CONFORMED COPY
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CREDIT AGREEMENT
among
THE RYLAND GROUP, INC.
CERTAIN LENDERS
CHEMICAL BANK
BANK OF AMERICA, N.T. AND S.A.
NATIONSBANK OF NORTH CAROLINA, N.A.
as Co-Agents
and
PNC BANK, N.A.
as Co-Manager
and
CHEMICAL BANK
as Administrative Agent
Dated as of July 29, 1993
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TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions . . . . . . . . . . . 23
1.3 Accounting Principles . . . . . . . . . . . . . . . 24
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS . . . . . . . . . . 24
2.1A Revolving Credit Commitments . . . . . . . . . . . 24
2.1B Overline Commitments . . . . . . . . . . . . . . . 24
2.2A Revolving Credit Notes . . . . . . . . . . . . . . 25
2.2B Overline Notes . . . . . . . . . . . . . . . . . . 25
2.3A Procedure for Revolving Credit Borrowing . . . . . 26
2.3B Procedure for Overline Borrowing . . . . . . . . . 27
2.4 The Swing Line Loans . . . . . . . . . . . . . . . 27
2.5 Fees . . . . . . . . . . . . . . . . . . . . . . . 30
2.6 Optional Termination and Reduction of Commitments . 31
2.7 Optional Prepayments; Mandatory Prepayments . . . . 32
2.8 Conversion and Continuation Options . . . . . . . . 33
2.9 Minimum Amounts of Tranches . . . . . . . . . . . . 34
2.10 Interest Rates and Payment Dates . . . . . . . . . 34
2.11 Repayment of Loans . . . . . . . . . . . . . . . . 35
2.12 Computation of Interest and Fees . . . . . . . . . 36
2.13 Inability to Determine Interest Rate . . . . . . . 36
2.14 Pro Rata Treatment and Payments . . . . . . . . . . 37
2.15 Illegality . . . . . . . . . . . . . . . . . . . . 39
2.16 Eurocurrency Reserve Costs; Requirements of Law . . 39
2.17 Taxes . . . . . . . . . . . . . . . . . . . . . . . 42
2.18 Indemnity . . . . . . . . . . . . . . . . . . . . . 43
SECTION 3. LETTERS OF CREDIT . . . . . . . . . . . . . . . . . 44
3.1 L/C Commitment . . . . . . . . . . . . . . . . . . 44
3.2 Procedure for Issuance of Letters of Credit . . . . 45
3.3 Fees, Commissions and Other Charges . . . . . . . . 45
3.4 L/C Participations . . . . . . . . . . . . . . . . 46
3.5 Reimbursement Obligation of the Company . . . . . . 48
3.6 Obligations Absolute . . . . . . . . . . . . . . . 48
3.7 Letter of Credit Payments . . . . . . . . . . . . . 49
3.8 Application . . . . . . . . . . . . . . . . . . . . 49
SECTION 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . 50
4.1 Financial Condition . . . . . . . . . . . . . . . . 50
4.2 No Change . . . . . . . . . . . . . . . . . . . . . 50
4.3 Corporate Existence; Compliance with Law . . . . . 51
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PAGE
4.4 Corporate Power; Authorization; Enforceable
Obligations . . . . . . . . . . . . . . . . . . . 51
4.5 No Legal Bar . . . . . . . . . . . . . . . . . . . 52
4.6 No Material Litigation . . . . . . . . . . . . . . 52
4.7 No Default . . . . . . . . . . . . . . . . . . . . 52
4.8 Ownership of Property; Liens . . . . . . . . . . . 52
4.9 Intellectual Property . . . . . . . . . . . . . . . 52
4.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . 53
4.11 Federal Regulations . . . . . . . . . . . . . . . . 53
4.12 ERISA . . . . . . . . . . . . . . . . . . . . . . . 53
4.13 Investment Company Act; Other Regulations . . . . . 54
4.14 Subsidiaries . . . . . . . . . . . . . . . . . . . 54
4.15 Accuracy and Completeness of Information . . . . . 54
4.16 Environmental Matters . . . . . . . . . . . . . . . 55
4.17 Status of the Notes . . . . . . . . . . . . . . . . 56
4.18 Purpose of Loans . . . . . . . . . . . . . . . . . 56
SECTION 5. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . 56
5.1 Conditions to Initial Extensions of Credit . . . . 56
5.2 Conditions to Each Extension of Credit . . . . . . 58
SECTION 6. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . 59
6.1 Financial Statements . . . . . . . . . . . . . . . 59
6.2 Certificates; Other Information . . . . . . . . . . 60
6.3 Payment of Obligations . . . . . . . . . . . . . . 61
6.4 Conduct of Business and Maintenance of
Existence . . . . . . . . . . . . . . . . . . . . . 61
6.5 Maintenance of Property; Insurance . . . . . . . . 62
6.6 Inspection of Property; Books and Records;
Discussions . . . . . . . . . . . . . . . . . . . . 62
6.7 Notices . . . . . . . . . . . . . . . . . . . . . . 62
6.8 Environmental Laws . . . . . . . . . . . . . . . . 63
6.9 Guarantees from Future Subsidiaries . . . . . . . . 64
SECTION 7. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . 64
7.1 Financial Condition Covenants . . . . . . . . . . . 64
7.2 Limitation on Indebtedness . . . . . . . . . . . . 65
7.3 Limitation on Liens . . . . . . . . . . . . . . . . 68
7.4 Limitation on Guarantee Obligations . . . . . . . . 69
7.5 Limitations of Fundamental Changes . . . . . . . . 70
7.6 Limitation on Sale of Assets . . . . . . . . . . . 71
7.7 Limitation on Dividends . . . . . . . . . . . . . . 72
7.8 Limitation on Investments . . . . . . . . . . . . . 72
7.9 Limitation on Optional Payments and
Modification of Debt Instruments . . . . . . . . . 74
7.10 Transactions with Affiliates . . . . . . . . . . . 75
7.11 Limitation on Inventory . . . . . . . . . . . . . . 75
7.12 Fiscal Year . . . . . . . . . . . . . . . . . . . . 76
7.13 Compliance with ERISA . . . . . . . . . . . . . . . 76
7.14 Preferred Stock . . . . . . . . . . . . . . . . . . 76
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PAGE
7.15 Limitation on Indebtedness of New Subsidiaries . . 76
7.16 Limitation on Indebtedness of Joint Ventures . . . 76
SECTION 8. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . 76
SECTION 9. THE AGENTS . . . . . . . . . . . . . . . . . . . . 80
9.1 Appointment . . . . . . . . . . . . . . . . . . . . 80
9.2 Delegation of Duties . . . . . . . . . . . . . . . 81
9.3 Exculpatory Provisions . . . . . . . . . . . . . . 81
9.4 Reliance by Administrative Agent . . . . . . . . . 81
9.5 Notice of Default . . . . . . . . . . . . . . . . . 82
9.6 Non-Reliance on Administrative Agent and
Other Lenders . . . . . . . . . . . . . . . . . . . 82
9.7 Indemnification . . . . . . . . . . . . . . . . . . 83
9.8 Administrative Agent in Its Individual Capacity . . 83
9.9 Successor Administrative Agent . . . . . . . . . . 84
SECTION 10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . 84
10.1 Amendments and Waivers . . . . . . . . . . . . . . 84
10.2 Notices . . . . . . . . . . . . . . . . . . . . . . 85
10.3 No Waiver; Cumulative Remedies . . . . . . . . . . 86
10.4 Survival of Representations and Warranties . . . . 86
10.5 Payment of Expenses and Taxes . . . . . . . . . . . 86
10.6 Successors and Assigns; Participations and
Assignments . . . . . . . . . . . . . . . . . . . . 87
10.7 Adjustments; Set-off . . . . . . . . . . . . . . . 90
10.8 New Lenders . . . . . . . . . . . . . . . . . . . . 91
10.9 Counterparts . . . . . . . . . . . . . . . . . . . 92
10.10 Severability . . . . . . . . . . . . . . . . . . . 92
10.11 Integration . . . . . . . . . . . . . . . . . . . . 92
10.12 GOVERNING LAW . . . . . . . . . . . . . . . . . . . 92
10.13 Submission To Jurisdiction . . . . . . . . . . . . 93
10.14 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . 94
10.15 Confidentiality . . . . . . . . . . . . . . . . . . 94
SCHEDULES
Schedule 1.1(b) Lenders, Addresses and Commitments
Schedule 1.1(a) Significant Homebuilding Subsidiaries
Schedule 4.6 Litigation
Schedule 4.14 List of Subsidiaries
Schedule 6.2(g) Financial Information
Schedule 7.2(f) Existing IRB Indebtedness
Schedule 7.3(f) Existing Liens
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EXHIBITS
Exhibit A-1 Form of Revolving Credit Note
Exhibit A-2 Form of Overline Note
Exhibit B Form of Swing Line Note
Exhibit C Form of Borrowing Base Certificate
Exhibit D Form of Guarantee
Exhibit E-1 Form of Legal Opinion of Timothy J. Geckle,Esq.
Exhibit E-2 Form of Legal Opinion of Piper & Marbury, counsel for the
Company and the Guarantors
Exhibit F Form of Assignment and Acceptance
Exhibit G Form of Compliance Certificate
Exhibit H Form of New Lender Supplement
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CREDIT AGREEMENT, dated as of July 29, 1993, among THE RYLAND GROUP, INC.,
a Maryland corporation (the "COMPANY"), the several lenders from time to time
parties to this Agreement (the "LENDERS"), CHEMICAL BANK, a New York banking
corporation ("CHEMICAL"), BANK OF AMERICA N.T. AND S.A., a national trust and
savings association ("BANK OF AMERICA"), and NATIONSBANK OF NORTH CAROLINA,
N.A., a national banking association ("NATIONSBANK"), as Co-Agents (Chemical,
Bank of America and NationsBank, in such capacity, the "CO-AGENTS"), PNC BANK,
N.A., a national banking association, as Co-Manager (in such capacity, the
"CO-MANAGER") and Chemical, as Administrative Agent (in such capacity, the
"ADMINISTRATIVE AGENT").
W I T N E S S E T H :
WHEREAS, the Company has requested the Lenders to make certain extensions
of credit to it; and
WHEREAS, the Lenders are willing to make such extensions of credit on the
terms and conditions contained herein;
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the following terms shall
have the following meanings:
"ABR": for any day, a rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to the greater of (a) the Prime Rate in effect on
such day and (b) the Federal Funds Effective Rate in effect on such day plus 1/2
of 1%. For purposes hereof: "PRIME RATE" shall mean the rate of interest per
annum publicly announced from time to time by Chemical as its prime rate in
effect at its principal office in New York City (the Prime Rate not being
intended to be the lowest rate of interest charged by Chemical in connection
with extensions of credit to debtors); and "FEDERAL FUNDS EFFECTIVE RATE" shall
mean, for any day, the rate set forth for such date opposite the caption
"Federal Funds (Effective)" in the weekly statistical release designated "H.15
(510)", or any successor publication, published by the Board of Governors of the
Federal Reserve System, or, if such rate is not so published for
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any day which is a Business Day, the average of the quotations for the day of
such transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by it. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Federal
Funds Effective Rate for any reason, including the inability or failure of the
Administrative Agent to obtain sufficient quotations in accordance with the
terms thereof, the ABR shall be determined without regard to clause (b) of the
first sentence of this definition until the circumstances giving rise to such
inability no longer exist. Any change in the ABR due to a change in the Prime
Rate or the Federal Funds Effective Rate shall be effective as of the opening of
business on the effective day of such change in the Prime Rate or the Federal
Funds Effective Rate, respectively.
"ABR LOANS": Revolving Credit Loans or Overline Loans the rate of
interest applicable to which is based upon the ABR.
"ADJUSTED CONSOLIDATED NET INCOME": with respect to a Person for any
period, the Consolidated Net Income of such Person and its Subsidiaries for such
period plus, to the extent reflected as a charge in the statement of such
Consolidated Net Income, total income tax expense minus any extraordinary income
or gains, determined in accordance with GAAP.
"ADJUSTED CONSOLIDATED TANGIBLE NET WORTH": with respect to the Company
at any date, Consolidated Net Worth of the Company as at such date, less,
without duplication, (a) Consolidated Intangibles, (b) the amount of such
Consolidated Net Worth attributable to the Ryland Financial Division and (c) the
amount of such Consolidated Net Worth attributable to equity investments in and
Advances to any unconsolidated joint venture the Indebtedness of which
(excluding Advances from the Company or any Subsidiary to such joint venture)
exceeds 25% of its total assets, determined in accordance with GAAP.
"ADJUSTED REVOLVING CREDIT COMMITMENT": with respect to any Lender at any
date, an amount equal to such Lender's Revolving Credit Commitment MINUS such
Lender's Revolving Credit Commitment Percentage of the excess of (i) Permitted
Senior Indebtedness on such date over (ii) $187,476,000.
"ADVANCE": means any advance, loan or extension of credit to any Person
or the purchase of any bonds,
3
notes, debentures or other debt securities of any Person.
"AFFILIATE": as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, "control" of a Person means the
power, directly or indirectly, either to (i) vote 10% or more of the securities
having ordinary voting power for the election of directors of such Person or
(ii) direct or cause the direction of the management and policies of such Person
whether by contract or otherwise.
"AGENTS": the collective reference to the Co-Agents and the
Administrative Agent; individually, an "AGENT".
"AGGREGATE OUTSTANDING REVOLVING EXTENSIONS OF CREDIT": on any date, an
amount equal to the sum of (a) the aggregate principal amount of all Revolving
Credit Loans and Swing Line Loans then outstanding and (b) the L/C Obligations
then outstanding.
"AGREEMENT": this Credit Agreement, as amended, supplemented or otherwise
modified from time to time.
"APPLICABLE MARGIN": for each Type of Loan, (a) at any time when both (x)
the Company's long term senior unsecured debt is not rated by Moody's Investors
Services, Inc. or is rated lower than Baa3 by such rating agency and (y) the
Company's long term senior unsecured debt is not rated by Standard & Poors'
Corporation or is rated lower than BBB- by such rating agency, the rate per
annum set forth under the relevant column heading below:
Eurodollar C/D
ABR Loans Loans Rate Loans
--------- ---------- ----------
0% 1.75% 1.90%
and (b) at any time when either (x) the Company's long term senior unsecured
debt is rated at least Baa3 by Moody's Investors Services, Inc. or (y) the
Company's long term senior unsecured debt is rated at least BBB- by Standard &
Poors' Corporation, the rate per annum set forth under the relevant column
heading below:
Eurodollar C/D
ABR Loans Loans Rate Loans
--------- ---------- ----------
0% 1.50% 1.65%
4
"APPLICATION": an application, in such form as the Issuing Bank may
specify from time to time, requesting the Issuing Bank to open a Letter of
Credit.
"ASSIGNEE": as defined in subsection 10.6(c).
"ASSOCIATES MORTGAGE FUNDING CORPORATION": Associates Mortgage Funding
Corporation, a Delaware corporation.
"AVAILABLE COMMITMENTS": on any date, the excess, if any, of (a) the
amount of the aggregate Adjusted Revolving Credit Commitments on such date over
(b) the Aggregate Outstanding Revolving Extensions of Credit on such date.
"AVAILABLE OVERLINE COMMITMENTS": on any date, the excess, if any, of (a)
the amount of the aggregate Overline Commitments on such date over (b) the
aggregate Overline Loans outstanding on such date.
"BORROWING BASE": as of any date of determination, an amount equal to the
sum of (i) 25% of Unsold Land Under Development, (ii) 75% of Unsold Housing
Inventory, (iii) Sold Housing Inventory and (iv) Working Capital (if greater
than zero). The Borrowing Base shall be determined as of the last Business Day
of each calendar month and shall be certified pursuant to Borrowing Base
Certificates delivered pursuant to subsection 6.2(f); the Borrowing Base set
forth in any such Borrowing Base Certificate shall be in effect from the date of
delivery of such Borrowing Base Certificate until the date of delivery of the
Borrowing Base Certificate for the succeeding calendar month.
"BORROWING BASE CERTIFICATE": a certificate substantially in the form of
Exhibit C, with such changes as the Administrative Agent may from time to time
reasonably request for the purpose of monitoring the Borrowing Base.
"BORROWING DATE": any day specified in a notice pursuant to subsection
2.3A, 2.3B or 2.4 as a date on which the Company requests that Loans be made
hereunder.
"BUSINESS DAY": a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to close;
PROVIDED, HOWEVER, that when used in connection with a Eurodollar Loan, the term
"Business Day" shall also exclude any day on which commercial banks are not open
for dealings in Dollar deposits in the London interbank market.
5
"CASH EQUIVALENTS": (a) securities issued or directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality thereof having maturities of not more than 90 days from the date
of acquisition, (b) time deposits and certificates of deposit of any of the
Lenders, or of any domestic or foreign commercial bank which has capital and
surplus in excess of $500,000,000 or which has a commercial paper rating meeting
the requirements specified in clause (d) below, having maturities of not more
than 90 days from the date of acquisition, (c) repurchase obligations with a
term of not more than 30 days for underlying securities of the types described
in clauses (a) and (b) entered into with any bank meeting the qualifications
specified in clause (b) above and (d) commercial paper of any Person rated at
least A-2 or the equivalent thereof by Standard & Poor's Corporation or P-2 or
the equivalent thereof by Moody's Investors Service, Inc. and in either case
maturing within 90 days after the date of acquisition.
"C/D ASSESSMENT RATE": for any day as applied to any C/D Rate Loan or any
ABR Loan, the annual assessment rate in effect on such day which is payable by a
member of the Bank Insurance Fund classified as well-capitalized and within
supervisory subgroup "B" (or a comparable successor assessment risk
classification) within the meaning of 12 C.F.R. SECTION 327.3(d) (or any
successor provision) to the Federal Deposit Insurance Corporation (or any
successor) for such Corporation's (or such successor's) insuring time deposits
at offices of such institution in the United States.
"C/D BASE RATE": with respect to each day during each Interest Period
pertaining to a C/D Rate Loan, the rate of interest per annum determined by the
Administrative Agent to be the arithmetic average (rounded upward to the nearest
1/16th of 1%) of the respective rates notified to the Administrative Agent by
each of the Reference Lenders as the average rate bid at 9:00 A.M., New York
City time, or as soon thereafter as practicable, on the first day of such
Interest Period by a total of three certificate of deposit dealers of recognized
standing selected by such Reference Lender for the purchase at face value from
such Reference Lender of its certificates of deposit in an amount comparable to
the C/D Rate Loan of such Reference Lender to which such Interest Period applies
and having a maturity comparable to such Interest Period.
"C/D RATE": with respect to each day during each Interest Period
pertaining to a C/D Rate Loan, a rate per annum determined for such day in
accordance with the
6
following formula (rounded upward to the nearest 1/100th of 1%):
C/D Base Rate + C/D Assessment Rate
-----------------------------
1.00 - C/D Reserve Percentage
"C/D RATE LOANS": Revolving Credit Loans the rate of interest applicable
to which is based upon the C/D Rate.
"C/D RESERVE PERCENTAGE": for any day as applied to any C/D Rate Loan or
any ABR Loan, that percentage (expressed as a decimal) which is in effect on
such day, as prescribed by the Board of Governors of the Federal Reserve System
(or any successor) (the "BOARD"), for determining the maximum reserve
requirement for a Depositary Institution (as defined in Regulation D of the
Board) in respect of new non-personal time deposits in Dollars having a maturity
comparable to the Interest Period for such C/D Rate Loan.
"CLOSING DATE": the date on which the conditions specified in Section 5
are satisfied in full, which shall be a Business Day on or before July 21, 1993.
"CODE": the Internal Revenue Code of 1986, as amended from time to time.
"COMBINED NET INCOME": with respect to a Person or segment for any
period, the combined net income (or loss) of such Person and its Subsidiaries
and Existing Consolidated Joint Ventures or such segment for such period (taken
as a cumulative whole), determined on a combined basis in accordance with GAAP.
"COMBINED TOTAL LIABILITIES": with respect to a Person or segment at a
particular date, all amounts which would, in conformity with GAAP, be included
under total liabilities on a combined balance sheet of such Person and its
Subsidiaries and Existing Consolidated Joint Ventures or such segment as at such
date.
"COMMITMENT PERCENTAGE": as to any Lender at any time, the percentage of
the sum of the aggregate Revolving Credit Commitments and the Overline
Commitments then constituted by the sum of such Lender's Revolving Credit
Commitment and such Lender's Overline Commitment.
"COMMITMENT PERIOD": the period from and including the date hereof to but
not including the Termination Date or such earlier date on which the Revolving
Credit Commitments shall terminate as provided herein.
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"COMMITMENTS": the Revolving Credit Commitments, the Swing Line
Commitment, the Overline Commitments and the L/C Commitment.
"COMMON STOCK": the Company's Common Stock, par value $1.00 per share, as
the same exists on the date hereof or any other class of stock of the Company
the right of which to share in distributions of earnings or assets of the
Company is without limit as to amount or percentage.
"COMMONLY CONTROLLED ENTITY": an entity, whether or not incorporated,
which is under common control with the Company within the meaning of Section
4001 of ERISA or is part of a group which includes the Company and which is
treated as a single employer under Section 414 of the Code.
"CONSOLIDATED ADJUSTED NET WORTH": at a particular date, (a) Consolidated
Net Worth of the Financial Services Segment at such date PLUS (b) the amount of
long-term subordinated debt of the Financial Services Segment the maturity of
which is no less than two years from May 28, 1993 PLUS (c) an amount equal to 1%
of the Financial Services Segment's Servicing Portfolio, if any, MINUS (d) the
amount of purchased Servicing Rights that are capitalized on the combined
balance sheets of the Financial Services Segment, MINUS (e) the book value of
any other assets reflected on the then-most-current combined balance sheets of
the Financial Services Segment that should be properly treated under GAAP as
intangible assets, including, without limitation, goodwill, trademarks, trade
names, service marks, copyrights, patents, licenses, rights with respect to the
foregoing, and the excess of the purchase price over the net assets of
businesses acquired by entities in the Financial Services Segment.
"CONSOLIDATED INTANGIBLES": with respect to any Person at any date, all
amounts, determined in accordance with GAAP, included in the Consolidated Net
Worth of such Person and attributable to (a) goodwill, including any amounts
(however designated on the balance sheet) representing the cost of acquisitions
of Subsidiaries in excess of underlying tangible assets or (b) patents,
trademarks and copyrights.
"CONSOLIDATED NET INCOME": with respect to a Person for any period, the
consolidated net income (or loss) of such Person and its Subsidiaries and
Existing Consolidated Joint Ventures for such period (taken as a cumulative
whole), determined in accordance with GAAP.
8
"CONSOLIDATED NET WORTH": with respect to any Person at any date, all
amounts which would, in conformity with GAAP, be included under shareholders'
equity on a consolidated balance sheet of such Person and its consolidated
Subsidiaries and Existing Consolidated Joint Ventures at such date.
"CONTRACTUAL OBLIGATION": as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.
"CURRENT MARKET PRICE": with respect to shares of Common Stock or any
other class of capital stock or other security of the Company or any other
issuer, the last reported sales price, regular way, or, in the event that no
sale takes place on such day, the average of the reported closing bid and asked
prices, regular way, in either case as reported on the New York Stock Exchange
Composite Tape or, if such security is not listed or admitted to trading on the
New York Stock Exchange, on the principal national securities exchange on which
such security is listed or admitted to trading or, if not listed or admitted to
trading on any national securities exchange, by NASDAQ National Market System
or, if such security is not quoted on such National Market System, the average
of the closing bid and asked prices on each such day in the over-the-counter
market as reported by NASDAQ or, if bid and asked prices for such security on
each such day shall not have been reported through NASDAQ, the average of the
bid and asked prices on such day as furnished by any New York Stock Exchange
member firm regularly making a market in such security selected for such purpose
by the Board of Directors of the Company or a committee thereof, in each case,
on each trading day during the applicable period.
"DEFAULT": any of the events specified in Section 8, whether or not any
requirement for the giving of notice, the lapse of time, or both, or any other
condition, has been satisfied.
