Exhibit 4.1
CREDIT AGREEMENT
DATED AS OF APRIL 10, 1996
AMONG
RICHMOND AMERICAN HOMES OF CALIFORNIA, INC.
RICHMOND AMERICAN HOMES OF MARYLAND, INC.
RICHMOND AMERICAN HOMES OF NEVADA, INC.
RICHMOND AMERICAN HOMES OF VIRGINIA, INC.
RICHMOND AMERICAN HOMES, INC.
RICHMOND HOMES, INC. I
and
RICHMOND HOMES, INC. II
as Borrowers
AND
THE BANKS NAMED HEREIN
as Banks
AND
BANK ONE, ARIZONA, NA
as Agent
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.......................................... 1
ARTICLE II THE CREDITS.......................................... 22
2.1 Commitment........................................... 22
2.2 Required Payments.................................... 22
2.3 Ratable Loans........................................ 23
2.4 Types of Advances.................................... 23
2.5 Fees; Reduction in Commitment........................ 23
2.6 Minimum Amount of Each Advance....................... 25
2.7 Optional Principal Payments.......................... 25
2.8 Method of Selecting Types and Interest
Periods for New Advances........................... 26
2.9 Conversion and Continuation of Outstanding Advances.. 27
2.10 Changes in Interest Rate, etc........................ 28
2.11 Determination of Applicable Margins and Applicable
Unused Commitment Rate............................. 28
2.12 Rates Applicable After Event of Default.............. 29
2.13 Method of Payment.................................... 29
2.14 Notes; Telephonic Notices............................ 30
2.15 Interest Payment Dates; Interest Basis............... 30
2.16 Notification of Advances, Interest Rates,
Prepayments and Commitment Reductions.............. 30
2.17 Lending Installations................................ 30
2.18 Non-Receipt of Funds by Agent........................ 30
2.19 Swing Line........................................... 31
2.20 Withholding Tax Exemption............................ 32
2.21 Extension of Facility Termination Date............... 33
2.22 Conversion Period.................................... 35
2.23 Replacement of Certain Banks......................... 40
ARTICLE III CHANGE IN CIRCUMSTANCES.............................. 41
3.1 Yield Protection..................................... 41
3.2 Changes in Capital Adequacy Regulations.............. 42
3.3 Availability of Types of Advances.................... 43
3.4 Funding Indemnification.............................. 43
3.5 Bank Statements; Survival of Indemnity............... 43
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ARTICLE IV THE LETTER OF CREDIT FACILITY........................ 44
4.1 Facility Letters of Credit........................... 44
4.2 Limitations.......................................... 44
4.3 Conditions........................................... 45
4.4 Procedure for Issuance of Facility Letters of Credit..46
4.5 Duties of Issuing Bank............................... 47
4.6 Participation........................................ 48
4.7 Compensation for Facility Letters of Credit.......... 50
4.8 Issuing Bank Reporting Requirements.................. 51
4.9 Indemnification; Nature of Issuing Bank's Duties..... 52
4.10 No Obligation to Issue............................... 53
4.11 Obligations of Issuing Bank and Other Banks.......... 53
ARTICLE V CONDITIONS PRECEDENT................................. 54
5.1 Initial Advance...................................... 54
5.2 Each Advance......................................... 55
ARTICLE VI REPRESENTATIONS AND WARRANTIES....................... 56
6.1 Existence and Standing............................... 56
6.2 Authorization and Validity........................... 57
6.3 No Conflict; Government Consent...................... 57
6.4 Financial Statements................................. 57
6.5 Material Adverse Change.............................. 58
6.6 Taxes................................................ 58
6.7 Litigation and Contingent Obligations................ 58
6.8 Subsidiaries......................................... 58
6.9 ERISA................................................ 58
6.10 Accuracy of Information.............................. 58
6.11 Regulation U......................................... 59
6.12 Material Agreements.................................. 59
6.13 Labor Disputes and Acts of God....................... 59
6.14 Ownership............................................ 59
6.15 Operation of Business................................ 59
6.16 Laws; Environment.................................... 59
6.17 Investment Company Act............................... 60
6.18 Public Utility Holding Company Act................... 60
6.19 Subordination Provisions............................. 60
6.20 Indenture Provisions................................. 60
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ARTICLE VII AFFIRMATIVE COVENANTS................................ 61
7.1 Financial Reporting.................................. 61
7.2 Use of Proceeds...................................... 63
7.3 Notice of Event of Default........................... 64
7.4 Conduct of Business.................................. 64
7.5 Taxes................................................ 64
7.6 Insurance............................................ 64
7.7 Compliance with Laws................................. 64
7.8 Maintenance of Properties............................ 64
7.9 Inspection........................................... 65
7.10 Environment.......................................... 65
ARTICLE VIII NEGATIVE COVENANTS................................... 65
8.1 Dividends............................................ 65
8.2 Indebtedness......................................... 66
8.3 Merger............................................... 67
8.4 Sale of Assets....................................... 68
8.5 Investments and Acquisitions......................... 68
8.6 Liens................................................ 70
8.7 Affiliates........................................... 72
8.8 Modifications to Certain Indebtedness................ 73
8.9 Amendments........................................... 73
ARTICLE IX FINANCIAL COVENANTS.................................. 73
9.1 Minimum Consolidated Tangible Net Worth.............. 73
9.2 Leverage Test; Interest Coverage Test................ 73
9.3 Net Worth............................................ 75
9.4 Spec Unit Inventory.................................. 75
ARTICLE X EVENTS OF DEFAULT.................................... 76
10.1 Representations and Warranties....................... 76
10.2 Non-payment.......................................... 76
10.3 Other Defaults....................................... 76
10.4 Other Indebtedness................................... 76
10.5 Bankruptcy........................................... 77
10.6 Receiver............................................. 77
10.7 Judgment............................................. 77
10.8 Unfunded Liabilities................................. 78
10.9 Withdrawal Liability................................. 78
10.10 Increased Contributions.............................. 78
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10.11 Change in Control.................................... 78
10.12 Dissolution.......................................... 78
10.13 Guaranty............................................. 78
10.14 Collateral........................................... 78
10.15 No Defaults.......................................... 78
ARTICLE XI ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES....... 79
11.1 Acceleration......................................... 79
11.2 Amendments........................................... 80
11.3 Preservation of Rights............................... 80
11.4 New Borrowers........................................ 81
ARTICLE XII GENERAL PROVISIONS................................... 81
12.1 Survival of Representations.......................... 81
12.2 Governmental Regulation.............................. 81
12.3 Taxes................................................ 82
12.4 Headings............................................. 82
12.5 Entire Agreement..................................... 82
12.6 Nature of Obligations; Benefits of this Agreement.... 82
12.7 Expenses; Indemnification............................ 82
12.8 Numbers of Documents................................. 83
12.9 Accounting........................................... 83
12.10 Severability of Provisions........................... 83
12.11 Nonliability of Banks and Issuing Bank............... 83
12.12 CHOICE OF LAW........................................ 83
12.13 Arbitration.......................................... 83
12.14 CONSENT TO JURISDICTION.............................. 85
12.15 WAIVER OF JURY TRIAL................................. 85
12.16 Confidentiality...................................... 85
ARTICLE XIII AGENT................................................ 86
13.1 Appointment.......................................... 86
13.2 Powers............................................... 86
13.3 General Immunity..................................... 86
13.4 No Responsibility for Loans, Recitals, etc........... 86
13.5 Action on Instructions of Banks...................... 86
13.6 Employment of Agents and Counsel..................... 87
13.7 Reliance on Documents; Counsel....................... 87
13.8 Agent's Reimbursement and Indemnification............ 87
13.9 Rights as a Bank or Issuing Bank..................... 87
13.10 Bank Credit Decision................................. 88
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13.11 Successor Agent...................................... 88
13.12 Agent's Fee.......................................... 89
ARTICLE XIV RATABLE PAYMENTS..................................... 89
14.1 Ratable Payments..................................... 89
ARTICLE XV BENEFIT OF AGREEMENT, ASSIGNMENTS;
PARTICIPATIONS....................................... 89
15.1 Successors and Assigns............................... 89
15.2 Participations....................................... 90
15.2.1 Permitted Participants; Effect............. 90
15.2.2 Voting Rights.............................. 90
15.2.3 Waiver of Setoff........................... 90
15.3 Assignments.......................................... 90
15.3.1 Permitted Assignments...................... 90
15.3.2 Effect; Effective Date..................... 90
15.4 Dissemination of Information......................... 91
15.5 Tax Treatment........................................ 91
ARTICLE XVI NOTICES.............................................. 91
16.1 Giving Notice........................................ 91
16.2 Change of Address.................................... 92
ARTICLE XVII COUNTERPARTS......................................... 92
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LIST OF SCHEDULES AND EXHIBITS
EXHIBITS:
Exhibit A Form of Deed of Trust
Exhibit B Form of Mortgage
Exhibit C Form of Environmental Agreement
Exhibit D Form of Guaranty
Exhibit E Form of Note
Exhibit F Form of Opinion of Haligman & Lottner
Exhibit G Form of Certificate of General Counsel
Exhibit H Form of Opinion of Local Counsel
Exhibit I Form of Borrowing Notice
Exhibit J Form of Compliance Certificate of Authorized Officer
(Financial Covenant Tests)
Exhibit K Form of Assignment (with Form of Notice of Assignment
attached)
SCHEDULES:
Schedule "1" Refinanced Loans
Schedule "2.21" Terms Relating to Last 24 Months of Term/No Extension
Schedule "2.22" Terms Relating to Conversion Period
Schedule "6.3" Required Orders, Consents and Approvals
Schedule "8.2(ii)" Existing Indebtedness
Schedule "8.6(iv)" Existing Liens
CREDIT AGREEMENT
THIS AGREEMENT is entered into as of April 10, 1996, among the
Borrowers named herein, the Banks listed on the signature pages of this
Agreement, and BANK ONE, ARIZONA, NA, a national banking association, as Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which
Guarantor or any Borrower (i) acquires any going concern or all or substantially
all of the assets of any firm, corporation or division thereof, whether through
purchase of assets, merger or otherwise or (ii) directly or indirectly acquires
(in one transaction or as the most recent transaction in a series of
transactions) at least a majority (in number of votes) of the securities of a
corporation which have ordinary voting power for the election of directors
(other than securities having such power only by reason of the happening of a
contingency) or a majority (by percentage or voting power) of the outstanding
partnership or other ownership interests of a partnership, joint venture,
limited liability company or other similar business organization.
"Adjusted Consolidated Tangible Net Worth" means Consolidated Tangible
Net Worth, plus (i) Indebtedness evidenced by the Convertible Subordinated
Notes, but only to the extent that the maturity date of such Indebtedness will
occur after the Facility Termination Date, and (ii) any other Public
Indebtedness constituting convertible subordinated notes with convertible and
subordination features similar to the Convertible Subordinated Notes, but only
to the extent that the maturity date of such Indebtedness will occur after the
Facility Termination Date. Adjusted Consolidated Tangible Net Worth shall
specifically not include the Net Worth of any Subsidiary (taken as a whole on a
consolidated basis) engaged primarily or substantially in the business of
mortgage lending or asset management. As used in this definition, "Net Worth"
means, as to each such Subsidiary (taken as a whole on a consolidated basis),
the sum of (A) all capital accounts (including without limitation, any paid-in
capital, capital surplus, and retained earnings), less (B) all advances or other
sums or consideration paid and outstanding from such Subsidiary to Guarantor,
all as determined in conformity with Agreement Accounting Principles.
"Advance" means a borrowing hereunder consisting of the aggregate
amount of the several Loans made by Banks (or Swing Line Advances made by Bank
One) to a Borrower of the same Type and, in the case of a LIBOR Advance, for the
same Interest Period.
"Affected Bank" is defined in Section 2.23.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person beneficially
owns (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934,
as amended) 10% or more of any class of voting securities (or other ownership
interests) of the controlled Person or possesses, directly or indirectly, the
power to direct or cause the direction of the management or policies of the
controlled Person, whether through ownership of stock, by contract or otherwise.
"Agent" means Bank One, Arizona, NA, a national banking association, in
its capacity as agent for Banks pursuant to Article XIII, and not in its
individual capacity as a Bank, and any successor Agent appointed pursuant to
Article XIII.
"Aggregate Available Credit" means the aggregate of the Available
Credits of all of Banks.
"Aggregate Commitment" means the aggregate of the Commitments of all
Banks, as reduced from time to time pursuant to the terms hereof. As of the date
of this Agreement, the Aggregate Commitment is $150,000,000.
"Aggregate Debt Coverage Test" is defined in Section 9.3(b).
"Agreement" means this Credit Agreement, as it may be amended or
modified and in effect from time to time.
"Agreement Accounting Principles" is defined in Section 12.9.
"Applicable Floating Rate Margin" means, as at any date of
determination, the margin indicated in Section 2.11 as then applicable in the
determination of the Floating Rate.
"Applicable Letter of Credit Rate" means, as at any date of
determination, the rate per annum indicated in Section 4.7(b) as then applicable
in the determination of the Facility Letter of Credit Fee under Section 4.7.
"Applicable LIBOR Rate Margin" means, as at any date of determination,
the margin indicated in Section 2.11 as then applicable in the determination of
LIBOR Rates.
"Applicable Margin(s)" means the Applicable LIBOR Rate Margin and/or
the Applicable Floating Rate Margin, as the case may be.
"Applicable Unused Commitment Rate" means, as at any date of
determination, the rate per annum indicated in Section 2.11 as then applicable
in the determination of the Unused Commitment Fee under Section 2.5(b).
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"Article" means an article of this Agreement unless another document is
specifically referenced.
"Authorized Officer" means any one or more of the Chairman, President,
Senior Vice President or any Vice President, Chief Financial Officer, or other
officer of each Borrower or Guarantor, as applicable, acting singly or together,
in accordance with the applicable resolutions and bylaws of such Borrower or
Guarantor.
"Available Credit" means, at any date with respect to any Bank, the
amount (if any) by which such Bank's Commitment exceeds the sum of (i) the
outstanding principal balance of such Bank's Loans as of such date, plus (ii)
such Bank's ratable share (determined in accordance with Section 4.6) of the
Facility Letter of Credit Obligations as of such date.
"Bank One" means Bank One, Arizona, NA, in its individual capacity, and
its successors.
"Banks" means the lending institutions listed on the signature pages of
this Agreement and their respective successors and assigns.
"Borrowers" means RICHMOND AMERICAN HOMES OF CALIFORNIA, INC., a
Colorado corporation, RICHMOND AMERICAN HOMES OF MARYLAND, INC., a Maryland
corporation, RICHMOND AMERICAN HOMES OF NEVADA, INC., a Colorado corporation,
RICHMOND AMERICAN HOMES OF VIRGINIA, INC., a Virginia corporation, RICHMOND
AMERICAN HOMES, INC., a Delaware corporation, RICHMOND HOMES, INC. I, a Delaware
corporation, and RICHMOND HOMES, INC. II, a Delaware corporation, and their
successors and assigns, and any Subsidiary that shall hereafter become a
Borrower in accordance with Section 11.4 hereof, and any successors and assigns
of any of the foregoing.
"Borrower" means any one of the Borrowers.
"Borrowing Base" means, with respect to an Inventory Valuation Date for
which it is to be determined, an amount equal to the sum of the following assets
of each Borrower (but only to the extent that such assets are not subject to any
Liens other than Permitted Liens):
(i) the Receivables, multiplied by ninety percent (90%), plus
(ii) the book value of Presold Units, multiplied by eighty percent
(80%), plus
(iii) the book value of Spec Units, multiplied by seventy percent
(70%), plus
(iv) the book value of Model Units, multiplied by seventy percent
(70%), plus
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(v) the book value of Land Under Development, multiplied by fifty
percent (50%);
provided, however, that (A) the aggregate of the amounts calculated pursuant to
clauses (iii) and (v) with respect to all Borrowers shall not exceed, on any
Inventory Valuation Date, the aggregate of the amounts calculated pursuant to
clauses (ii) and (iv) with respect to all Borrowers, and (B) the aggregate of
the amounts calculated pursuant to clause (v) shall not exceed at any time fifty
percent (50%) of the Aggregate Commitment.
"Borrowing Base Certificate" means, with respect to each Borrower, a
written certificate in a form acceptable to Agent setting forth the amount of
the Borrowing Base with respect to the calendar month most recently completed,
certified as true and correct by an Authorized Officer of the applicable
Borrower.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Borrowing Notice" is defined in Section 2.8.
"Business Day" means (i) with respect to any borrowing, payment or rate
selection of LIBOR Advances, a day (other than a Saturday or Sunday) on which
banks generally are open in Phoenix and New York for the conduct of
substantially all of their commercial lending activities and on which dealings
in United States dollars are carried on in the London interbank market, and (ii)
for all other purposes, a day (other than a Saturday or Sunday) on which banks
generally are open in Phoenix for the conduct of substantially all of their
commercial lending activities.
"Capitalized Lease" of a Person means any lease of Property by such
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.
"Cash Equivalents" means:
(a) U.S. Treasury bills and notes;
(b) GNMA securities;
(c) debt insured by other agencies guaranteed by the full
faith and credit of the United States of America;
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(d) commercial paper rated either "A1" or better by Standard
and Poor's or "P1" by Moody's Investor Service;
(e) Dutch Auction Preferred Stocks (DAP) rated either "AA"
or better by Standard & Poor's or Moody's Investor Service;
(f) certificates of deposit issued by commercial banks,
savings banks or savings and loan associations whose short-term debt is
rated either "A1" or better by Standard and Poor's or "P1" or better by
Moody's Investor Service, or if such an institution is a subsidiary
whose short-term debt is unrated, then its parent corporation must have
such a rating;
(g) bankers acceptances issued by financial institutions
that meet the requirements for certificates of deposit;
(h) deposits in institutions having the same qualifications
required for investments in certificates of deposit;
(i) repurchase agreements collateralized by any otherwise
acceptable collateral as defined above; and
(j) money market accounts a majority of whose assets are
composed of items described by any of the foregoing clauses (a) through
(i) through brokerage firms deemed acceptable by Guarantor's
management.
"Change in Control" means (a) as to Guarantor, the acquisition by any
Person, or two or more Persons acting in concert, of beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934) of 50% or more of the outstanding
shares of voting stock of Guarantor, or (b) as to any Borrower, the acquisition
by any Person (except Guarantor or one or more of the Borrowers), or two or more
Persons acting in concert of any beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of any of the outstanding shares of voting stock of such
Borrower.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Collateral" means the Presold Units, Spec Units, Model Units and Land
Under Development owned by Borrowers from time to time upon which Banks hold a
properly perfected first and prior Deed of Trust as security for the
Obligations.
"Collateral Documents" is defined in Paragraph C(5) of Schedule "2.22."
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"Commitment" means, for each Bank, the obligation of such Bank to make
Loans, and to participate in the Facility Letters of Credit in accordance with
Section 4.6(a), not exceeding the amount set forth opposite its signature below
or as set forth in any Notice of Assignment relating to any assignment that has
become effective pursuant to Section 15.3.2, as such amount may be modified from
time to time pursuant to the terms hereof.
"Consolidated Indebtedness" means, at any date, the outstanding amount
of all Indebtedness of Borrowers and Guarantor, without duplication, all
determined on a consolidated basis for Guarantor in conformity with Agreement
Accounting Principles. For purposes of this definition, "Consolidated
Indebtedness" shall specifically not include:
(i) Indebtedness of any Subsidiary that is not engaged in
either the construction of Housing Units and/or land development for
the future construction of Housing Units and such Indebtedness is not
otherwise directly related to the construction of Housing Units and/or
land development for the future construction of Housing Units; and
(ii) Indebtedness of Borrowers and Guarantor evidenced by
existing and future guarantees (or other enhancements) in favor of Rock
Creek special districts not to exceed in the aggregate $45,000,000; and
(iii) Indebtedness evidenced by the Convertible Subordinated
Notes, and any other Public Indebtedness constituting convertible
subordinated notes with convertible and subordination features similar
to the Convertible Subordinated Notes, but only to the extent, in each
case, that the maturity date of such Indebtedness will occur after the
Facility Termination Date.
"Consolidated Interest Expense" means for any period, without
duplication, the aggregate amount of interest which, in conformity with
Agreement Accounting Principles, would be set opposite the caption "interest
expense" or any like caption on a consolidated income statement for Guarantor
(other than for Guarantor's mortgage lending and financial asset management
Subsidiaries), including, without limitation, imputed interest included on
Capitalized Lease Obligations, all commissions, discounts and other fees and
charges owed with respect to Letters of Credit and bankers' acceptance
financing, the net costs associated with Rate Hedging Obligations, amortization
of other financing fees and expenses, the interest portion of any deferred
payment obligation, amortization of discount or premiums, if any, and all other
noncash interest expense, other than interest and other charges amortized to
cost of sales. Consolidated Interest Expense includes, with respect to Borrowers
and Guarantor (other than for Guarantor's mortgage lending and financial asset
management Subsidiaries), without duplication, all interest included as a
component of cost of sales for such period.
"Consolidated Interest Incurred" means for any period, without
duplication, the aggregate amount of interest which, in conformity with
Agreement Accounting Principles, would be set opposite the caption "interest
expense" or any like caption on a consolidated income statement
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for Guarantor (other than for Guarantor's mortgage lending and financial asset
management Subsidiaries), including, without limitation, imputed interest
included on Capitalized Lease Obligations, all commissions, discounts and other
fees and charges owed with respect to Letters of Credit and bankers' acceptance
financing, the net costs associated with Rate Hedging Obligations, amortization
of other financing fees and expenses, the interest portion of any deferred
payment obligation, amortization of discount or premium, if any, and all other
noncash interest expense other than interest and other charges amortized to cost
of sales. Consolidated Interest Incurred includes, with respect to a Borrower
and Guarantor, without duplication, all capitalized interest for such period,
all interest attributable to discontinued operations for such period to the
extent not set forth on the income statement under the caption "interest
expense" or any like caption, and all interest actually paid by a Borrower or
Guarantor (other than for Guarantor's mortgage lending and financial asset
management Subsidiaries) under any contingent obligation during such period.
"Consolidated Net Income" means, for any period, the net income (or
loss) of Guarantor on a consolidated basis for such period taken as a single
accounting period, determined in conformity with Agreement Accounting
Principles.
"Consolidated Tangible Net Worth" means, as to Guarantor, at any date,
the sum of all capital accounts (including without limitation, any paid-in
capital, capital surplus, and retained earnings) determined on a consolidated
basis in conformity with Agreement Accounting Principles, less (i) its
consolidated Intangible Assets, and (ii) loans and advances to directors,
officers and employees of Guarantor but excluding (I) loans for purposes of
exercising options to purchase capital stock in Guarantor to the extent not
otherwise netted out in the determination of shareholders equity, and (II) any
arms-length mortgage loans made by any Subsidiary in the ordinary course of such
Subsidiary's business, and (III) any advances made to employees in the ordinary
course of business for travel and other items, and (IV) other such loans and
advances not to exceed $5,000,000 in the aggregate outstanding at any one time,
all determined as of such date. For purposes of this definition "Intangible
Assets" means the amount (to the extent reflected in determining such
consolidated stockholders' equity) of (A) all write-ups in the book value of any
asset owned by Guarantor or any Subsidiary, (B) any amount, however designated
on the balance sheet, representing the excess of the purchase price paid for
assets or stock acquired over the value assigned thereto on the books of
Guarantor or any Subsidiary, (C) all unamortized debt discount, goodwill,
patents, trademarks, service marks, trade names, copyrights, organization or
developmental expenses and other intangible items, and (D) all items that would
be considered intangible assets under Agreement Accounting Principles.
"Consolidated Tangible Net Worth Test" is defined in Section 9.1.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with Guarantor, a Borrower or any of their
respective Subsidiaries, are treated as a single employer under Section 414 of
the Code.
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"Conversion/Continuation Notice" is defined in Section 2.9.
"Convertible Subordinated Notes" means the 8-3/4% Convertible
Subordinated Notes due 2005 of Guarantor issued in the original principal amount
of $28,000,000.
"Conversion Date" means the first day of the Conversion Period,
determined pursuant to Section 2.22.
"Conversion Period" means the period of time commencing on the
Conversion Date and expiring on the Facility Termination Date. The Conversion
Period shall be either (i) a Secured Conversion Period, (ii) an Unsecured
Conversion Period, or (iii) a Modified Secured Conversion Period.
"Deed of Trust" means each and all Deeds of Trust, Assignment of Rents,
Security Agreement and Fixture Filing, securing the Obligations, granted from
time to time by a Borrower, as Trustor, for the benefit of Agent on behalf of
Banks, as Beneficiary, as the same may be amended or modified and in effect from
time to time, each being substantially in the form of Exhibit A attached hereto
(conformed as necessary with respect to the laws of the state where the
Collateral described therein is located), and each and all Mortgages, Assignment
of Rents, Security Agreement and Fixture Filing, securing the Obligations,
granted from time to time by a Borrower, as Mortgagor, for the benefit of Agent
on behalf of Banks, as Mortgagee, as the same may be amended or modified and in
effect from time to time, each being substantially in the form of Exhibit B
attached hereto (conformed as necessary with respect to the laws of the state
where the Collateral described therein is located).
"Dividend" means (i) any dividend paid or declared by any Borrower or
Guarantor, as applicable; (ii) any purchase, redemption, retirement or other
acquisition by any Borrower or Guarantor, as applicable for value, or the
setting aside of any funds or issuance of any warrants for such purpose, of any
of the capital stock of such Borrower or Guarantor, as applicable now or
hereafter outstanding or any interest therein; and (iii) as to any Borrower, any
distribution of assets, properties, cash, rights, obligations or other
consideration or securities of such Borrower, directly or indirectly, to
Guarantor.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"Due Diligence Documents" is defined in Paragraph C(6) of Schedule
"2.22."
"EBITDA" means, for any period, without duplication, the following, all
as determined on a consolidated basis for Guarantor in conformity with Agreement
Accounting Principles,
(i) the sum of the amounts for such period of (a) Consolidated
Net Income, (b) Consolidated Interest Expense, (c) charges against
income for all federal, state and local taxes, (d) depreciation
expense, (e) amortization expense, (f) other non-cash charges and
expenses, and (g) any losses arising outside of the
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ordinary course of business which have been included in the determin-
ation of Consolidated Net Income, less
(ii) any gains arising outside of the ordinary course of
business which have been included in the determination of Consolidated
Net Income.
"Environmental Agreement" means each and all Environmental Indemnity
Agreements executed by Borrowers and Guarantor from time to time for the benefit
of Banks and Agent, and relating to the Collateral, as the same may be amended
or modified and in effect from time to time, each being substantially in the
form of Exhibit C.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"Event of Default" means an event described in Article X after the
expiration of any applicable cure or notice period provided in Article X.
"Excluded Taxes" is defined in Section 3.1(i).
"Existing Letters of Credit" is defined in Section 4.4(f).
"Extension Request" is defined in Section 2.21(a).
"Facility Letter of Credit" means a Letter of Credit issued by the
Issuing Bank for the account of a Borrower in accordance with Article IV.
