EXHIBIT 10.12
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SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
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Dated as of December 29, 1999
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BEAZER HOMES USA, INC.,
The Guarantors Parties Thereto,
The Banks Parties Thereto,
Bank One, NA
As Agent,
and
Comerica Bank
and
Guaranty Federal Bank, F.S.B.,
as Managing Agents
$250,000,000 REVOLVING CREDIT FACILITY
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ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS 1
Section 1.01. Defined Terms....................................................... 1
Section 1.02. Accounting Terms.................................................... 16
ARTICLE II
AMOUNTS AND TERMS OF THE LOANS 16
Section 2.01. Revolving Credit.................................................... 16
Section 2.02. Reduction of Commitment............................................. 18
Section 2.03. Notice and Manner of Borrowing...................................... 18
Section 2.04. Non-Receipt of Funds by Agent....................................... 18
Section 2.05. Determination of Applicable Margins and
Applicable Commitment Rate..................................... 19
Section 2.06. Conversions and Renewals............................................ 21
Section 2.07. Interest............................................................ 21
Section 2.08. Interest Rate Determination......................................... 22
Section 2.09. Fees................................................................ 23
Section 2.10. Notes............................................................... 23
Section 2.11. Prepayments......................................................... 24
Section 2.12. Method of Payment................................................... 24
Section 2.13. Use of Proceeds..................................................... 25
Section 2.14. Yield Protection.................................................... 25
Section 2.15. Changes in Capital Adequacy Regulations............................. 25
Section 2.16. Availability of LIBOR Loans......................................... 26
Section 2.17. Funding Indemnification............................................. 26
Section 2.18. Bank Statements; Survival of Indemnity.............................. 26
Section 2.19. Extension of Termination Date....................................... 27
Section 2.20. Replacement of Certain Banks........................................ 29
Section 2.21. Swing Line.......................................................... 30
Section 2.22. Amounts Payable Under Original Agreement............................ 30
ARTICLE III
CONDITIONS PRECEDENT 31
Section 3.01. Conditions Precedent to the Initial Loan............................ 31
Section 3.02. Conditions Precedent to All Loans................................... 33
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES 34
Section 4.01. Incorporation, Formations Good Standing, and Due Qualification...... 34
Section 4.02. Power and Authority................................................. 34
Section 4.03. Legally Enforceable Agreement....................................... 34
Section 4.04. Financial Statements................................................ 34
Section 4.05. Labor Disputes and Acts of God...................................... 35
Section 4.06. Other Agreements.................................................... 35
Section 4.07. Litigation.......................................................... 35
Section 4.08. No Defaults on Outstanding Judgments or Orders...................... 35
Section 4.09. Ownership and Liens................................................. 35
Section 4.10. Subsidiaries and Ownership of Stock................................. 36
Section 4.11. ERISA............................................................... 36
Section 4.12. Operation of Business............................................... 36
Section 4.13. Taxes............................................................... 36
Section 4.14. Laws; Environment................................................... 36
Section 4.15. Investment Company Act.............................................. 37
Section 4.16. Public Utility Holding Company Act.................................. 37
Section 4.17. Year 2000........................................................... 38
ARTICLE V
AFFIRMATIVE COVENANTS 38
Section 5.01. Maintenance of Existence............................................ 38
Section 5.02. Maintenance of Records.............................................. 38
Section 5.03. Maintenance of Properties........................................... 38
Section 5.04. Conduct of Business................................................. 38
Section 5.05. Maintenance of Insurance............................................ 38
Section 5.06. Compliance with Laws................................................ 38
Section 5.07. Right of Inspection................................................. 39
Section 5.08. Reporting Requirements.............................................. 39
Section 5.09. Subsidiary Reporting Requirements................................... 42
Section 5.10. Environment......................................................... 42
Section 5.11. Use of Proceeds..................................................... 43
Section 5.12. Ranking of Obligations.............................................. 43
Section 5.13. Taxes............................................................... 43
Section 5.14. Wholly Owned Status................................................. 43
Section 5.15. New Subsidiaries.................................................... 43
Section 5.16. Year 2000........................................................... 43
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ARTICLE VI
NEGATIVE COVENANTS 43
Section 6.01. Liens............................................................... 43
Section 6.02. Debt................................................................ 44
Section 6.03. Mergers, Etc........................................................ 44
Section 6.04. Leases.............................................................. 44
Section 6.05. Sale and Leaseback.................................................. 45
Section 6.06. Sale of Assets...................................................... 45
Section 6.07. Investments......................................................... 45
Section 6.08. Guaranties, Etc..................................................... 46
Section 6.09. Transactions With Affiliates........................................ 46
Section 6.10. Land Inventory...................................................... 46
Section 6.11. Total Inventory..................................................... 47
Section 6.12. Senior Debt ........................................................ 47
Section 6.13. Amendment or Modification of Indenture.............................. 47
Section 6.14. UHIC................................................................ 47
Section 6.15. Negative Pledges.................................................... 47
ARTICLE VII
FINANCIAL COVENANTS 47
Section 7.01. Minimum Consolidated Tangible Net Worth............................. 47
Section 7.02. Leverage Ratio...................................................... 48
Section 7.03. Permitted Senior Debt............................................... 48
Section 7.04. Fixed Charge Coverage Ratio......................................... 48
Section 7.05. Land Inventory...................................................... 48
ARTICLE VIII
EVENTS OF DEFAULT 48
Section 8.01. Events of Default................................................... 48
Section 8.02. Set Off............................................................. 51
ARTICLE IX
GUARANTY 51
Section 9.01. Guaranty............................................................ 51
Section 9.02. No Impairment of Guaranty........................................... 52
Section 9.03. Continuation and Reinstatements etc................................. 52
Section 9.04. Limitation on Guaranteed Amount..................................... 53
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ARTICLE X
AGENCY PROVISIONS 53
Section 10.01. Authorization and Action........................................... 53
Section 10.02. Liability of Agent................................................. 53
Section 10.03. Rights of Agent as a Bank.......................................... 54
Section 10.04. Independent Credit Decisions....................................... 54
Section 10.05. Indemnification.................................................... 54
Section 10.06. Successor Agent.................................................... 55
Section 10.07. Sharing of Payments, Etc........................................... 55
Section 10.08. Withholding Tax Matters............................................ 56
ARTICLE XI
MISCELLANEOUS 56
Section 11.01. Amendments, Etc.................................................... 56
Section 11.02. Notices, Etc....................................................... 57
Section 11.03. No Waiver.......................................................... 57
Section 11.04. Costs, Expenses, and Taxes......................................... 57
Section 11.05. Integration........................................................ 57
Section 11.06. Indemnity.......................................................... 58
Section 11.07. Governing Law...................................................... 58
Section 11.08. Severability of Provisions......................................... 58
Section 11.09. Counterparts....................................................... 58
Section 11.10. Headings........................................................... 58
Section 11.11. Submission to Jurisdiction......................................... 58
Section 11.12. Jury Trial Waiver.................................................. 58
Section 11.13. Government Regulation.............................................. 59
Section 11.14. No Fiduciary Duty.................................................. 59
Section 11.15. Confidentiality.................................................... 59
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS 59
Section 12.01. Successors and Assigns............................................. 59
Section 12.02. Participations..................................................... 59
Section 12.03. Assignments........................................................ 60
Section 12.04. Dissemination of Information....................................... 61
Section 12.05. Tax Treatment...................................................... 61
ARTICLE XIII
THE LETTER OF CREDIT FACILITY 62
Section 13.01. Facility Letters of Credit......................................... 62
Section 13.02. Limitations........................................................ 62
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Section 13.03. Conditions......................................................... 63
Section 13.04. Procedure for Issuance of Facility Letters of Credit............... 63
Section 13.05. Duties of Issuing Bank............................................. 64
Section 13.06. Participation...................................................... 65
Section 13.07. Compensation for Facility Letters of Credit........................ 66
Section 13.08. Issuing Bank Reporting Requirements................................ 67
Section 13.09. Indemnification; Nature of Issuing Banks' Duties................... 67
Section 13.10. Designation or Resignation of Issuing Bank......................... 68
Section 13.11. Termination of Issuing Bank's Obligation........................... 69
Section 13.12. Obligations of Issuing Bank and Other Banks........................ 69
Section 13.13. Issuing Bank's Rights.............................................. 69
LIST OF EXHIBITS
EXHIBIT DESCRIPTION REFERENCE
- ------- ----------- ---------
Exhibit A Form of Note 2.10
Exhibit B Intentionally Omitted
Exhibit C Summary of Opinion of Counsel for 3.01(5)
Borrower and Delaware Guarantors
Exhibit D Summary of Opinion of Illinois
Counsel for Borrower 3.01(5)
Exhibit E Summary of Opinion of Counsel for
Agent 3.01(6)
Exhibit F Summary of Opinion of Local Counsel for 3.01(10)
Beazer Homes Corp.
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Exhibit G Form of Certificate for Borrowings 3.02
and Facility Letters of Credit
Exhibit H List of Subsidiaries of Borrower 4.10
Exhibit I Assignment Agreement 12.03(b)
Exhibit J PNC Letters of Credit 13.10(c)
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of December 29,
1999 among BEAZER HOMES USA, INC., a Delaware corporation (the "Borrower"),
BEAZER MORTGAGE CORPORATION, a Delaware corporation, BEAZER HOMES CORP., a
Tennessee corporation, BEAZER HOMES SALES ARIZONA INC., a Delaware corporation,
BEAZER REALTY CORP., a Georgia corporation, BEAZER/SQUIRES REALTY, INC., a North
Carolina corporation, PANITZ HOMES REALTY, Inc., a Florida corporation, BEAZER
HOMES HOLDING CORP., a Delaware corporation, BEAZER HOMES TEXAS HOLDINGS, INC.,
a Delaware corporation, and BEAZER HOMES TEXAS, L.P., a Delaware limited
partnership (individually an "Original Guarantor" and collectively the "Original
Guarantors"), BEAZER REALTY INC., a New Jersey corporation, HOMEBUILDERS TITLE
SERVICES, INC., a Delaware corporation, and TEXAS LONE STAR TITLE, L.P., a Texas
limited partnership (collectively, the "New Guarantors") and BANK ONE, NA,
COMERICA BANK, GUARANTY FEDERAL BANK, F.S.B., BANK UNITED, AMSOUTH BANK,
SUNTRUST BANK, PNC BANK, N.A., and WACHOVIA BANK, N.A. (collectively, the
"Banks") and BANK ONE, NA as Agent (the "Agent") for the Banks and as an Issuing
Bank (as hereinafter defined).
WITNESSETH:
WHEREAS, the Borrower, the Original Guarantors and certain of the
Banks are party to that certain Amended and Restated Credit Agreement dated as
of November 3, 1998 (the "Original Agreement"); and
WHEREAS, the parties hereto now desire to amend and restate the
Original Agreement in its entirety to effect the changes in the Banks'
Commitments set forth herein, the guaranty hereunder by the New Guarantors and
certain other modifications of the terms of the Original Agreement as
hereinafter provided;
NOW THEREFORE, in consideration of the premises, the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree that,
effective as of the Effective Date (as hereinafter defined), the Original
Agreement is hereby amended and restated in its entirety as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. DEFINED TERMS. As used in this Agreement, the following
terms have the following meanings (terms defined in the singular shall have the
same meaning when used in the plural and vice versa):
"ABR Loan" means any Loan when and to the extent that the interest
rate therefor is determined by reference to the Alternate Base Rate.
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"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which the
Borrower or any of its Subsidiaries (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 interests of a partnership.
"Adjusted Land Value" means, as of any date, (i) the book value of all
Land, less (ii) the sum of (a) the book value of Finished Lots that are subject
to BONA FIDE contracts of sale with Persons that are not Affiliates and (b) the
lesser of (1) the product of (x) the number of Housing Units with respect to
which the Borrower and its Subsidiaries (including any company or other entity
acquired in an Acquisition by the Borrower or a Subsidiary as of such date)
entered into BONA FIDE contracts of sale with Persons that are not Affiliates
during the six-month period ending on such date multiplied by (y) the average
book value of all Finished Lots as of such date and (2) forty percent (40%) of
Consolidated Tangible Net Worth as of such date.
"Affiliate" means any Person (1) which directly or indirectly
controls, or is controlled by, or is under common control with, the Borrower or
a Subsidiary; (2) which directly or indirectly beneficially owns or holds five
percent (5%) or more of any class of voting stock of the Borrower or any
Subsidiary; or (3) five percent (5%) or more of the voting stock of which is
directly or indirectly beneficially owned or held by the Borrower or a
Subsidiary. The term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Agent" means Bank One.
"Aggregate Commitments" means the aggregate Commitments of all the
Banks, as reduced or increased from time to time pursuant to the terms of this
Agreement.
"Agreement" means this Amended and Restated Credit Agreement, as
amended, supplemented, or modified from time to time.
"Alternate Base Rate" means a fluctuating rate per annum equal to the
higher of (i) the Prime Rate, changing when and as said rate changes, or (ii)
the sum of 1/2 of 1% plus the Federal Funds Rate then in effect.
"Applicable ABR Margin" means, as at any date of determination, the
margin indicated in Section 2.05 as then applicable to ABR Loans and Swing Line
Loans (under Section 2.07(a)(i)).
"Applicable Commitment Rate" means, as at any date of determination,
the rate per annum indicated in Section 2.05 as then applicable in the
determination of the commitment fee (under Section 2.09).
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"Applicable Letter of Credit Rate" means, as at any date of
determination, a rate per annum equal to (i) the Applicable LIBOR Margin, less
(ii) 0.125% per annum.
"Applicable LIBOR Margin" means, as at any date of determination, the
margin indicated in Section 2.05 as then applicable to LIBOR Loans (under
Section 2.07(a)(ii)).
"Applicable Margin(s)" means the Applicable ABR Margin and/or the
Applicable LIBOR Margin, as the case may be.
"Bank One" means Bank One, NA (formerly known as The First National
Bank of Chicago).
"Banks" means the Banks that are signatories to this Agreement, and
their respective successors and assigns.
"BOCM" means Banc One Capital Markets, Inc. (formerly known as First
Chicago Capital Markets, Inc.)
"Borrowing" means a borrowing consisting of Loans of the same type
made, renewed or converted on the same day.
"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
unencumbered assets of the Borrower and the Guarantors: (i) the lesser of (a)
one hundred percent (100%) of the Unrestricted Cash and (b) $10,000,000.00, (ii)
one-hundred percent (100%) of the Receivables, (iii) ninety percent (90%) of the
book value of Housing Units Under Contract, (iv) seventy-five percent (75%) of
the book value of Speculative Housing Units, (v) seventy percent (70%) of the
book value of Finished Lots (subject to the limitation set forth below), (vi)
fifty percent (50%) of the book value of Lots under Development (subject to the
limitation set forth below), and (vii) the lesser of (a) twenty-five percent
(25%) of the book value of Entitled Land and (b) $30,000,000.00 (subject to the
limitation set forth below). Notwithstanding the foregoing, the Borrowing Base
shall not include any amounts under clauses (v), (vi) and (vii) above to the
extent that the sum of such amounts exceeds forty percent (40%) of the total
Borrowing Base. The term "unencumbered" means that such asset is not subject to
any Lien (except for Liens permitted under Sections 6.01(1), (2) or (6)).
"Borrowing Base Certificate" means a written certificate in a form
acceptable to the Majority Banks setting forth the amount of the Borrowing Base
with respect to the fiscal quarter, or (if applicable under Section 2.01(d) or
(e)) calendar month, most recently completed, certified as true and correct by
the Chief Financial Officer of the Borrower.
"Business Day" means (i) with respect to any Borrowing, payment or
rate selection of LIBOR Loans, a day (other than a Saturday or Sunday) on which
banks generally are open in Chicago 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
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generally are open in Chicago for the conduct of substantially all of their
commercial lending activities.
"Capital Lease" means all leases which have been or should be
capitalized on the books of the lessee in accordance with GAAP.
"Change of Control" means any of the following: (i) the sale, lease,
conveyance or other disposition of all or substantially all of the assets of the
Borrower or (except for an Internal Reorganization) of a Significant Guarantor
or Significant Subsidiary, as an entirety or substantially as an entirety to any
Person or "group" (within the meaning of Section 13(d)(3) of the Exchange Act)
in one or a series of transactions; (ii) the acquisition of fifty percent (50%)
or more of the aggregate voting power of all classes of Common Equity of the
Borrower or (except for an Internal Reorganization) of a Significant Guarantor
or Significant Subsidiary in one transaction or a series of related
transactions; (iii) the liquidation or dissolution of the Borrower or (except
for an Internal Reorganization) of a Significant Guarantor or Significant
Subsidiary; (iv) any transaction or a series of related transactions (as a
result of a tender offer, merger, consolidation or otherwise but excluding an
Internal Reorganization) that results in, or that is in connection with, (a) any
Person, including, a "group" (within the meaning of Section 13(d)(3) of the
Exchange Act) acquiring "beneficial ownership" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of fifty percent (50%) or more of the
aggregate voting power of all classes of Common Equity of the Borrower, a
Significant Guarantor or a Significant Subsidiary, or of any Person that
possesses "beneficial ownership" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of fifty percent (50%) or more of the aggregate
voting power of all classes of Common Equity of the Borrower, a Significant
Guarantor or a Significant Subsidiary, or (b) less than fifty percent (50%)
(measured by the aggregate voting power of all classes) of the Common Equity of
the Borrower being registered under Section 12(b) or 12(g) of the Exchange Act;
(v) a majority of the Board of Directors of the Borrower, a Significant
Guarantor or a Significant Subsidiary, not being comprised of persons who (a)
were members of the Board of Directors of such Borrower, Significant Guarantor
or Significant Subsidiary, as of the date of this Agreement ("Original
Directors"), or (b) were nominated for election or elected to the Board of
Directors of such Borrower, Significant Guarantor, or Significant Subsidiary,
with the affirmative vote of at least a majority of the directors who themselves
were Original Directors or who were similarly nominated for election or elected;
or (vi) with respect to any Significant Guarantor or Significant Subsidiary
which is not a corporation, any loss of the right or power to control the
activities, directly, or indirectly through one or more intermediaries, or both.
Nothing herein contained shall modify or otherwise affect the provisions of
Section 6.06.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and the regulations and published interpretations thereof.
"Commitment" has the meaning assigned to such term in Section 2.01.
"Common Equity" of any Person means any and all shares, rights to
purchase, warrants or options (whether or not currently exercisable),
participations, or other equivalents of or interests in (however designated) the
equity (which includes, but is not limited to, common
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stock, preferred stock and partnership and joint venture interests) of such
Person (excluding any debt securities convertible into, or exchangeable for,
such equity) to the extent that the foregoing is entitled to (i) vote in the
election of directors of such Person or (ii) if such Person is not a
corporation, vote or otherwise participate in the selection of the governing
body, partners, managers or other persons that will control the management and
policies of such Person.
"Commonly Controlled Entity" means an entity, whether or not
incorporated, which is under common control with the Borrower within the meaning
of Section 414(b) or 414(c) of the Code.
"Consolidated Debt" means the Debt of the Borrower and its
Subsidiaries determined on a consolidated basis (but shall not include Debt of
any Joint Venture or Debt of any Subsidiary which is not a Guarantor, except to
the extent that such Debt is guaranteed by the Borrower or a Guarantor).
"Consolidated Subordinated Debt" means, as of any date, all Debt of
the Borrower and the Guarantors (on a consolidated basis), the payment of which
is, either expressly by its terms or otherwise, subordinated to payment of the
Obligations to the satisfaction of the Majority Banks.
"Consolidated Tangible Assets" of the Borrower means, as of any date,
the total amount of assets of the Borrower and its Subsidiaries (less applicable
reserves) on a consolidated basis at the end of the fiscal quarter immediately
preceding such date (or on such date if such date is the last day of the fiscal
quarter), as determined in accordance with GAAP, less (i) Intangible Assets and
(ii) appropriate adjustments on account of minority interests of other Persons
holding equity Investments in Subsidiaries, in the case of each of clauses (i)
and (ii) above, as would be reflected on a consolidated balance sheet of the
Borrower and its Subsidiaries as of the end of the fiscal quarter immediately
preceding such date (or on such date if such date is the last day of the fiscal
quarter), prepared in accordance with GAAP.
"Consolidated Tangible Net Worth" of the Borrower means, at any date,
the consolidated stockholders' equity of the Borrower determined in accordance
with GAAP, less Intangible Assets, all determined as of such date.
"D&P" means Duff & Phelps Credit Rating Co.
"Debt" means, without duplication, with respect to any Person (1)
indebtedness or liability for borrowed money, including, without limitation,
subordinated indebtedness (other than trade accounts payable and accruals
incurred in the ordinary course of business); (2) obligations evidenced by
bonds, debentures, notes, or other similar instruments; (3) obligations for the
deferred purchase price of property (including, without limitation, seller
financing of any Inventory) or services, PROVIDED, HOWEVER, that Debt shall not
include obligations with respect to options to purchase real property that have
not been exercised; (4) obligations as lessee under Capital Leases to the extent
that the same would, in accordance with GAAP, appear as liabilities in the
Borrower's consolidated balance sheet; (5) current liabilities in respect of
unfunded vested benefits under Plans and incurred withdrawal liability under any
Multiemployer Plan; (6)
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reimbursement obligations under letters of credit (including contingent
obligations with respect to letters of credit not yet drawn upon); (7)
obligations under acceptance facilities; (8) all guaranties, endorsements (other
than for collection or deposit in the ordinary course of business), and other
contingent obligations to purchase, to provide funds for payment, to supply
funds to invest in any other Person or entity, or otherwise to assure a creditor
against loss, provided, however, that "Debt" shall not include guaranties of
performance obligations; (9) obligations secured by any Liens on any property of
such Person, whether or not the obligations have been assumed; and (10) net
liabilities under interest rate swap, exchange or cap agreements.
"Debt/Cap Ratio" means, as at any date of determination, the quotient
obtained by dividing (a) Consolidated Debt as at such date by (b) the sum of
Consolidated Debt and Consolidated Tangible Net Worth as at such date.
"Default" means any of the events specified in Section 8.01, whether
or not any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"EBITDA" means, for any period, on a consolidated basis for the
Borrower and its Subsidiaries, the sum of the amounts for such period of (i) Net
Income (but excluding from such Net Income for the applicable period any income
derived from any Investment referred to in Section 6.07(9) to the extent that
such income exceeds the cash distributions thereof received by the Borrower or
its Subsidiaries in such period), PLUS (ii) charges against income for foreign,
federal, state and local taxes, PLUS (iii) Interest Expense, PLUS (iv)
depreciation, PLUS (v) amortization expense, including, without limitation,
amortization of goodwill and other intangible assets and amortization of
deferred compensation expense, PLUS (vi) extraordinary losses, MINUS (vii)
interest income, MINUS (viii) extraordinary gains (and any unusual gains arising
in or outside of the ordinary course of business not included in extraordinary
gains that have been included in the determination of Net Income).
"Effective Date" means the later of (a) the date on which this
Agreement has been fully executed and delivered by the Banks, the Agent, the
Issuing Bank or Banks and the Borrower and (b) the date on which the conditions
set forth in Section 3.01 have been satisfied.
"Entitled Land" means all Lots that are neither Lots under Development
nor Finished Lots.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published interpretations
thereof.
"Eurocurrency Reserve Requirement" means, for any 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 such term is used in Regulation D) but without
benefit or credit of proration, exemptions, or offsets that might otherwise be
available from time to time under Regulation D. Without limiting the effect of
the foregoing, the Eurocurrency Reserve Requirement shall reflect any other
reserves required to be
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maintained against (1) any category of liabilities that includes deposits by
reference to which the LIBOR Interest Rate for LIBOR Loans is to be determined;
or (2) any category of extension of credit or other assets that include LIBOR
Loans.
"Event of Default" means any of the events specified in Section 8.01,
provided that any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Extension Request" has the meaning assigned to that term in Section
2.19(a).
"Facility Letter of Credit" means (a) any Letter of Credit issued as a
"Facility Letter of Credit" by Bank One as "Issuing Bank" under the Original
Agreement that is outstanding on the Effective Date and (b) any Letter of Credit
issued by an Issuing Bank for the account of the Borrower in accordance with
Article XIII.
"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, which fee shall
be calculated in the manner provided in Section 13.07.
"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, and (ii) the aggregate amount paid by an Issuing Bank on any Facility
Letters of Credit to the extent (if any) not reimbursed by the Borrower or by
the Banks under Section 13.04.
"Federal Funds Rate" means, for each day, a fluctuating 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, 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. Chicago time on such
day on such transactions received by the Agent from three Federal Funds brokers
of recognized standing selected by the Agent in its sole discretion.
"Finished Lots" means Lots in respect of which a building permit, from
the applicable local governmental authority, has been or could be obtained;
PROVIDED, HOWEVER, that the term "Finished Lots" shall not include any Land upon
which the construction of a Housing Unit has commenced.
"Fitch" means Fitch Investors Services, L.P.
"GAAP" means generally accepted accounting principles in the United
States in effect from time to time (subject to the provisions of Section 1.02).
7
"Guarantor" means an Original Guarantor, a New Guarantor and any
Person that, pursuant to Section 5.15, guarantees the Obligations.
"Guaranty" means the guaranty of the Obligations by each Guarantor
under the provisions of Article IX contained herein or under a guaranty of the
Obligations delivered under Section 5.15.
"Housing Unit" means a single-family dwelling, including the Land on
which such dwelling is located, whether such dwelling is detached or attached
(including condominiums but excluding mobile homes), which dwelling is either
under construction or completed and is (or, upon completion of construction
thereof, will be) available for sale; the term "Housing Unit" includes a
Speculative Housing Unit.
"Housing Unit Closing" means a closing of the sale of a Housing Unit
by the Borrower or a Subsidiary (including any company or other entity acquired
in an Acquisition by the Borrower or a Subsidiary) to a BONA FIDE purchaser for
value that is not an Affiliate.
"Housing Unit Under Contract" means a Housing Unit owned by the
Borrower or a Subsidiary as to which the Borrower or such Subsidiary has a BONA
FIDE contract of sale, in a form customarily employed by the Borrower or such
Subsidiary and reasonably satisfactory to the Majority Banks, entered into not
more than 15 months prior to the date of determination with a Person who is not
an Affiliate, under which contract no defaults then exist and not less than
$1,000.00 toward the purchase price has been paid; PROVIDED, HOWEVER, that in
the case of any Housing Unit the purchase of which is to be financed in whole or
in part by a loan insured by the Federal Housing Administration or guaranteed by
the Veterans Administration, the required minimum downpayment shall be the
amount (if any) required under the rules of the relevant agency.
"Incur" means to, directly or indirectly, create, incur, assume,
guarantee, extend the maturity of or otherwise become liable with respect to any
Debt; provided, however, that neither the accrual of interest (whether such
interest is payable in cash or kind) nor the accretion of original issue
discount shall be considered an Incurrence of Debt.
"Intangible Assets" means, at any time, the amount (to the extent
reflected in determining consolidated stockholders equity of the Borrower and
its Subsidiaries) of (i) Investments in any Subsidiaries that are not Guarantors
and (ii) all unamortized debt discount and expense, unamortized deferred
charges, good will, patents, trademarks, service marks, trade names, copyrights
and all other items which would be treated as intangibles on a consolidated
balance sheet of the Borrower and its Subsidiaries prepared in accordance with
GAAP.
"Interest Deficit" has the meaning assigned to that term in Section
2.08(b) hereof.
"Interest Expense" means, for any period, the total interest expense
of the Borrower and its Subsidiaries, whether paid directly or amortized through
cost of sales (including the interest component of Capital Leases).
8
"Interest Period" means, with respect to any LIBOR Loan, the period
commencing on the date such Loan is made, converted or renewed, and ending, as
the Borrower may select pursuant to Section 2.03, on the numerically
corresponding day in the first, second, third or sixth calendar month
thereafter, except that each such Interest Period that commences on the last
Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar month;
provided that all of the foregoing provisions relating to Interest Periods are
subject to the following:
(a) No Interest Period may extend beyond the Termination
Date; and
(b) If an Interest Period would end on a day that is not a
Business Day, such Interest Period shall be extended to the next
Business Day unless such Business Day would fall in the next calendar
month, in which event such Interest Period shall end on the
immediately preceding Business Day.