"DESIGNATED EVENT": the occurrence of any of the following: (i) whether
or not approved by the Board of Directors of the Company, any person, entity or
"group" within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act
is or becomes the beneficial owner, directly or indirectly, of securities having
30% or more of the voting power of the Voting Stock; (ii) the Company shall
engage in a Stock Repurchase or Stock Distribution where the sum of the
aggregate Fair Market Value of such Stock Repurchase and Stock Distribution and
all other such Stock Repurchases and Stock
9
Distributions effected during the 12-month period ending on the date on which
such Stock Repurchase or Stock Distribution is effected exceeds 20% of the Fair
Market Value of the Common Stock of the Company as of the date such Stock
Repurchase or Stock Distribution is effected; (iii) there shall occur any
consolidation of the Company with, or merger of the Company into, any other
entity, any merger of another entity into the Company, or any sale or transfer
of all or substantially all of the assets of the Company (other than any such
sale or transfer to one or more wholly-owned subsidiaries of the Company), in
one transaction or a series of related transactions, to one or more persons or
entities (other than (w) a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock of
the Company, or (x) a merger which is effected solely to change the jurisdiction
of incorporation of the Company, or (y) the sale or transfer of any of the stock
or assets of the Limited-Purpose Subsidiaries, or (z) a merger pursuant to which
the holders of Voting Stock of the Company prior to the effective date of such
merger hold immediately after such effective date 70% or more of the class of
stock of the surviving entity or its parent corporation that is entitled to vote
generally for the election of directors); or (iv) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Company's Board of Directors (together with any new director whose election
by the Company's Board of Directors or whose nomination for election by the
Company's stockholders was approved by a vote of at least a majority of the
directors then still in office who either were directors of the Company at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
directors of the Company then in office.
"DOLLARS" and "$": dollars in lawful currency of the United States of
America.
"DOMESTIC DOLLAR LOANS": the collective reference to C/D Rate Loans and
ABR Loans.
"ENVIRONMENTAL LAWS": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
(including common law) regulating, relating to or imposing liability or
standards of conduct concerning pollution or protection of the environment, as
now or may at any time hereafter be in effect.
10
"ERISA": the Employee Retirement Income Security Act of 1974, as amended
from time to time.
"EURODOLLAR LOANS": Revolving Credit Loans the rate of interest
applicable to which is based upon the Eurodollar Rate.
"EURODOLLAR RATE": with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, the rate per annum equal to the average
(rounded upward to the nearest 1/16th of 1%) of the respective rates notified to
the Administrative Agent by each of the Reference Lenders as the rate at which
such Reference Lender is offered Dollar deposits at or about 10:00 A.M., New
York City time, two Business Days prior to the beginning of such Interest Period
in the interbank eurodollar market where the eurodollar and foreign currency and
exchange operations in respect of its Eurodollar Loans are then being conducted
for delivery on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of its Eurodollar
Loan to be outstanding during such Interest Period.
"EVENT OF DEFAULT": any of the events specified in Section 8, provided
that any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"EXCHANGE ACT": the Securities Exchange Act of 1934, as amended.
"EXISTING CONSOLIDATED JOINT VENTURES": real estate joint ventures in
which the Company or any of its Subsidiaries has an investment and which are
being consolidated in the Company's consolidated financial statements as of the
Closing Date.
"EXISTING CREDIT AGREEMENT": the Credit Agreement, dated as of June 27,
1990, among the Company, certain lenders parties thereto, Chemical Bank, as
successor to Manufacturers Hanover Trust Company, as General Agent, Bid Agent
and Co-Agent and Maryland National Bank, as Co-Agent, as amended.
"FAIR MARKET VALUE": with respect to shares of Common Stock or any other
class of capital stock or securities of the Company which are publicly traded,
the average of the Current Market Prices of such shares or securities for the
five (5) consecutive trading days ending with the fifth (5th) Business Day
preceding the date on which the Stock Repurchase or Stock Distribution is
effected. Fair Market Value of any security not publicly traded or any other
property constituting a
11
part of a Stock Repurchase or Stock Distribution shall be the value thereof as
determined in good faith by the Board of Directors of the Company or any
designated committee of the Board of Directors of the Company after giving
consideration to such market prices, opinions and valuations as such Board of
Directors or committee may deem necessary or appropriate.
"FHLMC SECURITIES": participation certificates representing undivided
interests in mortgage loans purchased by the Federal Home Loan Mortgage
Corporation or its successor pursuant to the Emergency Home Finance Act of 1970,
as amended.
"FINANCIAL SERVICES SEGMENT": the business segment of the Company and its
Subsidiaries engaged in the mortgage banking (including the title and escrow
businesses), securities issuance, bond administration and management services
and related activities, which segment on the date of this Agreement consists
principally of the activities of Ryland Mortgage Company and its Subsidiaries
but excludes the Limited-Purpose Subsidiaries.
"FINANCIAL SERVICES SEGMENT COMBINED TOTAL LIABILITIES": at any time, all
amounts which would, in accordance with GAAP, be included as liabilities on a
combined balance sheet of the Financial Services Segment as at such date;
PROVIDED, that reverse repurchase agreements secured by FHLMC Securities, FNMA
Securities and GNMA Securities, whether such securities are issued in
certificated form or book entry form, arising from the call of bonds issued by
Affiliates of Ryland Mortgage Company may be excluded from those liabilities so
long as (a) the underlying collateral value is at least 100.5% of the
obligations of Ryland Mortgage Company and/or Associates Mortgage Funding
Corporation under those agreements or (b) the underlying collateral is subject
to a hedging agreement.
"FINANCING LEASE": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
"FIXED CHARGE COVERAGE": for any fiscal period of the Company, the ratio
of (a) the sum for such fiscal period of the following items: (i) Combined Net
Income of the Homebuilding Segment, plus (ii) income taxes, depreciation and
amortization deducted from combined revenues in determining such Combined Net
Income, plus (iii) interest expense deducted from combined revenues in
determining such Combined Net Income, including, without duplication, previously
capitalized interest
12
expense which would be included in "Cost of Goods Sold" and deducted from
combined revenues in determining such Combined Net Income on a combined balance
sheet of the Homebuilding Segment determined in accordance with GAAP, plus (iv)
the greater of (A) cash dividends received by the Company from the Financial
Services Segment, determined in accordance with GAAP, and (B) 50% of combined
net income of the Financial Services Segment plus income tax expense deducted in
determining such net income, determined in accordance with GAAP, plus (v) cash
distributions received by the Company from all unconsolidated joint ventures in
which the Company or any of its Subsidiaries within the Homebuilding Segment is
a participant, less (vi) the amount of the Company's equity interest in the
earnings of such joint ventures, determined in accordance with GAAP, to (b) the
amount of cash interest expense deducted from combined revenues in determining
such Combined Net Income, and including, without duplication, such cash interest
expense constituting capitalized interest for such period determined in
accordance with GAAP.
"FNMA SECURITIES": modified pass-through mortgage-backed certificates
guaranteed by the Federal National Mortgage Association or its successor
pursuant to the National Housing Act, as amended.
"GAAP": generally accepted accounting principles in the United States of
America in effect from time to time.
"GNMA SECURITIES": modified pass-through mortgage-backed certificates
guaranteed by the Government National Mortgage Association or its successor
pursuant to Section 306(g) of the National Housing Act, as amended.
"GOVERNMENTAL AUTHORITY": any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"GUARANTEE": the Guarantee executed and delivered by the Guarantors,
substantially in the form of Exhibit D, as the same may from time to time be
amended or otherwise modified.
"GUARANTEE OBLIGATION": as to any Person (the "GUARANTEEING PERSON"), any
obligation of (a) the guaranteeing person or (b) another Person (including,
without limitation, any bank under any letter of credit) to induce the creation
of which the guaranteeing person has issued a reimbursement, counterindemnity or
similar
13
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "PRIMARY OBLIGATIONS")
of any other third Person (the "PRIMARY OBLIGOR") in any manner, whether
directly or indirectly, including, without limitation, any obligation of the
guaranteeing person, whether or not contingent, (i) to purchase any such primary
obligation or any property constituting direct or indirect security therefor,
(ii) to advance or supply funds (1) for the purchase or payment of any such
primary obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; PROVIDED, HOWEVER, that the term
Guarantee Obligation shall not include endorsements of instruments for deposit
or collection in the ordinary course of business. The amount of any Guarantee
Obligation of any guaranteeing person shall be deemed to be the lower of (a) an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Guarantee Obligation is made and (b) the maximum amount
for which such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary obligation
and the maximum amount for which such guaranteeing person may be liable are not
stated or determinable, in which case the amount of such Guarantee Obligation
shall be such guaranteeing person's maximum reasonably anticipated liability in
respect thereof as determined by the Company in good faith.
"GUARANTORS": at any time, each of the Significant Subsidiaries of the
Company which are included in the Homebuilding Segment, including, without
limitation, the Subsidiaries listed on Schedule 1.1(a) hereto.
"HAZARDOUS MATERIALS": any hazardous materials, hazardous wastes,
hazardous constituents, hazardous or toxic substances, petroleum products
(including crude oil or any fraction thereof), defined or regulated as such in
or under any Environmental Law.
"HOMEBUILDING SEGMENT": the business segment of the Company and its
Subsidiaries and Existing Consolidated Joint Ventures engaged in the
construction and sale of single family attached and unattached dwellings and
related activities, which segment on the date of this Agreement consists
principally of the
14
activities of the Ryland Homes Division of the Company, Ryland Trading, Ltd. and
M. J. Brock & Sons, Inc.
"INDEBTEDNESS": of any Person at any date, (a) all indebtedness of such
Person for borrowed money or for the deferred purchase price of property or
services (other than current trade liabilities incurred in the ordinary course
of business and payable in accordance with customary practices), (b) any other
indebtedness of such Person which is evidenced by a note, bond, debenture or
similar instrument, (c) all obligations of such Person under Financing Leases,
(d) all obligations of such Person in respect of acceptances issued or created
for the account of such Person and (e) all liabilities secured by any Lien on
any property owned by such Person even though such Person has not assumed or
otherwise become liable for the payment thereof.
"INSOLVENCY": with respect to any Multiemployer Plan, the condition that
such Plan is insolvent within the meaning of Section 4245 of ERISA.
"INSOLVENT": pertaining to a condition of Insolvency.
"INTEREST PAYMENT DATE": (a) as to any ABR Loan, the last day of each
March, June, September and December to occur while such Loan is outstanding, (b)
as to any Eurodollar Loan having an Interest Period of three months or less and
any C/D Rate Loan having an Interest Period of 90 days or less, the last day of
such Interest Period, (c) as to any Eurodollar Loan or C/D Rate Loan having an
Interest Period longer than three months or 90 days, respectively, each day
which is three months or 90 days, respectively, or a whole multiple thereof,
after the first day of such Interest Period and the last day of such Interest
Period and (d) as to any Swing Line Loan, the date which is the last day of each
calendar quarter.
"INTEREST PERIOD": (a) with respect to any Eurodollar Loan:
(i) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar Loan
and ending one, two, three or six months thereafter, as selected by the
Company in its notice of borrowing or notice of conversion, as the case
may be, given with respect thereto; and
(ii) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Eurodollar Loan and
ending one,
15
two, three or six months thereafter, as selected by the Company by
irrevocable notice to the Administrative Agent not less than three
Business Days prior to the last day of the then current Interest
Period with respect thereto;
and (b) with respect to any C/D Rate Loan:
(i) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such C/D Rate
Loan and ending 30, 60, 90 or 180 days thereafter, as selected by
the Company in its notice of borrowing or notice of conversion, as
the case may be, given with respect thereto; and
(ii) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such C/D Rate Loan and
ending 30, 60, 90 or 180 days thereafter, as selected by the Company
by irrevocable notice to the Administrative Agent not less than two
Business Days prior to the last day of the then current Interest
Period with respect thereto;
PROVIDED that, all of the foregoing provisions relating to Interest Periods are
subject to the following:
(1) if any Interest Period pertaining to a Eurodollar Loan
would otherwise end on a day that is not a Business Day, such
Interest Period shall be extended to the next succeeding Business
Day unless the result of such extension would be to carry such
Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;
(2) if any Interest Period pertaining to a C/D Rate Loan would
otherwise end on a day that is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day;
(3) any Interest Period that would otherwise extend beyond the
Termination Date shall end on the Termination Date;
(4) any Interest Period pertaining to a Eurodollar Loan that
begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last
Business Day of a calendar month; and
16
(5) the Company shall select Interest Periods so as not to
require a payment or prepayment of any Eurodollar Loan or C/D Rate
Loan during an Interest Period for such Loan.
"INVESTMENTS": any Advance to, or any contribution to or purchase of
stock or other equity securities of, or any purchase of assets constituting a
business unit of, any Person, excluding investments in stock or other equity
securities existing on the date of this Agreement and any investment
representing any interest of the Company or any Subsidiary in the retained or
undistributed earnings of any Person.
"ISSUING BANK": Chemical Bank or an Affiliate thereof, in its capacity as
issuer of any Letter of Credit, or such other Lender as the Administrative Agent
and the Company shall agree upon.
"L/C COMMITMENT": $40,000,000.
"L/C FEE PAYMENT DATE": the last day of each March, June, September and
December.
"L/C OBLIGATIONS": at any time, an amount equal to the sum of (a) the
aggregate then undrawn and unexpired amount of the then outstanding Letters of
Credit and (b) the aggregate amount of drawings under Letters of Credit which
have not then been reimbursed pursuant to subsection 3.5.
"L/C PARTICIPANTS": the collective reference to all the Lenders other
than the Issuing Bank.
"LETTERS OF CREDIT": as defined in subsection 3.1(a) and including any
letters of credit outstanding on the Closing Date issued by Chemical for the
account of the Company or any of its Subsidiaries prior to the Closing Date.
"LIEN": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any Financing Lease having substantially the same economic
effect as any of the foregoing, and the filing of any financing statement under
the Uniform Commercial Code or comparable law of any jurisdiction in respect of
any of the foregoing).
17
"LIMITED-PURPOSE SUBSIDIARIES": Subsidiaries included within the
Limited-Purpose Subsidiaries Segment.
"LIMITED-PURPOSE SUBSIDIARIES SEGMENT": the business segment of the
Company and its Subsidiaries which facilitates, through special-purpose entities
created or existing solely for such purpose, the financing of mortgage loans and
mortgage backed securities and the securitization of mortgage loans and other
related activities.
"LOAN": any loan made by any Lender pursuant to this Agreement.
"LOAN DOCUMENTS": this Agreement, the Notes, the Applications and the
Guarantee.
"MATERIAL ADVERSE EFFECT": a material adverse effect on (a) the
operations or financial condition of the Company and its Restricted Subsidiaries
taken as a whole, (b) the ability of the Company to perform its obligations
under this Agreement or the Notes, or (c) the validity or enforceability of this
Agreement or any of the Notes or the rights or remedies of the Agents or the
Lenders hereunder or thereunder.
"MATERIALS OF ENVIRONMENTAL CONCERN": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Law, including, without limitation, asbestos,
polychlorinated biphenyls and urea-formaldehyde insulation.
"MULTIEMPLOYER PLAN": a Plan which is a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"1992 SUBORDINATED DEBT INDENTURE": the Indenture, dated as of July 15,
1992, between the Company and Security Trust Company, N.A., as Trustee, pursuant
to which the Company's 10-1/2% Senior Subordinated Notes due July 15, 2002 were
issued.
"NON-EXCLUDED TAXES": as defined in subsection 2.17.
"NOTES": the collective reference to the Revolving Credit Notes, the
Overline Notes and the Swing Line Notes.
"OVERLINE COMMITMENT": as to any Overline Lender, the lesser of (i) the
amount set forth opposite such
18
Overline Lender's name in the column headed "Overline Commitment" on Schedule
1.1(b) hereto and (ii) such Overline Lender's Overline Commitment Percentage of
the excess of $250,000,000 over the aggregate Revolving Credit Commitments then
in effect, after giving effect to any increase in the aggregate Revolving Credit
Commitments as a result of the addition of any New Lender pursuant to subsection
10.8 hereof.
"OVERLINE COMMITMENT PERCENTAGE": as to any Overline Lender at any time,
the percentage of the aggregate Overline Commitments then constituted by such
Overline Lender's Overline Commitment.
"OVERLINE COMMITMENT PERIOD": the period from and including the date
hereof to but not including the Overline Termination Date or such earlier date
on which the Commitments or Overline Commitments shall terminate as provided
herein.
"OVERLINE LENDER": each Lender having an Overline Commitment.
"OVERLINE LOANS": as defined in subsection 2.1B.
"OVERLINE NOTE": as defined in subsection 2.2B.
"OVERLINE TERMINATION DATE": November 30, 1993.
"PARTICIPANTS": as defined in subsection 10.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA.
"PERMITTED IRB LETTERS OF CREDIT": letters of credit and other credit
enhancement instruments issued for the account of the Company or any of its
Subsidiaries which at any time support industrial revenue bonds issued for the
benefit of the Company or any of its Subsidiaries, which are outstanding on the
date of this Agreement and are shown on Schedule 7.2(f).
"PERMITTED SENIOR INDEBTEDNESS": at any date, the aggregate unpaid
principal amount of Indebtedness outstanding on such date permitted under,
without duplication, (i) subsection 7.2(c), (e), (f), (h) and (k), (ii)
subsection 7.2(g), other than such Indebtedness permitted thereunder by
reference to subsection 7.4(c), (iii) subsection 7.2(i), other than such
Indebtedness permitted thereunder in connection with acquisitions or mergers by
any Subsidiary in the Ryland Financial Division and (iv) subsection 7.2(j), but
only such Indebtedness permitted thereunder relating to refinancings of
Indebtedness included in this
19
definition of Permitted Senior Indebtedness pursuant to clauses (i), (ii) and
(iii) above.
"PERSON": an individual, partnership, corporation, business trust, joint
stock company, trust, unincorporated association, joint venture, Governmental
Authority or other entity of whatever nature.
"PLAN": at a particular time, any employee benefit plan which is covered
by ERISA and in respect of which the Company or a Commonly Controlled Entity is
(or, if such plan were terminated at such time, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"REFERENCE LENDERS": Chemical, NationsBank and Bank of America.
"REGISTER": as defined in subsection 10.6(d).
"REGULATION U": Regulation U of the Board of Governors of the Federal
Reserve System.
"REIMBURSEMENT OBLIGATION": the obligation of the Company to reimburse
the Issuing Bank pursuant to subsection 3.5 for amounts drawn under Letters of
Credit.
"REORGANIZATION": with respect to any Multiemployer Plan, the condition
that such plan is in reorganization within the meaning of Section 4241 of ERISA.
"REPORTABLE EVENT": any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg.
SECTION 2615.
"REQUIRED LENDERS": at any time, Lenders the Commitment Percentages of
which aggregate at least 66-2/3%.
"REQUIREMENT OF LAW": as to any Person, the Charter and By-Laws or other
organizational or governing documents of such Person, and any law, treaty, rule
or regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
"RESPONSIBLE OFFICER": the chief executive officer and the president of
the Company or, with respect to
20
financial matters, the chief financial officer or the chief accounting officer
of the Company.
"RESTRICTED SUBSIDIARY": any Subsidiary of the Company OTHER THAN the
Limited-Purpose Subsidiaries and any Subsidiary that the Required Lenders agree
in writing is not to be treated hereunder as a Restricted Subsidiary.
"REVOLVING CREDIT COMMITMENT": as to any Lender, the amount set forth
opposite such Lender's name on Schedule 1.1(b) under the caption "Revolving
Credit Commitments".
"REVOLVING CREDIT COMMITMENT PERCENTAGE": as to any Lender at any time,
the percentage of the aggregate Revolving Credit Commitments then constituted by
such Lender's Revolving Credit Commitment.
"REVOLVING CREDIT LOANS": as defined in subsection 2.1A.
"REVOLVING CREDIT NOTE": as defined in subsection 2.2A.
"RYLAND FINANCIAL DIVISION": all subsidiaries and operations of the
Company and its Subsidiaries other than the Homebuilding Segment.
"RYLAND MORTGAGE COMPANY": Ryland Mortgage Company, an Ohio corporation.
"SERVICING PORTFOLIO": for Ryland Mortgage Company, at any time, an
amount equal to the aggregate unpaid principal amount of all loans with respect
to which Ryland Mortgage Company owns Servicing Rights, other than loans
serviced on behalf of the Resolution Trust Corporation.
"SERVICING RIGHTS": all of Ryland Mortgage Company's right, title and
interest in agreements between Ryland Mortgage Company and Persons other than
Ryland Mortgage Company and Associates Mortgage Funding Corporation pursuant to
which Ryland Mortgage Company undertakes to service one-to-four family and
multifamily dwelling mortgage loans and pools of one-to-four family and
multifamily dwelling mortgage loans for such Persons.
"SIGNIFICANT SUBSIDIARY": a Subsidiary satisfying the requirements of
Rule 1-02(v) of Regulation S-X as adopted by the Securities and Exchange
Commission under
21
the provisions of the Securities Act of 1933 and the Exchange Act as in force on
the date of this Agreement.
"SINGLE EMPLOYER PLAN": any Plan which is covered by Title IV of ERISA,
but which is not a Multiemployer Plan.
"SOLD HOUSING INVENTORY": at any date, an amount equal to the aggregate
contract price with respect to homes and lots under construction for which final
contracts of sale have been entered into on or prior to such date, and are still
in effect on such date, but with respect to which settlement under such
contracts has not occurred.
"SPECIFIED DEBT": the Company's Senior Debt Securities issued pursuant to
the Company's Registration Statement on Form S-3 (Registration No. 33-28692) or
any successor registration statement and outstanding on the Closing Date.
"STOCK DISTRIBUTION": any dividend or other distribution to holders of
Common Stock of cash, property or securities (excluding however any dividends or
distributions of Common Stock or rights to purchase Common Stock).
"STOCK REPURCHASE": any purchase of shares of Common Stock by the Company
or any Subsidiary, whether for cash, shares of capital stock of the Company,
other securities of the Company, evidences of indebtedness of the Company or any
other person or any other property (including shares of a Subsidiary of the
Company), or any combination thereof.
"SUBORDINATED DEBT": (i) Indebtedness of the Company outstanding on the
date hereof issued pursuant to the 1992 Subordinated Debt Indenture and (ii) any
other unsecured Indebtedness of the Company no part of the principal of which is
required to be paid (whether by way of mandatory sinking fund, mandatory
redemption, mandatory prepayment or otherwise) prior to December 31, 1998, and
the payment of the principal of and interest on which and other obligations of
the Company in respect thereof are subordinated to the prior payment in full of
the principal of and interest (including post-petition interest) on the Notes
and all other obligations and liabilities of the Company to the Administrative
Agent and the Lenders hereunder on terms and conditions approved in writing by
the Required Lenders.
"SUBSIDIARY": as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having ordinary
voting power
22
(other than stock or such other ownership interests having such power only by
reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation, partnership or other entity are
at the time owned directly or indirectly through one or more intermediaries, or
both, by such Person. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary
or Subsidiaries of the Company and shall exclude any real estate joint venture
which the Company or any Subsidiary within the Homebuilding Segment either
directly or indirectly participates in or controls.
"SWING LINE LENDER": Chemical, in its capacity as the Swing Line Lender.
"SWING LINE COMMITMENT": $20,000,000.
"SWING LINE LOAN": as defined in subsection 2.4.
"SWING LINE NOTE": as defined in subsection 2.4.
"TERMINATION DATE": July 29, 1996.
"TOTAL HOUSING INVENTORY": at any date, the amount which would be
included under "Housing inventories" on a combined balance sheet of the
Homebuilding Segment determined on a combined basis in accordance with GAAP as
at such date.
"TRANCHE": the collective reference to Eurodollar Loans or C/D Rate Loans
the Interest Periods with respect to all of which begin on the same date and end
on the same later date (whether or not such Loans shall originally have been
made on the same day); Tranches may be identified as "EURODOLLAR TRANCHES" or
"C/D RATE TRANCHES", as applicable.
"TYPE": as to any Loan, its nature as an ABR Loan, a Eurodollar Loan or a
C/D Rate Loan.