"Facility Letter of Credit Fee" means a fee, payable with respect to
each Facility Letter of Credit issued by the Issuing Bank, in an amount per
annum equal to the product of (i) the Applicable Letter of Credit Rate
(determined as of the date on which the quarterly installment of such fee is
due) and (ii) the face amount of such Facility Letter of Credit.
"Facility Letter of Credit Obligations" means, at any date, the sum of
(i) the aggregate undrawn face amount of all outstanding Facility Letters of
Credit, plus (ii) the aggregate amount paid by an Issuing Bank on any Facility
Letters of Credit to the extent (if any) not reimbursed by a Borrower or by
Banks under Section 4.4.
"Facility Rating" means the publicly announced ratings by any two (2)
of the following nationally recognized rating agencies: Moody's Investors
Service, Inc., Standard & Poor's Corporation, Fitch's Investment Service, and
Duff & Phelps Credit Rating Co., as selected by Borrowers, on Borrowers' Debt
evidenced by this Agreement and the Notes; provided, however, (i) except as
provided in clause (ii), if the two ratings are not identical, the Facility
Rating shall be the lower of the two ratings, (ii) if more than one rating
gradation exists between the two ratings, the Facility Rating shall be the
rating that is one gradation below the higher of the two ratings, and (iii) if
only one rating is announced, the Facility Rating shall be the rating that is
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one gradation below the announced rating. The Facility Rating shall change if
and when such rating(s) change.
"Facility Termination Date" means June 30, 2000, as the same may be
extended as provided in Section 2.21.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding 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 at approximately 10:00 a.m., Phoenix
time, on such day on such transactions received by Agent from three (3) Federal
funds brokers of recognized standing selected by Agent in its sole discretion.
"Financial Covenant Test" means each of the Consolidated Tangible Net
Worth Test, the Leverage Test, the Individual Debt Coverage Test and the
Aggregate Debt Coverage Test.
"Floating Rate" means, for any day, a rate per annum equal to (i) the
Prime Rate for such day, plus (ii) the Applicable Floating Rate Margin, in each
case changing when and as the Prime Rate changes.
"Floating Rate Advance" means an Advance which bears interest at the
Floating Rate.
"Floating Rate Loan" means a Loan which bears interest at the Floating
Rate.
"GAAP" means generally accepted accounting principles in effect from
time to time, consistently applied.
"Guarantor" means M.D.C. HOLDINGS, INC., a Delaware corporation.
"Guarantor Permitted Liens" means, as to Guarantor, any of the
following:
(i) Liens for taxes, assessments or governmental charges or
levies on Guarantor's Property if the same shall not at the time be
delinquent or thereafter can be paid without penalty, or are being
contested in good faith and by appropriate proceedings and for which
adequate reserves shall have been established on Guarantor's books in
accordance with Agreement Accounting Principles.
(ii) Liens imposed by law, such as carriers', warehousemen's,
mechanics' and materialmen's Liens and other similar Liens arising in
the ordinary course of business with respect to amounts that either (A)
are not yet delinquent, or (B) are delinquent but are being contested
in good faith by
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appropriate proceedings and for which adequate reserves shall have been
established on Guarantor's books in accordance with Agreement
Accounting Principles.
(iii) Utility easements, rights of way, zoning restrictions,
covenants, reservations, and such other burdens, encumbrances or
charges against real property, or other minor irregularities of title,
as are of a nature generally existing with respect to properties of a
similar character and which do not in any material way interfere with
the use thereof or the sale thereof in the ordinary course of business
of any Borrower or Guarantor.
(iv) Easements, dedications, assessment district or similar
Liens in connection with municipal financing and other similar
encumbrances or charges, in each case reasonably necessary or
appropriate for the development of real property of Guarantor, and
which are granted in the ordinary course of the business of Guarantor,
and which in the aggregate do not materially burden or impair the fair
market value or use of such real property (or the project to which it
is related) for the purposes for which it is or may reasonably be
expected to be held.
(v) Any option or right of first refusal to purchase real
property granted to the master developer or the seller of real property
that arises as a result of the non-use or non-development of such real
property by Guarantor.
(vi) Any agreement or contract to participate in the income or
revenue or to pay lot premiums, in each case derived from the sale of
Housing Units and granted in the ordinary course of business to the
seller of the real property upon which the Housing Unit is constructed.
"Guaranty" means a Guaranty, in substantially the form of Exhibit D,
duly executed by Guarantor, as the same may be amended or modified and in effect
from time to time.
"Housing Unit" means a single-family dwelling (where construction has
commenced), whether detached or attached (including condominiums but excluding
mobile homes), including the parcel of land on which such dwelling is located,
that is or will be available for sale by a Borrower. Each "Housing Unit" is
either a Presold Unit, a Spec Unit or a Model Unit.
"Housing Unit Closing" means a closing of the sale of a Housing Unit by
a Borrower to a bona fide purchaser for value.
"Indebtedness" of a Person means, without duplication, such Person's
(i) obligations for borrowed money,
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(ii) obligations representing the deferred purchase price of
Property or services (other than trade accounts payable and accrued
expenses arising or occurring in the ordinary course of such Person's
business, and other than the obligations evidenced by the Permitted
Liens or Guarantor Permitted Liens, as applicable, described in clause
(vi) of the definition of Permitted Liens or Guarantor Permitted Liens,
as applicable, all of which shall specifically not be included in the
calculation of Indebtedness),
(iii) obligations, whether or not assumed, secured by Liens
on, or payable out of the proceeds or production from, Property now or
hereafter owned or acquired by such Person, other than the obligations
evidenced by the Permitted Liens or Guarantor Permitted Liens, as
applicable, described in clause (vi) of the definition of Permitted
Liens or Guarantor Permitted Liens, as applicable,
(iv) obligations which are evidenced by notes, bonds,
debentures, or other similar instruments,
(v) Capitalized Lease Obligations,
(vi) net liabilities under Rate Hedging Obligations,
(vii) all liabilities and obligations of others of the kind
described in clauses (i) through (vi) and (viii) that such Person has
guaranteed or that is otherwise its legal liability, and
(viii) reimbursement obligations for which such Person is
obligated with respect to a Letter of Credit; Indebtedness shall
specifically not include contingent obligations with respect to a
Letter of Credit.
Indebtedness includes, without limitation, (A) in the case of each Borrower, the
Obligations, and (B) in the case of Guarantor, the obligations under the
Guaranty, and the obligations evidenced by the Senior Notes and the Convertible
Subordinated Notes and the documents executed in connection therewith.
"Indenture" means that certain Indenture, dated as of December 15,
1993, between Guarantor, Borrowers, the pledgors named therein, and First Bank
National Association pursuant to which the Senior Notes were issued, as amended
by the First Supplemental Indenture dated as of February 2, 1994.
"Individual Debt Coverage Test" is defined in Section 9.3(a).
"Interest Coverage Test" is defined in Section 9.2(b).
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"Interest Period" means, for each LIBOR Advance, the period commencing
on the date of such LIBOR Advance and ending on the last day of the period
selected by the applicable Borrower pursuant to the provisions herein and,
thereafter, each subsequent period commencing on the last day of the immediately
preceding Interest Period and ending on the last day of the period selected by
such Borrower pursuant to the provisions of this Agreement. The duration of each
Interest Period shall be 7 days or one (1), two (2), three (3), or six (6)
months as selected by the applicable Borrower (A), for a new Advance, in the
Borrowing Notice, or (B), for an outstanding Advance, in the
Conversion/Continuation Notice; provided, however, that:
(i) Whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding
Business Day, provided that if such extension would cause the last day
of such Interest Period to occur in the next following calendar month,
the last day of such Interest Period shall occur on the next preceding
Business Day; and
(ii) No Interest Period with respect to any LIBOR Advance
shall extend beyond the Facility Termination Date.
"Inventory Valuation Date" means the last day of the most recent
calendar month with respect to which a Borrower is required to have delivered a
Borrowing Base Certificate pursuant to Section 7.1(vi) hereof.
"Investment" of a Person means any loan, advance, extension of credit
(other than accounts receivable arising in the ordinary course of business), or
contribution of capital by such Person to any other Person or any investment in,
or purchase or other acquisition of, the stock, partnership, joint venture or
limited liability company interests, notes, debentures or other securities of
any other Person made by such Person.
"Issuance Date" means the date on which a Facility Letter of Credit is
issued, amended or extended.
"Issuing Bank" means Bank One or such other Bank as Borrowers, Agent
and such other Bank may agree upon, that may from time to time issue Facility
Letters of Credit.
"Land Under Development" means parcels of land owned by any Borrower
(including without limitation Finished Lots, as defined in Schedule "2.22")
which are zoned for Housing Units with respect to which development activity has
commenced for the purpose of construction of Housing Units by such Borrower;
provided, however, that the term "Land Under Development" shall not include (i)
any real property upon which the construction of a Housing Unit has commenced,
and (ii) vacant land held by a Borrower for future development or sale and
designated as inactive land in the footnotes to Guarantor's financial
statements. For purposes of this definition, the construction of a Housing Unit
shall be deemed to have commenced upon commencement of the trenching for the
foundation of the Housing Unit.
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"Lending Installation" means, with respect to a Bank or Agent, any
office, branch, banking subsidiary of the holding company of a Bank or Agent, or
banking Affiliate of such Bank or Agent located in each event in the United
States.
"Letter of Credit" means a letter of credit or similar instrument which
is issued by a financial institution upon the application of a Person or upon
which such Person is an account party or for which such Person is in any way
liable.
"Leverage Multiplier" means, at the date hereof, 2.15, as such amount
may hereafter be adjusted from time to time as provided in Section 9.2(c).
"Leverage Test" is defined in Section 9.2(a).
"LIBOR Advance" means an Advance which bears interest at a LIBOR Rate.
"LIBOR Base Rate" means, with respect to a LIBOR Advance for the
relevant Interest Period, the rate of interest determined by Agent, based on
Telerate System reports or other source as may be selected by Agent, to be the
"London Interbank Offered Rate" at which deposits in United States dollars are
offered by major banks in London, England, two (2) Business Days before the
first day of the respective Interest Period, in the approximate amount of the
relevant LIBOR Advance and having a maturity approximately equal to such LIBOR
Advance's Interest Period.
"LIBOR Loan" means a Loan which bears interest at a LIBOR Rate.
"LIBOR Rate" means, with respect to a LIBOR Advance for the relevant
Interest Period, the sum of (i) the quotient of (a) the LIBOR Base Rate
applicable to such Interest Period, divided by (b) one minus the Reserve
Requirement (expressed as a decimal) applicable to such Interest Period, plus
(ii) the Applicable LIBOR Rate Margin. The LIBOR Rate shall be rounded to the
next higher multiple of 1/16 of 1% if the rate is not such a multiple.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment (the purpose of which is to grant a security
interest), deposit arrangement (the purpose of which is to grant a security
interest), encumbrance or other security agreement or arrangement of any kind or
nature whatsoever the purpose of which is to grant a security interest, whether
or not filed or recorded or otherwise perfected (including the interest of a
vendor or lessor under any conditional sale, any Capitalized Lease or any lease
deemed to constitute a security interest, any other title retention agreement).
"Loan" means, with respect to a Bank, such Bank's portion of any
Advance. For purposes of a Swing Line Advance, Bank One's portion of such
Advance is 100%.
"Loan Documents" means this Agreement, the Notes and any Reimbursement
Agreements, and if applicable, the Deeds of Trust and Environmental Agreements.
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"Majority Banks" means Banks in the aggregate having more than fifty
percent (50%) of the Aggregate Commitment, or if the Aggregate Commitment has
been terminated, Banks in the aggregate holding more than fifty percent (50%) of
the aggregate unpaid principal amount of the outstanding Advances; provided,
however, if Agent and any Lending Installation(s) of Agent have in the aggregate
fifty percent (50%) or more of the Aggregate Commitment or hold fifty percent
(50%) or more of the aggregate unpaid principal amount of the outstanding
Advances, as applicable, then "Majority Banks" shall mean all Banks other than
Agent and its Lending Installation(s).
"Material Adverse Effect" means a material adverse effect, based on
commercially reasonable standards, on (i) the business, Property, condition
(financial or otherwise), or results of operations of Borrowers and Guarantor,
taken as a whole, (ii) the ability of Guarantor to perform its obligations under
the Guaranty, or (iii) the validity or enforceability under applicable law of
any of the Loan Documents or the Guaranty or the rights or remedies of Agent,
Banks or any Issuing Bank thereunder (other than as to clause (iii), a Material
Adverse Effect resulting solely from the acts or omissions of Agent and/or any
Bank(s)). Items disclosed by Guarantor in its form 10-Q and form 10-K or any
other filings with the Securities and Exchange Commission shall not be deemed to
have a Material Adverse Effect solely because of such disclosure, and the
existence and content of such disclosure shall not be prima facia evidence of a
Material Adverse Effect.
"Model Unit" means a Housing Unit constructed initially for inspection
by prospective purchasers that is not intended to be sold until all or
substantially all other Housing Units in the applicable subdivision are sold.
"Modified Secured Conversion Period" means the period commencing on
the first day of the first month following the second consecutive fiscal quarter
in which Borrowers have breached a Financial Covenant Test and expiring on the
Facility Termination Date, all as more specifically described in Section 2.22,
during the term of which, among other things, (i) the Aggregate Commitment is
reduced from time to time, and (ii) Borrowers shall provide to Banks Collateral
for the Obligations.
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement as described in Section 3(37) of
ERISA to which Guarantor, any Borrower or any member of the Controlled Group is
a party to which more than one employer is obligated to make contributions.
"Net Worth" is defined in Section 9.3(a).
"Non-Recourse Indebtedness" with respect to any Person means
Indebtedness of such Person (i) for which the sole legal recourse for collection
of principal and interest on such Indebtedness is against the specific property
identified in the instruments evidencing or securing such Indebtedness and such
property was acquired with the proceeds of such Indebtedness or such
Indebtedness was incurred within ninety (90) days after the acquisition of such
property and
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for which no other assets of such Person may be realized upon in collection of
principal or interest on such Indebtedness, or (ii) that refinances Indebtedness
described in clause (i) and for which the recourse is limited to the same extent
described in clause (i).
"Note" means a promissory note, in substantially the form of Exhibit E
hereto, duly executed by Borrowers and payable to the order of a Bank in the
amount of its Commitment, including any amendment, modification, renewal or
replacement of such promissory note.
"Notice of Assignment" is defined in Section 15.3.2.
"Obligations" means all unpaid principal of and accrued and unpaid
interest on the Notes, the Facility Letter of Credit Obligations, all accrued
and unpaid fees and all expenses, reimbursements, indemnities and other
obligations of a Borrower to Banks or to any Bank, Agent, any Issuing Bank or
any indemnified party hereunder arising under the Loan Documents.
"Participants" is defined in Section 15.2.1.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Permitted Liens" means, as to each Borrower, any of the following:
(i) Liens for taxes, assessments or governmental charges or
levies on such Borrower's Property if the same (A) shall not at the
time be delinquent or thereafter can be paid without penalty, or (B)
are being contested in good faith and by appropriate proceedings and
for which adequate reserves shall have been established on such
Borrower's or Guarantor's books in accordance with Agreement Accounting
Principles.
(ii) Liens imposed by law, such as carriers', warehousemen's,
mechanics' and materialmen's Liens and other similar Liens arising in
the ordinary course of business with respect to amounts that either (A)
are not yet delinquent, or (B) are delinquent but are being contested
in good faith by appropriate proceedings and for which adequate
reserves shall have been established on such Borrower's or Guarantor's
books in accordance with Agreement Accounting Principles.
(iii) Utility easements, rights of way, zoning restrictions,
covenants, reservations, and such other burdens, encumbrances or
charges against real property, or other minor irregularities of title,
as are of a nature generally existing with respect to properties of a
similar character and which do not in any material way interfere with
the use thereof or the sale thereof in the ordinary course of business
of any Borrower.
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(iv) Easements, dedications, assessment district or similar
Liens in connection with municipal financing and other similar
encumbrances or charges, in each case reasonably necessary or
appropriate for the development of real property of such Borrower, and
which are granted in the ordinary course of the business of such
Borrower, and which in the aggregate do not materially burden or impair
the fair market value or use of such real property (or the project to
which it is related) for the purposes for which it is or may reasonably
be expected to be held.
(v) Any option or right of first refusal to purchase real
property granted to the master developer or the seller of real property
that arises as a result of the non-use or non-development of such real
property by the applicable Borrower.
(vi) Any agreement or contract to participate in the income or
revenue or to pay lot premiums, in each case derived from the sale of
Housing Units and granted in the ordinary course of business to the
seller of the real property upon which the Housing Unit is constructed.
"Person" means any natural person, corporation, firm, joint venture,
partnership, limited liability company, association, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.
"Plan" means an employee pension benefit plan which is covered by Title
IV of ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which Guarantor, any Borrower or any member of the Controlled Group
may have any liability.
"Presold Unit" means a Housing Unit owned by a Borrower that is subject
to a bona fide written agreement between such Borrower and a third Person
purchaser for sale in the ordinary course of such Borrower's business of such
Housing Unit and the related lot, accompanied by a cash earnest money deposit or
down payment in an amount that is customary, and subject only to ordinary and
customary contingencies to the purchaser's obligation to buy the Housing Unit
and related Lot.
"Prime Rate" means the rate per annum most recently publicly announced
by Bank One, or its successors, in Phoenix, Arizona, as its "prime rate," as in
effect from time to time. The Prime Rate will change on each day the "prime
rate" changes. The "prime rate" is not necessarily the best or lowest rate
offered by said bank, and said bank my lend to its customers at rates that are
at, above, or below its "prime rate."
"Property" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other assets owned,
leased or operated by such Person.
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"Public Indebtedness" means Indebtedness evidenced by notes,
debentures, or other similar instruments issued after the date of this Agreement
pursuant to either (i) a registered public offering or (ii) a private placement
of such instruments in accordance with an exemption from registration (other
than Indebtedness evidenced by the Senior Notes, the Convertible Subordinated
Notes, or the 6.6421% Subordinated Exchangeable Variable Rate Notes of Guarantor
due April 1, 1998 in the existing amount of $10,230,000, or any Refinancing
Indebtedness with respect to any of the foregoing) under the Securities Act of
1933 and/or the Securities Exchange Act of 1934 or similar law.
"Purchasers" is defined in Section 15.3.1.
"Rate Hedging Obligations" of a Person means any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts and warrants, and (ii) any and all
cancellations, buy backs, reversals, terminations or assignments of any of the
foregoing.
"Receivables" means the net proceeds payable to, but not yet received
by, any Borrower following a Housing Unit Closing.
"Refinanced Loans" means, severally and collectively, the loans listed
on Schedule "1" hereto.
"Refinancing Indebtedness" means Indebtedness that refunds, refinances
or extends any Indebtedness described in Schedule "8.2" hereto (or that refunds,
refinances or extends any refund, refinancing or extension of such
Indebtedness), but only to the extent that
(i) the Refinancing Indebtedness is subordinated to or pari
passu with the Obligations (or Guarantor's obligations under the
Guaranty, as applicable) to the same extent as the Indebtedness being
refunded, refinanced or extended,
(ii) the Refinancing Indebtedness is scheduled to mature
no earlier than the then current maturity date of such Indebtedness,
(iii) such Refinancing Indebtedness is in an aggregate amount
that is equal to or less than the sum of the aggregate amount then
outstanding plus all amounts committed but undisbursed under the
Indebtedness being refunded, refinanced or extended,
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(iv) the Person or Persons liable for the payment of such
Refinancing Indebtedness are the same Person or Persons (or
successor(s) thereto) that were liable for the Indebtedness being
refunded, refinanced or extended when such Indebtedness was initially
incurred, and
(v) such Refinancing Indebtedness is incurred within 120 days
after the Indebtedness being refunded, refinanced or extended is so
refunded, refinanced or extended.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto
or other regulation or official interpretation of said Board of Governors
relating to reserve requirements applicable to member banks of the Federal
Reserve System.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto
or other regulation or official interpretation of said Board of Governors
relating to the extension of credit by banks for the purpose of purchasing or
carrying margin stocks applicable to member banks of the Federal Reserve System.
"Related Business" means any line or lines of business or business
activity reasonably related to (i) the home building business, or (ii) a
substantial business segment of Guarantor, Borrowers, and their Subsidiaries on
the date hereof, all as reasonably determined by Agent.
"Rejecting Bank" is defined in Section 2.21(b).
"Reimbursement Agreement" means, with respect to a Facility Letter of
Credit, such form of application therefor and form of reimbursement agreement
therefor (whether in a single or several documents, taken together) as an
Issuing Bank may employ in the ordinary course of business for its own account,
with such modifications thereto as may be agreed upon by such Issuing Bank and a
Borrower and as are not materially adverse (in the reasonable judgment of such
Issuing Bank and Agent) to the interests of Banks; provided, however, in the
event of any conflict between the terms of any Reimbursement Agreement and this
Agreement, the terms of this Agreement shall control.
"Replacement Bank" is defined in Section 2.23.
"Reportable Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such Section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within thirty (30)
days of the occurrence of such event; provided, however, that a failure to meet
the minimum funding standard of Section 412 of the Code and of Section 302 of
ERISA shall be a Reportable Event regardless of the issuance of any such waiver
of the
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notice requirement in accordance with either Section 4043(a) of ERISA or waiver
of the funding requirements under Section 412(d) of the Code.
"Required Banks" means at least three (3) Banks in the aggregate having
at least 66-2/3% of the Aggregate Commitment or, if the Aggregate Commitment has
been terminated, at least three (3) Banks in the aggregate holding at least
66-2/3% of the aggregate unpaid principal amount of the outstanding Advances.
Solely for purposes of this definition, Agent and all of its Lending
Installations that are Banks shall be deemed to be a single Bank.
"Reserve Requirement" means, with respect to an Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities (as defined therein).
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Secured Conversion Period" means the 24-month Conversion Period
described in Section 2.22 during the term of which, among other things, (i) the
Aggregate Commitment is reduced from time to time, and (ii) Borrowers shall
provide to Banks Collateral for the Obligations.
"Senior Debt" means the Senior Notes or, if the Senior Notes are
refinanced, the Refinancing Indebtedness with respect thereto.
"Senior Debt Rating" means the publicly announced ratings by any two
(2) of the following nationally recognized rating agencies: Moody's Investors
Service, Inc., Standard & Poor's Corporation, Fitch's Investment Service, and
Duff & Phelps Credit Rating Co., as selected by Borrowers, on Guarantor's Senior
Debt; provided, however, (i) except as provided in clause (ii), if the two
ratings are not identical, the Senior Debt Rating shall be the lower of the two
ratings, (ii) if more than one rating gradation exists between the two ratings,
the Senior Debt Rating shall be the rating that is one gradation below the
higher of the two ratings, and (iii) if only one rating is announced, the Senior
Debt Rating shall be the rating that is one gradation below the announced
rating. The Senior Debt Rating shall change if and when such rating(s) change.
"Senior Notes" means the 11-1/8% Senior Notes due 2003 of Guarantor
issued in the original principal amount of $190,000,000 pursuant to the
Indenture.
"Single Employer Plan" means a Plan maintained by Guarantor, any
Borrower or any member of the Controlled Group for employees of Guarantor, any
Borrower or any member of the Controlled Group.
"Spec Unit" means any Housing Unit owned by any Borrower that is not a
Presold Unit or a Model Unit.
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"Subordinated Indebtedness" means any Indebtedness of Borrower the
payment of which is subordinated to payment of the Obligations to the reasonable
satisfaction of Agent, including Borrowers' Indebtedness under the guarantees of
the Senior Notes. Subordinated Indebtedness shall specifically not include
Indebtedness of any Borrower to Guarantor.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power for the election of the
board of directors of which shall at the time be beneficially owned (within the
meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended)
directly or indirectly, by such Person or by one or more of its Subsidiaries or
by such Person and one or more of its Subsidiaries, or (ii) any partnership,
association, joint venture, limited liability company or similar business
organization more than 50% of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled. Unless otherwise
expressly provided, all references herein to a "Subsidiary" shall mean a direct
or indirect Subsidiary of Guarantor.
"Substantial Portion" means, with respect to the Property of Borrowers
and Guarantor, taken as a whole, Property which represents more than 10% of
Consolidated Tangible Net Worth, as would be shown in the consolidated financial
statements of Guarantor as of the beginning of the fiscal quarter in which such
determination is made.
"Swing Line Advances" has the meaning set forth in Section 2.19.
"Swing Line Advance Maturity Date" means that day that is the second
Business Day following the date in which a Swing Line Advance was funded by Bank
One.
"Transferee" is defined in Section 15.4.
"Type" means, with respect to any Advance, its nature as a Floating
Rate Advance or LIBOR Advance.
"Unfunded Liabilities" means the amount (if any) by which the present
value of all vested nonforfeitable benefits under all Single Employer Plans
exceeds the fair market value of the assets of such Plans allocable to such
benefits, all determined as of the then most recent valuation date for such
Plans, using the actuarial methods and assumptions utilized in the actuarial
report for each such Plan as of such date.
"Unmatured Event of Default" means an event which but for the lapse of
time or the giving of notice, or both, would constitute an Event of Default.
"Unsecured Conversion Period" means the 12-month Conversion Period
described in Section 2.22 during the term of which, among other things, (i) the
Aggregate Commitment shall be reduced from time to time, and (ii) Borrowers
shall not be required to provide to Banks Collateral for the Obligations.
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"Unused Commitment" means, at any date with respect to any Bank, the
amount (if any) by which such Bank's Commitment exceeds the sum of (i) the
outstanding principal balance of such Bank's Loans as of such date, plus (ii)
such Bank's ratable share (determined in accordance with Section 4.6) of the
outstanding amount of the Facility Letters of Credit.
"Unused Commitment Fee" means a fee payable by Borrowers to each Bank
with respect to such Bank's Unused Commitment, calculated in accordance with
Section 2.5(b).
"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of
the outstanding voting securities (or the election of the board of directors) of
which shall at the time be beneficially owned (within the meaning of Rule 13d-3
of the Securities Exchange Act of 1934, as amended) directly or indirectly, by
such Person or one or more Wholly-Owned Subsidiaries of such Person, or by such
Person and one or more Wholly-Owned Subsidiaries of such Person, or (ii) any
partnership, association, joint venture, limited liability company or similar
business organization 100% of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
ARTICLE II
THE CREDITS
2.1 Commitment. From and including the date of this Agreement and prior
to the Facility Termination Date, each Bank severally agrees, on the terms and
conditions set forth in this Agreement, to make Loans and to issue Facility
Letters of Credit to Borrowers from time to time in amounts not to exceed in the
aggregate at any one time outstanding the amount of its Commitment; provided,
however, that (i) a Bank shall not be required to make any Loan or Loans in
excess of the amount of such Bank's then Available Credit, and (ii) the
aggregate principal amount of all Advances plus the aggregate amount of the
Facility Letter of Credit Obligations outstanding at any time and from time to
time to any individual Borrower shall not exceed the Borrowing Base for such
Borrower determined as of the most recent Inventory Valuation Date, and (iii)
the aggregate principal amount of all Advances plus the aggregate amount of the
Facility Letter of Credit Obligations outstanding with respect to all Borrowers
shall not exceed the aggregate of all Borrowing Bases for all Borrowers
determined as of the most recent Inventory Valuation Date. Subject to the terms
of this Agreement, each Borrower may borrow, repay and reborrow at any time
prior to the Facility Termination Date. The Commitments to lend hereunder shall
expire on the Facility Termination Date.