"Internal Reorganization" means any reorganization between or among
the Borrower and any Subsidiary or Subsidiaries or between or among any
Subsidiary and one or more other Subsidiaries or any combination thereof by way
of liquidations, mergers, consolidations, conveyances, assignments, sales,
transfers and other dispositions of all or substantially all of the assets of a
Subsidiary (whether in one transaction or in a series of transactions); PROVIDED
THAT (a) the Borrower shall preserve and maintain its status as a validly
existing corporation and (b) all assets, liabilities, obligations and guarantees
of any Subsidiary party to such reorganization will continue to be held by such
Subsidiary or be assumed by the Borrower or a Wholly-Owned Subsidiary of the
Borrower.
"Inventory" means all Housing Units, Lots, goods, merchandise and
other personal property wherever located to be used for or incorporated into any
Housing Unit.
"Inventory Valuation Date" means (a) the last day of the most recent
fiscal quarter of the Borrower with respect to which the Borrower is required to
have delivered a Borrowing Base Certificate pursuant to Section 5.08(6) hereof
or (b) if the Borrower elects pursuant to Section 2.01(d) or is required
pursuant to Section 2.01(e) to deliver a Borrowing Base Certificate with respect
to a calendar month subsequent to such most recent fiscal quarter, the last day
of such subsequent calendar month.
"Investment" has the meaning provided therefor in Section 6.07. The
amount of any Investment shall include (a) in the case of any loan or advance,
the outstanding amount of such loan or advance and (b) in the case of any equity
Investment, the amount of the "net equity investment" as determined in
accordance with GAAP; PROVIDED, HOWEVER, that, solely for purposes of Section
6.07(12), the amount of the Investment in a Joint Venture shall be the "net cash
investment" therein, as determined in accordance with GAAP, but not less than
zero (0).
"Issuance Date" means the date on which a Facility Letter of Credit is
issued, amended or extended.
9
"Issuing Bank" means Bank One and any other Bank that may from time to
time be designated as an Issuing Bank in accordance with the provisions of
Section 13.10.
"Joint Venture" means any Person (other than a Subsidiary) in which
the Borrower or a Subsidiary holds any stock, partnership interest, joint
venture interest, limited liability company interest or other equity interest.
"Land" means land owned by the Borrower or a Subsidiary, which land is
being developed or is held for future development or sale.
"Lending Office" means, with respect to any Bank, the Lending Office
of such Bank (or of an affiliate of such Bank) designated on the signature pages
hereof or such other office or branch of such Bank (or of an affiliate of such
Bank) as that Bank may from time to time specify to the Borrower and the Agent
as the office or branch at which its Loans (or Loans of a type designated in
such notice) are to be made and maintained.
"Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued by a financial institution upon the application of
such Person or upon which such Person is an account party or for which such
Person is in any way liable.
"Level" means the level of a Pricing Factor, Applicable Margin or
Applicable Commitment Rate (as applicable) as designated in the Table set forth
in Section 2.05. The five Levels in such Table are identified as Levels I
through V, and Level I shall constitute the lowest Level and Level V shall
constitute the highest Level.
"LIBOR Interest Rate" means, for each LIBOR Loan for the relevant
Interest Period, the rate per annum (rounded upward, if necessary, to the
nearest one-sixteenth of 1%) determined by the Agent to be equal to the quotient
of (a) the London Interbank Offered Rate for such LIBOR Loan for such Interest
Period divided by (b) one minus the Eurocurrency Reserve Requirement for such
Interest Period.
"LIBOR Loan" means any Loan when and to the extent that the interest
rate therefor is determined by reference to the LIBOR Interest Rate.
"Lien" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), or preference, priority, or other security agreement or preferential
arrangement, charge, or encumbrance of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction to evidence any of the
foregoing).
"Loan(s)" means a loan made by a Bank pursuant to this Agreement,
including (unless the context otherwise indicates) a Swing Line Loan. Each such
Loan (other than a Swing Line Loan) shall be an ABR Loan or a LIBOR Loan.
10
"Loan Document(s)" means this Agreement, the Notes, the Reimbursement
Agreements, and any and all documents delivered hereunder or pursuant hereto.
"London Interbank Offered Rate" means, with respect to a LIBOR Loan
for the relevant Interest Period, the rate determined by the Agent to be the
rate at which deposits in U.S. Dollars are offered by Bank One to first-class
banks in the London interbank market at approximately 11:00 A.M. (London time)
two (2) Business Days prior to the first day of such Interest Period, in the
approximate amount of Bank One's relevant LIBOR Loan and having a maturity
approximately equal to such Interest Period.
"Lots" means all Land owned by the Borrower and/or a Subsidiary which
is zoned by the municipality in which such real property is located for
residential building and use, and with respect to which the Borrower or such
Subsidiary has obtained all necessary approvals for its subdivision for Housing
Units; PROVIDED, HOWEVER, that the term "Lots" shall not include any Land upon
which the construction of a Housing Unit has commenced.
"Lots under Development" means Lots with respect to which construction
of streets or other subdivision improvements has commenced but which are not
Finished Lots.
"Majority Banks" means at any time the Banks holding at least
sixty-six and two-thirds percent (66 2/3%) of the then aggregate unpaid
principal amount of the Notes held by the Banks (including in such amount any
participation held by such Bank as a result of its purchase thereof pursuant to
Section 10.07), or, if no such principal amount is then outstanding, Banks
having at least sixty-six and two-thirds percent (66 2/3%) of the Aggregate
Commitments.
"Merged Banks" has the meaning assigned to that term in Section
12.03(c).
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a plan described in Section 4001(a)(3) of
ERISA in respect of which the Borrower, a Subsidiary or a Commonly Controlled
Entity is an "employer" as defined in Section 3(5) of ERISA.
"Net Income" means, for any period, the net earnings (or loss) after
taxes of the Borrower and its Subsidiaries on a consolidated basis for such
period.
"New Guarantors" has the meaning assigned to that term in the preamble
to this Agreement.
"Note(s)" means the promissory notes described in Section 2.10 hereof.
"Notice of Assignment" has the meaning assigned to that term in
Section 12.03(b) hereof.
"Obligations" means (a) the due and punctual payment of principal of
and interest on the Loans and the Notes, (b) the due and punctual payment of the
Facility Letter of Credit Obligations, and (c) the due and punctual payment of
fees, expenses, reimbursements,
11
indemnifications and other present and future monetary obligations of the
Borrower to the Banks or to any Bank, the Agent, the Issuing Bank or any
indemnified party under the Loan Documents.
"Original Agreement" has the meaning assigned to that term in the
recitals of this Agreement.
"Original Guarantors" has the meaning assigned to that term in the
preamble to this Agreement.
"Participant" has the meaning assigned to that term in Section
12.02(a) hereof.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Performance Letter of Credit" means any Letter of Credit of the
Borrower or a Guarantor that is issued for the benefit of a municipality, other
governmental authority, utility, water or sewer authority, or other similar
entity for the purpose of assuring such beneficiary of the Letter of Credit of
the proper and timely completion of construction work.
"Permitted Acquisition" means any Acquisition (other than by means of
a hostile takeover, hostile tender offer or other similar hostile transaction)
of a business or entity engaged primarily in the business of home building;
provided that, immediately after giving effect to such Acquisition, no Default
or Event of Default has occurred and is continuing.
"Permitted Senior Debt" means the sum of all Debt of the Borrower and
its Subsidiaries on a consolidated basis, excluding (i) Secured Debt, (ii)
Performance Letters of Credit, (iii) performance bonds and (iv) Debt of any
Joint Venture.
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, limited liability company, unincorporated
association, joint venture, governmental authority, or other entity of whatever
nature.
"Plan" means any pension plan which is covered by Title IV of ERISA
and in respect of which (a) the Borrower or a Subsidiary or a Commonly
Controlled Entity is an "employer" as defined in Section 3(5) of ERISA and (b)
the Borrower or a Subsidiary has any material liability; PROVIDED, HOWEVER, that
the term "Plan" shall not include any Multiemployer Plan.
"PNC" means PNC Bank, N.A.
"PNC Letters of Credit" has the meaning ascribed to that term in
Section 13.10 hereof.
"Pricing Factor" means either the Debt/Cap Ratio or the Senior Debt
Rating.
12
"Prime Rate" means a rate per annum equal of the prime rate of
interest announced from time to time by Bank One or its parent (which is not
necessarily the lowest rate charged to any customer), changing when and as said
prime rate changes.
"Principal Office" means, with respect to the Agent, the Principal
Office of the Agent designated as such on the signature pages hereof or such
other office of the Agent as the Agent may from time to time specify to the
Borrower and the Banks as its Principal Office.
"Prohibited Transaction" means any transaction set forth in Section
406 of ERISA or Section 4975 of the Code that could subject the Borrower or any
Subsidiary to any material liability.
"Purchaser" has the meaning assigned to that term in Section 12.03(a)
hereof.
"Receivables" means the net proceeds payable to, but not yet received
by, the Borrower or a Subsidiary following a Housing Unit Closing.
"Refinancing Debt" means Debt that refunds, refinances or extends any
applicable Debt ("Refinanced Debt") but only to the extent that (i) the
Refinancing Debt is subordinated to or PARI PASSU with the Obligations to the
same extent as such Refinanced Debt, if at all, (ii) the Refinancing Debt is
scheduled to mature no earlier than the earlier of (A) the current maturity date
of such Refinanced Debt or (B) a date three (3) years after the Termination Date
(as determined at the time such Refinancing Debt is Incurred), (iii) such
Refinancing Debt is in an aggregate amount that is equal to or less than the sum
of (A) the aggregate amount then outstanding under the Refinanced Debt, PLUS (B)
accrued and unpaid interest on such Refinanced Debt, PLUS (C) reasonable fees
and expenses incurred in obtaining such Refinancing Debt, it being understood
that this clause (iii) shall not preclude the Refinancing Debt from being a part
of a Debt financing that includes other or additional Debt otherwise permitted
herein, (iv) such Refinancing Debt is Incurred by the same Person that initially
Incurred such Refinanced Debt or by another Person of which the Person that
initially Incurred such Refinanced Debt is a Subsidiary, and (v) such
Refinancing Debt is Incurred within 60 days after such Refinanced Debt 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 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.
"Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official
13
interpretation of said Board of Governors relating to the extension of credit by
foreign lenders for the purpose of purchasing or carrying margin stock (as
defined therein).
"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 the
applicable Issuing Bank may employ in the ordinary course of business for its
own account, with the modifications thereto as may be agreed upon by such
Issuing Bank and the Borrower and as are not materially adverse (in the
reasonable judgment of such Issuing Bank and the Agent) to the interests of the
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.
"Rejecting Bank" has the meaning assigned to such term in Section
2.19(b).
"Replacement Bank" has the meaning assigned to such term in Section
2.20.
"Reportable Event" means any of the events set forth in Section 4043
of ERISA with respect to a Plan (excluding any such event with respect to which
the PBGC has waived the 30-day notice requirement).
"S&P" means Standard & Poor's Rating Services.
"Secured Debt" means all Debt of the Borrower or any of its
Subsidiaries (excluding Debt owing to the Borrower or any of its Subsidiaries)
that is secured by a Lien on assets of the Borrower or any of its Subsidiaries.
"Senior Debt" means the Senior Notes or, if the Senior Notes are
refinanced, the Refinancing Debt with respect thereto.
"Senior Debt Rating" means the second highest rating among the
publicly announced ratings of Moody's, S&P, D&P and/or Fitch of the Borrower's
unsecured long-term debt (including the Senior Debt and the Obligations),
provided, however, (i) at any time at which neither of the two highest ratings
is by Moody's or S&P, the Senior Debt Rating shall be (x) the rating assigned by
either Moody's or S&P at any time at which only one of Moody's or S&P shall
publicly announce a rating of the Borrower's unsecured long-term debt, or (y)
the higher of the two ratings by Moody's and S&P at any time at which both shall
publicly announce a rating of the Borrower's unsecured long-term debt, and (ii)
at any time at which (A) none of Moody's, S&P, D&P or Fitch publicly announces
ratings of the Borrower's unsecured long-term debt, or (B) neither Moody's nor
S&P publicly announces ratings of the Borrower's unsecured long-term debt, no
Senior Debt Rating shall be deemed to exist. The Senior Debt Rating shall change
if and when such rating(s) change, and such change in the Senior Debt Rating
shall have the effect provided for in Section 2.05 and elsewhere in this
Agreement.
"Senior Indentures" means either of the Indentures identified in the
definition of the term "Senior Notes" and any other Indenture hereafter entered
into by the Borrower pursuant to which the Borrower Incurs any Refinancing Debt
with respect to any of the Senior Notes.
14
"Senior Notes" means (i) the 9% Senior Notes due 2004 of the Borrower
issued in the original principal amount of $115,000,000 pursuant to the
Indenture dated March 2, 1994 and (ii) the 8 7/8 percent Senior Notes due 2008
of the Borrower issued in the original principal amount of $100,000,000 pursuant
to the Indenture dated March 25, 1998.
"Significant Guarantor" means, at any date of determination thereof,
any Guarantor that (together with its Subsidiaries) accounts for five percent
(5%) or more of the Consolidated Tangible Assets as of the last day of the most
recent fiscal quarter then ended and of the net revenues for the twelve-month
period ending on the last day of the most recent fiscal quarter then ended, in
each case of the Borrower and its Subsidiaries taken as a whole. Such percentage
shall be determined on the basis of financial reports that shall be available
not later than 25 days (or, in the case of the last fiscal quarter of the fiscal
year, 35 days) following the end of such fiscal quarter.
"Significant Subsidiary" means, at any date of determination thereof,
any Subsidiary that (together with its Subsidiaries) accounts for five percent
(5%) or more of the Consolidated Tangible Assets as of the last day of the most
recent fiscal quarter then ended and of the net revenues for the twelve-month
period ending on the last day of the most recent fiscal quarter then ended, in
each case of the Borrower and its Subsidiaries taken as a whole. Such percentage
shall be determined on the basis of financial reports that shall be available
not later than 25 days (or, in the case of the last fiscal quarter of the fiscal
year, 35 days) following the end of such fiscal quarter.
"Speculative Housing Unit" means any Housing Unit owned by the
Borrower or a Subsidiary that is not a Housing Unit Under Contract.
"STIC" means Security Title Insurance Company, Inc., a Vermont
corporation and Wholly Owned Subsidiary of the Borrower.
"Subsidiary" means, as to the Borrower or a Guarantor, in the case of
a corporation, a corporation of which shares of stock having ordinary voting
power (other than stock having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of
such corporation are at the time owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by the Borrower or such Guarantor, as the case may be, or in the case of an
entity which is not a corporation, the activities of which are controlled
directly, or indirectly through one or more intermediaries, or both, by the
Borrower or such Guarantor, as the case may be.
"Swing Line Bank" means Bank One or any Purchaser to which Bank One
assigns the Swing Line Commitment in accordance with Section 12.03 hereof.
"Swing Line Commitment" means the commitment of the Swing Line Bank to
make Swing Line Loans pursuant to Section 2.21(a) hereof. The Swing Line
Commitment is in the amount of $10,000,000.
"Swing Line Loan" has the meaning assigned to such term in Section
2.21(a).
15
"Termination Date" means November 2, 2002.
"Transferee" has the meaning assigned to that term in Section 12.04.
"UHIC" means United Homes Insurance Corporation, a Vermont corporation
and Wholly Owned Subsidiary of the Borrower.
"Unrestricted Cash" of a Person means the cash of such Person that
would not be identified as "restricted" on a balance sheet of such Person
prepared in accordance with GAAP.
"Wholly Owned Subsidiary" of any Person means (i) a Subsidiary, of
which one hundred percent (100%) of the outstanding Common Equity (except for
directors' qualifying shares or certain minority interests owned by other
Persons solely due to local law requirements that there be more than one
stockholder, but which interest is not in excess of what is required for such
purpose) is owned directly by such Person or through one or more other Wholly
Owned Subsidiaries of such Person, or (ii) any entity other than a corporation
in which such Person, directly or indirectly, owns all of the outstanding Common
Equity of such entity.
"Year 2000 Issues" means anticipated costs, problems and uncertainties
associated with the inability of the Borrower's or its Subsidiaries' computer
applications to effectively handle data (including dates) on and after January
1, 2000, as such inability affects the business, operations, or financial
condition of the Borrower or its Subsidiaries.
SECTION 1.02. ACCOUNTING TERMS. (a) All accounting terms not
specifically defined herein shall be construed in accordance with GAAP
consistent with those applied in the preparation of the financial statements
referred to in Section 4.04, and all financial data submitted pursuant to this
Agreement shall be prepared in accordance with such principles.
(b) Notwithstanding anything to the contrary contained in this
Agreement, in determining the Borrower's compliance with the provisions of
Article VII hereof, GAAP shall not include modifications of generally accepted
accounting principles that become effective after the date hereof.
ARTICLE II
AMOUNTS AND TERMS OF THE LOANS
SECTION 2.01. REVOLVING CREDIT. (a) Each Bank severally agrees, on the
terms and conditions hereinafter set forth, to make Loans (other than Swing Line
Loans) to the Borrower from time to time during the period from the date of this
Agreement up to but not including the Termination Date, and to purchase
undivided interests and participations in Facility Letters of Credit in
accordance with Section 13.06, in an aggregate principal amount of Loans and of
such Bank's ratable share of Facility Letter of Credit Obligations not to exceed
at any time outstanding the amount set opposite such Bank's name on the
signature pages of this Agreement (such Bank's obligations to make Loans (other
than Swing Line Loans) and to purchase undivided interests and participations in
Facility Letters of Credit in accordance with
16
Section 13.06 in such amounts, as reduced, increased or otherwise modified from
time to time pursuant to the terms of this Agreement, being herein referred to
as such Bank's "Commitment"), subject to the limitations set forth in Section
2.01(b) and Section 13.02.
(b) The aggregate amount of Permitted Senior Debt at any one time
outstanding may not exceed the Borrowing Base as of the most recent Inventory
Valuation Date, and no Loan (including a Swing Line Loan) shall be made that
would have the effect of increasing the then outstanding amount of the Permitted
Senior Debt to an amount exceeding such Borrowing Base, provided that a Loan
shall not be deemed to have increased the amount of the Permitted Senior Debt to
the extent that the proceeds of such Loan are immediately used to repay a Swing
Line Loan theretofore included in the Permitted Senior Debt. No Loans shall be
made at any time that any Swing Line Loan is outstanding, except for Loans that
are used, on the day on which made, to repay in full the outstanding principal
balance of the Swing Line Loans.
(c) Each Borrowing which shall not utilize the Commitment in full
shall be in an amount not less than One Million Dollars ($1,000,000) for a
Borrowing consisting of LIBOR Loans and Five Hundred Thousand Dollars ($500,000)
in the case of a Borrowing consisting of ABR Loans and, in either case, if in
excess of the specified amount, in integral multiples of One Hundred Thousand
Dollars ($100,000). Each Borrowing shall consist of a Loan made by each Bank in
the proportion which that Bank's Commitment bears to the Aggregate Commitments.
Within the limits of the Aggregate Commitments, the Borrower may borrow, repay
pursuant to Section 2.11, and reborrow under this Section 2.01. On such terms
and conditions, the Loans may be outstanding as ABR Loans or LIBOR Loans. Each
type of Loan shall be made and maintained at such Bank's Lending Office for such
type of Loan. The failure of any Bank to make any requested Loan to be made by
it on the date specified for such Loan shall not relieve any other Bank of its
obligation (if any) to make such Loan on such date, but no Bank shall be
responsible for the failure of any other Bank to make such Loans to be made by
such other Bank. The provisions of this Section 2.01(c) shall not apply to Swing
Line Loans.
(d) The Borrower may elect to deliver to the Agent a Borrowing Base
Certificate setting forth the Borrowing Base as of the last day of a calendar
month subsequent to the most recent fiscal quarter with respect to which a
Borrowing Base Certificate was required to be delivered under Section 5.08(6) of
the Agreement.
(e) The Agent or the Majority Lenders may, upon notice to the Borrower
from the Agent, require the Borrower to deliver a Borrowing Base Certificate
determined as of the last day of a calendar month (as designated in such notice)
subsequent to the fiscal quarter with respect to which a Borrowing Base
Certificate was required to be delivered under Section 5.08(6) of the Agreement,
provided that the Borrowing Base Certificate under this Section 2.01(e) shall
only be required to be delivered on the later to occur of (i) the tenth (10th)
day following the Agent's notice to the Borrower under this Section 2.01(e) or
(ii) the twenty-fifth (25th) day after the last day of the applicable calendar
month (as designated in such notice).
(f) The Borrower may elect to include in a Borrowing Base Certificate
delivered in anticipation of a Permitted Acquisition all assets that would have
been included in the Borrowing Base had the Permitted Acquisition been
consummated as of the last day of the
17
most recent fiscal quarter or (if applicable under Section 2.01(d) or (e))
calendar month, provided, however, that such Borrowing Base Certificate shall
expressly state that it is delivered in anticipation of, and shall only be
effective hereunder for purposes of Borrowings made on or after, the
consummation of such Permitted Acquisition (it being understood that, until the
consummation of such Permitted Acquisition, the previously delivered Borrowing
Base Certificate shall remain in effect).
SECTION 2.02. REDUCTION OF AGGREGATE COMMITMENTS. The Borrower shall
have the right, upon at least three (3) Business Days' prior notice to the
Agent, to terminate in whole or reduce in part the unused portion of the
Aggregate Commitments, provided that each partial reduction shall be in the
amount of at least Five Million Dollars ($5,000,000), and provided further that
no reduction shall be permitted if, after giving effect thereto, and to any
prepayment made therewith, the sum of (i) the outstanding and unpaid principal
amount of the Loans and (ii) the Facility Letter of Credit Obligations shall
exceed the Aggregate Commitments. Each reduction in part of the unused portion
of each Bank's Commitment shall be made in the proportion that such Bank's
Commitment bears to the total amount of the Aggregate Commitments. Any
Commitment, once reduced or terminated, may not be reinstated.
SECTION 2.03. NOTICE AND MANNER OF BORROWING. The Borrower shall give
the Agent notice of any Loans under this Agreement, on the Business Day of each
ABR Loan, and at least three (3) Business Days before each LIBOR Loan,
specifying: (1) the date of such Loan; (2) the amount of such Loan; (3) the type
of Loan (whether an ABR Loan or a LIBOR Loan); and (4) in the case of a LIBOR
Loan, the duration of the Interest Period applicable thereto. All notices given
by the Borrower under this Section 2.03 shall be irrevocable and shall be given
not later than 10:00 A.M. Chicago time on the day specified above for such
notice. The Agent shall notify each Bank of each such notice (including any
notice provided for in Section 2.20(d)) not later than 11:00 A.M. Chicago time
on the date it receives such notice from the Borrower if such notice is received
by the Agent at or before 10:00 A.M. Chicago time. In the event such notice from
the Borrower is received after 10:00 A.M. Chicago time, it shall be treated as
if received on the next succeeding Business Day, and the Agent shall notify each
Bank of such notice as soon as practicable but not later than 11:00 A.M. Chicago
time on the next succeeding Business Day. Not later than 1:00 P.M. Chicago time
on the date of such Loans, each Bank will make available to the Agent in
immediately available funds, such Bank's PRO RATA share of such Loans. After the
Agent's receipt of such funds, on the date of such Loans and upon fulfillment of
the applicable conditions set forth in Article III, the Agent will make such
Loans available to the Borrower in immediately available funds by crediting the
amount thereof to the Borrower's account with the Agent. The provisions of this
Section 2.03 shall not apply to Swing Line Loans.
SECTION 2.04. NON-RECEIPT OF FUNDS BY AGENT. (a) Unless the Agent
shall have received notice from a Bank prior to the date (in the case of a LIBOR
Loan), or by 12:00 noon Chicago time on the date (in the case of an ABR Loan),
on which such Bank is to provide funds to the Agent for a Loan to be made by
such Bank that such Bank will not make available to the Agent such funds, the
Agent may assume that such Bank has made such funds available to the Agent on
the date of such Loan in accordance with Section 2.03 and the Agent in its sole
discretion may, but shall not be obligated to, in reliance upon such assumption,
make available to the Borrower on such date a corresponding amount. If and to
the extent such Bank shall not have given the notice provided for above and
shall not
18
have made such funds available to the Agent, such Bank agrees to repay to the
Agent forthwith on demand such corresponding amount together with interest
thereon, for each day from the date such amount is made available to the
Borrower until the date such amount is repaid to the Agent, at the Federal Funds
Rate for three Business Days and thereafter at the Alternate Base Rate. If such
Bank shall repay to the Agent such corresponding amount, such amount so repaid
shall constitute such Bank's Loan for purposes of this Agreement. If such Bank
does not pay such corresponding amount forthwith upon Agent's demand therefor,
the Agent shall promptly notify the Borrower, and the Borrower shall immediately
pay such corresponding amount to the Agent with interest thereon, for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to the Agent, at the rate of interest applicable at the time to
such proposed Loan. Nothing set forth in this Section shall affect the rights of
the Borrower with respect to any Bank that defaults in the performance of its
obligation to make a Loan hereunder.
(b) Unless the Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Banks hereunder that the
Borrower will not make such payment in full, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date and the Agent
in its sole discretion may, but shall not be obligated to, in reliance upon such
assumption, cause to be distributed to each Bank on such due date an amount
equal to the amount then due such Bank. If and to the extent the Borrower shall
not have so made such payment in full to the Agent, each Bank shall repay to the
Agent forthwith on demand such amount distributed to such Bank together with
interest thereon, for each day from the date such amount is distributed to such
Bank until the date such Bank repays such amount to the Agent, at the Federal
Funds Rate for three Business Days and thereafter at the Alternate Base Rate.
(c) The provisions of this Section 2.04 shall not apply to Swing Line
Loans.
SECTION 2.05. DETERMINATION OF APPLICABLE MARGINS AND APPLICABLE
COMMITMENT RATE. (a) The Applicable Margins and the Applicable Commitment Rate
shall be determined by reference to the Senior Debt Rating and the Debt/Cap
Ratio in accordance with the following table and the provisions of this Section
2.05:
- -------------- -------------- ------------------ ------------------- --------------------- --------------------
Senior Applicable Applicable
Level Debt Debt/Cap LIBOR Margin Applicable Commitment
Rating Ratio ABR Margin Rate
- -------------- -------------- ------------------ ------------------- --------------------- --------------------
V BBB-/Baa3 less than 30% .80% -0- 0.20%
- -------------- -------------- ------------------ ------------------- --------------------- --------------------
19
- -------------- -------------- ------------------ ------------------- --------------------- --------------------
IV BB+/Ba1 equal to or more 1.00% -0- 0.225%
than 30% and
less than 35%
- -------------- -------------- ------------------ ------------------- --------------------- --------------------
III BB/Ba2 equal to or more 1.15% -0- 0.25%
than 35% and
less than 40%
- -------------- -------------- ------------------ ------------------- --------------------- --------------------
II BB-/Ba3 equal to or more 1.35% 0.10% 0.30%
B+/B1 than 40% and
less than 55%
- -------------- -------------- ------------------ ------------------- --------------------- --------------------
I B/B2 & Below 55% or more 1.55% 0.30% 0.35%
- -------------- -------------- ------------------ ------------------- --------------------- --------------------
The Applicable Margins and Applicable Commitment Rate shall be
determined on the basis of the Levels of the Pricing Factors in accordance with
the following provisions:
(i) At any time at which the Pricing Factors are at the same
Level, the Applicable Margins and Applicable Commitment Rate shall be
at that Level;
(ii) At any time at which the Pricing Factors are at different
Levels, the Applicable Margins and the Applicable Commitment Rate shall
be at the Level that corresponds to (A) the Level of the higher of the
two Pricing Factors (i.e. the lower pricing) whenever the Pricing
Factors differ by one Level and (B) the Level that is one Level lower
than the higher of the two Pricing Factors whenever the Pricing Factors
differ by more than one Level;
(iii) At any time at which there is or is deemed to be no Senior
Debt Rating, the Applicable Margins and the Applicable Commitment Rate
shall be at the Level that is one Level lower than the Level of the
Debt/Cap Ratio; and
(iv) At any time at which (A) neither D&P nor Fitch publicly
announces a rating of the Borrower's unsecured long-term debt, and (B)
Moody's or S&P (but not both) publicly announces a rating of the
Borrower's unsecured long-term debt, the Applicable Margin and
Applicable Commitment Rate shall be determined in accordance with
subsections (i) and (ii) above (as applicable), except that (A) the
Applicable LIBOR Margin set forth in the Table above shall be increased
by 0.075% and (B) the Applicable Commitment Rate set forth in the Table
shall be increased by 0.025%.