"UNIFORM CUSTOMS": the Uniform Customs and Practice for Documentary
Credits (1983 Revision), International Chamber of Commerce Publication No. 400,
as the same may be amended from time to time.
"UNSOLD HOUSING INVENTORY": at any date, an amount equal to (i) the
amount which would be included under "Housing inventories: Unsold" less (ii)
the amounts which would be included under the definitions of "Unsold Land Held"
and "Unsold Land Under Development" in this Agreement, determined on a combined
basis in accordance with GAAP as at such date.
23
"UNSOLD LAND HELD": at any date, the amount which would be included under
"Housing inventories: Unsold: Land held for future development or resale" on a
combined balance sheet of the Homebuilding Segment determined on a combined
basis in accordance with GAAP as at such date.
"UNSOLD LAND UNDER DEVELOPMENT": at any date, an amount equal to (i) the
amount which would be included under "Housing inventories: Unsold: Homes and
lots under construction" on a combined balance sheet of the Homebuilding Segment
determined on a combined basis in accordance with GAAP as at such date less (ii)
the portion of such amount attributable to lots on which construction of a
foundation or slab has been commenced, determined on a combined basis in
accordance with GAAP as at such date less.
"VOTING STOCK": shares of stock of the Company entitling the holder
thereof to vote generally for the election of directors of the Company.
"WORKING CAPITAL": at any date, an amount equal to (i) cash and Cash
Equivalents PLUS (ii) accounts and notes receivable PLUS (iii) prepaid expenses
and deposits (iv) LESS accounts payable LESS (v) accrued expenses LESS (vi)
customer deposits, in each case as such amounts would be determined with respect
to the Homebuilding Segment on a consolidated basis in accordance with GAAP as
at such date.
1.2 OTHER DEFINITIONAL PROVISIONS. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in the Notes or any certificate or other document made or delivered
pursuant hereto.
(b) As used herein and in the Notes, and any certificate or other
document made or delivered pursuant hereto, accounting terms relating to the
Company and its Subsidiaries not defined in subsection 1.1 and accounting terms
partly defined in subsection 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
24
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
1.3 ACCOUNTING PRINCIPLES. Unless otherwise defined or specified herein,
all accounting terms used in this Agreement shall be construed herein, and all
accounting determinations hereunder shall be made, in accordance with GAAP,
applied on a basis consistent with the most recent audited consolidated
financial statements of the Company and its Subsidiaries delivered to the
Lenders; provided, however, that if there shall occur any change after the date
hereof in GAAP and such change affects the method of calculating any of the
factors that go into any component of the financial covenants and ratios set
forth in this Agreement, the Required Lenders will, upon request of the Company,
and the Company will, upon request of the Required Lenders, make adjustments to
such covenants and ratios as reasonably required so that they are consistent
with the financial covenants and ratios made as of the date hereof,
notwithstanding such change.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1A REVOLVING CREDIT COMMITMENTS. (a) Subject to the terms and
conditions hereof, each Lender severally agrees to make revolving credit loans
("REVOLVING CREDIT LOANS") to the Company from time to time during the
Commitment Period in an aggregate principal amount at any one time outstanding,
when added to such Lender's Revolving Credit Commitment Percentage of the then
Aggregate Outstanding Revolving Extensions of Credit, not to exceed the lesser
of (i) the amount of such Lender's Adjusted Revolving Credit Commitment then in
effect and (ii) such Lender's Commitment Percentage of the excess of the
Borrowing Base then in effect over Permitted Senior Indebtedness then
outstanding. During the Commitment Period the Company may use the Revolving
Credit Commitments by borrowing, prepaying the Revolving Credit Loans in whole
or in part, and reborrowing, all in accordance with the terms and conditions
hereof.
(b) The Revolving Credit Loans may from time to time be (i) Eurodollar
Loans, (ii) ABR Loans, (iii) C/D Rate Loans or (iv) a combination thereof, as
determined by the Company and notified to the Administrative Agent in accordance
with subsections 2.3A and 2.8, PROVIDED that no Revolving Credit Loan shall be
made as a Eurodollar Loan or a C/D Rate Loan after the day that is one month or
30 days, respectively, prior to the Termination Date.
2.1B OVERLINE COMMITMENTS. Subject to the terms and conditions hereof,
each Overline Lender severally agrees
25
to make overline revolving credit loans ("OVERLINE LOANS") to the Company from
time to time during the Overline Commitment Period in an aggregate principal
amount at any one time outstanding not to exceed the lesser of (i) such Overline
Lender's Overline Commitment and (ii) such Overline Lender's Overline Commitment
Percentage of the excess of the Borrowing Base then in effect over the sum of
(A) Permitted Senior Indebtedness then outstanding and (B) the Aggregate
Outstanding Revolving Extensions of Credit then outstanding, PROVIDED, that no
Overline Lender shall have any obligation to make any Overline Loan if, on the
Borrowing Date with respect to such Overline Loan, the amount of the Aggregate
Outstanding Revolving Extensions of Credit is less than the aggregate Adjusted
Revolving Credit Commitments in effect on such date. During the Overline
Commitment Period the Company may use the Overline Commitments by borrowing,
prepaying the Overline Loans in whole or in part, and reborrowing, all in
accordance with the terms and conditions hereof. All Overline Loans shall bear
interest as set forth in subsection 2.10(g) and shall not be entitled to be
converted into Eurodollar Loans or C/D Rate Loans.
2.2A REVOLVING CREDIT NOTES. The Revolving Credit Loans made by each
Lender shall be evidenced by a promissory note of the Company, substantially in
the form of Exhibit A-1, with appropriate insertions as to payee, date and
principal amount (a "REVOLVING CREDIT NOTE"), payable to the order of such
Lender and in a principal amount equal to the lesser of (a) the amount of the
Revolving Credit Commitment of such Lender and (b) the aggregate unpaid
principal amount of all Revolving Credit Loans made by such Lender. Each Lender
is hereby authorized to record the date, Type and amount of each Revolving
Credit Loan made by such Lender, each continuation thereof, each conversion of
all or a portion thereof to another Type, the date and amount of each payment or
prepayment of principal thereof and, in the case of Eurodollar Loans and C/D
Rate Loans, the length of each Interest Period with respect thereto, on the
schedule annexed to and constituting a part of its Revolving Credit Note, and
any such recordation shall constitute PRIMA FACIE evidence of the accuracy of
the information so recorded. Each Revolving Credit Note shall (x) be dated the
Closing Date, (y) be stated to mature on the Termination Date and (z) provide
for the payment of interest in accordance with subsection 2.10.
2.2B OVERLINE NOTES. The Overline Loans made by each Overline Lender
shall be evidenced by a promissory note of the Company, substantially in the
form of Exhibit A-2, with appropriate insertions as to payee, date and principal
amount (a "OVERLINE NOTE"), payable to the order of such Overline Lender and in
a principal amount equal to the lesser of (a) the amount set forth opposite such
Overline Lender's name in the column headed "Overline Commitment" on Schedule
1.1(b) hereto and (b) the aggregate unpaid principal amount
26
of all Overline Loans made by such Overline Lender. Each Overline Lender is
hereby authorized to record the date and amount of each Overline Loan made by
such Overline Lender and the date and amount of each payment or prepayment of
principal thereof, on the schedule annexed to and constituting a part of its
Overline Note, and any such recordation shall constitute PRIMA FACIE evidence of
the accuracy of the information so recorded. Each Overline Note shall (x) be
dated the Closing Date, (y) be stated to mature on the Overline Termination Date
and (z) provide for the payment of interest in accordance with subsection 2.10.
2.3A PROCEDURE FOR REVOLVING CREDIT BORROWING. The Company may borrow
under the Revolving Credit Commitments during the Commitment Period on any
Business Day, PROVIDED that the Company shall give the Administrative Agent
irrevocable notice (which notice must be received by the Administrative Agent
prior to 10:30 A.M., New York City time, (a) three Business Days prior to the
requested Borrowing Date, if all or any part of the requested Revolving Credit
Loans are to be initially Eurodollar Loans, (b) two Business Days prior to the
requested Borrowing Date, if all or any part of the requested Revolving Credit
Loans are to be initially C/D Rate Loans, or (c) on the requested Borrowing
Date, otherwise), specifying (i) the amount to be borrowed, (ii) the requested
Borrowing Date, (iii) whether the borrowing is to be of Eurodollar Loans, ABR
Loans, C/D Rate Loans or a combination thereof and (iv) if the borrowing is to
be entirely or partly of Eurodollar Loans or C/D Rate Loans, the respective
amounts of each such Type of Loan and the respective lengths of the initial
Interest Periods therefor. Each borrowing under the Revolving Credit
Commitments shall be in an amount equal to (x) in the case of ABR Loans,
$10,000,000 or a whole multiple of $1,000,000 in excess thereof (or, if the then
Available Commitments are less than $10,000,000, such lesser amount) and (y) in
the case of Eurodollar Loans or C/D Rate Loans, $10,000,000 or a whole multiple
of $1,000,000 in excess thereof. Upon receipt of any such notice from the
Company, the Administrative Agent shall promptly notify each Lender thereof.
Each Lender will make the amount of its pro rata share of each borrowing
available to the Administrative Agent for the account of the Company at the
office of the Administrative Agent specified in subsection 10.2 prior to 12:00
noon, New York City time, on the Borrowing Date requested by the Company in
funds immediately available to the Administrative Agent. Such borrowing will
then be made available to the Company by the Administrative Agent crediting the
account of the Company on the books of such office with the aggregate of the
amounts made available to the Administrative Agent by the Lenders and in like
funds as received by the Administrative Agent. With respect to any Revolving
Credit Loans to be made on the Closing Date, if the principal amount of the
Revolving Credit Loan to be made by a Lender on the Closing Date is equal to
27
or less than the aggregate principal amount of loans outstanding on the Closing
Date made by such Lender to the Company under the Existing Credit Agreement, the
Revolving Credit Loan to be made by such Lender on the Closing Date shall be
made without any payments being made by such Lender. If the principal amount of
the Revolving Credit Loan to be made by a Lender on the Closing Date is greater
than the aggregate principal amount of loans outstanding on the Closing Date
made by such Lender to the Company under the Existing Credit Agreement, then not
later than 11:00 A.M., New York City time, on the Closing Date such Lender shall
make available to the Administrative Agent at its office specified in subsection
10.2 an amount in immediately available funds equal to the excess of the
Revolving Credit Loan to be made by such Lender over such principal amount of
loans outstanding owing to such Lender under the Existing Credit Agreement.
Such borrowing will then be made available to the Company by the Administrative
Agent crediting the account of the Company on the books of such office with the
aggregate of the amounts made available to the Administrative Agent by the
Lenders and in like funds as received by the Administrative Agent.
2.3B PROCEDURE FOR OVERLINE BORROWING. The Company may borrow under the
Overline Commitments during the Overline Commitment Period on any Business Day,
PROVIDED that the Company shall give the Administrative Agent irrevocable notice
(which notice must be received by the Administrative Agent prior to 10:30 A.M.,
New York City time, on the requested Borrowing Date), specifying (i) the amount
to be borrowed and (ii) the requested Borrowing Date. Each borrowing under the
Overline Commitments shall be in an amount equal to $5,000,000 or a whole
multiple of $1,000,000 in excess thereof (or, if the Available Overline
Commitments are less than $5,000,000, such lesser amount). Upon receipt of any
such notice from the Company, the Administrative Agent shall promptly notify
each Overline Lender thereof. Each Overline Lender will make the amount of its
pro rata share of each borrowing available to the Administrative Agent for the
account of the Company at the office of the Administrative Agent specified in
subsection 10.2 prior to 2:00 P.M., New York City time, on the Borrowing Date
requested by the Company in funds immediately available to the Administrative
Agent. Such borrowing will then be made available to the Company by the
Administrative Agent crediting the account of the Company on the books of such
office with the aggregate of the amounts made available to the Administrative
Agent by the Overline Lenders and in like funds as received by the
Administrative Agent.
2.4 THE SWING LINE LOANS. (a) Subject to the terms and conditions
hereof, the Swing Line Lender agrees to make swing line loans (individually, a
"SWING LINE LOAN"; collectively, the "SWING LINE LOANS") to the Company from
28
time to time during the Commitment Period in an aggregate principal amount at
any one time outstanding not to exceed the Swing Line Commitment, PROVIDED that
at no time shall the aggregate principal amount of Swing Line Loans outstanding,
when added to the then outstanding Aggregate Outstanding Revolving Extensions of
Credit other than Swing Line Loans, exceed the lesser of (x) the aggregate
Adjusted Revolving Credit Commitments then in effect and (y) the excess of the
Borrowing Base then in effect over Permitted Senior Indebtedness. Amounts
borrowed by the Company under this subsection 2.4 may be repaid and, through but
excluding the Termination Date, reborrowed. All Swing Line Loans shall bear
interest as set forth in subsection 2.10(d) and shall not be entitled to be
converted into Eurodollar Loans or C/D Rate Loans. Each borrowing of Swing Line
Loans shall be in an amount equal to $500,000 or a whole multiple thereof (or,
if the then Available Commitments are less than $500,000, such lesser amount).
The Company shall give the Swing Line Lender irrevocable notice (which notice
must be received by the Swing Line Lender prior to 2:00 P.M., New York City
time) on the requested Borrowing Date specifying the amount of the requested
Swing Line Loan. The proceeds of the Swing Line Loan will be made available by
the Swing Line Lender to the Company at the office of the Administrative Agent
by crediting the account of the Company at such office with such proceeds.
(b) The Swing Line Loans shall be evidenced by a promissory note of the
Company substantially in the form of Exhibit B, with appropriate insertions (the
"SWING LINE NOTE"), payable to the order of the Swing Line Lender and
representing the obligation of the Company to pay the unpaid principal amount of
the Swing Line Loans, with interest thereon as prescribed in subsection 2.10.
The Swing Line Lender is hereby authorized to record the Borrowing Date, the
amount of each Swing Line Loan and the date and amount of each payment or
prepayment of principal thereof, on the schedule annexed to and constituting a
part of the Swing Line Note and any such recordation shall constitute PRIMA
FACIE evidence of the accuracy of the information so recorded. The Swing Line
Note shall (a) be dated the Closing Date, (b) be stated to mature on the
Termination Date and (c) bear interest for the period from the date thereof to
the Termination Date on the unpaid principal amount thereof from time to time
outstanding at the applicable interest rate per annum determined as provided in,
and payable as specified in, subsection 2.10.
(c) The Swing Line Lender at any time in its sole and absolute
discretion, may, and, with respect to each Swing Line Loan which has not been
repaid by the Company in immediately available funds prior to 10:30 A.M. on the
day which is the third Business Day after the Borrowing Date with respect to
such Swing Line Loan shall, on behalf of the
29
Company (which hereby irrevocably directs the Swing Line Lender to act on its
behalf) request prior to 12:00 Noon (New York City time) each Lender on such
third Business Day after the Borrowing Date with respect to such Swing Line
Loan, including the Swing Line Lender, to make a Revolving Credit Loan in an
amount equal to such Lender's Revolving Credit Commitment Percentage of the
amount of the Swing Line Loan (the "REFUNDED SWING LINE LOANS") outstanding on
the date such notice is given. Unless any of the events described in paragraph
(f) of Section 8 shall have occurred (in which event the procedures of paragraph
(d) of this subsection 2.4 shall apply) each Lender shall make the proceeds of
its Revolving Credit Loan available to the Swing Line Lender for the account of
the Swing Line Lender at the office of the Administrative Agent specified in
subsection 10.2 prior to 2:00 P.M. (New York City time) in funds immediately
available on the date such notice is given. The proceeds of such Revolving
Credit Loans shall be immediately applied to repay the Refunded Swing Line
Loans. Each Revolving Credit Loan made pursuant to this subsection 2.4(c) shall
be an ABR Loan.
(d) If prior to the making of a Revolving Credit Loan pursuant to
paragraph (c) of this subsection 2.4 one of the events described in paragraph
(f) of Section 8 shall have occurred, each Lender will on the date such
Revolving Credit Loan was to have been made, purchase an undivided participating
interest in the Refunded Swing Line Loan in an amount equal to its Revolving
Credit Commitment Percentage of such Refunded Swing Line Loan. Each Lender will
immediately transfer to the Swing Line Lender, in immediately available funds,
the amount of its participation and upon receipt thereof the Swing Line Lender
will deliver to such Lender a Swing Line Loan participation certificate dated
the date of receipt of such funds and in such amount.
(e) Whenever, at any time after the Swing Line Lender has received from
any Lender such Lender's participating interest in a Refunded Swing Line Loan,
the Swing Line Lender receives any payment on account thereof, the Swing Line
Lender will distribute to such Lender its participating interest in such amount
(appropriately adjusted in the case of interest payments, to reflect the period
of time during which such Lender's participating interest was outstanding and
funded); PROVIDED, HOWEVER, that in the event that such payment received by the
Swing Line Lender is required to be returned, such Lender will return to the
Swing Line Lender any portion thereof previously distributed by the Swing Line
Lender to it.
(f) Each Lender's obligation to purchase participating interests pursuant
to this subsection 2.4 shall be absolute and unconditional and shall not be
affected by any circumstance, including, without limitation, (i) any set-off,
counterclaim, recoupment, defense or other right which
30
such Lender or the Company may have against the Swing Line Lender, the Company
or anyone else for any reason whatsoever; (ii) the occurrence or continuance of
an Event of Default; (iii) any adverse change in the condition (financial or
otherwise) of the Company; (iv) any breach of this Agreement by the Company or
any other Lender; or (v) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing.
.
2.5 FEES. (a) The Company agrees to pay to the Administrative Agent for
the account of each Lender a commitment fee for the period from and including
the Closing Date to the Termination Date, computed at the rate of 3/8th of 1%
per annum on such Lender's Revolving Credit Commitment Percentage of the average
daily amount of the Available Commitments during the period for which payment is
made, payable quarterly in arrears on the last day of each March, June,
September and December and on the Termination Date or such earlier date on which
the Commitments shall terminate as provided herein, commencing on the first of
such dates to occur after the Closing Date; PROVIDED, that if both (x) the
Company's long term senior unsecured debt shall cease to be rated by Moody's
Investors Services, Inc. or shall be rated lower than Baa3 by such rating
agency, and (y) the Company's long term senior unsecured debt shall cease to be
rated by Standard & Poors' Corporation or shall be rated lower than BBB- by such
rating agency, then, from the date on which the first such lower rating or
cessation of rating becomes effective until the ratings at the level of Baa3 or
BBB-, respectively, or better, are once again in effect, the commitment fee
payable pursuant to this subsection 2.5(a) shall be calculated at the rate of
1/2 of 1% per annum.
(b) The Company agrees to pay to the Administrative Agent on the Closing
Date for the account of each Lender a facility fee equal to (i) in the case of
any Lender having a Revolving Credit Commitment on the Closing Date of less than
$20,000,000, 1/8 of 1% of such Lender's Revolving Credit Commitment on the
Closing Date, (ii) in the case of any Lender having a Revolving Credit
Commitment on the Closing Date of $20,000,000 or greater but less than
$30,000,000, 1/4 of 1% of such Lender's Revolving Credit Commitment on the
Closing Date and (iii) in the case of any Lender having a Revolving Credit
Commitment on the Closing Date of at least $30,000,000, 3/8 of 1% of such
Lender's Revolving Credit Commitment on the Closing Date.
(c) The Company agrees to pay to the Administrative Agent and any Lender
the fees in the amounts and on the dates agreed by the Company in writing with
the Administrative Agent or such Lender, as the case may be.
(d) The Company agrees to pay to the Administrative Agent for the account
of each Overline Lender
31
a commitment fee for the period from and including the Closing Date to the
Overline Termination Date, computed at the rate of 3/8th of 1% per annum on such
Overline Lender's Overline Commitment Percentage of the average daily amount of
the Available Overline Commitments during the Overline Commitment Period,
payable in arrears on the Overline Termination Date or such earlier date on
which the Commitments or the Overline Commitments shall terminate as provided
herein; PROVIDED, that if both (x) the Company's long term senior unsecured debt
shall cease to be rated by Moody's Investors Services, Inc. or shall be rated
lower than Baa3 by such rating agency, and (y) the Company's long term senior
unsecured debt shall cease to be rated by Standard & Poors' Corporation or shall
be rated lower than BBB- by such rating agency, then, from the date on which the
first such lower rating or cessation of rating becomes effective until the
ratings at the level of Baa3 or BBB-, respectively, or better, are once again in
effect, the commitment fee payable pursuant to this subsection 2.5(d) shall be
calculated at the rate of 1/2 of 1% per annum.
(e) The Company agrees to pay to the Administrative Agent on the Closing
Date (i) for the account of each Overline Lender which also has a Revolving
Credit Commitment hereunder on the Closing Date, an overline facility fee equal
to 1/2 of 1% of such Overline Lender's Overline Commitment on the Closing Date
and (ii) for the account of each Overline Lender which does not have a Revolving
Credit Commitment hereunder on the Closing Date, an overline facility fee equal
to (x) in the case of any such Overline Lender having an Overline Commitment on
the Closing Date of less than $20,000,000, 1/8 of 1% of such Overline Lender's
Overline Commitment on the Closing Date, (y) in the case of any such Overline
Lender having a Overline Commitment on the Closing Date of $20,000,000 or
greater but less than $30,000,000, 1/4 of 1% of such Overline Lender's Overline
Commitment on the Closing Date and (z) in the case of any such Overline Lender
having a Overline Commitment on the Closing Date of at least $30,000,000, 3/8 of
1% of such Overline Lender's Overline Commitment on the Closing Date.
2.6 OPTIONAL TERMINATION AND REDUCTION OF COMMITMENTS. (a) The Company
shall have the right, upon not less than five Business Days' notice to the
Administrative Agent, to terminate the Revolving Credit Commitments or, from
time to time, to reduce the amount of the Revolving Credit Commitments, PROVIDED
that no such termination or reduction shall be permitted if, after giving effect
thereto and to any prepayments or repayments of the Revolving Credit Loans and
the Swing Line Loans made on the effective date thereof, the Aggregate
Outstanding Revolving Extensions of Credit would exceed the Adjusted Revolving
Credit Commitments then in effect, and PROVIDED, FURTHER, that no such
termination or reduction shall be permitted if the Overline Commitments are
32
then in effect. Any such reduction shall be in an amount equal to $10,000,000
or a whole multiple of $1,000,000 in excess thereof and shall reduce permanently
the Revolving Credit Commitments then in effect.
(b) The Company shall have the right, upon not less than five Business
Days' notice to the Administrative Agent, to terminate the Overline Commitments
or, from time to time, to reduce the amount of the Overline Commitments,
PROVIDED that no such termination or reduction shall be permitted if, after
giving effect thereto and to any prepayments or repayments of the Overline Loans
made on the effective date thereof, the aggregate amount of Overline Loans then
outstanding would exceed the Overline Commitments then in effect. Any such
reduction shall be in an amount equal to $5,000,000 or a whole multiple of
$1,000,000 in excess thereof and shall reduce permanently the Overline
Commitments then in effect.
2.7 OPTIONAL PREPAYMENTS; MANDATORY PREPAYMENTS. (a) The Company may on
the last day of any Interest Period with respect thereto, in the case of
Eurodollar Loans or C/D Rate Loans, or at any time and from time to time, in the
case of ABR Loans and Swing Line Loans, prepay the Revolving Credit Loans and
the Swing Line Loans, in whole or in part, without premium or penalty, upon (i)
at least two Business Days' irrevocable notice, which must be received prior to
10:30 A.M. on the day of such notice, to the Administrative Agent with respect
to Eurodollar Loans or C/D Rate Loans, and (ii) upon irrevocable notice received
prior to 10:30 A.M. on the date of such prepayment with respect to ABR Loans, in
each case specifying the date and amount of prepayment and whether the
prepayment is of Eurodollar Loans, C/D Rate Loans, ABR Loans or a combination
thereof, and, if of a combination thereof, the amount allocable to each. Upon
receipt of any such notice the Administrative Agent shall promptly notify each
Lender thereof. If any such notice is given, the amount specified in such
notice shall be due and payable on the date specified therein. No notice shall
be required for prepayments of the Swing Line Loans. Partial prepayments shall
be in an aggregate principal amount of $10,000,000 in the case of the Revolving
Credit Loans, or $1,000,000, in the case of the Swing Line Loans, or, in each
case, a whole multiple of $1,000,000 in excess thereof.