2.2 Required Payments. Any outstanding Advances and all other
unpaid Obligations shall be paid in full by Borrowers on the Facility
Termination Date. Additionally, if for any reason at any time either (i) the
principal amount of all Advances plus the aggregate amount of the Facility
Letter of Credit Obligations outstanding with respect to all Borrowers exceeds
the
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Aggregate Commitment, or (ii) the aggregate principal amount of all Advances
plus the aggregate amount of the Facility Letter of Credit Obligations
outstanding to any individual Borrower exceeds the Borrowing Base for such
Borrower determined as of the most recent Inventory Valuation Date, or (iii) the
aggregate principal amount of all Advances plus the aggregate amount of the
Facility Letter of Credit Obligations outstanding with respect to all Borrowers
exceeds the aggregate of all Borrowing Bases for all Borrowers determined as of
the most recent Inventory Valuation Date, then:
(a) Borrowers or the applicable Borrower shall, within five
(5) days after notice from Agent, make a payment to Agent for the
benefit of Banks from the funds of the applicable Borrower or Borrowers
in an amount equal to such excess principal amount; and
(b) Until Borrowers or the applicable Borrower shall have made
the payment to Agent described in subparagraph (a) above, Borrowers
shall not, directly or indirectly, declare, make or pay, or incur any
liability to make or pay, or cause or permit to be declared, made or
paid, any Dividend.
2.3 Ratable Loans. Each Advance hereunder, including without
limitation, any Advance made by the Banks pursuant to Section 2.19(d), but
excluding Swing Line Advances, shall consist of Loans made by the several Banks
ratably in proportion to the ratio that their respective Commitments bear to the
Aggregate Commitment. Swing Line Advances shall consist of Loans made by Bank
One.
2.4 Types of Advances. The Advances may be Floating Rate Advances or
LIBOR Advances, or a combination thereof, selected by Borrowers in accordance
with Sections 2.8 and 2.9.
2.5 Fees; Reduction in Commitment.
(a) Commitment Fee. Borrowers agree to pay to Agent, for the
account of each Bank, a commitment fee, at a rate equal to the
applicable rate set forth below, determined with respect to the amount
of such Bank's initial Commitment notified to Agent during syndication
and multiplied by the amount of such Bank's actual Commitment:
Commitment Fee (as a percentage
Bank's Initial Commitment of Bank's Commitment)
$30,000,000 or more .33%
Less than $30,000,000 .22%
The commitment fee shall be paid by Borrowers to Agent in advance,
contemporaneously with the execution of this Agreement, and shall be
non-
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refundable in any event. Notwithstanding anything herein to the
contrary, each Borrower shall be responsible to pay a portion of the
commitment fee calculated as follows: the total commitment fee divided
by the number of Borrowers equals the portion of the commitment fee to
be paid by each Borrower.
(b) Unused Commitment Fee. Borrowers agree to pay to Agent for
the account of each Bank an Unused Commitment Fee, at a rate per annum
equal to the Applicable Unused Commitment Rate, calculated on the basis
of a 365-day year in accordance with this Section from the date hereof
and to and including the Facility Termination Date, and payable
quarterly in arrears on the first day of each January, April, July and
October hereafter and on the Facility Termination Date. For each
quarter (or portion thereof), the Unused Commitment Fee shall be equal
to (A) such Bank's average daily Commitment during such quarter (or
portion thereof) minus (B) such Bank's "average daily outstandings" for
the quarter (or portion thereof) with respect to which the Unused
Commitment Fee is being computed, with the resulting number multiplied
by (C) the Applicable Unused Commitment Rate, and the final product
divided by (D) four (4).
As used herein, "average daily outstandings" means the sum of
(i) the outstanding principal balance of such Bank's Loans (including,
with respect to Bank One only, the outstanding principal balance of
Swing Line Advances) plus (ii) such Bank's ratable share (determined in
accordance with Section 4.5) of the outstanding amount of the Facility
Letters of Credit, all calculated for each day during the quarter (or
portion thereof) for which the fee is being computed, divided by the
number of days in that quarter (or portion thereof). If the Unused
Commitment Fee is being computed for less than a full quarter, the
number used in clause (D) above shall be computed on a daily basis for
the number of days for which the fee is being computed. The Unused
Commitment Fee shall continue to be payable during the Conversion
Period.
All accrued Unused Commitment Fees shall be payable on the
effective date of any termination of the obligations of Banks to make
Loans hereunder. Notwithstanding anything herein to the contrary, each
Borrower shall be responsible to pay a portion of the Unused Commitment
Fee calculated as follows: the total Unused Commitment Fee divided by
the number of Borrowers equals the portion of the Unused Commitment Fee
to be paid by each Borrower.
(c) Extension Fee. If the Facility Maturity Date is extended
pursuant to the provisions of Section 2.21, then Borrowers shall pay to
Agent, for the account of each Bank an extension fee for each such
extension, at a rate equal to the applicable rate set forth below
determined with respect to the amount of such Bank's initial Commitment
notified to Agent during syndication and multiplied by the amount of
such Bank's actual Commitment:
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Extension Fee (as a percentage
Bank's Initial Commitment of Bank's Commitment)
$30,000,000 or more .15%
Less than $30,000,000 .10%
The extension fee shall be paid by Borrowers to Agent in advance, in
the manner provided in Section 2.21(d). The extension fee shall be
non-refundable in any event. Notwithstanding anything herein to the
contrary, each Borrower shall be responsible to pay a portion of the
extension fee calculated as follows: the total extension fee divided by
the number of Borrowers equals the portion of the extension fee to be
paid by each Borrower.
(d) Reductions in Aggregate Commitment. Borrowers may
permanently reduce the Aggregate Commitment in whole, or in part
ratably among Banks (in proportion to the ratio that their respective
Commitment bear to the Aggregate Commitment) in integral multiples of
$5,000,000 at any time or from time to time, upon at least three (3)
Business Days' written notice to Agent, which notice shall specify the
amount of any such reduction; provided, however, that the amount of the
Aggregate Commitment may not be reduced below the sum of (i) the
aggregate principal amount of the outstanding Advances plus (ii) the
Facility Letter of Credit Obligations.
2.6 Minimum Amount of Each Advance. Except with respect to Swing Line
Advances, each Advance shall be in the minimum amount of $2,000,000 (and in
multiples of $1,000,000 if in excess thereof). Borrowers shall be entitled to
aggregate, on a single day, the amount of all Advances requested by Borrowers
solely for purposes of satisfying the minimum Advance amount set forth in this
Section 2.6. Any Advances that are so aggregated shall be deemed to be a single
Advance for purposes of complying with the provisions of this Agreement relating
to requesting, electing, repaying, and converting LIBOR Advances, and all
Borrowers requesting, electing, repaying and converting such Advances shall be
considered a single "Borrower" for purposes thereof and in computing the
outstanding number of LIBOR Advances.
2.7 Optional Principal Payments.
(a) Repayment of Advances. Any Borrower may at any time or
from time to time pay, without penalty or premium, all Floating Rate
Advances outstanding with respect to such Borrower, or, in a minimum
aggregate amount of $1,000,000 or any integral multiple of $500,000 in
excess thereof (except with respect to Swing Line Advances), any
portion of the outstanding Floating Rate Advances upon one (1) Business
Day's prior notice to Agent. Borrowers shall be entitled to aggregate,
on a single day, the amount of all repayments made by Borrowers solely
for purposes of satisfying the minimum repayment amount set forth in
this Section 2.7. Any Advances that are so aggregated shall be deemed
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to be a single Advance for purposes of complying with the provisions of
this Agreement relating to requesting, electing, repaying, and
converting LIBOR Advances, and all Borrowers requesting, electing,
repaying and converting such Advances shall be considered a single
"Borrower" for purposes thereof. Any Borrower may, (i) upon one (1)
Business Days' prior notice to Agent, pay, without penalty or premium,
any LIBOR Advance outstanding with respect to such Borrower in full on
the last day of the Interest Period for such LIBOR Advance, and (ii)
upon three (3) Business Days' prior notice to Agent, prepay any LIBOR
Advance outstanding with respect to such Borrower in full prior to the
last day of the Interest Period for such LIBOR Advance, provided that
such Borrower shall also pay at the time of such prepayment all amounts
payable with respect thereto pursuant to Section 3.4 hereof.
(b) Several Liability. Except as otherwise indicated in
Section 12.7 of this Agreement, the obligations of Borrowers under this
Agreement, the Notes and the other Loan Documents shall not be the
joint obligations of Borrowers, but shall instead be the several
obligations of each Borrower. Each Borrower shall only be obligated to
pay principal, interest, and other amounts that relate to Advances made
to such Borrower, or that relate to Property owned by such Borrower, or
that relate to such Borrower's obligations under this Agreement, the
Notes and the other Loan Documents.
2.8 Method of Selecting Types and Interest Periods for New Advances.
Any Borrower requesting an Advance shall select the Type of Advance and, in the
case of each LIBOR Advance, the Interest Period applicable to each Advance from
time to time. Such Borrower shall give Agent irrevocable notice (a "Borrowing
Notice") in the form of Exhibit I not later than (a) 10:00 a.m., Phoenix time,
one (1) Business Day before the Borrowing Date of each Floating Rate Advance
(except a Swing Line Advance), (b) 10:00 a.m., Phoenix time, three (3) Business
Days before the Borrowing Date of each LIBOR Advance, and (c) noon, Phoenix
time, on the Borrowing Date of each Swing Line Advance, specifying:
(i) the Borrower requesting the Advance,
(ii) the Borrowing Date, which shall be a Business Day,
of such Advance,
(iii) whether the Advance is a Swing Line Advance,
(iv) the aggregate amount of such Advance,
(v) the Type of Advance selected; provided, however, that the
aggregate number of LIBOR Advances of all Borrowers outstanding at any
one time shall not exceed five (5) (for purposes of this clause (v),
Borrowers shall be entitled to aggregate, on a single day, the number
of LIBOR Advances
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outstanding pursuant to the provisions of Sections 2.6 and 2.7), and
further provided that any Swing Line Advance shall be a Floating Rate
Advance, and
(vi) in the case of each LIBOR Advance, the Interest
Period applicable thereto.
Not later than 11:00 a.m., Phoenix time, on each Borrowing Date, each Bank shall
make available its Loan or Loans, in funds immediately available in Phoenix to
Agent at its address specified pursuant to Article XVI. Agent will make the
funds so received from Banks available to the applicable Borrower at Agent's
aforesaid address. Disbursements of all Advances (other than Swing Line
Advances) to any single Borrower may be made not more frequently than one time
per Business Day. Disbursements of all Swing Line Advances to any single
Borrower may be made not more frequently than one time per Business Day, or on a
more frequent basis as Bank One may agree. Interest on all Advances shall be
calculated on the basis of a 360 day year, based on the actual days elapsed.
2.9 Conversion and Continuation of Outstanding Advances. Floating Rate
Advances shall continue as Floating Rate Advances unless and until such Floating
Rate Advances are converted into LIBOR Advances. Each LIBOR Advance shall
continue as a LIBOR Advance until the end of the then applicable Interest Period
therefor, at which time such LIBOR Advance shall be automatically converted into
a Floating Rate Advance unless the applicable Borrower(s) shall have given Agent
a Conversion/Continuation Notice requesting that, at the end of such Interest
Period, such LIBOR Advance either continues as a LIBOR Advance for the same or
another Interest Period or be repaid. Subject to the terms of Section 2.6, the
applicable Borrower may elect from time to time to convert all or any part of an
Advance of any Type into any other Type or Types of Advances; provided, however,
that any conversion of any LIBOR Advance may be made on, and only on, the last
day of the Interest Period applicable thereto, and further provided that the
aggregate number of LIBOR Advances of all Borrowers outstanding at any one time
shall not exceed five (5).
The applicable Borrower(s) shall give Agent irrevocable notice (a
"Conversion/Continuation Notice") of each conversion of an Advance or
continuation of a LIBOR Advance not later than 10:00 a.m., Phoenix time, at
least one (1) Business Day, in the case of a conversion into a Floating Rate
Advance, or three (3) Business Days, in the case of a conversion into or
continuation of a LIBOR Advance, prior to the date of the requested conversion
or continuation, specifying:
(i) the Borrower(s) requesting the conversion or
continuation;
(ii) the requested date which shall be a Business Day, of
such conversion or continuation;
(iii) the aggregate amount and Type of the Advance which is
to be converted or continued; and
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(iv) the amount and Type(s) of Advance(s) into which such
Advance is to be converted or continued and, in the case of a
conversion into or continuation of a LIBOR Advance, the Interest Period
applicable thereto.
2.10 Changes in Interest Rate, etc. Each Floating Rate Advance shall
bear interest on the outstanding principal amount thereof, for each day from and
including the date such Advance is made or is converted from a LIBOR Advance
into a Floating Rate Advance pursuant to Section 2.9 to but excluding the date
it becomes due or is converted into a LIBOR Advance pursuant to Section 2.9
hereof, at a rate per annum equal to the Floating Rate for such day. Changes in
the rate of interest on any Advance maintained as a Floating Rate Advance will
take effect simultaneously with each change in the Floating Rate or in the
Applicable Floating Rate Margin. Each LIBOR Advance shall bear interest from and
including the first day of the Interest Period applicable thereto to (but not
including) the last day of such Interest Period at the interest rate determined
as applicable to such LIBOR Advance. No Interest Period may end after the
Facility Termination Date.
2.11 Determination of Applicable Margins and Applicable Unused
Commitment Rate.
(a) Facility Rating. The Applicable Margins and the Applicable
Unused Commitment Rate shall be determined by reference to the Facility
Rating or, if no Facility Rating exists, by reference to the Senior
Debt Rating, in accordance with the following table:
Facility or Applicable Applicable
Senior Debt LIBOR Rate Floating Rate Applicable Unused
Rating Margin (%) Margin (%) Commitment Rate (%)
BBB-/Baa3 or 1.00 0 0.250
higher
BB+/Ba1 1.25 0 0.300
BB/Ba2 1.50 0 0.350
BB-/Ba3 1.75 0.125 0.375
B+/B1 2.00 0.250 0.375
Lower or no 2.10 0.250 0.425
Rating
(b) Adjustment of Margins. The Applicable Floating Rate Margin
and the Applicable Unused Commitment Rate shall be adjusted, as
applicable from time to time, effective on the first Business Day after
any change in the Facility Rating or the Senior Debt Rating, as
applicable. The applicable LIBOR Rate Margin in respect of any LIBOR
Advance shall be adjusted, as applicable from time to time, effective
on the first day of the Interest Period for any LIBOR Advance after any
change in the Facility Rating or the Senior Debt Rating, as applicable.
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(c) Changes to Ratings. Notwithstanding the foregoing, (i) if
either of the two (2) rating agencies selected by Borrowers for
purposes of calculating the foregoing amounts shall not have in effect
a Facility Rating or a Senior Debt Rating for a reason related to the
creditworthiness of Borrowers or Guarantor or to any act or failure to
act on the part of Borrowers or Guarantor, then the Applicable Margins
and the Applicable Unused Commitment Rate shall be determined by
reference to the last category listed above, and (ii) if the rating
system used by either such rating agency shall change, or if neither
rating agency shall have in effect a Senior Debt Rating nor a Facility
Rating and clause (i) above shall not be applicable, then Borrowers and
Banks, acting through Agent, shall negotiate in good faith to amend the
references to specific ratings in this definition to reflect such
changed rating system or the non-availability of ratings from such
rating agencies.
2.12 Rates Applicable After Event of Default. Notwithstanding anything
to the contrary contained in Section 2.8, 2.9 or 2.10, during the continuance of
an Event of Default the Required Banks may, at their option, by notice to
Borrowers (which notice may be revoked at the option of the Required Banks
notwithstanding any provision of Section 11.2 requiring unanimous consent of
Banks to changes in interest rates), declare that no Advance may be made as,
converted into or continued as a LIBOR Advance. Notwithstanding anything to the
contrary contained in Section 2.8, 2.9 or 2.10, during the continuance of an
Unmatured Event of Default the Required Banks may, at their option, by notice to
Borrowers (which notice may be revoked at the option of the Required Banks
notwithstanding any provision of Section 11.2 requiring unanimous consent of
Banks to changes in interest rates), declare that no Advance may be made as or
converted into a LIBOR Advance. During the continuance of an Event of Default,
the Required Banks may, at their option, by notice to a Borrower (which notice
may be revoked at the option of the Required Banks notwithstanding any provision
of Section 11.2 requiring unanimous consent of Banks to changes in interest
rates), declare that (i) each LIBOR Advance shall bear interest for the
remainder of the applicable Interest Period at the rate otherwise applicable to
such Interest Period plus 2% per annum and (ii) each Floating Rate Advance shall
bear interest at a rate per annum equal to the Floating Rate otherwise
applicable to the Floating Rate Advance plus 2% per annum.
2.13 Method of Payment. All payments of the Obligations hereunder shall
be made, without setoff, deduction, or counterclaim, in immediately available
funds to Agent at Agent's address specified pursuant to Article XVI, or at any
other Lending Installation of Agent specified in writing by Agent to a Borrower,
by noon (local time at the place of receipt) on the date when due (or with
respect to Swing Line Advances, in accordance with Section 2.19), and, except
for Swing Line Advances shall be applied ratably by Agent among Banks, in
proportion to the ratio that each Bank's Commitment bears to the Aggregate
Commitment. Each payment delivered to Agent for the account of any Bank shall be
delivered promptly by Agent to such Bank in the same type of funds that Agent
received at its address specified pursuant to Article XVI or at any Lending
Installation specified in a notice received by Agent from such Bank. If Agent
receives, for the account of a Bank, a payment from a Borrower and fails to
remit such payment to the
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Bank on the Business Day such payment is received (if received by noon, Phoenix
time, by Agent) or on the next Business Day (if received after noon, Phoenix
time, by Agent), Agent shall pay to such Bank interest on such payment at a rate
per annum equal to the Federal Funds Effective Rate for each day for which such
payment is so delayed.
2.14 Notes; Telephonic Notices. Each Bank is hereby authorized to
record the principal amount of each of its Loans and each repayment on the
schedule attached to its Note; provided, however, that the failure to so record
shall not affect Borrowers' obligations under such Note. Each Borrower hereby
authorizes Agent to extend, convert or continue Advances, effect selections of
Types of Advances and to transfer funds based on telephonic notices made by any
person or persons who Agent in good faith believes to be acting on behalf of
such Borrower. Each Borrower agrees to deliver promptly to Agent a written
confirmation, if such confirmation is requested by Agent, of each telephonic
notice signed by an Authorized Officer of such Borrower. If the written
confirmation differs in any material respect from the action taken by Agent, the
records of Agent shall govern absent manifest error.
2.15 Interest Payment Dates; Interest Basis. Interest accrued on each
Advance shall be payable on the first day of each calendar month, commencing
with the first such date to occur after the date hereof, and on any date on
which the Advance is prepaid, whether due to acceleration or otherwise. Interest
shall be payable for the day an Advance is made but not for the day of any
payment on the amount paid if payment is received prior to noon (local time at
the place of receipt). If any payment of principal of or interest on an Advance
shall become due on a day which is not a Business Day, such payment shall be
made on the next succeeding Business Day, and such extension of time shall be
included in computing interest in connection with such payment.
2.16 Notification of Advances, Interest Rates, Prepayments and
Commitment Reductions. Promptly after receipt thereof, Agent will notify each
Bank of the contents of each Aggregate Commitment reduction notice, Borrowing
Notice, Conversion/Continuation Notice, and repayment notice received by it
hereunder. Agent will notify each Bank of the interest rate applicable to each
LIBOR Advance promptly upon determination of such interest rate and will give
each Bank prompt notice of each change in the Floating Rate, the applicable
Margin or the Applicable Unused Commitment Rate.
2.17 Lending Installations. Each Bank may book its Loans at any Lending
Installation selected by such Bank and may change its Lending Installation from
time to time. All terms of this Agreement shall apply to any such Lending
Installation and the Notes shall be deemed held by each Bank for the benefit of
such Lending Installation. Each Bank may, by written or telex notice to Agent
and Borrowers, designate a Lending Installation through which Loans will be made
by it and for whose account Loan payments are to be made.
2.18 Non-Receipt of Funds by Agent. Unless the applicable Borrower(s)
or a Bank, as the case may be, notifies Agent prior to the date on which such
payment is due to Agent of (i) in the case of a Bank, the proceeds of a Loan or
(ii) in the case of a Borrower, a payment
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of principal, interest, fees or other amounts due under the Loan Documents to
Agent for the account of Banks, that it does not intend to make such payment,
Agent may assume that such payment has been made. Agent may, but shall not be
obligated to, make the amount of such payment available to the intended
recipient in reliance upon such assumption. If the applicable Borrower(s) or
such Bank, as the case may be, has not in fact made such payment to Agent, the
recipient of such payment shall, on demand by Agent, repay to Agent the amount
so made available together with interest thereon in respect of each day during
the period commencing on the date such amount was so made available by Agent
until the date Agent recovers such amount at a rate per annum equal to (a) in
the case of payment by a Bank, the Federal Funds Effective Rate for such day or
(b) in the case of payment by a Borrower, the interest rate applicable to the
relevant Advance.
2.19 Swing Line. Notwithstanding the minimum amount of an Advance that
may be requested and the minimum amount of an Advance repaid under this
Agreement, Banks desire to fund Advances for Borrowers in amounts that may be
less than the minimum Advance amounts required under Section 2.6, and Banks
desire to permit Borrowers to repay Advances in amounts that may be less than
the minimum repayment amounts required under Section 2.7. Such Advances made
pursuant to this Section 2.19 shall be deemed to be Advances for purposes of
this Agreement and are referred to herein as "Swing Line Advances." Swing Line
Advances shall be requested, advanced, and repaid in accordance with the
provisions and limitations of this Agreement relating to all Advances, subject
to the following:
(a) Aggregate Limit. The aggregate amount of all
outstanding Swing Line Advances shall not exceed at any one time
$10,000,000.
(b) Floating Rate Advances. All Swing Line Advances
shall be Floating Rate Advances.
(c) Funding Swing Line Advances. Swing Line Advances shall be
funded by Bank One pursuant to the procedures set forth in Section 2.8
of this Agreement. The principal amount of each Swing Line Advance,
together with all accrued interest, shall be repaid by the applicable
Borrower to Bank One in same day funds by 5:00 p.m. (or such later time
as may be acceptable to Agent), Phoenix time, on the Swing Line Advance
Maturity Date. Additionally, if the aggregate principal amount of all
outstanding Swing Line Advances exceeds $10,000,000, Borrowers shall
pay to Bank One the excess amount in same day funds by noon, Phoenix
time, on the first Business Day following the day that the excess
amount occurs.
(d) Repayment of Swing Line Advances. If Borrowers fail to pay
any Swing Line Advances on the applicable Swing Line Advance Maturity
Date, then such Advances shall no longer be Swing Line Advances, but
shall continue to be Floating Rate Advances for purposes of this
Agreement. Each Bank shall be deemed to have irrevocably and
unconditionally purchased and received from
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Agent an undivided interest and participation (ratably in proportion to
the ratio that such Bank's Commitment bears to the Aggregate
Commitment) in such Advances. In such event, as of 11:59 p.m., Phoenix
time, on the Swing Line Advance Maturity Date, Agent shall notify each
Bank of the total principal amount of all Matured Swing Line Advances
and each Bank's ratable share thereof. Upon receipt of such notice,
each Bank shall promptly and unconditionally pay to Agent for the
account of Bank One the amount of such Bank's share (ratably in
proportion to the ratio that such Bank's Commitment bears to the
Aggregate Commitment) of such payment in same day funds, and Agent
shall promptly pay such amount, and any other amounts received by Agent
for Bank One's account pursuant to this Section 2.19(d), to Bank One.
If Agent so notifies such Bank prior to 10:00 a.m., Phoenix time, on
any Business Day, such Bank shall make available to Agent for the
account of Bank One such Bank's share of the amount of such payment on
such Business Day in same day funds. If Agent notifies such Bank after
10:00 a.m., Phoenix time, on any Business Day, such Bank shall make
available to Agent for the account of Bank One such Bank's share of the
amount of such payment on the next succeeding Business Day in same day
funds. If and to the extent such Bank shall not have so made its share
of the amount of such payment available to Agent for the account of
Bank One, such Bank agrees to pay to Agent for the account of Bank One
forthwith on demand such amount, together with interest thereon, for
each day from the date such payment was first due until the date such
amount is paid to Agent for the account of Bank One, at the Federal
Funds Effective Rate. The failure of any Bank to make available to
Agent for the account of Bank One such Bank's share of any such payment
shall not relieve any other Bank of its obligation hereunder to make
available to Agent for the account of Bank One its share of any payment
on the date such payment is to be made.
(e) Advances. The payments made by Banks to Bank One in
reimbursement of Swing Line Advances shall constitute, and Borrowers
hereby expressly acknowledge and agree that such payments shall
constitute, Advances hereunder to the applicable Borrower and such
payments shall for all purposes be treated as Advances to such Borrower
(notwithstanding that the amounts thereof may not comply with the
provisions of Section 2.6 and 2.7(a)). Such Advances shall be Floating
Rate Advances, subject to Borrowers' rights under Article II hereof.
2.20 Withholding Tax Exemption. At least five (5) Business Days prior
to the first date on which interest or fees are payable hereunder for the
account of any Bank, each Bank (if any) that is not incorporated under the laws
of the United States of America, or a state thereof, agrees that it will deliver
to each of Borrowers and Agent two (2) duly completed copies of United States
Internal Revenue Service Form 1001 or 4224, certifying in either case that such
Bank is entitled to receive payments under this Agreement and the Notes without
deduction or withholding of any United States federal taxes and an Internal
Revenue Service Form W-8 or
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W-9 entitling such Bank to receive a complete exemption from United States tax
backup withholding. Each Bank which so delivers a Form 1001 or 4224 further
undertakes to deliver to each of Borrowers and Agent two (2) additional copies
of such form (or a successor form) on or before the date that such form expires
(currently, three (3) successive calendar years for Form 1001 and one (1)
calendar year for Form 4224) or becomes obsolete or after the occurrence of any
event requiring a change in the most recent forms so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be reasonably
requested by Borrowers or Agent, in each case certifying that such Bank is
entitled to receive payments under this Agreement and the Notes without
deduction or withholding of any United States federal taxes, unless an event
(including without limitation any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Bank from duly completing and delivering any such form with respect to it and
such Bank advises Borrowers and Agent that it is not capable of receiving
payments without any deduction or withholding of United States federal tax.
