any Proceeds Event thereof; PROVIDED
that with respect to any Proceeds Event described in paragraph
(c) of such definition which includes the sale, transfer or
disposition by the Borrower of any of its Subsidiaries of any
Acquired Land Parcel, the Borrower shall repay the Loans and
reduce the Commitments by the amount equal to the greater of
(i) the aggregate amount of Proceeds received from such
Proceeds Event or (ii) the outstanding amount of the Loan
relating to such Acquired Land Parcel.
(c) Notwithstanding the foregoing, no such repayment and reduction
shall be due pursuant to subsection 3.5(b) with respect to any
Proceeds Event on account of:
(i) the sale or other disposition of obsolete, inoperative,
surplus or worn out real or personal, tangible or intangible,
property (including without limitation, any property which is
no longer used or useful in the business of the Borrower or
its Subsidiaries) in the ordinary course of business and for
fair market value; or
(ii) the sale, transfer or other disposition by the Borrower or
any of its Subsidiaries of any real or personal, tangible or
intangible, property of the Borrower and its Subsidiaries, to
the extent that the Proceeds from such sale, transfer or
other disposition (in the aggregate with the Proceeds from
all other sales, transfers and other dispositions occurring
during the fiscal
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year in which such sale, transfer or other disposition
occurred other than those described in paragraph (i)) is
less than $500,000; or
(iii) the recovery by the Borrower of amounts owing to it under
property insurance policies except, to the extent that (1)
such recoveries exceed the reasonably estimated cost of
replacing the property on account of which such amounts
were paid to the Borrower and its Subsidiaries or (2) the
Borrower and its Subsidiaries are not diligently proceeding
with such replacement.
3.6 APPLICATION OF PREPAYMENTS.
(a) Any payments of the Loans and reductions of the Commitments
made pursuant to subsections 3.3, 3.4, or 3.5 shall be
applied to the prepayment of the Loans with such prepayment
being applied in inverse order of maturity to the then
outstanding installments thereof, PROVIDED that any
prepayment made pursuant to subsection 3.5(b) as a result of
any sale, transfer or disposition of any Acquired Land Parcel
shall be applied (i) FIRST to the Loan relating to such
Acquired Land Parcel, (ii) SECOND to any other outstanding
Loans hereunder as selected by the Agent in its sole
discretion and (iii) THIRD to the repayment of the
intercompany indebtedness evidenced by the HM Note (as
defined in the ZN Credit Agreement).
(b) Any payments of the Loans and reductions of the Commitments
made pursuant to subsections 3.3, 3.4, or 3.5 shall not be
applied to the prepayment of the Loans of a Defaulting Lender
at any time under the Facility when the aggregate amount of
Loans of any Non-Defaulting Lender exceeds such
Non-Defaulting Lender's Commitment Percentage of all Loans
then outstanding.
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3.7 PREPAYMENT PREMIUM. If, on or before the Commitment Termination
Date, the Borrower prepays any portion of the Loans with the
proceeds of a loan from a lender other than the Lenders hereto
and under the terms of this Agreement, the Borrower shall pay to
the Agent for the benefit of the Lenders, on or before the date
of such prepayment, a prepayment premium of 1% on any
outstanding obligations so repaid.
3.8 MINIMUM AMOUNTS AND MAXIMUM NUMBER OF NOTES. All borrowings and
repayments of Loans hereunder shall be in such amounts so that,
after giving effect thereto, the aggregate principal amount of
the Loans comprising each Note shall be equal to $500,000 or a
whole multiple of $250,000 in excess thereof. In no event shall
there be more than twenty eight (28) Loans outstanding at any
time.
3.9 INTEREST RATES AND PAYMENT DATES.
(a) Each Loan shall bear interest at a rate per annum equal to
the ABR plus the Applicable Margin in effect for such day.
(b) If all or a portion of (i) any principal of any Loan, (ii)
any interest payable thereon or (iii) any other amount
payable hereunder shall not be paid when due (whether at
the stated maturity, by acceleration or otherwise), the
principal of the Loans and any such overdue interest, or
other amount shall bear interest at a rate per annum which
is the rate described in paragraph (a) of this subsection
plus 2%, in each case from the date of such non-payment
until such overdue principal, interest, or other amount is
paid in full (as well as after as before judgment).
(c) Interest on each Loan shall be payable in arrears on each
Interest Payment Date and shall accrue from and including
the Borrowing Date of such Loan but excluding the date of
repayment thereof, PROVIDED that interest accruing pursuant
to paragraph (c) of this subsection shall be payable from
time to time on demand.
(d) Notwithstanding anything to the contrary contained herein,
in no event shall the Borrower be obligated to pay interest
in excess of the maximum amount which is chargeable under
applicable law.
3.10 COMPUTATION OF INTEREST AND FEES.
(a) Any change in the interest rate on a Loan resulting from a
change in the ABR shall become effective as of the opening
of business on the day on which such change becomes
effective.
(b) Each determination of an interest rate by the Agent
pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrower and
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the Lenders in the absence of manifest error. The Agent shall,
at the request of the Borrower, deliver to the Borrower a
statement showing the quotations used by the Agent in
determining any interest rate pursuant to subsection 3.9(a).
3.11 PRO RATA TREATMENT AND PAYMENTS.
(a) Each borrowing by the Borrower from the Lenders hereunder
and any reduction of the Commitments of the Lenders shall
be made pro rata according to the respective relevant
Commitment Percentages of the Lenders holding obligations
in respect of which such amounts were paid. Except as
provided in subsection 3.6(a), each payment (including each
prepayment) by the Borrower on account of principal of and
(subject to the provisions of subsections 3.3, 3.4, 3.5 and
3.6) interest on the Loans shall be made pro rata according
to the respective outstanding principal amounts of such
Loans then held by the Lenders. Except as otherwise set
forth herein, all payments (including prepayments) to be
made by the Borrower hereunder, whether on account of
principal, interest, fees or otherwise, shall be made
without set off or counterclaim and shall be made prior to
2:00 P.M., Charlotte, North Carolina time, on the due date
thereof to the Agent, for the account of the applicable
Lenders, at the Agent's office specified in subsection
10.3, in Dollars and in immediately available funds. The
Agent shall distribute such payments to the Lenders holding
obligations on account of which such amounts were paid
promptly upon receipt in like funds as received. If any
payment hereunder becomes due and payable on a day other
than a Business Day, such payment shall be extended to the
next succeeding Business Day, and, with respect to payments
of principal, interest thereon shall be payable at the then
applicable rate during such extension.
(b) All such payments shall be applied FIRST to accrued and
unpaid fees and expenses payable hereunder, SECOND, to
accrued and unpaid interest on the applicable Loan and
THIRD, in accordance with subsection 3.6(a), to reduce the
outstanding principal balance of such Loan.
(c) Unless the Agent shall have been notified in writing by any
Lender prior to a borrowing that such Lender will not make
the amount that would constitute its relevant Commitment
Percentage of such borrowing available to the Agent, the
Agent may assume that such Lender is making such amount
available to the Agent, and the Agent may, in reliance upon
such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available
to the Agent by the required time on the borrowing date
therefor, such Lender shall pay to the Agent, on demand,
such amount with interest thereon at a rate equal to the
daily average Federal Funds Effective Rate for the period
until such Lender
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makes such amount immediately available to the Agent. A
certificate of the Agent submitted to any Lender shall, to
the extent permitted by applicable law, be prima facie
evidence of the amounts owing under this subsection 3.11.
If such Lender's relevant Commitment Percentage of such
borrowing is not made available to the Agent by such Lender
within three (3) Business Days of such borrowing date, the
Agent shall also be entitled to recover such amount with
interest thereon at the rate per annum applicable to Loans
hereunder, on demand, from the Borrower.
SECTION 4: REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement and to make
the Loans, the Borrower hereby represents and warrants to the Agent
and each Lender that:
4.1 FINANCIAL CONDITION. The consolidated balance sheets of the
Borrower and its consolidated Subsidiaries as at September 30,
1997 and the related consolidated statements of income and
cash flows for the fiscal period ended on such date, copies of
which have heretofore been furnished to the Agent, are
complete and correct and present fairly in all material
respects the consolidated financial condition of the Borrower
and its consolidated Subsidiaries as at such date, and the
consolidated results of their operations and their
consolidated cash flows for the fiscal period then ended. All
such financial statements, including the related schedules and
notes thereto, have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except
as approved by such accountants or Responsible Officer, as the
case may be, and as disclosed therein). Neither the Borrower
nor any of its consolidated Subsidiaries had, at the date of
the most recent balance sheet referred to above, any material
Guarantee Obligation, contingent liability or liability for
taxes, or any long-term lease or unusual forward or long-term
commitment, including, without limitation, any interest rate
or foreign currency swap or exchange transaction, which is not
reflected in the foregoing statements or in the notes thereto.
Except to the extent permitted under this Agreement or as
disclosed to the Agent prior to the date hereof, or as
otherwise separately disclosed to the Agent in writing prior
to the date hereof, there has been no sale, transfer or other
disposition by the Borrower or any of its consolidated
Subsidiaries of any material part of its business or property
(including any capital stock of any other Person) material in
relation to the consolidated financial condition of the
Borrower and its consolidated Subsidiaries at September 30,
1997 during the period from September 30, 1997 to and
including the date hereof.
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4.2 NO CHANGE. Since September 30, 1997, there has been no
development or event which has had a Material Adverse Effect.
4.3 DISCLOSURE. No information, schedule, exhibit or report or
other document furnished by the Borrower or any of its
Subsidiaries to the Agent or any Lender in connection with the
negotiation of this Agreement or any other Loan Document (or
pursuant to the terms hereof or thereof), as such information,
schedule, exhibit or report or other document has been
amended, supplemented or superseded by any other information,
schedule, exhibit or report or other document later delivered
to the same parties receiving such information, schedule,
exhibit or report or other document, contained any material
misstatement of fact or omitted to state a material fact or
any fact necessary to make the statements contained therein,
in light of the circumstances when made, not materially
misleading.
4.4 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each of the Borrower
and its Subsidiaries (a) is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
organization, (b) has the corporate power and authority, and
the legal right, to own and operate its property, to lease the
property it operates as lessee and to conduct the business in
which it is currently engaged, (c) is duly qualified as a
foreign corporation and in good standing under the laws of
each jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such
qualification, except to the extent that all failures to be so
qualified could not, in the aggregate, reasonably be expected
to have a Material Adverse Effect and (d) is in compliance
with all Requirements of Law except to the extent that all
failures to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
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4.5 CORPORATE POWER, AUTHORIZATION, ENFORCEABLE OBLIGATIONS. The
Borrower has the corporate power and authority, and the legal
right, to make, deliver and perform the Loan Documents to
which it is a party and to borrow hereunder and has taken all
necessary corporate action to authorize the borrowings on the
terms and conditions of this Agreement and any Notes and to
authorize the execution, delivery and performance of the Loan
Documents to which it is a party. No consent or authorization
of, filing with, notice to or other act by or in respect of,
any Governmental Authority or any other Person is required in
connection with the borrowings hereunder or with the
execution, delivery, performance, validity or enforceability
of the Loan Documents to which the Borrower is a party. This
Agreement has been, and each other Loan Document to which it
is a party will be, duly executed and delivered on behalf of
the Borrower. This Agreement constitutes, and each other Loan
Document to which it is a party when executed and delivered
will constitute, a legal, valid and binding obligation of the
Borrower enforceable against the Borrower in accordance with
its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of
good faith and fair dealing.