(b) The Applicable Margin and the Applicable Commitment Rate shall be
adjusted, from time to time, effective (as applicable) on the first Business Day
after any change in the Senior Debt Ratings that results in any change in the
Applicable Margins or Applicable Commitment Rate or the fifth (5th) Business Day
after the Agent's receipt of the Borrower's quarterly or annual financial
statements evidencing a change in the Debt/Cap Ratio that results in any change
in the Applicable Margins or Applicable Commitment Rates, PROVIDED, HOWEVER,
that any change
20
in the Applicable LIBOR Margin shall only apply to LIBOR Loans for Interest
Periods commencing after such change in the Applicable LIBOR Margin is
effective.
SECTION 2.06. CONVERSIONS AND RENEWALS. The Borrower may elect from
time to time to convert all or a part of one type of Loan into another type of
Loan or to renew all or part of a Loan by giving the Agent notice at least one
(1) Business Day before conversion into an ABR Loan, and at least three (3)
Business Days before the conversion into or renewal of a LIBOR Loan, specifying:
(1) the renewal or conversion date; (2) the amount of the Loan to be converted
or renewed; (3) in the case of conversions, the type of Loan to be converted
into; and (4) in the case of renewals of or a conversion into a LIBOR Loan, the
duration of the Interest Period applicable thereto; PROVIDED that (a) the
minimum principal amount of each Loan of each Bank outstanding after a renewal
or conversion shall be One Million Dollars ($1,000,000) in the case of a LIBOR
Loan, and Two Hundred Fifty Thousand Dollars ($250,000) in the case of an ABR
Loan; and (b) LIBOR Loans may be converted on a Business Day that is not the
last day of the Interest Period for such Loan only if the Borrower pays on the
date of conversion all amounts due pursuant to Section 2.17 hereof; and (c) the
Borrower may not renew a LIBOR Loan or convert an ABR Loan into a LIBOR Loan at
any time that a Default has occurred that is continuing. Each such notice shall
be accompanied by a Borrowing Base Certificate dated as at the date of such
notice. All conversions and renewals shall be made in the proportion that each
Bank's Loan bears to the total amount of all the Banks' Loans. All notices given
by the Borrower under this Section 2.06 shall be irrevocable and shall be given
not later than 10:00 A.M. Chicago time on the day which is not less than the
number of Business Days specified above for such notice. The Agent shall notify
each Bank of each such notice not later than 11:00 A.M. Chicago time on the date
it receives such notice from the Borrower if such notice is received by the
Agent at or before 10:00 A.M. Chicago time. In the event such notice from the
Borrower is received after 10:00 A.M. Chicago time, it shall be treated as if
received on the next succeeding Business Day, and the Agent shall notify each
Bank of such notice as soon as practicable but not later than 11:00 A.M. Chicago
time on the next succeeding Business Day. Notwithstanding the foregoing, if the
Borrower shall fail to give the Agent the notice as specified above for the
renewal or conversion of a LIBOR Loan prior to the end of the Interest Period
with respect thereto, such LIBOR Loan shall automatically be converted into an
ABR Loan on the last day of the Interest Period for such Loan. The provisions of
this Section 2.06 shall not apply to Swing Line Loans.
SECTION 2.07. INTEREST. (a) The Borrower shall pay interest to the
Agent for the account of each Bank on the outstanding and unpaid principal
amount of the Loans at the following rates:
(i) If an ABR Loan or Swing Line Loan, then at a rate per
annum equal to the sum of (A) the Applicable ABR Margin in effect from
time to time as interest accrues and (B) the Alternate Base Rate in
effect from time to time as interest accrues; and
(ii) if a LIBOR Loan, then at a rate per annum for the
Interest Period applicable to such LIBOR Loan equal to the sum of (A)
the Applicable LIBOR
21
Margin in effect on the first day of such Interest Period and (B) the
LIBOR Interest Rate determined for such Interest Period.
(b) Any change in the interest rate based on the Alternate Base Rate
resulting from a change in the Alternate Base Rate shall be effective as of the
opening of business on the day on which such change in the Alternate Base Rate
becomes effective. Interest on each LIBOR Loan shall be calculated on the basis
of a year of 360 days for the actual number of days elapsed. Interest on each
ABR Loan and Swing Line Loan shall be calculated on the basis of a year of 365
days for the actual number of days elapsed.
(c) Interest on the Loans shall be paid (in an amount set forth in a
statement delivered by the Agent to the Borrower, PROVIDED, HOWEVER, that the
failure of the Agent to deliver such statement shall not limit or otherwise
affect the obligations of the Borrower hereunder) in immediately available funds
to the Agent at its Principal Office for the account of the applicable Lending
Office of each Bank as follows:
(1) For each ABR Loan and Swing Line Loan on the first day of each
calendar month commencing on the first such date after such Loan;
(2) For each LIBOR Loan, on the last day of the Interest Period with
respect thereto, except that, if such Interest Period is longer than
three months, interest shall also be paid on the last day of the third
month of such Interest Period; and
(3) If not sooner paid, then on the Termination Date or such earlier date
as the Loans may be due or declared due hereunder.
(d) Any principal amount of any Loan not paid when due (at maturity,
by acceleration, or otherwise) shall bear interest thereafter until paid in
full, payable on demand, at a rate per annum equal to the Alternate Base Rate or
the applicable LIBOR Interest Rate, as the case may be, for such Loan in effect
from time to time as interest accrues, plus the Applicable Margin in effect from
time to time as interest accrues, plus two percent (2%) per annum.
SECTION 2.08. INTEREST RATE DETERMINATION. (a) The Agent shall
determine each London Interbank Offered Rate, as applicable. The Agent shall
give prompt notice to the Borrower and the Banks of the applicable interest rate
determined by the Agent pursuant to the terms of this Agreement.
(b) If the provisions of this Agreement or any Note would at any time
require payment by the Borrower to a Bank of any amount of interest in excess of
the maximum amount then permitted by the law applicable to any Loan, the
interest payments to such Bank shall be reduced to the extent necessary so that
such Bank shall not receive interest in excess of such maximum amount. If, as a
result of the foregoing a Bank shall receive interest payments hereunder or
under a Note in an amount less than the amount otherwise provided hereunder,
such deficit (hereinafter called "Interest Deficit") will cumulate and will be
carried forward (without interest) until the termination of this Agreement.
Interest otherwise payable to a Bank hereunder and under a Note for any
subsequent period shall be increased by the maximum amount of the Interest
Deficit that may be so added without causing such Bank to receive interest in
excess of
22
the maximum amount then permitted by the law applicable to the Loans. The amount
of the Interest Deficit relating to the Loans shall be treated as a prepayment
premium (to the extent permitted by law) and paid in full at the time of any
optional prepayment by the Borrower to the Banks of all the Loans at that time
outstanding pursuant to Section 2.11 hereof. The amount of the Interest Deficit
relating to the Loans at the time of any complete payment of the Loans at that
time outstanding (other than an optional prepayment thereof pursuant to Section
2.11 hereof) shall be canceled and not paid.
SECTION 2.09. FEES. (a) The Borrower shall pay to BOCM upon the
execution of this Agreement a one time, nonrefundable fee in the amount provided
for in that certain fee letter dated November 23, 1999 from the Agent and BOCM
to the Borrower and accepted by the Borrower on December 2, 1999. The Agent
shall deliver to each Bank that was not a party to the Original Agreement its
applicable fee (as set forth in the invitation letter dated December 2, 1999
from BOCM to such Banks) promptly upon the Agent's receipt thereof.
(b) The Borrower agrees to pay to the Agent for the account of each
Bank (subject to adjustment in the case of the Swing Line Bank as hereinafter
provided) a commitment fee on the average daily unused portion of such Bank's
Commitment (in an amount set forth in a statement delivered by the Agent to the
Borrower, PROVIDED, HOWEVER, that the failure of the Agent to deliver such
statement shall not limit or otherwise affect the obligations of the Borrower
hereunder) from the date of this Agreement until the Termination Date at the
Applicable Commitment Rate, payable in arrears on the first day of each January,
April, July and October during the term of such Bank's Commitment, commencing
January 1, 1999, and ending on the Termination Date. The commitment fees shall
be calculated on the basis of a year of 365 days for the actual number of days
elapsed. Upon receipt of any commitment fees, the Agent will promptly thereafter
cause to be distributed such payments to the Banks in the proportion that each
Bank's unused Commitment bears to the unused Aggregate Commitments (subject to
adjustment in the case of the Swing Line Bank as hereinafter provided). For
purposes of determining the commitment fee payable to the Swing Line Bank, the
unused portion of such Bank's Commitment shall be reduced dollar-for-dollar by
the amount of any Swing Line Loans then outstanding.
(c) The Borrower shall pay to the Agent and BOCM (to the extent not
heretofore paid) such additional fees as are specified in a fee letter from the
Agent and BOCM to the Borrower dated October 30, 1998 accepted by the Borrower
on November 2, 1998.
SECTION 2.10. NOTES. All Loans made by each Bank under this Agreement
shall be evidenced by, and repaid with interest in accordance with, a single
promissory note of the Borrower (a) in substantially the form of EXHIBIT A
hereto in the case of each Bank that is not a party to the Original Agreement,
in each case duly completed, dated the date of this Agreement, and payable to
such Bank for the account of its applicable Lending Office, such Note to
represent the obligation of the Borrower to repay the Loans made by such Bank
and (b) in the case of each Bank that is party to the Original Agreement, the
Note heretofore delivered by the Borrower to such Bank pursuant to the Original
Agreement, such Note representing the obligation of Borrower to repay the Loans
made by such Bank. Each Bank is hereby authorized by the Borrower to endorse on
the schedule attached to the Note held by it the amount and type
23
of each Loan and each renewal, conversion, and payment of principal amount
received by such Bank for the account of its applicable Lending Office on
account of its Loans, which endorsement shall, in the absence of manifest error,
be conclusive as to the outstanding balance of the Loans made by such Bank;
PROVIDED, HOWEVER, that the failure to make such notation with respect to any
Loan or renewal, conversion, or payment shall not limit or otherwise affect the
obligations of the Borrower under this Agreement or the Note held by such Bank.
All Loans shall be repaid on the Termination Date.
SECTION 2.11. PREPAYMENTS. (a) The Borrower may, upon notice to the
Agent not later than 11:00 A.M. (Chicago time) on the date of prepayment in the
case of ABR Loans and at least three (3) Business Days' prior notice to the
Agent in the case of LIBOR Loans, prepay (including, without limitation, all
amounts payable pursuant to the terms of Section 2.17 hereof) the Notes in whole
or in part with accrued interest to the date of such prepayment on the amount
prepaid, PROVIDED that (1) each partial payment shall be in a principal amount
of not less than One Million Dollars ($1,000,000) in the case of a LIBOR Loan
and Two Hundred Fifty Thousand Dollars ($250,000) in the case of an ABR Loan;
and (2) LIBOR Loans may be prepaid only on the last day of the Interest Period
for such Loans; PROVIDED, HOWEVER, that such prepayment of LIBOR Loans may be
made on any other Business Day if the Borrower pays at the time of such
prepayment all amounts due pursuant to Section 2.17 hereof. Upon receipt of any
such prepayments, the Agent will promptly thereafter cause to be distributed
such prepayment to each Bank for the account of its applicable Lending Office
pro rata to each Bank in the proportion that its Commitment bears to the
Aggregate Commitments, except that prepayments of Swing Line Loans shall be made
solely to the Swing Line Bank.
(b) The Borrower shall immediately upon a Change in Control prepay the
Notes in full and all accrued interest to the date of such prepayment, and in
the case of LIBOR Loans all amounts due pursuant to Section 2.17 hereof.
SECTION 2.12. METHOD OF PAYMENT. The Borrower shall make each payment
under this Agreement and under the Notes not later than 11:00 A.M. Chicago time
on the date when due in lawful money of the United States to the Agent for the
account of the applicable Lending Office of each Bank (or, in the case of Swing
Line Loans, for the account of the Swing Line Bank) in immediately available
funds. The Agent will promptly thereafter cause to be distributed (1) such
payments of principal and interest with respect to Loans (other than Swing Line
Loans) in like funds to each Bank for the account of its applicable Lending
Office pro rata to each Bank in the proportion that its Commitment bears to the
Aggregate Commitments, (2) such payments of principal and interest with respect
to Swing Line Loans solely to the Swing Line Bank and (3) other fees payable to
any Bank to be applied in accordance with the terms of this Agreement. If any
such payment is not received by a Bank on the Business Day on which the Agent
received such payment (or the following Business Day if the Agent's receipt
thereof occurs after 2:00 P.M. (Chicago time)), such Bank shall be entitled to
receive from the Agent interest on such payment at the Federal Funds Rate for
three Business Days and thereafter at the Alternate Base Rate (which interest
payment shall not be an obligation for the Borrower's account, including under
Section 11.04 or Section 11.06). The Borrower hereby authorizes each Bank, if
and to the extent payment is not made when due under this Agreement or under the
Notes, to charge from time to time against any account of the Borrower with such
Bank any
24
amount as due. Whenever any payment to be made under this Agreement or under the
Notes shall be stated to be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day, and such extension of time
shall be included in the computation of the payment of interest and the
commitment fee, as the case may be, except, in the case of a LIBOR Loan, if the
result of such extension would be to extend such payment into another calendar
month, such payment shall be made on the immediately preceding Business Day.
SECTION 2.13. USE OF PROCEEDS. The proceeds of the Loans hereunder
shall be used by the Borrower for working capital and general corporate purposes
of the Borrower and the Guarantors to the extent permitted in this Agreement and
to repay Swing Line Loans. The Borrower will not, directly or indirectly, use
any part of such proceeds for the purpose of repaying the Senior Notes or for
purchasing or carrying any margin stock within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System or to extend credit to any
Person for the purpose of purchasing or carrying any such margin stock, or for
any purpose which violates, or is inconsistent with, Regulation X of such Board
of Governors.
SECTION 2.14. 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 Office to any tax,
duty, charge or withholding on or from payments due from the
Borrower (excluding federal taxation of the overall net income of
any Bank or applicable Lending Office), or changes the basis of
taxation of payments to any Bank in respect of its Loans or other
amounts due it hereunder, or
(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 Office (other than reserves
and assessments taken into account in determining the interest
rate applicable to LIBOR Loans), or
(iii) imposes any other condition the result of which is to increase the
cost to any Bank or any applicable Lending Office of making,
funding or maintaining loans or reduces any amount receivable by
any Bank or any applicable Lending Office in connection with
loans, or requires any Bank or any applicable Lending Office 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 of demand by such Bank, the Borrower shall pay
such Bank that portion of such increased expense incurred or reduction in an
amount received which such Bank reasonably determines is attributable to making,
funding and maintaining its Loans and its Commitment.
SECTION 2.15. CHANGES IN CAPITAL ADEQUACY REGULATIONS. If a Bank
determines the amount of capital required or expected to be maintained by such
Bank, any Lending Office of
25
such Bank or any corporation controlling such Bank is increased as a result of a
Change, then, within 10 days of demand by such Bank, the Borrower shall pay such
Bank the amount necessary to compensate for any shortfall in the rate of return
on the portion of such increased capital which such Bank determines is
attributable to this Agreement, its Loans or its obligation to make Loans
hereunder (after taking into account such Bank's policies as to capital
adequacy); PROVIDED, HOWEVER, that a Bank shall impose such cost upon the
Borrower only if such Bank is generally imposing such cost on its other
borrowers having similar credit arrangements. "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 or any
Lending Office or any corporation controlling any Bank. "Risk-Based Capital
Guidelines" means (i) the risk-based capital guidelines in effect in the United
States on the date of this Agreement, including transition rules, and (ii) 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.
SECTION 2.16. AVAILABILITY OF LIBOR LOANS. If any Bank determines that
maintenance of its LIBOR Loans at the Lending Office selected by the Bank would
violate any applicable law, rule, regulation, or directive, whether or not
having the force of law (and it is not reasonably possible for the Bank to
designate an alternate Lending Office without being adversely affected thereby),
or if the Majority Banks determine that (i) deposits of a type and maturity
appropriate to match fund LIBOR Loans are not available or (ii) the interest
rate applicable to LIBOR Loans does not accurately reflect the cost of making or
maintaining such LIBOR Loans, then the Agent shall suspend the availability of
LIBOR Loans and require any LIBOR Loans to be repaid.
SECTION 2.17. FUNDING INDEMNIFICATION. If any payment of a LIBOR Loan
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 Loan is not
made on the date specified by the Borrower for any reason other than default by
the Banks, the Borrower will indemnify each Bank for any loss or cost incurred
by it resulting therefrom, including, without limitation, any loss or cost in
liquidating or employing deposits required to fund or maintain the LIBOR Loan.
SECTION 2.18. BANK STATEMENTS; SURVIVAL OF INDEMNITY. To the extent
reasonably possible, each Bank shall designate an alternate Lending Office with
respect to its LIBOR Loans to reduce any liability of the Borrower to such Bank
under Sections 2.14 and 2.15 or to avoid the unavailability of LIBOR Loans. Each
Bank shall deliver a written statement of such Bank as to the amount due, if
any, under Sections 2.14, 2.15 or 2.17. Such written statement shall set forth
in reasonable detail the calculations upon which such Bank determined such
amount and shall be final, conclusive and binding on the Borrower in the absence
of manifest error. Determination of amounts payable under such Sections in
connection with a LIBOR Loan shall be calculated as though each Bank funded its
LIBOR Loan through the
26
purchase of a deposit of the type and maturity corresponding to the deposit used
as a reference in determining the LIBOR Rate applicable to such Loan, whether in
fact that is the case or not. Unless otherwise provided herein, the amount
specified in the written statement shall be payable on demand after receipt by
the Borrower of the written statement. The obligations of the Borrower under
Sections 2.14, 2.15 and 2.17 shall survive payment of the Obligations and
termination of this Agreement.
SECTION 2.19. EXTENSION OF TERMINATION DATE. (a) The Borrower may
request an extension of the Termination Date to February 28, 2004 (in the case
of the first such extension) or to the first anniversary of the then scheduled
Termination Date (in the case of each subsequent extension) by submitting a
request for an extension to the Agent (i) in the case of the first such
extension, on or after January 1, 2000 and on or before February 28, 2000, and
(ii) in the case of each subsequent extension, not more than 38 months nor less
than 36 months prior to the then scheduled Termination Date; PROVIDED that, in
the case of each such request, the Borrower shall have theretofore furnished to
the Agent the annual financial statements for the immediately preceding fiscal
year provided for in Section 5.08(2). At the time of or prior to the delivery of
such request, the Borrower shall propose to the Agent the amount of the fees
that the Borrower would agree to pay with respect to such extension if approved
by the Banks. Promptly upon (but not later than five Business Days after) the
Agent's receipt and approval of the extension request and fee proposal (as so
approved, the "Extension Request"), the Agent shall deliver to each Bank a copy
of, and shall request each Bank to approve, the Extension Request. Each Bank
approving the Extension Request shall deliver its written approval no later than
30 days after such Bank's receipt of the Extension Request. If the approval of
each of the Banks is received by the Agent within 30 days of the receipt by them
of the Extension Request (or as otherwise provided in Section 2.19(b)), the
Agent shall promptly so notify the Borrower and each Bank in writing, and the
Termination Date shall be extended to February 28, 2004 (in the case of the
first such extension) or to the first anniversary of the then scheduled
Termination Date (in the case of each subsequent extension), and in such event
the Borrower may thereafter request, each time the Termination Date is so
extended, a further extension of the then scheduled Termination Date in
accordance with this Section 2.19. If any of the Banks does not deliver to the
Agent such Bank's written approval to any Extension Request within such 30-day
period, the Termination Date shall not be extended, except as otherwise provided
in Section 2.19(b).
(b) If (i) any Bank (but not more than one Bank) ("Rejecting Bank")
shall not approve an Extension Request, (ii) all rights and obligations (from
and after the date of the assignment described below) of such Rejecting Bank
under this Agreement and under the other Loan Documents (including, without
limitation, its Commitment and all Loans owing to it) shall have been assigned,
within 90 days following the Bank's receipt of such Extension Request, in
accordance with Section 2.20, to one or more Replacement Banks who shall have
approved in writing such Extension Request at the time of such assignment, or,
to the extent not so assigned, such Rejecting Bank's Commitment shall have been
terminated as provided in Section 2.19(c), and (iii) no other Bank shall have
given written notice to the Agent of such Bank's withdrawal of its approval of
the Extension Request, the Agent shall promptly so notify the Borrower and each
Bank, and the Termination Date shall be extended to February 28, 2004 (in the
27
case of the first such extension) or to the first anniversary of the then
scheduled Termination Date (in the case of each subsequent extension), and in
such event the Borrower may thereafter request, each time the Termination Date
is so extended, a further extension as provided in Section 2.19(a).
(c) Within ninety (90) days following the Banks' receipt of an
Extension Request, the Borrower may, upon notice to the Agent and the Rejecting
Bank, and subject to the provisions of the last sentence of this Section
2.19(c), terminate the Commitment of such Rejecting Bank (or such portion of the
Commitment as is not assigned to a Replacement Bank in accordance with Section
2.20), which termination shall occur as of a date set forth in such Borrower's
notice but in no event more than thirty (30) days following such notice (subject
to the provisions of Section 2.20(b)). Upon the effective date of such
termination, the Borrower shall pay to the Rejecting Bank all amounts due and
owing to it hereunder or under any other Loan Document, including, without
limitation, the aggregate outstanding principal amount of the Loans owed to such
Rejecting Bank, together with accrued interest thereon through the date of such
termination, amounts payable under Sections 2.14 and 2.15 with respect to such
Rejecting Bank and the fees payable to such Rejecting Bank under Section
2.09(b). Upon request by the Borrower or the Agent, the Rejecting Bank will
deliver to the Borrower and the Agent a letter setting forth the amounts payable
to the Rejecting Bank as set forth above. Upon the termination of such Rejecting
Bank's Commitment and payment of the amounts provided for in the immediately
preceding sentence, the Borrower shall have no further obligations to such
Rejecting Bank under this Agreement and such Rejecting Bank shall cease to be a
party hereto, PROVIDED, HOWEVER, that such Rejecting Bank shall continue to be
entitled to the benefits of Sections 2.14, 2.15, 2.17, 11.04 and 11.06, as well
as to any fees accrued for its account hereunder not yet paid, and shall
continue to be obligated under Section 10.05 with respect to obligations and
liabilities accruing prior to the termination of such Rejecting Bank's
Commitment. If, as a result of the termination of the Rejecting Bank's
Commitment, any payment of a LIBOR Loan occurs on a day which is not the last
day of the applicable Interest Period, the Borrower shall pay to the Agent for
the benefit of the Banks any loss or cost incurred by the Banks resulting
therefrom in accordance with Section 2.17. Upon the effective date of the
termination of the Rejecting Bank's Commitment, the Aggregate Commitments shall
be reduced by the amount of the terminated Commitment of the Rejecting Bank, and
each other Bank shall be deemed to have irrevocably and unconditionally
purchased and received (subject to the provisions of the last sentence of this
Section 2.19(c), without recourse or warranty, from the Rejecting Bank, an
undivided interest and participation in any Facility Letter of Credit then
outstanding, ratably, such that each Bank (excluding the Rejecting Bank but
including any Replacement Bank that acquires an interest hereunder from such
Rejecting Bank) holds a participation interest in each Facility Letter of Credit
in proportion to the ratio that such Bank's Commitment (upon the effective date
of such termination of the Rejecting Bank's Commitment) bears to the Aggregate
Commitments (as reduced by the termination of such Rejecting Bank's Commitment
or a part thereof). Notwithstanding the foregoing, if, upon the termination of
the Commitment of such Rejecting Bank, the sum of the outstanding principal
balance of the Loans and the Facility Letter of Credit Obligations would exceed
the Aggregate Commitments (as reduced), the Borrower may not terminate such
Rejecting Bank's Commitment unless the Borrower, on or prior to the effective
date of such termination, prepays, in accordance with the provisions of this
Agreement, outstanding Loans or causes to be canceled, released and returned to
the applicable Issuing Bank outstanding Facility Letters of Credit in sufficient
amounts such that, on the effective date of such termination, the sum of the
outstanding principal balance of the
28
Loans and the Facility Letter of Credit Obligations does not exceed the
Aggregate Commitments (as reduced).
(d) Within ten days of the Agent's notice to the Borrower that all of
the Banks have approved an Extension Request (whether pursuant to Section
2.19(a) or 2.19(b)), the Borrower shall pay to the Agent for the account of each
Bank the applicable extension fees specified in the Extension Request.
SECTION 2.20. REPLACEMENT OF CERTAIN BANKS. (a) In the event a Bank
("Affected Bank"): (i) shall have requested compensation from the Borrower under
Sections 2.14 or 2.15 to recover additional costs incurred by such Bank that are
not being incurred generally by the other Banks, (ii) shall have delivered a
notice pursuant to Section 2.16 claiming that such Bank is unable to extend
LIBOR Loans to the Borrower for reasons not generally applicable to the other
Banks, (iii) shall have invoked Section 11.13 or (iv) is a Rejecting Bank
pursuant to Section 2.19, then, in any such case, the Borrower or the Agent may
make written demand on such Affected Bank (with a copy to the Agent in the case
of a demand by the Borrower and a copy to the Borrower in the case of a demand
by the Agent) for the Affected Bank to assign, and, if a Replacement Bank (as
hereinafter defined) notifies the Affected Bank of its willingness to purchase
the Affected Bank's interest and the Agent and the Borrower consent thereto in
writing, then such Affected Bank shall assign pursuant to one or more duly
executed assignment and acceptance agreements in substantially and in all
material respects in the form and substance of EXHIBIT I five (5) Business Days
after the date of such demand, to one or more financial institutions that comply
with the provisions of Section 12.03(a) that the Borrower or the Agent, as the
case may be, shall have engaged for such purpose ("Replacement Bank"), all (or,
to the extent permitted under Section 2.20(b), a part) of such Affected Bank's
rights and obligations (from and after the date of such assignment) under this
Agreement and the other Loan Documents (including, without limitation, its
Commitment and all Loans owing to it) in accordance with Section 12.03. The
Agent agrees, upon the occurrence of such events with respect to an Affected
Bank and upon the written request of the Borrower, to use its reasonable efforts
to obtain the commitments from one or more financial institutions to act as a
Replacement Bank. As a condition to any 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 2.14 and 2.15 with respect to such Affected Bank
and the fees payable to such Affected Bank under Section 2.09(b); 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 Sections 2.14,
2.15, 2.17, 11.04 and 11.06, as well as to any fees accrued for its account
hereunder and not yet paid, and shall continue to be obligated under Section
10.05 with respect to obligations and liabilities accruing prior to the
replacement of such Affected Bank.