(b) If on any date (including any date on which a Borrowing Base
Certificate is delivered pursuant to Section 6.2(f)) (i) the sum of (A) the
Aggregate Outstanding Revolving Extensions of Credit as of such date and (B)
Permitted Senior Indebtedness as of such date exceeds the then applicable
Borrowing Base or (ii) the Aggregate Outstanding Revolving Extensions of Credit
exceeds the aggregate Adjusted Revolving Credit Commitments then in effect,
then, without notice or demand, the Company shall, on
33
such date, prepay the Loans in an amount equal to such excess, together with
interest on the amount paid or prepaid accrued to the date of such payment or
prepayment and any amounts payable pursuant to subsection 2.8 in connection
therewith; PROVIDED, that if the aggregate principal amount of Loans then
outstanding is less than the amount of such excess (because L/C Obligations
constitute a portion thereof), the Company shall, to the extent of the balance
of such excess, replace outstanding Letters of Credit and/or deposit an amount
in cash in a cash collateral account established with the Administrative Agent
for the benefit of the Lenders. The Company may, subject to the terms and
conditions of this Agreement, reborrow the amount of any prepayment made under
this subsection 2.7.
(c) If on any date on which any Overline Loan is outstanding the amount
of the Aggregate Outstanding Revolving Extensions of Credit is less than the
aggregate Adjusted Revolving Credit Commitments then in effect, then, without
notice or demand, the Company shall, on such date, prepay the in full all
Overline Loans then outstanding, together with interest on the amount paid or
prepaid accrued to the date of such payment or prepayment.
(d) If on any date on which any Overline Loan is outstanding (including
any date on which a Borrowing Base Certificate is delivered pursuant to Section
6.2(f)) the sum of (A) the Aggregate Outstanding Revolving Extensions of Credit
as of such date, (B) Permitted Senior Indebtedness as of such date and (C) the
aggregate principal amount of Overline Loans then outstanding exceeds the then
applicable Borrowing Base, then, without notice or demand, the Company shall, on
such date, prepay the Overline Loans in an amount equal to the lesser of such
excess and the aggregate principal amount of Overline Loans then outstanding,
together with interest on the amount paid or prepaid accrued to the date of such
payment or prepayment.
(e) If on any date on which any Overline Loan is outstanding the
aggregate principal amount of the Overline Loans outstanding exceeds the
aggregate Overline Commitments then in effect, then, without notice or demand,
the Company shall, on such date, prepay the Overline Loans in an amount equal to
such excess, together with interest on the amount paid or prepaid accrued to the
date of such payment or prepayment.
2.8 CONVERSION AND CONTINUATION OPTIONS. (a) The Company may elect from
time to time to convert Eurodollar Loans or C/D Rate Loans to ABR Loans, and/or
to convert Eurodollar Loans or ABR Loans to C/D Rate Loans, by giving the
Administrative Agent at least two Business Days' prior irrevocable notice of
such election, PROVIDED that any such conversion of Eurodollar Loans or C/D Rate
Loans may only be
34
made on the last day of an Interest Period with respect thereto. The Company
may elect from time to time to convert ABR Loans other than Overline Loans or
C/D Rate Loans to Eurodollar Loans by giving the Administrative Agent at least
three Business Days' prior irrevocable notice of such election, PROVIDED that
any such conversion of C/D Rate Loans may, subject to the third succeeding
sentence, only be made on the last day of an Interest Period with respect
thereto. Any such notice of conversion to Eurodollar Loans or C/D Rate Loans
shall specify the length of the initial Interest Period or Interest Periods
therefor. Upon receipt of any such notice the Administrative Agent shall
promptly notify each Lender thereof. If the last day of the then current
Interest Period with respect to C/D Rate Loans that are to be converted to
Eurodollar Loans is not a Business Day, such conversion shall be made on the
next succeeding Business Day, and during the period from such last day to such
succeeding Business Day such Loans shall bear interest as if they were ABR
Loans. All or any part of outstanding Eurodollar Loans, ABR Loans (other than
Overline Loans) and C/D Rate Loans may be converted as provided herein, PROVIDED
that (i) no Loan may be converted into a Eurodollar Loan or a C/D Rate Loan when
any Event of Default has occurred and is continuing and the Administrative Agent
has or the Required Lenders have determined that such a conversion is not
appropriate and (ii) no Loan may be converted into a Eurodollar Loan or a C/D
Rate Loan after the date that is one month or 30 days, respectively, prior to
the Termination Date (in the case of conversions of Revolving Credit Loans).
(b) Any Eurodollar Loans or C/D Rate Loans may be continued as such upon
the expiration of the then current Interest Period with respect thereto by the
Company giving notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in subsection 1.1,
of the length of the next Interest Period to be applicable to such Loans,
PROVIDED that no Eurodollar Loan or C/D Rate Loan may be continued as such (i)
when any Event of Default has occurred and is continuing and the Administrative
Agent has or the Required Lenders have determined that such a continuation is
not appropriate or (ii) after the date that is one month or 30 days prior to,
respectively, the Termination Date (in the case of continuations of Revolving
Credit Loans); and PROVIDED, FURTHER, that if the Company shall fail to give any
required notice as described above in this paragraph or if such continuation is
not permitted pursuant to the preceding proviso such Loans shall be
automatically converted to ABR Loans on the last day of such then expiring
Interest Period.
2.9 MINIMUM AMOUNTS OF TRANCHES. All borrowings, conversions and
continuations of Loans hereunder and all selections of Interest Periods
hereunder shall be in such amounts and be made pursuant to such elections so
that, after
35
giving effect thereto, the aggregate principal amount of the Loans comprising
(i) each Eurodollar Tranche shall be equal to $10,000,000 or a whole multiple of
$1,000,000 in excess thereof and (ii) each C/D Rate Tranche shall be equal to
$10,000,000 or a whole multiple of $1,000,000 in excess thereof.
2.10 INTEREST RATES AND PAYMENT DATES. (a) Each Eurodollar Loan shall
bear interest for each day during each Interest Period with respect thereto at a
rate per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Margin.
(b) Each ABR Loan shall bear interest at a rate per annum equal to the
ABR plus the Applicable Margin.
(c) Each C/D Rate Loan shall bear interest for each day during each
Interest Period with respect thereto at a rate per annum equal to the C/D Rate
determined for such day plus the Applicable Margin.
(d) Each Swing Line Loan made by the Swing Line Lender shall bear
interest for each day during which such Swing Line Loan is outstanding at the
rate per annum determined by the Swing Line Lender to be the rate at which the
Swing Line Lender is able to obtain funds for such day in the federal funds
market in which the Swing Line Lender customarily acquires federal funds plus
(i) a Lender margin of (A) 1.375% per annum with respect to any day when either
(x) the Company's long term senior unsecured debt is rated at least Baa3 by
Moody's Investors Services, Inc. or (y) the Company's long term senior unsecured
debt is rated at least BBB- by Standard & Poors' Corporation and (B) 1.625% per
annum with respect to any day when both (x) the Company's long term senior
unsecured debt is not rated by Moody's Investors Services, Inc. or is rated
lower than Baa3 by such rating agency and (y) the Company's long term senior
unsecured debt is not rated by Standard & Poors' Corporation or is rated lower
than BBB- by such rating agency, in each case payable for the account of each
Lender (including the Swing Line Lender in its capacity as a Lender), pro rata
according to their respective Revolving Credit Commitment Percentages and (ii) a
Swing Line Lender margin of 1/8 of 1% per annum, payable to the Swing Line
Lender in its capacity as such. The Swing Line Lender shall, upon request,
quote to the Company the interest rate in effect for Swing Line Loans on the
date of quotation.
(e) If all or a portion of (i) the principal amount of any Revolving
Credit Loan, Overline Loan or Swing Line Loan, (ii) any interest payable thereon
or (iii) any other amount payable hereunder shall not be paid when due (whether
at the stated maturity, by acceleration or otherwise), such overdue amount shall
bear interest at a rate
36
per annum which is (x) in the case of overdue principal, 2% above the rate that
would otherwise be applicable thereto pursuant to the foregoing provisions of
this subsection until the earlier of the date such amount is paid in full or the
last day of the Interest Period applicable to such overdue amount, and then 2%
above the rate described in paragraph (b) of this subsection or (y) in the case
of overdue interest and any other amount payable hereunder, 2% above the rate
described in paragraph (b) of this subsection, in each case from the date of
such non-payment up to but not including the date of actual payment in full (as
well after as before judgment).
(f) Interest on Revolving Credit Loans and Swing Line Loans shall be
payable in arrears on each Interest Payment Date, PROVIDED that interest
accruing pursuant to paragraph (e) of this subsection shall be payable on
demand.
(g) Each Overline Loan shall bear interest for each day during which such
Overline Loan is outstanding at the rate per annum equal to the ABR plus the
Applicable Margin.
2.11 REPAYMENT OF LOANS. (a) On the Termination Date, the Company will
pay to the Administrative Agent for the account of each Lender the unpaid
principal amount of each Revolving Credit Loan made by such Lender.
(b) The Company will repay to the Swing Line Lender the unpaid principal
amount of each Swing Line Loan in accordance with subsection 2.4(c), and in any
event not later than the Termination Date.
(c) On the Overline Termination Date, the Company will pay to the
Administrative Agent for the account of each Overline Lender the unpaid
principal amount of each Overline Loan made by such Lender.
2.12 COMPUTATION OF INTEREST AND FEES. (a) Commitment fees and, whenever
it is calculated on the basis of the Prime Rate, interest shall be calculated on
the basis of a 365- (or 366-, as the case may be) day year for the actual days
elapsed; and, otherwise, interest shall be calculated on the basis of a 360-day
year for the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Company and the Lenders of each determination of a
Eurodollar Rate or of a C/D Rate. Any change in the interest rate on a Loan
resulting from a change in the ABR, the Eurocurrency Reserve Requirements, the
C/D Assessment Rate or the C/D Reserve Percentage shall become effective as of
the opening of business on the day on which such change becomes effective. The
Administrative Agent shall as soon as practicable notify the Company and the
37
Lenders of the effective date and the amount of each such change in interest
rate.
(b) Each determination of an interest rate by the Administrative Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Company and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Company, deliver to the
Company a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to this Section 2.12.
(c) If any Reference Lender shall for any reason no longer have a
Revolving Credit Commitment or any Loans outstanding, such Reference Lender
shall thereupon cease to be a Reference Lender, and if, as a result, there shall
only be one Reference Lender remaining, the Administrative Agent (after
consultation with the Company and with the consent of the Required Lenders)
shall, by notice to the Company and the Lenders, designate another Lender as a
Reference Lender so that there shall at all times be at least two Reference
Lenders.
(d) Each Reference Lender shall use its best efforts to furnish
quotations of rates to the Administrative Agent as contemplated hereby. If any
of the Reference Lenders shall be unable or shall otherwise fail to supply such
rates to the Administrative Agent upon its request, the rate of interest shall,
subject to the provisions of subsection 2.13, be determined on the basis of the
quotations of the remaining Reference Lenders or Reference Lender.
2.13 INABILITY TO DETERMINE INTEREST RATE. If prior to the first day of
any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Company) that, by
reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate or the C/D
Rate for such Interest Period, or
(b) the Administrative Agent shall have received notice from the
Required Lenders that the Eurodollar Rate or the C/D Rate determined or to be
determined for such Interest Period will not adequately and fairly reflect
the cost to such Lenders (as conclusively certified by such Lenders) of
making or maintaining their affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Company and the Lenders as soon as practicable thereafter. If such notice is
given (x) any Eurodollar Loans or C/D Rate Loans, as the case may be,
38
requested to be made on the first day of such Interest Period shall be made as
ABR Loans, (y) any Loans that were to have been converted on the first day of
such Interest Period to Eurodollar Loans or C/D Rate Loans, as the case may be,
shall be converted to or continued as ABR Loans and (z) any outstanding
Eurodollar Loans or C/D Rate Loans, as the case may be, shall be converted, on
the first day of such Interest Period, to ABR Loans. Until such notice has been
withdrawn by the Administrative Agent, no further Eurodollar Loans or C/D Rate
Loans, as the case may be, shall be made or continued as such, nor shall the
Company have the right to convert Loans to Eurodollar Loans or C/D Rate Loans,
as the case may be.
2.14 PRO RATA TREATMENT AND PAYMENTS. (a) Each borrowing by the Company
from the Lenders hereunder (other than Swing Line Loans and Overline Loans),
each payment by the Company on account of any commitment fee hereunder (other
than pursuant to subsection 2.5(d)) and any reduction of the Revolving Credit
Commitments of the Lenders shall be made pro rata according to the respective
Revolving Credit Commitment Percentages of the Lenders. Each borrowing by the
Company from the Overline Lenders hereunder in the form of an Overline Loan,
each payment by the Company on account of any commitment fee pursuant to
subsection 2.5(d) and any reduction of the Overline Commitments of the Overline
Lenders shall be made pro rata according to the respective Overline Commitment
Percentages of the Overline Lenders. Each payment (including each prepayment)
by the Company on account of the principal of and interest on the Overline Loans
shall be made PRO RATA according to the respective outstanding principal of the
Overline Loans, respectively, then held by the Overline Lenders. Each payment
(including each prepayment) by the Company on account of the principal of and
interest on the Revolving Credit Loans shall be made pro rata according to the
respective outstanding principal of the Revolving Credit Loans, respectively,
then held by the Lenders, subject to the provisions of subsection 2.7(c).
Notwithstanding any other provision of this Agreement that requires payments
hereunder to be allocated to any particular category of obligations hereunder,
if at any time (i) the Administrative Agent shall have received insufficient
funds to pay all amounts then due and payable hereunder or (ii) the
Administrative Agent shall have received written notice from the Company or any
Lender than an Event of Default has occurred and is continuing, the amount of
funds received shall be applied FIRST to the payment of commitment fees and
other amounts then due and payable hereunder other than fees in respect of
Letters of Credit, principal and interest, and Reimbursement Obligations, PRO
RATA in respect of all such amounts owing to each Lender, SECOND to the payment
of fees in respect of Letters of Credit and interest then due and payable
hereunder, PRO RATA in respect of all such amounts owing to each Lender, and
THEN to the payment of Reimbursement
39
Obligations and all principal amounts then outstanding (whether of not due and
payable) hereunder, PRO RATA in respect of all such amounts owing to each
Lender. All payments (including prepayments) to be made by the Company
hereunder and under the Notes, whether on account of principal, interest, fees
or otherwise, shall be made without set off or counterclaim and shall be made
prior to 12:30 P.M., New York City time, on the due date thereof to the
Administrative Agent, for the account of the Lenders, at the Administrative
Agent's office specified in subsection 10.2, in Dollars and in immediately
available funds. The Administrative Agent shall distribute such payments to the
Lenders promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on the Eurodollar Loans) becomes due and payable
on a day other than a Business Day, such payment shall be extended to the next
succeeding Business Day, and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension. If
any payment on a Eurodollar Loan becomes due and payable on a day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day unless the result of such extension would be to extend such payment
into another calendar month, in which event such payment shall be made on the
immediately preceding Business Day.
(b) Unless the Administrative Agent shall have been notified in writing
by any Lender prior to a borrowing that such Lender will not make the amount
that would constitute its Revolving Credit Commitment Percentage, with respect
to Revolving Credit Loans, or its Overline Commitment Percentage, with respect
to Overline Loans, of such borrowing available to the Administrative Agent, the
Administrative Agent may assume that such Lender is making such amount available
to the Administrative Agent, and the Administrative Agent may, in reliance upon
such assumption, make available to the Company a corresponding amount. If such
amount is not made available to the Administrative Agent by the required time on
the Borrowing Date therefor, such Lender shall pay to the Administrative Agent,
on demand, such amount with interest thereon at a rate equal to the daily
average Federal Funds Effective Rate for the period until such Lender makes such
amount immediately available to the Administrative Agent. A certificate of the
Administrative Agent submitted to any Lender with respect to any amounts owing
under this subsection shall be conclusive in the absence of manifest error. If
such Lender's Revolving Credit Commitment Percentage or Overline Commitment
Percentage, as the case may be, of such borrowing is not made available to the
Administrative Agent by such Lender within three Business Days of such Borrowing
Date, the Administrative Agent shall also be entitled to recover such amount
with interest thereon at the rate per annum applicable to ABR Loans hereunder,
on demand, from the Company. Nothing contained in this
40
subsection 2.14(b) shall relieve any Lender that has failed to make available
its Revolving Credit Commitment Percentage or its Overline Commitment
Percentage, as the case may be, of any borrowing hereunder from its obligation
to do so in accordance with the terms hereof.
2.15 ILLEGALITY. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Domestic Dollar Loans to Eurodollar Loans shall forthwith be cancelled
and (b) such Lender's Loans then outstanding as Eurodollar Loans, if any, shall
be converted automatically to ABR Loans on the respective last days of the then
current Interest Periods with respect to such Loans or within such earlier
period as required by law. If any such conversion of a Eurodollar Loan occurs
on a day which is not the last day of the then current Interest Period with
respect thereto, the Company shall pay to such Lender such amounts, if any, as
may be required pursuant to subsection 2.18.
2.16 EUROCURRENCY RESERVE COSTS; REQUIREMENTS OF LAW. (a) The Company
agrees to pay to each Lender which requests compensation under this subsection
2.16(a) (by notice to the Company), on the last day of each Interest Period with
respect to any Eurodollar Loan made by such Lender, so long as such Lender shall
be required to maintain reserves against "Eurocurrency liabilities" under
Regulation D of the Board of Governors of the Federal Reserve System (or, so
long as such Lender may be required by such Board of Governors or by any other
Governmental Authority to maintain reserves against any other category of
liabilities which includes deposits by reference to which the interest rate on
Eurodollar Loans is determined as provided in this Agreement or against any
category of extensions of credit or other assets of such Lender which includes
any Eurodollar Loans), an additional amount (determined by such Lender and
notified to the Company) representing such Lender's calculation or, if an
accurate calculation is impracticable, reasonable estimate (using such
reasonable means of allocation as such Lender shall determine) of the actual
costs, if any, incurred by such Lender during such Interest Period as a result
of the applicability of the foregoing reserves to such Eurodollar Loans, which
amount in any event shall not exceed the product of the following for each day
of such Interest Period:
(i) the principal amount of the Eurodollar Loans made by such Lender to
which such Interest Period relates outstanding on such day; and
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(ii) the difference between (x) a fraction the numerator of which is the
Eurodollar Rate (expressed as a decimal) applicable to such Eurodollar Loan
and the denominator of which is one minus the maximum rate (expressed as a
decimal) at which such reserve requirements are imposed by such Board of
Governors or other Governmental Authority on such date minus (y) such
numerator; and
(iii) a fraction the numerator of which is one and the denominator of
which is 360.
(b) If the adoption of or any change in any Requirement of Law or
in the interpretation or application thereof or compliance by any Lender with
any request or directive (whether or not having the force of law) from any
central bank or other Governmental Authority made subsequent to the date
hereof:
(i) shall subject any Lender to any tax of any kind whatsoever
with respect to this Agreement, any Note, any Letter of Credit, any
Application or any Eurodollar Loan or C/D Rate Loan made by it, or
change the basis of taxation of payments to such Lender in respect
thereof (except for Non-Excluded Taxes covered by subsection 2.17 and
changes in the rate of tax on the overall net income of such Lender);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of Eurocurrency Reserve Costs
pursuant to paragraph (a) above or the C/D Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such
Lender, by an amount which such Lender in good faith deems to be material, of
making, converting into, continuing or maintaining Eurodollar Loans or C/D
Rate Loans or issuing or participating in Letters of Credit, or to reduce any
amount receivable hereunder in respect thereof, then, in any such case, the
Company shall promptly pay such Lender, upon its demand, any additional
amounts necessary to compensate such Lender for such increased cost or
reduced amount receivable. If any Lender becomes entitled to claim any
42
additional amounts pursuant to this subsection, it shall promptly notify the
Company, through the Administrative Agent, of the event by reason of which it
has become so entitled. This covenant shall survive the termination of this
Agreement and the payment of the Notes and all other amounts payable
hereunder.
(c) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any
Governmental Authority made subsequent to the date hereof does or shall have
the effect of reducing the rate of return on such Lender's or such
corporation's capital as a consequence of its obligations hereunder or under
any Letter of Credit to a level below that which such Lender or such
corporation could have achieved but for such change or compliance (taking
into consideration such Lender's or such corporation's policies with respect
to capital adequacy) by an amount deemed by such Lender in good faith to be
material, then from time to time, after submission by such Lender to the
Company (with a copy to the Administrative Agent) of a written request
therefore, the Company shall pay to such Lender such additional amount or
amounts as will compensate such Lender for such reduction.
(d) A certificate of each Lender setting forth such amount or amounts
as shall be necessary to compensate such Lender as specified in paragraph
(a), (b) or (c) of this subsection 2.16, as the case may be, shall be
delivered to the Company and shall, if submitted in good faith, be conclusive
absent manifest error; provided that any certificate delivered by a Lender
pursuant to this subsection 2.16(d) shall (i) in the case of a certificate in
respect of amounts payable pursuant to paragraph (a) or (b) of this
subsection 2.16, set forth in reasonable detail the basis for and the
calculation of such amounts, and (ii) in the case of a certificate in respect
of amounts payable pursuant to paragraph (c) of this Section 2.16, (A) set
forth at least the same amount of detail in respect of the calculation of
such amount as such Lender provides in similar circumstances to other
similarly situated borrowers from such Lender, and (B) include a statement by
such Lender that it has allocated to its Revolving Credit Commitment or
outstanding Loans no greater than a proportionately equal amount of any
reduction of the rate of return on such Lender's capital due to the adoption
or change in any Requirement of Law regarding capital adequacy as it has
allocated to each of its
43
other commitments to lend or other outstanding loans to similarly situated
borrowers that are affected similarly by such adoption or change.
2.17 TAXES. (a) All payments made by the Company under this Agreement
and the Notes shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding net income taxes and franchise taxes (imposed
in lieu of net income taxes) imposed on the Administrative Agent or any Lender
as a result of a present or former connection between the Administrative Agent
or such Lender and the jurisdiction of the Governmental Authority imposing such
tax or any political subdivision or taxing authority thereof or therein (other
than any such connection arising solely from the Administrative Agent or such
Lender having executed, delivered or performed its obligations or received a
payment under, or enforced, this Agreement or the Notes). If any such
non-excluded taxes, levies, imposts, duties, charges, fees deductions or
withholdings ("NON-EXCLUDED TAXES") are required to be withheld from any amounts
payable to the Administrative Agent or any Lender hereunder or under the Notes,
the amounts so payable to the Administrative Agent or such Lender shall be
increased to the extent necessary to yield to the Administrative Agent or such
Lender (after payment of all Non-Excluded Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement and the Notes, PROVIDED, HOWEVER, that the Company shall not be
required to increase any such amounts payable to any Lender that is not
organized under the laws of the United States of America or a state thereof if
(i) such Lender fails to comply with the requirements of paragraph (b) of this
subsection or (ii) either of the certifications made by such Lender as set forth
in such paragraph is not true and correct with respect to such Lender. Whenever
any Non-Excluded Taxes are payable by the Company, as promptly as possible
thereafter the Company shall send to the Administrative Agent for its own
account or for the account of such Lender, as the case may be, a certified copy
of an original official receipt received by the Company showing payment thereof.
If the Company fails to pay any Non-Excluded Taxes when due to the appropriate
taxing authority or fails to remit to the Administrative Agent the required
receipts or other required documentary evidence, the Company shall indemnify the
Administrative Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Administrative Agent or any Lender as a
result of any such failure. The agreements in this subsection shall survive the
termination of this Agreement and the payment of the Notes and all other amounts
payable hereunder.