4.6 NO LEGAL BAR. The execution, delivery and performance of the
Loan Documents to which the Borrower is a party, the
borrowings hereunder and the use of the proceeds thereof will
not violate any Requirement of Law or Contractual Obligation
of the Borrower or of any of its Subsidiaries and will not
result in, or require, the creation or imposition of any Lien
on any of its or their respective properties or revenues
pursuant to any such Requirement of Law or Contractual
Obligation.
4.7 NO MATERIAL LITIGATION. No litigation, investigation or
proceeding of or before any arbitrator or Governmental
Authority is pending or, to the knowledge of the Borrower,
threatened by or against the Borrower or any of its
Subsidiaries or against any of its or their respective
properties or revenues (a) with respect to any of the Loan
Documents or any of the transactions contemplated hereby or
thereby, or (b) which could reasonably be expected to have a
Material Adverse Effect.
4.8 NO DEFAULT. Neither the Borrower nor any of its Subsidiaries
is in default under or with respect to any of its Contractual
Obligations in any respect which could reasonably be expected
to have a Material Adverse Effect. No Default or Event of
Default has occurred and is continuing.
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4.9 OWNERSHIP OF PROPERTY; LIENS. Each of the Borrower and its
Subsidiaries has good and marketable title in fee simple to,
or a valid leasehold interest in, all its real property, and
good title to, or a valid leasehold interest in, all its other
property, which is material to the operations of the business
of, the Borrower and its Subsidiaries, taken as a whole and
none of such property is subject to any Lien except as
permitted by subsection 7.3.
4.10 INTELLECTUAL PROPERTY. The Borrower and each of its
Subsidiaries owns, or is licensed to use, all trademarks,
trade names, copyrights, technology, know-how and processes
necessary for the conduct of its business as currently
conducted, except for those for which the failure to own or
license could not reasonably be expected to have a Material
Adverse Effect (the "INTELLECTUAL PROPERTY"). No claim has
been asserted and is pending by any Person challenging or
questioning the use of any such Intellectual Property or the
validity or effectiveness of any such Intellectual Property
which could reasonably be expected to have a Material Adverse
Effect, nor does the Borrower know of any valid basis for any
such claim. To the best knowledge of the Borrower, the use of
such Intellectual Property by the Borrower and its
Subsidiaries does not infringe on the rights of any Person,
except for such claims and infringements that, in the
aggregate, could not reasonably be expected to have a Material
Adverse Effect.
4.11 NO BURDENSOME RESTRICTIONS. No Requirement of Law applicable
to the Borrower or any of its Subsidiaries could reasonably be
expected to have a Material Adverse Effect.
4.12 TAXES. Each of the Borrower and its Subsidiaries has filed or
caused to be filed all material tax returns which, to the
knowledge of the Borrower, are required to be filed and has
paid all taxes shown to be due and payable on said returns or
on any assessments made against it or any of its property and
all other taxes, fees or other charges imposed on it or any of
its property by any Governmental Authority (other than any the
amount or validity of which are currently being contested in
good faith by appropriate proceedings and with respect to
which reserves in conformity with GAAP have been provided on
the books of the Borrower or its Subsidiaries, as the case may
be); no tax Lien has been filed, other than Liens permitted by
subsection 7.3, and, to the knowledge of the Borrower, no
claim is being asserted, with respect to any such tax, fee or
other charge.
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4.13 FEDERAL REGULATIONS. No part of the proceeds of any Loans
will be used in any manner which would violate, or result in
the violation of, Regulation D, Regulation G or Regulation U
of the Board of Governors of the Federal Reserve System as now
and from time to time hereafter in effect. If requested by any
Lender or the Agent, the Borrower will furnish to the Agent
and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form G-3 or FR Form U-1
referred to in said Regulation G or Regulation U, as the case
may be.
4.14 ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or
Section 302 of ERISA) has occurred during the five-year period
prior to the date on which this representation is made or
deemed made with respect to any Plan, and each Plan has
complied in all material respects with the applicable
provisions of ERISA and the Code. No termination of a Single
Employer Plan has occurred, and no Lien in favor of the PBGC
or a Plan has arisen, during such five-year period. The
present value of all accrued benefits under each Single
Employer Plan (based on those assumptions used to fund such
Plans) did not, as of the last annual valuation date prior to
the date on which this representation is made or deemed made,
exceed the value of the assets of such Plan allocable to such
accrued benefits. Neither the Borrower nor any Commonly
Controlled Entity has had a complete or partial withdrawal
from any Multiemployer Plan, and neither the Borrower nor any
Commonly Controlled Entity would become subject to any
liability under ERISA if the Borrower or any such Commonly
Controlled Entity were to withdraw completely from all
Multiemployer Plans as of the valuation date most closely
preceding the date on which this representation is made or
deemed made. No such Multiemployer Plan is in Reorganization
or Insolvent. The present value (determined using actuarial
and other assumptions which are reasonable in respect of the
benefits provided and the employees participating) of the
liability of the Borrower and each Commonly Controlled Entity
for post retirement benefits to be provided to their current
and former employees under Plans which are welfare benefit
plans (as defined in Section 3(l) of ERISA) does not, in the
aggregate, exceed the assets under all such Plans allocable to
such benefits by an amount in excess of $100,000.
4.15 INVESTMENT COMPANY ACT; OTHER REGULATIONS. The Borrower is
not an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment
Company Act of 1940, as amended. The Borrower is not subject
to regulation under any Federal or State statute or regulation
(other than Regulation X of the Board of Governors of the
Federal Reserve System) which limits its ability to incur
Indebtedness under this Agreement or other Loan Documents.
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4.16 SUBSIDIARIES, SCHEDULE III hereto (as amended, supplemented or
otherwise modified from time to time to reflect the creation
or acquisition of new Subsidiaries subsequent to the Closing
Date), sets forth all of the Subsidiaries of the Borrower at
the date hereof, together with the ownership and jurisdiction
of each.
4.17 ACQUIRED LAND PARCELS, SCHEDULE VIII hereto sets forth all
the Acquired Land Parcels as of the date hereof, together with
the ownership and location of each.
4.18 ENVIRONMENTAL MATTERS.
(a) The facilities and properties owned, leased or operated by
the Borrower or any of its Subsidiaries (the "PROPERTIES")
do not contain, and have not previously contained, any
Materials of Environmental Concern in amounts or
concentrations which (i) constitute or constituted a
violation of, or (ii) could reasonably be expected to give
rise to liability under, any Environmental Law except
insofar as such violation or liability or any aggregation
thereof, is not reasonably likely to result in the payment
of a Material Adverse Amount;
(b) the Properties and all operations at the Properties are in
compliance in all respects with all applicable
Environmental Laws, and there is no contamination at or
under (or, to the knowledge of the Borrower, about) the
Properties or violation of any Environmental Law with
respect to the Properties or the business operated by the
Borrower or any of its Subsidiaries (the "BUSINESS")
except insofar as such violation or failure to be in
compliance or contamination, or any aggregation thereof,
is not reasonably likely to result in the payment of a
Material Adverse Amount;
(c) neither the Borrower nor any of its Subsidiaries has
received any notice of violation, alleged violation,
non-compliance, liability or potential liability regarding
compliance with Environmental Laws with regard to any of
the Properties or the Business, nor does the Borrower have
knowledge that any such notice will be received or is
being threatened, except insofar as such notice or
threatened notice, or any aggregation thereof, does not
involve a matter or matters that is or are reasonably
likely to result in the payment of a Material Adverse
Amount;
(d) Materials of Environmental Concern have not been
transported or disposed of from the Properties in
violation of, or in a manner or to a location which could
reasonably be expected to give rise to liability under,
any Environmental Law, nor have any Materials of
Environmental Concern been generated, treated, stored or
disposed of at, on or under any of the Properties in
violation of, or in a manner that could reasonably be
expected to give rise to liability under, any applicable
Environmental Law,
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except insofar as any such violation or liability referred
to in this paragraph, or any aggregation thereof, is not
reasonably likely to result in the payment of a Material
Adverse Amount;
(e) no judicial proceeding or governmental or administrative
action is pending or, to the knowledge of the Borrower,
threatened, under any Environmental Law to which the
Borrower, any of its Subsidiaries is or will be named as a
party with respect to the Properties or the Business, nor
are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under
any Environmental Law which are binding upon Borrower or
any of its Subsidiaries with respect to the Properties or
the Business, except insofar as such proceeding, action,
decree, order or other requirement, or any aggregation
thereof, is not reasonably likely to result in the payment
of a Material Adverse Amount; and
(f) there has been no release or threat of release of
Materials of Environmental Concern at or from the
Properties, or arising from or related to the operations
of the Borrower or any Subsidiary in connection with the
Properties or otherwise in connection with the Business,
in violation of or in amounts or in a manner that could
reasonably give rise to liability under Environmental
Laws, except insofar as any such violation or liability
referred to in this paragraph, or any aggregation thereof,
is not reasonably likely to result in a payment of a
Material Adverse Amount.
4.19 SOLVENCY. The aggregate value of all of the tangible and
intangible assets of the Borrower and its Subsidiaries on a
consolidated basis, at a fair valuation, exceeds the total
liabilities of the Borrower and its Subsidiaries on a
consolidated basis (including contingent, subordinated,
unmatured and unliquidated liabilities). The Borrower and its
Subsidiaries have the ability to pay their respective debts as
they mature and do not have unreasonably small capital with
which to conduct their respective businesses. For purposes of
this subsection 4.19, the "fair valuation" of such assets is
the price at which the assets would change hands between a
willing buyer and a willing seller, both being adequately
informed of the relevant facts, and neither being under any
compulsion to buy or to sell.
4.20 GUARANTEES. The provisions of each Guarantee are effective to
create a legal, valid, binding and enforceable guarantee of
the obligations described therein, except as enforceability
may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable
principles.
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4.21 JOINDER AGREEMENTS. Each Joinder Agreement constitutes a
legal, valid and binding obligation of the Loan Party who is a
party thereto, enforceable against it in accordance with its
terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and
by general equitable principles.
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4.22 MORTGAGES.
(a) The provisions of each Mortgage are effective to create a
legal, valid and binding obligation of the Loan Party
party thereto, enforceable against such party in
accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable
principles.
(b) Upon recordation and filing by the Agent (and, after the
Closing Date, any additional recordation or filings
required to be made pursuant to the Loan Documents) each
Mortgage will constitute a valid, perfected first priority
mortgage lien on the real property (as described therein)
enforceable as such against all creditors of any Mortgagor
and any Persons purporting to purchase any such Collateral
from the Loan Party who is mortgagee with respect thereto.