If a Bank does not provide duly executed forms to Borrowers and Agent
within the time periods set forth in the preceding paragraph, Borrowers or Agent
shall withhold taxes from payments to such Bank at the applicable statutory
rates and Borrowers shall not be required to pay any additional amounts as a
result of such withholding. Upon the reasonable request of Borrowers or Agent,
each Bank that has not provided the forms or other documents, as provided above,
on the basis of being a "United States person," shall submit to Borrowers and
Agent a certificate or other evidence to the effect that it is such a "United
States person."
2.21 Extension of Facility Termination Date.
(a) Extension Requests. Borrowers may request a two-year
extension of the Facility Termination Date by submitting a request for
an extension to Agent (an "Extension Request") no more than 28 months
nor less than 26 months prior to the then scheduled Facility
Termination Date. Promptly upon (but not later than five (5) Business
Days after) receipt of the Extension Request, Agent shall notify each
Bank of the contents thereof and shall request each Bank to approve the
Extension Request. Each Bank approving the Extension Request shall
deliver its written approval no later than sixty (60) days after the
date of the Extension Request. If the approval of each of Banks is
received by Agent within sixty (60) days after the date of the
Extension Request (or as otherwise provided in Section 2.21(b)), Agent
shall promptly so notify Borrowers and each Bank, and the Facility
Termination Date shall be extended by two (2) years, and in such event
Borrowers may thereafter request further extension(s) of the then
scheduled Facility Termination Date in accordance with this Section
2.21. If any of Banks does not deliver to Agent such Bank's written
approval to any Extension Request within sixty (60) days after the date
of such Extension Request, the Facility Termination Date shall not be
extended, except as otherwise provided in Section 2.21(b) or 2.21(c).
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(b) Rejecting Banks/Full Assignment. If (i) any Banks whose
pro rata shares of the Aggregate Commitment do not exceed (in the
aggregate) 20% of the Aggregate Commitment ("Rejecting Banks") shall
not approve an Extension Request, (ii) all rights and obligations of
such Rejecting Banks under this Agreement and under the other Loan
Documents (including, without limitation, their Commitment and all
Loans owing to them) shall have been assigned, within ninety (90) days
following such Extension Request, in accordance with Section 2.23, to
one or more Replacement Banks who shall have approved in writing such
Extension Request at the time of such assignment, and (iii) no other
Bank shall have given written notice to Agent of such Bank's withdrawal
of its approval of the Extension Request, Agent shall promptly so
notify Borrowers and each Bank and the Facility Termination Date shall
be extended by two (2) years, and in such event Borrowers may
thereafter request further extension(s) as provided in Section 2.21(a).
(c) Rejecting Banks/No Full Assignment. If (A) the Rejecting
Banks shall not approve an Extension Request, (B) the provisions of
clause (b)(ii) above do not apply, and (iii) no other Bank shall have
given written notice to Agent of such Bank's withdrawal of its approval
of the Extension Request, Agent shall promptly notify Borrowers and
each Bank and any Replacement Bank, and the Facility Termination Date
shall be extended by two (2) years, and in such event Borrowers may
thereafter request further extension(s) as provided in Section 2.21
(a); provided, however, that the Aggregate Commitment shall be
automatically reduced, effective as of the first day of the extension
period, and shall equal the aggregate Commitments of the Banks who are
not Rejecting Banks and the Banks who are Replacement Banks. All rights
and obligations of such Rejecting Banks under this Agreement and under
the other Loan Documents (including, without limitation, their
Commitment and all Loans owing to them) shall either be (I) assigned to
Replacement Banks pursuant to Section 2.21(b), or (II) terminated,
effective as of the then existing Facility Termination Date (or such
earlier date as Borrowers and Agent may designate), in which case the
terminated Bank shall have concurrently received, in cash, all amounts
due and owing to the terminated Bank hereunder or under any other Loan
Document, including without limitation the aggregate outstanding
principal amount of the Loans owed to such Bank, together with accrued
interest thereon through the date of such termination, all amounts
payable under Sections 3.1 and 3.2 with respect to such Bank and all
fees payable to such Bank hereunder (and payment of such amount may not
be waived except with the consent of each Bank, as more specifically
provided in Section 11.2(i)); provided that, upon such Bank's
termination, such Bank shall cease to be a party hereto but shall
continue to be entitled to the benefits of Article III and Section
12.7, as well as to any fees accrued hereunder and not yet paid, and
shall continue to be obligated under Section 13.8 with respect to
obligations and liabilities accruing prior to the termination of such
Bank.
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(d) Approval of Extension. Within ten (10) days after Agent's
notice to Borrowers that all (or some, as applicable) of Banks have
approved an Extension Request (whether pursuant to Section 2.21(a), (b)
or (c)), Borrowers shall pay to Agent for the account of each Bank
approving the extension and each Replacement Bank an extension fee
calculated in the manner set forth in Section 2.5(c).
(e) No Extension. If the Extension Request is not approved
pursuant to Section 2.21(a), (b) or (c), or if Borrowers do not request
an extension pursuant to this Section 2.21, then during the twenty-four
(24) months preceding the Facility Termination Date, the terms and
conditions set forth on Schedule "2.21" shall be deemed to be
incorporated into this Agreement by this reference, and Borrowers,
Banks and Agent agree that the terms and conditions set forth in
Schedule "2.21" shall be controlling to the extent the same are
inconsistent with the terms and conditions of this Agreement, and
Borrowers, Banks and Agent shall act in accordance therewith.
2.22 Conversion Period.
(a) Commencement of Conversion Period. If (A) any Financial
Covenant Test is breached, and such breach in each case continues for
two (2) consecutive fiscal quarters, or (B) the representations and
warranties in Section 6.7 are untrue or incorrect as of the date which
the same were made (or deemed to be made), and such date is after the
date of this Agreement, then unless the Required Banks in their sole
and absolute discretion agree otherwise, the Conversion Period shall
automatically commence. In the case of clause (A), the Conversion Date
shall be first day of the first month after the second consecutive
fiscal quarter of such breach, and in the case of clause (B), the
Conversion Date shall be the first day of the first month after such
breach. If the Conversion Date occurs pursuant to clause (A), Borrowers
shall have the right to elect, by notice given to Agent on or before
that day that is thirty (30) days after the Conversion Date, that the
Conversion Period be an Unsecured Conversion Period or a Secured
Conversion Period. If Borrowers fail to provide such notice within such
30-day period, then Borrowers shall be deemed to have elected that the
Conversion Period be an Unsecured Conversion Period. If the Conversion
Date occurs pursuant to clause (B), the Conversion Period shall be a
Secured Conversion Period.
Notwithstanding the foregoing, with respect to clause (A), if
as of the end of the second consecutive fiscal quarter of such failure
to comply with the foregoing tests, either
(I) With respect to the Consolidated Tangible Net
Worth Test, Consolidated Tangible Net Worth is less than (i)
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$150,000,000 plus (ii) fifty percent (50%) of the Consolidated
Net Income earned after January 1, 1996 (excluding any quarter
in which there is a loss, but applying any Consolidated Net
Income thereafter first to such loss before determining 50% of
such amount for purposes of this calculation) plus (iii) one
hundred percent (100%) of the net proceeds of capital stock
issued by Guarantor after January 1, 1996, or
(II) With respect to the Leverage Test, Consolidated
Indebtedness exceeds the product of 2.50 multiplied by
Adjusted Consolidated Tangible Net Worth,
then the Conversion Period shall be a Secured Conversion Period (or,
subject to the provisions of Section 2.22(f) hereof, a Modified Secured
Conversion Provision, as applicable).
(b) Unsecured Conversion Period. If Borrowers elect, or
are deemed to have elected, that the Conversion Period be an Unsecured
Conversion Period, then:
(i) The Facility Termination Date shall be that date
that is the day preceding the first anniversary date of the
Conversion Date.
(ii) From and after three (3) calendar months after
the Conversion Date, the Aggregate Commitment (and each Bank's
Commitment) in effect as of the Conversion Date shall be
reduced on the first day after the end of each three-month
period by a percentage of such Aggregate Commitment amount (or
such
Bank's Commitment amount) as follows:
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Percentage Percentage
of Commitment of Commitment
Period Reduction Remaining
3 calendar months after
Conversion Date 25% 75%
6 calendar months after
Conversion Date 25% 50%
9 calendar months after
Conversion Date 25% 25%
12 calendar months after
Conversion Date 25% 0%
(c) Secured Conversion Period. If Borrowers elect, or
are deemed to have elected pursuant to Section 2.22(a), that the
Conversion Period be a Secured Conversion Period, then:
(i) The Facility Termination Date shall be that date
that is the day preceding the second anniversary date of the
Conversion Date.
(ii) From and after three (3) calendar months after
the Conversion Date, the Aggregate Commitment (and each Bank's
Commitment) in effect as of the Conversion Date shall be
reduced on the first day after the end of each three-month
period by a percentage of such Aggregate Commitment amount (or
such Bank's Commitment amount) as follows:
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Percentage Percentage
of Commitment of Commitment
Period Reduction Remaining
3 calendar months after
Conversion Date 5% 95%
6 calendar months after
Conversion Date 10% 85%
9 calendar months after
Conversion Date 10% 75%
12 calendar months after
Conversion Date 15% 60%
15 calendar months after
Conversion Date 15% 45%
18 calendar months after
Conversion Date 15% 30%
21 calendar months after
Conversion Date 15% 15%
24 calendar months after
Conversion Date 15% 0%
(iii) Borrowers shall provide, and Agent and Banks
shall accept, Collateral for the Obligations in accordance
with the terms of Schedule "2.22". Within thirty (30) days
after the Conversion Date, Borrowers shall provide to Agent
all Collateral Documents relating to the Collateral. Within
ninety (90) days after the Conversion Date, Borrowers shall
provide to Agent all Due Diligence Documents relating to the
Collateral.
(iv) During the Conversion Period, the terms and
conditions set forth on Schedule "2.22" shall be deemed to be
incorporated into this Agreement by this reference, and
Borrowers, Banks and Agent agree that the terms and conditions
set forth in Schedule "2.22" shall be controlling to the
extent the same are inconsistent with the terms and conditions
of this Agreement, and Borrowers, Banks and Agent shall act in
accordance therewith.
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(d) Breach During Certain Periods. Notwithstanding the
provisions of Section 2.22(a) above, if any Financial Covenant Test is
breached for two (2) consecutive fiscal quarters and the second such
fiscal quarter occurs (i) during an Unsecured Conversion Period, or
(ii) during a Secured Conversion Period, or (iii) during a Modified
Secured Conversion Period, or (iv) during the twelve-month period
immediately preceding the Facility Termination Date where no Conversion
Period is in effect, then the provisions of Section 2.22(a) shall not
apply, and such breach shall not be deemed to be an Event of Default
under this Agreement.
(e) Breach During End of Term. Notwithstanding the provisions
of subparagraph 2.22(a) above, if (A) any Financial Covenant Test is
breached for two (2) consecutive fiscal quarters and the second such
fiscal quarter occurs during the period that is twenty-four (24) months
to thirteen (13) months immediately preceding the Facility Termination
Date, or (B) the representations and warranties in Section 6.7 are
untrue or incorrect as of the date which the same were made (or deemed
to be made), and such date occurs during the period that is twenty-four
(24) to thirteen (13) months immediately preceding the Facility
Termination Date, and (C) in either event, no Conversion Period is then
in effect, then unless the Required Banks in their sole and absolute
discretion agree otherwise, the Conversion Period shall automatically
commence. The Conversion Date shall be first day of the first month
after (I) the second consecutive fiscal quarter of such breach, in the
case of clause (A), or (II) such breach, in the case of clause (B).
Borrowers shall have the right to elect, by notice given to Banks on or
before that day that is thirty (30) days after the Conversion Date,
that the Conversion Period be an Unsecured Conversion Period or a
Modified Secured Conversion Period; provided, however, that the
Conversion Period shall be a Secured Conversion Period if the
provisions of Section 2.22(a)(I) or (II) apply, or if the Conversion
Period results from a breach of Section 6.7. If Borrowers fail to
provide such notice within such 30-day period, then Borrowers shall be
deemed to have elected that the Conversion Period be an Unsecured
Conversion Period. If Borrowers elect (or are deemed to have elected)
that the Conversion Period be an Unsecured Conversion Period, then the
provisions of subparagraph 2.22(a) shall apply. If Borrowers elect that
the Conversion Period be a Modified Secured Conversion Period, then:
(i) the Aggregate Commitment (and each Bank's
Commitment) in effect as of end of the second fiscal quarter
to which such breach relates shall be reduced on the first day
after the end of each three-month period thereafter in an
equal portion of such Aggregate Commitment amount (or such
Bank's Commitment amount), such that the Aggregate Commitment
amount (and each Bank's Commitment amount) shall be zero on
the Facility Termination Date.
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(ii) Borrowers shall provide, and Agent and Banks
shall accept, Collateral for the Obligations in accordance
with the terms of Schedule "2.22". Within thirty (30) days
after the end of the second fiscal quarter to which the breach
relates, Borrowers shall provide to Agent all Collateral
Documents relating to the Collateral. Within ninety (90) days
after the end of the second fiscal quarter to which such
breach relates, Borrowers shall provide to Agent all Due
Diligence Documents relating to the Collateral.
(iii) During the Conversion Period, the terms and
conditions set forth on Schedule "2.22" shall be deemed to be
incorporated into this Agreement by this reference, and
Borrowers, Banks and Agent agree that the terms and conditions
set forth in Schedule "2.22" shall be controlling to the
extent the same are inconsistent with the terms and conditions
of this Agreement, and Borrowers, Banks and Agent shall act in
accordance therewith.
2.23 Replacement of Certain Banks. In the event a Bank
(the "Affected Bank"):
(i) shall have requested compensation from Borrowers under
Sections 3.1 or 3.2 to cover additional costs incurred by such Bank
that are not being incurred generally by the other Banks, or
(ii) shall have delivered a notice pursuant to Section 3.3
that such Affected Bank is unable to extend LIBOR Loans for reasons not
generally applicable to the other Banks, or
(iii) is a Rejecting Bank pursuant to Section 2.21,
then, in any such case, and at any time after such event occurs,
Borrowers or Agent may make written demands on such Affected Bank (with
a copy to Agent in the case of a demand by Borrowers and a copy to
Borrowers in the case of a demand by Agent) for the Affected Bank to
assign, and such Affected Bank shall assign, pursuant to one or more
duly executed assignment agreements in substantially the form provided
for in Section 15.3.1, within five (5) Business Days after the date of
such demand, to one or more financial institutions that comply with the
provisions of Section 15.3, and that are selected by Borrowers and/or
Agent, that are reasonably acceptable to Agent or Borrowers, as
applicable, that Borrowers or Agent, as the case may be, shall have
engaged for such purpose (the "Replacement Bank"), all of such Affected
Bank's rights and obligations under this Agreement and the other Loan
Documents (including, without limitation, its Commitment and all Loans
owing to it) in accordance with Section 15.3. If any Affected Bank
fails to execute and deliver such assignment
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agreements within thirty (30) days after demand, then such Affected
Bank shall have no further right to receive any amounts payable under
Sections 3.1 and 3.2 with respect to such Affected Bank.
Agent agrees, upon the occurrence of such events with respect to an
Affected Bank and upon written request of Borrowers, to use its reasonable
efforts to obtain the commitments from one or more financial institutions to act
as a Replacement Bank. Agent is authorized, but shall not be obligated to,
execute one or more of such assignment agreements as attorney-in-fact for any
Affected Bank failing to execute and deliver the same within five (5) Business
Days after the date of such demand. Further, with respect to such assignment,
the Affected Bank shall have concurrently received, in cash, all amounts due and
owing to the Affected Bank hereunder or under any other Loan Document, including
without limitation the aggregate outstanding principal amount of the Loans owed
to such Bank, together with accrued interest thereon through the date of such
assignment, amounts payable under Sections 3.1 and 3.2 with respect to such
Affected Bank and all fees payable to such Affected Bank hereunder; provided
that, upon such Affected Bank's replacement, such Affected Bank shall cease to
be a party hereto but shall continue to be entitled to the benefits of Article
III and Section 12.7, as well as to any fees accrued hereunder and not yet paid,
and shall continue to be obligated under Section 13.8 with respect to
obligations and liabilities accruing prior to the replacement of such Affected
Bank.
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1 Yield Protection. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law), or any interpretation thereof, or the compliance
of any Bank therewith,
(i) subjects any Bank or any applicable Lending Installation
to any tax, duty, charge or withholding on or from payments due from
Borrowers (excluding any taxes imposed on, or based on, or determined
by reference to the net income of any Bank or applicable Lending
Installation, including, without limitation, franchise taxes,
alternative minimum taxes and any branch profits tax (collectively,
"Excluded Taxes")), any taxes imposed on, or based on, or determined by
reference to or changes the basis of taxation of payments to any Bank
in respect of its Loans or other amounts due it hereunder (except for
Excluded Taxes),
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by, any Bank or any applicable Lending Installation (other
than reserves and assessments taken into account in determining the
interest rate applicable to LIBOR Rates), or
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(iii) imposes any other condition or requirement the result of
which is to increase the cost to any Bank or any applicable Lending
Installation of making, funding or maintaining loans or reduces any
amount receivable by any Bank or any applicable Lending Installation in
connection with loans, or requires any Bank or any applicable Lending
Installation to make any payment calculated by reference to the amount
of loans held or interest received by it, by an amount deemed material
by such Bank,
then, within fifteen (15) days after demand by such Bank, Borrowers
shall pay such Bank that portion of such increased expense incurred or
reduction in an amount received which such Bank determines is
attributable to making, funding and maintaining its Loans and its
Commitment; provided, however, that Borrowers shall not be required to
increase any such amounts payable to any Bank (1) if such Bank fails to
comply with the requirements of Section 2.20 hereof or (2) to the
extent that such Bank determines, in its sole reasonable discretion,
that it can, after notice from Borrowers, through reasonable efforts,
eliminate or reduce the amount of tax liabilities payable (without
additional costs or expenses unless Borrowers agree to bear such costs
or expenses) or other disadvantages or risks (economic or otherwise) to
such Bank or Agent. If any Bank receives a refund in respect of any
amount described in clause (i), (ii) and (iii) above for which such
Bank has received payment from Borrowers hereunder, such Bank shall
promptly notify Borrowers of such refund and such Bank shall repay the
amount of such refund to Borrowers, provided that Borrowers, upon the
request of such Bank, agree to return such refund to such Bank in the
event such Bank is required to repay such refund. The determination as
to whether any Bank has received a refund shall be made by such Bank
and such determination shall be conclusive absent manifest error.
3.2 Changes in Capital Adequacy Regulations. If a Bank or Issuing Bank
determines the amount of capital required or expected to be maintained by such
Bank, any Lending Installation of such Bank or Issuing Bank or any corporation
controlling such Bank or Issuing Bank is increased as a result of a Change,
then, within fifteen (15) days after demand by such Bank or Issuing Bank,
Borrowers shall pay such Bank or Issuing Bank the amount necessary to compensate
for any shortfall in the rate of return on the portion of such increased capital
which such Bank or Issuing Bank determines is attributable to this Agreement,
its Loans or its obligation to make Loans hereunder, or its issuance or
maintenance of or participation in, or commitment to issue, to maintain or to
participate in, the Facility Letters of Credit hereunder (after taking into
account such Bank's or Issuing Bank's policies as to capital adequacy). "Change"
means (i) any change after the date of this Agreement in the Risk-Based Capital
Guidelines or (ii) any adoption of or change in any other law, governmental or
quasi-governmental rule, regulation, policy, guideline, interpretation, or
directive (whether or not having the force of law) after the date of this
Agreement which affects the amount of capital required or expected to be
maintained by any Bank, Issuing Bank, Lending Installation or any corporation
controlling any Bank or Issuing Bank. "Risk-Based Capital Guidelines" means (A)
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the risk-based capital guidelines in effect in the United States on the date of
this Agreement, including transition rules, and (B) the corresponding capital
regulations promulgated by regulatory authorities outside the United States
implementing the July 1988 report of the Basle Committee on Banking Regulation
and Supervisory Practices Entitled "International Convergence of Capital
Measurements and Capital Standards," including transition rules, and any
amendments to such regulations adopted prior to the date of this Agreement.
3.3 Availability of Types of Advances. If any Bank determines and
notifies Agent that maintenance of any of such Bank's LIBOR Loans at a suitable
Lending Installation would violate any applicable law, rule, regulation or
directive, whether or not having the force of law, Agent shall suspend the
availability of the affected Type of Advance and require any LIBOR Advances of
the affected Type to be repaid; or if the Required Banks determine and notify
Agent that (i) deposits of a type or maturity appropriate to match fund LIBOR
Advances are not available, Agent shall suspend the availability of the affected
Type of Advance with respect to any LIBOR Advances made after the date of any
such determination, or (ii) an interest rate applicable to a Type of Advance
does not accurately reflect the cost of making a LIBOR Advance of such Type,
then, if for any reason whatsoever the provisions of Section 3.1 are
inapplicable, Agent shall suspend the availability of the affected Type of
Advance with respect to any LIBOR Advance made after the date of any such
determination.
3.4 Funding Indemnification. If any payment of a LIBOR Advance occurs
on a date which is not the last day of the applicable Interest Period, whether
because of acceleration, prepayment or otherwise, or a LIBOR Advance is not made
on the date specified by Borrowers for any reason other than default by Banks,
Borrowers will indemnify each Bank for any loss or cost or expense incurred by
it resulting therefrom, including, without limitation, any loss or cost in
liquidating or employing deposits acquired to fund or maintain the LIBOR
Advance.
3.5 Bank Statements; Survival of Indemnity. To the extent reasonably
possible, each Bank shall designate an alternate Lending Installation with
respect to its LIBOR Advances to reduce any liability of Borrowers to such Bank
under Sections 3.1 and 3.2 or to avoid the unavailability of a Type of Advance
under Section 3.3, so long as such designation is not disadvantageous to such
Bank. Each Bank or Issuing Bank shall deliver a written statement of such Bank
or Issuing Bank as to the amount due, if any, under Sections 3.1, 3.2 or 3.4.
Such written statement shall set forth in reasonable detail the calculations
upon which such Bank or Issuing Bank determined such amount and shall be final,
conclusive and binding on Borrowers in the absence of manifest error.
Determination of amounts payable under such Sections in connection with a LIBOR
Advance shall be calculated as though each Bank funded its LIBOR Advance through
the purchase of a deposit of the type and maturity corresponding to the deposit
used as a reference in determining the LIBOR Advance applicable to such Loan,
whether in fact that is the case or not. Unless otherwise provided herein, the
amount specified in the written statement shall be payable within three (3) days
after receipt by Borrowers of the written statement. The obligations of
Borrowers under Sections 3.1, 3.2 and 3.4 shall survive payment of the
Obligations and termination of this Agreement.
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ARTICLE IV
THE LETTER OF CREDIT FACILITY
4.1 Facility Letters of Credit. The Issuing Bank agrees, on the terms
and conditions set forth in this Agreement, to issue from time to time for the
account of a Borrower, through such offices or branches as it and a Borrower may
jointly agree, one or more Facility Letters of Credit in accordance with this
Article IV, during the period commencing on the date hereof and ending on the
Business Day prior to the Facility Termination Date. Each Facility Letter of
Credit shall be either (i) a standby letter of credit to support obligations of
the requesting Borrower(s), contingent or otherwise, arising in the ordinary
course of business, or (ii) a documentary letter of credit in respect of the
purchase of goods or services by such Borrower(s) in the ordinary course of
business.
4.2 Limitations. No Issuing Bank shall issue, amend or extend,
at any time, any Facility Letter of Credit:
(i) if the aggregate maximum amount then available for drawing
under Letters of Credit issued by such Issuing Bank, after giving
effect to the Facility Letter of Credit or amendment or extension
thereof requested hereunder, shall exceed any limit imposed by law or
regulation upon such Issuing Bank;
(ii) if, after giving effect to the Facility Letter of Credit
or amendment or extension thereof requested hereunder, the aggregate
principal amount of the Facility Letter of Credit Obligations of all
Borrowers would exceed $20,000,000;
(iii) that, in the case of the issuance of a Facility Letter
of Credit, is in, or in the case of an amendment of a Facility Letter
of Credit, increases the face amount thereof by, an amount in excess of
the then Aggregate Available Credit;
(iv) if, after giving effect to the Facility Letter of Credit
or amendment or extension thereof requested hereunder, the aggregate
principal amount of the Facility Letter of Credit Obligations of such
Borrower plus the principal amount of all Advances outstanding with
respect to such Borrower would exceed the Borrowing Base for such
Borrower as of the most recent Inventory Valuation Date;
(v) if, after giving effect to the Facility Letter of Credit
or amendment or extension thereof requested hereunder, the aggregate
principal amount of all Facility Letter of Credit Obligations plus the
principal amount of all Advances outstanding would exceed the aggregate
Borrowing Bases determined as of the most recent Inventory Valuation
Date;
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(vi) if such Issuing Bank receives written notice from Agent
at or before noon, Phoenix time, on the proposed Issuance Date of such
Facility Letter of Credit that one or more of the conditions precedent
contained in Sections 5.1 or 5.2, as applicable, would not on such
Issuance Date be satisfied, unless such conditions are thereafter
satisfied and written notice of such satisfaction is given to such
Issuing Bank by Agent;
(vii) that has an expiration date (taking into account any
automatic renewal provisions thereof) that is later than one (1) year
after the Issuance Date, or such later time as the Issuing Bank may
agree; provided, however in no event shall the expiration date be later
than the Business Day next preceding the scheduled Facility Termination
Date; or
(viii) that is in a currency other than Dollars, or that is
not consistent with the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication
No. 500, as the same may be updated.
4.3 Conditions. In addition to being subject to the satisfaction of the
conditions contained in Sections 5.1 and 5.2, as applicable, the issuance of any
Facility Letter of Credit is subject to the satisfaction in full of the
following conditions:
(i) the Borrower requesting the Facility Letter of Credit
shall have delivered to the Issuing Bank at such times and in such
manner as the Issuing Bank may reasonably prescribe a Reimbursement
Agreement and such other documents and materials as may be reasonably
required pursuant to the terms thereof, and the proposed Facility
Letter of Credit shall be reasonably satisfactory to such Issuing Bank
in form and content; and
(ii) as of the Issuance Date no order, judgment or decree of
any court, arbitrator or governmental authority shall enjoin or
restrain such Issuing Bank from issuing the Facility Letter of Credit
and no law, rule or regulation applicable to such Issuing Bank and no
directive from and governmental authority with jurisdiction over the
Issuing Bank shall prohibit such Issuing Bank from issuing Letters of
Credit generally or from issuing that Facility Letter or Credit.