(b) In the event that the Affected Bank is a Rejecting Bank, the
Borrower may elect to have a part of the Rejecting Bank's rights and obligations
under this Agreement and the other Loan Documents assigned pursuant to this
Section 2.20, PROVIDED that the Borrower also elects, pursuant to Section
2.19(c), to terminate the entire amount of the Rejecting Bank's
29
Commitment not so assigned, which termination shall be effective on the date on
which such assignment of the Rejecting Bank's rights and obligations is
consummated under this Section 2.20.
SECTION 2.21. SWING LINE. (a) The Swing Line Bank agrees, on the terms
and conditions hereinafter set forth, to make loans ("Swing Line Loans") to the
Borrower from time to time during the period from the date of this Agreement, up
to but not including the Termination Date, in an aggregate principal amount not
to exceed at any time outstanding the lesser of (i) the Swing Line Commitment or
(ii) the amount by which the Swing Line Bank's Commitment under Section 2.01
exceeds the outstanding principal amount of the Loans made by the Swing Line
Bank pursuant to Section 2.01, subject to the limitations set forth in Section
2.01(b).
(b) Each Swing Line Loan which shall not utilize the Swing Line
Commitment in full shall be in an amount not less than One Million Dollars
($1,000,000) and, if in excess thereof, in integral multiples of One Million
Dollars ($1,000,000). Within the limits of the Swing Line Commitment, the
Borrower may borrow, repay and reborrow under this Section 2.21.
(c) The Borrower shall give the Swing Line Bank notice of any request
for a Swing Line Loan not later than 2:00 p.m. Chicago time on the Business Day
of such Swing Line Loan, specifying the amount of such requested Swing Line
Loan. Each such notice shall be accompanied by a Borrowing Base Certificate
dated as of the date of such notice (and by the notice provided for in Section
2.21(d)). All notices given by the Borrower under this Section 2.21(c) shall be
irrevocable. Upon fulfillment of the applicable conditions set forth in Article
III, the Swing Line Bank will make the Swing Line Loan available to the Borrower
in immediately available funds by crediting the amount thereof to the Borrower's
account with the Swing Line Bank.
(d) On the first Business Day following the making of a Swing Line
Loan, such Swing Line Loan shall be paid in full from the proceeds of a Loan
made pursuant to Section 2.01. Each notice given by the Borrower under Section
2.21(c) shall include, or, if it does not include, shall be deemed to include an
irrevocable notice under Section 2.03 requesting the Banks to make an ABR Loan
on the next succeeding Business Day in the full amount of such Swing Line Loan.
SECTION 2.22 AMOUNTS PAYABLE UNDER ORIGINAL AGREEMENT. (a) On the
Effective Date, each Bank ("Funding Bank") that is not party to the Original
Agreement shall make a payment to the Agent in an amount sufficient, upon the
application of such payments by all such Funding Banks to the reduction of the
outstanding Advances held by the Banks that are not Funding Banks, to cause the
principal amount outstanding under the Loans by all Banks hereunder as at the
Effective Date to be in proportion to the ratio that such Bank's Commitment
(upon the Effective Date) bears to the Aggregate Commitments. The Borrower
hereby irrevocably authorizes each Funding Bank to fund to the Agent the payment
required to be made pursuant to the immediately preceding sentence for
application to the payment in full of the Loans held by "Banks" that are party
to the Original Agreement but not party to this Agreement
30
and to reduction of the outstanding Loans held by the Banks that are not Funding
Banks, and each such payment shall constitute a Loan hereunder, provided that
such Loans shall not increase the aggregate amount of all Loans outstanding
hereunder on the Effective Date to an amount exceeding the aggregate amount
outstanding under the Original Agreement immediately prior thereto. If, as a
result of the repayment of the Loans provided for in this Section 2.22(a), any
payment of a Borrowing consisting of LIBOR Loans occurs on a day which is not
the last day of the applicable Interest Period under the Original Agreement, the
Borrower will pay to the Agent for the benefit of the Banks that were party to
the Original Agreement any loss or cost incurred by such Bank resulting
therefrom in accordance with Section 2.17 of the Original Agreement. Upon the
Effective Date, all Loans outstanding hereunder (including any Loans made by the
Banks on such date) shall be ABR Loans, subject to the Borrower's right to
convert the same to LIBOR Loans on or after such date in accordance with the
provisions of Section 2.06.
(b) Borrower hereby agrees to pay to the Agent, for the benefit of the
Banks that were party to the Original Agreement, the amount of all interest (if
any) that has accrued but not been paid under the Original Agreement through the
Effective Date, all commitment fees that have accrued but not been paid under
the Original Agreement through the Effective Date and all "Facility Letter of
Credit Fees" that have accrued but not been paid under the Original Agreement
through the Effective Date, all of which amounts shall be paid by the Borrower
on the date or dates on which such amounts would have been due and payable under
the terms of the Original Agreement.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01. CONDITIONS PRECEDENT TO EFFECTIVE DATE. The Effective
Date of this Agreement shall not occur, and the Banks and the Issuing Bank or
Issuing Banks shall not be required to perform any of their obligations
hereunder, unless and until the Borrower has paid to the Agent the applicable
fees referred to in Sections 2.09(a) and (c) and the Agent shall have received
each of the following, in form and substance satisfactory to the Agent and its
counsel and (except for the Notes) in sufficient copies for each Bank:
(1) NOTES. A Note payable to each Bank not a party to the Original
Agreement duly executed by the Borrower;
(2) EVIDENCE OF ALL CORPORATE ACTION BY THE BORROWER. Certified copies
of all corporate action taken by the Borrower, including resolutions of its
Board of Directors, authorizing the execution, delivery and performance of the
Loan Documents to which it is a party and each other document to be delivered
pursuant to this Agreement;
(3) INCUMBENCY AND SIGNATURE CERTIFICATE OF BORROWER. A certificate of
the Secretary or Assistant Secretary of the Borrower certifying the names and
true signatures of the officers of the Borrower authorized to sign the Loan
Documents to which it is a party and the other documents to be delivered by the
Borrower under this Agreement;
31
(4) ARTICLES OF INCORPORATION OF BORROWER. Copies of the articles of
incorporation of the Borrower, together with all amendments, and a certificate
of good standing, all certified by the appropriate governmental officer in its
jurisdiction of incorporation;
(5) OPINIONS OF COUNSEL FOR BORROWER. A favorable opinion of Paul,
Hastings, Janofsky & Walker LLP, counsel for the Borrower and for the Guarantors
that are Delaware Persons, in substantially the form of EXHIBIT C and as to such
other matters as the Agent may reasonably request and of the Borrower's Illinois
counsel (as approved by the Agent), in substantially the form of EXHIBIT D and
as to such other matters as the Agent may reasonably request;
(6) OPINION OF COUNSEL FOR AGENT. A favorable opinion of Sidley &
Austin, counsel for the Agent, in substantially the form of EXHIBIT E hereto;
(7) EVIDENCE OF ALL CORPORATE OR PARTNERSHIP ACTION BY GUARANTORS.
With respect to each corporate Guarantor, certified (as of the date of this
Agreement) copies of all corporate action taken by such Guarantor, including
resolutions of its Board of Directors, authorizing the execution, delivery, and
performance of the applicable Guaranty, and with respect to each limited
partnership Guarantor, partnership action taken by such Guarantor, including any
and all necessary partnership consents authorizing the execution, delivery, and
performance of the applicable Guaranty;
(8) ARTICLES OF INCORPORATION OF GUARANTORS. Copies of the articles of
incorporation of each corporate Guarantor, together with all amendments, and a
certificate of good standing, all certified by the appropriate governmental
officer in its jurisdiction of incorporation; PROVIDED, HOWEVER, that, if a
certificate of good standing is not currently available, the Guarantor shall
deliver other reasonably satisfactory evidence of its good standing and, within
thirty (30) days, shall deliver a certificate of good standing;
(9) INCUMBENCY AND SIGNATURE CERTIFICATE OF GUARANTORS. A certificate
(dated as of the date of this Agreement) of the Secretary or Assistant Secretary
of each corporate Guarantor or the general partner of each partnership Guarantor
certifying the names and true signatures of the officers of each such corporate
Guarantor and the representative of each partnership Guarantor authorized to
sign the Guaranty;
(10) OPINION OF COUNSEL FOR CERTAIN GUARANTORS. With respect to Beazer
Homes Corp., a favorable opinion of Tennessee counsel in substantially the form
of EXHIBIT F hereto, and as to such other matters as the Agent may reasonably
request;
(11) PARTNERSHIP AGREEMENT. A true and complete copy of the limited
partnership agreement of each limited partnership Guarantor, including without
limitation, any and all amendments and modifications thereto, and any and all
filed partnership certificates; and
(12) OTHER DOCUMENTS. Such other and further documents as any Bank or
its counsel may have reasonably requested.
32
Notwithstanding the foregoing, the parties hereto acknowledge and
agree that the Agent, at its election, may (a) waive, with respect to the
Original Guarantors, the requirement for delivery of articles of incorporation
(under item (8) above) and the partnership agreement and partnership
certificates (under item (ii) above) provided and with respect to the Original
Guarantors to the extent that the Borrower delivers or causes the applicable
Original Guarantors to deliver to the Agent a certificate that such documents,
as delivered pursuant to the Original Agreement, have not been modified or
amended and remain in full force and effect, and (b) waive the requirement for
the opinion provided for in item (10) above.
Upon the Effective Date, the Original Agreement shall be amended and
restated in its entirety by this Agreement, which shall supersede the Original
Agreement.
SECTION 3.02. CONDITIONS PRECEDENT TO ALL LOANS. The obligation of
each Bank to make each Loan (including the Loans referred to in Section 2.22
and, in the case of the Swing Line Bank, any Swing Line Loan) shall be subject
to the further conditions precedent that (except as hereinafter provided) on the
date of such Loan:
(1) The following statements shall be true and the Agent shall have
received a certificate, substantially in the form of the certificate
attached hereto as EXHIBIT G, signed by a duly authorized officer of
the Borrower dated the date of such Loan, stating that:
(a) The representations and warranties contained in Article IV of
this Agreement, are correct on and as of the date of such Loan as
though made on and as of such date except to the extent that any
such representation or warranty is stated to relate solely to an
earlier date, in which case such representation or warranty is
correct as of such earlier date;
(b) No Default or Event of Default has occurred and is continuing, or
would result from such Loan; and
(c) Upon the making of the requested Loans, the aggregate outstanding
amount of Permitted Senior Debt shall not exceed the Borrowing
Base as of the most recent Inventory Valuation Date; and
(2) The Agent shall have received such other approvals, opinions, or
documents as any Bank through the Agent may reasonably request; and
(3) Such other and further documents as any Bank or its counsel may have
reasonably requested. All matters incident to the making of such Loan
shall be reasonably satisfactory to the Banks and their counsel.
Notwithstanding the foregoing, in the case of a Loan (provided for in
Section 2.21(d)) made to repay a Swing Line Loan, the satisfaction of the
foregoing conditions with respect to such Swing Line Loan shall constitute
satisfaction of such conditions with respect to the Loan made on the next
succeeding Business Day to repay such Swing Line Loan.
33
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower and each of the Guarantors, jointly and severally,
represent and warrant that:
SECTION 4.01. INCORPORATION, FORMATION, GOOD STANDING, AND DUE
QUALIFICATION. The Borrower, each Subsidiary, and each of the Guarantors is (in
the case of a corporation) a corporation duly incorporated or (in the case of a
limited partnership) a limited partnership duly formed, validly existing, and in
good standing under the laws of the jurisdiction of its incorporation or
formation; has the power and authority to own its assets and to transact the
business in which it is now engaged or proposed to be engaged in; and is duly
qualified and in good standing under the laws of each other jurisdiction in
which such qualification is required.
SECTION 4.02. POWER AND AUTHORITY. The execution, delivery and
performance by the Borrower and the Guarantors of the Loan Documents to which
each is a party have been duly authorized by all necessary corporate or
partnership action, as the case may be, and do not and will not (1) require any
consent or approval of the stockholders of such corporation, or partners of such
partnership; (2) contravene such corporation's charter or bylaws, or such
partnership's partnership agreement; (3) violate, in any material respect, any
provision of any law, rule, regulation (including, without limitation,
Regulations U and X of the Board of Governors of the Federal Reserve System),
order, writ, judgment, injunction, decree, determination, or award presently in
effect having applicability to such corporation or partnership; (4) result in a
breach of or constitute a default under any indenture or loan or credit
agreement or any other material agreement, lease, or instrument to which such
corporation or partnership is a party or by which it or its properties may be
bound or affected; (5) result in, or require, the creation or imposition of any
Lien, upon or with respect to any of the properties now owned or hereafter
acquired by such corporation or partnership; and (6) cause such corporation or
partnership to be in default, in any material respect, under any such law, rule,
regulation, order, writ, judgment, injunction, decree, determination, or award
or any such indenture, agreement, lease or instrument.
SECTION 4.03. LEGALLY ENFORCEABLE AGREEMENT. This Agreement is, and
each of the other Loan Documents when delivered under this Agreement will be
legal, valid, and binding obligations of the Borrower or each Guarantor, as the
case may be, enforceable against the Borrower or each Guarantor, as the case may
be, in accordance with their respective terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency, and other
similar laws affecting creditors' rights generally.
SECTION 4.04. FINANCIAL STATEMENTS. The consolidated balance sheet of
the Borrower and its Subsidiaries as at June 30, 1998, and the consolidated
statements of operations, cash flow and changes to stockholders' equity of the
Borrower and its Subsidiaries for the period of three fiscal quarters ended June
30, 1998, are complete and correct and fairly present as at such date the
financial condition of the Borrower and its Subsidiaries and the results of
their
34
operations for the periods covered by such statements, all in accordance with
GAAP consistently applied (subject to year-end adjustments), and since June 30,
1998, there has been no material adverse change in the condition (financial or
otherwise), business, or operations of the entities for which combined financial
statements have been furnished to the Banks. There are no liabilities of the
Borrower or any Subsidiary, fixed or contingent, which are material but are not
reflected in the financial statements or in the notes thereto, other than
liabilities arising in the ordinary course of business since June 30, 1998. No
information, exhibit, or report furnished by the Borrower to any Bank in
connection with the negotiation of this Agreement taken together, contained any
material misstatement of fact or omitted to state a material fact or any fact
necessary to make the statements contained therein not materially misleading.
SECTION 4.05. LABOR DISPUTES AND ACTS OF GOD. Neither the business nor
the properties of the Borrower or any Subsidiary or any Guarantor are 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), materially and adversely
affecting such business or properties or the operation of the Borrower or such
Subsidiary or such Guarantor.
SECTION 4.06. OTHER AGREEMENTS. Neither the Borrower nor any
Significant Subsidiary nor any Significant Guarantor is a party to any
indenture, loan, or credit agreement, or to any lease or other agreement or
instrument or subject to any charter, corporate or other restriction which could
have a material adverse effect on the business, properties, assets, operations,
or conditions, financial or otherwise, of the Borrower or any Significant
Subsidiary or any Significant Guarantor, or the ability of the Borrower or any
Significant Guarantor to carry out its obligations under the Loan Documents to
which it is a party. Neither the Borrower nor any Significant Subsidiary nor any
Significant Guarantor is in default in any material respect in the performance,
observance, or fulfillment of any of the obligations, covenants, or conditions
contained in any agreement or instrument material to its business to which it is
a party.
SECTION 4.07. LITIGATION. There is no pending or, to the knowledge of
the Borrower or any Guarantor, threatened action or proceeding against or
affecting the Borrower or any Significant Subsidiary or any Significant
Guarantor before any court, governmental agency, or arbitrator, which may, in
any one case or in the aggregate, materially adversely affect the financial
condition, operations, properties, or business of the Borrower or any
Significant Subsidiary or any Significant Guarantor or the ability of the
Borrower or any Significant Guarantor to perform its obligation under the Loan
Documents to which it is a party.
SECTION 4.08. NO DEFAULTS ON OUTSTANDING JUDGMENTS OR ORDERS. The
Borrower, each Significant Subsidiary and each Significant Guarantor have
satisfied all judgments, and neither the Borrower nor any Significant Subsidiary
nor any Significant Guarantor is in default with respect to any judgment, writ,
injunction, decree, rule, or regulation of any court, arbitrator, or federal,
state, municipal, or other governmental authority, commission, board, bureau,
agency, or instrumentality, domestic or foreign.
SECTION 4.09. OWNERSHIP AND LIENS. The Borrower and each Subsidiary
and each Guarantor have title to, or valid leasehold interests in, all of their
respective properties and
35
assets, real and personal, including the properties and assets and leasehold
interests reflected in the financial statements referred to in Section 4.04
(other than any properties or assets disposed of in the ordinary course of
business), and none of the properties and assets owned by the Borrower or any
Subsidiary or any Guarantor and none of their leasehold interests is subject to
any Lien, except such as may be permitted pursuant to Section 6.01 of this
Agreement.
SECTION 4.10. SUBSIDIARIES AND OWNERSHIP OF STOCK. Set forth in
EXHIBIT H hereto is a complete and accurate list of the Subsidiaries of the
Borrower, showing the jurisdiction of incorporation or formation of each and
showing the percentage of the Borrower's ownership of the outstanding stock or
partnership interest of each Subsidiary. All of the outstanding capital stock of
each such corporate Subsidiary has been validly issued, is fully paid and
nonassessable, and is owned by the Borrower free and clear of all Liens. The
limited partnership agreement of each such limited partnership Subsidiary is in
full force and effect and has not been amended or modified. Each of the
Guarantors is a Wholly Owned Subsidiary of the Borrower.
SECTION 4.11. ERISA. The Borrower and each Subsidiary and each
Guarantor are in compliance in all material respects with all applicable
provisions of ERISA. Neither a Reportable Event nor a Prohibited Transaction has
occurred and is continuing with respect to any Plan; no notice of intent to
terminate a Plan has been filed, nor has any Plan been terminated; no
circumstances exist which constitute grounds entitling the PBGC to institute
proceedings to terminate, or appoint a trustee to administer, a Plan, nor has
the PBGC instituted any such proceedings; neither the Borrower nor any Commonly
Controlled Entity has completely or partially withdrawn from a Multiemployer
Plan under circumstances that could subject the Borrower or any Subsidiary to
material withdrawal liability; the Borrower and each Commonly Controlled Entity
have met their minimum funding requirements under ERISA with respect to all of
their Plans and the present value of all vested benefits under each Plan does
not materially exceed the fair market value of all Plan assets allocable to such
benefits, as determined on the most recent valuation date of the Plan and in
accordance with the provisions of ERISA; and neither the Borrower nor any
Commonly Controlled Entity has incurred any material liability to the PBGC under
ERISA.
SECTION 4.12. OPERATION OF BUSINESS. The Borrower, each Subsidiary and
each 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 and the Borrower and each of its Subsidiaries and each Guarantor are
not in violation of any valid rights of others with respect to any of the
foregoing.
SECTION 4.13. TAXES. All income tax liabilities or income tax
obligations of the Borrower, each Subsidiary and each Guarantor have been paid
or have been accrued by or reserved for by the Borrower. The Borrower
constitutes the parent of an affiliated group of corporations for purposes of
filing a consolidated United States federal income tax return.
SECTION 4.14. LAWS; ENVIRONMENT. The Borrower, each Subsidiary and
each Guarantor have duly complied, and their businesses, operations, assets,
equipment, property,
36
leaseholds, or other facilities 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). The
Borrower, each Subsidiary and each Guarantor have been issued and will maintain
all required federal, state, and local permits, licenses, certificates, and
approvals relating to (1) air emissions; (2) discharges to surface water or
groundwater; (3) noise emissions; (4) solid or liquid waste disposal; (5) 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
(6) other environmental, health or safety matters. Neither the Borrower nor any
Subsidiary nor any Guarantor has received notice of, or has actual knowledge of
any violations of any federal, state, or local environmental, health, or safety
laws, codes or ordinances or any rules or regulations promulgated thereunder
with respect to its businesses, operations, assets, equipment, property,
leaseholds, or other facilities. Except in accordance with a valid governmental
permit, license, certificate or approval, 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
the premises, of any toxic or hazardous substances or hazardous wastes at or
from the premises; and accordingly the premises of the Borrower, each Subsidiary
and each Guarantor have not been adversely affected, in any material respect, by
any toxic or hazardous substances or wastes. There has been no complaint, order,
directive, claim, citation, or notice by any governmental authority or any
person or entity with respect to violations of law or damages by reason of
Borrower's or any Subsidiary'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 the premises; (3) noise emissions; (4) solid or liquid waste disposal;
(5) use, generation, storage, transportation, or disposal of toxic or hazardous
substances or hazardous waste; or (6) other environmental, health or safety
matters affecting the Borrower, any Subsidiary or any Guarantor or its business,
operations, assets, equipment, property, leaseholds, or other facilities.
Neither the Borrower nor any Subsidiary nor any 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).
SECTION 4.15. INVESTMENT COMPANY ACT. Neither the Borrower nor any
Subsidiary thereof is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 4.16. PUBLIC UTILITY HOLDING COMPANY ACT. Neither the 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.
37
Section 4.17. YEAR 2000. As of the date hereof, the Borrower has made
a full and complete assessment of the Year 2000 Issues and has a realistic and
achievable program for remediating the Year 2000 Issues on a timely basis. Based
on such assessment and program, the Borrower does not reasonably anticipate that
the Year 2000 Issues will have a material adverse effect on its operations,
business or financial condition.
ARTICLE V
AFFIRMATIVE COVENANTS
So long as any Note shall remain unpaid or any Bank shall have any
Commitment under this Agreement, the Borrower and each Guarantor will:
SECTION 5.01. MAINTENANCE OF EXISTENCE. Preserve and maintain, and
cause each Subsidiary to preserve and maintain (except for a Subsidiary that
ceases to maintain its existence solely as a result of an Internal
Reorganization), its corporate or limited partnership existence and good
standing in the jurisdiction of its incorporation or formation and qualify and
remain qualified to transact business in each jurisdiction in which such
qualification is required.
SECTION 5.02. MAINTENANCE OF RECORDS. Keep and cause each Subsidiary
to keep, adequate records and books of account, in which complete entries will
be made in accordance with GAAP consistently applied, reflecting all financial
transactions of the Borrower and its Subsidiaries.
SECTION 5.03. MAINTENANCE OF PROPERTIES. Maintain, keep, and preserve,
and cause each Subsidiary to maintain, keep, and preserve, all of its properties
(tangible and intangible) necessary or useful in the proper conduct of its
business in good working order and condition, ordinary wear and tear excepted.
SECTION 5.04. CONDUCT OF BUSINESS. Continue, and cause each Subsidiary
to continue (except in the case of a Subsidiary that ceases to engage in
business solely as a result of an Internal Reorganization), to engage in a
business of the same general type and in the same manner as conducted by it on
the date of this Agreement.
SECTION 5.05. MAINTENANCE OF INSURANCE. Maintain, and cause each
Subsidiary to maintain, insurance with financially sound reputable insurance
companies or associations (or, in the case of insurance for construction
warranties and builder default protection for buyers of Housing Units from the
Borrower or any of its Subsidiaries, UHIC) in such amounts and covering such
risks as are usually carried by companies engaged in the same or a similar
business and similarly situated, which insurance may provide for reasonable
deductibility from coverage thereof.
SECTION 5.06. COMPLIANCE WITH LAWS. Comply, and cause each Subsidiary
to comply, in all material respects with all applicable laws, rules,
regulations, and orders, such compliance to include, without limitation, paying
before the same become delinquent all taxes, assessments and governmental
charges imposed upon it or upon its property, other than any such
38
taxes, assessments and charges being contested by the Borrower in good faith
which will not have a material adverse effect on the financial condition of the
Borrower.
SECTION 5.07. RIGHT OF INSPECTION. At any reasonable time and from
time to time, permit any Bank or any agent or representative thereof to examine
and make copies of and abstracts from the records and books of account of, and
visit the properties of, the Borrower and any Subsidiary, and to discuss the
affairs, finances, and accounts of the Borrower and any Subsidiary with any of
their respective officers and directors and the Borrower's independent
accountants.
SECTION 5.08. REPORTING REQUIREMENTS. Furnish to the Agent for
delivery to each of the Banks:
(1) QUARTERLY FINANCIAL STATEMENTS. As soon as available and in any
event within sixty (60) days after the end of each of the first three quarters
of each fiscal year of the Borrower, an unaudited condensed consolidated balance
sheet of the Borrower and its Subsidiaries as of the end of such quarter,
unaudited condensed consolidated statements of operations and cash flow of the
Borrower and its Subsidiaries for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, and unaudited
condensed consolidated statements of changes in stockholders' equity of the
Borrower and its Subsidiaries for the portion of the fiscal year ended with the
last day of such quarter, all in reasonable detail and stating in comparative
form the respective figures for the corresponding date and period in the
previous fiscal year and all prepared in accordance with GAAP consistently
applied and certified by the chief financial officer of the Borrower (subject to
year-end adjustments); statements in the form of the Borrower's quarterly 10-Q
report to the Securities and Exchange Commission that are consistent with the
foregoing requirements shall satisfy such requirements;
(2) ANNUAL FINANCIAL STATEMENTS. As soon as available and in any event
within one hundred (100) days after the end of each fiscal year of the Borrower,
a consolidated balance sheet of the Borrower and its Subsidiaries as of the end
of such fiscal year, consolidated statements of operations and cash flow of the
Borrower and its Subsidiaries for such fiscal year, and consolidated statements
of changes in stockholders' equity of the Borrower and its Subsidiaries for such
fiscal year, all in reasonable detail and stating in comparative form the
respective figures for the corresponding date and period in the prior fiscal
year and all prepared in accordance with GAAP consistently applied and
accompanied by an opinion thereon acceptable to the Agent by Ernst & Young or
other independent accountants selected by the Borrower and acceptable to the
Agent; statements in the form of the Borrower's annual 10-K report to the
Securities and Exchange Commission that are consistent with the foregoing
requirements shall satisfy such requirements;
(3) FINANCIAL PROJECTIONS. On August 15, 1999 and each anniversary
thereof, two-year financial projections (including a consolidated income
statement, balance sheet and statement of cash flows for the Borrower and its
Subsidiaries) broken down by quarters, and as soon as available (but not later
than June 15 of each year), a mid-year update of the financial projections for
the current year;
39
(4) VARIANCE ANALYSIS. (a) Within sixty (60) days of the end of each
of the first three fiscal quarters of each fiscal year of the Borrower, a
quarterly variance analysis comparing actual quarterly results versus the most
recently projected quarterly results for the fiscal quarter most recently ended
(including consolidated income statements of the Borrower and its Subsidiaries,
an analysis of revenues, closings and operating profits of the Borrower and each
Subsidiary on a state by state basis, and such other items as are requested by
any of the Banks), together with a written explanation of material variances.
(b) Within one hundred (100) days after the end of each fiscal
year of the Borrower, a quarterly variance analysis comparing actual quarterly
results versus the most recently projected quarterly results for the fiscal year
most recently ended (including consolidated income statements of the Borrower
and its Subsidiaries accompanied by an opinion thereon acceptable to the Agent
by Ernst & Young or other independent accountants selected by the Borrower and
acceptable to the Agent, an analysis of revenues, closings and operating profits
of the Borrower and each Subsidiary on a state by state basis, and such other
items as are requested by any of the Banks), together with a written explanation
of material variances.
(5) MANAGEMENT LETTERS. Promptly upon receipt thereof, copies of any
reports submitted to the Borrower or any Subsidiary by independent certified
public accountants in connection with examination of the financial statements of
the Borrower or any Subsidiary made by such accountants.
(6) BORROWING BASE CERTIFICATE. Within thirty-five (35) days after the
end of each fiscal quarter, a Borrowing Base Certificate, with respect to the
Inventory Valuation Date occurring on the last day of such fiscal quarter.