4.23 HM SERVICES SUBORDINATION. The HM Services Subordination
Agreement constitutes a legal, valid, binding and enforceable
obligation of the third parties thereto, enforceable against
each such party in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general
equitable principles.
4.24 ZN NET WORTH AGREEMENT. The ZN Net Worth Agreement constitutes
a legal, valid, binding and enforceable obligation of ▇▇▇▇▇▇
National, enforceable against it in accordance with its terms,
except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and
by general equitable principles.
SECTION 5: CONDITIONS PRECEDENT
5.1 CONDITIONS TO INITIAL EXTENSIONS OF CREDIT. The agreement of
each Lender to make the initial extension of credit requested
to be made by it is subject to the satisfaction, immediately
prior to or concurrently with the making of such extension of
credit on the Closing Date, of the following conditions
precedent:
(a) LOAN DOCUMENTS. The Agent shall have received (i) this
Agreement, executed and delivered by a duly authorized
officer of the Borrower, (ii) the Note (to the extent so
requested by any Lender), executed and delivered by a duly
authorized officer of the Borrower, (iii) each
Subsidiaries Guarantee, executed and delivered by a duly
authorized officer of the party thereto, (iv) each
Security Document executed and delivered by a duly
authorized
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officer of the party thereto, (v) the HM Services
Subordination Agreement, executed and delivered by a duly
authorized officer of each party thereto, and, (vi) the ZN
Net Worth Agreement, executed and delivered by a duly
authorized officer of the party thereto.
(b) AGREEMENTS. The Agent shall have received true and correct
copies, certified as to authenticity by the Borrower, of
such documents or instruments as may be reasonably
requested by the Agent.
(c) CLOSING CERTIFICATE OF BORROWER. The Agent shall have
received a certificate of the President or any Vice
President and the Secretary or an Assistant Secretary of
the Borrower, dated the Closing Date, (i) attaching the
Charter and By-Laws of the Borrower, (ii) attaching the
resolutions of the Board of Directors of the Borrower with
respect to the transactions contemplated hereby, (iii)
certifying that such resolutions have not been amended,
modified, revoked or rescinded as of the date of such
certificate and (iv) certifying as to the incumbency and
signature of the officers of the Borrower executing any
Loan Document; such certificate (and the attachments
thereto) shall be in form and substance satisfactory to
the Agent.
(d) CLOSING CERTIFICATE OF LOAN PARTIES. The Agent shall have
received a certificate of the President or any Vice
President and the Secretary or an Assistant Secretary of
each Loan Party (other than the Borrower), dated the
Closing Date, (i) attaching the Charter and By-Laws of
such Loan Party, (ii) attaching the resolutions of the
Board of Directors of such Loan Party with respect to the
transactions contemplated hereby to which it is a party,
(iii) certifying that the such resolutions have not been
amended, modified, revoked or rescinded as of the date of
such certificate and (iv) certifying as to the incumbency
and signature of the officers of such Loan Party executing
any Loan Document; such certificate (and the attachments
thereto) shall be in form and substance satisfactory to
the Agent.
(e) CORPORATE STRUCTURE. The Agent shall be satisfied with the
corporate and legal structure and capitalization of the
Loan Parties, including the terms and conditions of the
charter, bylaws and each class of Capital Stock of the
Loan Parties and of each agreement or instrument relating
to such structure or capitalization.
(f) FEES. The Borrower shall have paid the accrued fees and
expenses owing hereunder or in connection herewith
(including, without limitation, accrued fees and
disbursements of counsel to the Agent), to the extent that
such fees and expenses have been presented for payment a
reasonable time prior to the Closing Date.
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(g) LEGAL OPINION. The Agent shall have received, with a
counterpart for each Lender, the executed legal opinion of
Frost & ▇▇▇▇▇▇, LLP., counsel to the Borrower and the
other Loan Parties, substantially in the form of EXHIBIT
G. Such legal opinion shall cover such other matters
incident to the transactions contemplated by this
Agreement as the Agent may reasonably require.
(h) ACTIONS TO PERFECT LIENS. The Agent shall have received
such duly executed financing statements on form UCC-1 as
may be necessary or, in the reasonable opinion of the
Agent, desirable to perfect the Liens created by the
Security Documents.
(i) LIEN SEARCHES. The Agent shall have received the results
of a recent search by a Person reasonably satisfactory to
the Agent, of the Uniform Commercial Code, judgment and
tax lien filings which may have been filed with respect to
personal property of the Borrower, and the results of such
search shall be reasonably satisfactory to the Agent.
(j) REVIEW OF OPERATIONS. The Agent shall have completed a
review of the operations of the Loan Parties (including,
without limitation, an on-site review of the financial
statements, financial reporting and computer systems and
inventory, receivables, and equipment by the Agent), each
in scope, and with results, satisfactory to the Agent;
without limiting the generality of the foregoing, the
Agent shall have been given such access to the management,
records, books of account, schedules, projections,
contracts and properties of each Loan Party as it shall
have requested.
(k) INSURANCE. The Agent shall have received evidence in form
and substance satisfactory to the Agent of the existence
of the insurance required under subsection 6.5.
(l) BUSINESS PLAN AND PROJECTIONS. The Agent shall have
received a business plan with projections in scope and
form satisfactory to the Agent.
(m) ADDITIONAL ITEMS. The Agent shall have received such other
opinions or documents as the Agent or the Majority Lenders
through the Agent may reasonably request.
5.2 CONDITIONS TO EACH EXTENSION OF CREDIT. The agreement of each
Lender to make any extension of credit requested to be made by
it on any date (including, without limitation, its initial
extension of credit) is subject to the satisfaction of the
following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the Borrower and
each other Loan Party in or pursuant to the
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Loan Documents shall be true and correct in all material
respects on and as of such date as if made on and as of
such date.
(b) NO DEFAULT. No Default or Event of Default shall have
occurred and be continuing on such date or after giving
effect to the extensions of credit requested to be made on
such date.
(c) LTV RATIO. The LTV Ratio of each Lender shall be no
greater than fifty percent (50%) after giving effect to
the extensions of credit requested to be made on such
date. "LTV RATIO" shall mean the ratio of (i) the
Commitment Percentage of such Lender with respect to such
Loan to (ii) the lesser of (A) the actual cost of the
Acquired Land Parcel or (B) the appraised value of the
Acquired Land Parcel, each as determined by the Agent in
its sole discretion.
(d) TITLE INSURANCE. The Agent shall have received a mortgagee
title insurance policy issued by a title insurer
satisfactory to the Agent in amounts satisfactory to the
Agent and assuring the Agent that the Mortgage is a valid
and enforceable first priority mortgage Lien on the
respective Acquired Land Parcel, free and clear of all
defects and encumbrances except Liens permitted pursuant
to subsection 7.3 ("TITLE INSURANCE"). Such Title
Insurance shall be in form and substance satisfactory to
the Agent and (i) shall include (to the extent available
in the respective jurisdiction of each Acquired Land
Parcel) endorsements for future advances under this
Agreement, the Notes and the Mortgages, and for such other
matters that the Agent in its discretion may request, (ii)
shall not include an exception for mechanic's liens, and
(iii) shall provide for affirmative insurance as the Agent
in its discretion may request.
(e) ALTA SURVEYS. The Agent shall have received an ALTA Survey
of the respective Acquired Land Parcel, showing all
improvements thereon, prepared in accordance with the
current standards for "Land Title Surveys" of the American
Title Association and the American Congress on Surveying
and Mapping, in form and substance satisfactory to the
Agent, dated a recent date, certified and acceptable to
the Agent.
(f) PHASE I ENVIRONMENTAL ASSESSMENT. If the aggregate
outstanding Loans of all the Lenders (including any such
Loans to be made on the requested Borrowing Date) made in
connection with any Acquired Land Parcel are equal to, or
greater than $100,000, the Agent shall have received a
Phase I Environmental Assessment to the respective
Acquired Land Parcel in form and substance satisfactory to
the Agent and dated a recent date acceptable to the Agent.
The Agent shall forward a copy thereof to each Lender.
(g) APPRAISAL. If the aggregate outstanding Loans of all of
the Lenders (including any such Loans to be made on the
requested Borrowing Date) made in
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connection with any Acquired Land Parcel are equal to, or
greater than $250,000, the Agent shall have received an
M.A.I. Appraisal to the respective Acquired Land Parcel in
form and substance satisfactory to the Agent and dated a
recent date acceptable to the Agent. The Agent shall
forward a copy thereof to each Lender.
(h) SUBDIVISION, ZONING, TAX PARCEL, ETC. The Agent shall have
received evidence acceptable to it with respect to any
Acquired Land Parcel that such property: (i) consists of
one or more separate subdivided parcels, (ii) is currently
zoned to permit its intended use, (iii) is a separate tax
map parcel, (iv) has access to a dedicated public street,
road or highway, (v) is not located in a flood plain or
flood prone area.
(i) INSURANCE. The Agent shall have received evidence in form
and substance satisfactory to the Agent of the existence
of the insurance required under subsection 6.5 for each
additional Acquired Land Parcel.
(j) ADDITIONAL ITEMS. The Agent shall have received such other
approvals, opinions or documents as the Agent or the
Majority Lenders through the Agent may reasonably request.
Each borrowing by the Borrower hereunder shall constitute a
representation and warranty by the Borrower as of the date thereof that the
applicable conditions contained in this subsection 5.2 have been satisfied.
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SECTION 6: AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments
remain in effect or any amount is owing to any Lender or the Agent
hereunder or under any other Loan Document, the Borrower shall and
(except in the case of delivery of financial information and reports
and notices) shall cause each of its Subsidiaries to:
6.1 FINANCIAL STATEMENTS. Furnish to the Agent and to each Lender:
(a) as soon as available, but in any event within one hundred
twenty (120) days after the end of each fiscal year of the
Borrower, a copy of the consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at the end
of such year and the related consolidated statements of
income and retained earnings and of cash flows for such
year, setting forth in each case in comparative form the
figures for the previous year, reported on without a
"going concern" or like qualification or exception, or
qualification arising out of the scope of the audit, by
independent certified public accountants of nationally
recognized standing.
(b) as soon as available, but in any event not later than
forty-five (45) days after the end of each fiscal quarter
of the Borrower, the unaudited consolidated balance sheets
of the Borrower and its consolidated Subsidiaries as at
the end of such quarter and the related unaudited
consolidated statements of income and retained earnings
and of cash flows of the Borrower and its consolidated
Subsidiaries for such quarter and the portion of the
Borrower's fiscal year through the end of such quarter,
setting forth in comparative form the figures for the
previous year, certified by a Responsible Officer as being
fairly stated in all material respects (subject to normal
year-end audit adjustments);
all such financial statements shall be complete and correct in
all material respects and shall be prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the periods
reflected therein and with prior periods (except as approved by such
accountants or officer, as the case may be, and disclosed therein).