4.4 Procedure for Issuance of Facility Letters of Credit.
(a) Request for Facility Letter of Credit. The requesting
Borrower shall give the Issuing Bank and Agent not less than five (5)
Business Days' prior written notice of any requested issuance of a
Facility Letter of Credit under this Agreement. Such notice shall
specify (i) the stated amount of the Facility Letter of Credit
requested, (ii) the requested Issuance Date, which shall be a Business
Day, (iii) the date on which such requested Facility Letter of Credit
is to expire,
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which date shall be in compliance with the requirements of Section
4.2(vii), (iv) the purpose for which such Facility Letter of Credit is
to be issued (which shall be a purpose permitted pursuant to Section
7.2), and (v) the Person for whose benefit the requested Facility
Letter of Credit is to be issued. At the time such request is made, the
requesting Borrower shall also provide Agent and the Issuing Bank with
a copy of the form of the Facility Letter of Credit it is requesting be
issued.
(b) Issuing Bank. Within two (2) Business Days after receipt
of a request for issuance of a Facility Letter of Credit in accordance
with Section 4.4(a), the Issuing Bank shall approve or disapprove, in
its reasonable discretion, the form of such requested Facility Letter
of Credit, but the issuance of such approved Facility Letter of Credit
shall continue to be subject to the provisions of this Article IV. The
Issuing Bank shall use reasonable efforts to notify the applicable
Borrower of any changes in the Issuing Bank's policies or procedures
that could reasonably be expected to affect adversely the Issuing
Bank's approval of the form of any requested Facility Letters of
Credit.
(c) Confirmation of Issuance. Upon receipt of a request for
issuance of a Facility Letter of Credit in accordance with Section
4.4(a), Agent shall determine, as of the close of business on the day
it receives such request, whether the issuance of such Facility Letter
of Credit would be permitted under the provisions of Sections 4.2(ii),
(iii), (iv) and (v) and, prior to the close of business on the second
Business Day after Agent received such request, Agent shall notify the
Issuing Bank and such Borrower (in writing or by telephonic notice
confirmed promptly thereafter in writing) whether issuance of the
requested Facility Letter of Credit would be permitted under the
provisions of Sections 4.2(ii), (iii), (iv) and (v). If Agent notifies
the Issuing Bank and the applicable Borrower that such issuance would
be so permitted, then, subject to the terms and conditions of this
Article IV and provided that the applicable conditions set forth in
Sections 5.1 and 5.2 have been satisfied, the Issuing Bank shall, on
the requested Issuance Date, issue the requested Facility Letter of
Credit in accordance with the Issuing Bank's usual and customary
business practices. The Issuing Bank shall give Agent written notice,
or telephonic notice confirmed promptly thereafter in writing, of the
issuance of a Facility Letter of Credit.
(d) Extension and Amendment. An Issuing Bank shall not extend
or amend any Facility Letter of Credit unless the requirements of this
Section 4.4 are met as though a new Facility Letter of Credit were
being requested and issued; provided, however, that if the Facility
Letter of Credit, as originally issued, sets forth such extension or
amendment, then the Issuing Bank shall so extend or amend the Facility
Letter of Credit upon the request of the applicable Borrower given in
the manner set forth in Section 4.4(a) and upon satisfaction of the
terms and conditions of Section 4.4(c).
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(e) Other Letters of Credit. Any Bank may, but shall not be
obligated to, issue to a Borrower Letters of Credit (that are not
Facility Letters of Credit) for its own account, and at its own risk.
None of the provisions of this Article IV shall apply to any Letter of
Credit that is not a Facility Letter of Credit.
(f) Existing Letters of Credit. As of the date of this
Agreement, certain of the Banks have previously issued, and there are
currently outstanding, Letters of Credit for the benefit of one or more
Borrowers (the "Existing Letters of Credit"), all pursuant to the
Refinanced Loans. Such Existing Letters of Credit shall remain
outstanding after the date of this Agreement. Borrowers remain
obligated with respect to the Existing Letters of Credit, and the
Refinanced Loans shall remain outstanding obligations of Borrowers to
the extent of such Existing Letters of Credit. At the request of the
applicable Borrower from time to time pursuant to, and subject to the
limitations and procedures of, Section 4.4(a), the Existing Letters of
Credit shall be converted to Facility Letters of Credit. The date of
such conversion shall be deemed to be the date of issuance of such
Facility Letter of Credit for purposes of this Agreement, including
without limitation, for purposes of calculating the fees payable under
Section 4.7. Immediately upon such conversion, the Issuing Bank,
through Agent, shall be deemed to have sold and transferred, and each
Bank shall be deemed to have irrevocably and unconditionally purchased
and received from Agent, without recourse or warranty, in each case
without further action on the part of any Person, an undivided interest
and participation, (ratably in proportion to the ratio that such Bank's
Commitment bears to the Aggregate Commitment) in such Facility Letter
of Credit. Each Bank severally agrees to fund any disbursements by the
Issuing Bank pursuant to Existing Letters of Credit by funding in
accordance with Section 4.6. The Existing Letters of Credit converted
to Facility Letters of Credit pursuant to this Section 4.4(f) shall be
deemed to be Facility Letters of Credit for all purposes under this
Agreement, and shall be subject to all terms and conditions hereof.
4.5 Duties of Issuing Bank. Any action taken or omitted to be taken by
an Issuing Bank under or in connection with any Facility Letter of Credit, if
taken or omitted in the absence of willful misconduct or gross negligence, shall
not put such Issuing Bank under any resulting liability to any Bank or, assuming
that such Issuing Bank has complied with the procedures specified in Section
4.4, relieve any Bank of its obligations hereunder to such Issuing Bank. In
determining whether to pay under any Facility Letter of Credit, the Issuing Bank
shall have no obligation relative to Banks other than to confirm that any
documents required to be delivered under such Facility Letter of Credit appear
to have been delivered in compliance and that they appear to comply on their
face with the requirements of such Facility Letter of Credit.
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4.6 Participation.
(a) Proportionate Share of Banks. Immediately upon issuance by
an Issuing Bank of any Facility Letter of Credit in accordance with
Section 4.4, each Bank shall be deemed to have irrevocably and
unconditionally purchased and received from such Issuing Bank, without
recourse or warranty, an undivided interest and participation (ratably
in proportion to the ratio that such Bank's Commitment bears to the
Aggregate Commitment) in such Facility Letter of Credit.
(b) Payment by Issuing Bank. In the event that an Issuing Bank
makes any payment under any Facility Letter of Credit and the
applicable Borrower shall not have repaid such amount to such Issuing
Bank on or before the date of such payment by such Issuing Bank, such
Issuing Bank shall promptly so notify Agent, which shall promptly so
notify each Bank. Upon receipt of such notice, each Bank shall promptly
and unconditionally pay to Agent for the account of such Issuing Bank
the amount of such Bank's share (ratably in proportion to the ratio
that such Bank's Commitment bears to the Aggregate Commitment) of such
payment in same day funds, and Agent shall promptly pay such amount,
and any other amounts received by Agent for such Issuing Bank's account
pursuant to this Section 4.6(b), to such Issuing Bank. If Agent so
notifies such Bank prior to 10:00 a.m., Phoenix time, on any Business
Day, such Bank shall make available to Agent for the account of such
Issuing Bank such Bank's share of the amount of such payment on such
Business Day in same day funds. If and to the extent such Bank shall
not have so made its share of the amount of such payment available to
Agent for the account of such Issuing Bank, such Bank agrees to pay to
Agent for the account of such Issuing Bank forthwith on demand such
amount, together with interest thereon, for each day from the date such
payment was first due until the date such amount is paid to Agent for
the account of such Issuing Bank, at the Federal Funds Effective Rate.
The failure of any Bank to make available to Agent for the account of
such Issuing Bank such Bank's share of any such payment shall not
relieve any other Bank of its obligation hereunder to make available to
Agent for the account of such Issuing Bank its share of any payment on
the date such payment is to be made.
(c) Advances. The payments made by Banks to an Issuing Bank in
reimbursement of amounts paid by it under a Facility Letter of Credit
shall constitute, and Borrowers hereby expressly acknowledge and agree
that such payments shall constitute, Advances hereunder to the
applicable Borrower and such payments shall for all purposes be treated
as Advances to such Borrower (notwithstanding that the amounts thereof
may not comply with the provisions of Section 2.6). Such Advances shall
be Floating Rate Advances, subject to Borrowers' rights under Article
II hereof.
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(d) Copies of Documents. Upon the request of Agent or any
Bank, an Issuing Bank shall furnish to the requesting Agent or Bank
copies of any Facility Letter of Credit or Reimbursement Agreement to
which such Issuing Bank is party and such other documentation as may
reasonably be requested by Agent or the Bank.
(e) Obligations of Banks. The obligations of Banks to make
payments to Agent for the account of an Issuing Bank with respect to a
Facility Letter of Credit shall be irrevocable, not subject to any
qualification or exception whatsoever and shall be made in accordance
with, but not subject to, the terms and conditions of this Agreement
under all circumstances notwithstanding:
(i) any lack of validity or enforceability of this
Agreement, any Facility Letter of Credit (except where due to
the gross negligence or willful misconduct of the Issuing
Bank), or any of the other Loan Documents;
(ii) the existence of any claim, setoff, defense or
other right which any Borrower may have at any time against a
beneficiary named in a Facility Letter of Credit or any
transferee of any Facility Letter of Credit (or any Person for
whom any such transferee may be acting), such Issuing Bank,
Agent, any Bank, or any other Person, whether in connection
with this Agreement, any Facility Letter of Credit, the
transactions contemplated herein or any unrelated transactions
(including any underlying transactions between a Borrower or
any Subsidiary and the beneficiary named in any Facility
Letter of Credit) other than the defense of payment in
accordance with this Agreement or a defense based on the gross
negligence or willful misconduct of the Issuing Bank;
(iii) any draft, certificate or any other document
presented under the Facility Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect of
any statement therein being untrue or inaccurate in any
respect so long as the payment by the Issuing Bank under such
Facility Letter of Credit against presentation of such draft,
certificate or other document shall not have constituted gross
negligence or willful misconduct;
(iv) the surrender or impairment of any security
for the performance or observance of any of the terms of any
of the Loan Documents;
(v) any failure by Agent or the Issuing Bank to
make any reports required pursuant to Section 4.8; or
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(vi) the occurrence of any Event of Default or
Unmatured Event of Default.
4.7 Compensation for Facility Letters of Credit.
(a) Payment of Facility Letter of Credit Fee. Each Borrower
agrees to pay to Agent, in the case of each outstanding Facility Letter
of Credit, the Facility Letter of Credit Fee therefor, payable in
quarterly installments in advance on the Issuance Date and on the first
day of each January, April, July and October after the Issuance Date
(which installment shall be a pro rata portion of the annual Facility
Letter of Credit Fee for the 3-month period in which such payment date
occurs). If the Issuance Date is a date other than the first day of
January, April, July or October, then the first quarterly installment
of the Facility Letter of Credit Fee shall be payable in arrears, on
the first day of January, April, July, or October, as applicable, next
following the Issuance Date. Such initial installment shall be a pro
rata portion of the annual Facility Letter of Credit Fee for the period
commencing on the Issuance Date and ending on the day preceding such
payment date. Facility Letter of Credit Fees shall be calculated, on a
pro rata basis for the period to which such payment applies, for actual
days that will elapse during such period, on the basis of a 365 day
year. Agent shall promptly remit such Facility Letter of Credit Fees,
when paid, to Banks (ratably in the proportion that each Bank's
Commitment bears to the Aggregate Commitment).
(b) Calculation of Fee. The Facility Letter of Credit Fee
shall be determined by reference to the Facility Rating or, if no
Facility Rating exists, by reference to the Senior Debt Rating, in
accordance with the following table:
Facility or Applicable
Senior Debt Letter of Credit
Rating Rate (%)
BBB-/Baa3 or higher 1.125
BB+/Ba1 1.125
BB/Ba2 1.250
BB-/Ba3 1.250
B+/B1 1.375
Lower or no 1.375
Rating
(c) Adjustment of Fee. The Applicable Letter of Credit Rate
shall be adjusted, as applicable from time to time, effective on the
first January 1, April 1, June 1, or October 1 to occur after any
change in the Facility Rating or the Senior Debt Rating, as applicable.
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(d) Changes to Ratings. Notwithstanding the foregoing, (i) if
either of the two (2) rating agencies selected by Borrowers for
purposes of calculating the Applicable Letter of Credit Rate shall not
have in effect a Facility Rating or a Senior Debt Rating for a reason
related to the creditworthiness of Borrowers or Guarantor or to any act
or failure to act on the part of Borrowers or Guarantor, then the
Applicable Letter of Credit Rate shall be determined by reference to
the last category listed above, and (ii) if the rating system used by
either such rating agency shall change, or if neither rating agency
shall have in effect a Senior Debt Rating nor a Facility Rating and
clause (i) above shall not be applicable, then Borrowers and Banks,
acting through Agent, shall negotiate in good faith to amend the
references to specific ratings in this definition to reflect such
changed rating system or the non-availability of ratings from such
rating agencies.
(e) Amounts Owed to Issuing Bank. An Issuing Bank shall have
the right to receive solely for its own account such amounts as the
applicable Borrower may agree, in writing, to pay to such Issuing Bank
with respect to issuance fees and for such Issuing Bank's out-of-pocket
costs of issuing and servicing Facility Letters of Credit.
4.8 Issuing Bank Reporting Requirements. Each Issuing Bank shall, no
later than the tenth day following the last day of each month, provide to Agent
a schedule of the Facility Letters of Credit issued by it, in form and substance
reasonably satisfactory to Agent, showing the Issuance Date, account party,
original face amount, amount (if any) paid thereunder, expiration date and the
reference number of each Facility Letter of Credit outstanding at any time
during such month and the aggregate amount (if any) payable by each Borrower to
such Issuing Bank during the month pursuant to Section 3.2. Copies of such
reports shall be provided promptly to each Bank and Borrowers by Agent.
4.9 Indemnification; Nature of Issuing Bank's Duties.
(a) Indemnity. In addition to amounts payable as elsewhere
provided in this Article IV, each Borrower hereby agrees to protect,
indemnify, pay and hold harmless Agent and each Bank and Issuing Bank
from and against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable attorneys'
fees) arising from the claims of third parties against Agent, Issuing
Bank or Bank as a consequence, direct or indirect, of (i) the issuance
of any Facility Letter of Credit for such Borrower other than, in the
case of an Issuing Bank, as a result of its willful misconduct or gross
negligence, or (ii) the failure of an Issuing Bank issuing a Facility
Letter of Credit for such Borrower to honor a drawing under such
Facility Letter of Credit as a result of any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto
government or governmental authority.
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(b) Assumption of Risk. As among Borrowers, Banks, Agent and
the Issuing Bank, Borrowers assume all risks of the acts and omissions
of, or misuse of Facility Letters of Credit by, the respective
beneficiaries of such Facility Letters of Credit. In furtherance and
not in limitation of the foregoing, neither the Issuing Bank nor Agent
nor any Bank shall be responsible:
(i) for the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any
party in connection with the application for and issuance of
the Facility Letters of Credit, even if it should in fact
prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged;
(ii) for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer
or assign a Facility Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part,
which may prove to be invalid or ineffective for any reason;
(iii) for failure of the beneficiary of a Facility
Letter of Credit to comply fully with conditions required in
order to draw upon such Facility Letter of Credit;
(iv) or errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise, whether or not they be in
cipher;
(v) for errors in interpretation of technical terms;
(vi) for any loss or delay in the transmission or
otherwise of any document required in order to make a drawing
under any Facility Letter of Credit or of the proceeds
thereof;
(vii) for the misapplication by the beneficiary of a
Facility Letter of Credit of the proceeds of any drawing under
such Facility Letter of Credit; and
(viii) for any consequences arising from causes
beyond the control of Agent, the Issuing Bank and Banks
including, without limitation, any act or omission, whether
rightful or wrongful, of any present or future de jure or de
facto government or governmental authority. None of the above
shall affect, impair, or prevent the vesting of any of the
Issuing Bank's rights or powers under this Section 4.9.
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(c) Good Faith. In furtherance and extension and not in
limitation of the specific provisions hereinabove set forth, any action
taken or omitted by an Issuing Bank under or in connection with the
Facility Letters of Credit or any related certificates, if taken or
omitted in good faith under commercially reasonable standards, shall
not put such Issuing Bank, Agent or any Bank under any resulting
liability to any Borrower or relieve any Borrower of any of its
obligations hereunder to any such Person.
(d) Certain Acts of Issuing Bank. Notwithstanding anything to
the contrary contained in this Section 4.9, Borrowers shall have no
obligation to indemnify an Issuing Bank under this Section 4.9 in
respect of any liability incurred by such Issuing Bank arising
primarily out of the willful misconduct or gross negligence of such
Issuing Bank, as determined by a court of competent jurisdiction, or
out of the wrongful dishonor by such Issuing Bank of a proper demand
for payment made under the Facility Letters of Credit issued by such
Issuing Bank, unless such dishonor was made at the request of a
Borrower.
4.10 No Obligation to Issue. The Issuing Bank shall not at any time be
obligated to issue any Facility Letter of Credit if such issuance would conflict
with, or cause the Issuing Bank or any other Bank, to exceed any limits imposed
by any applicable law, rule or regulation.
4.11 Obligations of Issuing Bank and Other Banks. Except to the extent
that a Bank shall have agreed to be designated as an Issuing Bank, no Bank shall
have any obligation to accept or approve any request for, or to issue, amend or
extend, any Letter of Credit, and the obligations of the Issuing Bank to issue,
amend or extend any Facility Letter of Credit are expressly limited by and
subject to the provisions of this Article IV.
ARTICLE V
CONDITIONS PRECEDENT
5.1 Initial Advance. Banks shall not be required to make the initial
Advance hereunder, and the Issuing Bank shall not be required to issue the
initial Facility Letter of Credit hereunder, unless Borrowers have paid to Agent
the fees set forth in the letter agreement of even date herewith between Agent
and Borrowers, and Borrowers have furnished to Agent with sufficient copies for
Banks:
(i) Copies of the certificate of incorporation of
each Borrower and Guarantor, together with all amendments, and a
certificate of good standing, all certified by the appropriate
governmental officer in the jurisdiction of incorporation.
(ii) Copies, certified by the Secretary or Assistant
Secretary of each Borrower and Guarantor, of each such corporation's
by-laws and of its
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Board of Directors' resolutions (and resolutions of other bodies, if
any are deemed necessary by counsel for any Bank) authorizing the
execution of the Loan Documents and the Guaranty.
(iii) Incumbency certificates, executed by the
Secretary or Assistant Secretary of each Borrower and Guarantor, which
shall identify by name and title and bear the signature of the officers
of the such corporation authorized to sign the Loan Documents and the
Guaranty (as applicable) and (if applicable) to make borrowings
hereunder and to request, apply for and execute Facility Letter of
Credit Reimbursement Agreements with respect to Facility Letters of
Credit hereunder, upon which certificates Agent, Banks and the Issuing
Bank shall be entitled to rely until informed of any change in writing
by the applicable Borrower or Guarantor.
(iv) A written opinion of Haligman & Lottner, P.C.,
counsel to Borrowers and Guarantor, addressed to Agent and Banks in
substantially the form of Exhibit F hereto.
(v) A written certificate of General Counsel of
Guarantor, addressed to Agent and Banks in substantially the form of
Exhibit G hereto.
(vi) A written opinion of local counsel to Borrowers
and Guarantor, addressed to Agent and Banks in substantially the form
of Exhibit H hereto.
(vii) A letter or other evidence from Price
Waterhouse LLP, accountants for Borrowers and Guarantor, in form
acceptable to Agent, indicating that no material accounting adjustments
have occurred with respect to Guarantor's consolidated financial
statements in connection with the adoption of FASB 121.
(viii) Notes payable to the order of each of Banks.
(ix) Written money transfer instructions, in form
acceptable to Agent, addressed to Agent and signed by an Authorized
Officer, together with such other related money transfer authorizations
as Agent may have reasonably requested.
(x) The Guaranty duly executed by Guarantor.
(xi) Evidence satisfactory to Agent (A) of payment in
full (which payment may be made from the proceeds of the initial
Advance hereunder) of all obligations of Borrowers and Guarantor to,
and termination of the financing arrangements evidenced by, the
Refinanced Loans, and (B) that all Liens securing the obligations and
financing arrangements related to the Refinanced Loans shall
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be discharged promptly, but in no event later than ninety (90) days,
following the payment of such obligations.
(xii) An accurate list of all of the Subsidiaries of
Guarantor and each Borrower, setting forth their respective
jurisdictions of incorporation or formation and the percentage of their
respective capital stock or partnership interests owned by Guarantor or
any Borrower or their Subsidiaries.
(xiii) Such other documents as any Bank or Issuing
Bank or their respective counsel may have reasonably requested.
5.2 Each Advance. Banks shall not be required to make any Advance
(other than the conversion of an Advance of one Type to an Advance of another
Type that does not increase the aggregate amount of outstanding Advances),
unless on the applicable Borrowing Date, and an Issuing Bank shall not be
required to issue, amend or extend a Facility Letter of Credit unless on the
applicable Issuance Date:
(i) There exists no Event of Default or Unmatured Event of
Default.
(ii) The representations and warranties contained in Article
VI are true and correct in all material respects as of such Borrowing
Date or Issuance Date except to the extent any such representation or
warranty is stated to relate solely to an earlier date, in which case
such representation or warranty shall be true and correct in all
material respects on and as of such earlier date and except for changes
permitted by this Agreement. Solely for purposes of this Section 5.2,
the representations and warranties in Sections 6.5 and 6.7 relate
solely to the date of this Agreement.
(iii) After the making of such Advance or issuance of such
Facility Letter of Credit, (A) the principal amount of all Advances
plus the aggregate amount of the Facility Letter of Credit Obligations
outstanding shall not exceed the Aggregate Commitment, and (B) the
aggregate principal amount of all Advances plus the aggregate amount of
the Facility Letter of Credit Obligations outstanding to any individual
Borrower shall not exceed the Borrowing Base for such Borrower
(determined as of the most recent Inventory Valuation Date), and (C)
the aggregate principal amount of all Advances plus the aggregate
amount of the Facility Letter of Credit Obligations outstanding shall
not exceed the aggregate Borrowing Bases (determined as of the most
recent Inventory Valuation Date).
(iv) Borrowers shall have delivered to Agent, within the time
period specified in Section 2.8, a duly completed Borrowing Notice in
substantially the form of Exhibit I hereto.
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(v) All legal matters incident to (A) the making of such
Advance shall be reasonably satisfactory to Agent and its counsel and
(B) the issuance of such Facility Letter of Credit shall be reasonably
satisfactory to Agent, such Issuing Bank and their respective counsel.
Each Borrowing Notice with respect to each such Advance and each
request for a Facility Letter of Credit shall constitute a representation and
warranty by Borrowers that the conditions contained in Sections 5.2(i) and (ii)
have been satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Borrowers represent and warrant to Banks and Agent that:
6.1 Existence and Standing. Each Borrower is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite authority to conduct its
business in each jurisdiction in which its business is conducted (except to the
extent that a failure to maintain such existence, good standing or authority
would not reasonably be expected to have and does not have a Material Adverse
Effect). Guarantor is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation and has all
requisite authority to conduct its business in each jurisdiction in which its
business is conducted (except to the extent that a failure to maintain such
existence, good standing or authority would not reasonably be expected to have
and does not have a Material Adverse Effect).
6.2 Authorization and Validity. Each Borrower has the corporate power
and authority to execute and deliver the Loan Documents and to perform its
obligations hereunder and thereunder. The execution and delivery by each
Borrower of the Loan Documents and the performance of its obligations thereunder
have been duly authorized and the Loan Documents constitute legal, valid and
binding obligations of each Borrower enforceable against each Borrower in
accordance with their terms, subject to bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally and general principles
of equity. Guarantor has the corporate power and authority to execute and
deliver the Guaranty and to perform its obligations thereunder. The execution
and delivery by Guarantor of the Guaranty and the performance of its obligations
thereunder have been duly authorized, and the Guaranty constitutes the legal,
valid and binding obligations of Guarantor enforceable against Guarantor in
accordance with its terms, subject to bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally and general principles
of equity.
6.3 No Conflict; Government Consent. Neither the execution and delivery
by each Borrower of the Loan Documents or by Guarantor of the Guaranty, nor the
consummation of the transactions herein contemplated, nor compliance with the
provisions hereof or thereof will violate in any material respect any law, rule,
regulation, order, writ, judgment, injunction,
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decree or award binding on each Borrower or Guarantor or a Borrower's or
Guarantor's certificate of incorporation or bylaws or the provisions of any
indenture (including without limitation the Indenture), instrument or agreement
to which each Borrower or Guarantor is a party or is subject, or by which it, or
its Property, is bound, or conflict with or constitute a default thereunder, or
result in the creation or imposition of any Lien in, of or on the Property of
each Borrower or Guarantor pursuant to the terms of any such indenture,
instrument or agreement. Except as set forth on Schedule "6.3" hereto, no order,
consent, approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption by, any governmental or public body
or authority, or any subdivision thereof, is required to authorize, or is
required in connection with the execution, delivery and performance of, or the
legality, validity, binding effect or enforceability of, any of the Loan
Documents or the Guaranty.
6.4 Financial Statements. The December 31, 1995 audited consolidated
financial statements of Guarantor and the December 31, 1995 unaudited financial
statements of Borrowers and the Subsidiaries delivered to Banks were prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Such statements fairly present, in all material respects, the consolidated
financial condition and operations of Guarantor, Borrowers and their
Subsidiaries at such date and the consolidated results of their operations for
the period then ended.
6.5 Material Adverse Change. Since the date of the financial statements
(whether quarterly or annual) of each Borrower and Guarantor described in
Section 6.4, there has been no change in the business, Property, condition
(financial or otherwise) or results of operations of Borrowers and Guarantor
(taken as a whole) that has had or would reasonably be expected to have a
Material Adverse Effect. The foregoing representation and warranty is made
solely as of the date of this Agreement.
6.6 Taxes. Each Borrower and Guarantor have filed all United States
federal income tax returns and all other material tax returns which are required
to be filed and have paid all taxes due pursuant to said returns or pursuant to
any assessment received by a Borrower or Guarantor, except such taxes, if any,
as are being contested in good faith and as to which adequate reserves have been
provided. No tax Liens (except Permitted Liens) have been filed and no claims
are being asserted with respect to any such taxes that have had or would
reasonably be expected to have a Material Adverse Effect. The charges, accruals
and reserves on the books of each Borrower and Guarantor in respect of any taxes
or other governmental charges are adequate in accordance with Agreement
Accounting Principles.
6.7 Litigation and Contingent Obligations. Except as set forth in
Guarantor's form 10-K report for the period ending December 30, 1995, there is
no litigation, arbitration, governmental investigation, proceeding or inquiry
pending or, to the knowledge of any Authorized Officer, threatened against or
affecting any Borrower or Guarantor that has had or would reasonably be expected
to have a Material Adverse Effect. Other than any liability incident to such
litigation, arbitration or proceedings, each Borrower and Guarantor have no
material contingent obligations not provided for or disclosed in the financial
statements (whether
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quarterly or annual) of Guarantor and Borrowers that have been most recently
delivered by Guarantor and Borrowers to Agent that has had or would reasonably
be expected to have a Material Adverse Effect.