(7) COMPLIANCE CERTIFICATE. Within sixty (60) days after the end of
each of the first three quarters, and within one hundred (100) days after the
end of each fourth quarter, of each fiscal year of the Borrower, a certificate
of the President or chief financial officer of the Borrower certifying (a) the
Borrower's compliance with all financial covenants including, without
limitation, those set forth in Sections 6.10 and 6.11 and Article VII hereof,
which certificate shall set forth in reasonable detail the computation thereof
and (b) certifying that to the best of his knowledge no Default or Event of
Default has occurred and is continuing, or if a Default or Event of Default has
occurred and is continuing, a statement as to the nature thereof and the action
which is proposed to be taken with respect thereto;
(8) PRODUCTION MONITOR SUMMARY. Within thirty (30) days after the end
of each fiscal quarter, a certificate of the President or Chief Operating
Officer of the Borrower certifying the Inventory as at such date which lists by
state of location each item of Inventory, in the following categories: (a)
pre-foundation, (b) foundation, (c) framed, (d) being finished, and (e) model
homes; such summary shall include a delineation of sold or unsold items in each
category;
(9) LAND BANK INVENTORY. Within sixty (60) days after the end of each
calendar quarter, a certificate of the President or Chief Operating Officer of
the Borrower certifying the
40
Land as at such date, which lists by state of location all Land, delineating
Finished Lots, Lots under Development, Entitled Land and estimated undeveloped
Lots.
(10) ACCOUNTANT'S REPORT. Simultaneously with the delivery of the
annual financial statements referred to in Section 5.08(2), a certificate of the
independent public accountants who audited such statements to the effect that,
in making the examination necessary for the audit of such statements, they have
obtained no knowledge of any condition or event which constitutes a Default or
Event of Default, or if such accountants shall have obtained knowledge of any
such condition or event, specifying in such certificate each such condition or
event of which they have knowledge and the nature and status thereof;
(11) NOTICE OF LITIGATION. 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 the Borrower or any Subsidiary which, if determined adversely
to the Borrower or such Subsidiary, would reasonably be expected to result in a
judgment against the Borrower or such Subsidiary in excess of $1,000,000 or
would reasonably be expected to have a material adverse effect on the financial
condition, properties, or operations of the Borrower or such Subsidiary;
(12) NOTICE OF DEFAULTS AND EVENTS OF DEFAULT. As soon as possible and
in any event within ten (10) days after the occurrence of each Default or Event
of Default, a written notice setting forth the details of such Default or Event
of Default and the action which is proposed to be taken by the Borrower with
respect thereto;
(13) ERISA REPORTS. As soon as possible, and in any event within
thirty (30) days after the 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 the Borrower or
any Commonly Controlled Entity, and promptly but in any event within two (2)
Business Days of receipt by the Borrower or any Commonly Controlled Entity 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 $50,000 with respect to the Borrower or any Commonly Controlled
Entity, the Borrower will deliver to each Bank a certificate of the chief
financial officer of the Borrower setting forth all relevant details and the
action which the Borrower proposes to take with respect thereto;
(14) REPORTS TO OTHER CREDITORS. Promptly after the furnishing
thereof, copies of any statement, report, document, notice, certificate, and
correspondence furnished to any other party pursuant to the terms of any
indenture, loan, credit, or similar agreement and not otherwise required to be
furnished to the Bank pursuant to any other clause of this Section 5.08;
(15) PROXY STATEMENTS, ETC. Promptly after the sending or filing
thereof, copies of all proxy statements, financial statements, and reports which
the Borrower or any Subsidiary sends to its stockholders, and copies of all
regular, periodic, and special reports, and all registration statements which
the Borrower or any Subsidiary files with the Securities and
41
Exchange Commission or any governmental authority which may be substituted
therefor, or with any national securities exchange; and
(16) GENERAL INFORMATION. Such other information respecting the
condition or operations, financial or otherwise, of the Borrower or any
Subsidiary as any Bank may from time to time reasonably request.
SECTION 5.09. SUBSIDIARY REPORTING REQUIREMENTS. In the event any of
the following statements are prepared with respect to any Subsidiary, then upon
written request from any Bank, furnish to the Agent for delivery to each of the
Banks the following with respect to any Subsidiary:
(1) QUARTERLY FINANCIAL STATEMENTS. An unaudited balance sheet of such
Subsidiary as of the end of most recently completed fiscal quarter, statements
of operations and cash flow of such Subsidiary for the period commencing at the
end of the previous fiscal year and ending with the end of such quarter, and
statements of changes in stockholders' equity of such Subsidiary for the portion
of the fiscal year ended with the last day of such quarter, all in reasonable
detail and stating in comparative form the respective figures for the
corresponding date and period in the previous fiscal year and all prepared in
accordance with GAAP consistently applied and certified by the chief financial
officer of such Subsidiary (subject to year-end adjustments);
(2) ANNUAL FINANCIAL STATEMENTS. A balance sheet of such Subsidiary as
of the end of such fiscal year, statements of operations and cash flow of such
Subsidiary for such fiscal year, and statements of changes in stockholders'
equity of such Subsidiary for such fiscal year, all in reasonable detail and
stating in comparative form the respective figures for the corresponding date
and period in the prior fiscal year and all prepared in accordance with GAAP
consistently applied and as to the consolidated statements accompanied by an
opinion thereon acceptable to the Agent by Ernst & Young or other independent
accountants selected by the Borrower and acceptable to the Agent.
SECTION 5.10. ENVIRONMENT. Be and remain, and cause each Subsidiary to
be and remain, in compliance with the provisions of all federal, state, and
local environmental, health, and safety laws, codes and ordinances, and all
rules and regulations issued thereunder; notify the Agent promptly of any notice
of a hazardous discharge or environmental complaint received from any
governmental agency or any other party (and the Agent shall notify the Banks
promptly following its receipt of any such notice from the Borrower); notify the
Agent promptly of any hazardous discharge from or affecting its premises (and
the Agent shall notify the Banks promptly following its receipt of any such
notice from the Borrower); promptly contain and remove the same, in compliance
with all applicable laws; promptly pay any fine or penalty assessed in
connection therewith; permit any Bank to inspect the premises, to conduct tests
thereon, and to inspect all books, correspondence, and records pertaining
thereto; and at such Bank's request, and at the Borrower's expense, provide a
report of a qualified environmental engineer, satisfactory in scope, form, and
content to the Majority Banks, and such other and further assurances reasonably
satisfactory to the Majority Banks that the condition has been corrected.
42
SECTION 5.11. USE OF PROCEEDS. Use the proceeds of the Loans solely as
provided in Section 2.13 hereof.
SECTION 5.12. RANKING OF OBLIGATIONS. Ensure that at all times its
Obligations under the Loan Documents shall be and constitute unconditional
general obligations of the Borrower ranking at least PARI PASSU with all its
other unsecured Debt.
SECTION 5.13. TAXES. Pay and cause each Subsidiary to pay when due all
taxes, assessments and governmental charges and levies upon it or its income,
profits or property, except those which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves have been
set aside.
SECTION 5.14. WHOLLY OWNED STATUS. Ensure that at all times each of
the Guarantors is a Wholly Owned Subsidiary of the Borrower.
SECTION 5.15. NEW SUBSIDIARIES. Within thirty (30) days after the date
on which any Person shall become a Subsidiary, cause such Subsidiary to execute
and deliver to the Agent, for the benefit of the Banks, a guaranty of the
Obligations in the form of Article IX and an opinion of counsel, certified
copies of resolutions, articles of incorporation, incumbency certificates and
other documents with respect to such Subsidiary and its guaranty substantially
similar to the documents delivered pursuant to Section 3.01 with respect to the
New Guarantors and Guaranty, all of which shall be reasonably satisfactory to
the Majority Banks in form and substance. Neither STIC nor UHIC shall be
required to deliver a Guaranty.
SECTION 5.16. YEAR 2000. The Borrower will take all actions reasonably
necessary to assure that the Year 2000 Issues will not have a material adverse
effect on the business, operations or financial condition of the Borrower and,
upon the Agent's request, will provide the Agent a description of its program to
address the Year 2000 Issues, including updates and progress reports. The
Borrower will promptly advise the Agent of any reasonably anticipated material
adverse effect as a result of the Year 2000 Issues.
ARTICLE VI
NEGATIVE COVENANTS
So long as any Note shall remain unpaid or any Bank shall have any
Commitment under this Agreement, the Borrower and each Guarantor will not:
SECTION 6.01. LIENS. Create, incur, assume, or suffer to exist, or
permit any Subsidiary to create, incur, assume, or suffer to exist, any Lien,
upon or with respect to any of its properties, now owned or hereafter acquired,
except the following:
(1) Liens for taxes or assessments or other government charges or
levies if not yet due and payable or, if due and payable, if they are being
contested in good faith by appropriate proceedings and for which appropriate
reserves are maintained;
43
(2) Liens imposed by law, such as mechanics', materialmen's,
landlords', warehousemen's, and carriers' Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are not
past due for more than ninety (90) days or which are being contested in good
faith by appropriate proceedings and for which appropriate reserves have been
established;
(3) Liens under workers' compensation, unemployment insurance, Social
Security, or similar legislation;
(4) Liens, deposits, or pledges to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money), Capital
Leases (permitted under the terms of this Agreement), public or statutory
obligations, surety, stay, appeal, indemnity, performance, or other similar
bonds, or other similar obligations arising in the ordinary course of business;
(5) Judgment and other similar Liens arising in connection with any
court proceeding, provided the execution or other enforcement of such Liens is
effectively stayed and the claims secured thereby are being actively contested
in good faith and by appropriate proceedings;
(6) Easements, rights-of-way, restrictions, and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use, and enjoyment by the Borrower or any Subsidiary of the property
or assets encumbered thereby in the normal course of its business or materially
impair the value of the property subject thereto;
(7) Liens securing Secured Debt permitted under Section 6.02.
SECTION 6.02. SECURED DEBT. Create, incur, assume or suffer to exist,
or permit any Subsidiary to create, incur, assume or suffer to exist, any
Secured Debt, except for Secured Debt in an aggregate amount outstanding at any
one time not exceeding $50,000,000.
SECTION 6.03. MERGERS, ETC. Wind up, liquidate or dissolve itself,
reorganize, merge or consolidate with or into, or convey, sell, assign,
transfer, lease, or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to any Person, or acquire all or substantially all
the assets or the business of any Person, or permit any Subsidiary to do so,
except (1) for any Permitted Acquisition, (2) that any Subsidiary (other than
STIC and UHIC) may merge into or transfer assets to the Borrower as a result of
an Internal Reorganization or otherwise and (3) that any Subsidiary (other than
STIC and UHIC) may merge into or consolidate with or transfer assets to any
other Subsidiary (other than STIC and UHIC) as a result of an Internal
Reorganization or otherwise.
SECTION 6.04. LEASES. Create, incur, assume, or suffer to exist, or
permit any Subsidiary to create, incur, assume, or suffer to exist, any
obligation as lessee for the rental or hire of any real or personal property,
except (1) Capital Leases not otherwise prohibited by the terms of this
Agreement; (2) leases existing on the date of this Agreement and any extension
or
44
renewals thereof; (3) leases between the Borrower and any Subsidiary or between
any Subsidiaries; (4) operating leases entered into in the ordinary course of
business; and (5) any lease of property having a value of $500,000 or less.
SECTION 6.05. SALE AND LEASEBACK. Sell, transfer or otherwise dispose
of, or permit any Subsidiary to sell, transfer, or otherwise dispose of, any
real or personal property to any Person and thereafter directly or indirectly
lease back the same or similar property, except for the sale and leaseback of
model homes.
SECTION 6.06. SALE OF ASSETS. Sell, lease, assign, transfer, or
otherwise dispose of, or permit any Subsidiary to sell, lease, assign, transfer,
or otherwise dispose of, any of its now owned or hereafter acquired assets
(including, without limitation, shares of stock and indebtedness of
subsidiaries, receivables, and leasehold interests), except: (1) Inventory
disposed of in the ordinary course of business; (2) the sale or other
disposition of assets no longer used or useful in the conduct of its business;
(3) the sale and leaseback of model homes, or (4) that any Subsidiary (other
than STIC and UHIC) may sell, lease, assign, or otherwise transfer its assets to
the Borrower or any Wholly Owned Subsidiary (other than STIC and UHIC) in
connection with an Internal Reorganization or otherwise.
SECTION 6.07. INVESTMENTS. Make, or permit any Subsidiary to make, any
loan or advance to any Person, or purchase or otherwise acquire, or permit any
Subsidiary to purchase or otherwise acquire, any capital stock, assets (other
than assets acquired in the ordinary course of business), obligation, or other
securities of, make any capital contribution to, or otherwise invest in or
acquire any interest in any Person including, without limitation, any hostile
takeover, hostile tender offer or similar hostile transaction (collectively,
"Investments"), except: (1) a direct obligation of the United States or any
agency thereof with maturities of one year or less from the date of acquisition;
(2) commercial paper rated at least "A-1" by Standard & Poor's Corporation or
"P-1" by Moody's Investors Service, Inc.; (3) certificates of deposit with
maturities of one year or less from the date of acquisition issued by any
commercial bank or federal savings bank having capital and surplus in excess of
$250,000,000; (4) a direct obligation of any state or municipality within the
United States with maturities of one year or less from the date of acquisition
and which, at the time of such acquisition, is accorded one of the two highest
debt ratings for obligations of such type by Standard & Poor's or Moody's; (5)
mutual funds investing in assets of the type described in items (1), (2), (3) or
(4) above which in any case would be classified as a current asset in accordance
with GAAP which are managed by a fund manager of recognized standing in the
United States and having capital and surplus of at least $100,000,000 or having
at least $250,000,000 under management; (6) stock, obligation, or securities
received in settlement of debts (created in the ordinary course of business)
owing to the Borrower or any Subsidiary provided such issuance is approved by
the board of directors of the issuer thereof; (7) a loan or advance from the
Borrower to a Subsidiary, or from a Subsidiary to a Subsidiary, or from a
Subsidiary to the Borrower (subject, however, to the limitations set forth in
Section 6.14 in the case of Investments in STIC and UHIC); (8) any Permitted
Acquisition for which the total consideration payable for such Permitted
Acquisition does not exceed, or have a value exceeding, $50,000,000; (9) the
Acquisition of Trafalgar House Properties Inc.; (10) an Investment in a Wholly
Owned Subsidiary, which Investment is, or constitutes a part of, an Internal
Reorganization (subject, however, to the limitations set forth in
45
Section 6.14 in the case of Investments in STIC and UHIC); (11) Investments in
STIC and UHIC to the extent permitted in Section 6.14; (12) any Investment in a
Joint Venture, provided that the amount of all such Investments by the Borrower
and its Subsidiaries in all Joint Ventures does not exceed $25,000,000 in the
aggregate; or (13) any Investment of $500,000 or less.
SECTION 6.08. GUARANTIES, ETC. Assume, guarantee, endorse, or
otherwise be or become directly or contingently responsible or liable, or permit
any Subsidiary to assume, guarantee, endorse, or otherwise be or become directly
or contingently responsible or liable (including, but not limited to, an
agreement to purchase any obligation, stock, assets, goods, or services, or to
supply or advance any funds, assets, goods, or services, or an agreement to
maintain or cause such Person to maintain a minimum working capital or net worth
or otherwise to assure the creditors of any Person against loss), for
obligations of any Person, except: (1) guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business; (2) guaranties of performance obligations in the ordinary
course of business; (3) guaranties of any obligation of $500,000 or less,
PROVIDED, HOWEVER, that neither the Borrower nor any Subsidiary shall guarantee
an obligation of STIC or UHIC; and (4) that the Borrower or any Subsidiary or
any Guarantor may, whether as a result of an Internal Reorganization or
otherwise, guarantee the Debt of any other Subsidiary (other than STIC and UHIC)
or Guarantor or the Borrower permitted under this Agreement.
SECTION 6.09. TRANSACTIONS WITH AFFILIATES. Enter into any
transaction, including, without limitation, the purchase, sale, or exchange of
property or the rendering of any service, with any Affiliate, or permit any
Subsidiary to enter into any transaction, including, without limitation, the
purchase, sale, or exchange of property or the rendering of any service, with
any Affiliate, except in the ordinary course of and pursuant to the reasonable
requirements of the Borrower's or such Guarantor's or any Subsidiary's business
and upon fair and reasonable terms no less favorable to the Borrower or such
Guarantor or any Subsidiary than would obtain in a comparable arm's-length
transaction with a Person not an Affiliate (which exception shall include the
payment of insurance premiums to UHIC for the purchase of construction
warranties and builder default protection for buyers of Housing Units from the
Borrower or any of its Subsidiaries and to STIC for title insurance); PROVIDED,
HOWEVER, that the following transactions shall not be prohibited by this Section
6.09: (i) any transaction pursuant to the Tax Sharing Agreement dated as of
March 2, 1994, between the Borrower and Hanson America Inc., the Services
Agreement dated as of March 2, 1994, between the Borrower and Hanson America
Inc., the agreement with Beazer Homes, Ltd. regarding use of name, the Pension
and Employee Benefits Agreement dated as of March 2, 1994, among Beazer Homes,
Inc., the Borrower and Hanson America Inc., the Cross Indemnification Agreement
dated as of March 2, 1994, between the Borrower and Hanson America Inc., and the
Registration Rights Agreement dated as of March 2, 1994, between the Borrower
and Beazer America, Inc; (ii) transactions involving the purchase, sale or
exchange of property having a value of $500,000 or less; and (iii) transactions
otherwise permitted by this Agreement.
SECTION 6.10. LAND INVENTORY. Permit the ratio, determined as at the
end of any fiscal quarter, of (i) the sum of the number of Finished Lots and the
reasonably estimated number of Finished Lots that will be developed on other
Land, all determined as at the end of such fiscal
46
quarter, to (ii) the number of Housing Unit Closings for the period of four (4)
full fiscal quarters ending with such fiscal quarter, to exceed 2.5 to 1.0.
SECTION 6.11. HOUSING INVENTORY. Permit the number of Speculative
Housing Units, as at the end of any fiscal quarter, to exceed the greater of (a)
the number of Housing Unit Closings occurring during the period of twelve (12)
months ending on the last day of such fiscal quarter, multiplied by thirty
percent (30%) or (b) the number of Housing Unit Closings occurring during the
period of six (6) months ending on the last day of such fiscal quarter,
multiplied by seventy percent (70%).
SECTION 6.12. SENIOR DEBT. Repay in whole or in part the principal of
the Senior Debt, except for refinancings thereof from the proceeds of
Refinancing Debt with respect thereto.
SECTION 6.13. AMENDMENT OR MODIFICATION OF SENIOR INDENTUREs. Amend or
modify, or permit any amendment or modification of, either of the Senior
Indentures (other than those provided for in clauses (i), (ii), (iii), (v) or
(vi) of Section 10.01(a) of such Senior Indentures).
SECTION 6.14. STIC AND UHIC. Permit any of the following: (i) the
assets of STIC and UHIC to exceed $10,000,000, in the aggregate, at any time;
(ii) the aggregate amount of all Investments in STIC and UHIC by the Borrower
and its Subsidiaries to exceed $10,000,000, in the aggregate; (iii) UHIC to
engage in any business other than the issuance of construction warranties and
builder default protection for buyers of Housing Units from the Borrower or any
of its Subsidiaries; or (iv) STIC to engage in any business other than title
insurance.
SECTION 6.15. NEGATIVE PLEDGES. Directly or indirectly enter into any
agreement (other than this Agreement and the Senior Indentures) with any Person
that prohibits or restricts or limits the ability of the Borrower or any
Guarantor to create, incur, pledge or suffer to exist any Lien upon any assets
of the Borrower or any Guarantor (except that agreements creating or securing
Secured Debt permitted under Section 6.02 may prohibit, restrict or limit other
Liens on those assets encumbered by the Liens securing such Secured Debt).
ARTICLE VII
FINANCIAL COVENANTS
So long as any Note shall remain unpaid or any Bank shall have any
Commitment under this Agreement:
SECTION 7.01. MINIMUM CONSOLIDATED TANGIBLE NET WORTH. The Borrower
will maintain at all times a Consolidated Tangible Net Worth of not less than
the sum of (i) $162,400,000 (subject to adjustment of such amount as hereinafter
provided), (ii) an amount equal to fifty percent (50%) of the cumulative Net
Income of the Borrower earned after June 30, 1998 (excluding any quarter in
which there is a loss), and (iii) one hundred percent (100%) of the
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net proceeds received after June 30, 1998 by the Borrower or any Subsidiary from
the sale or issuance of any of its Common Equity. If the Borrower elects to
convert to common stock some or all of the $50,000,000 of its preferred stock
outstanding as of the date of this Agreement (and provided its common stock
price on the day that the conversion notice is given is greater than $21.00 per
share), the amount set forth in clause (i) above shall be reduced (but not below
$130,000,000) to the extent that Consolidated Tangible Net Worth is reduced as a
result of the election by the preferred shareholders to convert their preferred
stock to cash rather than to common stock.
SECTION 7.02. LEVERAGE RATIO. The Borrower will not at any time permit
the ratio of Consolidated Debt to Consolidated Tangible Net Worth to exceed 2.0
to 1.0. For purposes of this Section 7.02, Consolidated Tangible Net Worth shall
exclude the Borrower's and Guarantors' Investments in Joint Ventures and in
Subsidiaries that are not Guarantors.
SECTION 7.03. PERMITTED SENIOR DEBT. The Borrower will not permit the
outstanding amount of the Permitted Senior Debt to exceed the Borrowing Base.
SECTION 7.04. FIXED CHARGE COVERAGE RATIO. The Borrower shall maintain
a ratio of (i) EBITDA to (ii) the sum (for the Borrower and its Subsidiaries on
a consolidated basis) of (A) interest incurred, whether capitalized or expensed
directly, plus (B) required principal payments (other than balloon payments on
long-term Debt), (C) scheduled principal payments on Capital Lease obligations
(other than balloon payments on long-term Capital Leases) and (D) dividends paid
with respect to any one or more classes of preferred stock of the Borrower, of
at least 1.5 to 1.0, which ratio shall be determined as of the last day of each
fiscal quarter for the four-quarter period ending on such day.
SECTION 7.05. LAND INVENTORY. The Borrower shall not permit
the ratio of (i) Adjusted Land Value to (ii) the sum of (a) Consolidated
Tangible Net Worth plus (b) fifty percent (50%) of Consolidated Subordinated
Debt to exceed 1.0 to 1.0.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.01. EVENTS OF DEFAULT. If any of the following events shall
occur:
(1) The Borrower shall fail to pay (a) the principal of any Note, or
any amount of a commitment or other fee, as and when due and payable or (b)
interest on any Note or any amount of any commitment fee or other fee within
five (5) Business Days after the same is due and payable;
(2) Any representation or warranty made or deemed made by the Borrower
or by any Guarantor in any Loan Document or which is contained in any
certificate, document, opinion, or financial or other statement furnished at any
time under or in connection with this Agreement shall prove to have been
incorrect, incomplete, or misleading in any material respect on or as of the
date made or deemed made;
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(3) The Borrower or any Guarantor shall fail to perform or observe any
term, covenant, or agreement contained in Articles V, VI or VII hereof, and such
failure shall continue for a period of thirty (30) consecutive days;
(4) The Borrower or any Significant Subsidiary or any Significant
Guarantor shall (a) fail to pay (within the applicable cure period, if any) any
amount in respect of indebtedness for borrowed money equal to or in excess of
$5,000,000 in the aggregate (other than the Notes) of the Borrower or such
Significant Subsidiary or such Significant Guarantor, as the case may be, or any
interest or premium thereon, when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise); or (b) fail to perform or
observe any term, covenant, or condition on its part to be performed or observed
(within the applicable cure period, if any) under any agreement or instrument
relating to any such indebtedness, when required to be performed or observed, if
the effect of such failure to perform or observe is to accelerate, or permit the
acceleration of after the giving of notice or passage of time, or both, the
maturity of such indebtedness, whether or not such failure to perform or observe
shall be waived by the holder of such indebtedness, or any such indebtedness
shall be declared to be due and payable, or required to be prepaid (other than
by a regularly scheduled required prepayment), prior to the stated maturity
thereof;
(5) The Borrower or any Significant Subsidiary or any Significant
Guarantor (a) shall generally not pay, or shall be unable to pay, or shall admit
in writing its inability to pay its debts as such debts become due; or (b) shall
make an assignment for the benefit of creditors, or petition or apply to any
tribunal for the appointment of a custodian, receiver, or trustee for it or a
substantial part of its assets; or (c) shall commence any proceeding under any
bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, or
liquidation law or statute of any jurisdiction, whether now or hereafter in
effect; or (d) shall have had any such petition or application filed or any such
proceeding commenced against it in which an order for relief is entered or an
adjudication or appointment is made and which remains undismissed for a period
of forty (40) days or more; or (e) shall take any corporate action indicating
its consent to, approval of, or acquiescence in any such petition, application,
proceeding, or order for relief or the appointment of a custodian, receiver, or
trustee for all or any substantial part of its properties; or (f) shall suffer
any such custodianship, receivership, or trusteeship to continue undischarged
for a period of forty (40) days or more;
(6) One or more judgments, decrees, or orders for the payment of money
in excess of $10,000,000 in the aggregate shall be rendered against the Borrower
and/or any Subsidiary and/or any Guarantor, and such judgments, decrees, or
orders shall continue unsatisfied and in effect for a period of twenty (20)
consecutive days without being vacated, discharged, satisfied, or stayed or
bonded pending appeal;
(7) Any Guaranty hereunder shall at any time after its execution and
delivery and for any reason cease to be in full force and effect or shall be
declared null and void, or the validity or enforceability thereof shall be
contested by the Guarantor or the Guarantor shall deny it has any further
liability or obligation under, or shall fail to perform its obligations under,
the Guaranty (except to the extent that the foregoing occurs solely by reason of
the liquidation or dissolution of a Guarantor as a result of an Internal
Reorganization);
49
(8) Any Change of Control of the Borrower or any Subsidiary or any
Guarantor shall occur;
(9) Any of the following events shall occur or exist with respect to
the Borrower, any Subsidiary or any Commonly Controlled Entity under ERISA: any
Reportable Event shall occur; complete or partial withdrawal from any
Multiemployer Plan shall take place; any Prohibited Transaction shall occur; a
notice of intent to terminate a Plan shall be filed, or a Plan shall be
terminated; or circumstances shall exist which constitute grounds entitling the
PBGC to institute proceedings to terminate a Plan, or the PBGC shall institute
such proceedings; and in each case above, such event or condition, together with
all other events or conditions described in this Section 8.01(9), if any, could
subject the Borrower or any Significant Guarantor or Significant Subsidiary to
any tax, penalty, or other liability which in the aggregate may exceed $500,000;
or
(10) If any federal, state, or local agency asserts a material claim
against the Borrower or any Significant Guarantor or Significant Subsidiary
and/or its assets, equipment, property, leaseholds, or other facilities for
damages or cleanup costs relating to a hazardous discharge or an environmental
complaint; provided, HOWEVER, that such claim shall not constitute a default if,
within fifteen (15) days of the occurrence giving rise to the claim, (a) the
Borrower can prove to the reasonable satisfaction of the Majority Banks that the
Borrower has commenced and is diligently pursuing either: (i) a cure or
correction of the event which constitutes the basis for the claim, and continues
diligently to pursue such cure or correction or (ii) proceedings for an
injunction, a restraining order or other appropriate emergent relief preventing
such agency or agencies from asserting such claim, which relief is granted
within thirty (30) days of the occurrence giving rise to the claim and the
injunction, order, or emergent relief is not thereafter resolved or reversed on
appeal or (iii) the defense against the claim through action in a court or
agency exercising jurisdiction over the claim; and (b) in any of the foregoing
events, the Borrower has posted a bond, letter of credit, or other security
satisfactory in form, substance, and amount to the Majority Banks and the agency
or entity asserting the claim to secure the correction of the event which
constitutes the basis for the claim in accordance with applicable laws;
then, and in any such event, the Agent shall at the request of, or may, with the
consent of, the Majority Banks, by notice to the Borrower, (1) declare the
Banks' obligation to make Loans (including, in the case of the Swing Line Bank,
Swing Line Loans) to be terminated, whereupon the same shall forthwith
terminate; and (2) declare the outstanding Notes, all interest thereon, and all
other amounts payable under this Agreement to be forthwith due and payable,
whereupon the Notes, all such interest, and all such amounts shall become and be
forthwith due and payable, without presentment, demand, protest, or further
notice of any kind, all of which are hereby expressly waived by the Borrower;
PROVIDED, HOWEVER, in the case of an event described in Section 8.01(5) hereof
the obligations of the Banks to make Loans (including, in the case of the Swing
Line Bank, Swing Line Loans) hereunder shall automatically terminate and the
Obligations shall immediately become due and payable without any election or
action on the part of the Agent or any Bank.