6.2 CERTIFICATES; OTHER INFORMATION. Furnish to the Agent and to
each Lender:
(a) concurrently with the delivery of the financial statements
referred to in subsection 6.1(a), a certificate of the
independent certified public accountants reporting on such
financial statements stating whether in the course of
conducting its annual audit they became aware of any
Default or Event of Default pertaining to accounting
matters and, if so, the nature of such Default or Event of
Default;
(b) concurrently with the delivery of the financial statements
referred to in subsections 6.1(a) and (b), a certificate
of a Responsible Officer
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substantially in the form of EXHIBIT H (i) stating that,
to the best of such Officer's knowledge, during such
period (A) no Subsidiary has been formed or acquired
without complying with this Agreement and the requirements
of subsection 6.10 with respect thereto, (B) neither the
Borrower nor any of its Subsidiaries has changed its name,
its principal place of business, its chief executive
office or the location of any material item of tangible
Collateral without complying with the requirements of this
Agreement and the Security Documents with respect thereto,
(C) no Acquired Land Parcel contains Materials of
Environmental Concern, and (D) the Borrower has observed
or performed all of its covenants and other agreements,
and satisfied every condition, contained in this Agreement
and the other Loan Documents to be observed, performed or
satisfied by it, and that such Officer has obtained no
knowledge of any Default or Event of Default except as
specified in such certificate and (ii) setting forth the
computations used by the Borrower in determining (as of
the end of such fiscal period) compliance with the
covenant contained in subsection 7.1;
(c) not later than one hundred twenty (120) days after the end
of each fiscal year of the Borrower, a copy of the
projections by the Borrower of the operating budget and
cash flow budget of the Borrower and its Subsidiaries for
the succeeding fiscal year as adopted by the Board of
Directors of the Borrower, such projections to be
accompanied by a certificate of a Responsible Officer to
the effect that such projections have been prepared on the
basis of assumptions believed by the Borrower to be
reasonable;
(d) concurrently with the delivery of the accountants'
certificates referred to in subsection 6.2(a), any comment
letter submitted by such accountants to management as of
that date;
(e) concurrently with the delivery of the projections referred
to in subsection 6.2(c), the consolidated financial plan
and financial forecasts as customarily prepared by the
management of the Borrower for internal use;
(f) as soon as available, but in any event (i) not later than
one hundred twenty (120) days after the end of each fiscal
year of the Borrower, a copy of all financial statements
and regular, periodical or special reports that the
Borrower may make to, or file with, the SEC on an annual
basis and (ii) not later than forty-five (45) days after
the end of each fiscal quarter of the Borrower, a copy of
all financial statements and regular, periodical or
special reports that the Borrower may make to, or file
with, the SEC on a quarterly basis; and
(g) promptly, such additional financial and other information
as any Lender may from time to time reasonably request.
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6.3 PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise satisfy at
or before maturity in accordance with customary terms or
before they become delinquent or in default, as the case may
be, all of its material obligations of whatever nature, except
where the amount or validity thereof is then being contested
in good faith by appropriate proceedings and reserves in
conformity with GAAP with respect thereto have been provided
on the books of the Borrower or its Subsidiaries, as the case
may be.
6.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. Continue to
engage in business of the same general type as now conducted
by it and preserve, renew and keep in full force and effect
its corporate existence and take all reasonable action to
maintain all rights, privileges and franchises necessary (in
the reasonable judgment of the Borrower) desirable in the
normal conduct of its business except as otherwise permitted
pursuant to subsection 7.13; comply with all Contractual
Obligations and Requirements of Law except to the extent that
failure to comply therewith could not, in the aggregate, be
reasonably expected to have a Material Adverse Effect.
6.5 MAINTENANCE OF PROPERTY; INSURANCE.
(a) Keep all material property useful and necessary in its
business in good working order and condition; maintain
with financially sound and reputable insurance companies
insurance policies insuring all its material property
against loss by fire, explosion, theft and such other
casualties as may be reasonably satisfactory to the Agent
such policies to be in at least such form amounts and
having coverage against at least such risks as are
customarily insured against in the same general area by
companies engaged in the same or a similar business as may
be reasonably satisfactory to the Agent with losses
payable to the Borrower and the Agent, as their respective
interests may appear;
(b) Each insurance policy described in subsection 6.5(a) shall
(i) contain endorsements, in form satisfactory to each
Lender, (ii) name the Agent, as an insured party, (iii)
provide that no cancellation, material reduction in amount
or material change in coverage thereof shall be effective
until at least thirty (30) days after receipt by the Agent
of written notice thereof and (iv) be reasonably
satisfactory in all other respect to the Agent. In the
event of any termination or notice of non-payment by any
insurer with respect to any policy or any lapse in the
coverage thereunder, the Borrower shall cause such insurer
to give prompt written notice to each Lender of the
occurrence of such termination, nonpayment or lapse.
(c) The Borrower shall deliver to the Agent a report of a
reputable insurance broker with respect to such
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insurance in each calendar year and such supplemental
reports with respect thereto as the Agent may from time to
time reasonably request.
6.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. Keep
proper books of records and accounts in which full, true and
correct entries in conformity with GAAP and all Requirements
of Law shall be made of all dealings and transactions in
relation to its business and activities; permit
representatives of the Agent or any Lender to visit and
inspect any of its properties and examine and make abstracts
from any of its books and records at any reasonable time (upon
reasonable advance notice when no Default or Event of Default
has occurred and is continuing) and, with respect to the
Agent, as often as may reasonably be desired or, with respect
to any Lender other than the Agent, not more than once per
calendar year at the expense of such Lender (or, if an Event
of Default has occurred and is continuing, at any reasonable
time and as often as may be desired at the expense of the
Borrower), and to discuss the Business, operations, properties
and financial and other condition of the Borrower and its
Subsidiaries with officers and employees of the Borrower and
its Subsidiaries and with its independent certified public
accountants.
6.7 NOTICES. Promptly after a Responsible Officer of Borrower
obtains knowledge thereof, give notice to the Agent (who shall
give prompt notice thereof to the Lenders) of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or
(ii) litigation, investigation or proceeding which may
exist at any time between the Borrower or any of its
Subsidiaries and any Governmental Authority, which in
either case, if not cured or if adversely determined, as
the case may be, could reasonably be expected to have a
Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any
of its Subsidiaries in which the amount involved is
$100,000 or more and not covered by insurance or in which
injunctive or similar relief is sought which could have a
Material Adverse Effect;
(d) the following events, as soon as possible and in any event
within thirty (30) days after the Borrower knows or has
reason to know thereof: (i) the occurrence or expected
occurrence of any Reportable Event with respect to any
Plan that is an employee pension benefit plan (as defined
in Section 3(2) of ERISA), a failure to make any required
contribution to a Plan, the creation of any Lien in favor
of the PBGC or a Plan that is an employee pension benefit
plan (as defined in Section 3(2) of ERISA) or any
withdrawal from, or the termination, Reorganization or
Insolvency of, any
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Multiemployer Plan or (ii) the institution of proceedings
or the taking of any other action by the PBGC or the
Borrower or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or
the terminating, Reorganization or Insolvency of, any Plan
that is an employee pension benefit plan (as defined in
Section 3(2) of ERISA);
(e) the acquisition or creation of any Subsidiary which has
Capital Stock that is directly or indirectly owned by the
Borrower or any Subsidiary;
(f) any Lien (other than any Liens permitted under this
Agreement) or any other event that could reasonably be
expected to have a Material Adverse Effect on the
aggregate value of the Collateral or on the security
interest created by this Agreement or any other Loan
Document; and
each notice pursuant to this subsection 6.7 shall be
accompanied by a statement of a Responsible Officer setting forth
details of the occurrence referred to therein and stating what
action the Borrower proposes to take with respect thereto.
6.8 ENVIRONMENTAL LAWS.
(a) Comply with, and use reasonable efforts to ensure
compliance by all tenants and subtenants, if any, with,
all applicable Environmental Laws and obtain and comply
with and maintain, and use reasonable efforts to ensure
that all tenants and subtenants obtain and comply with and
maintain, any and all licenses, approvals, notifications,
registrations or permits required by applicable
Environmental Laws, except to the extent that failure to
do so could not be reasonably expected to have a Material
Adverse Effect.
(b) Conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions
required under Environmental Laws and promptly comply in
all material respects with all lawful orders and
directives of all Governmental Authorities regarding
Environmental Laws, except to the extent that failure to
so conduct, complete or comply could not reasonably be
expected to have a Material Adverse Effect and except to
the extent that the same are being contested in good faith
by appropriate proceedings and the pendency of such
proceedings could not be reasonably expected to have a
Material Adverse Effect.
6.9 FURTHER ASSURANCES; ADDITIONAL COLLATERAL.
(a) Upon the request of the Agent, promptly perform or cause
to be performed any and all acts and execute or cause to
be executed any and all documents (including, without
limitation, financing statements and continuation
statements) (i) for filing under the provisions of the
Uniform Commercial Code or any other Requirement of Law
which are necessary or reasonably
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advisable to maintain in favor of the Agent, for the
benefit of the Lenders, Liens on the Collateral that are
duly perfected in accordance with all applicable
Requirements of Law, and (ii) for the continuation and
maintenance of Title Insurance which are necessary or
reasonably advisable to maintain such Title Insurance in
favor of the Agent, for the benefit of the Lenders.
(b) Upon request of the Agent, promptly provide such documents
and legal opinions in respect of any aspect or consequence
of the transactions contemplated hereby as the Agent shall
reasonably request.
6.10 ADDITIONAL SUBSIDIARIES.
(a) With respect to any Person that, subsequent to the Closing
Date, becomes a Subsidiary promptly (i) cause such new
Subsidiary to become a party to the Subsidiaries Guarantee
and HM Services Subordination Agreement pursuant to
documentation which is in form and substance satisfactory
to the Agent, execute and deliver such amendments to this
Agreement and the other Loan Documents as requested by the
Agent to reflect the existence of such new Subsidiary and
(iii) if so requested by the Agent, deliver to the Agent
legal opinions relating to the matters described in
clauses (i) and (ii) immediately preceding, which opinions
shall be in form and substance, and from counsel,
reasonably satisfactory to the Agent.
(b) With respect to any Person that, subsequent to the Closing
Date, becomes a Subsidiary, promptly cause such new
Subsidiary to (i) take all actions necessary or advisable
to cause the Lien created by the relevant Security
Document, if any, to be duly perfected in accordance with
all applicable Requirements of Law, including, without
limitation, the filing of recording requirements in such
jurisdictions as may be requested by the Agent and (ii)
deliver to the Agent legal opinions relating to the
matters described in clauses (i) and (ii) immediately
preceding, which opinions shall be in form and substance,
and from counsel, reasonably satisfactory to the Agent.
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SECTION 7: NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in
effect or any amount is owing to any Lender or the Agent hereunder or under any
other Loan Document, the Borrower shall not, and (except with respect to
subsection 7.1) shall not permit any of its Subsidiaries to, directly or
indirectly:
7.1 FINANCIAL CONDITION COVENANT (INDEBTEDNESS TO NET WORTH). Permit
on the last day of the fiscal year ending December 31, 1998
and thereafter on the last day of any fiscal quarter of the
Borrower, the ratio of (i) Senior Indebtedness to (ii) the sum
of Consolidated Tangible Net Worth plus Subordinated
Indebtedness, to be greater than 3.00 to 1.00.