6.8 Subsidiaries. All of the issued and outstanding shares of capital
stock of Borrowers have been duly authorized and validly issued and are fully
paid and non-assessable.
6.9 ERISA. The Unfunded Liabilities of all Single Employer Plans do not
in the aggregate exceed $5,000,000. The withdrawal liabilities to Multiemployer
Plans of the Guarantor, any Borrower and any other member of the Controlled
Group do not, and are not reasonably expected to, exceed $5,000,000 in the
aggregate. Each Plan complies in all material respects with all applicable
requirements of law and regulations, no Reportable Event has occurred with
respect to any Plan, neither Guarantor, nor any Borrower nor any other member of
the Controlled Group has withdrawn from any Multiemployer Plan or initiated
steps to do so, and no steps have been taken to terminate any Plan.
6.10 Accuracy of Information. All factual information heretofore or
contemporaneously furnished in writing by or on behalf of any Borrower or
Guarantor to Agent or any Issuing Bank for purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all other such
factual information hereafter furnished in writing by or on behalf of any
Borrower or Guarantor to Agent or any Issuing Bank will be, true and accurate
(taken as a whole), in all material respects, on the date as of which such
information is dated or certified and not incomplete by omitting to state any
material fact necessary to make such information (taken as a whole) not
misleading at such time.
6.11 Regulation U. Neither Guarantor, nor any Borrower nor any
Subsidiary is engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying Margin
Stock (as defined in Regulation U).
6.12 Material Agreements. Neither any Borrower nor Guarantor is in
default in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in (i) any agreement to which it is a party,
or (ii) any agreement or instrument evidencing or governing Indebtedness, which
default has had or would reasonably be expected to have a Material Adverse
Effect.
6.13 Labor Disputes and Acts of God. Neither the business nor the
Property of any Borrower or of Guarantor is affected by any fire, explosion,
accident, strike, lockout, or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy, or other casualty
(whether or not covered by insurance), which has had or would reasonably be
expected to have a Material Adverse Effect.
6.14 Ownership. Each Borrower and Guarantor have title to, or valid
leasehold interests in, all of their respective properties and assets, real and
personal, including the properties and assets and leasehold interests reflected
in the financial statements referred to in
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Section 6.4 (except to the extent that (i) such properties or assets have been
disposed of in the ordinary course of business or (ii) the failure to have such
title has not had and would not reasonably be expected to have a Material
Adverse Effect).
6.15 Operation of Business. Each Borrower and Guarantor possess all
licenses, permits, franchises, patents, copyrights, trademarks, and trade names,
or rights thereto, to conduct their respective businesses substantially as now
conducted, and as presently proposed to be conducted, with such exceptions as
have not had and would not reasonably be expected to have a Material Adverse
Effect.
6.16 Laws; Environment. Except as set forth in Guarantor's form 10-K
report for the period ending December 31, 1995, each Borrower and Guarantor have
duly complied, and their businesses, operations and Property are in compliance,
in all material respects, with the provisions of all federal, state, and local
statutes, laws, codes, and ordinances and all rules and regulations promulgated
thereunder (including without limitation those relating to the environment,
health and safety). Except as set forth in the form 10-K described herein, each
Borrower and Guarantor have been issued all required federal, state, and local
permits, licenses, certificates, and approvals relating to (1) air emissions;
(2) discharges to surface water or groundwater; (3) solid or liquid waste
disposal; (4) the use, generation, storage, transportation, or disposal of toxic
or hazardous substances or hazardous wastes (intended hereby and hereafter to
include any and all such materials listed in any federal, state, or local law,
code, or ordinance and all rules and regulations promulgated thereunder as
hazardous); or (5) other environmental, health or safety matters. Except in
accordance with a valid governmental permit, license, certificate or approval or
as set forth in the form 10-K described herein, to the best knowledge of each
Borrower, there has been no material emission, spill, release, or discharge into
or upon (1) the air; (2) soils, or any improvements located thereon; (3) surface
water or groundwater; or (4) the sewer, septic system or waste treatment,
storage or disposal system servicing any Property of a Borrower or Guarantor, of
any toxic or hazardous substances or hazardous wastes at or from such Property.
Neither Guarantor nor any Borrower has received notice of any written complaint,
order, directive, claim, citation, or notice from any governmental authority or
any person or entity with respect to violations of law or damage by reason of
any Borrower's or Guarantor's (1) air emissions; (2) spills, releases, or
discharges to soils or improvements located thereon, surface water, groundwater
or the sewer, septic system or waste treatment, storage or disposal systems
servicing any Property; (3) solid or liquid waste disposal; (4) use, generation,
storage, transportation, or disposal of toxic or hazardous substances or
hazardous waste; or (5) other environmental, health or safety matters affecting
any Borrower or Guarantor or its business, operation or Property. Except as set
forth in the form 10-K described herein, neither any Borrower nor Guarantor has
any material Indebtedness, obligation, or liability, absolute or contingent,
matured or not matured, with respect to the storage, treatment, cleanup, or
disposal of any solid wastes, hazardous wastes, or other toxic or hazardous
substances (including without limitation any such indebtedness, obligation, or
liability with respect to any current regulation, law or statute regarding such
storage, treatment, cleanup, or disposal). A matter will not constitute a breach
of this Section 6.16 unless it is reasonably likely to result in a Material
Adverse Effect.
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6.17 Investment Company Act. Neither Guarantor nor any Borrower is an
"investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended.
6.18 Public Utility Holding Company Act. Neither Guarantor nor any
Borrower nor any Subsidiary is a "holding company" or a "subsidiary company" of
a "holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
6.19 Subordination Provisions. The Obligations to the Banks constitute
senior indebtedness which is entitled to the benefits of the subordination
provisions of the Convertible Subordinated Notes. The Obligations to the Banks
constitute Guarantor Senior Indebtedness of Borrowers under the Indenture which
entitle the Banks to the benefits of the subordination provisions of the
Indenture.
6.20 Indenture Provisions. Each Borrower is a Wholly-Owned Restricted
Subsidiary, as that term is defined in the Indenture. Each Borrower is a
Guarantor, as that term is defined in the Indenture.
ARTICLE VII
AFFIRMATIVE COVENANTS
During the term of this Agreement, unless the Required Banks shall
otherwise consent in writing:
7.1 Financial Reporting. Each Borrower will maintain, and Guarantor
will maintain, a system of accounting established and administered in accordance
with GAAP, and furnish to Banks:
(i) Within 100 days after the close of each fiscal year, (A)
an unqualified (or qualified as reasonably acceptable to Agent) audited
financial statements of Guarantor certified by one of the "Big Six"
accounting firms or other nationally recognized independent certified
public accountants, reasonably acceptable to Banks, prepared in
accordance with GAAP on a consolidated basis, including balance sheets
as of the end of such fiscal year and statements of income and retained
earnings and a statement of cash flows, in each case setting forth in
comparative form the figures for the preceding fiscal year, and (B)
unaudited financial statements, prepared in accordance with GAAP
(excluding footnotes) on a consolidated basis for each Borrower and its
respective Subsidiaries, including balance sheets as of the end of such
fiscal year and statements of income and retained earnings and a
statement of cash flows, in each case setting forth in comparative form
the figures for the preceding fiscal year.
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(ii) Within sixty (60) days after the close of the first three
(3) quarterly periods of each fiscal year, for Guarantor and each
Borrower and their respective Subsidiaries, on a consolidated basis,
unaudited financial statements, including balance sheets as of the end
of such period, statements of income and retained earnings, and a
statement of cash flows for the portion of the fiscal year ending with
such fiscal period, all certified by an Authorized Officer. All such
balance sheets shall set forth in comparative form figures for the
preceding year end. All such income statements shall reflect current
period and year-to-date figures.
(iii) Annually, together with the financial statements
described in clause (i) above, a copy of the business plan of Guarantor
and each Borrower for the upcoming two (2) fiscal years, including, as
to Guarantor, a consolidated balance sheet, statement of income and
projection of cash flows.
(iv) Within sixty (60) days of the end of each of the first
three quarterly periods of each fiscal year, a quarterly variance
analysis comparing actual quarterly results versus projected quarterly
results for the fiscal quarter most recently ended, including an
analysis of revenues, Housing Unit Closings and operating profits (by
operating division) for such period, and such other items as are
reasonably requested by Agent, together with a written explanation of
material variances.
(v) Within 100 days after the end of each fiscal year, a
variance analysis comparing actual annual results versus the business
plan for the fiscal year most recently ended, including an analysis of
revenues, Housing Unit Closings and operating profits (by operating
division) for such period, and such other items as are reasonably
requested by Agent, together with a written explanation of material
variances.
(vi) By the twenty-fifth day of each calendar month, a
Borrowing Base Certificate of an Authorized Officer for each Borrower,
with respect to the Inventory Valuation Date occurring on the last day
of the immediately preceding calendar month.
(vii) Within sixty (60) days after the end of each quarterly
period of each fiscal year, a report identifying as to Guarantor and
its Subsidiaries the inventory of real estate operations, including
land and housing units as of such date, designated in the same
categories as are identified in Guarantor's corporate status report
currently delivered to Agent; such summary shall include a delineation
of sold or unsold items in each category.
(viii) Within sixty (60) days after the end of each of the
first three quarterly periods, and within one hundred (100) days after
the end, of each fiscal
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year, a certificate of an Authorized Officer as to Borrower's and
Guarantor's compliance with the Financial Covenant Tests in the form of
Exhibit J hereto.
(ix) Within 270 days after the close of each fiscal year, a
statement of the Unfunded Liabilities of each Single Employer Plan,
certified as correct by an actuary enrolled under ERISA (which
requirement may be satisfied by the delivery of the most recent
actuarial valuation of each such Single Employer Plan).
(x) As soon as possible and in any event within ten (10) days
after any Borrower knows that any Reportable Event has occurred with
respect to any Plan, a statement, signed by an Authorized Officer of
such Borrower, describing said Reportable Event and the action which
such Borrower (or Guarantor) proposes to take with respect thereto.
(xi) As soon as possible, and in any event within thirty (30)
days after any Borrower knows or has reason to know that any
circumstances exist that constitute grounds entitling the PBGC to
institute proceedings to terminate a Plan subject to ERISA with respect
to any Borrower or any member of the Controlled Group and promptly but
in any event within two (2) Business Days of receipt by Guarantor, any
Borrower or any member of the Controlled Group of notice that the PBGC
intends to terminate a Plan or appoint a trustee to administer the
same, and promptly but in any event within five (5) Business Days of
the receipt of notice concerning the imposition of withdrawal liability
in excess of $500,000 with respect to Guarantor, any Borrower or any
member of the Controlled Group, a certificate of an Authorized Officer
setting forth all relevant details of such event and the action which
any Borrower (or Guarantor) proposes to take with respect thereto.
(xii) Promptly after the sending or filing thereof, copies of
all proxy statements, financial statements (including form 10-K and
10-Q, exclusive of exhibits unless otherwise requested by Agent), and
reports which Guarantor sends to its stockholders, and copies of all
regular (except form S-8), periodic, and special reports, and all
registration statements (exclusive of exhibits unless otherwise
requested by Agent) which Guarantor is required to file with the
Securities and Exchange Commission or any governmental authority which
may be substituted therefor, or with any national securities exchange.
(xiii) Promptly after the commencement thereof, notice of all
actions, suits and proceedings before any court or governmental
department, commission, board, bureau, agency, or instrumentality,
domestic or foreign, affecting a Borrower or Guarantor (a) which, if
determined adversely to such Borrower or Guarantor, could reasonably be
expected to have a Material Adverse Effect or (b) in which liability in
excess of $2,500,000 (in the aggregate with respect to any
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action, suit or proceeding) is claimed and alleged against such
Borrower or Guarantor.
(xiv) As soon as possible and in any event within ten (10)
days after receipt by any Borrower or Guarantor, a copy of (a) any
written notice or claim to the effect that any Borrower or Guarantor is
or may be liable to any Person as a result of the release of any toxic
or hazardous waste or substance into the environment, and (b) any
notice alleging any violation of any federal, state or local
environmental, health or safety law or regulation by any Borrower or
Guarantor which, in the case of either (a) or (b), could reasonably be
expected to have a Material Adverse Effect or could result in liability
to any Borrower or Guarantor in excess of $2,500,000 (in the aggregate
with respect to any notice or claim).
(xv) Such other information (including non-financial
information) as Agent may from time to time reasonably request.
7.2 Use of Proceeds. Subject to the limitations contained in this
Agreement, each Borrower will use the proceeds of Advances for its own
acquisition, development or holding of real property or the construction of
improvements in connection with the home building, real estate operations or
related businesses of such Borrower (including payment of reimbursement
obligations with respect to Facility Letters of Credit), and any other use
permitted with the definition of "Guarantor Senior Indebtedness" under the
Indenture, and to repay outstanding Advances. Each Borrower will not, and
Guarantor and each Subsidiary will not, use any of the proceeds of the Advances
to purchase or carry any "margin stock" (as defined in Regulation U) or, except
as otherwise permitted by this Agreement, to purchase any securities in any
transaction that is subject to Sections 13 and 14 of the Securities Exchange Act
of 1934, as amended.
7.3 Notice of Event of Default. Each Borrower will, and Guarantor will,
give prompt notice in writing to Agent of the occurrence of (i) any Event of
Default or Unmatured Event of Default and (ii) any other development, financial
or otherwise, that has had or would be reasonably expected to have a Material
Adverse Effect.
7.4 Conduct of Business. Except as otherwise permitted under this
Agreement, each Borrower will, and Guarantor will, carry on and conduct business
in the same general manner and in substantially the same fields of enterprise as
presently conducted and to do all things necessary to remain duly incorporated,
validly existing and in good standing as a domestic corporation in their
respective jurisdictions of incorporation and maintain all requisite authority
to conduct business in each jurisdiction in which business is conducted;
provided, however, that nothing contained herein shall prohibit the dissolution
of any Borrower as long as another Borrower succeeds to the assets, liabilities
and business of the dissolved Borrower.
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7.5 Taxes. Each Borrower will, and Guarantor will, pay prior to
delinquency all taxes, assessments and governmental charges and levies upon them
or their income, profits or Property, except (i) those that solely encumber
property abandoned or in the process of being abandoned and with respect to
which there is no recourse to Guarantor or any Subsidiary; (ii) those that are
being contested in good faith by appropriate proceedings and with respect to
which adequate reserves have been established in accordance with GAAP, and (iii)
to the extent that the failure to do so would not reasonably be expected to have
and does not have a Material Adverse Effect.
7.6 Insurance. Each Borrower will, and Guarantor will, maintain with
financially sound and reputable insurance companies insurance on all their
Property in such amounts and covering such risks as is consistent with sound
business practice, and each Borrower will furnish to Agent upon request full
information as to the insurance carried.
7.7 Compliance with Laws. Each Borrower will, and Guarantor will,
comply with all laws, rules, regulations, orders, writs, judgments, injunctions,
decrees or awards to which it may be subject, except to the extent that the
failure to do so would not reasonably be expected to have and does not have a
Material Adverse Effect.
7.8 Maintenance of Properties. Each Borrower will, and Guarantor will,
do all things necessary to maintain, preserve, protect and keep its Property in
good repair, working order and condition, except to the extent that the failure
to do so would not reasonably be expected to have and does not have a Material
Adverse Effect.
7.9 Inspection. Each Borrower will, and Guarantor will, permit Agent
and Banks, by their respective representatives and agents, to inspect any of the
Property, corporate (or partnership) books and financial records of such
Borrower and Guarantor to examine and make copies of the books of accounts and
other financial records of such Borrower and Guarantor, and to discuss the
affairs, finances and accounts of such Borrower and Guarantor with, and to be
advised as to the same by, their respective officers at such reasonable times
and intervals as Agent may designate.
7.10 Environment. Each Borrower will, and Guarantor will, (i) comply,
in all material respects, with the provisions of all federal, state, and local
environmental, health, and safety laws, codes and ordinances, and all rules and
regulations issued thereunder; (ii) promptly contain and remove or otherwise
remediate any hazardous discharge from or affecting the Property of any Borrower
or Guarantor, to the extent required by and in compliance with all applicable
laws; (iii) promptly pay any fine or penalty assessed in connection therewith or
contest the same in good faith; and (iv) permit Agent to inspect such Property,
to conduct tests thereon, and to inspect all books, correspondence, and records
pertaining thereto at reasonable hours and places; and (v) at the request of the
Required Banks, and at such Borrower's expense, provide a report of a qualified
environmental engineer, satisfactory in scope, form, and content to the Required
Banks, and such other and further assurances reasonably satisfactory to the
Required Banks that any new condition or occurrence hereafter identified in any
updated form 10-K or 10-Q has been
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corrected; provided that a failure to comply with the provisions of clauses (i)
through (v) of this Section 7.10 shall not constitute an Event of Default or an
Unmatured Event of Default unless such noncompliance has resulted in or is
reasonably likely to result in a Material Adverse Effect.
ARTICLE VIII
NEGATIVE COVENANTS
During the term of the Agreement, unless the Required Banks shall
otherwise consent in writing:
8.1 Dividends. Each Borrower will not, directly or indirectly, declare,
make or pay, or incur any liability to make or pay, or cause or permit to be
declared, made or paid, any Dividend if, prior to or after giving effect to the
declaration and payment of any Dividend, there shall exist any Event of Default
under this Agreement, or Borrowers shall be in breach of the Individual Debt
Coverage Test or the Aggregate Debt Coverage Test. Guarantor will not, directly
or indirectly, declare, make or pay, or incur any liability to make or pay, or
cause or permit to be declared, made or paid, any Dividend if, prior to or after
giving effect to the declaration and payment of any Dividend, there shall exist
any Event of Default under this Agreement.
8.2 Indebtedness. Each Borrower will not, and Guarantor will not,
create, incur or suffer to exist any Indebtedness, except, without duplication
and without duplication as to Borrowers and Guarantor:
(i) The Loans.
(ii) Indebtedness existing on the date hereof (and not
otherwise permitted under this Section 8.2) and described in Schedule
"8.2(ii)" hereto and Refinancing Indebtedness with respect thereto.
(iii) Indebtedness of Guarantor's mortgage lending and
financial asset management Subsidiaries.
(iv) Rate Hedging Obligations.
(v) Intercompany Indebtedness between any Borrower, Guarantor
and/or any Subsidiary, provided that, as to Indebtedness of a Borrower
to Guarantor, such Indebtedness is subordinated by Guarantor under the
Guaranty to the reasonable satisfaction of Agent.
(vi) Trade accounts payable and accrued expenses arising
or occurring in the ordinary course of business.
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(vii) Indebtedness constituting Capitalized Lease
Obligations.
(viii) Indebtedness with respect to Letters of Credit
(including Facility Letters of Credit) in an aggregate face amount
outstanding at any time not to exceed $35,000,000.
(ix) Indebtedness secured by purchase-money Liens
permitted under Section 8.6(iii).
(x) Subordinated Indebtedness.
(xi) Non-Recourse Indebtedness incurred in the ordinary
course of business.
(xii) Performance bonds, completion bonds, guarantees of
performance, and guarantees of Indebtedness of a special district
entered into in the ordinary cause of business.
(xiii) Indebtedness of a Person existing as of the time of the
Acquisition of such Person by any Borrower or Guarantor, provided that,
after giving effect to such Acquisition, Borrowers or Guarantor, as
applicable, are in compliance with the terms of this Agreement
(including without limitation the Financial Covenant Tests).
(xiv) Indebtedness evidenced by the Senior Notes and the
Convertible Subordinated Notes and Refinancing Indebtedness with
respect thereto.
(xv) Public Indebtedness, so long as such Indebtedness (A) as
to Guarantor, is either subordinated to or pari passu with Guarantor's
obligations under the Guaranty; and (B) as to Borrowers, is
Subordinated Indebtedness.
(xvi) Indebtedness of a Borrower or Guarantor secured by a
Lien on real property owned by such Borrower or Guarantor, where (A)
the real property is not related to Housing Units or Land Under
Development, and (B) the aggregate outstanding amount of such
Indebtedness, plus all amounts committed but undisbursed in connection
with such Indebtedness, does not exceed seventy-five percent (75%) of
the fair market value of the real property encumbered by such Lien.
(xvii) Indebtedness, except Public Indebtedness, not otherwise
permitted by this Section 8.2 in an aggregate amount outstanding at any
time not to exceed $35,000,000.
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(xviii) Indebtedness of Guarantor which arises pursuant to a
guarantee of payment or collection executed by Guarantor, guaranteeing
the Indebtedness of one or more Borrowers which is permitted under
clauses (i) through (xvii) of this Section 8.2.
8.3 Merger. Each Borrower will not, nor will it permit Guarantor
to, merge or consolidate with or into any other Person, unless:
(i) the Borrower is merging with any other Borrower;
(ii) a Subsidiary (other than a Borrower) is merging with
any Borrower or Guarantor or another Subsidiary, and the Borrower or
Guarantor, if applicable, is the continuing corporation;
(iii) no Event of Default shall exist or shall occur after
giving effect to such transaction;
(iv) after giving effect to such transaction, Borrowers
and Guarantor, as applicable, shall be in compliance with the Financial
Covenant Tests;
(v) (a) the other Person to the transaction is in a Related
Business or, (b) if not in a Related Business, the aggregate net worth
of the acquired non-related entities of all such transactions during
any 24-month period shall not exceed $15,000,000, and the Borrower or
Guarantor, if involved in the merger, is the continuing corporation;
and
(vi) the transaction is not otherwise prohibited under
this Agreement.
8.4 Sale of Assets. Each Borrower will not lease, sell or otherwise
dispose of its Property, in a single transaction or a series of transactions, to
any other Person except (i) for sales or leases in the ordinary course of
business, and (ii) for leases, sales or other dispositions of its Property that,
together with all other Property of such Borrower previously leased, sold or
disposed of (other than in the ordinary course of business) as permitted by this
Section during the month in which any such lease, sale or other disposition
occurs, do not constitute a Material Portion of the Property of any Borrower.
For purposes of this Section 8.4, "Material Portion" means, with
respect to the Property of any Borrower, Property which represents more than 25%
of the book value of all assets of such Borrower. If a Material Portion of the
Property of any Borrower is leased, sold or disposed of in violation of this
Section 8.4, the applicable Borrower shall pay to Agent for the benefit of Banks
at the time of such lease, sale or disposal, all amounts owed by such Borrower
pursuant to Section 2.2, taking into account the effect of lease, sale or
disposal.
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8.5 Investments and Acquisitions. Each Borrower will not, and Guarantor
will not, make or suffer to exist any Investments (including without limitation,
loans and advances to, and other Investments in, Subsidiaries), or commitments
therefor, or to create any Subsidiary or to become or remain a partner in any
partnership or joint venture, or to make any Acquisition of any Person, except:
(i) Investments in Cash Equivalents.
(ii) Loans or advances made to officers, directors or
employees of Guarantor or any Borrower or any Subsidiary.
(iii) Carryback loans made in the ordinary course of business
in conjunction with the sale of Property of such Borrower or Guarantor.
(iv) Investments in interests in issuances of collateralized
mortgage obligations, mortgages, mortgage loan servicing or other
mortgage related assets.
(v) Investments in contract rights granted by, entitlements
granted by, interests in securities issued by, or tangible assets of,
political subdivisions or enterprises thereof related to the home
building or real estate operations of Guarantor or any Borrower or any
Subsidiary, including without limitation Investments in special
districts as described in Section 8.2(xii).
(vi) Investments in existing Subsidiaries and other
Investments in existence on the date hereof.
(vii) Investments in Subsidiaries or other Persons whose
primary business is not a Related Business in an aggregate amount
outstanding at any one time not to exceed $15,000,000.
(viii) The Acquisition of or Investment in a business or
entity engaged primarily in a Related Business, provided that (a)
immediately upon the consummation of any such Acquisition or Investment
each Borrower and Guarantor is in compliance with the terms, covenants
and conditions of this Agreement (including without limitation the
Financial Covenant Tests), and (b) Borrowers shall deliver to Agent a
certificate, signed by an Authorized Officer, certifying to the best
knowledge of Borrowers and Guarantor, that, on the date of, and taking
into account, the consummation of such Acquisition, and based on the
reasonable assumptions set forth in such Certificate, no Event of
Default has occurred and is continuing, and Borrowers and Guarantor, as
applicable, are in compliance with the Financial Covenant Tests.
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(ix) The creation of new Subsidiaries engaged primarily in a
Related Business (or the purpose of which is principally to preserve
the use of a name in which such business is conducted).
(x) stock, obligations or securities received in satisfaction
of debts owing to any Borrower or Guarantor in the ordinary course of
business.
(xi) Pledges or deposits in cash by a Borrower or Guarantor to
support surety bonds, performance bonds or guarantees of completion in
the ordinary course of business.
(xii) Loans representing intercompany Indebtedness between any
Borrower, Guarantor and/or any Subsidiary, provided as to Loans from
Guarantor to any Borrower, repayment of such Loans is subordinated to
payment of the Obligations to the reasonable satisfaction of Agent.
Borrowers shall be entitled to repay such loans, unless such repayment
is prohibited by Section 2.2 or Section 8.1.
(xiii) Investments pursuant to a Borrower's or Guarantor's
employment compensation plans or agreements.
(xiv) Payments on account of the purchase, redemption or other
acquisition or retirement for value, or any payment in respect of any
amendment (in anticipation of or in connection with any such
retirement, acquisition or defeasance) in whole or in part, of any
shares of capital stock or other securities of Guarantor, but only to
the extent the same is permitted under the Indenture.
(xv) Investments, in addition to those enumerated in this
Section 8.5, in an aggregate amount outstanding at any time not to
exceed $5,000,000.
8.6 Liens. Each Borrower will not, and Guarantor will not, create,
incur, or suffer to exist any Lien in, of or on the Property of any Borrower or
Guarantor, except:
(i) Permitted Liens and Guarantor Permitted Liens.
(ii) Liens for taxes, assessments or governmental charges or
levies which solely encumber property abandoned or in the process of
being abandoned and with respect to which there is no recourse to
Guarantor or any Borrower or any Subsidiary.
(iii) Purchase-money Liens on any Property hereafter acquired
or the assumption of any Lien on Property existing at the time of such
acquisition (and not created in contemplation of such acquisition), or
a Lien incurred in connection
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with any conditional sale or other title retention or a Capitalized
Lease; provided that
(a) Any Property subject to any of the foregoing is
acquired by any Borrower or Guarantor in the ordinary course
of its respective business and the Lien on any such Property
attaches to such asset concurrently or within ninety (90) days
after the acquisition thereof;
(b) The obligation secured by any Lien so created,
assumed, or existing shall not exceed ninety percent (90%) of
the cost the Property covered thereby by any Borrower or
Guarantor acquiring the same; and
(c) Each Lien shall attach only to the Property so
acquired.
(iv) Liens existing on the date hereof (and not otherwise
permitted under this Section 8.6) and described in Schedule "8.6(iv)"
hereto and Liens securing Refinancing Indebtedness with respect
thereto, but only to the extent such Liens encumber the same collateral
in whole or in part as the previous Liens securing the Indebtedness
being refunded, refinanced or extended.