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(b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:
(i) deliver to the Company and the Administrative Agent (A) two
duly completed copies of United States Internal Revenue Service Form 1001 or
4224, or successor applicable form, as the case may be, and (B) an Internal
Revenue Service Form W-8 or W-9, or successor applicable form, as the case
may be;
(ii) deliver to the Company and the Administrative Agent two
further copies of any such form or certification on or before the date that
any such form or certification expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent form previously
delivered by it to the Company; and
(iii) obtain such extensions of time for filing and complete such
forms or certifications as may reasonably be requested by the Company or the
Administrative Agent;
unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Company and the
Administrative Agent. Such Lender shall certify (i) in the case of a Form 1001
or 4224, that it is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes and (ii) in
the case of a Form W-8 or W-9, that it is entitled to an exemption from United
States backup withholding tax. Each Person that shall become a Lender or a
Participant pursuant to subsection 10.6 shall, upon the effectiveness of the
related transfer, be required to provide all of the forms and statements
required pursuant to this subsection, provided that in the case of a Participant
such Participant shall furnish all such required forms and statements to the
Lender from which the related participation shall have been purchased.
2.18 INDEMNITY. The Company agrees to indemnify each Lender and to hold
each Lender harmless from any loss or expense which such Lender may sustain or
incur as a consequence of (a) default by the Company in making a borrowing of,
conversion into or continuation of Eurodollar Loans or C/D Rate Loans after the
Company has given a notice requesting the same in accordance with the provisions
of this Agreement, (b) default by the Company in making any prepayment after the
Company has given a notice thereof in
45
accordance with the provisions of this Agreement or (c) the making of a
prepayment of Eurodollar Loans or C/D Rate Loans on a day which is not the last
day of an Interest Period with respect thereto. Such indemnification may
include an amount equal to the excess, if any, of (i) the amount of interest
which would have accrued on the amount so prepaid, or not so borrowed, converted
or continued, for the period from the date of such prepayment or of such failure
to borrow, convert or continue to the last day of such Interest Period (or, in
the case of a failure to borrow, convert or continue, the Interest Period that
would have commenced on the date of such failure) in each case at the applicable
rate of interest for such Loans provided for herein (excluding, however, the
Applicable Margin included therein, if any) over (ii) the amount of interest (as
reasonably determined by such Lender) which would have accrued to such Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank eurodollar market. This covenant shall survive
the termination of this Agreement and the payment of the Notes and all other
amounts payable hereunder. A certificate of any Lender setting forth any amount
or amounts which such Lender is entitled to receive pursuant to this Section
shall be delivered to the Company and shall be conclusive absent manifest error.
SECTION 3. LETTERS OF CREDIT
3.1 L/C COMMITMENT. (a) Subject to the terms and conditions hereof,
the Issuing Bank, in reliance on the agreements of the other Lenders set forth
in subsection 3.4(a), agrees to issue letters of credit ("LETTERS OF CREDIT")
for the account of the Company on any Business Day during the Commitment Period
in such form as may be approved from time to time by the Issuing Bank; PROVIDED
that the Issuing Bank shall have no obligation to issue any Letter of Credit if,
after giving effect to such issuance, (i) the L/C Obligations would exceed the
L/C Commitment or (ii) the Aggregate Outstanding Revolving Extensions of Credit
would exceed the lesser of (A) the aggregate Adjusted Revolving Credit
Commitments then in effect and (B) the excess of the Borrowing Base then in
effect over Permitted Senior Indebtedness. Each Letter of Credit shall (i) be
denominated in Dollars and shall be either (x) a standby letter of credit issued
to support obligations of the Company and its Subsidiaries, contingent or
otherwise, arising in the ordinary course of business or (y) a documentary
letter of credit in respect of the purchase of goods or services by the Company
and its Subsidiaries in the ordinary course of business and (ii) expire no later
than the Termination Date.
(b) Each Letter of Credit shall be subject to the Uniform Customs and, to
the extent not inconsistent therewith, the laws of the State of New York.
46
(c) Letters of credit outstanding on the Closing Date issued by Chemical
under the Existing Credit Agreement for the account of the Company or any of its
Subsidiaries prior to the Closing Date shall be deemed to be Letters of Credit
hereunder.
(d) The Issuing Bank shall not at any time be obligated to issue any
Letter of Credit hereunder if such issuance would conflict with, or cause the
Issuing Bank or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
3.2 PROCEDURE FOR ISSUANCE OF LETTERS OF CREDIT. The Company may from
time to time request that the Issuing Bank issue a Letter of Credit by
delivering to the Issuing Bank at its address for notices specified herein an
Application therefor, completed to the satisfaction of the Issuing Bank, and
such other certificates, documents and other papers and information as the
Issuing Bank may reasonably request in accordance with its customary procedures.
Upon receipt of any Application, the Issuing Bank will process such Application
and the certificates, documents and other papers and information delivered to it
in connection therewith in accordance with its customary procedures and shall
promptly issue the Letter of Credit requested thereby (but in no event shall the
Issuing Bank be required to issue any Letter of Credit earlier than three
Business Days after its receipt of the Application therefor and all such other
certificates, documents and other papers and information relating thereto) by
issuing the original of such Letter of Credit to the beneficiary thereof or as
otherwise may be agreed by the Issuing Bank and the Company. The Issuing Bank
shall furnish a copy of such Letter of Credit to the Company promptly following
the issuance thereof.
3.3 FEES, COMMISSIONS AND OTHER CHARGES.
(a) The Company shall pay (i) to the Administrative Agent, for the
account of the Issuing Bank and the L/C Participants in accordance with their
respective Revolving Credit Commitment Percentages, a letter of credit
commission with respect to each Letter of Credit, computed for the period from
the Closing Date (in the case of the first such payment) or the date on which
the last such payment was due (in all other cases) to the date upon which such
payment is due hereunder at the rate of (A) 1.375% per annum of the average
daily aggregate amount available to be drawn under such Letter of Credit during
the period for which such fee is calculated with respect to any day when either
(x) the Company's long term senior unsecured debt is rated at least Baa3 by
Moody's Investors Services, Inc. or (y) the Company's long term senior unsecured
debt is rated at least BBB- by Standard & Poors' Corporation and (B) 1.625% per
47
annum of the average daily aggregate amount available to be drawn under such
Letter of Credit during the period for which such fee is calculated with respect
to any day when both (x) the Company's long term senior unsecured debt is not
rated by Moody's Investors Services, Inc. or is rated lower than Baa3 by such
rating agency and (y) the Company's long term senior unsecured debt is not rated
by Standard & Poors' Corporation or is rated lower than BBB- by such rating
agency and (ii) to the Issuing Bank for its own account, a letter of credit
commission with respect to each Letter of Credit, computed for the period from
the Closing Date (in the case of the first such payment) or the date on which
the last such payment was due (in all other cases) to the date upon which such
payment is due hereunder at the rate of 1/8% per annum of the average daily
aggregate amount available to be drawn under such Letter of Credit during the
period for which such fee is calculated. Such commissions shall be payable in
arrears on each L/C Fee Payment Date and shall be nonrefundable.
(b) In addition to the foregoing fees and commissions, the Company shall
pay or reimburse the Issuing Bank for such normal and customary costs and
expenses as are incurred or charged by the Issuing Bank in issuing, effecting
payment under, amending or otherwise administering any Letter of Credit.
(c) The Administrative Agent shall, promptly following its receipt
thereof, distribute to the Issuing Bank and the L/C Participants all fees and
commissions received by the Administrative Agent for their respective accounts
pursuant to this subsection.
3.4 L/C PARTICIPATIONS. (a) The Issuing Bank irrevocably agrees to
grant and hereby grants to each L/C Participant, and, to induce the Issuing Bank
to issue Letters of Credit hereunder, each L/C Participant irrevocably agrees to
accept and purchase and hereby accepts and purchases from the Issuing Bank, on
the terms and conditions hereinafter stated, for such L/C Participant's own
account and risk an undivided interest equal to such L/C Participant's Revolving
Credit Commitment Percentage in the Issuing Bank's obligations and rights under
each Letter of Credit issued hereunder and the amount of each draft paid by the
Issuing Bank thereunder. Each L/C Participant unconditionally and irrevocably
agrees with the Issuing Bank that, if a draft is paid under any Letter of Credit
for which the Issuing Bank is not reimbursed in full by the Company in
accordance with the terms of this Agreement, such L/C Participant shall pay to
the Issuing Bank upon demand at the Issuing Bank's address for notices specified
herein an amount equal to such L/C Participant's Revolving Credit Commitment
Percentage of the amount of such draft, or any part thereof, which is not so
reimbursed; PROVIDED, that no L/C Participant shall be
48
obligated to make such payment to the extent that, after giving effect to such
payment, the sum of (i) such payment, (ii) such Lender's Revolving Credit
Commitment Percentage of the L/C Obligations on the date of such payment other
than that with respect to which such payment would be made and (iii) such
Lender's Revolving Credit Commitment Percentage of the Aggregate Outstanding
Revolving Extensions of Credit on such date other than the L/C Obligations
exceeds such Lender's Revolving Credit Commitment. Each L/C Participant's
obligation to purchase its participating interest in each Letter of Credit
pursuant to this subsection 3.4(a) shall not be affected by any circumstance,
including, without limitation, (i) any set-off, counterclaim, recoupment,
defense or other right which such L/C Participant may have against the Issuing
Bank, the Company, any direct or indirect beneficiary of any Letter of Credit,
the Administrative Agent or any other Person whatsoever, (ii) the occurrence or
continuance of a Default or an Event of Default; (iii) any adverse change in the
condition (financial or otherwise) of the Company; (iv) any breach of this
Agreement by the Company, the Administrative Agent or any other Lender; or (v)
any other circumstance, happening or event whatsoever, whether or not similar to
any of the foregoing; and such obligation shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any reimbursement obligation of the Company is rescinded or must otherwise be
restored or returned by the Issuing Bank upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Company or upon or as a result
of the appointment of a receiver, intervenor or conservator of, or trustee or
similar officer for, the Company or any substantial part of its property, or
otherwise, all as though such payment had not been made.
(b) If any amount required to be paid by any L/C Participant to the
Issuing Bank pursuant to subsection 3.4(a) in respect of any unreimbursed
portion of any payment made by the Issuing Bank under any Letter of Credit is
paid to the Issuing Bank within three Business Days after the date such payment
is due, such L/C Participant shall pay to the Issuing Bank on demand an amount
equal to the product of (i) such amount, times (ii) the daily average federal
funds rate, as quoted by the Issuing Bank, during the period from and including
the date such payment is required to the date on which such payment is
immediately available to the Issuing Bank, times (iii) a fraction the numerator
of which is the number of days that elapse during such period and the
denominator of which is 360. If any such amount required to be paid by any L/C
Participant pursuant to subsection 3.4(a) is not in fact made available to the
Issuing Bank by such L/C Participant within three Business Days after the date
such payment is due, the Issuing Bank shall be entitled to recover from such L/C
Participant, on demand, such amount with interest thereon calculated from such
due date at the rate
49
per annum applicable to ABR Loans hereunder. A certificate of the Issuing Bank
submitted to any L/C Participant with respect to any amounts owing under this
subsection shall be conclusive in the absence of manifest error.
(c) Whenever, at any time after the Issuing Bank has made payment under
any Letter of Credit and has received from any L/C Participant its PRO RATA
share of such payment in accordance with subsection 3.4(a), the Issuing Bank
receives any payment related to such Letter of Credit (whether directly from the
Company or otherwise, including proceeds of collateral applied thereto by the
Issuing Bank), or any payment of interest on account thereof, the Issuing Bank
will distribute to such L/C Participant its pro rata share thereof; PROVIDED,
HOWEVER, that in the event that any such payment received by the Issuing Bank
shall be required to be returned by the Issuing Bank, such L/C Participant shall
return to the Issuing Bank the portion thereof previously distributed by the
Issuing Bank to it.
3.5 REIMBURSEMENT OBLIGATION OF THE COMPANY. The Company agrees to
reimburse the Issuing Bank on each date on which the Issuing Bank notifies the
Company of the date and amount of a draft presented under any Letter of Credit
and paid by the Issuing Bank for the amount of (a) such draft so paid and (b)
any taxes, fees, charges or other costs or expenses incurred by the Issuing Bank
in connection with such payment, PROVIDED, that the failure of the Company to so
reimburse the Issuing Bank on such date shall not be deemed to be an Event of
Default if (i) the Company receives notice of such draft after 1:30 P.M. on such
date and (ii) the Company makes such reimbursement in full no later than the
first Business Day following such date. Each such payment shall be made to the
Issuing Bank at its address for notices specified herein in lawful money of the
United States of America and in immediately available funds. Interest shall be
payable on any and all amounts remaining unpaid by the Company under this
subsection from the date such amounts become payable (whether at stated
maturity, by acceleration or otherwise) to but not including the date of payment
in full at the rate which would be payable on any outstanding ABR Loans which
were then overdue.
3.6 OBLIGATIONS ABSOLUTE. The Company's obligations under this Section
3 shall be absolute and unconditional under any and all circumstances and
irrespective of any set-off, counterclaim or defense to payment which the
Company may have or have had against the Issuing Bank or any beneficiary of a
Letter of Credit. The Company also agrees with the Issuing Bank that the
Issuing Bank shall not be responsible for, and the Company's Reimbursement
Obligations under subsection 3.5 shall not be affected by, among other things,
the validity or genuineness of documents or of any endorsements thereon, even
though such
50
documents shall in fact prove to be invalid, fraudulent or forged, or any
dispute between or among the Company and any beneficiary of any Letter of Credit
or any other party to which such Letter of Credit may be transferred or any
claims whatsoever of the Company against any beneficiary of such Letter of
Credit or any such transferee, PROVIDED, that payment by the Issuing Bank under
such Letters of Credit against presentation of such documents shall not have
been determined by a final judgement of a court of competent jurisdiction to
have constituted gross negligence or willful misconduct by the Issuing Bank.
The Issuing Bank shall not be liable for any error, omission, interruption or
delay in transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions caused by the Issuing Bank's gross negligence or willful misconduct.
The Company agrees that any action taken or omitted by the Issuing Bank under or
in connection with any Letter of Credit or the related drafts or documents, if
done in the absence of gross negligence or willful misconduct and in accordance
with the standards or care specified in the Uniform Commercial Code of the State
of New York and the Uniform Customs, shall be binding on the Company and shall
not result in any liability of the Issuing Bank to the Company.
3.7 LETTER OF CREDIT PAYMENTS. If any draft shall be presented for
payment under any Letter of Credit, the Issuing Bank shall promptly notify the
Company of the date and amount thereof. The responsibility of the Issuing Bank
to the Company in connection with any draft presented for payment under any
Letter of Credit shall, in addition to any payment obligation expressly provided
for in such Letter of Credit, be limited to determining that the documents
(including each draft) delivered under such Letter of Credit in connection with
such presentment appear on their face to be in conformity with such Letter of
Credit.
3.8 APPLICATION. To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the provisions of this
Section 3, the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement and to make the Loans
and issue or participate in the Letters of Credit the Company hereby represents
and warrants to the Agents and each Lender that:
4.1 FINANCIAL CONDITION. The consolidated balance sheets of the Company
and its consolidated Subsidiaries as at December 31, 1992 and the related
consolidated statements of income and of cash flows for the fiscal year ended on
such
51
date, reported on by Ernst & Young, copies of which have heretofore been
furnished to each Lender, present fairly the consolidated financial condition of
the Company and its consolidated Subsidiaries as at such dates, and the
consolidated results of their operations and changes in cash flows for the
fiscal year then ended. The unaudited consolidated balance sheet of the Company
and its consolidated Subsidiaries as at March 31, 1993 and the related unaudited
consolidated statements of income and of cash flows for the three-month period
ended on such date, certified by a Responsible Officer, copies of which have
heretofore been furnished to each Lender, present fairly the consolidated
financial condition of the Company and its consolidated Subsidiaries as at such
date, and the consolidated results of their operations and changes in cash flows
for the three-month period then ended (subject to normal year-end audit
adjustments). All such financial statements, including the related schedules
and notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by such
accountants or Responsible Officer, as the case may be, and as disclosed therein
and except the quarterly statements are unaudited and do not include footnotes
as would be required for audited financial statements). Neither the Company nor
any of its Restricted Subsidiaries had, at the date of the most recent balance
sheet referred to above, any Guarantee Obligation, contingent liability or
liability for taxes, or any long-term lease or any interest rate or foreign
currency swap or exchange transaction, which is not reflected in the foregoing
statements or in the notes thereto and which, in the aggregate, would be
material to the Company and its Subsidiaries taken as a whole, except as set
forth on Schedule 4.6.
4.2 NO CHANGE. Since December 31, 1992, no development or event has
occurred which has had or could reasonably be expected to have a Material
Adverse Effect except as otherwise disclosed in the Company's audited or
unaudited financial statements including the periodic quarterly reports on Form
10-Q, in each case delivered to the Lenders prior to the Closing Date. Between
December 31, 1992 and the Closing Date, no dividends or other distributions have
been declared, paid or made upon the capital stock of the Company nor has any of
the capital stock of the Company been redeemed, retired, purchased or otherwise
acquired for value by the Company or any of its Subsidiaries, except for payment
of regular quarterly dividends of not more than $0.17 per share per quarter,
payment of the dividend on the Series A ESOP Convertible Preferred Stock and
except as otherwise disclosed in the Company's audited or unaudited financial
statements including the periodic quarterly reports on Form 10-Q delivered to
the Lenders prior to the Closing Date.
52
4.3 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each of the Company and
its Restricted Subsidiaries (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, (b) has the
corporate power and authority, and the legal right, to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification and (d) is in compliance with all Requirements of
Law, except in the case of the foregoing clauses (c) and (d) to the extent that
the failure to be so qualified or to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
4.4 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. The Company
has the corporate power and authority, and the legal right, to make, deliver and
perform this Agreement and the Notes and to borrow hereunder and has taken all
necessary corporate action to authorize the borrowings on the terms and
conditions of this Agreement and the Notes and to authorize the execution,
delivery and performance of this Agreement and the Notes. No consent or
authorization of, filing with or other act by or in respect of, any Governmental
Authority or any other Person is required in connection with the borrowings
hereunder or with the execution, delivery, performance, validity or
enforceability of this Agreement or any other Loan Document. This Agreement has
been, and, as of the Closing Date, the Notes will be, duly executed and
delivered on behalf of the Company. This Agreement constitutes, and each other
Loan Document when executed and delivered by the Company for value received will
constitute, a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law).
4.5 NO LEGAL BAR. The execution, delivery and performance of this
Agreement and the Notes, the borrowings hereunder and the use of the proceeds
thereof will not violate any Requirement of Law or Contractual Obligation of the
Company or of any of its Subsidiaries and will not result in, or require, the
creation or imposition of any Lien on any of its or their respective properties
or revenues pursuant to any such Requirement of Law or Contractual Obligation.
4.6 NO MATERIAL LITIGATION. Schedule 4.6 sets forth information with
respect to certain litigation,
53
investigations, or proceedings pending against the Company and its Subsidiaries.
Subject to the matters set forth on such Schedule, no litigation, investigation
or proceeding of or before any arbitrator or Governmental Authority is pending
or, to the knowledge of the Company, threatened by or against the Company or any
of its Restricted Subsidiaries or against any of its or their respective
properties or revenues (a) with respect to this Agreement or the Notes or any of
the transactions contemplated hereby, or (b) which could reasonably be expected
to have a Material Adverse Effect.
4.7 NO DEFAULT. Neither the Company nor any of its Restricted
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which could reasonably be expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.
4.8 OWNERSHIP OF PROPERTY; LIENS. Each of the Company and its Restricted
Subsidiaries has good record and marketable title in fee simple to, or a valid
leasehold interest in, all its real property, and good title to all its other
property, except for defects in title that do not interfere in any material
respect with its ability to conduct its business as currently conducted or to
utilize such properties for their intended purposes, and none of such property
is subject to any Lien except as permitted by subsection 7.3.
4.9 INTELLECTUAL PROPERTY. The Company and each of its Restricted
Subsidiaries owns, or is licensed to use, all trademarks, tradenames,
copyrights, technology, know-how and processes necessary for the conduct of its
business as currently conducted except for those the failure to own or license
which could not reasonably be expected to have a Material Adverse Effect (the
"INTELLECTUAL PROPERTY"). No claim has been asserted and is pending by any
Person challenging or questioning the use of any such Intellectual Property or
the validity or effectiveness of any such Intellectual Property, which could
reasonably be expected to have a Material Adverse Effect nor does the Company
know of any valid basis for any such claim. The use of such Intellectual
Property by the Company and its Restricted Subsidiaries does not infringe on the
rights of any Person, except for such claims and infringements that, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
4.10 TAXES. Each of the Company and its Restricted Subsidiaries has
filed or caused to be filed all tax returns which, to the knowledge of the
Company, are required to be filed and which if not so filed could reasonably be
expected to have a Material Adverse Effect, and has paid all taxes shown to be
due and payable on said
54
returns or on any assessments made against it or any of its property and all
other taxes, fees or other charges of a material nature imposed on it or any of
its property by any Governmental Authority (other than any the amount or
validity of which are currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been
provided on the books of the Company or its Subsidiaries, as the case may be);
no tax Lien has been filed, and, to the knowledge of the Company, no claim is
being asserted, with respect to any such tax, fee or other charge which
reasonably could be expected to have a Material Adverse Effect.
4.11 FEDERAL REGULATIONS. No part of the proceeds of any Loans will be
used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U of the Board of
Governors of the Federal Reserve System as now and from time to time hereafter
in effect or for any purpose which violates the provisions of the Regulations of
such Board of Governors. If requested by any Lender or the Administrative
Agent, the Company will furnish to the Administrative Agent and each Lender a
statement to the foregoing effect in conformity with the requirements of FR Form
U-1 referred to in said Regulation U.
4.12 ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no
Lien in favor of the PBGC or a Plan has arisen, during such five-year period.
The present value of all accrued benefits under each Single Employer Plan (based
on those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits to an extent which could reasonably be expected to have a Material
Adverse Effect. Neither the Company nor any Commonly Controlled Entity has had
a complete or partial withdrawal from any Multiemployer Plan which could
reasonably be expected to have a Material Adverse Effect, and neither the
Company nor any Commonly Controlled Entity would become subject to any liability
under ERISA in an amount which could reasonably be expected to have a Material
Adverse Effect if the Company or any such Commonly Controlled Entity were to
withdraw completely from all Multiemployer Plans as of the valuation date most
closely preceding the date on which this representation is made or deemed made.
To the knowledge of the Company or any Commonly Controlled Entity, no such
55
Multiemployer Plan for which the Company or any Subsidiary could reasonably be
expected to have a material liability is in Reorganization or Insolvent. The
present value (determined using actuarial and other assumptions which are
reasonable in respect of the benefits provided and the employees participating)
of the liability of the Company and each Commonly Controlled Entity for post
retirement benefits to be provided to their current and former employees under
Plans which are welfare benefit plans (as defined in Section 3(1) of ERISA) does
not, in the aggregate, exceed the assets under all such Plans allocable to such
benefits by an amount in excess of $5,000,000.
4.13 INVESTMENT COMPANY ACT; OTHER REGULATIONS. The Company is not an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. The
Company is not subject to regulation under any Federal or State statute or
regulation which limits its ability to incur Indebtedness.
4.14 SUBSIDIARIES. All the Subsidiaries of the Company at the date of
this Agreement are listed on Schedule 4.14 and the Subsidiaries that, as of the
date of this Agreement, are Significant Subsidiaries of the Company are
designated as such on Schedule 4.14.
4.15 ACCURACY AND COMPLETENESS OF INFORMATION. The written information,
reports and other papers and data with respect to the Company (other than
projections and estimates) furnished to the Administrative Agent or the Lenders
in connection with this Agreement or the obtaining of the commitments of the
Lenders hereunder was, at the time so furnished and when considered as a whole,
complete and correct in all material respects, or has been subsequently
supplemented by other information, reports or other papers or data, to the
extent necessary to give in all material respects a true and accurate knowledge
of the subject matter in all material respects. All projections and estimates
with respect to the Company and its Subsidiaries so furnished by the Company
were prepared and presented in good faith, it being recognized by the
Administrative Agent and the Lenders that such projections as to future events
are not to be viewed as facts and that actual results during the period or
periods covered by any such projections may differ from the projected results
and that such differences may be material; except as set forth and required
within this Agreement, the Company shall not be required to update such
projections.