7.2 LIMITATION ON INDEBTEDNESS AND PREFERRED STOCK. Create, incur,
assume or suffer to exist any Indebtedness or preferred stock
(other than preferred stock which, by its terms, does not
require the payment of any cash dividends thereon or
redemption/reimbursement obligations or impose any cash
penalties (other than accrual of dividends on unpaid
dividends) for the failure to declare cash dividends thereon),
except:
(a) Indebtedness of the Borrower under this Agreement;
(b) current trade liabilities incurred in the ordinary course of
business;
(c) Indebtedness of any Subsidiary to the Borrower or any other
Subsidiary, which has executed the following: Subsidiaries
Guarantee, the HM Services Subordination Agreement and as
applicable, a Mortgage pursuant to subsection 6.10 of this
Agreement;
(d) Indebtedness outstanding on the date hereof and listed on SCHEDULE
V and any refinancings, refundings, renewals or extensions
thereof in an amount not to exceed the then current principal
amount thereof;
(e) Indebtedness of a corporation which becomes a Subsidiary after the
date hereof, PROVIDED that (i) such Indebtedness existed at
the time such corporation became a Subsidiary and was not
created in anticipation thereof and (ii) immediately after
giving effect to the acquisition of such corporation by the
Borrower no Default or Event of Default shall have occurred
and be continuing; and
(f) additional Indebtedness not exceeding in aggregate principal
amount at any one time outstanding $500,000; and
(g) Guarantee Obligations permitted pursuant to subsection 7.4.
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7.3 LIMITATION ON LIENS. Create, incur, assume or suffer to exist
any Lien upon any of its property (including but not limited
to subordinate deeds of trusts or mortgages), assets or
revenues, whether now owned or hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, PROVIDED that adequate
reserves with respect thereto are maintained on the books of
the Borrower or its Subsidiaries, as the case may be, in
conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business
for sums which are not overdue for a period of more than
ninety (90) days or which are being contested in good faith by
appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation
and deposits securing liability to insurance carriers under
insurance or self-insurance arrangements;
(d) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business
which, in the aggregate, are not substantial in amount and
which do not in any case materially detract from the value of
the property subject thereto or materially interfere with the
ordinary conduct of the business of the Borrower or such
Subsidiary;
(e) Liens in existence on the date hereof listed on SCHEDULE VI,
securing Indebtedness permitted by subsection 7.2(d), PROVIDED
that no such Lien is spread to cover any additional property
after the date hereof and that the amount of Indebtedness
secured thereby is not increased; and
(f) Liens on the property or assets of a corporation which becomes a
Subsidiary after the date hereof securing Indebtedness
permitted by subsection 7.2(e), PROVIDED that (i) such Liens
existed at the time such corporation became a Subsidiary and
were not created in anticipation thereof, (ii) any such Lien
is not spread to cover any additional property or assets of
such corporation after the time such corporation becomes a
Subsidiary, and (iii) the amount of Indebtedness secured
thereby is not increased.
7.4 LIMITATION ON GUARANTEE OBLIGATIONS. Create, incur, assume or
suffer to exist any Guarantee Obligation, except:
(a) Guarantee Obligations in existence on the date hereof and listed
on SCHEDULE VII;
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(b) guarantees made by the Borrower of obligations of any of its
Subsidiaries, which obligations are otherwise permitted under
this Agreement; and
(c) guarantees made by Subsidiaries of the Borrower of obligations of
the Borrower or any of its other Subsidiaries, which
obligations are otherwise permitted under this Agreement.
7.5 LIMITATION ON FUNDAMENTAL CHANGES. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution), or
convey, sell, lease, assign, transfer or otherwise dispose of,
all or substantially all of its property, business or assets,
except:
(a) any Subsidiary of the Borrower may be merged or consolidated with
or into the Borrower (PROVIDED that the Borrower shall be the
continuing or surviving corporation) or with or into any one
or more wholly owned Subsidiaries of the Borrower (PROVIDED
that the wholly owned Subsidiary or Subsidiaries shall be the
continuing or surviving corporation);
(b) any wholly owned Subsidiary may sell, lease, transfer or otherwise
dispose of any or all of its assets (upon voluntary
liquidation or otherwise) to the Borrower or any other wholly
owned Subsidiary of the Borrower; and
(c) any Subsidiary of the Borrower may enter into any transaction
permitted by subsection 7.5 or 7.6.
7.6 LIMITATION ON SALE OF ASSETS. Convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business
or assets (including, without limitation, receivables and
leasehold interests but, in the case of the Borrower,
excluding the sale of Capital Stock or other securities of the
Borrower), whether now owned or hereafter acquired, or, in the
case of any Subsidiary, issue or sell any shares of such
Subsidiary's Capital Stock to any Person other than the
Borrower or any wholly owned Subsidiary, except:
(a) the sale or other disposition of obsolete or worn out property
(including, without limitation, any property which is no
longer used or useful in the business of the Borrower and its
Subsidiaries) in the ordinary course of business and for fair
market value; and
(b) the sale or transfer of inventory (including, without limitation,
"out-of-date" and "less than first quality" inventory) in the
ordinary course of business.
7.7 LIMITATION ON DIVIDENDS. Declare or pay any dividend on, or make
any payment on account of, or set apart assets for a sinking
or other analogous fund for, the purchase, redemption,
defeasance, retirement or other
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acquisition of, any shares of any class of Capital Stock of
the Borrower or any warrants or options to purchase any such
Stock, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or
indirectly, whether in cash or property or in obligations of
the Borrower or any Subsidiary (such declarations, payments,
setting apart, purchases, redemptions, defeasances,
retirements, acquisitions and distributions being herein
called "RESTRICTED PAYMENTS").
7.8 LIMITATION ON INVESTMENTS, LOANS AND ADVANCES. Make any advance,
loan, extension of credit or capital contribution to, or
purchase any stock, bonds, notes, debentures or other
securities of or any assets constituting a business unit of,
or make any other investment in, any Person, except:
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) loans and advances to employees of the Borrower or its
Subsidiaries for travel, entertainment and relocation expenses
in the ordinary course of business;
(d) investments in existence on the date hereof which are described
on SCHEDULE VIII hereof;
(e) the Borrower may make intercompany loans and advances to its
wholly owned Subsidiaries which have executed the following:
Subsidiaries Guarantee, the HM Services Subordination
Agreement and as applicable, a Mortgage pursuant to subsection
6.10 of this Agreement; and
(f) other advances, loans and extensions of credit in an aggregate
amount not to exceed $500,000.
7.9 LIMITATION ON TRANSACTIONS WITH AFFILIATES. Enter into any
transaction, including, without limitation, any purchase,
sale, lease or exchange of property or the rendering of any
service, with any Affiliate unless such transaction is (a)
otherwise permitted under this Agreement, (b) in the ordinary
course of the Borrower's or such Subsidiary's business and (c)
upon fair and reasonable terms no less favorable to the
Borrower or such Subsidiary, as the case may be, than it would
obtain in a comparable arm's length transaction with a Person
which is not an Affiliate.
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7.10 LIMITATION ON SALES AND LEASEBACKS. Enter into any arrangement
with any Person providing for the leasing by the Borrower or
any Subsidiary of real or personal property which has been or
is to be sold or transferred by the Borrower or such
Subsidiary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security
of such property or rental obligations of the Borrower or such
Subsidiary.
7.11 LIMITATION ON CHANGES IN FISCAL YEAR. Permit the fiscal year of
the Borrower to end on a day other than December 31.
7.12 LIMITATION ON NEGATIVE PLEDGE CLAUSES. Enter into with any Person
any agreement, other than this Agreement, purchase money
mortgages, Financing Leases and other similar fixed asset
financings permitted by this Agreement (in which cases, any
prohibition or limitation shall only be effective against the
assets financed thereby), which prohibits or limits the
ability of the Borrower or any of its Subsidiaries to create,
incur, assume or suffer to exist any Lien upon any of its
property, assets or revenues, whether now owned or hereafter
acquired.
7.13 LIMITATION ON LINES OF BUSINESS. Enter into any business, either
directly or through any Subsidiary, except for (a) the
businesses and businesses of a similar type in which the
Borrower and its Subsidiaries are engaged on the date hereof
and (b) other activities relating thereto.