(v) Liens incurred in the ordinary course of business not
otherwise permitted by this covenant, provided that the aggregate
amount of Indebtedness secured by such Liens outstanding at any time
shall not exceed $25,000,000.
(vi) Judgments and similar Liens arising in connection with
court proceedings; provided the execution or enforcement thereof is
stayed and the claim is being contested in good faith.
(vii) Liens securing Non-Recourse Indebtedness of Guarantor or
any Borrower, where the amount of such Indebtedness is greater than
fifty percent (50%) of the fair market value of the Property encumbered
by the Liens.
(viii) Liens existing with respect to Indebtedness of a Person
acquired in an Acquisition permitted by this Agreement.
(ix) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or other
social security or retirement benefits, or similar legislation.
(x) Liens incurred or deposits made to secure the
performance of tenders, bids, leases, statutory obligations, surety and
appeal bonds, progress
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payments, government contracts, utility services and other obligations
of like nature in each case incurred in the ordinary course of
business.
(xi) Leases or subleases granted to others not materially
interfering with the ordinary course of business of Guarantor or any
Borrower.
(xii) Any interest in or title of a lessor to property subject
to any Capitalized Lease Obligations.
(xiii) Liens in favor of the trustee named therein arising
under the Indenture and liens for trustee's fees and similar costs
under any Refinancing Indebtedness of the Senior Notes.
(xiv) Any option, contract or other agreement to sell or
purchase an asset or participate in the income or revenue derived
therefrom.
(xv) Any legal right of, or right granted in good faith to, a
lender or lenders to which a Borrower or Guarantor may be indebted to
offset against, or appropriate and apply to the payment of, such
Indebtedness any and all balances, credits, deposits, accounts, or
monies of Guarantor or Borrower with or held by such lender or lenders.
(xvi) Any pledge or deposit of cash or property by Borrower or
any Guarantor in conjunction with obtaining surety and performance
bonds and letters of credit required to engage in constructing on-site
and off-site improvements or as otherwise required by political
subdivisions or other governmental authorities in the ordinary course
of business.
(xvii) Liens incurred in the ordinary course of business as
security for Borrowers' or Guarantor's obligations with respect to
indemnification in favor of title insurance providers.
(xviii) Letters of credit, bonds or other assets pledged to
secure insurance in the ordinary course of business.
(xix) Liens on assets securing warehouse lines of credit and
other credit facilities to finance the operations of Guarantor's
mortgage lending Subsidiaries and/or financial asset management
Subsidiaries and Liens related to issuances of CMOs and
mortgage-related securities, so long as such assets are owned by such
mortgage lending Subsidiaries and financial asset Subsidiaries.
(xx) Liens described in Section 8.2(xvi) securing the
Indebtedness described therein, so long as (i) each such Lien attaches
only to the real property
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described in Section 8.2(xvi) and (ii) the obligation secured by such
Lien is limited to repayment of the Indebtedness permitted under
Section 8.2(xvi).
(xxi) Any other Liens; provided, however, that such Liens
under this clause (xxi) do not at any time attach to Property with a
book value, in the aggregate, in excess of $15,000,000.
Notwithstanding anything herein to the contrary, each Borrower will not, and
will not permit Guarantor to, create, incur, or suffer to exist any Lien in, of
or on the capital stock of any Borrower except Liens granted by Guarantor
pursuant to the Indenture and Refinancing Indebtedness with respect thereto.
8.7 Affiliates. Each Borrower will not, and Guarantor will not, enter
into any transaction (including, without limitation, the purchase or sale of any
Property or service) with, or make any payment or transfer to, any Affiliate
(other than a Subsidiary) except (i) in the ordinary course of business and
pursuant to the reasonable requirements of such Borrower's or Guarantor's
business and upon fair and reasonable terms no less favorable to such Borrower
or Guarantor than such Borrower or Guarantor would obtain in a comparable
arms-length transaction, (ii) Investments permitted under Section 8.5, (iii)
pursuant to employment compensation plans and agreements, and (iv) with
officers, directors and employees of Guarantor or any Subsidiary so long as the
same are duly authorized pursuant to the articles of incorporation or bylaws (or
procedures conducted in accordance therewith) of Guarantor or such Borrower.
8.8 Modifications to Certain Indebtedness. Each Borrower will not, and
Guarantor will not, make any amendment or modification to the subordination
provisions of any indenture, note or other agreement evidencing or governing (i)
as to any Borrower, any Subordinated Indebtedness, and (ii) as to Guarantor,
Indebtedness that has been subordinated to Guarantor's obligations under the
Guaranty.
8.9 Amendments. Each Borrower will not, nor will it permit Guarantor
to, amend or modify the Indenture or the Senior Notes, except for amendments or
modifications that do not (i) impose upon any Borrower or Guarantor obligations
not contained therein as of the date of this Agreement, (ii) change the
definition of Guarantor Senior Indebtedness or change any subordination
provisions, or (iii) otherwise adversely affect any Borrower or Guarantor.
ARTICLE IX
FINANCIAL COVENANTS
During the term of this Agreement, unless the Required Banks shall
otherwise consent in writing:
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9.1 Minimum Consolidated Tangible Net Worth. Guarantor's Consolidated
Tangible Net Worth shall not be less than (i) $170,000,000 plus (ii) fifty
percent (50%) of the Consolidated Net Income earned after January 1, 1996
(excluding any quarter in which there is a loss, but applying any Consolidated
Net Income thereafter first to such loss before determining 50% of such amount
for purposes of this calculation) plus (iii) one hundred percent (100%) of the
net proceeds of capital stock issued by Guarantor after January 1, 1996 (the
"Consolidated Tangible Net Worth Test"). Guarantor's compliance with the
foregoing covenant shall be measured on a quarterly basis, based on the
financial statements delivered to Agent pursuant to Section 7.1. Guarantor's
failure to maintain Consolidated Tangible Net Worth in the amount required
herein shall not constitute an Event of Default or an Unmatured Event of
Default; provided, however, that if Guarantor fail to maintain Consolidated
Tangible Net Worth in the amount required herein for two (2) consecutive fiscal
quarters, then the Conversion Period shall commence in accordance with, but
subject to the limitations of, Section 2.22.
9.2 Leverage Test; Interest Coverage Test.
(a) Leverage Test. Guarantor's Consolidated Indebtedness
shall not exceed the product of (i) the then applicable Leverage
Multiplier multiplied by (ii) Adjusted Consolidated Tangible Net Worth
(the "Leverage Test").
(b) Interest Coverage Test. If at any time Guarantor shall
fail to maintain, for two (2) consecutive fiscal quarters, a ratio,
determined as of the last day of each fiscal quarter for the
four-quarter period ending on such day, of (i) EBITDA to (ii)
Consolidated Interest Incurred, of at least 1.75 to 1.0 (the "Interest
Coverage Test"), then the Leverage Multiplier, effective as of the
first day of the fiscal quarter immediately following the second
quarter of such breach with respect to which Guarantor shall have so
failed the Interest Coverage Test, shall be decreased to the extent
herein provided. Upon any failure to satisfy the Interest Coverage Test
(i.e., a failure for two (2) consecutive fiscal quarters) that occurs
on a date on which the Leverage Multiplier is 2.15, the Leverage
Multiplier shall be decreased by 0.25 to 1.90. Upon any failure (i.e.,
a failure for two (2) consecutive fiscal quarters) to satisfy the
Interest Coverage Test that occurs on a date on which the Leverage
Multiplier is less than 2.15, the Leverage Multiplier shall be
decreased by 0.10.
(c) Adjustment of Leverage Multiplier. If at any time at which
the Leverage Multiplier is less than 2.15, Guarantor shall satisfy the
Interest Coverage Test (which for purposes of this Section 9.2(c) shall
be deemed satisfied only if, on the same day on which Guarantor
maintains the Interest Coverage Test, Guarantor is also in compliance
with the Leverage Test), then the Leverage Multiplier, effective as of
the first day of the fiscal quarter immediately following the fiscal
quarter with respect to which Guarantor shall have so satisfied the
Interest Coverage Test, shall be increased to the extent herein
provided. Upon satisfaction of the Interest Coverage Test on a date on
which the Leverage
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Multiplier is 1.90, the Leverage Multiplier shall be increased to 2.15.
Upon satisfaction of the Interest Coverage Test on a date on which the
Leverage Multiplier is less than 1.90, the Leverage Multiplier shall be
increased by 0.10. In no event shall the Leverage Multiplier exceed
2.15.
(d) Effectiveness of Change in Leverage Multiplier. Any
increase or decrease of the Leverage Multiplier provided for in this
Section 9.2 shall be effective as of the first day of a fiscal quarter
as provided in Section 9.2(b) or (c) (as applicable), and the Leverage
Multiplier (as adjusted) shall remain in effect for the entire fiscal
quarter and thereafter unless and until adjusted as of the first day of
any subsequent fiscal quarter as provided in this Section 9.2(b) or (c)
(as applicable).
(e) Measure of Compliance. Guarantor's compliance with
covenants in this Section 9.2 shall be measured on a quarterly basis,
based on the financial statements delivered to Agent pursuant to
Section 7.1. A failure to satisfy the Leverage Test or the Interest
Coverage Test shall not constitute an Event of Default or an Unmatured
Event of Default; provided, however, if Guarantor fails to satisfy the
Leverage Test for two (2) consecutive fiscal quarters, then the
Conversion Period shall commence in accordance with, but subject to the
limitations of, Section 2.22.
9.3 Net Worth of Borrowers.
(a) Individual Net Worth. Each Borrower will not at any time
permit the ratio of (i) the aggregate amount of all Advances
outstanding to such Borrower plus the aggregate amount paid by an
Issuing Bank on any Facility Letters of Credit for such Borrower to the
extent (if any) not reimbursed by such Borrower under Section 4.4 to
(ii) such Borrower's Net Worth, to be greater than .75 to 1 (the
"Individual Debt Coverage Test"). For purposes of this covenant, "Net
Worth" means, as to such Borrower, the sum of (A) all capital accounts
(including without limitation, any paid-in capital, capital surplus,
and retained earnings) plus (B) all advances or other sums or
consideration paid and outstanding from Guarantor to such Borrower to
the extent the same are subordinated to the Obligations, less (C) all
advances or other sums or consideration paid and outstanding from such
Borrower to Guarantor, all as determined in conformity with Agreement
Accounting Principles.
(b) Aggregate Net Worth. Borrowers will not at any time permit
the ratio of (i) the aggregate amount of all Advances plus the
aggregate amount paid by an Issuing Bank on any Facility Letters of
Credit for any Borrower to the extent (if any) not reimbursed by such
Borrower under Section 4.4, plus the aggregate amount, without
duplications, of all contingent obligations of any Borrower whereby
such Borrower guarantees any obligation or liability of
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Guarantor (except pursuant to the Indenture or any Refinancing
Indebtedness thereof), to (ii) the aggregate Net Worth of all
Borrowers, to be greater than .75 to 1 (the "Aggregate Debt Coverage
Test"). For purposes of this covenant, "Net Worth" shall have the
meaning set forth in subparagraph (a) above.
(c) Measure of Compliance. Borrowers' compliance with the
covenants in this Section 9.3 shall be measured on a quarterly basis,
based on the financial statements delivered to Agent pursuant to
Section 7.1. A failure to satisfy the Individual Debt Coverage Test or
the Aggregate Debt Coverage Test shall not constitute an Event of
Default or an Unmatured Event of Default; provided, however, if
Borrowers fail to satisfy the Individual Debt Coverage Test or the
Aggregate Debt Coverage Test for two (2) consecutive fiscal quarters,
then the Conversion Period shall commence in accordance with, but
subject to the limitations of, Section 2.22.
9.4 Spec Unit Inventory. Borrowers will not at any time permit the
aggregate number of all Spec Units owned by Borrowers to exceed the greater of
(i) fifty percent (50%) of the number of Housing Unit Closings during the
preceding twelve (12) months, or (ii) one hundred ten percent (110%) of the
number of Housing Unit Closings during the preceding six (6) months. A failure
to satisfy the requirements of this Section 9.4 shall not constitute an Event of
Default or an Unmatured Event of Default, but any Spec Units owned by Borrowers
in excess of the foregoing requirements shall not be included in the Borrowing
Base.
ARTICLE X
EVENTS OF DEFAULT
The occurrence of any one or more of the following events shall
constitute an Event of Default:
10.1 Representations and Warranties. Any representation or warranty
(except the representations and warranties in Section 6.7, but only to the
extent the same are made, or deemed made, after the date hereof) made or deemed
made by or on behalf of any Borrower or Guarantor to Banks, the Issuing Bank or
Agent under or in connection with this Agreement, any Loan Document, or any
certificate or information delivered in connection with this Agreement or any
other Loan Document shall not be true and correct in any material respect on the
date as of which made, and, with respect to any matter which is reasonably
capable of being cured, such Borrower or Guarantor, as applicable, shall have
failed to cure the occurrence causing the representation or warranty to be
materially untrue or incorrect within thirty (30) days after notice thereof by
Agent to Borrowers.
10.2 Non-payment. Nonpayment of principal of any Note when due, or
nonpayment of interest upon any Note or of any fees or other obligations under
any of the Loan Documents within five (5) days after billing therefor by Agent
or Banks.
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10.3 Other Defaults. The breach by any Borrower (other than a
breach which constitutes an Event of Default under any other Section of this
Article X) of any of the terms or provisions of this Agreement which is not
remedied within thirty (30) days after notice thereof to Borrowers.
10.4 Other Indebtedness.
(a) Failure of any Borrower or Guarantor to pay when due
(after any applicable grace period and after notice from the holder
thereof) any Indebtedness (other than Non-Recourse Indebtedness) equal
to or exceeding $5,000,000 (in the aggregate); or
(b) The default (after any applicable grace period and after
notice from the holder thereof) by any Borrower or Guarantor in the
performance of any term, provision or condition contained in any
agreement under which any Indebtedness (other than Non-Recourse
Indebtedness) equal to or exceeding $5,000,000 (in the aggregate) was
created or is governed; or
(c) Any other event shall occur or condition exist (after any
applicable grace period and after notice from the holder thereof), the
effect of which is to cause, or to permit the holder or holders of any
Indebtedness (other than Non- Recourse Indebtedness) of any Borrower or
Guarantor equal to or exceeding $5,000,000 to cause such Indebtedness
to become due prior to its stated maturity; or
(d) Any Indebtedness (other than Non-Recourse Indebtedness) of
any Borrower or Guarantor equal to or exceeding $5,000,000 (in the
aggregate) shall be declared to be due and payable or required to be
prepaid (other than by a regularly scheduled payment) prior to the
stated maturity thereof (after any applicable grace period and after
notice from the holder thereof); or
(e) Any Borrower or Guarantor shall not pay, or shall admit in
writing its inability to pay, its debts generally as they become due.
10.5 Bankruptcy. Any Borrower or Guarantor shall:
(i) have an order for relief entered with respect to it
under the Federal bankruptcy laws as now or hereafter in effect;
(ii) make an assignment for the benefit of creditors;
(iii) apply for, seek, consent to, or acquiesce in, the
appointment of a receiver, custodian, trustee, examiner, liquidator or
similar official for it or any Substantial Portion of the Property of
Borrowers and Guarantor;
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(iv) institute any proceeding seeking an order for relief
under the Federal bankruptcy laws as now or hereafter in effect or
seeking to adjudicate it a bankrupt or insolvent, or seeking
dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fail
to file, within the applicable time period for the filing thereof, an
answer or other pleading denying the material allegations of any such
proceeding filed against it; or
(v) fail to contest in good faith any appointment or
proceeding described in Section 10.6.
10.6 Receiver. A receiver, trustee, examiner, liquidator or similar
official shall be appointed for any Borrower or Guarantor or any Substantial
Portion of the Property of Borrowers and Guarantor without the application,
approval or consent of any Borrower or Guarantor, or a proceeding described in
Section 10.5(iv) shall be instituted against any Borrower or Guarantor and such
appointment continues undischarged or such proceeding continues undismissed or
unstayed for a period of sixty (60) consecutive days.
10.7 Judgment. Any Borrower or Guarantor shall fail within thirty (30)
days to pay, bond or otherwise discharge any judgment or order for the payment
of money in excess of $10,000,000 which has not been stayed on appeal or is not
otherwise being appropriately contested in good faith.
10.8 Unfunded Liabilities. The Unfunded Liabilities of all Single
Employer Plans shall exceed in the aggregate $5,000,000 or any Reportable Event
shall occur in connection with any Plan, which Reportable Event has had or would
reasonably be expected to have a Material Adverse Effect.
10.9 Withdrawal Liability. Any Borrower, or Guarantor or any member of
the Controlled Group shall have been notified by the sponsor of a Multiemployer
Plan that it has incurred withdrawal liability to such Multiemployer Plan in an
amount which, when aggregated with all other amounts required to be paid to
Multiemployer Plans by any Borrower or Guarantor or any other member of the
Controlled Group as withdrawal liability (determined as of the date of such
notification), exceeds $5,000,000 or requires payments exceeding $2,000,000 per
annum; provided, however, that such event shall not constitute an Event of
Default as long as such Borrower, Guarantor or the Controlled Group member, as
applicable, is contesting in good faith the imposition of withdrawal liability.
10.10 Increased Contributions. Any Borrower, or Guarantor, or any other
member of the Controlled Group shall have been notified by the sponsor of a
Multiemployer Plan that such Multiemployer Plan is in reorganization, if as a
result of such reorganization the aggregate annual contributions of Borrowers,
Guarantor and the other members of the Controlled Group (taken as a whole) to
all Multiemployer Plans which are then in reorganization have been or will
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be increased over the amounts contributed to such Multiemployer Plans for the
respective plan years of each such Multiemployer Plan immediately preceding the
plan year in which the reorganization occurs by an amount exceeding $5,000,000.
10.11 Change in Control. Any Change in Control shall occur.
10.12 Dissolution. The dissolution or liquidation of Guarantor or any
Borrower shall occur, except as permitted under Section 8.3.
10.13 Guaranty. The Guaranty shall fail to remain in full force or
effect with respect to Guarantor or any action shall be taken by Guarantor to
discontinue or to assert the invalidity or unenforceability of the Guaranty, or
Guarantor shall fail to comply with any of the terms or provisions of the
Guaranty, or Guarantor denies that it has any further liability under the
Guaranty or gives notice to such effect.
10.14 Collateral. Borrowers shall fail to provide (i) Collateral for
the Obligations in accordance with Section 2.22(c), or (ii) all Collateral
Documents relating to the Collateral in accordance with Section 2.22(c).
10.15 No Defaults. The occurrence of any of the following events
shall specifically not be an Event of Default or an Unmatured Event of Default
under this Agreement:
(a) The breach of any Financial Covenant Test.
(b) The representations and warranties made by Borrowers and
Guarantor pursuant to Section 6.7 shall be untrue or incorrect on the
date as of which the same were made, and such date is after the date of
this Agreement.
(c) If any Borrower shall apply for, seek, consent to, or
acquiesce in, the appointment of a receiver, custodiation, trustee,
examiner, liquidator or similar official for it or for a Significant
Amount of its Property, or if a receiver, custodian, trustee, examiner,
liquidator or similar official shall be appointed for any Borrower
without its application, approval or consent for it or for a
Significant Amount of its Property; provided, however, that upon the
occurrence and during the continuation of the foregoing, all Property
of such Borrower shall be automatically excluded from the Borrowing
Base; and provided further, that upon any such appointment for any
Property of any Borrower that is not a Significant Amount of its
Property (which appointment shall not be an Event of Default or
Unmatured Event of Default under this Agreement), such Property shall
be automatically excluded from the Borrowing Base. "Significant Amount"
means, with respect to the Property of such Borrower and its
Subsidiaries, taken as a whole, Property which represents more than 10%
of the book value of the assets of such Borrower as would be shown on
the financial statements of such
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Borrower as of the beginning of the fiscal quarter in which such
determination is made, all as determined in accordance with Agreement
Accounting Principles.
(d) Borrowers' failure to provide all Due Diligence Documents
relating to the Collateral in accordance with Section 2.22(c);
provided, however, that the affected Collateral shall be automatically
excluded from the Borrowing Base.
ARTICLE XI
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
11.1 Acceleration; Remedies.
(a) If any Event of Default described in Section 10.5 or 10.6
occurs with respect to any Borrower, the obligations of Banks to make
Loans and of the Issuing Bank to issue Facility Letters of Credit
hereunder shall automatically terminate and the Obligations shall
immediately become due and payable without any election or action on
the part of Agent, the Issuing Bank or any Bank. If any other Event of
Default occurs, the Required Banks may terminate or suspend the
obligations of Banks to make Loans and of the Issuing Bank to issue
Facility Letters of Credit hereunder, or declare the Obligations to be
due and payable, or both, whereupon the Obligations shall become
immediately due and payable, without presentment, demand, protest or
notice of any kind, all of which each Borrower hereby expressly waives.
If, within five (5) days after acceleration of the maturity of the
Obligations or termination of the obligations of Banks to make Loans
hereunder as a result of any Event of Default (other than any Event of
Default as described in Section 10.5 or 10.6 with respect to a
Borrower) and before any judgment or decree for the payment of the
Obligations due shall have been obtained or entered, the Required Banks
(in their sole discretion) shall so direct, Agent shall, by notice to
Borrowers, rescind and annul such acceleration and/or termination.
(b) Upon the occurrence of any Event of Default and upon the
directive of the Required Banks, Agent or (but only upon directive of
the Required Banks) any Bank shall proceed to protect, exercise and
enforce the rights and remedies of Agent and Banks under the Loan
Documents and the Guaranty against any Borrower, Guarantor and any
other party and such other rights and remedies as are provided by law
or equity.
(c) The order and manner in which Banks' rights and remedies
are to be exercised shall be determined by the Required Banks in their
sole discretion, and all payments received by Agent and Banks, or any
of them, shall be applied first to the costs and expenses (including
attorneys' fees and disbursements) of Agent and of Banks, and
thereafter paid pro rata to each Bank in the same
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proportions that each Bank's Commitment bears to the Aggregate
Commitment, without priority or preference among Banks. Regardless of
how each Bank may treat payments for the purpose of its own accounting,
for the purpose of computing Borrower's obligations hereunder and under
the Notes, payments shall be applied first, to the costs and expenses
of Agent and Banks, as set forth above, second, to the payment of
accrued and unpaid interest due under any Loan Documents to and
including the date of such application (ratably, and without
duplication, according to the accrued and unpaid interest due under
each of the Loan Documents), and third, to the payment of all other
amounts (including principal and fees) then owing to Agent or Banks
under the Loan Documents. No application of payments will cure any
Event of Default, or prevent acceleration, or continued acceleration,
of amounts payable under the Loan Documents, or prevent the exercise,
or continued exercise, of rights or remedies of Banks hereunder or
thereunder or at law or in equity.
11.2 Amendments. Subject to the provisions of this Article XI, the
Required Banks (or Agent with the consent in writing of the Required Banks) and
Borrowers may enter into agreements supplemental hereto for the purpose of
adding or modifying any provisions to the Loan Documents or changing in any
manner the rights of Banks or any Borrower hereunder or waiving any Event of
Default hereunder; provided, however, that no such supplemental agreement shall,
without the consent of each Bank and Issuing Bank affected thereby:
(i) Extend the maturity of any Loan or Note or forgive all
or any portion of the principal amount thereof, or reduce the rate of,
or extend the time of payment of, interest or fees thereon;
(ii) Release Guarantor from any of its obligations under the
Guaranty or the Environmental Agreements;
(iii) Change the percentage specified in the definition of
Required Banks or Majority Banks;
(iv) Increase the amount of the Commitment of any Bank
hereunder, or permit any Borrower to assign its rights under this
Agreement except by operation of law pursuant to a merger permitted
under Section 8.3;
(v) Amend any provisions of this Agreement relating to
Facility Letters of Credit;
(vi) Amend any provisions of this Agreement relating to
Swing Line Advances without the consent of Bank One; or
(vii) Amend this Section 11.2, Section 12.7, Section 14.1 or
Section 15.2.3.
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No amendment of any provision of this Agreement relating to Agent shall be
effective without the written consent of Agent. Agent may waive payment or
reduce the amount of the fees referred to in Section 13.12 or the fee required
under Section 15.3.2 without obtaining the consent of any other party to this
Agreement.
11.3 Preservation of Rights. No delay or omission of any Bank or
Issuing Bank or Agent to exercise any right under the Loan Documents shall
impair such right or be construed to be a waiver of any Event of Default or an
acquiescence therein, and the making of a Loan or the issuance, amendment or
extension of a Facility Letter of Credit notwithstanding the existence of an
Event of Default or the inability of any Borrower to satisfy the conditions
precedent to such Loan or Facility Letter of Credit shall not constitute any
waiver or acquiescence. Any single or partial exercise of any such right shall
not preclude other or further exercise thereof or the exercise of any other
right, and no waiver, amendment or other variation of the terms, conditions or
provisions of the Loan Documents whatsoever shall be valid unless in writing
signed by Banks (and, if applicable, Agent) required pursuant to Section 11.2,
and then only to the extent in such writing specifically set forth. All remedies
contained in the Loan Documents or by law afforded shall be cumulative and all
shall be available to Agent, the Issuing Bank and Banks until the Obligations
have been paid in full.
11.4 New Borrowers. Additional Persons may be added as Borrowers
under this Agreement upon satisfaction of the following terms and conditions:
(i) such Person is (a) a Wholly-Owned Subsidiary of
Guarantor, (b) a Wholly Owned Restricted Subsidiary, as defined in the
Indenture, and (c) a "Guarantor" (as defined therein) under the
Indenture, and
(ii) the addition of such Person as a Borrower shall not
cause an Event of Default or an Unmatured Event of Default to occur,
and
(iii) Borrowers shall cause such Subsidiary to execute and
deliver to Agent such documents and instruments whereby such Subsidiary
assumes the obligations of a Borrower under this Agreement, the Notes
and the other Loan Documents, and
(iv) Borrowers shall deliver or cause to be delivered, by and
with respect to such Subsidiary, certificates, opinions and other
documents substantially similar to those required to be delivered under
the provisions of Sections 5.1(i), (ii), (iii), (v), (vi) and (vii) and
such other documents as Agent or any Issuing Bank or their respective
counsel may reasonably request; all of the foregoing shall be in form
and substance satisfactory to Agent or such Issuing Bank, as the case
may be.
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ARTICLE XII
GENERAL PROVISIONS
12.1 Survival of Representations. All representations and warranties of
each Borrower contained in this Agreement shall survive delivery of the Notes
and the making of the Loans and the issuance, amendment or extension of any
Facility Letter of Credit herein contemplated.
12.2 Governmental Regulation. Anything contained in this Agreement to
the contrary notwithstanding, no Bank or Issuing Bank shall be obligated to
extend credit to any Borrower in violation of any limitation or prohibition
provided by any applicable statute or regulation effective after the date of
this Agreement.