4.16 ENVIRONMENTAL MATTERS. Except to the extent that all of the
following, in the aggregate, would not reasonably be expected to have a Material
Adverse Effect:
56
(a) To the knowledge of the Company, the facilities and properties owned,
leased or operated by the Company or any of its Subsidiaries (the "PROPERTIES")
do not contain, and have not previously contained, any Materials of
Environmental Concern in amounts or concentrations which (i) constitute or
constituted a violation of, or (ii) could reasonably be expected to give rise to
liability under, any Environmental Law.
(b) To the knowledge of the Company, the Properties and all operations at
the Properties are in compliance, and, to the extent of the Company's and its
Subsidiaries' involvement with the Properties, have in the last five years been
in compliance, in all material respects with all applicable Environmental Laws,
and there is no contamination at, under or about the Properties or violation of
any Environmental Law with respect to the Properties or the business operated by
the Company or any of its Subsidiaries (the "BUSINESS").
(c) Neither the Company nor any of its Subsidiaries has received any
notice of violation, alleged violation, non-compliance, liability or potential
liability regarding environmental matters or compliance with Environmental Laws
with regard to any of the Properties or the Business, nor does the Company have
knowledge or reason to believe that any such notice will be received or is being
threatened.
(d) To the knowledge of the Company, Materials of Environmental Concern
have not been transported or disposed of from the Properties while owned or
operated by the Company or any of its Subsidiaries in violation of, or in a
manner or to a location which could reasonably be expected to give rise to
liability under, any Environmental Law, nor have any Materials of Environmental
Concern been generated, treated, stored or disposed of at, on or under any of
the Properties in violation of, or in a manner that could reasonably be expected
to give rise to liability under, any applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative action is
pending or, to the knowledge of the Company, threatened, under any Environmental
Law to which the Company or any Subsidiary is or will be named as a party with
respect to the Properties or the Business, nor are there any consent decrees or
other decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any Environmental Law
with respect to the Properties or the Business.
(f) To the knowledge of the Company, there has been no release or threat
of release of Materials of
57
Environmental Concern at or from the Properties, or arising from or related to
the operations of the Borrower or any Subsidiary in connection with the
Properties or otherwise in connection with the Business, in violation of or in
amounts or in a manner that could reasonably give rise to liability under
Environmental Laws.
4.17 STATUS OF THE NOTES. All indebtedness of the Company under this
Agreement, the Notes and the Applications (including, without limitation
principal, interest (including interest accruing after the occurrence of any
event described in Section 8(f), whether or not such interest constitutes an
allowed claim in any proceeding referred to in Section 8(f)), fees, expenses and
indemnities) constitutes, and the Company hereby expressly agrees that all such
indebtedness shall constitute, "Senior Debt" as such term is used in the 1992
Subordinated Debt Indenture.
4.18 PURPOSE OF LOANS. The proceeds of the Loans shall be used by the
Company for working capital purposes in the ordinary course of business and to
make the purchases and investments permitted by Section 7.
SECTION 5. CONDITIONS PRECEDENT
5.1 CONDITIONS TO INITIAL EXTENSIONS OF CREDIT. The agreement of each
Lender to make the initial extensions of credit requested to be made by it is
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions precedent:
(a) LOAN DOCUMENTS. The Administrative Agent shall have received (i)
this Agreement, executed and delivered by a duly authorized officer of the
Company and each Agent, with a counterpart for each Lender, (ii) for the
account of each Lender, a Revolving Credit Note, conforming to the
requirements hereof and executed by a duly authorized officer of the
Company, (iii) for the account of the Swing Line Lender, a Swing Line Note
conforming to the requirements hereof and executed by a duly authorized
officer of the Company and (iv) the Guarantee, executed by a duly
authorized officer of each Guarantor.
(b) CORPORATE PROCEEDINGS. The Administrative Agent shall have
received, with a counterpart for each Lender, (i) a copy of the
resolutions, in form and substance reasonably satisfactory to the
Administrative Agent, of the Board of Directors of the Company and each
Guarantor authorizing (x) in the case of the Company, the execution,
delivery and performance of this Agreement, the Notes and the other Loan
Documents to which it is a party, and the borrowings contemplated
58
hereunder, and (y) in the case of each Guarantor, the execution, delivery
and performance of the Guarantee, in each case, certified by the Secretary
or an Assistant Secretary of the Company or such Guarantor, as the case
may be, as of the Closing Date, which certificate shall state that the
resolutions thereby certified have not been amended, modified, revoked or
rescinded and shall be in form and substance satisfactory to the
Administrative Agent and (ii) an incumbency certificate of the Company and
each Guarantor, satisfactory in form and substance to the Administrative
Agent, with appropriate insertions and attachments.
(c) CORPORATE DOCUMENTS. The Administrative Agent shall have
received, with a counterpart for each Lender, true and complete copies of
the Charter and By-laws of the Company and each Guarantor, certified as of
the Closing Date as complete and correct copies thereof by the Secretary
or an Assistant Secretary of the Company or such Guarantor, as the case
may be.
(d) NO VIOLATION. The consummation of the transactions contemplated
hereby shall not contravene, violate or conflict with, nor involve the
Administrative Agent or any Lender in any violation of, any Requirement of
Law.
(e) FEES. The Administrative Agent shall have received the fees to
be received on the Closing Date referred to in subsection 2.5.
(f) LEGAL OPINIONS. The Administrative Agent shall have received,
with a counterpart for each Lender, the executed legal opinions of (i)
Timothy J. Geckle, Corporate Counsel to the Company, substantially in the
form of Exhibit E-1 hereto, and (ii) Piper & Marbury, counsel to the
Company and the Guarantors, substantially in the form of Exhibit E-2.
Such legal opinions shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent
may reasonably require.
(g) BORROWING BASE CERTIFICATE. The Administrative Agent shall have
received a Borrowing Base Certificate, dated the Closing Date and setting
forth a calculation of the Borrowing Base as of May 31, 1993, showing that
the Aggregate Outstanding Revolving Extensions of Credit on the Closing
Date (after giving effect to the extension of credit hereunder on the
Closing Date), when added to the Permitted Senior Indebtedness on the
Closing Date, shall not exceed the Borrowing Base as set forth therein.
59
(h) EXISTING CREDIT AGREEMENT. The Administrative Agent shall have
received evidence satisfactory to it that the Commitments under the
Existing Credit Agreement have been terminated.
5.2 CONDITIONS TO EACH EXTENSION OF CREDIT. The agreement of each Lender
to make any extension of credit requested to be made by it on any date
(including, without limitation, its initial extension of credit) is subject to
the satisfaction of the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties made by the Company or any Guarantor in or pursuant to the Loan
Documents shall be true and correct in all material respects on and as of
such date as if made on and as of such date.
(b) NO DEFAULT. No Default or Event of Default shall have occurred
and be continuing on such date or after giving effect to the Loans
requested to be made on such date.
(c) ADDITIONAL DOCUMENTS. The Administrative Agent shall have
received each additional document, instrument, legal opinion or item of
information reasonably requested by it, including, without limitation, a
copy of any debt instrument, security agreement or other material contract
to which the Company may be a party.
(d) ADDITIONAL MATTERS. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement shall be satisfactory in form
and substance to the Administrative Agent, and the Administrative Agent
shall have received such other documents and legal opinions in respect of
any aspect or consequence of the transactions contemplated hereby or
thereby as it shall reasonably request.
Each borrowing by and Letter of Credit issued on behalf of the Company hereunder
shall constitute a representation and warranty by the Company as of the date of
such Loan that the conditions contained in subsection 5.2(a) and (b) have been
satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
The Company hereby agrees as follows for so long as any of the Commitments
remain in effect, any Note or any Letter of Credit remains outstanding and
unpaid or any other amount is owing to any Lender or the Administrative Agent
hereunder:
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6.1 FINANCIAL STATEMENTS. The Company will furnish to each Lender:
(a) as soon as available, but in any event within 100 days after the
end of each fiscal year of the Company, copies of the consolidated balance
sheets of the Company and its consolidated Subsidiaries as at the end of
such year and the related consolidated statements of income and retained
earnings and changes in cash flows for such year, setting forth in each
case in comparative form the figures for the previous year, reported on
without a "going concern" or like qualification or exception, or
qualification arising out of the scope of the audit (other than
qualifications related to the incorporation of reports by other
independent certified public accountants), by Ernst & Young or other
independent certified public accountants of nationally recognized standing
not unacceptable to the Required Lenders; and
(b) as soon as available, but in any event not later than 55 days
after the end of each of the first three quarterly periods of each fiscal
year of the Company, the unaudited consolidated balance sheets of the
Company and its consolidated Subsidiaries as at the end of such quarter
and the related unaudited consolidated statements of income and retained
earnings and changes in cash flows of the Company and its consolidated
Subsidiaries for such quarter and the portion of the fiscal year through
the end of such quarter, setting forth in each case in comparative form
the figures for the previous year, certified by a Responsible Officer as
being fairly stated in all material respects when considered in relation
to the consolidated financial position of the Company and its consolidated
Subsidiaries (subject to normal year-end audit adjustments);
all such financial statements to be prepared in accordance with GAAP applied
consistently throughout the periods reflected therein and with prior periods
(except as approved by such accountants or officer, as the case may be, and
disclosed therein).
6.2 CERTIFICATES; OTHER INFORMATION. The Company will furnish to each
Lender:
(a) concurrently with the delivery of the financial statements
referred to in subsection 6.1(a), a certificate of the independent
certified public accountants reporting on such financial statements
stating that in making the examination necessary therefor no knowledge was
obtained of any Default or
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Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements
referred to in subsections 6.1(a) and 6.1(b), a compliance certificate of
a Responsible Officer, substantially in the form of Exhibit G, stating
that, to the best of such officer's knowledge, the Company during such
period has observed or performed all of its covenants and other
agreements, and satisfied every condition, contained in this Agreement and
in the Notes to be observed, performed or satisfied by it (and containing
calculations demonstrating compliance with subsections 7.1 and 7.11 and
such other financial information as requested by the Administrative
Agent), and that such officer has obtained no knowledge of any Default or
Event of Default except as specified in such certificate;
(c) not later than 65 days after the end of each fiscal year of the
Company, a copy of the projections by the Company of the operating budget
and cash flow budget of the Company and its Subsidiaries for the
succeeding fiscal year, such projections to be accompanied by a
certificate of a Responsible Officer to the effect that while such officer
has no reason to believe such projections are incorrect or misleading in
any material respect, such projections are based upon assumptions that may
not materialize or may change adversely due to factors related to the
Company's business or industry, and unanticipated events and circumstances
may occur subsequent to the date of such projections, such that the actual
results achieved may vary from such projections, and such variations may
be material, and that the Company is under no obligation to update such
projections;
(d) promptly upon their becoming available, but in any event no later
than ten days after the same are sent, copies of all financial statements,
reports, notices and proxy statements sent or made available generally by
the Company to its stockholders, or by any Restricted Subsidiary of the
Company to its stockholders (other than the Company), of all regular and
periodic reports and all registration statements (excluding exhibits
thereto and Registration Statements on Form S-8) and prospectuses, if any,
filed by the Company or any of its Restricted Subsidiaries with any
securities exchange or with the Securities and Exchange Commission or any
successor or analogous Governmental Authority; and all of press releases
and other statements made available generally by the Company or any of its
Restricted Subsidiaries to the public concerning
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material developments in the business of the Company and any of its Restricted
Subsidiaries;
(e) promptly, such additional financial and other information as any
Lender may from time to time reasonably request;
(f) as soon as practicable, but in no event later than 25 days after
the end of each month, a Borrowing Base Certificate certifying in
reasonable detail the Borrowing Base as of the last day of such month,
which certificate shall be complete and correct as of the date thereof;
and
(g) concurrently with the delivery of the financial statements
referred to in subsections 6.1(a) and 6.1(b), the financial information
set forth on Schedule 6.2(g) hereto.
6.3 PAYMENT OF OBLIGATIONS. The Company and each Restricted Subsidiary
will pay, discharge or otherwise satisfy at or before maturity or before they
become delinquent, as the case may be, all obligations of whatever nature which
if not so paid could reasonably be expected to have a Material Adverse Effect,
except where the amount or validity thereof is currently being contested in good
faith by appropriate proceedings and reserves in conformity with GAAP with
respect thereto have been provided on the books of the Company or its
Subsidiaries, as the case may be.
6.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. The Company and
the Restricted Subsidiaries, taken as a whole, will at all times remain
principally engaged in the business currently being conducted by the Company and
the Restricted Subsidiaries, and in all respects material to the business of the
Company and the Restricted Subsidiaries taken as a whole, the Company shall, and
will cause each of the Restricted Subsidiaries to, preserve, renew and keep in
full force and effect its corporate existence and take all reasonable action to
maintain all rights, privileges and franchises required for the normal conduct
of such business, except (i) as otherwise permitted pursuant to subsection 7.5
and (ii) the Company shall not be required to preserve any such right, privilege
or franchise if the Company shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company or any Subsidiary
and that the loss thereof could not reasonably be expected to have a Material
Adverse Effect. The Company shall, and will cause each Restricted Subsidiary
to, comply with all Contractual Obligations and Requirements of Law except to
the extent that failure to comply therewith could not reasonably be expected to
have a Material Adverse Effect.
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6.5 MAINTENANCE OF PROPERTY; INSURANCE. The Company and each Restricted
Subsidiary will keep in all material respects all property useful and necessary
in its business in good working order and condition (PROVIDED, HOWEVER, that
nothing in this subsection 6.5 shall prevent the Company from discontinuing the
operation or maintenance, or both the operation and maintenance, of any of such
properties if such discontinuance is, in the judgment of the Company, desirable
in the conduct of its business or the business of any Subsidiary and could not
reasonably be expected to have a Material Adverse Effect); maintain with
financially sound and reputable insurance companies insurance on all its
property in at least such amounts and against at least such risks (but including
in any event public liability, product liability and business interruption) as
are usually insured against in the same general area by companies engaged in the
same or a similar business; and furnish to each Lender, upon written request,
reasonable information as to the insurance carried.
6.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. The Company
and each Restricted Subsidiary will keep proper books of records and account in
which full, true and correct entries in conformity with GAAP and all
Requirements of Law shall be made of all dealings and transactions in relation
to its business and activities; and permit representatives of any Lender, at
such Lender's expense, to visit and inspect as reasonably requested any of its
properties and the properties of the real estate joint ventures in which the
Company or any Subsidiary within the Homebuilding Segment participates or
manages and examine and make abstracts from any of its books and records at any
reasonable time and as often as may reasonably be desired and to discuss the
business, operations, properties and financial and other condition of the
Company and its Subsidiaries and such real estate joint ventures in which the
Company or any Subsidiary within the Homebuilding Segment participates or
manages, as reasonably requested with officers and employees of the Company and
its Subsidiaries and with its independent certified public accountants.
6.7 NOTICES. The Company will promptly give notice to the Administrative
Agent and each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Company or any of its Restricted Subsidiaries or (ii)
litigation, investigation or proceeding which may exist at any time
between the Company or any of its Restricted Subsidiaries and any
Governmental Authority, which, in
64
either case, reasonably could be expected to have a Material Adverse
Effect;
(c) any litigation or proceeding affecting the Company or any of its
Restricted Subsidiaries (i) in which the amount involved and not covered
by insurance is $10,000,000 or more or (ii) in which injunctive or similar
relief is sought which reasonably could be expected to have a Material
Adverse Effect;
(d) the following events, as soon as possible and in any event within
30 days after the Company knows or has reason to know thereof: (i) the
occurrence of any Reportable Event with respect to any Plan, or any
withdrawal from, or the termination, Reorganization or Insolvency of any
Multiemployer Plan or (ii) the institution of proceedings or the taking of
any other action by the PBGC or the Company or any Commonly Controlled
Entity or any Multiemployer Plan with respect to the withdrawal from, or
the terminating, Reorganization or Insolvency of, any Plan;
(e) any change in the rating by Moody's Investors Services, Inc. or
Standard & Poors' Corporation of the Company's long term senior unsecured
debt; and
(f) any event or occurrence which has a Material Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Company proposes to take with respect thereto.
6.8 ENVIRONMENTAL LAWS. (a) The Company, each Restricted Subsidiary and
each joint venture in which the Company or any Restricted Subsidiary
participates or manages will comply with and insure compliance by all tenants
and subtenants, if any, with all Environmental Laws and obtain and comply in all
material respects with and maintain, and insure that all tenants and subtenants
obtain and comply with and maintain, any and all licenses, approvals,
registrations or permits required by Environmental Laws, except in each case to
the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect; and
(b) The Company, each Restricted Subsidiary and each such joint venture
will conduct and complete all investigations, studies, sampling and testing, and
all remedial, removal and other actions required under Environmental Laws and
promptly comply in all material respects with all lawful orders and directives
of all Governmental Authorities respecting Environmental Laws, except to the
extent that the same are being contested in
65
good faith by appropriate proceedings and the pendency of such proceedings could
not reasonably be expected to have a Material Adverse Effect; and
(c) The Company will defend, indemnify and hold harmless the
Administrative Agent and the Lenders, and their respective employees, agents,
officers and directors, from and against any claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or nature
known or unknown, contingent or otherwise, arising out of, or in any way
relating to the violation of or noncompliance with any Environmental Laws, or
any orders, requirements or demand of Governmental Authorities related thereto,
including without limitation reasonable attorney and consultant fees,
investigation and laboratory fees, court costs and litigation expenses, except
to the extent that any of the foregoing arise out of the gross negligence or
willful misconduct of the party seeking indemnification therefor. The
agreements contained in this paragraph (c) shall survive the termination of this
Agreement and the payment of the Notes and all other amounts payable hereunder.
6.9 GUARANTEES FROM FUTURE SUBSIDIARIES. The Company will promptly
secure the execution and delivery of the Guarantee to the Administrative Agent
on behalf of the Lenders from each Significant Subsidiary formed and organized
after the Closing Date, if such Significant Subsidiary is included in the
Homebuilding Segment.
SECTION 7. NEGATIVE COVENANTS
The Company hereby agrees as follows for so long as any of the Commitments
remain in effect, any Note or any Letter of Credit remains outstanding and
unpaid or any other amount is owing to any Lender or any Agent hereunder:
7.1 FINANCIAL CONDITION COVENANTS. The Company shall not:
(a) MAINTENANCE OF CONSOLIDATED NET WORTH OF THE COMPANY. Permit the
Consolidated Net Worth of the Company (i) on June 30, 1993, to be less
than $275,000,000 or (ii) on the last day of any fiscal quarter ending
after June 30, 1993, to be less than $275,000,000 plus the sum of (A) 50%
of Consolidated Net Income of the Company for the period from July 1, 1993
through such date plus (B) the aggregate amount of net proceeds received
by the Company from all registered public offerings of securities of the
Company characterized as capital stock in accordance with GAAP after July
1, 1993 through such date.
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(b) MAINTENANCE OF TOTAL LIABILITIES IN RELATION TO ADJUSTED
CONSOLIDATED TANGIBLE NET WORTH. Permit Combined Total Liabilities of the
Homebuilding Segment on the last day of any fiscal quarter of the Company
to be greater than the sum of (i) 2.75 multiplied by that portion of
Adjusted Consolidated Tangible Net Worth on such day which is less than or
equal to $185,000,000 plus (ii) 2.0 multiplied by that portion of Adjusted
Consolidated Tangible Net Worth on such day which is greater than
$185,000,000; PROVIDED, that in the event that Fixed Charge Coverage is
less than 1.75 for any two consecutive fiscal quarters of the Company, the
multipliers specified in clauses (i) and (ii) of this subsection (i.e.
2.75 and 2.0) shall each be reduced by 0.25, effective as of the last day
of the second of such two consecutive fiscal quarters of the Company, and
such multipliers shall be further reduced by 0.1 on and as of the last day
of each subsequent fiscal quarter of the Company unless Fixed Charge
Coverage for such subsequent fiscal quarter is equal to or greater than
1.75, in which case such multipliers shall be as set forth in clauses (i)
and (ii) of this subsection effective as of such day.
(c) MAINTENANCE OF FIXED CHARGE COVERAGE. Permit Fixed Charge
Coverage to be less than 1.50 for any three consecutive fiscal quarters of
the Company.
(d) MAINTENANCE OF NET WORTH RATIO OF THE FINANCIAL SERVICES SEGMENT.
Permit the ratio of Financial Services Segment Combined Total Liabilities
to the Consolidated Adjusted Net Worth of the Financial Services Segment
to be greater than 8.0 to 1.0 as of the end of any quarter in Ryland
Mortgage Company's fiscal year.
7.2 LIMITATION ON INDEBTEDNESS. Neither the Company nor any Restricted
Subsidiary will create, incur, assume or suffer to exist any Indebtedness,
except:
(a) Indebtedness in respect of the Loans, the Notes, and the other
obligations of the Company under this Agreement;
(b) Indebtedness of the Company to any Subsidiary and of any
Subsidiary to the Company or any other Subsidiary; PROVIDED, in each case,
that such Indebtedness be permitted as an Investment pursuant to
subsection 7.8;
(c) Indebtedness of the Company or any of its Subsidiaries in respect
of purchase money mortgage financing in an aggregate amount at any time
outstanding not to exceed the sum of (i) $75,000,000 and (ii) 25% of
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the amount equal to the excess of Adjusted Consolidated Tangible Net Worth
over $185,000,000, PROVIDED, that the holder of such Indebtedness shall
have no recourse against the Company or any Subsidiary in respect of such
Indebtedness, such recourse being limited solely to the assets financed
with the proceeds of such Indebtedness, and PROVIDED, FURTHER, that the
aggregate value of all assets pledged in respect of or otherwise securing
such Indebtedness shall not at any time exceed the lesser of (x) an amount
equal to 200% of aggregate amount of such Indebtedness and (y)
$150,000,000;
(d) Subordinated Debt in an aggregate principal amount not exceeding
$200,000,000 at any time outstanding;
(e) Specified Debt;
(f) Indebtedness in respect of industrial revenue bonds outstanding
on the Closing Date and listed on Schedule 7.2(f) hereto;
(g) Indebtedness constituting, or constituting the primary
obligations guaranteed by, the Guarantee Obligations permitted pursuant to
subsection 7.4(a), (b) or (c);
(h) Indebtedness of the Company or any other entity in the
Homebuilding Segment in the form of reimbursement obligations in respect
of letters of credit issued for the account of the Company or such other
entity other than Letters of Credit issued hereunder and other than
Permitted IRB Letters of Credit, PROVIDED, that the aggregate amount of
all such Indebtedness shall not exceed $35,000,000 at any one time
outstanding, and PROVIDED, FURTHER, that such Indebtedness shall not
include any letters of credit supporting obligations under any
Indebtedness having a final maturity of more than one year from the date
of incurrence of such Indebtedness, and PROVIDED, FURTHER, that
Indebtedness permitted pursuant to subsection 7.2(o) hereof shall not be
included under this paragraph (h);
(i) Indebtedness of a corporation which becomes a Subsidiary or which
is merged into the Company or any Subsidiary after the date hereof,
PROVIDED that (i) such Indebtedness existed at the time such corporation
became a Subsidiary or was so merged and was not created in anticipation
thereof and (ii) immediately after giving effect to the acquisition of
such corporation by the Company no Default or Event of Default shall have
occurred and be continuing;
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(j) refinancing of existing Indebtedness of the Company or any
Restricted Subsidiary or other Indebtedness permitted under this
subsection 7.2 (a), (b), (c), (d), (e), (f), (g), (h), (k), (l), (m), (n)
and (o) on terms no less favorable to the Company and not resulting in an
Event of Default or Default hereunder, PROVIDED, that the principal amount
of any such Indebtedness shall not be increased pursuant to any such
refinancing;
(k) subject to subsection 7.15 hereof, additional Indebtedness of the
Company or any of its Subsidiaries in the Homebuilding Segment (other than
the Indebtedness described in the paragraphs of this subsection 7.2 other
than this paragraph) (i) having restrictive covenants no more restrictive
or less favorable to the Company than the terms and provisions hereof,
(ii) having a final maturity of greater than one year from the date of
incurrence of such Indebtedness and (iii) having no revolving credit or
other provisions for short-term repayment and reborrowing, PROVIDED, that
no more than an aggregate of $20,000,000 in principal of such Indebtedness
matures prior to the Termination Date;
(l) Indebtedness of any entity within the Ryland Financial Division
so long as there is no recourse in respect thereof to the Company or any
entity in the Homebuilding Segment or so long as any such recourse to the
Company or any entity within the Homebuilding Segment is permitted
pursuant to subsection 7.4;
(m) Indebtedness of the Company and any of its Subsidiaries incurred
to finance the acquisition of fixed or capital assets (whether pursuant to
a loan, a Financing Lease or otherwise) in an aggregate amount at any time
outstanding not to exceed $7,500,000; PROVIDED, that such Indebtedness
shall be secured solely by the assets financed with the proceeds of such
Indebtedness;
(n) Indebtedness of the Company or any other entity in the
Homebuilding Segment in the form of reimbursement obligations in respect
of completion bonds issued for the account of the Company or such other
entity in the ordinary course of business of the Homebuilding Segment in
respect of construction projects undertaken by it; and
(o) Indebtedness of the Company or any other entity in the
Homebuilding Segment in the form of reimbursement obligations in respect
of letters of credit issued for the account of the Company or such other
entity for the benefit of employee benefit or employee insurance programs
of the Company or any of its Subsidiaries.