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SECTION 8: EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan when due
in accordance with the terms hereof or any other Loan
Document, or the Borrower shall fail to pay any interest on
any Loan, or any other amount payable hereunder or any other
Loan Document, within five (5) Business Days after any such
interest or other amount becomes due in accordance with the
terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by the Borrower
or any other Loan Party herein or in any other Loan Document
or which is contained in any certificate, document or
financial or other statement furnished by it at any time under
or in connection with this Agreement or any such other Loan
Document shall prove to have been incorrect in any material
respect on or as of the date made or deemed made; or
(c) The Borrower or any other Loan Party shall default in the
observance or performance of any agreement contained in
Section 7 or any negative covenant contained in any other Loan
Document; or
(d) The Borrower or any other Loan Party shall default in the
observance or performance of any other agreement contained in
this Agreement or any other Loan Document (other than as
provided in paragraphs (a) through (c) of this Section 8), and
such default shall continue unremedied for a period of thirty
(30) days; or
(e) The Borrower or any other Loan Party shall (i) default in any
payment of principal of or interest of any Indebtedness (other
than the Loans) or in the payment of any Guarantee Obligation,
beyond the period of grace (not to exceed sixty (60) days), if
any, provided in the instrument or agreement under which such
Indebtedness or Guarantee Obligation was created; or (ii)
default in the observance or performance of any other
agreement or condition relating to any such Indebtedness or
Guarantee Obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, or any
other event shall occur or condition exist, the effect of
which default or other event or condition is to cause, or to
permit the holder or holders of such Indebtedness or
beneficiary or beneficiaries of such Guarantee Obligation (or
a trustee or Agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, with the giving of
notice or the passage of time if required, such Indebtedness
to become due prior to its stated maturity or such Guarantee
Obligation to become payable; PROVIDED, HOWEVER, that no
Default or Event of Default shall exist under this paragraph
unless the aggregate amount of Indebtedness and/or Guarantee
Obligations in respect of which any default or other event or
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condition referred to in this paragraph shall have occurred
shall be equal to at least $500,000; or
(f) An Event of Default shall have occurred and be continuing under,
and as defined in, the Floor Plan Facility; or
(g) (i) The Borrower or any other Loan Party shall commence any case,
proceeding or other action (A) under any existing or future
law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors,
seeking to have an order for relief entered with respect to
it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with
respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian, conservator or other similar
official for it or for all or any substantial part of its
assets, or the Borrower or any Subsidiary shall make a general
assignment for the benefit of its creditors; or (ii) there
shall be commenced against the Borrower or any Subsidiary any
case, proceeding or other action of a nature referred to in
clause (i) above which (A) results in the entry of an order
for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of
thirty (30) days; or (iii) there shall be commenced against
the Borrower or any Subsidiary any case, proceeding or other
action seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial
part of its assets which results in the entry of an order for
any such relief which shall not have been vacated, discharged,
or stayed or bonded pending appeal within thirty (30) days
from the entry thereof, or (iv) the Borrower or any Subsidiary
shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts
set forth in clause (i), (ii), or (iii) above; or (v) the
Borrower or any Subsidiary shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its
debts as they become due; or
(h) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan, (ii) any "accumulated funding deficiency"
(as defined in Section 302 of ERISA), whether or not waived,
shall exist with respect to any Plan or any Lien in favor of
the PBGC or a Plan shall arise on the assets of the Borrower
or any Commonly Controlled Entity, (iii) a Reportable Event
shall occur with respect to, or proceedings shall commence to
have a trustee appointed, or a trustee shall be appointed, to
administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment
of a trustee is, in the reasonable opinion of the Majority
Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any
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Single Employer Plan shall terminate for purposes of Title IV
of ERISA, (v) the Borrower or any Commonly Controlled Entity
shall, or in the reasonable opinion of the Majority Lenders is
likely to, incur any liability in connection with a withdrawal
from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (vi) any other adverse event or condition shall occur
or exist with respect to a Plan; and in each case in clauses
(i) through (vi) above, such event or condition, together with
all other such events or conditions, if any, could reasonably
be expected to involve an aggregate amount of liability to the
Borrower or any Subsidiary in excess of $500,000; or
(i) One or more judgments or decrees shall be entered against the
Borrower or any other Loan Party involving in the aggregate a
liability (not paid or fully covered by insurance) of $500,000
or more and all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within
thirty (30) days from the entry thereof; or
(j) (i) any of the Security Documents shall cease, for any reason
(other than a partial or full release in accordance with the
terms thereof), to be in full force and effect or the Borrower
or any other Loan Party which is a party to any of the
Security Documents shall so assert, (ii) the Lien created by
any of the Security Documents shall cease to be enforceable
and of the same effect and priority purported to be created
thereby, (iii) any Guarantee shall cease, for any reason, to
be in full force and effect or any Guarantor shall so assert,
(iv) the HM Services Subordination Agreement shall cease, for
any reason, to be in full force and effect or the Creditor or
any Debtor shall so assert or (v) the ZN Net Worth Agreement
shall cease, for any reason, to be in full force and effect or
▇▇▇▇▇▇ National Corporation shall so assert; or
(k) Any Change in Control shall occur;
then, and in any such event, (i) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (g) of this Section 8 with respect to the
Borrower, automatically the Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement shall immediately become due and payable, and (ii) if such
event is any other Event of Default, either or both of the following actions may
be taken: (A) with the consent of the Majority Lenders, the Agent may, or upon
the request of the Majority Lenders, the Agent shall, by notice to the Borrower
declare the Commitments to be terminated forthwith, whereupon the Commitments
shall immediately terminate; and (B) with the consent of the Majority Lenders,
the Agent may, or upon the request of the Majority Lenders, the Agent shall, by
notice to the Borrower, declare the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement to be due and payable
forthwith, whereupon the same shall immediately become due and payable. Except
as expressly provided above in this
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Section 8, presentment, demand, protest and all other notices of any kind are
hereby expressly waived.
SECTION 9: THE AGENT
9.1 APPOINTMENT. (a) Each Lender hereby irrevocably designates and
appoints NationsBank, N.A. as the Agent of such Lender under
this Agreement and the other Loan Documents, and each such
Lender irrevocably authorizes the Agent, in such capacity, to
take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such
powers and perform such duties as are expressly delegated to
the Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Agreement, the Agent shall not have
any duties or responsibilities, except those expressly set
forth herein, or 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 the
Agent.
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9.2 DELEGATION OF DUTIES. The Agent may execute any of its duties
under this Agreement and the other Loan Documents by or
through administrative agents or attorneys-in-fact and shall
be entitled to advice of counsel concerning all matters
pertaining to such duties. The Agent shall not be responsible
for the negligence or misconduct of any administrative agents
or attorneys-in-fact selected by it with reasonable care.
9.3 EXCULPATORY PROVISIONS. Neither the Agent nor any of its officers,
directors, employees, administrative agents, attorneys-in-fact
or Affiliates shall be (i) liable for any action lawfully
taken or omitted to be taken by it or such Person under or in
connection with this Agreement or any other Loan Document
(except for its or such Person's own gross negligence or
willful misconduct) or (ii) responsible in any manner to any
of the Lenders for any recitals, statements, representations
or warranties made by the Borrower or any officer thereof
contained in this Agreement or any other Loan Document or in
any certificate, report, statement or other document referred
to or provided for in, or received by the Agent under or in
connection with, this Agreement or any other Loan Document or
for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other
Loan Document or for any failure of the Borrower to perform
its obligations hereunder or thereunder. The Agent shall not
be under any obligation to any Lender to ascertain or to
inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or
any other Loan Document, or to inspect the properties, books
or records of the Borrower.
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9.4 RELIANCE BY AGENT. The Agent shall be entitled to rely, and shall
be fully protected in relying, upon any Note, writing,
resolution, notice, consent, certificate, affidavit, letter,
telecopy, telex or teletype message, statement, order 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, without limitation, counsel to the
Borrower), independent accountants and other experts selected
by the Agent. Without limiting the foregoing or the obligation
of the Borrower to confirm in writing any telephonic notice
permitted to be given hereunder, the Agent may prior to
receipt of written confirmation act without liability upon the
basis of such telephonic notice, believed by the Agent in good
faith to be from a Responsible Officer or Borrower. The Agent
may deem and treat the payee of any Note as the owner thereof
for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the
Agent. The 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 Majority Lenders as it deems appropriate or
it shall first be indemnified to its satisfaction by the
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. The Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement
and the other Loan Documents in accordance with a request of
the Majority Lenders, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Loans.
9.5 NOTICE OF DEFAULT. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Lender
or the Borrower referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a
"notice of default". In the event that the Agent receives such
a notice, the Agent shall give notice thereof to the Lenders.
The Agent shall take such action with respect to such Default
or Event of Default as shall be reasonably directed by the
Majority Lenders; PROVIDED that unless and until the Agent
shall have received such directions, the 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 in the best interests of the
Lenders.
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9.6 NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender expressly
acknowledges that neither the Agent nor any of its officers,
directors, employees, administrative agents, attorneys-in-fact
or Affiliates has made any representations or warranties to it
and that no act by the Agent hereinafter taken, including any
review of the affairs of the Borrower, shall be deemed to
constitute any representation or warranty by the Agent to any
Lender. Each Lender represents to the Agent that it has,
independently and without reliance upon the Agent or any other
Lender, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and
investigation into the business, operations, property,
financial and other condition and creditworthiness of the
Borrower and made its own decision to make its Loans hereunder
and enter into this Agreement. Each Lender also represents
that it will, independently and without reliance upon the
Agent or any other Lender, 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 investigation as it deems
necessary to inform itself as to the business, operations,
property, financial and other condition and creditworthiness
of the Borrower. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by
the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other
information concerning the business, operations, property,
condition (financial or otherwise), prospects or
creditworthiness of the Borrower which may come into the
possession of the Agent or any of its officers, directors,
employees, administrative agents, attorneys-in-fact or
Affiliates.
9.7 INDEMNIFICATION. The Lenders agree to indemnify the Agent in its
capacity as such (to the extent not reimbursed by the Borrower
and without limiting the obligation of the Borrower to do so),
ratably according to their respective Commitment Percentages
in effect on the date on which indemnification is sought (such
Commitment Percentages to be determined as if there are no
Defaulting Lenders), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever
which may at any time (including, without limitation, at any
time following the payment of the Loans) be imposed on,
incurred by or asserted against the Agent in any way relating
to or arising out of, the Commitments, this Agreement, any of
the other Loan Documents or any documents contemplated by or
referred to herein or therein or the transactions contemplated
hereby or thereby or any action taken or omitted by the Agent
under or in connection with any of the foregoing; PROVIDED
that no Lender shall be liable for the payment of any portion
of such liabilities, obligations, losses, damages, penalties,
actions, judgments,
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suits, costs, expenses or disbursements resulting solely from
the Agent's gross negligence or willful misconduct. To the
extent that any Lender would be required to indemnify the
Agent pursuant to this subsection 9.7 but for the fact that it
is a Defaulting Lender, such Defaulting Lender shall not be
entitled to receive any portion of any payment or other
distribution hereunder until each other Lender shall have been
reimbursed for the excess, if any, of the aggregate amount
paid by such Lender under this subsection 9.7 over the
aggregate amount that such Lender would have been obligated to
pay had such first Lender not been a Defaulting Lender. The
agreements in this subsection 9.7 shall survive the payment of
the Loans and all other amounts payable hereunder. The
agreements in this subsection 9.7 shall survive the payment of
the Loans and all other amounts payable hereunder.
9.8 AGENT IN ITS INDIVIDUAL CAPACITY. The Agent and each of its
respective Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower
as though the Agent were not the Agent hereunder and under the
other Loan Documents. With respect to its Loans made or
renewed by it and any Note issued to it, the Agent shall have
the same rights and powers under this Agreement and the other
Loan Documents as any Lender and may exercise the same as
though it were not the Agent, and the terms "Lender" and
"Lenders" shall include the Agent in its respective individual
capacity.
9.9 SUCCESSOR AGENT. The Agent may resign as Agent upon ten (10) days'
notice to the Lenders and Borrower. If the Agent shall resign
as Agent under this Agreement and the other Loan Documents,
then the Majority Lenders shall appoint from among the Lenders
a successor Agent for the Lenders, which successor Agent
(PROVIDED that it shall have been approved by the Borrower),
shall succeed to the rights, powers and duties of the Agent
hereunder. Effective upon such appointment and approval, the
term "Agent" shall mean such successor Agent, and the former
Agent's rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the
part of such former Agent or any of the parties to this
Agreement or any holders of the Loans. After any retiring
Agent's resignation as Agent, the provisions of this Section 9
shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement and
the other Loan Documents.
SECTION 10: MISCELLANEOUS
10.1 AMENDMENT AND WAIVERS. Neither this Agreement nor any other Loan
Document, nor any terms hereof or thereof, may be amended,
supplemented or modified except in accordance with the
provisions of this subsection 10.1. The Majority Lenders may,
or, with the written consent of
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the Majority Lenders, the Agent may, from time to time, (a)
enter into with the Borrower written amendments, supplements
or modifications hereto and to the other Loan Documents for
the purpose of adding any provisions to this Agreement or the
other Loan Documents or changing in any manner the rights of
the Lenders or of the Borrower hereunder or thereunder or (b)
waive, on such terms and conditions as the Majority Lenders or
the Agent, as the case may be, may specify in such instrument,
any of the requirements of this Agreement or the other Loan
Documents or any Default or Event of Default and its
consequences; PROVIDED, HOWEVER, that no such waiver and no
such amendment, supplement or modification shall:
(i) reduce the amount or extend the scheduled date of maturity of any
Loan or of any installment thereof, or reduce the stated rate
of any interest or fee payable hereunder or extend the
scheduled date of any payment thereof or increase the amount
or extend the expiration date of any Lenders' Commitments, in
each case without the consent of each Non-Defaulting Lender
directly affected thereby;
(ii) amend, modify or waive any provision of this subsection 10.1 or
reduce the percentage specified in the definition of Majority
Lenders, or consent to the assignment or transfer by the
Borrower of any of its rights and obligations under this
Agreement and the other Loan Documents, in each case without
the written consent of all the Non-Defaulting Lenders;
(iii) consent to the assignment or transfer by the Borrower of any of
its rights and obligations under this Agreement and the other
Loan Documents, in each case without the written consent of
all the Non-Defaulting Lenders;
(iv) take any action having the effect of releasing any of the
material collateral or material guarantee obligations provided
for in any Guarantee or Security Document, in each case
without the written consent of the Non-Defaulting Lenders;
(v) amend, modify or waive any provision of Section 9 without the
written consent of the then Agent.