12.3 Taxes. Any recording, intangible, filing or stamp fees or taxes or
other similar assessments or charges made by any governmental or revenue
authority in respect of the Loan Documents shall be paid by Borrowers, together
with interest and penalties, if any.
12.4 Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.
12.5 Entire Agreement. The Loan Documents and the letter agreement(s)
referred to in this Agreement embody the entire agreement and understanding
among Borrowers, Agent and Banks and supersede all prior agreements and
understandings among Borrowers, Agent, and Banks relating to the subject matter
thereof.
12.6 Nature of Obligations; Benefits of this Agreement.
(a) The respective obligations of Banks hereunder are several
and not joint and no Bank shall be the partner or agent of any other
(except to the extent to which Agent is authorized to act as such). The
failure of any Bank to perform any of its obligations hereunder shall
not relieve any other Bank from any of its obligations hereunder.
(b) This Agreement shall not be construed so as to confer any
right or benefit upon any Person other than the parties to this
Agreement and their respective successors and assigns.
12.7 Expenses; Indemnification. Borrowers shall reimburse Agent for any
reasonable outside attorneys' fees and costs paid or incurred by Agent in
connection with the preparation, negotiation, execution, delivery, review,
amendment, modification, and administration of the Loan Documents. Borrowers
also agree to reimburse Agent, Banks and each Issuing Bank for any reasonable
costs and out-of-pocket expenses (including reasonable outside attorneys' fees
and time charges of attorneys for Agent, Banks and such Issuing Bank) paid or
incurred by Agent,
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any Bank or such Issuing Bank in connection with the collection and enforcement
of the Loan Documents. Borrowers further agrees to indemnify Agent and each Bank
or Issuing Bank, its directors, officers and employees against all losses,
claims, damages, penalties, judgments, liabilities and expenses (including,
without limitation, all expenses of litigation or preparation therefor whether
or not Agent or any Bank or Issuing Bank is a party thereto) which any of them
may pay or incur arising out of or relating to this Agreement, the other Loan
Documents, the transactions contemplated hereby or the direct or indirect
application or proposed application of the proceeds of any Loan hereunder
(except to the extent arising due to the gross negligence or willful misconduct
of the indemnified Person or the failure of the indemnified Person to comply
with regulatory requirements applicable to it). The obligations of Borrowers
under this Section shall be joint and several and shall survive the termination
of this Agreement.
12.8 Numbers of Documents. All statements, notices, closing documents,
and requests hereunder shall be furnished to Agent with sufficient counterparts
so that Agent may furnish one to each of Banks.
12.9 Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP applied on a
basis consistent with the consolidated audited financial statements of Guarantor
as of December 31, 1994 ("Agreement Accounting Principles"). If any change in
GAAP from the principles used in preparing such statements would have a material
effect upon the results of any calculation required by or compliance with any
provision of this Agreement, then such calculation shall be made or calculated
and compliance with such provision shall be determined using accounting
principles used in preparing the consolidated audited financial statements of
Guarantor as of December 31, 1994.
12.10 Severability of Provisions. Any provision in any Loan Document
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.
12.11 Nonliability of Banks and Issuing Bank. The relationship between
Borrowers and Banks and Agent shall be solely that of borrowers and lender.
Neither Agent nor any Bank or Issuing Bank shall have any fiduciary
responsibilities to any Borrower. Neither Agent nor any Bank or Issuing Bank
undertakes any responsibility to any Borrower to review or inform any Borrower
of any matter in connection with any phase of any Borrower's business or
operations.
12.12 CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ARIZONA, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
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12.13 Arbitration. Subject to the provisions of this Section 12.13,
Borrowers, Banks and Agent agree to submit to binding arbitration any and all
claims, disputes and controversies between or among them (and their respective
employees, officers, directors, attorneys, and other agents if permitted by law
or a contract between them and such persons) relating to this Agreement and the
Loan Documents and the negotiation, execution, collateralization,
administration, repayment, modification, extension or collection thereof or
arising thereunder. Such arbitration shall proceed in Phoenix, Arizona, shall be
governed by Arizona law and shall be conducted in accordance with the Commercial
Arbitration Rules of the American Arbitration Association (the "AAA"), as
modified in this Section 12.13. Judgment upon the award rendered by each
arbitrator(s) may be entered in any court having jurisdiction.
(a) Nothing in the preceding paragraph, nor the exercise of
any right to arbitrate thereunder, shall limit the right of any party
hereto (1) to foreclose against any real or personal property
collateral encumbered by a Deed of Trust or other Loan Document, or
otherwise permitted under applicable law; (2) subject to provisions of
applicable law, to exercise self-help remedies such as setoff or
repossession or other self-help remedies provided in this Agreement or
any other Loan Document; or (3) to obtain provisional or ancillary
remedies such as replevin, injunctive relief, attachment, or
appointment of a receiver from a court having jurisdiction, before,
during or after the pendency of any arbitration proceeding, or (4) to
defend or obtain injunctive or other equitable relief from a court of
competent jurisdiction against the foregoing or assert mandatory
counterclaims, if any, prior to and during the pendency of a
determination in arbitration of issues of performance, default, damages
and other such claims and disputes.
(b) Arbitration hereunder shall be before a three-person panel
of neutral arbitrators, consisting of one person from each of the
following categories: (1) an attorney who has practiced in the area of
commercial real estate law for at least ten (10) years; (2) a person
with at least ten (10) years' experience in real estate lending; and
(3) a person with at least ten (10) years' experience in the
homebuilding industry. The AAA shall submit a list of persons meeting
the criteria outlined above for each category of arbitrator, and the
parties shall select one person from each category in the manner
established by the AAA.
(c) In any dispute between the parties that is arbitratable
hereunder, where the aggregate of all claims and the aggregate of all
counterclaims is an amount less than Fifty Thousand And No/100ths
Dollars ($50,000), the arbitration shall be before a single neutral
arbitrator to be selected in accordance with the Commercial Rules of
the American Arbitration Association and shall proceed under the
Expedited Procedures of said Rules.
(d) In any arbitration hereunder, the arbitrators shall decide
(by documents only or with a hearing, at the arbitrators' discretion)
any pre-hearing
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motions which are substantially similar to pre-hearing motions to
dismiss for failure to state a claim or motions for summary
adjudication.
(e) In any arbitration hereunder, discovery shall be permitted
in accordance with the Arizona Rules of Civil Procedure. Scheduling of
such discovery may be determined by the arbitrators, and any discovery
disputes shall be finally determined by the arbitrators.
(f) The Arizona Rules of Evidence shall control the admission
of evidence at the hearing in any arbitration conducted hereunder;
provided, however, no error by the arbitrators in application of the
Rules of Evidence shall be grounds, as such, for vacating the
arbitrators' award.
(g) Notwithstanding any AAA rule to the contrary, the
arbitration award shall be in writing and shall specify the factual and
legal basis for the award, including findings of fact and conclusions
of law.
(h) Each party shall each bear its own costs and expenses and
an equal share of the arbitrators' costs and administrative fees of
arbitration.
12.14 CONSENT TO JURISDICTION. EACH BORROWER AND BANK HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR ARIZONA STATE COURT SITTING IN PHOENIX, ARIZONA IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND EACH BORROWER
AND BANK HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES
ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. NOTHING IN THIS SECTION 12.14 SHALL LIMIT THE RIGHT OF AGENT
OR ANY BANK OR ISSUING BANK TO BRING PROCEEDINGS AGAINST ANY BORROWER IN THE
COURTS OF ANY OTHER JURISDICTION. SUBJECT TO THE PROVISIONS OF SECTION 12.13,
UNLESS PROHIBITED BY LAW, ANY JUDICIAL PROCEEDING BY ANY BORROWER AGAINST AGENT
OR ANY BANK OR ISSUING BANK OR ANY AFFILIATE OF AGENT OR ANY BANK OR ISSUING
BANK INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT IN A COURT IN
PHOENIX, ARIZONA.
12.15 WAIVER OF JURY TRIAL. SUBJECT TO THE PROVISIONS OF SECTION
12.13, EACH BORROWER, AGENT AND EACH BANK AND ISSUING BANK HEREBY
WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR
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OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
12.16 Confidentiality. Each Bank and Agent agree to use commercially
reasonable efforts to keep confidential any financial reports and other
information from time to time supplied to them by any Borrower hereunder to the
extent that such information is not and does not become publicly available
through or with the consent or acquiescence of any Borrower, except for
disclosure (i) to Agent and the other Banks or to a Transferee, (ii) to legal
counsel, accountants, and other professional advisors to a Bank, Agent or a
Transferee, (iii) to regulatory officials, (iv) to any Person as required by
law, regulation, or legal process, (v) to any Person in connection with any
legal proceeding to which that Bank is a party, and (vi) permitted by Section
15.4. Any Bank or Agent disclosing such information shall use commercially
reasonable efforts to advise the Person to whom such information is disclosed of
the foregoing confidentiality agreement and to direct such Person to comply
therewith.
ARTICLE XIII
AGENT
13.1 Appointment. Bank One is hereby appointed Agent hereunder and
under each other Loan Document, and each of Banks irrevocably authorizes Agent
to act as the agent of such Bank. Agent agrees to act as such upon the express
conditions contained in this Article XIII. Agent shall not have a fiduciary
relationship in respect of any Borrower, any Bank or the Issuing Bank by reason
of this Agreement.
13.2 Powers. Agent shall have and may exercise such powers under the
Loan Documents as are specifically delegated to Agent by the terms of each
thereof, together with such powers as are reasonably incidental thereto. Agent
shall have no implied duties to Banks, or any obligation to Banks to take any
action thereunder except any action specifically provided by the Loan Documents
to be taken by Agent. Agent shall have the sole and exclusive right to take any
actions or to give any notices relating to this Agreement pursuant to the
Indenture.
13.3 General Immunity. Neither Agent (in its capacity as Agent and not
in its capacity as a Bank) nor any of its directors, officers, agents or
employees shall be liable to any Borrower or any Bank for action taken or
omitted to be taken by it or them hereunder or under any other Loan Document or
in connection herewith or therewith except for its or their own gross negligence
or willful misconduct.
13.4 No Responsibility for Loans, Recitals, etc. Neither Agent nor any
of its directors, officers, agents or employees shall be responsible for or have
any duty to ascertain, inquire into, or verify (i) any statement, warranty or
representation made in connection with any Loan Document or any borrowing or any
request for the issuance, amendment or extension of any Facility Letter of
Credit hereunder; (ii) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document or Reimbursement Agreement,
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including, without limitation, any agreement by an obligor to furnish
information directly to each Bank; (iii) the satisfaction of any condition
specified in Article IV or V, except receipt of items required to be delivered
to Agent; or (iv) the validity, effectiveness or genuineness of any Loan
Document (including without limitation any Reimbursement Agreement) or any other
instrument or writing furnished in connection with any of the foregoing. Agent
shall have no duty to disclose to Banks information that is not required to be
furnished by any Borrower to Agent at such time, but is voluntarily furnished by
any Borrower to Agent (either in its capacity as Agent or in its individual
capacity).
13.5 Action on Instructions of Banks. Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder and under any other
Loan Document in accordance with written instructions signed by the Required
Banks (except as otherwise provided in Section 11.2), and such instructions and
any action taken or failure to act pursuant thereto shall be binding on all of
Banks and on all holders of Notes. Agent shall be fully justified in failing or
refusing to take any action hereunder and under any other Loan Document unless
it shall first be indemnified to its satisfaction by Banks pro rata against any
and all liability, cost and expense that it may incur by reason of taking or
continuing to take any such action.
13.6 Employment of Agents and Counsel. Agent may execute any of its
duties as Agent hereunder and under any other Loan Document by or through
employees, agents, and attorneys-in-fact and shall not be answerable to Banks,
except as to money or securities or other Property received by it or its
authorized agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. Agent shall be entitled
to advice of counsel concerning all matters pertaining to the agency hereby
created and its duties hereunder and under any other Loan Document.
13.7 Reliance on Documents; Counsel. Agent shall be entitled to rely
upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by Agent, which counsel may
be employees of Agent.
13.8 Agent's Reimbursement and Indemnification. Banks agree to
reimburse and indemnify Agent ratably in proportion to their respective
Commitments (i) for any amounts not reimbursed by Borrowers for which Agent is
entitled to reimbursement by Borrowers under the Loan Documents, (ii) for any
other expenses incurred by Agent on behalf of Banks, in connection with the
preparation, execution, delivery, administration and enforcement of the Loan
Documents, and (iii) for any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind and nature whatsoever which may be imposed on, incurred by or asserted
against Agent in any way relating to or arising out of the Loan Documents or any
other document delivered in connection therewith or the transactions
contemplated thereby, or the enforcement of any of the terms thereof or of any
such other documents, provided that no Bank shall be liable for any of the
foregoing to the extent they arise
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from the gross negligence or willful misconduct of Agent. The obligations of
Banks under this Section 13.8 shall survive payment of the Obligations and
termination of this Agreement.
13.9 Rights as a Bank or Issuing Bank. In the event Agent is a Bank,
Agent shall have the same rights and powers hereunder and under any other Loan
Document as any Bank and may exercise the same as though it were not Agent, and
the term "Bank" or "Banks" shall, at any time when Agent is a Bank, unless the
context otherwise indicates, include Agent in its individual capacity. In the
event Agent is an Issuing Bank, Agent shall have the rights and powers of the
Issuing Bank hereunder and may exercise the same as though it were not Agent,
and the term "Issuing Bank" shall, at any time when Agent is the Issuing Bank,
unless the context otherwise indicates, include and mean Agent in its capacity
as the Issuing Bank. Agent may accept deposits from, lend money to, and
generally engage in any kind of trust, debt, equity or other transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with any Borrower or any of its Subsidiaries in which such Borrower or such
Subsidiary is not restricted hereby from engaging with any other Person.
13.10 Bank Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon Agent or any other Bank and based on the
financial statements prepared by Borrowers and Guarantor and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and the other Loan Documents.
Each Bank also acknowledges that it will, independently and without reliance
upon Agent or any other Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan Documents.
13.11 Successor Agent. Agent may resign at any time by giving written
notice thereof to Banks and Borrowers, such resignation to be effective upon the
appointment of a successor Agent or, if no successor Agent has been appointed,
sixty (60) days after the retiring Agent gives notice of its intention to
resign. Agent may be removed at any time with or without cause by written notice
received by Agent from the Majority Banks, such removal to be effective on the
date specified by such Banks. The consent of Borrowers shall be required prior
to any removal of Agent becoming effective; provided, however, that if an Event
of Default has occurred and is continuing, the consent of Borrowers shall not be
required. Upon any such resignation or removal, the Majority Banks shall have
the right to appoint, on behalf of a Borrower and Banks, a successor Agent. Any
Bank can be a successor Agent upon the approval of the Majority Banks. Any other
successor Agent shall be appointed only with the prior reasonable consent of
Borrowers. If no successor Agent shall have been so appointed by the Majority
Banks within forty-five (45) days after the resigning Agent's giving notice of
its intention to resign, then the resigning Agent may appoint, on behalf of
Borrowers and Banks, a successor Agent.
If Agent has resigned or been removed and no successor Agent has been
appointed, Banks may perform all the duties of Agent hereunder and each Borrower
shall make all payments in respect of the Obligations to the applicable Bank and
for all other purposes shall
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deal directly with Banks. No successor Agent shall be deemed to be appointed
hereunder until such successor Agent has accepted the appointment. Any such
successor Agent shall be a commercial bank having capital and retained earnings
of at least $50,000,000. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
resigning or removed Agent. Upon the effectiveness of the resignation or the
Loan Documents, all amounts payable by Borrowers under this Agreement shall be
determined as if such Bank had not sold such participating interests, and each
Borrower, Agent and the Issuing Bank shall continue to deal solely and directly
with such Bank in connection with such Bank's rights and obligations under the
Loan Documents.
13.12 Agent's Fee. Borrowers agree to pay to Agent, for its own
account, the fees agreed to by Borrowers and Agent pursuant to that certain
letter agreement of even date herewith, or as otherwise agreed from time to
time.
ARTICLE XIV
RATABLE PAYMENTS
14.1 Ratable Payments. If any Bank (whether by common law right of
setoff or otherwise) has payment made to it upon its Loans (other than payments
received pursuant to Sections 3.1, 3.2 or 3.4) in a greater proportion than that
received by any other Bank, such Bank agrees, promptly upon demand, to purchase
a portion of the Loans held by the other Banks so that after such purchase each
Bank will hold its ratable proportion of Loans. If any Bank, whether in
connection with common law right of setoff or amounts which might be subject to
common law right of setoff or otherwise, receives collateral or other protection
for its Obligations or such amounts which may be subject to setoff, such Bank
agrees, promptly upon demand, to take such action necessary such that all Banks
share in the benefits of such collateral ratably in proportion to their Loans.
In case any such payment is prevented, restricted or otherwise impeded by legal
process, or otherwise, appropriate further adjustments shall be made.
ARTICLE XV
BENEFIT OF AGREEMENT, ASSIGNMENTS; PARTICIPATIONS
15.1 Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of Borrowers, Agent,
Banks and the Issuing Bank and their respective successors and assigns, except
that (i) no Borrower shall have the right to assign its rights or obligations
under the Loan Documents (except as otherwise permitted under Section 8.3), and
(ii) any assignment by any Bank must be made in compliance with Section 15.3.
Notwithstanding clause (ii) of this Section, any Bank may at any time, without
the consent of Borrowers or Agent, assign all or any portion of its rights under
this Agreement and its Notes to a Federal Reserve Bank; provided, however, that
no such assignment shall release the transferor Bank from its obligations
hereunder. Agent may treat the payee of any Note as the
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owner thereof for all purposes hereof unless and until such payee complies with
Section 15.3 in the case of an assignment thereof or, in the case of any other
transfer, a written notice of the transfer is filed with Agent. Any assignee or
transferee of a Note agrees by acceptance thereof to be bound by all the terms
and provisions of the Loan Documents. Any request, authority or consent of any
Person, who at the time of making such request or giving such authority or
consent is the holder of any Note, shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Note or of any Note or Notes
issued in exchange therefor.
15.2 Participations.
15.2.1 Permitted Participants; Effect. Any Bank may, in the
ordinary course of its business and in accordance with applicable law, at any
time sell to one or more banks or other Persons that are not, and that are not
Affiliates of a Person, in the home building business ("Participants")
participating interests in any Loan owing to such Bank, any Note held by such
Bank, any Commitment of such Bank or any other interest of such Bank under the
Loan Documents in an amount of not less than $5,000,000, so long as immediately
following such sale the selling Bank shall retain at least one-half (1/2) of its
Commitment. In the event of any such sale by a Bank of participating interests
to a Participant, such Bank's obligations under the Loan Documents shall remain
unchanged, such Bank shall remain solely responsible to the other parties hereto
for the performance of such obligations, such Bank shall remain the holder of
any such Note for all purposes under the Loan Documents, all amounts payable by
Borrowers under this Agreement shall be determined as if such Bank has not sold
such participating interests, and Borrowers, Agent and the Issuing Bank shall
continue to deal solely and directly with such Bank in connection with such
Bank's rights and obligations under the Loan Documents.
15.2.2 Voting Rights. Each Bank shall retain the sole right to
approve, and/or grant its consent to, without the consent of any Participant,
any amendment, modification or waiver or other matter relating to any provision
of the Loan Documents.
15.2.3 Waiver of Setoff. Each Participant shall be deemed to
have waived any and all rights of setoff, including any common law right of
setoff, in respect of its participating interest in amounts owing under the Loan
Documents.
15.3 Assignments.
15.3.1 Permitted Assignments. Any Bank may, in the ordinary
course of its business and in accordance with applicable law, at any time assign
to one or more banks or other financial institutions that are not, and that are
not Affiliates of a Person, in the home building business ("Purchasers") all or
any part of its rights and obligations under the Loan Documents in the amount of
not less than $10,000,000, provided that each such assignment shall be of a
constant, and not a varying, percentage of the assigning Bank's rights and
obligations under the Loan Documents; and provided further, that immediately
following such assignment, the assigning Bank either (i) shall retain a
Commitment of not less than $10,000,000 or, if the assigning Bank is Agent, not
less than $40,000,000, or (ii) shall have assigned all of its
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Commitment and have no remaining interest in the Obligations. Such assignment
shall be substantially in the form of Exhibit K hereto or in such other form as
may be agreed to by the parties thereto. The consent of Borrowers and Agent
shall be required prior to an assignment becoming effective; provided, however,
that if an Event of Default has occurred and is continuing, the consent of
Borrowers shall not be required.
15.3.2 Effect; Effective Date. Upon (i) delivery to Agent of a
notice of assignment, substantially in the form attached as Exhibit "1" to
Exhibit K hereto (a "Notice of Assignment"), together with any consents required
by Section 15.3.1, and (ii) payment by the Bank of a $5,000 fee to Agent for
processing such assignment, such assignment shall become effective on the
effective date specified in such Notice of Assignment. The Notice of Assignment
shall contain a representation by the Purchaser to the effect that none of the
consideration used to make the purchase of the Commitment and Loans under the
applicable assignment agreement are "plan assets" as defined under ERISA and
that the rights and interests of the Purchaser in and under the Loan Documents
will not be "plan assets" under ERISA.
On and after the effective date of such assignment, such Purchaser
shall for all purposes be a Bank party to this Agreement and any other Loan
Document executed by Banks and shall have all the rights and obligations of a
Bank under the Loan Documents, to the same extent as if it were an original
party hereto, and no further consent or action by Borrowers, Banks or Agent
shall be required to release the transferor Bank with respect to the percentage
of the Aggregate Commitment and Loans assigned to such Purchaser. Upon the
consummation of any assignment to a Purchaser pursuant to this Section 15.3.2,
the transferor Bank, Agent and Borrowers shall make appropriate arrangements so
that replacement Notes are issued to such transferor Bank and new Notes or, as
appropriate, replacement Notes, are issued to such Purchaser, in each case in
principal amounts reflecting their Commitment, as adjusted pursuant to such
assignment.
15.4 Dissemination of Information. Each Borrower authorizes each Bank
to disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "Transferee") and any
prospective Transferee any and all public information in such Bank's possession
concerning the creditworthiness of such Borrower, Guarantor and their
Subsidiaries; provided that each Transferee and prospective Transferee agrees to
be bound by Section 12.15 of this Agreement.
15.5 Tax Treatment. If any interest in any Loan Document is transferred
to any Transferee which is organized under the laws of any jurisdiction other
than the United States or any State thereof, the transferor Bank shall cause
such Transferee, concurrently with the effectiveness of such transfer, to comply
with the provisions of Section 2.19.
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ARTICLE XVI
NOTICES
16.1 Giving Notice. Except as otherwise permitted by Section 2.14 with
respect to borrowing notices, all notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by telex or by facsimile and addressed or delivered to such party at
its address set forth below its signature hereto or at such other address as may
be designated by such party in a notice to the other parties. Any notice, if
mailed and properly addressed with postage prepaid, shall be deemed given when
received; any notice, if transmitted by telex or facsimile, shall be deemed
given when transmitted (answerback confirmed in the case of telexes).
16.2 Change of Address. Any Borrower, Agent, any Bank and the Issuing
Bank may each change the address for service of notice upon it by a notice in
writing to the other parties hereto.
ARTICLE XVII
COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart. This
Agreement shall be effective when it has been executed by all Borrowers, Agent,
and Banks and each party has notified Agent by telex or telephone, that it has
taken such action.
IN WITNESS WHEREOF, Borrowers, Banks, and Agent have executed this
Agreement as of the date first above written.
BORROWERS:
RICHMOND AMERICAN HOMES OF
CALIFORNIA, INC., a Colorado corporation
ATTEST:
By:
------------------------------------
- ------------------------- Name: John J. Heaney, Vice President
3600 South Yosemite, Suite 900
Denver, Colorado 80237
Attention: John J. Heaney
-92-
RICHMOND AMERICAN HOMES OF
MARYLAND, INC., a Maryland corporation
ATTEST:
By:
------------------------------------
- ------------------------- Name: John J. Heaney, Vice President
3600 South Yosemite, Suite 900
Denver, Colorado 80237
Attention: John J. Heaney
RICHMOND AMERICAN HOMES OF NEVADA,
INC., a Colorado corporation
ATTEST:
By:
------------------------------------
- ------------------------- Name: John J. Heaney, Vice President
3600 South Yosemite, Suite 900
Denver, Colorado 80237
Attention: John J. Heaney
RICHMOND AMERICAN HOMES OF
VIRGINIA, INC., a Virginia corporation
ATTEST:
By:
------------------------------------
- ------------------------- Name: John J. Heaney, Vice President
3600 South Yosemite, Suite 900
Denver, Colorado 80237
Attention: John J. Heaney
-93-
RICHMOND AMERICAN HOMES, INC., a
Delaware corporation
ATTEST:
By:
------------------------------------
- -------------------------- Name: John J. Heaney, Vice President
3600 South Yosemite, Suite 900
Denver, Colorado 80237
Attention: John J. Heaney
RICHMOND HOMES, INC. I, a Delaware
corporation
ATTEST:
By:
-----------------------------------
- -------------------------- Name: John J. Heaney, Vice President
3600 South Yosemite, Suite 900
Denver, Colorado 80237
Attention: John J. Heaney
RICHMOND HOMES, INC. II, a Delaware
corporation
ATTEST:
By:
-----------------------------------
- -------------------------- Name: John J. Heaney, Vice President
3600 South Yosemite, Suite 900
Denver, Colorado 80237
Attention: John J. Heaney
-94-
Commitments BANKS:
$75,000,000.00 BANK ONE, ARIZONA, NA, a national banking
association, Individually and as Agent
By:
------------------------------
Name: Rhonda R. Williams
Vice President
Western Region Real Estate
Department A-383
241 North Central Avenue
Phoenix, Arizona 85004
Attention: Rhonda R. Williams
$40,000,000.00 BANK UNITED OF TEXAS FSB, a federal
savings bank
By:
---------------------------------
Name: Thomas S. Griffin
Vice President
5970 South Greenwood Plaza Boulevard
Suite 110
Englewood, Colorado 80111
Attention: Thomas S. Griffin
-95-
$20,000,000.00 SANWA BANK CALIFORNIA, a California
corporation
By:
------------------------------
Name: Russ Wakeham
Vice President
4041 MacArthur Boulevard, Suite 100
Newport Beach, California 92660
Attention: Russ Wakeham
$15,000,000.00 KEY BANK OF COLORADO, a Colorado
state bank
By:
------------------------------
Name: James R. Peoples
Senior Vice President
Southeast Branch
3600 South Yosemite Street
Suite 410
Denver, Colorado 80237
Attention: James R. Peoples
-96-
The undersigned Guarantor is executing this Agreement solely to indicate its
confirmation of all of the representations, warranties, covenants, terms and
provisions that relate to Guarantor and to evidence its agreement to be bound by
the same.
Attest: M.D.C. HOLDINGS, INC., a Delaware corporation
- --------------------------
By:
------------------------------------------
Name: John J. Heaney
Title: Vice President
-97-