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SECTION 8.02. SET OFF. Upon the occurrence and during the continuance
of any Event of Default, each Bank is hereby authorized at any time and from
time to time, without notice to the Borrower (any such notice being expressly
waived by the Borrower), to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Bank to or for the credit or the account
of the Borrower against any and all of the obligations of the Borrower now or
hereafter existing under this Agreement or the Bank's Note or any other Loan
Document, irrespective of whether or not the Agent or such Bank shall have made
any demand under this Agreement or such Bank's Note or such other Loan Document
and although such obligations may be unmatured. Each Bank agrees promptly to
notify the Borrower (with a copy to the Agent) after any such set-off and
application, provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Bank under this
Section 8.02 are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which each Bank may have.
ARTICLE IX
GUARANTY
SECTION 9.01. GUARANTY. (a) Each of the Guarantors (including both the
New Guarantors and the Original Guarantors) unconditionally and irrevocably
guarantees the due and punctual payment and performance of the Obligations. Each
of the Guarantors further agrees that the Obligations may be extended or
renewed, in whole or in part, without notice or further assent from it, and it
will remain bound upon this Guaranty notwithstanding any extension or renewal of
any Obligation.
(b) Each of the Guarantors waives presentation to, demand for payment
from and protest to the Borrower or any other Guarantor of any of the
Obligations, and also waives notice of protest for nonpayment. The Obligations
of the Guarantors hereunder shall not be affected by (i) the failure of the
Agent or any Bank to assert any claim or demand or to enforce any right or
remedy against the Borrower or any other Guarantor under the provisions of this
Agreement or any other agreement or otherwise; (ii) any extension or renewal of
any provision hereof or thereof; (iii) any rescission, waiver, compromise,
acceleration, amendment or modification of any of the terms or provisions of any
Loan Document or any other agreement; (iv) the release, exchange, waiver or
foreclosure of any security held by the Agent or any Bank for the Obligations or
any of them; (v) the failure of the Agent or any Bank to exercise any right or
remedy against any other guarantor of the Obligations; or (vi) the release or
substitution of any Guarantor.
(c) Each of the Guarantors further agrees that this Guaranty
constitutes a guaranty of performance and of payment when due and not just of
collection, and waives any right to require that any resort be had by the Agent
or any Bank to any security held for payment of the Obligations or to any
balance of any deposit, account or credit on the books of a Bank in favor of the
Borrower or any other Guarantor, or to any other Person.
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(d) Each of the Guarantors hereby expressly assumes all
responsibilities to remain informed of the financial condition of the Borrower
and each other Guarantor and any circumstances affecting the ability of the
Borrower to perform under this Agreement. Each Guarantor acknowledges that it
will receive direct and indirect benefits from the Loans contemplated by this
Agreement and that the Banks required as a condition to entering into this
Agreement, and in order to secure the prompt and complete payment, observance
and performance of the Obligations, that each Guarantor shall make this
Guaranty.
(e) Each of the Guarantors' guaranty shall not be affected by the
genuineness, validity, regularity or enforceability of the Obligations, the
Notes or any other instrument evidencing any Obligations, or by the existence,
validity, enforceability, perfection, or extent of any collateral therefor or by
any other circumstance relating to the Obligations which might otherwise
constitute a defense to this Guaranty. The Agent makes no representation or
warranty in respect of any such circumstances and has no duty or responsibility
whatsoever to the Guarantors in respect of the management and maintenance of the
Obligations or any such collateral.
SECTION 9.02. NO IMPAIRMENT OF GUARANTY. The Obligations of the
Guarantors hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason, including, without limitation, any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense or set-off, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
Obligations or otherwise. Without limiting the generality of the foregoing, the
Obligations of the Guarantors hereunder shall not be discharged or impaired or
otherwise affected by the failure of the Agent or any Bank to assert any claim
or demand or to enforce any remedy under this Agreement or any other agreement,
by any waiver or modification of any provision thereof, by any default, failure
or delay, willful or otherwise, in the performance of the Obligations, or by any
other act or thing or omission or delay to do any other act or thing which may
or might in any manner or to any extent vary the risk of the Guarantors or would
otherwise operate as a discharge of the Guarantors as a matter of law, unless
and until the Obligations are paid in full and the Commitments have been
terminated.
SECTION 9.03. CONTINUATION AND REINSTATEMENTS ETC. (a) Each of the
Guarantors further agrees that its guaranty hereunder shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of principal or of interest on any Obligation is rescinded or must
otherwise be restored by the Agent or any Bank upon the bankruptcy or
reorganization of the Borrower or a Guarantor, or otherwise. In furtherance of
the provisions of this Article IX, and not in limitation of any other right
which the Agent or any Bank may have at law or in equity against the Borrower or
the Guarantors by virtue hereof, upon failure of the Borrower to pay any
Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice or otherwise, each of the Guarantors hereby promises
to and will, upon receipt of written demand by the Agent on behalf of the Banks,
forthwith pay or cause to be paid to the Agent on behalf of the Banks in cash an
amount equal to the unpaid amount of all the Obligations, and thereupon the
Banks shall assign such Obligation, together with all security interests, if
any, then held by the Agent in respect of such Obligation, to the Guarantor or
Guarantors making such payment.
52
(b) Upon payment by any Guarantor of any sums to the Agent on
behalf of the Banks hereunder, all rights of such Guarantor against the
Borrower, arising as a result thereof by way of right of subrogation or
otherwise, shall in all respects be subordinate and junior in right of payment
to the prior final and indefeasible payment in full of all the Obligations to
the Agent on behalf of the Banks. If any amount shall be paid to such Guarantor
for the account of the Borrower, such amount shall be held in trust for the
benefit of the Banks and shall forthwith be paid to the Agent on behalf of the
Banks to be credited and applied to the Obligations, whether matured or
unmatured.
SECTION 9.04. LIMITATION ON GUARANTEED AMOUNT. Notwithstanding any
other provision of this Article IX, the amount guaranteed by any Guarantor
hereunder shall be limited to the extent, if any, required so that its
obligations under this Article IX shall not be subject to avoidance under
Section 548 of the Bankruptcy Code or to being set aside or annulled under any
applicable state law relating to fraud on creditors. In determining the
limitations, if any, on the amount of such Guarantor's obligations hereunder
pursuant to the preceding sentence, any rights of subrogation or contribution
which such Guarantor may have under this Article IX or applicable law shall be
taken into account.
ARTICLE X
AGENCY PROVISIONS
SECTION 10.01. AUTHORIZATION AND ACTION. Each Bank hereby irrevocably
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement as are delegated to the Agent by
the terms hereof, together with such powers as are reasonably incidental
thereto. The duties of the Agent shall be mechanical and administrative in
nature and the Agent shall not by reason of this Agreement be a trustee or
fiduciary for any Bank. The Agent shall have no duties or responsibilities
except those expressly set forth herein. As to any matters not expressly
provided for by this Agreement (including, without limitation, enforcement or
collection of the Notes), the Agent shall not be required to act or to refrain
from acting except upon the instructions of the Majority Banks or, to the extent
required under Section 11.01, all Banks (and shall be fully protected in so
acting or so refraining from acting), and such instructions shall be binding
upon all Banks and all holders of Notes; PROVIDED, HOWEVER, that the Agent shall
not be required to take any action which exposes the Agent to personal liability
or which is contrary to this Agreement or applicable law. The Agent shall
administer the Loan in the same manner that it would administer a comparable
loan held 100% for its own account.
SECTION 10.02. LIABILITY OF AGENT. Neither the Agent nor any of its
directors, officers, agents, or employees shall be liable for any action taken
or omitted to be taken by it or them under or in connection with this Agreement
in the absence of its or their own gross negligence or willful misconduct.
Without limiting the generality of the foregoing, the Agent (1) may treat the
payee of any Note as the holder thereof until the Agent receives written notice
of the assignment or transfer thereof signed by such payee and in form
satisfactory to the Agent; (2)
53
may consult with legal counsel (including counsel for the Borrower), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants, or experts; (3) makes no warranty or
representation to any Bank and shall not be responsible to any Bank for any
statements, warranties, or representations made in or in connection with this
Agreement; (4) shall not have any duty to ascertain or to inquire as to the
performance or observance of any terms, covenants, or conditions of this
Agreement on the part of the Borrower, or to inspect the property (including the
books and records) of the Borrower; (5) shall not be responsible to any Bank for
the due execution, legality, validity, enforceability, genuineness, perfection,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; and (6) shall incur no liability under or in respect
of this Agreement by acting upon any notice, consent, certificate or other
instrument or writing (which may be sent by telegram, telefax, or facsimile
transmission) reasonably believed by it to be genuine and signed or sent by the
proper party or parties.
SECTION 10.03. RIGHTS OF AGENT AS A BANK. With respect to its
Commitment, the Loans made by it and the Note issued to it, the Agent shall have
the same rights and powers under this Agreement as any other Bank and may
exercise the same as though it were not the Agent; and the term "Bank" or
"Banks" shall, unless otherwise expressly indicated, include the Agent in its
individual capacity. The Agent, each Bank and each of their respective
Affiliates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with, the Borrower,
any of its Subsidiaries and any Person who may do business with or own
securities of the Borrower or any Subsidiary, all as if the Agent were not the
Agent and without any duty to account therefor to the other Banks.
SECTION 10.04. INDEPENDENT CREDIT DECISIONS. Each Bank acknowledges
that it has, independently and without reliance upon the Agent or any other Bank
and based on such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement. Each Bank
also acknowledges that it will, independently and without reliance upon the
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. The Agent shall promptly
provide the Banks with copies of all notices of default and other formal notices
sent or received in accordance with Section 11.02 of this Agreement, any written
notice relating to changes in the Borrower's debt ratings that affect the Senior
Debt Rating received from the Borrower or a ratings agency and any other
documents or notices received by the Agent with respect to the Agreement and
requested in writing by any Bank. Except for notices, reports and other
documents and information expressly required to be furnished to the Banks by the
Agent hereunder, the Agent shall have no duty or responsibility to provide any
Bank with any credit or other information concerning the affairs, financial
condition or business of the Borrower or any of its Subsidiaries (or any of
their Affiliates) which may come into possession of the Agent or any of its
Affiliates.
SECTION 10.05. INDEMNIFICATION. The Banks severally agree to indemnify
the Agent in its capacity as Agent and not as a Bank (to the extent not
reimbursed by the Borrower), ratably according to the respective amounts of
their Commitments, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against the Agent in any way relating to or arising out of this
Agreement or any action
54
taken or omitted by the Agent under this Agreement, provided that no Bank shall
be liable for any portion of any of the foregoing (i) resulting from the Agent's
gross negligence or willful misconduct, (ii) on account of a strictly internal
or regulatory matter relating to the Agent (such as relating to legal lending
limit violation by the Agent), or (iii) in connection with a breach of an
express agreement made by the Agent to a Bank under this Agreement. Without
limitation of the foregoing, each Bank severally agrees to reimburse the Agent
(to the extent not reimbursed by the Borrower) promptly upon demand for its
ratable share of any reasonable out-of-pocket expenses (including counsel fees)
incurred by the Agent in connection with the preparation, administration, or
enforcement of, or legal advice in respect of rights or responsibilities under,
this Agreement; provided, however, that no Bank shall be required to reimburse
the Agent for any such expenses incurred (i) resulting from the Agent's gross
negligence or willful misconduct, (ii) on account of a strictly internal or
regulatory matter relating to the Agent (such as relating to legal lending limit
violation by the Agent), or (iii) in connection with a breach of an express
agreement made by the Agent to a Bank under this Agreement.
SECTION 10.06. SUCCESSOR AGENT. (a) The Agent may resign at any time
by giving at least sixty (60) days' prior written notice thereof to the Banks
and the Borrower and may be removed at any time with or without cause by the
Majority Banks. Upon any such resignation or removal, the Majority Banks shall
have the right to appoint a successor Agent, subject to Section 10.06(b). If no
successor Agent shall have been so appointed by the Majority Banks, and shall
have accepted such appointment, within thirty (30) days after the retiring
Agent's giving of notice of resignation or the Majority Banks' removal of the
retiring Agent, then the retiring Agent may, on behalf of the Banks, appoint a
successor Agent, which shall be a commercial bank or federal savings bank
organized under the laws of the United States of America or of any State
thereof, subject to Section 10.06(b). 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 retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations under this Agreement. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this Article X
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement.
(b) The appointment of any successor Agent that is not a Bank shall be
subject to the prior written approval of the Borrower, which approval shall not
be unreasonably withheld.
SECTION 10.07. SHARING OF PAYMENTS, ETC. If any Bank shall obtain any
payments (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of the Note held by it in excess of its
ratable share of payments on account of the Notes obtained by all the Banks,
such Bank shall purchase from the other Banks such participations in the Notes
held by them as shall be necessary to cause such purchasing Bank to share the
excess payment ratably with each of the other Banks, PROVIDED, HOWEVER, that if
all or any portion of such excess payment is thereafter recovered from such
purchasing Bank, such purchase from each Bank shall be rescinded and each Bank
shall repay to the purchasing Bank the purchase price to the extent of such
recovery together with an amount equal to such Bank's ratable share (according
to the proportion of (1) the amount of such Bank's required repayment to (2) the
total amount so recovered from the purchasing Bank) of any interest or other
amount paid or payable by the purchasing Bank in respect of the total amount so
recovered. The Borrower agrees that
55
any Bank so purchasing a participation from another Bank pursuant to this
Section 10.07 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off) with respect to such
participation as fully as if such Bank were the direct creditor of the Borrower
in the amount of such participation.
SECTION 10.08. WITHHOLDING TAX MATTERS. Each Bank which is a
Non-United States Person agrees to execute and deliver to the Agent for delivery
to the Borrower, before the first scheduled payment date in each year, either
(i) three United States Internal Revenue Service Forms 1001 or (ii) three United
States Internal Revenue Service Forms 4224 together with three United States
Internal Revenue Service Forms W-9, or any successor forms, as appropriate,
properly completed and claiming complete or partial, as the case may be,
exemption from withholding and deduction of United States federal taxes. Each
Bank which is a Non-United States Person represents and warrants to the Borrower
and to the Agent that, at the date of this Agreement, (i) its Lending Offices
are entitled to receive payments of principal, interest, and fees hereunder
without deduction or withholding for or on account of any taxes imposed by the
United States or any political subdivision thereof and (ii) it is permitted to
take the actions described in the preceding sentence under the laws and any
applicable double taxation treaties of the jurisdictions specified in the
preceding sentence. Each Bank which is a Non-United States Person further agrees
that, to the extent any form claiming complete or partial exemption from
withholding and deduction of United States federal taxes delivered under this
Section 10.08 is found to be incomplete or incorrect in any material respect,
such Bank shall execute and deliver to the Agent a complete and correct
replacement form.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. AMENDMENTS, ETC. No amendment, modification,
termination, or waiver of any provision of any Loan Document to which the
Borrower is a party, nor consent to any departure by the Borrower from any Loan
Document to which it is a party, shall in any event be effective unless the same
shall be in writing and signed by the Majority Banks and the Borrower, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given; PROVIDED, HOWEVER, that no amendment,
waiver or consent shall, unless in writing and signed by all the Banks and the
Borrower, do any of the following: (1) increase the Commitments of the Banks or
the Swing Loan Commitment of the Swing Line Bank or subject the Banks to any
additional obligations; (2) reduce the principal of, or interest on, the Notes
or any fees (other than the Agent's fees) hereunder; (3) postpone any date fixed
for any payment of principal of, or interest on, the Notes or any fees (other
than the Agent's fees) hereunder; (4) change the percentage of the Commitments
or of the aggregate unpaid principal amount of the Notes or the number of Banks
which shall be required for the Banks or any of them to take action hereunder
(including, without limitation, any change in the number of Banks required to
extend the Termination Date under the provisions of Section 2.19); (5) release
any Significant Guarantor; or (6) amend, modify or waive any provision of
Article X or this Section 11.01; and, PROVIDED FURTHER, that no amendment,
waiver,
56
or consent shall, unless in writing and signed by the Agent or the Swing Line
Bank (as applicable) in addition to the Banks required above to take such
action, affect the rights or duties of the Agent or the Swing Line Bank (as
applicable) under any of the Loan Documents; and, PROVIDED, further, that no
amendment, waiver or consent shall, unless in writing and signed by the Issuing
Bank in addition to the Banks required above to take such action, affect the
rights or duties of the Issuing Bank under any of the Loan Documents.
SECTION 11.02. NOTICES, ETC. All notices and other communications
provided for under this Agreement and under the other Loan Documents to which
the Borrower is a party shall be in writing (including telegraphic, telex, and
facsimile transmissions) and mailed or transmitted or hand delivered, if to the
Borrower, a Guarantor, a Bank or the Agent at its respective address set forth
on the signature pages hereof; or, as to each party, at such other address as
shall be designated by such party in a written notice to all other parties
complying as to delivery with the terms of this Section 11.02. Except as is
otherwise provided in this Agreement, all such notices and communications shall
be effective when deposited in the mails or delivered to the telegraph company,
or transmitted, answerback received, or hand delivered, respectively, addressed
as aforesaid, except that notices to the Agent pursuant to the provisions of
Article II shall not be effective until received by the Agent or, in the case of
Section 2.21, the Swing Line Bank.
SECTION 11.03. NO WAIVER. No failure or delay on the part of any Bank
or the Agent or the Issuing Bank in exercising any right, power, or remedy
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power, or remedy preclude any other or further
exercise thereof or the exercise of any other right, power, or remedy hereunder.
The making of a Loan or issuance, amendment or extension of a Facility Letter of
Credit notwithstanding the existence of a Default or Event of Default shall not
constitute any waiver or acquiescence of such Default or Event of Default, and
the making of any Loan or issuance, amendment or extension of a Facility Letter
of Credit notwithstanding any failure or inability to satisfy the conditions
precedent to such Loan or issuance, amendment or extension of a Facility Letter
of Credit shall not constitute any waiver or acquiescence with respect to such
conditions precedent with respect to any subsequent Loans or subsequent
issuance, amendment or extension of a Facility Letter of Credit. The rights and
remedies provided herein are cumulative, and are not exclusive of any other
rights, powers, privileges, or remedies, now or hereafter existing, at law, in
equity or otherwise.
SECTION 11.04. COSTS, EXPENSES, AND TAXES. The Borrower agrees to
reimburse the Agent for any reasonable costs, internal charges and out-of-pocket
expenses (including reasonable fees and time charges of attorneys for the Agent,
which attorneys may be employees of the Agent) paid or incurred by the Agent in
connection with the preparation, negotiation, execution, delivery, review,
amendment, modification and administration of the Loan Documents and the
collection of the Loans and enforcement of the Loan Documents. In addition, the
Borrower shall pay any and all stamp and other taxes and fees payable or
determined to be payable in connection with the execution, delivery, filing, and
recording of any of the Loan Documents and the other documents to be delivered
under any such Loan Documents, and agrees to hold the Agent and each of the
Banks harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or failing to pay such taxes and fees. This
provision shall survive termination of this Agreement.
SECTION 11.05. INTEGRATION. This Agreement (including the Borrower's
obligation to pay the fees of the Agent and BOCM as provided in Section 2.09(c)
and the letter referred to therein) and the Loan Documents contain the entire
agreement between the parties
57
relating to the subject matter hereof and supersede all oral statements and
prior writings with respect thereto.
SECTION 11.06. INDEMNITY. The Borrower hereby agrees to defend,
indemnify, and hold each Bank harmless from and against all claims, damages,
judgments, penalties, costs, and expenses (including attorney fees and court
costs now or hereafter arising from the aforesaid enforcement of this clause)
arising directly or indirectly from the activities of the Borrower and its
Subsidiaries, its predecessors in interest, or third parties with whom it has a
contractual relationship, or arising directly or indirectly from the violation
of any environmental protection, health, or safety law, whether such claims are
asserted by any governmental agency or any other person. This indemnity shall
survive termination of this Agreement.
SECTION 11.07. GOVERNING LAW. This Agreement and the Notes shall be
governed by, and construed in accordance with, the laws of the State of Illinois
(without regard to principles of conflict of law) but giving effect to federal
laws applicable to national banks.
SECTION 11.08. SEVERABILITY OF PROVISIONS. Any provision of any Loan
Document which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of such Loan
Document or affecting the validity or enforceability of such provision in any
other jurisdiction.
SECTION 11.09. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the different parties to this Agreement in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
Agreement.
SECTION 11.10. HEADINGS. Article and Section headings in the Loan
Documents are included in such Loan Documents for the convenience of reference
only and shall not constitute a part of the applicable Loan Documents for any
other purpose.
SECTION 11.11. SUBMISSION TO JURISDICTION. The Borrower, each
Subsidiary, and each Guarantor hereby submits to the nonexclusive jurisdiction
of the United States District Court for the Northern District of Illinois and of
any Illinois State court sitting in The City of Chicago for purposes of all
legal proceedings which may arise hereunder or under the Notes. The Borrower,
each Subsidiary, and each Guarantor irrevocably waives to the fullest extent
permitted by law, any objection which it may have or hereafter have to the
laying of the venue of any such proceeding brought in such a court, and any
claim that any such proceeding brought in such a court has been brought in an
inconvenient forum. The Borrower, each Subsidiary, and each Guarantor hereby
consents to process being served in any such proceeding by the mailing of a copy
thereof by registered or certified mail, postage prepaid, to its address
specified in Section 11.02 hereof or in any other manner permitted by law.
SECTION 11.12. JURY TRIAL WAIVER. THE BORROWER, EACH SUBSIDIARY, EACH
GUARANTOR, THE AGENT, AND EACH BANK HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR
COUNTERCLAIM, WHETHER IN CONTRACT OR TORT, AT LAW OR IN EQUITY, ARISING OUT OF
OR IN ANY WAY RELATED TO THIS
58
AGREEMENT OR THE LOAN DOCUMENTS. NO OFFICER OF ANY BANK OR OF THE AGENT HAS
AUTHORITY TO WAIVE, CONDITION, OR MODIFY THIS PROVISION.
SECTION 11.13. GOVERNMENTAL REGULATION. Anything contained in this
Agreement to the contrary notwithstanding, no Bank shall be obligated to extend
credit to the Borrower in violation of any limitation or prohibition provided by
any applicable statute or regulation.
SECTION 11.14. NO FIDUCIARY DUTY. The relationship between the
Borrower and the Banks and the Agent shall be solely that of borrower and
lender. Neither the Agent nor any Bank shall have any fiduciary responsibilities
to the Borrower. Neither the Agent nor any Bank undertakes any responsibility to
the Borrower to review or inform the Borrower of any matter in connection with
any phase of the Borrower's business or operations.
SECTION 11.15. CONFIDENTIALITY. Each Bank agrees to hold any
confidential information which it may receive from the Borrower pursuant to this
Agreement in confidence, except for disclosure (i) to other Banks and their
respective affiliates, (ii) to legal counsel, accountants, and other
professional advisors to that Bank or to a Transferee, (iii) to regulatory
officials, (iv) to any Person as requested pursuant to or 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 12.04.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
SECTION 12.01. SUCCESSORS AND ASSIGNS. The terms and provisions of the
Loan Documents shall be binding upon and inure to the benefit of the Borrower
and the Agent and the Banks and their respective successors and assigns, except
that (i) the Borrower shall not have the right to assign its rights or
obligations under the Loan Documents without the consent of all Banks and (ii)
any assignment by any Bank must be made in compliance with Section 12.03.
Notwithstanding clause (ii) of this Section, any Bank may at any time, without
the consent of the Borrower or the Agent, pledge all or any portion of its
rights under this Agreement and its Notes to a Federal Reserve Bank as security
for an obligation of such pledgor or of an affiliated entity to such Federal
Reserve Bank; PROVIDED, HOWEVER, that no such pledge shall release the pledgor
Bank from its obligations hereunder. The Agent may treat the payee of any Note
as the owner thereof for all purposes hereof unless and until such payee
complies with Section 12.03 in the case of an assignment thereof. 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 thereof.
SECTION 12.02. PARTICIPATIONS. (A) 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 entities
("Participants") participating interests in any Loan owing to such Bank, any
Note held by such Bank, any Commitment of such Bank (which may include, in the
case of the Swing Line Bank, the Swing Line Commitment) or any other interest
59
of such Bank under the Loan Documents in an amount not less than Five Million
Dollars ($5,000,000). 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 the Borrower under this Agreement shall be determined as if
such Bank had not sold participating interests, and the Borrower and the Agent
shall continue to deal solely and directly with such Bank in connection with
such Bank's rights and obligations under the Loan Documents.
(b) VOTING RIGHTS. Each Bank shall with respect to its Participants,
if any, retain the sole right to approve, without the consent of any
Participant, any amendment, modification or waiver of any provision of the Loan
Documents other than any amendment, modification or waiver with respect to any
Loan or Commitment (or Swing Line Commitment, if applicable) in which such
Participant has an interest which forgives principal, interest or fees (other
than Agent's fees) or reduces the interest rate or fees (other than Agent's
fees) payable with respect to any such Loan or Commitment (or Swing Line
Commitment, if applicable), postpones any date fixed for any regularly scheduled
payment of principal of, or interest or fees (other than Agent's fees) on, any
such Loan or Commitment (or Swing Line Commitment, if applicable) or releases
any Significant Guarantor.
(c) BENEFIT OF SET-OFF. The Borrower agrees that each Participant
shall be deemed to have the rights of set-off provided in Sections 2.12 and 8.02
in respect of its participating interest in amounts owing under the Loan
Documents to the same extent as if the amount of its participating interest were
owing directly to it as a Bank under the Loan Documents, provided that each Bank
shall retain the right of set-off provided in Sections 2.12 and 8.02 with
respect to the amount of participating interests sold to each Participant. The
Banks agree to share with each Participant, and each Participant, by exercising
the right of set-off provided in Section 2.12 or 8.02, agrees to share with each
Bank, any amount received pursuant to the exercise of its right of set-off, such
amounts to be shared in accordance with Section 10.07 as if each Participant
were a Bank.
SECTION 12.03. ASSIGNMENTS. (a) 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 entities ("Purchasers") all, or
any part (but in an amount not less than Five Million Dollars ($5,000,000) of
its Commitment and Loans, which may include, in the case of a Purchaser of an
interest from the Swing Line Bank, the Swing Line Commitment and Swing Line
Loans), of its rights and obligations under the Loan Documents, PROVIDED,
HOWEVER, that, based upon facts and circumstances existing at the time of any
such assignment, such assignment does not result in an event described in
Sections 2.14, 2.15, or 2.16 hereof. Such assignment shall be substantially in
the form of EXHIBIT I hereto or in such other form as may be agreed to by the
parties thereto. The consent of the Borrower and the Agent shall be required
prior to an assignment becoming effective with respect to a Purchaser which is
not a Bank or an Affiliate thereof; PROVIDED, HOWEVER, that if an Event of
Default has occurred and is continuing, the consent of the Borrower shall not be
required. Such consent shall not be unreasonably withheld.
(b) EFFECT; EFFECTIVE DATE. Upon (i) delivery to the Agent of a notice
of assignment, substantially in the form attached as Exhibit 1 to EXHIBIT I
hereto (a "Notice of
60
Assignment"), together with any consents required by Section 12.03; and (ii)
payment (by either the assignor or the assignee) of a $4,000.00 fee (or, in the
case of an assignment to the assignor's Affiliate or by reason of the provisions
of Section 2.19, a $2,000 fee) to the 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 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 the Borrower, the
Banks or the Agent shall be required to release the transferor Bank with respect
to the percentage of the Aggregate Commitments and Loans (and, if applicable,
Swing Line Commitments and Swing Line Loans) assigned to such Purchaser. Upon
the consummation of any assignment to a Purchaser pursuant to this Section
12.03(b), the transferor Bank, the Agent and the Borrower 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.