Any such waiver and any such amendment, supplement or modification shall apply
equally to each of the Lenders (including Defaulting Lenders) and shall be
binding upon the Borrower, the Lenders (including Defaulting Lenders), the Agent
and all future holders of the Loans. In the case of any waiver, the Borrower,
the Lenders (including Defaulting Lenders) and the Agent shall be restored to
their former positions and rights hereunder and under the other Loan Documents,
and any Default or Event of Default waived shall be deemed to be cured and not
continuing; no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereon.
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10.2 RELEASES OF COLLATERAL SECURITY AND GUARANTEE OBLIGATIONS.
Notwithstanding anything to the contrary contained herein or
in any Loan Document, upon request of the Borrower, the Agent
shall (without any notice to or vote or consent of any Lender)
take any action which has the effect of releasing any
collateral security and/or guarantee obligations provided for
in any Loan Document to the extent necessary to permit the
consummation of any Proceeds Event or any asset dispositions
permitted by subsection 7.6; PROVIDED that (unless the
Majority Lenders shall otherwise consent) the Proceeds of any
Proceeds Event are applied in the manner contemplated by
subsection 3.5 (if so required).
10.3 NOTICES. Unless otherwise expressly provided herein, all notices,
requests and demands to or upon the respective parties hereto
to be effective shall be in writing (including by facsimile
transmission) and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made (a) in the
case of delivery by hand, when delivered, (b) in the case of
delivery by mail, three (3) days after being deposited in the
mails, postage prepaid, or (c) in the case of delivery by
facsimile transmission, when sent and receipt has been
confirmed, addressed as follows in the case of the Borrower
and the Agent, and as set forth in SCHEDULE I in the case of
the other parties hereto, or to such other address as may be
hereafter notified by the respective parties hereto:
The Borrower:
HomeMax, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, V.P. and C.F.O.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY TO:
Frost & ▇▇▇▇▇▇, LLP.
2500 PNC Center
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
The Agent:
NationsBank, N.A.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
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Phone: ▇▇▇-▇▇▇-▇▇▇▇
WITH A COPY TO:
Shaw, Pittman, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: M. ▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
PROVIDED that any notice, request or demand to or upon the Agent pursuant to
subsection 2.2, 3.3, or 3.4 shall not be effective until received.
10.4 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising on the part of the Agent or any Lender,
any right, remedy, power or privilege hereunder or under the
other Loan Documents shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exclusive of
any rights, remedies, powers and privileges provided by law.
10.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made hereunder, in the other Loan Documents and
in any document, certificate or statement delivered pursuant
hereto or in connection herewith shall survive the execution
and delivery of this Agreement and the making of the Loans
hereunder.
10.6 PAYMENT OF EXPENSES AND TAXES. The Borrower agrees (a) to pay
or reimburse the Agent for all of its reasonable out-of-pocket
costs and expenses incurred in connection with the
development, preparation and execution of any amendment,
supplement or modification to, this Agreement and the other
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, without limitation, the reasonable fees and
disbursements of counsel to the Agent, (b) to pay or reimburse
each Lender and the Agent for all its costs and expenses
incurred in connection with the enforcement or preservation of
any rights under this Agreement, the other Loan Documents and
any such other documents, including, without limitation, the
reasonable fees and disbursements of counsel to each Lender
and of counsel to the Agent, (c) to pay, indemnify, and hold
each Lender and the Agent harmless from, any and all recording
and filing fees and any and all liabilities with respect to,
or resulting from any delay in paying, stamp, excise and other
taxes, if any, which may be payable or determined to be
payable in connection with
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the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or
consent under or in respect of, this Agreement, the other Loan
Documents and any such other documents, and (d) to pay,
indemnify, and hold each Lender and the Agent harmless from
and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever
with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the other
Loan Documents or the use of the proceeds of the Loans and any
such other documents, including, without limitation, any of
the foregoing relating to the violation of, noncompliance with
or liability under, any Environmental Law applicable to the
operations of the Borrower, any of its Subsidiaries or any of
the Properties (all the foregoing in this clause (d),
collectively, the "indemnified liabilities"), PROVIDED that
the Borrower shall have no obligation hereunder to the Agent
or any Lender with respect to indemnified liabilities to the
extent arising from the gross negligence or willful misconduct
of the Agent or such Lender. The agreements in this subsection
10.6 shall survive repayment of the Loans and all other
amounts payable hereunder.
10.7 TERMINATION. This Agreement shall terminate upon the termination
of all Commitments and the irrevocable repayment in full of
the aggregate outstanding principal amount of the Loans,
accrued interest thereon, and all fees and expenses and other
amounts due and payable at such time under any of the Loan
documents; PROVIDED that all indemnities set forth herein
including, without limitation, in subsections 9.7 and 10.6
shall survive such termination.
10.8 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS.
(a) This Agreement shall be binding upon and inure to the benefit of
the Borrower, the Lenders, the Agent and their respective
successors and assigns, except that the Borrower may not
assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of each Lender.
(b) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time
sell to one or more banks or other financial institutions
("PARTICIPANTS") participating interests in any Loan owing to
such Lender, any Commitment of such Lender or any other
interest of such Lender hereunder and under the other Loan
Documents; PROVIDED that, in the case of any such sale to an
additional bank or financial institution, (x) the aggregate
principal amount of the Loan (or, prior to the Closing Date,
Commitment) being sold is not less
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than $3,000,000 (or such lesser amount as may be agreed to by
the Agent) and (y) the aggregate principal amount of the Loan
(or, prior to the Closing Date, Commitment) remaining with the
selling Lender is not less than $3,000,000 (or such lesser
amount as may be agreed to by the Agent). In the event of any
such sale by a Lender of a participating interest to a
Participant, such Lender's obligations under this Agreement
shall remain unchanged, such Lender shall remain solely
responsible for the performance thereof, such Lender shall
remain the holder of any such Loan for all purposes under this
Agreement and the other Loan Documents, and the Borrower and
the Agent shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations
under this Agreement and the other Loan Documents. No Lender
shall be entitled to create in favor of any Participant, in
the participation agreement pursuant to which such
Participant's participating interest shall be created or
otherwise, any right to vote on, consent to or approve any
matter relating to this Agreement or any other Loan Document
except for those specified in clauses (i) and (ii) of the
proviso to subsection 10.1. The Borrower agrees that if
amounts outstanding under this Agreement are due or unpaid, or
shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant
shall, to the maximum extent permitted by applicable law, be
deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement
to the same extent as if the amount of its participating
interest were owing directly to it as a Lender under this
Agreement, PROVIDED that, in purchasing such participating
interest, such Participant shall be deemed to have agreed to
share with the Lenders the proceeds thereof as fully as if it
were a Lender hereunder.
(c) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time
and from time to time assign to any Lender or any affiliate
thereof or, with the consent of the Borrower and the Agent
(which in each case shall not be unreasonably withheld), to an
additional bank or financial institution (an "ASSIGNEE") all
or any part of its rights and obligations under this Agreement
and the other Loan Documents pursuant to an Assignment and
Acceptance, substantially in the form of EXHIBIT I, executed
by such Assignee, such assigning Lender (and, in the case of
an Assignee that is not then a Lender or an affiliate thereof,
by the Borrower and the Agent) and delivered to the Agent for
its acceptance and recording, PROVIDED that, in the case of
any such assignment to an additional bank or financial
institution, (x) the aggregate principal amount of the Loan
(or, prior to the Closing Date, Commitment) being assigned is
not less than $3,000,000 (or such lesser amount as may be
agreed to by the Borrower and the Agent) and (y) if such
assignment is of less than all of the rights and obligations
of the assigning Lender, the aggregate principal amount of the
Loan (or, prior to
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the Closing Date, Commitment) remaining with the assigning
Lender is not less than $3,000,000 (or such lesser amount as
may be agreed to by the Borrower and the Agent). Upon such
execution, delivery, acceptance and recording (and the payment
of the registration and processing fee described in clause (e)
below), from and after the effective date determined pursuant
to such Assignment and Acceptance, (x) the Assignee thereunder
shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of
a Lender hereunder with a Commitment as set forth therein, and
(y) the assigning Lender thereunder shall, to the extent
provided in such Assignment and Acceptance, be released from
its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining
portion of the Lenders' rights and obligations under this
Agreement, such assigning Lender shall cease to be a party
hereto). Notwithstanding any provision of this paragraph (c)
of this subsection, the consent of the Borrower shall not be
required for any assignment which occurs at any time when any
of the events described in subsection 8(g) shall have occurred
and be continuing.
(d) The Agent, on behalf of the Borrower, shall maintain at the
address of the Agent referred to in subsection 10.3 a copy of
each Assignment and Acceptance delivered to it and a register
(the "REGISTER") for the recordation of the names and
addresses of the Lenders and the Commitments of, and principal
amounts of the Loans owing to, each Lender from time to time.
The entries in the Register shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and
amounts therein recorded. The Borrower, the Agent and the
Lenders may (and, in the case of any Loan or other obligation
hereunder not evidenced by a Note, shall) treat each Person
whose name is recorded in the Register as the owner of a Loan
or other obligation hereunder as the owner thereof for all
purposes of this Agreement and the other Loan Documents,
notwithstanding any notice to the contrary. Any assignment of
any Loan or other obligation hereunder not evidenced by a Note
shall be effective only upon appropriate entries with respect
thereto being made in the Register. The Register shall be
available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an
Assignee that is not then a Lender or an affiliate thereof, by
the Borrower and the Agent), together with payment to the
Agent of a registration and processing fee of $2,500, the
Agent shall (i) promptly accept such Assignment and Acceptance
and (ii) on the effective date determined pursuant thereto
record the information contained therein in the Register and
give notice of such
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acceptance and recordation to the Lenders and the Borrower;
PROVIDED that no such fee shall be payable with respect to any
assignment from an assigning Lender to an affiliate thereof.
(f) The Borrower authorizes each Lender to disclose to any Participant
or Assignee (each, a "TRANSFEREE") and any prospective
Transferee any and all financial information in such Lenders'
possession concerning the Borrower and its Affiliates which
has been delivered to such Lender by or on behalf of the
Borrower pursuant to this Agreement or which has been
delivered to such Lender by or on behalf of the Borrower in
connection with such Lenders' credit evaluation of the
Borrower and its Affiliates prior to becoming a party to this
Agreement.