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7.3 LIMITATION ON LIENS. Neither the Company nor any Restricted
Subsidiary will create, incur, assume or suffer to exist any Lien upon any of
its property, assets or revenues, whether now owned or hereafter acquired,
except for:
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the Company or its
Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are
not overdue for a period of more than 60 days or which are being contested
in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements;
(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
Company or such Subsidiary;
(f) Liens in existence on the Closing Date listed on Schedule 7.3(f),
securing Indebtedness permitted by subsection 7.2(f), a refinancing
thereof pursuant to subsection 7.2(j) or any extensions, renewals or
replacements thereof, PROVIDED that no such Lien is spread to cover any
additional property after the Closing Date and that the amount of
Indebtedness secured thereby is not increased;
(g) Liens securing Indebtedness of the Company and its Subsidiaries
permitted by subsection 7.2(c) or 7.2(m) incurred to finance the
acquisition of fixed or capital assets or a refinancing thereof pursuant
to subsection 7.2(j), PROVIDED that (i) such Liens shall be
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created substantially simultaneously with the acquisition of such fixed or
capital assets (or, in the case of a refinancing pursuant to subsection
7.2(j), such Liens shall be renewals or replacements of Liens created
substantially simultaneously with the acquisition of such fixed or capital
assets) and (ii) such Liens do not at any time encumber any property other
than the property financed by such Indebtedness;
(h) Liens on the property or assets of a corporation which becomes a
Subsidiary or which is merged into the Company or a Subsidiary after the
date hereof securing Indebtedness permitted by subsection 7.2(i), PROVIDED
that (i) such Liens existed at the time such corporation became a
Subsidiary or was so merged and were not created in anticipation thereof,
(ii) any such Lien is not spread to cover any additional property or
assets of such corporation after the time such corporation becomes a
Subsidiary or is so merged, and (iii) the amount of Indebtedness secured
thereby is not increased;
(i) Liens on assets of the Financial Services Segment securing
Indebtedness of the Financial Services Segment permitted by subsection
7.2(g) or 7.2(l); and
(j) judgment and other similar Liens arising in connection with court
proceedings; PROVIDED (i) the execution or other enforcement thereof is
effectively stayed and the claims secured thereby are being actively
contested in good faith by appropriate proceedings and (ii) no Default or
Event of Default shall have occurred and be continuing.
7.4 LIMITATION ON GUARANTEE OBLIGATIONS. Neither the Company nor any
Restricted Subsidiary will create, incur, assume or suffer to exist any
Guarantee Obligation except:
(a) the Company and other entities within the Homebuilding Segment
may incur Guarantee Obligations for the benefit of the Ryland Financial
Division if the aggregate amount of such Guarantee Obligations, plus the
net amount of Investments by the Homebuilding Segment in the Financial
Services Segment, does not exceed $50,000,000 at any time outstanding;
(b) subject to subsection 7.15 hereof, the Company and other entities
within the Homebuilding Segment may incur Guarantee Obligations other than
those described in paragraphs (a) and (e) of this subsection 7.4 in an
aggregate amount at any time outstanding not exceeding 25% of Adjusted
Consolidated Tangible Net Worth at such time, PROVIDED, that Guarantee
Obligations of the Company and other entities within the Homebuilding
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Segment for the benefit of unconsolidated joint ventures permitted under
subsection 7.8(e) hereof shall not at any time exceed an aggregate amount
equal to 15% of Adjusted Consolidated Tangible Net Worth at such time;
(c) the Company and its Restricted Subsidiaries may incur Guarantee
Obligations in respect of Permitted IRB Letters of Credit;
(d) the entities within the Financial Services Segment may incur
other Guarantee Obligations; and
(e) the Company and other entities within the Homebuilding Segment
may incur Guarantee Obligations in respect of letters of credit and
completion bonds permitted pursuant to subsection 7.2(h), (n) or (o).
7.5 LIMITATIONS OF FUNDAMENTAL CHANGES. Neither the Company nor any
Restricted Subsidiary will enter into any merger, consolidation or amalgamation,
or liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease, assign, transfer or otherwise dispose of,
all or substantially all of its property, business or assets except:
(a) any Restricted Subsidiary of the Company may be merged or
consolidated with or into the Company PROVIDED that the Company shall be
the continuing or surviving corporation, or with or into any one or more
wholly owned Restricted Subsidiaries of the Company PROVIDED that the
wholly owned Restricted Subsidiary or Subsidiaries shall be the continuing
or surviving corporation;
(b) any wholly owned Restricted Subsidiary may sell, lease, transfer
or otherwise dispose of any or all of its assets (upon voluntary
liquidation or otherwise) to the Company or any other wholly owned
Restricted Subsidiary of the Company;
(c) the Company or any Restricted Subsidiary may sell, lease, transfer
or otherwise dispose of any or all of its assets to the Company or any
Restricted Subsidiary of the Company, whether existing on or created after
the date of this Agreement; provided, that if the transferor is the
Company or a Guarantor, the transferee shall be the Company or a
Guarantor; and
(d) sales, conveyances, leases, assignments, transfers or other
dispositions of property, business or assets permitted under subsection
7.6.
7.6 LIMITATION ON SALE OF ASSETS. Neither the Company nor any Restricted
Subsidiary will convey, sell,
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lease, assign, transfer or otherwise dispose of any of its property, business or
assets (including, without limitation, stock of Subsidiaries, receivables and
leasehold interests and, with respect to the Financial Services Segment, its
loan servicing, master servicing and bond administration portfolios), whether
now owned or hereafter acquired, except:
(a) obsolete or worn out property disposed of in the ordinary course
of business;
(b) the sale of inventory in the ordinary course of business;
(c) the sale or discount of accounts receivable arising in the
ordinary course of business in connection with the compromise or
collection thereof;
(d) the sale or discount without recourse of mortgage loan
receivables;
(e) the sale by the Financial Services Segment in the ordinary course
of its business of its rights under loan servicing, master servicing or
bond administration portfolios owned on the Closing Date;
(f) as permitted by subsection 7.5 (other than pursuant to subsection
7.5(d));
(g) the sale of mortgages and mortgage-backed or other securities by
the Financial Services Segment in the ordinary course of business;
(h) the sale, transfer or other disposition of any stock, property or
assets of the Limited-Purpose Subsidiaries;
(i) the sale, transfer or other disposition of Cash Equivalents; and
(j) the sale or other disposition of any other property or assets
(including stock or assets of Subsidiaries), PROVIDED that the aggregate
book value of all assets so sold or disposed of in any period of twelve
consecutive months shall not exceed 10% of consolidated total assets of
the Company (excluding the assets of the Limited Purpose Subsidiaries) as
at the beginning of such twelve-month period.
7.7 LIMITATION ON DIVIDENDS. The Company will not declare or pay any
dividend (other than dividends payable solely in common stock of the Company)
on, or make any payment on account of, or set apart assets for a sinking or
other analogous fund for, the purchase, redemption, defeasance, retirement or
other acquisition of, any shares of
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any class of stock of the Company or any warrants or options to purchase any
such stock, whether now or hereafter outstanding, or make any other distribution
in respect thereof, either directly or indirectly, whether in cash or property
or in obligations of the Company or any Subsidiary (such declarations, payments,
setting apart, purchases, redemptions, defeasances, retirements, acquisitions
and distributions being herein called "RESTRICTED PAYMENTS"), except that (i)
the Company may make any Restricted Payment so long as, after giving effect
thereto, no Default or Event of Default will be in existence and (ii) the
Company may in any event pay dividends in respect of the Company's Series A ESOP
Convertible Preferred Stock for any period in any amount not exceeding the
amount of principal and interest payable to the Company for such period by the
recipient of such dividends.
7.8 LIMITATION ON INVESTMENTS. Neither the Company nor any Restricted
Subsidiary will make any Investments, except:
(a) extensions of trade credit and other payables in the ordinary
course of business;
(b) Investments in Cash Equivalents;
(c) acquisitions by the Company or any of its Restricted Subsidiaries
within the Homebuilding Segment of assets constituting a business unit or
the capital stock of any Person; PROVIDED, that such business unit or
Person is engaged in the same general type of business as conducted by the
Company or one of its Restricted Subsidiaries; PROVIDED, FURTHER, that the
aggregate amount of consideration paid by the Company and its Restricted
Subsidiaries for all such acquisitions of assets or capital stock
(including as a part of such consideration any Indebtedness assumed as a
part thereof) does not exceed (i) during the period from and including
July 1, 1993, to and including December 31, 1993, an amount equal to 25%
of Adjusted Consolidated Tangible Net Worth as at the end of the fiscal
year of the Company ended December 31, 1992, (ii) in any fiscal year after
the fiscal year ending December 31, 1993, an amount equal to 25% of
Adjusted Consolidated Tangible Net Worth as at the end of the immediately
prior fiscal year of the Company or (iii) since the Closing Date, an
aggregate amount equal to $100,000,000; and PROVIDED, FINALLY, that after
giving effect thereto, no Default or Event of Default shall be in
existence;
(d) acquisitions by the Company or any of its Restricted Subsidiaries
other than acquisitions permitted under subsection 7.8(c) or (h) of, or
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investments in, assets constituting a business unit or the capital stock
of any Person; PROVIDED, that the aggregate amount of consideration paid
by the Company and its Restricted Subsidiaries for all such acquisitions
of assets or capital stock (including as a part of such consideration any
Indebtedness assumed as a part thereof) does not exceed an aggregate
amount equal to $25,000,000; and PROVIDED, FURTHER, that after giving
effect thereto, no Default or Event of Default shall be in existence;
(e) Investments made after July 1, 1993 by the Company or any of its
Subsidiaries within the Homebuilding Segment in joint ventures in which
neither the Company nor any of its Subsidiaries has an equity interest on
the Closing Date, in an aggregate amount for all such Investments not
exceeding at any date the sum of (i) $20,000,000, (ii) an amount equal to
the aggregate value of all cash distributions attributable to such
Investments received by the Company from all joint ventures in which the
Company or any of its Subsidiaries within the Homebuilding Segment is a
participant, determined in accordance with GAAP, during the period from
July 1, 1993 to and including such date and (iii) 15% of cumulative
Adjusted Consolidated Net Income of the Company for the period from and
including July 1, 1993 to and including the last day of the fiscal quarter
of the Company ending immediately prior to such date;
(f) Investments by the Company in any Subsidiary within the
Homebuilding Segment or in any Existing Consolidated Joint Venture or by
any Subsidiary within the Homebuilding Segment in the Company, in any
other Subsidiary within the Homebuilding Segment or in any Existing
Consolidated Joint Venture;
(g) Investments by the Company or any other entity within the
Homebuilding Segment in the Financial Services Segment if the aggregate
amount of such Investments outstanding on any date, plus the aggregate
amount of all Guarantee Obligations incurred by the Homebuilding Segment
for the benefit of the Ryland Financial Division outstanding on such date,
does not exceed the sum of (i) $50,000,000 and (ii) an amount equal to the
aggregate value of all cash dividends received by the Company from the
Financial Services Segment, determined in accordance with GAAP, during the
period from July 1, 1993 to and including such date;
(h) Investments by entities within the Financial Services Segment in
any Person and acquisitions of assets constituting a business unit or the
capital stock
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of any Person by entities within the Financial Services Segment;
(i) loans and advances to employees of the Company or its
Subsidiaries for travel, entertainment and relocation expenses in the
ordinary course of business;
(j) other loans and advances to employees of the Company in
connection with incentive or stock purchase plans or arrangements in an
aggregate amount not to exceed $1,000,000 at any time outstanding; and
(k) Investments in joint ventures, other than Existing Consolidated Joint
Ventures, existing on the Closing Date, PROVIDED, that the aggregate
amount of all such Investments shall not exceed at any date an amount
equal to the aggregate amount of all such Investments as at the end of the
fiscal year of the Company ended December 31, 1992.
7.9 LIMITATION ON OPTIONAL PAYMENTS AND MODIFICATION OF DEBT INSTRUMENTS.
(a) Neither the Company nor any Restricted Subsidiary will (i) make any optional
payment or prepayment on or redemption of any Subordinated Debt or (ii) amend,
modify or change, or consent or agree to any amendment, modification or change
to any of the terms (including, without limitation, the subordination terms) of
any Subordinated Debt (other than any such amendment, modification or change
which would extend the maturity or reduce the amount of any payment of principal
thereof or which would reduce the rate or extend the date for payment of
interest thereon or would otherwise make the terms of the Subordinated Debt more
favorable to the Company and no less favorable to the holders of the senior debt
to which such Subordinated Debt is subordinated).
(b) No Restricted Subsidiary within the Financial Services Segment will
amend, modify or change, or consent or agree to any amendment, modification or
change to any of the terms of any debt instrument to which it is a party the
effect of which would be to (i) impose restrictions on the payment of dividends,
directly or indirectly, to or for the benefit of the Company which would limit
such dividends to an aggregate amount for all Restricted Subsidiaries in the
Financial Services Segment in any fiscal year which is less than the Combined
Net Income of the Financial Services Segment for the current fiscal year or (ii)
impose restrictions on the making by such Restricted Subsidiaries of Advances,
directly or indirectly, to or for the benefit of the Company which would limit
such Advances to an aggregate amount for all Restricted Subsidiaries in the
Financial Services Segment which is less than $25,000,000 at any time
outstanding, PROVIDED, that provisions which by their terms would impose such
restrictions only in the event of a default
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under such debt instrument and solely as a result of such default shall not be
deemed to be included in the restrictions described in the foregoing clauses (i)
or (ii).
7.10 TRANSACTIONS WITH AFFILIATES. Neither the Company nor any
Restricted Subsidiary will enter into any transaction, including, without
limitation, any purchase, sale, lease or exchange of property or the rendering
of any service, with any Affiliate unless such transaction is otherwise
permitted under this Agreement, or is upon fair and reasonable terms no less
favorable to the Company or such Subsidiary, as the case may be, than it would
obtain in a comparable arm's length transaction with a Person not an Affiliate.
7.11 LIMITATION ON INVENTORY. The Company will not permit (a) Unsold
Land Held at the end of any month to exceed 20% of Adjusted Consolidated
Tangible Net Worth of the Company at such date, or (b) Unsold Land Under
Development to exceed an amount equal to 150% of Adjusted Consolidated Tangible
Net Worth or (c) the ratio of (i) the sum of (A) the average Unsold Land Held on
the last day of each month during the six-month period ending on such date plus
(B) the average Unsold Land Under Development on the last day of each month
during the six-month period ending on such date plus (C) the average Unsold
Housing Inventory on the last day of each month during the six-month period
ending on such date to (ii) the average Total Housing Inventory on the last day
of each month during the six-month period ending on such date to exceed .75 to
1. Notwithstanding any of the foregoing to the contrary, in the event that Fixed
Charge Coverage is less than 1.20 for any two consecutive fiscal quarters of the
Company, then for each fiscal quarter of the Company subsequent to the second
such consecutive fiscal quarter, the aggregate amount of purchases of land
which, immediately after such purchase, would be included under the definition
herein of "Unsold Land Held" during such subsequent quarter shall be limited to
an amount equal to 50% of the average quarterly amount attributable to the
purchase cost of land which would be included in "Cost of Goods Sold" on a
combined balance sheet of the Homebuilding Segment determined in accordance with
GAAP for the four fiscal quarters of the Company immediately prior to such
subsequent quarter, effective until the fiscal quarter of the Company
immediately following the first subsequent fiscal quarter of the Company for
which Fixed Charge Coverage is 1.20 or greater.
7.12 FISCAL YEAR. The Company will not permit the fiscal year of the
Company to end on a day other than December 31.
7.13 COMPLIANCE WITH ERISA. Neither the Company nor any Restricted
Subsidiary will (a) terminate any Plan so as to result in any material liability
to PBGC, (b) engage in
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any "prohibited transaction" (as defined in Section 4975 of the Code or Section
406 of ERISA) involving any Plan which would result in a material liability for
an excise tax or civil penalty in connection therewith, (c) incur or suffer to
exist any material "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, involving any Plan, or (d) allow or suffer to
exist any event or condition which presents a material risk of incurring a
material liability to PBGC by reason of termination of any such Plan.
7.14 PREFERRED STOCK. The Company will not permit any Restricted
Subsidiary within the Homebuilding Segment to issue preferred stock to any
Person other than the Company.
7.15 LIMITATION ON INDEBTEDNESS OF NEW SUBSIDIARIES. Notwithstanding
anything to the contrary in subsection 7.2 or subsection 7.4 hereof, the Company
shall not permit any Subsidiary of the Company in the Homebuilding Segment
created or acquired after the Closing Date to create, incur, assume or suffer to
exist any Indebtedness which otherwise would be permitted under subsection
7.2(k) or subsection 7.4(b) hereof.
7.16 LIMITATION ON INDEBTEDNESS OF JOINT VENTURES. The Company shall not
permit the aggregate principal amount at any one time outstanding of its
proportionate share of Indebtedness of unconsolidated joint ventures to exceed
an amount equal to 25% of Adjusted Consolidated Tangible Net Worth. For the
purposes hereof, the Company's proportionate share of the Indebtedness of each
unconsolidated joint venture shall be equal to the total Indebtedness of such
unconsolidated joint venture multiplied by the Company's percentage equity
investment in such unconsolidated joint venture.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Company shall fail to pay any principal of any Note or any
Reimbursement Obligation when due in accordance with the terms thereof or
hereof; or the Company shall fail to pay any interest on any Note, or any
other amount payable hereunder, within 2 days after any such interest or
other amount becomes due in accordance with the terms thereof or hereof;
or
(b) Any representation or warranty made or deemed made by the Company or
any Guarantor herein or in any other Loan Document or which is contained
in any certificate or document furnished at any time under or
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in connection with this Agreement shall prove to have been incorrect in
any material respect on or as of the date made or deemed made; or
(c) The Company shall default in the observance or performance of any
agreement contained in Section 7 (other than subsection 7.11); or
(d) The Company shall default in the observance or performance of any
other agreement contained in this Agreement (other than as provided in
paragraphs (a) through (c) of this Section 8), and such default shall
continue unremedied (i) for a period of 90 days, in the case of subsection
7.11, or (ii) for a period of 30 days, in the case of any other such
provision; or
(e) The Company or any of its Restricted Subsidiaries shall (i) default
in any payment of principal of or interest of any Indebtedness having a
principal balance of $10,000,000 or more (other than the Notes) or in the
payment of any Guarantee Obligation of $10,000,000 or more, beyond the
period of grace (not to exceed 15 days), if any, provided in the
instrument or agreement under which such Indebtedness or Guarantee
Obligation was created; or (ii) default in the observance or performance
of any other agreement or condition relating to any such Indebtedness or
Guarantee Obligation or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur
or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Guarantee Obligation
(or a trustee or agent on behalf of such holder or holders or beneficiary
or beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or such Guarantee
Obligation to become payable; provided that the failure by Ryland Mortgage
Company or any of its Subsidiaries to pay any such Indebtedness or
Guarantee Obligation in the form of reimbursement obligations in respect
of letters of credit issued for the account of Ryland Mortgage Company or
any of its Subsidiaries backing obligations under master servicing
agreements shall not constitute an Event of Default under this paragraph
(e) until the date which is 90 days after the date on which such
reimbursement obligations become due and payable; or
(f) (i) The Company or any of its Restricted Subsidiaries shall commence
any case, proceeding or other action (A) under any existing or future law
of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of
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debtors, seeking to have an order for relief entered with respect to it,
or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts,
or (B) seeking appointment of a receiver, trustee, custodian, conservator
or other similar official for it or for all or any substantial part of its
assets, or the Company or any of its Restricted Subsidiaries shall make a
general assignment for the benefit of its creditors; or (ii) there shall
be commenced against the Company or any of its Restricted Subsidiaries any
case, proceeding or other action of a nature referred to in clause (i)
above which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced
against the Company or any of its Restricted Subsidiaries any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial
part of its assets which results in the entry of an order for any such
relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within 60 days from the entry thereof; or (iv) the Company
or any of its Restricted Subsidiaries shall take any action in furtherance
of, or indicating its consent to, approval of, or acquiescence in, any of
the acts set forth in clause (i), (ii), or (iii) above; or (v) the Company
or any of its Restricted Subsidiaries shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as
they become due; or
(g) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Company or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of
the Required Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Company or any
Commonly Controlled Entity shall, or in the reasonable opinion of the
Required Lenders is likely to, incur any liability in connection with a
withdrawal
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from, or the Insolvency or Reorganization of, a Multiemployer Plan or (vi)
any other event or condition shall occur or exist with respect to a Plan;
and in each case in clauses (i) through (vi) above, such event or
condition, together with all other such events or conditions, if any,
could reasonably be expected to have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against the Company
or any of its Restricted Subsidiaries involving in the aggregate a
liability (not paid or fully covered by insurance) of $10,000,000 or more
and all such judgments or decrees shall not have been vacated, discharged,
stayed or bonded pending appeal within 60 days from the entry thereof; or
(i) If a Designated Event shall occur;
(j) The Company shall cease to own, directly or indirectly and free and
clear of any Lien, 100% of the issued and outstanding capital stock of
M.J. Brock & Sons, Inc. and Ryland Mortgage Company; or
(k) The Guarantee shall cease, for any reason, to be in full force and
effect, or the Company or any Guarantor shall so assert in writing;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Company,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the Notes (including, without limitation, all amounts of L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters of
Credit shall have presented the documents required thereunder) shall immediately
become due and payable, and (B) if such event is any other Event of Default,
either or both of the following actions may be taken: (i) with the consent of
the Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice to the Company
declare the Commitments to be terminated forthwith, whereupon the Commitments
shall immediately terminate; and (ii) with the consent of the Required Lenders,
the Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice of default to the Company, declare the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement and the Notes (including, without limitation, all amounts
of L/C Obligations, whether or not the beneficiaries of the then outstanding
Letters of Credit shall have presented the documents required thereunder) to be
due and payable forthwith, whereupon the same shall immediately become due and
payable.
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With respect to all Letters of Credit with respect to which presentment
for honor shall not have occurred at the time of an acceleration pursuant to the
preceding paragraph, the Company shall at such time deposit in a cash collateral
account opened by the Administrative Agent an amount equal to the aggregate then
undrawn and unexpired amount of such Letters of Credit. Amounts held in such
cash collateral account shall be applied by the Administrative Agent to the
payment of drafts drawn under such Letters of Credit, and the unused portion
thereof after all such Letters of Credit shall have expired or been fully drawn
upon, if any, shall be applied to repay other obligations of the Company
hereunder and under the Notes. After all such Letters of Credit shall have
expired or been fully drawn upon, all Reimbursement Obligations shall have been
satisfied and all other obligations of the Company hereunder and under the Notes
shall have been paid in full, the balance, if any, in such cash collateral
account shall be returned to the Company.