(c) BANK ACQUISITIONS AND MERGERS. If, as a result of acquisitions or
mergers by Banks (or by entities of which a Bank or Banks are subsidiaries), a
Bank or two or more Banks that are, directly or indirectly, subsidiaries of a
common parent (collectively, "Merged Banks") hold a Commitment or Commitments in
an aggregate amount exceeding the amount of the Commitment held by the Bank that
is the Agent hereunder, the Bank that is the Agent may, at its election, but
without any obligation to do so, acquire from such Merged Banks a portion of
their Commitments and rights and obligations hereunder in an amount necessary to
reduce the aggregate amount of the Commitments of the Merged Banks, and to
increase the Commitment of the Bank that is Agent, to equal amounts. Such
election shall be exercisable by notice from the Agent to the Merged Banks and
shall be effected, on a date designated in such notice, by Assignment
substantially in the form of EXHIBIT I hereto or such other form as may be
agreed to by the parties. On the date of delivery of such Assignment the
assignor shall pay to the assignee an amount equal to the principal balance of
the Loans outstanding with respect to the interest so assigned.
SECTION 12.04. DISSEMINATION OF INFORMATION. The 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 information in such
Bank's possession concerning the creditworthiness of the Borrower, each
Subsidiary, or each Guarantor, provided that such Transferee or prospective
Transferee agrees to be subject to Section 11.15 to the same effect as if it
were a Bank.
SECTION 12.05. 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 10.08.
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ARTICLE XIII
THE LETTER OF CREDIT FACILITY
SECTION 13.01. FACILITY LETTERS OF CREDIT. (a) Each Issuing Bank
agrees, on the terms and conditions set forth in this Agreement, to issue from
time to time for the account of the Borrower, through such offices or branches
as it and the Borrower may jointly agree, one or more Facility Letters of Credit
in accordance with this Article XIII, during the period commencing on the
Effective Date and ending on the sixtieth (60th) day prior to the Termination
Date.
(b) The Borrower shall not request, and no Issuing Bank shall issue, a
Facility Letter of Credit for any purpose other than for purposes for which Loan
proceeds may by used.
SECTION 13.02. LIMITATIONS. An Issuing Bank shall not 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 issuance, amendment or extension
of the Facility Letter of Credit requested hereunder, the aggregate
principal amount of the Facility Letter of Credit Obligations would exceed
$50,000,000;
(iii) if, after giving effect to the issuance, amendment or extension
of the Facility Letter of Credit requested hereunder, Permitted Senior Debt
would exceed the Borrowing Base as of the most recent Inventory Valuation
Date;
(iv) if, after giving effect to the issuance, amendment or extension
of the Facility Letter of Credit requested hereunder, the sum of (A) the
outstanding and unpaid principal amount of the Loans and (B) the Facility
Letter of Credit Obligations would exceed the Aggregate Commitments;
(v) if such Issuing Bank receives written notice from the Agent at or
before 11:00 A.M. (Chicago time) on the proposed Issuance Date of such
Facility Letter of Credit that one or more of the conditions precedent
contained in Section 13.03 would not on such Issuance Date be satisfied,
unless such conditions are thereafter satisfied or waived and written
notice of such satisfaction is given to such Issuing Bank by the Agent;
(vi) that has an expiration date (taking into account any automatic
renewal provisions thereof) later than thirty (30) days prior to the
scheduled Termination Date; or
(vii) that is in a currency other than U.S. Dollars.
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Section 13.03. CONDITIONS. The issuance, amendment or extension of any
Facility Letter of Credit is subject to the satisfaction in full of the
following conditions on the Issuance Date:
(i) the Borrower 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;
(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 the Issuing Bank and no directive from any
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;
(iii) The following statements shall be true, and the Agent and such
Issuing Bank shall have received a certificate, substantially in the form
of the certificate attached hereto as EXHIBIT G, signed by a duly
authorized officer of the Borrower dated the Issuance Date stating that:
(a) The representations and warranties contained in Article IV of
this Agreement are correct on and as of such Issuance Date as
though made on and as of such Issuance Date except to the extent
that any such representation or warranty is stated to relate
solely to an earlier date, in which case such representation or
warranty is correct as of such earlier date;
(b) No Default or Event of Default has occurred and is continuing or
would result from the issuance, amendment or extension of such
Facility Letter of Credit; and
(c) Upon the issuance, amendment or extension of the requested
Facility Letter of Credit on such Issuance Date, the aggregate
outstanding amount of Permitted Senior Debt shall not exceed the
Borrowing Base as of the most recent Inventory Valuation Date;
and
(iv) The Issuing Bank and the Agent shall have received such other
approvals, opinions, or documents as either may reasonably request.
SECTION 13.04. PROCEDURE FOR ISSUANCE OF FACILITY LETTERS OF CREDIT.
(a) The Borrower shall give the applicable Issuing Bank and the Agent not less
than two (2) Business Days' prior written notice of any requested issuance of a
Facility Letter of Credit under this Agreement (except that, in lieu of such
written notice, the Borrower may give the Issuing Bank and the Agent telephonic
notice of such request if confirmed in writing by delivery to such Issuing Bank
and the Agent (i) immediately (A) of a telecopy of the written notice required
hereunder which has been signed by an authorized officer of the Borrower or (B)
of a telex containing all information required to be contained in such written
notice and (ii) promptly (but
63
in no event later than the requested Issuance Date) of the written notice
required hereunder containing the original signature of an authorized officer of
the Borrower). Such notice shall specify (i) the stated amount of the Facility
Letter of Credit requested, which amount shall be in compliance with the
requirements of Section 13.02, (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, which date shall be in compliance with the requirements of Section
13.02(vi), (iv) the purpose for which such Facility Letter of Credit is to be
issued, which purpose shall be in compliance with the requirements of Section
13.01(b), 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 Borrower shall
also provide the Agent with a copy of the form of the Facility Letter of Credit
it is requesting be issued. Such notice, to be effective, must be received by
the Issuing Bank and the Agent not later than 2:00 p.m. (Chicago time) on the
last Business Day on which notice can be given under this Section 13.04(a).
(b) Promptly following receipt of a request for issuance of a Facility
Letter of Credit in accordance with Section 13.04(a), such Issuing Bank shall
approve or disapprove, in its reasonable discretion, the issuance 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
XIII.
(c) Subject to the terms and conditions of this Article XIII
(including, without limitation, Sections 13.02 and 13.03), the applicable
Issuing Bank shall, on the Issuance Date, issue the requested Facility Letter of
Credit in accordance with such Issuing Bank's usual and customary business
practices unless such Issuing Bank has actually received written or telephonic
notice from the Borrower specifically revoking the request to issue such
Facility Letter of Credit. The Issuing Bank shall give the Agent written notice,
or telephonic notice confirmed promptly thereafter in writing, of the issuance
of a Facility Letter of Credit, and the Agent shall promptly thereafter so
notify all Banks.
(d) No Issuing Bank shall extend or amend any Facility Letter of
Credit unless the requirements of this Section 13.04 are met as though a new
Facility Letter of Credit were being requested and issued.
(e) Any Bank may, but shall not be obligated to, issue to the Borrower
or any of its Subsidiaries 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 XIII shall apply to any Letter of Credit that is not a Facility Letter
of Credit.
SECTION 13.05. 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 in all material respects
with the procedures specified in Section 13.04, relieve any Bank of its
obligations hereunder to such Issuing Bank. In determining whether to pay under
any Facility Letter of Credit, such Issuing Bank shall have no obligation to the
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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SECTION 13.06. PARTICIPATION. (a) Immediately upon the Effective Date
(in the case of the Facility Letters of Credit outstanding on the Effective
Date) and immediately upon issuance after the Effective Date by an Issuing Bank
of any Facility Letter of Credit in accordance with Section 13.04, 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 the proportion of such Bank's Commitment to the
Aggregate Commitments) in such Facility Letter of Credit (including, without
limitation, all obligations of the Borrower with respect thereto other than
amounts owing to such Issuing Bank under Section 2.15).
(b) In the event that an Issuing Bank makes any payment under any
Facility Letter of Credit and the 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 the Agent, which shall promptly so
notify each Bank. Upon receipt of such notice, each Bank shall promptly and
unconditionally pay to the Agent for the account of such Issuing Bank the amount
of such Bank's ratable share (in the proportion of such Bank's Commitment to the
Aggregate Commitments) of such payment in same day funds, and the Agent shall
promptly pay such amount, and any other amounts received by the Agent for such
Issuing Bank's account pursuant to this Section 13.06(b), to such Issuing Bank.
If the Agent so notifies such Bank prior to 11:00 A.M. (Chicago time) on any
Business Day, such Bank shall make available to the Agent for the account of
such Issuing Bank such Bank's ratable 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 ratable share of the amount of such payment available to the
Agent for the account of the Issuing Bank, such Bank agrees to pay to the Agent
for the account of the 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 the Agent for the account of the Issuing
Bank, at the Federal Funds Rate. The failure of any Bank to make available to
the Agent for the account of an Issuing Bank such Bank's ratable share of any
such payment shall not relieve any other Bank of its obligation hereunder to
make available to the Agent for the account of such Issuing Bank its ratable
share of any payment on the date such payment is to be made.
(c) The payments made by the Banks to an Issuing Bank in reimbursement
of amounts paid by it under a Facility Letter of Credit shall constitute, and
the Borrower hereby expressly acknowledges and agrees that such payments shall
constitute, Loans hereunder (notwithstanding that the amounts thereof may not
comply with the provisions of Section 2.01(c)). Such Loans shall be ABR Loans,
subject to the Borrower's rights under Article II hereof.
(d) Upon the request of the Agent or any Bank, each 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.
(e) The obligations of the Banks to make payments to the 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, including, without limitation, the following:
65
(i) any lack of validity or enforceability of this Agreement or any of
the other Loan Documents;
(ii) the existence of any claim, setoff, defense or other right which
the 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), the Issuing Bank, the
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 the Borrower or any Subsidiary and the beneficiary named in any
Facility Letter of Credit);
(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;
(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 the Agent or an Issuing Bank to make any reports
required pursuant to Section 13.08; or
(vi) the occurrence of any Default or Event of Default.
(f) For purposes of determining the unused portion of the Aggregate
Commitments and the unused portion of a Bank's Commitment under Sections 2.02
and 2.09(b), the Aggregate Commitments shall be deemed used to the extent of the
aggregate undrawn face amount of the outstanding Facility Letters of Credit and
the Bank's Commitment shall be deemed used to the extent of such Bank's ratable
share (in the proportion of such Bank's Commitment to the Aggregate Commitments)
of the aggregate undrawn face amount of the outstanding Facility Letters of
Credit.
SECTION 13.07. COMPENSATION FOR FACILITY LETTERS OF CREDIT. (a) The
Borrower agrees to pay to the Agent, in the case of the issuance of each
Facility Letter of Credit, the Facility Letter of Credit Fee therefor, payable
in quarterly installments in advance on the Issuance Date (which 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 last day of the
calendar quarter in which the Issuance Date occurs) and on the first day of each
calendar quarter after the Issuance Date (which installment shall be a pro rata
portion of the annual Facility Letter of Credit Fee for the quarter in which
such payment is due). 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 360-day year. The Agent
shall promptly remit such Facility Letter of Credit Fees, when paid, to the
Banks ratably.
(b) The Borrower shall also pay to the applicable Issuing Bank, solely
for its own account, a fee with respect to each Facility Letter of Credit issued
by such Issuing Bank in an amount per annum equal to the product of (i) 0.125%
per annum and (ii) the face amount of such Facility Letter of Credit, which fee
shall be payable in advance on or before the issuance of such Facility Letter of
Credit. An Issuing Bank shall also have the right to receive, solely for its own
66
account, its out-of-pocket costs of issuing and servicing Facility Letters of
Credit, as the Borrower may agree in writing.
SECTION 13.08. ISSUING BANK REPORTING REQUIREMENTS. Each Issuing Bank
shall, no later than the tenth day following the last day of each month, provide
to the Agent a schedule of the Facility Letters of Credit issued by it 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 the Borrower to such Issuing Bank during the month pursuant to
Section 2.15. Copies of such reports shall be provided promptly to each Bank by
the Agent.
SECTION 13.09. INDEMNIFICATION; NATURE OF ISSUING BANK'S DUTIES. (a)
In addition to amounts payable as elsewhere provided in this Article XIII, the
Borrower hereby agrees to protect, indemnify, pay and save the Agent, each
Issuing Bank and each Bank harmless 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 the
Agent, any Issuing Bank or any Bank as a consequence, direct or indirect, of (i)
the issuance of any Facility Letter of Credit 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 to honor a drawing under a Facility Letter of
Credit as a result of any act or omission, whether rightful or wrongful, of any
government, court or other governmental agency or authority.
(b) As among the Borrower, the Banks, the Agent and each Issuing Bank,
the Borrower assumes 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 an Issuing Bank nor the 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) for errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex, facsimile transmission or otherwise; (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; or (viii) for any
consequences arising from causes beyond the control of the Agent, such Issuing
Bank and the Banks including, without limitation, any act or omission, whether
rightful or wrongful, of any government, court or other governmental agency or
authority. None of the above shall affect, impair, or prevent the vesting of any
of such Issuing Bank's rights or powers under this Section 13.09.
(c) 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,
67
shall not put such Issuing Bank, the Agent or any Bank under any resulting
liability to the Borrower or relieve the Borrower of any of its obligations
hereunder to any such Person, but the foregoing shall not relieve such Issuing
Bank of its obligation to confirm that any documents required to be delivered
under a 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.
(d) Notwithstanding anything to the contrary contained in this Section
13.09, the Borrower shall have no obligation to indemnify an Issuing Bank under
this Section 13.09 in respect of any liability incurred by an 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 the Borrower.
SECTION 13.10. DESIGNATION OR RESIGNATION OF ISSUING BANK. (a) Upon
request by the Borrower and approval by the Agent, a Bank may at any time agree
to be designated as an Issuing Bank hereunder, which designation shall be set
forth in a written instrument or instruments delivered by the Borrower, the
Agent and such Bank. The Agent shall promptly deliver to the other Banks a copy
of such instrument or instruments. From and after such designation and unless
and until such Bank resigns as an Issuing Bank in accordance with Section
13.10(b), such Bank shall have all of the rights and obligations of an Issuing
Bank hereunder.
(b) An Issuing Bank shall continue to be the Issuing Bank unless and
until (i) it shall have given the Borrower and the Agent notice that it has
elected to resign as Issuing Bank and (ii) unless there is, at the time of such
notice, at least one other Issuing Bank, another Bank shall have agreed to be
the replacement Issuing Bank and shall have been approved in writing by the
Agent and the Borrower. A resigning Issuing Bank shall continue to have the
rights and obligations of the Issuing Bank hereunder solely with respect to
Facility Letters of Credit theretofore issued by it notwithstanding the
designation of a replacement Issuing Bank hereunder, but upon its notice of
resignation (or, if at the time of such notice, there is not at least one other
Issuing Bank, then upon such designation of a replacement Issuing Bank), the
resigning Issuing Bank shall not thereafter issue any Facility Letters of Credit
(unless it shall again thereafter be designated as an Issuing Bank in accordance
with the provisions of this Section 13.10). The assignment of, or grant of a
participation interest in, all or any part of its Commitment or Loans by a Bank
that is also the Issuing Bank shall not constitute an assignment or transfer of
any of its rights or obligations as an Issuing Bank.
(c) Without limitation of the foregoing provisions of this Section
13.10, the parties hereto acknowledge that, prior to the Effective Date, PNC has
issued, for the account of the Borrower, the Letters of Credit ("PNC Letters of
Credit") identified in Exhibit J hereto. Upon written notice delivered by PNC to
the Agent (which notice may be given prior to, on or within thirty days after
the Effective Date) that PNC has agreed to be an Issuing Bank hereunder, the
parties hereto agree that (i) PNC shall be an Issuing Bank with respect to the
PNC Letters of Credit, (ii) the PNC Letters of Credit shall constitute Facility
Letters of Credit hereunder and shall be subject to the provisions hereof
relating to Facility Letters of Credit, (iii) Facility Letter of Credit Fees
shall thereafter accrue and be payable with respect to the PNC Letters of Credit
in
68
the amount and in a manner provided for in this Agreement and (iv) PNC shall
also be an Issuing Bank with respect to Facility Letters of Credit thereafter
issued by it in accordance with the terms of this Agreement.
SECTION 13.11. TERMINATION OF ISSUING BANK'S OBLIGATION. In the event
that the Banks' obligations to make Loans terminate or are terminated as
provided in Section 8.01, each Issuing Bank's obligation to issue Facility
Letters of Credit shall also terminate.
SECTION 13.12. 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 an Issuing
Bank to issue, amend or extend any Facility Letter of Credit are expressly
limited by and subject to the provisions of this Article XIII.
SECTION 13.13. ISSUING BANK'S RIGHTS. All of the representations,
warranties, covenants and agreements of the Borrower to the Banks under this
Agreement and of the Borrower under any other Loan Document shall inure to the
benefit of each Issuing Bank (unless the context otherwise indicates). Without
limitation of the foregoing, (a) the provisions of Section 2.15 (relating to
capital adequacy) shall apply with respect to each Issuing Bank and its issuance
of, or obligation to issue, Facility Letters of Credit; (b) the provisions of
Section 2.18 (relating to statements of amounts payable and the survival of
obligations) shall apply to each Issuing Bank; and (c) the provisions of Section
11.04 (relating to the Borrower's payment of costs, expenses, taxes, fees and
other amounts) shall apply to such costs, expenses, taxes, fees and other
amounts relating to the Facility Letters of Credit.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first written.
BEAZER HOMES USA, INC.
By:________________________________
Name: _____________________________
Title: ____________________________
Address for Notices
-------------------
5775 Peachtree Dunwoody Road
Suite C-550
Atlanta, Georgia 30342
Attention: President
Tel: (404) 250-3420
Fax: (404) 250-3428
BEAZER MORTGAGE CORPORATION
By:________________________________
Name: _____________________________
Title: ____________________________
69
BEAZER HOMES CORP.
By:________________________________
Name: _____________________________
Title: ____________________________
BEAZER HOMES SALES ARIZONA INC.
By:________________________________
Name: _____________________________
Title: ____________________________
BEAZER REALTY CORP.
By:________________________________
Name: _____________________________
Title: ____________________________
BEAZER/SQUIRES REALTY, INC.
By:________________________________
Name: _____________________________
Title: ____________________________
PANITZ HOMES REALTY INC.
By:________________________________
Name: _____________________________
Title: ____________________________
BEAZER HOMES HOLDINGS CORP.
By:________________________________
Name: _____________________________
Title: ____________________________
BEAZER HOMES TEXAS HOLDINGS, INC.
By:________________________________
Name: _____________________________
Title: ____________________________
BEAZER HOMES TEXAS, L.P.
70
By: BEAZER HOMES TEXAS HOLDINGS,
INC., its general partner
By:________________________________
Name: _____________________________
Title: ____________________________
BEAZER REALTY, INC.
By:________________________________
Name: _____________________________
Title: ____________________________
HOMEBUILDERS TITLE SERVICES, INC.
By:________________________________
Name: _____________________________
Title: ____________________________
TEXAS LONE STAR TITLE, INC.
By: BEAZER HOMES TEXAS HOLDINGS,
INC., its general partner
By:________________________________
Name: _____________________________
Title: ____________________________
Address for Notices to all
--------------------------
Guarantors
----------
c/o Beazer Homes USA, Inc.
5775 Peachtree Dunwoody Road
Suite C-550
Atlanta, Georgia 30342
Attention: President
Tel: (404) 250-3420
Fax: (404) 250-3428
71
Commitment: BANK ONE, NA
$40,000,000.00
By:___________________________
Name: _________________________
Title: ________________________
Addresses for Notices
---------------------
Bank One, NA
1 Bank One Plaza
Mail Suite 0151
Chicago, Illinois 60670
Attn: Mr. Chris Flynn
Telephone: (312) 732-3636
Telecopy: (312) 732-1117
Lending Office for Loans
------------------------
Bank One, NA
1 Bank One Plaza
Mail Suite 0318
Chicago, Illinois 60670
Attention: Ms. Margie Smith
Telephone: (312) 732-5462
Telecopy: (312) 732-1158
72
GUARANTY FEDERAL BANK, F.S.B.
Commitment:
By: ________________________
$40,000,000.00 Name: ______________________
Title: _____________________
Address for Notices
-------------------
Guaranty Federal Bank, F.S.B.
8333 Douglas Avenue
Dallas, TX 75225
Attn: Mr. Randy Reid
Telephone: (214)360-2735
Telecopy: (214)360-1661
Lending Office for Loans
------------------------
Guaranty Federal Bank, F.S.B.
8333 Douglas Avenue
Dallas, TX 75225
Attn: Ms. Martha Fleming
Telephone: (214) 360-8905
Telecopy: (214) 360-4854
73
BANK UNITED
Commitment: By: _______________________
Name: _____________________
$35,000,000.00 Title: ____________________
Address for Notices
-------------------
Bank United
3200 Southwest Freeway
Suite 2001
Houston, TX 77027
Attn: Mr. Max R. Epperson
Telephone: (713) 543-7802
Telecopy: (713) 543-6986
Lending Office for Loans
------------------------
Bank United
5963 La Place Court
Suite 202
Carlsbad, CA 92008
Attn: Mr. Tom Griffin
Telephone: (760) 804-8595
Telecopy: (760) 804-8590
74
COMERICA BANK
Commitment: By: ______________________
David J. Campbell
$40,000,000.00 Vice President
Address for Notices
-------------------
Comerica Bank
500 Woodward Avenue, MC: 3256
Detroit, MI 48226
Attn: Mr. David J. Campbell
Telephone: (313)222-9306
Telecopy: (313)222-9295
Lending Office for Loans
------------------------
Comerica Bank
500 Woodward Avenue, MC: 3256
Detroit, MI 48226
Attn: Ms. Betsy Branson
Telephone: (313) 222-5878
Telecopy: (313) 222-3697
75
AMSOUTH BANK
Commitment: By: _______________________
Name: _____________________
$25,000,000.00 Title: ____________________
By: ______________________
Name: ____________________
Title ____________________
Address for Notices
-------------------
AmSouth Bank
AmSouth/Sonat Tower
CRE-9th Floor
1900 5th Avenue North
Birmingham, AL 35203
Attn: Mr. Ronny Hudspeth
Telephone: (205) 307-4427
Telecopy: (205) 326-4075
Lending Office for Loans
------------------------
AmSouth Bank
AmSouth/Sonat Tower
CRE-9th Floor
1900 5th Avenue North
Birmingham, AL 35203
Attn: Ms. Wanda Pate
Telephone: (205) 326-4615
Telecopy: (205) 326-4075
76
SUNTRUST BANK, ATLANTA
Commitment: By: _______________________
Name: Donald L. Gaudette
$20,000,000.00 Title: Vice President
Address for Notices
-------------------
SunTrust Bank
303 Peachtree Street, N.E.
3rd Fl.
Atlanta, GA 30308
Attn: Mr. Donald L. Gaudette
Telephone: (404) 658-4925
Telecopy: (404) 588-8505
Address for Loans
-----------------
SunTrust Bank, Atlanta
25 Park Place
21st Fl.
Atlanta, GA 30303
Attn: Mr. Datanian Oldham
Telephone: (404) 588-8375
Telecopy: (404) 575-2730
77
PNC BANK, N.A.
Commitment: By: ______________________
Name: ____________________
$25,000,000.00 Title: ___________________
Address for Notices
-------------------
PNC Bank, N.A.
Two Tower Center
Real Estate Banking Group-18th Fl.
Suite J3-JTTC-18-6
East Brunswick, New Jersey 08816
Attn: Mr. Douglas G. Paul
Telephone: (732) 220-3566
Telecopy: (732) 220-3744
Address for Loans
-----------------
PNC Bank, N.A.
Two Tower Center
Real Estate Banking Group-18th Fl.
East Brunswick, New Jersey 08816
Attn: Ms. Jean Reis
Telephone: (732) 220-3582
Telecopy: (732) 220-3760
___________________________
___________________________
___________________________
___________________________
78
Commitment: WACHOVIA BANK, N.A.
$25,000,000 By: _____________________________
Name: ___________________________
Title: __________________________
Address for Notices
-------------------
Wachovia Bank, N.A.
106 West Maple Street
Cumming, Georgia 30040
Attn: Mr. Jeffrey S. Hoza
Telephone: (770) 781-6430
Telecopy: (770) 781-6461
Address for Loans
-----------------
Wachovia Bank, N.A.
106 West Maple Street
Cumming, GA 30040
Attn: Ms. Ruth Richardson
Telephone: (770) 781-6450
Telecopy: (770) 781-6461
AND
Ms. Cynthia Mitchell
Telephone: (404) 332-5195
Telecopy: (404) 332-1450
79
Exhibit A
NOTE
$______________________ ___________________, ____
FOR VALUE RECEIVED, the undersigned, BEAZER HOMES USA, INC., a
Delaware corporation (the "Borrower") HEREBY PROMISES TO PAY to the order of
_______________________ (the "Bank") to BANK ONE, NA, as Agent, at the Agent's
Office located at 1 Bank One Plaza, Chicago, IL, for the account of the
applicable Lending Office of the Bank, in lawful money of the United States and
in immediately available funds, the principal amount of _________________
Dollars ($_______) or the aggregate unpaid principal amount of all Loans made to
the Borrower by the Bank pursuant to the Credit Agreement and outstanding on the
Termination Date, whichever is less, and to pay interest from the date of this
Note, in like money, at said office for the account of the applicable Lending
Office, at the time and at a rate per annum as provided in the Credit Agreement.
The Bank is hereby authorized by the Borrower to endorse on the schedule
attached to the Note held by it the amount and type of each Loan and each
renewal, conversion, and payment of principal amount received by the Bank for
the account of the applicable Lending Office on account of its Loans, which
endorsement shall, in the absence of manifest error, be conclusive as to the
outstanding balance of the Loans made by the Bank; PROVIDED, HOWEVER, that the
failure to make such notation with respect to any Loan or renewal, conversion,
or payment shall not limit or otherwise affect the obligations of the Borrower
hereunder.
This Note is one of the Notes referred to in, and is entitled to the
benefits of, the Second Amended and Restated Credit Agreement, dated as of
December 29, 1999, between the Borrower, the Guarantors, the Bank and certain
other banks parties thereto (which, as it may be amended, modified, renewed or
extended from time to time, is herein called the "Credit Agreement"). Terms used
herein which are defined in the Credit Agreement shall have their defined
meanings when used herein. The Credit Agreement, among other things, contains
provisions for acceleration of the maturity of this Note upon the happening of
certain stated events and also for prepayments on account of principal hereof
prior to the maturity of this Note upon the terms and conditions specified in
the Credit Agreement.
The Borrower hereby agrees to pay all reasonable costs and expenses
(including reasonable attorney's fees and expenses) paid or incurred by the
holder of this Note in the collection of any principal or interest payable under
this Note or the enforcement of this Note or any other Loan Documents.
This Note shall be governed by the laws of the State of Illinois.
BEAZER HOMES USA, INC.