(g) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this subsection 10.8 concerning
assignments of Loans and Notes relate only to absolute
assignments and that such provisions do not prohibit
assignments creating security interests, including, without
limitation, any pledge or assignment by a Lender of any Loan
or Note to any Federal Reserve Bank in accordance with
applicable law.
10.9 ADJUSTMENTS; SET-OFF. (a) If any Lender (a "BENEFITED LENDER")
at any time shall receive any payment of all or part of its
Loans, or interest thereon, or receive any collateral in
respect thereof (whether voluntarily or involuntarily, by
set-off, pursuant to events or proceedings of the nature
referred to in subsection 8(g), or otherwise), in a greater
proportion than any such payment to or collateral received by
any other Lender, if any, in respect of such other Lenders'
Loans, or interest thereon, such benefited Lender shall
purchase for cash from the other Lenders such portion of each
such other Lenders' Loans, or shall provide such other Lenders
with the benefits of any such collateral, or the proceeds
thereof, as shall be necessary to cause such benefited Lender
to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Lenders, and if after taking
into account such sharing the benefited Lender continues to
have access to addition funds of or collateral granted by the
Borrower for application on account of its debt, then the
benefited Lender shall use such funds or collateral to reduce
debt of the Borrower held by it and share such payments and
the benefits of such collateral with the other Lenders;
PROVIDED, HOWEVER, that if all or any portion of such excess
payment or benefits is thereafter recovered from such
benefited Lender, such purchase shall be rescinded, and the
purchase price and benefits returned, to the extent of such
recovery, but without interest. The Borrower agrees that each
Lender so purchasing a portion of another Lenders' Loans or
may exercise all rights of payment (including, without
limitation, rights of set-off) with respect to such portion as
fully as if such Lender were the direct holder of such
portion.
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(b) In addition to any rights and remedies of the
Lenders provided by law, each Lender shall have the right,
without prior notice to the Borrower, any such notice being
expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by
the Borrower hereunder (whether at the stated maturity, by
acceleration or otherwise) to set-off and appropriate and
apply against such amount any and all deposits (general or
special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in
any currency, in each case whether direct or indirect,
absolute or contingent, matured or unmatured, at any time held
or owing by such Lender or any branch, agency or (to the
extent permitted by applicable law) banking affiliate thereof
to or for the credit or the account of the Borrower. Each
Lender agrees promptly to notify the Borrower and the Agent or
any Lender after any such set-off and application made by such
Lender, PROVIDED that the failure to give such notice shall
not affect the validity of the set-off and application.
10.10 COUNTERPARTS. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate
counterparts (including by facsimile transmission), and all of
said counterparts taken together shall be deemed to constitute
one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be lodged with the
Borrower and the Agent.
10.11 SEVERABILITY. Any provision of this Agreement which 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.
10.12 INTEGRATION. This Agreement and the other Loan Documents represent
the agreement of the Borrower, the Agent and the Lenders with
respect to the subject matter hereof, and there are no
promises, undertakings, representations or warranties by the
Agent or any Lender relative to subject matter hereof not
expressly set forth or referred to herein or in the other Loan
Documents.
10.13 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF OHIO.
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10.14 SUBMISSION TO JURISDICTION; WAIVERS. The Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan
Documents to which it is a party, or for recognition and
enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the Courts of the State
of Ohio, the courts of the United States of America for the
Sixth Circuit, and appellate courts from any thereof,
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such
court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail),
postage prepaid, to the Borrower at its address set forth in
subsection 10.3 or at such other address of which the Lenders
shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or
shall limit the right to ▇▇▇ in any other jurisdiction; and
(e) waives, except in the case of extreme bad faith (and otherwise to
the maximum extent not prohibited by law), any right it may
have to claim or recover in any legal action or proceeding
referred to in this subsection 10.14 any special, exemplary,
punitive or consequential damages.
10.15 ACKNOWLEDGEMENTS. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Agent nor any Lender has any fiduciary relationship
with or duty to the Borrower arising out of or in connection
with this Agreement or any of the other Loan Documents, and
the relationship between Agent and Lenders, on the one hand,
and the Borrower, on the other hand, in connection herewith is
solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated
hereby among the Borrower and the Lenders.
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10.16 WAIVERS OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, THE BORROWER, THE AGENT AND THE LENDERS HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
HOMEMAX, INC.
as Borrower
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇▇ ▇. Massarellli
Executive Vice President
NATIONSBANK, N.A.
as Agent and a Lender
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
STAR BANK, N.A.
as a Lender
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
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68
SCHEDULE I
LENDERS; ADDRESSES FOR NOTICES
1. NATIONSBANK, N.A.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
2. STAR BANK, N.A.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
ML ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
69
SCHEDULE II
COMMITMENTS AND COMMITMENT PERCENTAGES
Lender Commitment Commitment
------ Percentage
----------
NATIONSBANK, N.A. $6,000,000 50%
STAR BANK, N.A. $6,000,000 50%
70
SCHEDULE III
HOMEMAX, INC.
SUBSIDIARIES
NAME STATUS JURISDICTION OF INCORPORATION OWNERSHIP PERCENTAGE
-----------------------------------------------------------------------------------------------------------
HomeMax Indiana, LLC Guarantor Indiana 99%
HomeMax Kentucky, LLC Guarantor Kentucky 99%
HomeMax North Carolina, Inc. Guarantor North Carolina 100%
HomeMax South Carolina, Inc. Guarantor South Carolina 100%
HomeMax Tennessee, Inc. Guarantor Tennessee 100%
HM Properties, Inc. Guarantor Delaware 100%
HM Services, Inc. Guarantor Delaware 100%
71
SCHEDULE IV
INDEBTEDNESS
HOMEMAX, INC.
LONG TERM DEBT
As Of February 23, 1998
ENTITY ISSUE TYPE BANK ISSUE MATURITY RATE AMOUNT
DATE DATE
------------------------------------------------------------------------------------------------------------------------------
HomeMax, Inc. Promissory Note NationsBank, 02/19/1998 02/28/2001 Eurodollar Rate $33,920,000.00
N.A. Agent of ABR
HomeMax Promissory Note NationsBank, 02/19/1998 02/28/2001 Eurodollar Rate $33,920,000.00
Indiana, LLC N.A. Agent of ABR
HomeMax Promissory Note NationsBank, 02/19/1998 02/28/2001 Eurodollar Rate $33,920,000.00
Kentucky, LLC N.A. Agent of ABR
HomeMax Promissory Note NationsBank, 02/19/1998 02/28/2001 Eurodollar Rate $33,920,000.00
Ohio, Inc. N.A. Agent of ABR
HomeMax Promissory Note NationsBank, 02/19/1998 02/28/2001 Eurodollar Rate $33,920,000.00
North Carolina, Inc. N.A. Agent of ABR
HomeMax Promissory Note NationsBank, 02/19/1998 02/28/2001 Eurodollar Rate $33,920,000.00
South Carolina, Inc. N.A. Agent of ABR
HomeMax Promissory Note NationsBank, 02/19/1998 02/28/2001 Eurodollar Rate $33,920,000.00
Tennessee, Inc. N.A. Agent of ABR
72
SCHEDULE V
LIENS
HOMEMAX, INC.:
UCC-1 filings for furniture and computer equipment leased from CLG, Inc. and
Colonial Pacific Leasing Corporation.
THE LIENS DESCRIBED BELOW APPLY TO THE FOLLOWING ENTITIES:
HomeMax, Inc.
HomeMax Indiana, LLC
HomeMax Kentucky, LLC
HomeMax North Carolina, Inc.
HomeMax South Carolina, Inc.
HomeMax Ohio, Inc.
HomeMax Tennessee, Inc.
HM Properties, Inc.
HM Services, Inc.
UCC-1 filings for all inventory together with any and all accounts, chattel
paper, documents, equipment, general intangibles and all proceeds and products
of any and all of the foregoing.
Such liens are the result of security agreements delivered to NationsBank, N.A.,
as agent for itself and the other lenders (collectively, "Lenders") under the
Floor Plan Agreement between HomeMax, Inc., HomeMax Indiana, LLC, HomeMax
Kentucky, LLC, HomeMax North Carolina, Inc., HomeMax South Carolina, Inc.,
HomeMax Ohio, Inc. and HomeMax Tennessee, Inc. (collectively, "Borrowers") and
Lenders dated February 19, 1998.
See Attachment 1 to Schedule V
73
ATTACHMENT 1 TO SCHEDULE V
-------------------------------------- ---------------------------- ----------------------------- -------------------
LESSOR NATURE OF LEASE ITEMS LEASED UCC FILING
-------------------------------------- ---------------------------- ----------------------------- -------------------
CLG Equipment Lease Agreement Misc. computer equipment Yes
Inc. dated 8/22/97 and Modular office furniture
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ Raleigh, supplements
N.C. 27616
-------------------------------------- ---------------------------- ----------------------------- -------------------
Colonial Pacific Leasing Company Master Equipment Lease Modular Office Equipment Yes
▇.▇. ▇▇▇ ▇▇▇▇▇▇ dated 9/22/97 and Addendums
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------- ---------------------------- ----------------------------- -------------------
74
SCHEDULE VI
HOMEMAX, INC.
GUARANTEES
----------
HomeMax,Inc. HomeMax Indiana, LLC
HomeMax Kentucky, LLC
HomeMax Ohio, Inc.
HomeMax North Carolina, Inc.
HomeMax South Carolina, Inc.
HomeMax Tennessee, Inc.
HM Properties, Inc.
HM Services, Inc.
EACH OF THE ENTITIES LISTED ABOVE HAS DELIVERED THE FOLLOWING GUARANTEES:
1) Guarantee of $33,920,000 loan dated February 19, 1998 delivered to
NationsBank, as agent for itself and the other lenders (collectively,
"Lenders"), under the Floor Plan Agreement between HomeMax, Inc., HomeMax
Indiana, LLC, HomeMax Kentucky, LLC, HomeMax Ohio, Inc., HomeMax North
Carolina, Inc., HomeMax South Carolina, Inc., and HomeMax Tennessee, Inc.
(collectively, "Borrowers") and Lenders dated February 19, 1998.
2) Guarantee of $15,000,000 loan dated February 23, 1998 delivered to
NationsBank, as agent for itself and the other lenders (collectively,
"Lenders"), under the Credit Agreement between ▇▇▇▇▇▇ National Corporation and
Lenders dated February 23, 1998.
75
SCHEDULE VII
EXISTING INVESTMENTS
ENTITY INVESTMENT
------ ----------
HomeMax, Inc. Subsidiaries
HomeMax Indiana, LLC N/A
HomeMax Kentucky, LLC N/A
HomeMax North Carolina, Inc. N/A
HomeMax Ohio, Inc. N/A
HomeMax South Carolina, Inc. N/A
HomeMax Tennessee, Inc. N/A
76
SCHEDULE VIII
ACQUIRED LAND PARCELS
none
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