Except as expressly provided above in this Section, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
SECTION 9. THE AGENTS
9.1 APPOINTMENT. Each Lender hereby irrevocably designates and appoints
Chemical Bank as the Administrative Agent of such Lender under this Agreement
and the other Loan Documents, and each Lender irrevocably authorizes Chemical
Bank, as the Administrative Agent for such Lender, to take such action on its
behalf under the provisions of this Agreement and the other Loan Documents and
to exercise such powers and perform such duties as are expressly delegated to
the Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent. Neither the Co-Agents nor the
Co-Manager, in such capacities, shall have any duties, responsibilities,
obligations, liabilities or functions under this Agreement or the other Loan
Documents.
9.2 DELEGATION OF DUTIES. The Administrative Agent may execute any of
its duties under this Agreement and the other Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The
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Administrative Agent shall not be responsible for the negligence or misconduct
of any agents or attorneys in-fact selected by it with reasonable care.
9.3 EXCULPATORY PROVISIONS. Neither the Administrative Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or Affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with this Agreement or any other Loan
Document (except for its or such Person's own gross negligence or willful
misconduct) or (ii) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by the Company or any
officer thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Administrative Agent under or in connection with, this
Agreement or any other Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or the Notes or any
other Loan Document or for any failure of the Company to perform its obligations
hereunder or thereunder. The Administrative Agent shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of the Company.
9.4 RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent shall be
entitled to rely, and shall be fully protected in relying, upon any Note,
writing, resolution, notice, consent, certificate, affidavit, letter, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Company), independent accountants
and other experts selected by the Administrative Agent. The Administrative
Agent may deem and treat the payee of any Note as the owner thereof for all
purposes unless a written notice of assignment, negotiation or transfer thereof
shall have been filed with the Administrative Agent. The Administrative Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Required Lenders as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Administrative Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and the
Notes and the other Loan Documents in accordance with a request of the Required
Lenders, and such request and any
83
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Notes.
9.5 NOTICE OF DEFAULT. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender or
the Company referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event
that the Administrative Agent receives such a notice, the Administrative Agent
shall give notice thereof to the Lenders. The Administrative Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders; PROVIDED that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.
9.6 NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS. Each Lender
expressly acknowledges that neither the Administrative Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates has made
any representations or warranties to it and that no act by the Administrative
Agent hereinafter taken, including any review of the affairs of the Company,
shall be deemed to constitute any representation or warranty by the
Administrative Agent to any Lender. Each Lender represents to the
Administrative Agent that it has, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Company and made its own decision to make
its Loans hereunder and enter into this Agreement. Each Lender also represents
that it will, independently and without reliance upon the Administrative Agent
or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigation as it deems necessary
to inform itself as to the business, operations, property, financial and other
condition and creditworthiness of the Company. Except for notices, reports and
other documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations,
84
property, condition (financial or otherwise), prospects or creditworthiness of
the Company which may come into the possession of the Administrative Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates.
9.7 INDEMNIFICATION. The Lenders agree to indemnify the Administrative
Agent in its capacity as such (to the extent not reimbursed by the Company and
without limiting the obligation of the Company to do so), ratably according to
their respective Commitment Percentages in effect on the date on which
indemnification is sought under this subsection (or, if indemnification is
sought after the date upon which the Commitments shall have terminated and the
Loans shall have been paid in full, ratably in accordance with their Commitment
Percentages immediately prior to such date), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Notes)
be imposed on, incurred by or asserted against the Administrative Agent in any
way relating to or arising out of this Agreement, any of the other Loan
Documents or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by the Administrative Agent under or in connection with any of the foregoing;
PROVIDED that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the Administrative
Agent's gross negligence or willful misconduct. The agreements in this
subsection shall survive the payment of the Notes and all other amounts payable
hereunder.
9.8 ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY. The Administrative
Agent and its Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with the Company as though the Administrative
Agent were not the Administrative Agent hereunder and under the other Loan
Documents. With respect to its Loans made or renewed by it and any Note issued
to it, the Administrative Agent shall have the same rights and powers under this
Agreement and the other Loan Documents as any Lender and may exercise the same
as though it were not the Administrative Agent, and the terms "Lender" and
"Lenders" shall include the Administrative Agent in its individual capacity.
9.9 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may resign
as Administrative Agent upon 30 days' notice to the Lenders. If the
Administrative Agent shall resign as Administrative Agent under this Agreement
and
85
the other Loan Documents, then the Required Lenders shall appoint from among the
Lenders a successor agent for the Lenders, which successor agent shall be
approved by the Company, whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Notes. After any retiring
Administrative Agent's resignation as Administrative Agent, the provisions of
this subsection shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Administrative Agent under this Agreement and the
other Loan Documents.
SECTION 10. MISCELLANEOUS
10.1 AMENDMENTS AND WAIVERS. Neither this Agreement, any Note, any other
Loan Document, nor any terms hereof of thereof may be amended, supplemented or
modified except in accordance with the provisions of this subsection. With the
written consent of the Required Lenders, the Administrative Agent and the
Company may, from time to time, enter into written amendments, supplements or
modifications hereto and to the Notes and the other Loan Documents for the
purpose of adding any provisions to this Agreement or the Notes or the other
Loan Documents or changing in any manner the rights of the Lenders or of the
Company hereunder or thereunder or waiving, on such terms and conditions as the
Administrative Agent may specify in such instrument, any of the requirements of
this Agreement or the Notes or the other Loan Documents or any Default or Event
of Default and its consequences; PROVIDED, HOWEVER, that no such waiver and no
such amendment, supplement or modification shall (a) reduce the amount or extend
the maturity of any Note or any installment thereof, or reduce the rate or
extend the time of payment of interest thereon, or reduce any fee payable to any
Lender hereunder, in each case without the consent of the Lender affected
thereby, (b) change the amount of any Lender's Revolving Credit Commitment
without the consent of the Lender affected thereby and the Issuing Bank, (c)
change the amount of any Overline Lender's Overline Commitment without the
consent of the Overline Lender affected thereby, (d) amend, modify or waive any
provision of this subsection or reduce the percentage specified in the
definition of Required Lenders, or consent to the assignment or transfer by the
Company of any of its rights and obligations under this Agreement and the other
Loan Documents, in each case without the written consent of all the Lenders, (e)
amend, modify or waive any provision of Section 9 without the written consent
86
of the then Administrative Agent, (d) amend, modify or waive any provision of
subsection 2.1B, 2.2B, 2.3B, 2.7(c), 2.14 or any other provision or definition
affecting the rights and obligations of the Overline Lenders, in each case the
without the written consent of each Overline Lender, (f) amend, modify or waive
any provision of subsection 2.4 without the written consent of Swing Line
Lender, (g) amend, modify or waive any provision of Section 3 without the
written consent of the then Issuing Bank or (h) release the obligation of any
Guarantor under the Guarantee without the written consent of all the Lenders.
Any such waiver and any such amendment, supplement or modification shall apply
equally to each of the Lenders and shall be binding upon the Company, the
Lenders, the Agents and all future holders of the Notes. In the case of any
waiver, the Company, the Lenders and the Agents shall be restored to their
former position and rights hereunder and under the outstanding Notes and any
other Loan Documents, and any Default or Event of Default waived shall be deemed
to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default, or impair any right consequent
thereon.
10.2 NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy, telegraph or telex), and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made when delivered by hand, or 5
days after being deposited in the mail, postage prepaid, or, in the case of
telecopy notice, when received, or, in the case of telegraphic notice, when
delivered to the telegraph company, or, in the case of telex notice, when sent,
answerback received, addressed as follows in the case of the Company and the
Administrative Agent, and as set forth in Schedule 1.1 in the case of the other
parties hereto, or to such other address as may be hereafter notified by the
respective parties hereto and any future holders of the Notes:
The Company: The Ryland Group, Inc.
11000 Broken Land Parkway
Columbia, Maryland 21044-3562
Attention: Stephen B. Cook
Telecopy: 410-715-7195
The Administrative Agent:
Chemical Bank
270 Park Avenue
New York, New York 10017
Attention: Steven Edwards
Telecopy: 212-697-2877
PROVIDED that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to subsection
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2.3A, 2.3B, 2.4, 2.6, 2.7 or 2.8 shall not be effective until received.
10.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no delay
in exercising, on the part of the Administrative Agent or any Lender, any right,
remedy, power or privilege hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
10.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement and the Notes.
10.5 PAYMENT OF EXPENSES AND TAXES. The Company agrees (a) to pay or
reimburse the Administrative Agent for all its reasonable out-of-pocket costs
and expenses incurred in connection with the development, preparation and
execution of, and any amendment, supplement or modification to, this Agreement
and the Notes and the other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation of the transactions
contemplated hereby and thereby, including, without limitation, the reasonable
fees and disbursements of counsel to the Administrative Agent, (b) to pay or
reimburse each Lender and each Agent for all its costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Agreement, the Notes, the other Loan Documents and any such other documents,
including, without limitation, reasonable fees and disbursements of counsel to
such Agent and to the several Lenders, and (c) to pay, indemnify, and hold each
Lender and each Agent harmless from, any and all recording and filing fees and
any and all liabilities with respect to, or resulting from any delay in paying,
stamp, excise and other taxes, if any, which may be payable or determined to be
payable in connection with the execution and delivery of, or consummation of any
of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, this
Agreement, the Notes, the other Loan Documents and any such other documents, and
(d) to pay, indemnify, and hold each Lender and each Agent harmless from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the Notes, the other Loan
Documents or the use of
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the proceeds of the Loans (all the foregoing, collectively, the "indemnified
liabilities"), PROVIDED, that the Company shall have no obligation hereunder to
any Agent or any Lender with respect to indemnified liabilities arising from (i)
the gross negligence or willful misconduct of such Agent or any such Lender,
(ii) legal proceedings commenced against any Agent or any such Lender by any
security holder or creditor thereof arising out of and based upon rights
afforded any such security holder or creditor in its capacity as such, or (iii)
legal proceedings commenced against any Agent or any such Lender by any other
Lender or by any Transferee (as defined in subsection 10.6). Any person which
may seek indemnification under this subsection 10.5 will promptly notify the
Company of any claim, litigation, investigation or proceeding of which it shall
receive notice which may give rise to any liability subject to indemnification
under this subsection 10.5 and shall permit the Company to participate, at the
Company's expense, in the defense of such claim, litigation, investigation or
proceeding unless such person seeking indemnification shall have determined, in
its sole discretion, that such participation by the Company would be
disadvantageous to such person; PROVIDED, HOWEVER, that the failure so to notify
the Company will not relieve it of its indemnification obligations under this
subsection 10.5, except to the extent of any damages directly suffered by the
Company as a result of such failure to notify. The agreements in this
subsection shall survive repayment of the Notes and all other amounts payable
hereunder.
10.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS. (a) This
Agreement shall be binding upon and inure to the benefit of the Company, the
Lenders, the Administrative Agent, all future holders of the Notes and their
respective successors and assigns, except that the Company may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of each Lender.
(b) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time sell to one or more
banks or other financial institutions ("PARTICIPANTS") participating interests
in any Loan owing to such Lender, any Note held by such Lender, any Commitment
of such Lender or any other interest of such Lender hereunder and under the
other Loan Documents. In the event of any such sale by a Lender of a
participating interest to a Participant, such Lender's obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, such
Lender shall remain solely responsible for the performance thereof, such Lender
shall remain the holder of any such Note for all purposes under this Agreement
and the other Loan Documents, such Lender shall retain the sole right to enforce
against the Company the Obligations of the Company relating to the Loans and to
approve any
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amendment, modification or waiver of any provision of this Agreement (other than
amendments, modifications or waivers decreasing any fees payable hereunder or
changing the amount of principal of or the rate at which interest is payable on
the Loans, extending any scheduled principal payment date or date fixed for the
payment of interest on the Loans), and the Company and the Administrative Agent
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement and the other Loan
Documents. The Company agrees that if amounts outstanding under this Agreement
and the Notes are due or unpaid, or shall have been declared or shall have
become due and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement and any Note to the
same extent as if the amount of its participating interest were owing directly
to it as a Lender under this Agreement or any Note, PROVIDED that, in purchasing
such participating interest, such Participant shall be deemed to have agreed to
share with the Lenders the proceeds thereof as provided in subsection 10.7(a) as
fully as if it were a Lender hereunder. The Company also agrees that each
Participant shall be entitled to the benefits of subsections 2.16, 2.17, 2.18
with respect to its participation in the Commitments and the Loans outstanding
from time to time as if it were a Lender; PROVIDED that, in the case of
subsection 2.18, such Participant shall have complied with the requirements of
said subsection and PROVIDED, FURTHER, that no Participant shall be entitled to
receive any greater amount pursuant to any such subsection than the transferor
Lender would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant had no
such transfer occurred.
(c) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time and from time to
time assign to any Lender or any Affiliate thereof or, with the consent of the
Company and the Administrative Agent (which in each case shall not be
unreasonably withheld), to an additional bank or financial institution ("an
ASSIGNEE") all or any part of its rights and obligations under this Agreement
and the Notes pursuant to an Assignment and Acceptance, substantially in the
form of Exhibit F, executed by such Assignee, such assigning Lender (and, in the
case of an Assignee that is not then a Lender or an Affiliate thereof, by the
Administrative Agent and the Company) and delivered to the Administrative Agent
for its acceptance and recording in the Register. Upon such execution,
delivery, acceptance and recording, from and after the effective date determined
pursuant to such Assignment and Acceptance, (x) the Assignee thereunder shall be
a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender
90
hereunder with a Commitment as set forth therein, (y) the assigning Lender
thereunder shall, to the extent provided in such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such assigning Lender
shall cease to be a party hereto) and (z) after giving effect to each such
assignment, each of the assigning Lender (unless such assigning Lender shall
have assigned its entire Commitment pursuant to such assignment) and each
assignee shall have a Commitment in an amount not less than $5,000,000.
(d) The Administrative Agent shall maintain at its address referred to in
subsection 10.2 a copy of each Assignment and Acceptance delivered to it and a
register (the "REGISTER") for the recordation of the names and addresses of the
Lenders and the Commitment of, and principal amount of the Loans owing to, each
Lender from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and the Company, the Administrative Agent and the
Lenders may treat each Person whose name is recorded in the Register as the
owner of the Loan recorded therein for all purposes of this Agreement. The
Register shall be available for inspection by the Company or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an Affiliate thereof, by the Company and the Administrative
Agent) together with payment to the Administrative Agent of a registration and
processing fee of $2,500, the Administrative Agent shall (i) promptly accept
such Assignment and Acceptance and (ii) on the effective date determined
pursuant thereto record the information contained therein in the Register and
give notice of such acceptance and recordation to the Lenders and the Company.
On or prior to such effective date, the Company, at its own expense, shall
execute and deliver to the Administrative Agent (in exchange for the Revolving
Credit Note of the assigning Lender, which such Note shall be returned to the
Company marked "Cancelled") a new Revolving Credit Note to the order of such
Assignee in an amount equal to the Revolving Credit Commitment assumed by it
pursuant to such Assignment and Acceptance and, if the assigning Lender has
retained a Revolving Credit Commitment hereunder, a new Revolving Credit Note to
the order of the assigning Lender in an amount equal to the Revolving Credit
Commitment retained by it hereunder. Such new Notes shall be dated the Closing
Date and shall otherwise be in the form of the Note replaced thereby.
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(f) The Company authorizes each Lender to disclose to any Participant or
Assignee (each, a "TRANSFEREE") and any prospective Transferee any and all
financial information in such Lender's possession concerning the Company and its
Affiliates which has been delivered to such Lender by or on behalf of the
Company pursuant to this Agreement or which has been delivered to such Lender by
or on behalf of the Company in connection with such Lender's credit evaluation
of the Company and its Affiliates prior to becoming a party to this Agreement,
PROVIDED that, prior to any such disclosure of nonpublic information, each such
assignee or participant or proposed assignee or participant shall execute an
agreement whereby such assignee or participant shall agree to be bound by the
provisions contained in Section 10.15 hereof.
(g) Nothing herein shall prohibit any Lender from pledging or assigning
any Note to any Federal Reserve Bank in accordance with applicable law.
10.7 ADJUSTMENTS; SET-OFF. (a) If any Lender (a "BENEFITTED LENDER")
shall at any time receive any payment of all or part of its Loans or
Reimbursement Obligations owing to it, or interest thereon, or receive any
collateral in respect thereof (whether voluntarily or involuntarily, by set-off,
pursuant to events or proceedings of the nature referred to in Section 8(f), or
otherwise), other than in respect of Swing Line Loans or Overline Loans pursuant
to the provisions of this Agreement, in a greater proportion than any such
payment to or collateral received by any other Lender, if any, in respect of
such other Lender's Loans or the Reimbursements Obligations owing to it, or
interest thereon, such Benefitted Lender shall purchase for cash from the other
Lenders such portion of each such other Lender's Loan or the Reimbursement
Obligations owing to it, or shall provide such other Lenders with the benefits
of any such collateral, or the proceeds thereof, as shall be necessary to cause
such Benefitted Lender to share the excess payment or benefits of such
collateral or proceeds ratably with each of the Lenders; PROVIDED, HOWEVER, that
if all or any portion of such excess payment or benefits is thereafter recovered
from such Benefitted Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without
interest. The Company agrees that each Lender so purchasing a portion of
another Lender's Loan may exercise all rights of payment (including, without
limitation, rights of set-off) with respect to such portion as fully as if such
Lender were the direct holder of such portion.
(b) If an Event of Default shall occur and be continuing, in addition to
any rights and remedies of the Lenders provided by law, each Lender shall have
the right, without prior notice to the Company, any such notice being expressly
waived by the Company to the extent permitted by
92
applicable law, to set-off and appropriate and apply against any amount becoming
due and payable by the Company hereunder or under the Notes (whether at the
stated maturity, by acceleration or otherwise)any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender to or for the credit or the account of the Company. Each
Lender agrees promptly to notify the Company and the Administrative Agent after
any such set-off and application made by such Lender, PROVIDED that the failure
to give such notice shall not affect the validity of such set-off and
application.
10.8 NEW LENDERS. With the consent of the Company, the Issuing Bank, the
Swing Line Lender and the Administrative Agent, one or more commercial banks
(each, a "NEW LENDER") may become Lenders parties to this Agreement, and provide
Revolving Credit Commitments aggregating up to $35,000,000, pursuant to New
Lender Supplements, substantially in the form of Exhibit H hereto, entered into
by such New Lender, the Company and the Administrative Agent. Upon execution
and delivery of a New Lender Supplement by the Company, the Administrative Agent
and the New Lender party thereto, and effective on the Effective Date set forth
therein, such New Lender shall become a Lender party to this Agreement with the
Revolving Credit Commitment set forth therein. On such Effective Date (i) this
Agreement shall be deemed amended to the extent, and only to the extent,
necessary to reflect the addition of such New Lender and its Revolving Credit
Commitment and the resulting changes in the Revolving Credit Commitment
Percentages and Commitment Percentages of all the Lenders, (ii) the Company
shall cause to be delivered to such New Lender a conformed copy of this
Agreement, of all documents delivered as conditions precedent to the Closing
Date pursuant to Section 5 and of all amendments, supplements and modifications
hereto, and a duly executed Revolving Credit Note for such New Lender conforming
to the requirements of this Agreement and (iii) if any Revolving Credit Loans
shall be outstanding on such Effective Date, such New Lender shall make
Revolving Credit Loans in an aggregate principal amount such that, after giving
effect to such Revolving Credit Loans and to the changes in Revolving Credit
Commitment Percentages effected by such New Lender Supplement, the aggregate
outstanding principal amount of Revolving Credit Loans of each Lender will equal
its Revolving Credit Commitment Percentage of all outstanding Revolving Credit
Loans. Notwithstanding the foregoing, if on the Effective Date of any New
Lender Supplement there are Revolving Credit Loans outstanding as Eurodollar
Loans or C/D Rate Loans, the Company, the Administrative Agent and the New
Lender party thereto may, in their discretion, make appropriate arrangements
such that such New Lender is not
93
required to fund Eurodollar Loans or C/D Rate Loans on a day other than the
first day of the Interest Period applicable thereto; such arrangements may
include, without limitation, permitting such New Lender to fund its Revolving
Credit Loans as ABR Loans or upon another interest rate basis for the remainder
of any then current Interest Periods or other arrangements deemed fair and
equitable by the Company, the Administrative Agent and such New Lender.
10.9 COUNTERPARTS. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Company and the Administrative Agent.
10.10 SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.11 INTEGRATION. This Agreement represents the agreement of the
Company, the Agents and the Lenders with respect to the subject matter hereof,
and there are no promises or representations by any Agent or any Lender relative
to subject matter hereof not reflected herein.
10.12 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.
10.13 SUBMISSION TO JURISDICTION. The Company hereby irrevocably and
unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgement
in respect thereof, to the non-exclusive general jurisdiction of the
Courts of the State of New York, the courts of the United States of
America for the Southern District of New York, and appellate courts from
any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the
venue of any
94
such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or
claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
Company at its address set forth in subsection 9.2 or at such other
address of which the Administrative Agent shall have been notified
pursuant thereto; and
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction.
10.14 WAIVER OF JURY TRIAL. THE COMPANY, THE AGENTS AND THE LENDERS
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT OR THE NOTES OR ANY OTHER LOAN DOCUMENT
AND FOR ANY COUNTERCLAIM THEREIN.
10.15 CONFIDENTIALITY. Each Lender agrees to take normal and reasonable
precautions to maintain the confidentiality of information designated in writing
as confidential and provided to it by the Company or any Subsidiary in
connection with this Agreement or any other Loan Document; PROVIDED, HOWEVER,
that any Lender may disclose such information (a) at the request of any
regulatory authority or in connection with an examination of such Lender by any
such authority, (b) pursuant to subpoena or other court process, (c) when
required to do so in accordance with the provisions of any applicable law, (d)
at the direction of any other Governmental Authority, (e) to such Lender's
independent auditors and other professional advisors, (f) to any Transferee or
potential Transferee or (g) to the extent such information is public when
received by such Lender or becomes public thereafter due to the act or omission
of any person other than such Lender or its advisors, agents, employees or
representatives; PROVIDED that such Transferee agrees to comply with the
provisions of this subsection 10.15.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in New York, New York by their proper and duly
authorized officers as of the day and year first above written.
THE RYLAND GROUP, INC.
By: /s/ Stephen B. Cook
------------------------------------
Title: Vice President
CHEMICAL BANK, as Administrative Agent,
as a Co-Agent and as a Lender
By: /s/ Steven T. Edwards
------------------------------------
Title: Assistant Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a
Co-Agent and as a Lender
By: /s/ Douglas Dickinson
------------------------------------
Title: Vice President
NATIONSBANK OF NORTH CAROLINA,
N.A., as a Co-Agent and as a Lender
By: /s/ Randy K. Farrell
------------------------------------
Title: Senior Vice President
PNC BANK, NATIONAL ASSOCIATION,
as a Co-Manager and as a Lender
By: /s/ Dale R. Mason
------------------------------------
Title: Assistant Vice President
96
THE FIFTH THIRD BANK
By: /s/ Andrew K. Hauck
------------------------------------
Title: Vice President
THE INDUSTRIAL BANK OF JAPAN
TRUST COMPANY
By: /s/ Takeshi Kawano
------------------------------------
Title: Senior Vice President &
Senior Manager
Corporate Finance USA
NBD BANK, N.A.
By: /s/ Carolann M. Morykwas
------------------------------------
Title: Vice President
MARYLAND NATIONAL BANK
By: /s/ Charles A. Rudolphi
------------------------------------
Title: Vice President
TRUST COMPANY BANK
By: /s/ Hollis Linginfeller
------------------------------------
Title: Vice President
By: /s/ Elizabeth A. Muse
------------------------------------
Title: Assistant Vice President