By:________________________________
Name: _____________________________
Title: ____________________________
80
SCHEDULE TO NOTE
Unpaid Name of
Amount of Principal Person
Date Made Type of Principal Balance of Making
or Paid Loan Paid Note Notation
- --------- ------- --------- ---------- --------
81
Exhibit B
INTENTIONALLY OMITTED
82
Exhibit C
The opinion of Paul, Hastings, Janofsky & Walker LLP, to be rendered
pursuant to Section 3.01(5) of the Second Amended and Restated Credit Agreement
dated as of December 29, 1999 (the "Credit Agreement"; any capitalized term used
herein and not otherwise defined herein shall have the meaning assigned to such
term in the Credit Agreement) among Beazer Homes USA, Inc., the Original
Guarantors and New Guarantors parties thereto, the banks whose names appear on
the signature pages thereof and Bank One, NA, as Agent, shall be substantially
to the following effect:
a) The Borrower and each of Beazer Mortgage Corporation, a Delaware
corporation, Beazer Homes Corp., a Tennessee corporation, Beazer Homes Sales
Arizona Inc., a Delaware corporation, Beazer Homes Holding Corp., a Delaware
corporation, Beazer Homes Texas Holdings, Inc., a Delaware corporation, Beazer
Homes Texas, L.P., a Delaware limited partnership, Homebuilders Title Services,
Inc., a Delaware corporation, and Texas Lone Star Title, L.P., a Texas limited
partnership (collectively the "Guarantors") is a corporation duly incorporated
(or, in the case of Beazer Homes Texas, L.P., and Texas Lone Star Title, L.P., a
partnership duly formed), validly existing, and in good standing under the laws
of the jurisdiction of its incorporation or formation and has all requisite
power and authority, corporate or otherwise, to conduct its business, to own its
properties and to execute and deliver, and to perform all of its obligations
under the Loan Documents.
b) The execution and delivery by the Borrower and each Guarantor of
the Loan Documents and the performance of their respective obligations
thereunder have been duly authorized by all necessary corporate or other action
and do not and will not (i) require any consent or approval of its stockholders,
(ii) violate any provision of any law, rule or regulation (including, without
limitation, Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System), or, to our knowledge, any order, writ, judgment, injunction,
decree, determination or award presently in effect having applicability to it
which violation would (x) impair its ability to perform its obligations under
the Loan Documents or (y) have a material adverse effect on its financial
condition, properties, or operations, or on its charter or by-laws, (iii) to our
knowledge, result in a breach of or constitute a default under any indenture or
lease or loan or credit agreement or any other material agreement or instrument
to which it is a party or by which it or its properties may be bound or
affected, or (iv) to our knowledge, result in, or require, the creation or
imposition of any Lien upon any of the properties now owned or hereafter
acquired by it.
c) No authorization, consent, approval, license, exemption of or
filing or registration with any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, is or will be
necessary for the valid execution, delivery or performance by the Borrower and
each Guarantor of the Loan Documents.
d) Except as have been disclosed to the Agent and the Banks in
writing, there are to our knowledge no actions, suits or proceedings pending or
threatened against the
83
Borrower or any Subsidiary or their properties before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, the probable outcome of which would have a material adverse effect on
the consolidated financial condition, properties, or operations of the Borrower
and its Subsidiaries taken as a whole.
In rendering the foregoing opinion with respect to Beazer Homes Corp.,
we have relied upon the opinion of Tune, Entrekin & White as to matters of
Tennessee law.*
In rendering the foregoing opinion we express no opinion as to the
effect (if any) of any laws of any jurisdiction, except those of the General
Corporation Law and Revised Uniform Limited Partnership Act of the State of
Delaware, the Federal laws of the United States [and, to the extent provided for
in the preceding paragraph, the laws of Tennessee].
We express no opinion with respect to Beazer Realty Corp., a Georgia
corporation, Beazer/Squires Realty, Inc., a North Carolina corporation, Panitz
Homes Realty, Inc., a Florida corporation, or Beazer Realty, Inc., a New Jersey
corporation.
* If the Agent elects to waive the requirement for the opinion from Tennessee
counsel, this paragraph and the bracketed provisions of the next paragraph will
be deleted, the reference to Beazer Homes Corp. will be deleted from paragraph
(a) above and a reference to Beazer Homes Corp. will be added to the last
paragraph below.
84
Exhibit D
The opinion of Illinois counsel to be rendered pursuant to Section
3.01(5) of the Second Amended and Restated Credit Agreement dated as of December
29, 1999 (the "Credit Agreement"; any capitalized term used herein and not
otherwise defined herein shall have the meaning assigned to such term in the
Credit Agreement) among Beazer Homes USA, Inc., the Guarantors parties thereto,
the banks whose names appear on the signature page thereof and Bank One, NA, as
Agent, shall be substantially to the following effect:
The Loan Documents, when executed and delivered by the parties
thereto, will constitute the legal, valid and binding obligations of the
Borrower and each Guarantor enforceable against it in accordance with their
respective terms, except as enforcement of such terms may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium, fraudulent
transfer or similar laws affecting creditors' rights generally or by general
equitable principles.
Counsel is a member of the Bar of the State of Illinois.
In rendering the foregoing opinion we express no opinion as to the
effect (if any) of any laws of any jurisdiction, except those of the State of
Illinois and the Federal laws of the United States.
85
Exhibit E
Bank One, NA,
as Agent
1 Bank One Plaza
Chicago, Illinois 60670
Re: Second Amended and Restated Credit Agreement dated
as of December 29, 1999 (the "Credit Agreement")
among Beazer Homes USA, Inc., the Guarantors
parties thereto, and each of the banks ("Banks")
parties thereto
Ladies and Gentlemen:
We have acted as your special counsel in connection with the Credit
Agreement. Terms used in the Credit Agreement are used herein as defined
therein.
We have examined the opinions (the "Opinions") and other documents
delivered by the Borrower and the Guarantors pursuant to Article III of the
Credit Agreement. We have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the conformity to
the originals of all documents submitted to us as copies and the due authority
of all persons executing the same. We have relied as to factual matters on the
documents which we have reviewed, and as to matters of law covered by the
Opinions on such Opinions. We are qualified to practice law in the State of
Illinois and we do not purport to be experts on, or to express any opinion
herein concerning, the laws of any other jurisdiction.
Subject to the exceptions expressed in the preceding paragraph and
while we have not independently considered the matters covered by the Opinions
to the extent necessary to enable us to express the conclusions therein stated,
we are of the opinion that the Opinions and other documents delivered pursuant
to Article III of the Credit Agreement are substantially responsive to the
requirements of said Section. In that regard, we note that such Section does not
require the Opinions to address matters relating to Beazer Realty Corp., a
86
Georgia corporation, Beazer/Squires Realty, Inc., a North Carolina corporation,
Panitz Homes Realty, Inc., a Florida corporation, Beazer Realty, Inc., a New
Jersey corporation, or, if so elected by the Agent, Beazer Homes Corp., a
Tennessee corporation.
Very truly yours,
87
Exhibit F
The opinion of local counsel to be rendered pursuant to Section
3.01(10) of the Second Amended and Restated Credit Agreement dated as of
December 29, 1999, "Credit Agreement"; any capitalized term used herein and not
otherwise defined herein shall have the meaning assigned to such term in the
Credit Agreement) among Beazer Homes USA, Inc., the Guarantors parties thereto,
the banks whose names appear on the signature page thereof and Bank One, NA, as
Agent, shall be substantially to the following effect:
a) The Guarantor is a corporation duly incorporated validly existing,
and in good standing under the laws of the jurisdiction of its incorporation,
and has all requisite power and authority, corporate or otherwise, to conduct
its business, to own its properties and to execute and deliver, and to perform
all of its obligations under the Loan Documents.
b) The execution and delivery by the Guarantor of the Credit Agreement
and the performance of its obligations thereunder have been duly authorized by
all necessary corporate or other action and do not and will not (i) require any
consent or approval of its stockholders, or (ii) violate any provision of any
law, rule or regulation (including, without limitation, Regulation G, T, U or X
of the Board of Governors of the Federal Reserve System), or, to our knowledge,
any order, writ, judgment, injunction, decree, determination or award presently
in effect having applicability to it which violation would (x) impair its
ability to perform its obligations under the Loan Documents (y) have a material
adverse effect on its financial condition, properties, or operations, or on its
charter or by-laws.
c) No authorization, consent, approval, license, exemption of or
filing or registration with any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, is or will be
necessary for the valid execution, delivery or performance by the Guarantor of
the Credit Agreement.
d) Except as have been disclosed to the Agent and the Banks in
writing, there are to our knowledge no actions, suits or proceedings pending or
threatened against the Guarantor or its properties before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, the probable outcome of which would have a material adverse
effect on the consolidated financial condition, properties, or operations of the
Guarantor.
Counsel is a member of the Bar of the State of __________________.
In rendering the foregoing opinion we express no opinion as to the
effect (if any) of any laws of any jurisdiction, except those of the State of
______________, and the Federal laws of the United States.
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Exhibit G
CERTIFICATE
This Certificate is delivered pursuant to the Amended and Restated
Credit Agreement dated as of December 29, 1999 among Beazer Homes USA, Inc.,
Bank One, NA as Agent, the Banks party thereto and the Guarantors party thereto
(the "Credit Agreement"). Capitalized terms used herein and not defined herein
shall have the meanings provided therefor in the Credit Agreement. This
Certification is delivered in connection with [a notice requesting a Borrowing
under Section 2.03 OR a notice requesting issuance, amendment or extension of a
Facility Letter of Credit under Section 13.04]*.
The undersigned hereby certifies as follows:
1. The representations and warranties contained in Article IV of the
Credit Agreement are correct on and as of the [date of such Borrowing OR
Issuance Date]* as though made on and as of such date except to the extent that
any such representation or warranty is stated to relate solely to an earlier
date, in which case such representation or warranty is correct as of such
earlier date.
2. No Default or Event of Default has occurred and is continuing and
would result from [such Borrowing OR the issuance, amendment or extension of
such Facility Letter of Credit]*.
3. Upon [such Borrowing OR the issuance, amendment or extension of
such Facility Letter of Credit]*, the Permitted Senior Debt shall not exceed the
Borrowing Base as set forth in the Borrowing Base Certificate delivered by the
Borrower to the Agent as of the most recent Inventory Valuation Date, which
Borrowing Base Certificate is true and correct as of such Inventory Valuation
Date.
Date: _______________ _________________________ David J. Weiss
Executive Vice President and
Chief Financial Officer
Beazer Homes USA, Inc.
* Include appropriate portion of bracketed provision
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Exhibit H
Subsidiaries of Borrower
State of Borrower's
Subsidiary Incorporation % Ownership
- ---------- ------------- -----------
Beazer Mortgage Corporation Delaware 100%
Beazer Homes Corp. Tennessee 100%
Beazer Home Sales Arizona Inc. Delaware 100%
Beazer Realty Corp. Georgia 100%
Beazer/Squires Realty, Inc. North Carolina 100%
Panitz Homes Realty, Inc. Florida 100%
Beazer Homes Holdings Corp. Delaware 100%
Beazer Homes Texas Holdings, Inc. Delaware 100%
Beazer Homes Texas, L.P. Delaware 99%(1)
Beazer Realty, Inc. New Jersey 100%
Homebuilders Title Services, Inc. Delaware 100%
Texas Lone Star Title, L.P. Texas 99%(2)
Security Title Insurance Company,
Inc. Vermont 100%
United Home Insurance
Corporation Vermont 100%
- ---------------
(1) The 99% interest is held by Beazer Homes Corp., and the remaining 1% is held
by Beazer Homes Texas Holdings, Inc.
(2) The 99% interest is held by Beazer Home Sales Arizona Inc., and the
remaining 1% is held by Beazer Homes Texas Holdings, Inc.
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Exhibit I
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement") between
_____________ (the "Assignor") and __________________ (the "Assignee") is dated
as of _____________, 19__. The parties hereto agree as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a Credit
Agreement (which, as it may be amended, modified, renewed or extended from time
to time, is herein called the "Credit Agreement") described in Item 1 of
Schedule 1 attached hereto ("Schedule 1"). Capitalized terms used herein and not
otherwise defined herein shall have the meanings attributed to them in the
Credit Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to
the Assignee, and the Assignee hereby purchases and assumes from the Assignor,
an interest in and to the Assignor's rights and obligations under the Credit
Agreement such that after giving effect to such assignment the Assignee shall
have purchased pursuant to this Assignment Agreement the percentage interest
specified in Item 3 of Schedule 1 of all outstanding rights and obligations
under the Credit Agreement relating to the facilities listed in Item 3 of
Schedule 1 and the other Loan Documents. The Commitment (or Loans, if the
applicable Commitment has been terminated) purchased by the Assignee hereunder
is set forth in Item 3 of Schedule 1.
3. EFFECTIVE DATE. The effective date of this Assignment Agreement
(the "Effective Date") shall be the later of the date specified in Item 3 of
Schedule 1 or two Business Days (or such shorter period agreed to by the Agent)
after a Notice of Assignment substantially in the form of Exhibit 1 attached
hereto has been delivered to the Agent. Such Notice of Assignment must include
any consents required to be delivered to the Agent by Section 12.03 of the
Credit Agreement (including the consent of the Agent). In no event will the
Effective Date occur if the payments required to be made by the Assignee to the
Assignor on the Effective Date under Sections 4 and 5 hereof are not made on the
proposed Effective Date. The Assignor will notify the Assignee of the proposed
Effective Date no later than the Business Day prior to the proposed Effective
Date. As of the Effective Date, (i) the Assignee shall have the rights and
obligations of a Bank under the Loan Documents with respect to the rights and
obligations assigned to the Assignee hereunder and (ii) the Assignor shall
relinquish its rights and be released from its corresponding obligations under
the Loan Documents with respect to the rights and obligations assigned to the
Assignee hereunder.
4. PAYMENTS, OBLIGATIONS. On and after the Effective Date, the
Assignee shall be entitled to receive from the Agent all payments of principal,
interest and fees with respect to the interest assigned hereby. The Assignee
shall advance funds directly to the Agent with respect to all Loans and
reimbursement payments made on or after the Effective Date with respect to the
interest assigned hereby. [In consideration for the sale and assignment of Loans
hereunder, (i) the Assignee shall pay the Assignor on the Effective Date, an
amount equal to the principal amount of the portion of all ABR Loans assigned to
the Assignee hereunder and
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(ii) with respect to each LIBOR Loan made by the Assignor and assigned to the
Assignee hereunder which is outstanding on the Effective Date, (a) on the last
day of the Interest Period therefor or (b) on such earlier date agreed to by the
Assignor and the Assignee or (c) on the date on which any such LIBOR Loan either
becomes due (by acceleration or otherwise) or is prepaid (the date as described
in the foregoing clauses (a), (b) or (c) being hereinafter referred to as the
"Payment Date"), the Assignee shall pay the Assignor an amount equal to the
principal amounts of the portion of such LIBOR Loan assigned to the Assignee
which is outstanding on the Payment Date. If the Assignor and the Assignee agree
that the Payment Date for such LIBOR Loan shall be the Effective Date, they
shall agree to the interest rate applicable to the portion of such Loan assigned
hereunder for the period from the Effective Date to the end of the existing
Interest Period applicable to such LIBOR Loan (the "Agreed Interest Rate") and
any interest received by the Assignee in excess of the Agreed Interest Rate
shall be remitted to the Assignor. In the event interest for the period from the
Effective Date to but not including the Payment Date is not paid by the Borrower
with respect to any LIBOR Loan sold by the Assignor to the Assignee hereunder,
the Assignee shall pay to the Assignor interest for such period on the portion
of such LIBOR Loan sold by the Assignor to the Assignee hereunder at the
applicable rate provided by the Credit Agreement. In the event a prepayment of
any LIBOR Loan which is existing on the Payment Date and assigned by the
Assignor to the Assignee hereunder occurs after the Payment Date but before the
end of the Interest Period applicable to such LIBOR Loan, the Assignee shall
remit to the Assignor the excess of the prepayment penalty paid with respect to
the portion of such LIBOR Loan assigned to the Assignee hereunder over the
amount which would have been paid if such prepayment penalty was calculated
based on the Agreed Interest Rate. The Assignee will also promptly remit to the
Assignor (i) any principal payments received from the Agent with respect to
LIBOR Loans prior to the Payment Date and (ii) any amounts of interest on Loans
and fees received from the Agent which relate to the portion of the Loans
assigned to the Assignee hereunder for periods prior to the Effective Date, in
the case of ABR Loans, or the Payment Date, in the case of LIBOR Loans, and not
previously paid by the Assignee to the Assignor.]* In the event that either
party hereto receives any payment to which the other party hereto is entitled
under this Assignment Agreement, then the party receiving such amount shall
promptly remit it to the other party hereto.
* THE PARTIES MAY INSERT ALTERNATIVE PAYMENT PROVISIONS IN LIEU OF THE PAYMENT
TERMS INCLUDED IN THIS EXHIBIT.
5. FEES PAYABLE BY THE ASSIGNEE. [To the extent applicable, the
Assignee shall pay to the Assignor a fee on each day on which a payment of
interest or commitment fee is made under the Credit Agreement with respect to
the amounts assigned to the Assignee hereunder (other than a payment of interest
or commitment fee for the period prior to the Effective Date or, in the case of
LIBOR Loans, the Payment Date, which the Assignee is obligated to deliver to the
Assignor pursuant to Section 4 hereof). The amount of such fee shall be the
difference between (i) the interest or fee, as applicable, paid with respect to
the amounts assigned to the Assignee hereunder and (ii) the interest or fee, as
applicable, which would have been paid with respect to the amounts assigned to
the Assignee hereunder if each interest rate was ___ of 1% less than the
interest rate paid by the Borrower or if the commitment fee was _____ of 1% less
than the commitment fee paid by the Borrower, as applicable. In addition, the
Assignee agrees to pay ____% of the recordation fee required to be paid to the
Agent pursuant to the Credit Agreement in connection with this Assignment
Agreement.]*
*THE PARTIES MAY INSERT ALTERNATIVE PAYMENT PROVISIONS IN LIEU OF THE PAYMENT
TERMS INCLUDED IN THIS EXHIBIT.
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6. REPRESENTATIONS OF THE ASSIGNOR: LIMITATIONS ON THE ASSIGNOR'S
LIABILITY. The Assignor represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim created by the Assignor. It is
understood and agreed that the assignment and assumption hereunder are made
without recourse to the Assignor and that the Assignor makes no other
representation or warranty of any kind to the Assignee. Neither the Assignor nor
any of its officers, directors, employees, agents or attorneys shall be
responsible for (i) the due execution, legality, validity, enforceability,
genuineness, sufficiency or collectibility of any Loan Documents, including
without limitation, documents granting the Assignor and the other Banks a
security interest in assets of the Borrower, any Subsidiary, or any Guarantor,
(ii) any representation, warranty or statement made in or in connection with any
of the Loan Documents, (iii) the financial condition or creditworthiness of the
Borrower, any Subsidiary, or any Guarantor, (iv) the performance of or
compliance with any of the terms or provisions of any of the Loan Documents, (v)
inspecting any of the property, books or records of the Borrower, any
Subsidiary, or any Guarantor, (vi) the validity, enforceability, perfection,
priority, condition, value or sufficiency of any collateral securing or
purporting to secure the Loans or (vii) any mistake, error of judgment, or
action taken or omitted to be taken in connection with the Loans or the Loan
Documents.
7. REPRESENTATIONS OF THE ASSIGNEE. The Assignee (i) confirms that it
has received a copy of the Credit Agreement, together with copies of such
financial statements requested by the Assignee and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment Agreement, (ii) agrees that it will,
independently and without reliance upon the Agent, the Assignor 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 the Loan Documents, (iii) appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under the Loan
Documents as are delegated to the Agent by the terms thereof, together with such
powers as are reasonably incidental thereto, (iv) agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Bank, (v) agrees that its
payment instructions and notice instructions are as set forth in the attachment
to Schedule 1, (vi) confirms that none of the funds, monies, assets or other
consideration being used to make the purchase and assumption hereunder are "plan
assets" as defined under ERISA and that its rights, benefits and interests in
and under the Loan Documents will not be "plan assets" under ERISA, [and (vii)
attaches the forms prescribed by the Internal Revenue Service of the United
States certifying that the Assignee is entitled to receive payments under the
Loan Documents without deduction or withholding of any United States federal
income taxes]* and (viii) represents and warrants that the assignment hereunder
does not and will not, as of the effective date of such assignment, result in
any increased costs or expenses, including without limitation pursuant to
Section 2.14 or 2.15 of the Credit Agreement, payable by the Borrower or any
Guarantor.
* TO BE INSERTED IF THE ASSIGNEE IS NOT INCORPORATED UNDER THE LAWS OF THE
UNITED STATES, OR A STATE THEREOF.
93
8. INDEMNITY. The Assignee agrees to indemnify and hold the Assignor
harmless against any and all losses, costs and expenses (including, without
limitation, reasonable attorneys' fees) and liabilities incurred by the Assignor
in connection with or arising in any manner from the Assignee's non-performance
of the obligations assumed under this Assignment Agreement.
9. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the Assignee
shall have the right pursuant to Section 12.03 of the Credit Agreement to assign
the rights which are assigned to the Assignee hereunder to any entity or person,
provided that (i) any such subsequent assignment does not violate any of the
terms or conditions of the Loan Documents or any law, rule, regulation, order,
writ, judgment, injunction or decree and that all consents required under the
terms of the Loan Documents have been obtained and (ii) unless the prior written
consent of the Assignor is obtained, the Assignee is not thereby released from
its obligations to the Assignor hereunder, if any remain unsatisfied, including,
without limitation, its obligations under Sections 4, 5 and 8 hereof.
10. REDUCTIONS OF AGGREGATE COMMITMENTS. If any reduction in the
Aggregate Commitments (other than pursuant to Section 2.19(c) of the Credit
Agreement) occurs between the date of this Assignment Agreement and the
Effective Date, the percentage interest specified in Item 3 of Schedule 1 shall
remain the same, but the dollar amount purchased shall be recalculated based on
the reduced Commitment of the Assignor.
11. ENTIRE AGREEMENT. This Assignment Agreement and the attached
Notice of Assignment embody the entire agreement and understanding between the
parties hereto and supersede all prior agreements and understandings between the
parties hereto relating to the subject matter hereof.
12. GOVERNING LAW. This Assignment Agreement shall be governed by and
construed in accordance with, the laws of the State of Illinois without regard
to principles of conflict of laws.
13. NOTICES. Notices shall be given under this Assignment Agreement in
the manner set forth in the Credit Agreement. For the purpose hereof the
addresses of the parties hereto (until notice of a change is delivered) shall be
the addresses set forth in the attachment to Schedule 1.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement by their duly authorized officers as of the date first above written.
[NAME OF ASSIGNOR]
By:________________________________
Title:_____________________________
[NAME OF ASSIGNEE]
By:________________________________
Title:_____________________________
94
SCHEDULE 1
to Assignment Agreement
1. Description and Date of Credit Agreement:
2. Date of Assignment Agreement: _________________, 19__
3. Amounts (As of Date of Item 2 above):
Facility Facility Facility
1* 2* 3*
-------- -------- --------
a. Total of Commitments
(Loans)** under
Credit Agreement $_______ $_______ $_______
b. Assignee's Percentage
of each Facility
purchased under the
Assignment
Agreement*** _______% _______% _______%
c. Amount of Assigned
Share in each Facility
purchased under the
Assignment Agreement $_______ $_______ $_______
d. Assignee's aggregate
Commitment Amount
(Loan Amount)***
Purchased Hereunder: $_______ $_______ $_______
e. Proposed Effective
Date: ________ ________ ________
Accepted and Agreed:
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By:___________________________ By:______________________
Title:________________________ Title:___________________
* Insert specific facility names per Credit Agreement
** If a Commitment has been terminated, insert outstanding Loans
in place of Commitment
*** Percentage taken to 10 decimal places
95
Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT
Attach Assignor's Administrative Information Sheet, which must include
notice address for the Assignor and the Assignee and the ABR Loan Lending Office
address and the LIBOR Loan Lending Office address for the Assignee.
96
EXHIBIT 1
to Assignment Agreement
NOTICE
OF ASSIGNMENT
_______________________, 19__
To: [NAME OF BORROWER]*
_____________________
_____________________
[NAME OF AGENT]
_____________________
_____________________
From: [NAME OF ASSIGNOR] (the "Assignor")
[NAME OF ASSIGNEE] (the "Assignee")
1. We refer to that certain Credit Agreement (the "Credit Agreement")
described in Item I of Schedule 1 attached hereto ("Schedule 1"). Capitalized
terms used herein and not otherwise defined herein shall have the meanings
attributed to them in the Credit Agreement.
2. This Notice of Assignment (this "Notice") is given and delivered to
[the Borrower and]* the Agent pursuant to Section 12.03 of the Credit Agreement.
3. The Assignor and the Assignee have entered into an Assignment
Agreement, dated as of __________, 19__ (the "Assignment"), pursuant to which,
among other things, the Assignor has sold, assigned, delegated and transferred
to the Assignee, and the Assignee has purchased, accepted and assumed from the
Assignor the percentage interest specified in Item 3 of Schedule 1 of all
outstanding rights and obligations under the Credit Agreement relating to the
facilities listed in Item 3 of Schedule 1. The Effective Date of the Assignment
shall be the later of the date specified in Item 5 of Schedule 1 or two Business
Days (or such shorter period as agreed to by the Agent) after this Notice of
Assignment and any consents and fees required by Section 12.03 of the Credit
Agreement have been delivered to the Agent, provided that the Effective Date
shall not occur if any condition precedent agreed to by the Assignor and the
Assignee has not been satisfied.
* TO BE INCLUDED ONLY IF CONSENT MUST BE OBTAINED FROM THE BORROWER PURSUANT TO
SECTION 12.03 OF THE CREDIT AGREEMENT.
4. The Assignor and the Assignee hereby give to the Borrower and the
Agent notice of the assignment and delegation referred to herein. The Assignor
will confer with the
97
Agent before the date specified in Item 5 of Schedule 1 to determine if the
Assignment Agreement will become effective on such date pursuant to Section 3
hereof, and will confer with the Agent to determine the Effective Date pursuant
to Section 3 hereof if it occurs thereafter. The Assignor shall notify the Agent
if the Assignment Agreement does not become effective on any proposed Effective
Date as a result of the failure to satisfy the conditions precedent agreed to by
the Assignor and the Assignee. At the request of the Agent, the Assignor will
give the Agent written confirmation of the satisfaction of the conditions
precedent.
5. The Assignor or the Assignee shall pay to the Agent on or before
the Effective Date the processing fee of $4,000.00 required by Section 12.03 of
the Credit Agreement.
6. If any Notes are outstanding on the Effective Date, the Assignor
and the Assignee request and direct that the Agent prepare and cause the
Borrower to execute and deliver new Notes or, as appropriate, replacement Notes,
to the Assignor and the Assignee. The Assignor and, if applicable, the Assignee
each agree to deliver to the Agent the original Note received by it from the
Borrower upon its receipt of a new Note (or replacement Note) in the appropriate
amount, whereupon such original Note shall be marked "canceled" and returned to
the Borrower.
7. The Assignee advises the Agent that notice and payment instructions
are set forth in the attachment to Schedule 1.
8. The Assignee hereby represents and warrants that none of the funds,
monies, assets or other consideration being used to make the purchase pursuant
to the Assignment Agreement are "plan assets" as defined under ERISA and that
its rights, benefits, and interests in and under the Loan Documents will not be
"plan assets" under ERISA.
9. The Assignee authorizes the Agent to act as its agent under the
Loan Documents in accordance with the terms thereof. The Assignee acknowledges
that the Agent has no duty to supply information with respect to the Borrower or
the Loan Documents to the Assignee until the Assignee becomes a party to the
Credit Agreement.*
* MAY BE ELIMINATED IF ASSIGNEE IS A PARTY TO THE CREDIT AGREEMENT PRIOR TO THE
EFFECTIVE DATE.
NAME OF ASSIGNOR NAME OF ASSIGNEE
By:________________________ By:___________________________
Title:_____________________ Title:________________________
ACKNOWLEDGED [AND CONSENTED ACKNOWLEDGED [AND CONSENTED
TO] BY (NAME OF AGENT] TO] BY (NAME OF BORROWER]
By:________________________ By:___________________________
Title:_____________________ Title:________________________
98
[Attach photocopy of Schedule 1 to Assignment)
99