10/24/96
_________________________________
CREDIT AGREEMENT
_________________________________
Dated as of October 22, 1996
_________________________________
BEAZER HOMES USA, INC.,
The Guarantors Parties Thereto,
The Banks Parties Thereto,
and
The First National Bank of Chicago
As Agent
_________________________________
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS..................... 1
Section 1.01. Defined Terms........................................... 1
Section 1.02. Accounting Terms......................................... 14
ARTICLE II
AMOUNTS AND TERMS OF THE LOANS........................ 14
Section 2.01. Revolving Credit......................................... 14
Section 2.02. Reduction of Commitment.................................. 15
Section 2.03. Notice and Manner of Borrowing........................... 16
Section 2.04. Non-Receipt of Funds by Agent............................ 16
Section 2.05. Determination of Applicable Margins and
Applicable Commitment Rate......................................... 17
Section 2.06. Conversions and Renewals................................. 18
Section 2.07. Interest................................................. 18
Section 2.08. Interest Rate Determination.............................. 20
Section 2.09. Fees..................................................... 20
Section 2.10. Notes.................................................... 21
Section 2.11. Prepayments.............................................. 21
Section 2.12. Method of Payment........................................ 22
Section 2.13. Use of Proceeds.......................................... 23
Section 2.14. Yield Protection......................................... 23
Section 2.15. Changes in Capital Adequacy Regulations.................. 24
Section 2.16. Availability of LIBOR Loans.............................. 25
Section 2.17. Funding Indemnification.................................. 25
Section 2.18. Bank Statements; Survival of Indemnity................... 25
Section 2.19. Extension of Termination Date............................ 25
Section 2.20. Replacement of Certain Banks............................. 26
Section 2.21. Swing Line............................................... 27
ARTICLE III
CONDITIONS PRECEDENT................................ 28
Section 3.01. Conditions Precedent to the Initial
Loan..................................................... 28
Section 3.02. Conditions Precedent to All Loans........................ 30
ARTICLE IV
REPRESENTATIONS AND WARRANTIES............................ 31
Section 4.01. Incorporation, Formations Good Standing,
and Due Qualification.................................... 31
Section 4.02. Power and Authority...................................... 31
Section 4.03. Legally Enforceable Agreement............................ 32
Section 4.04. Financial Statements..................................... 32
Section 4.05. Labor Disputes and Acts of God........................... 32
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Section 4.06. Other Agreements......................................... 32
Section 4.07. Litigation............................................... 33
Section 4.08. No Defaults on Outstanding Judgments or
Orders................................................... 33
Section 4.09. Ownership and Liens...................................... 33
Section 4.10. Subsidiaries and Ownership of Stock...................... 33
Section 4.11. ERISA.................................................... 34
Section 4.12. Operation of Business.................................... 34
Section 4.13. Taxes.................................................... 34
Section 4.14. Laws; Environment........................................ 34
Section 4.15. Investment Company Act.................................. 35
Section 4.16. Public Utility Holding Company Act...................... 36
ARTICLE V
AFFIRMATIVE COVENANTS.................................. 36
Section 5.01. Maintenance of Existence................................. 36
Section 5.02. Maintenance of Records................................... 36
Section 5.03. Maintenance of Properties................................ 36
Section 5.04. Conduct of Business...................................... 36
Section 5.05. Maintenance of Insurance................................. 36
Section 5.06. Compliance with Laws..................................... 37
Section 5.07. Right of Inspection...................................... 37
Section 5.08. Reporting Requirements................................... 37
Section 5.09. Subsidiary Reporting Requirements........................ 41
Section 5.10. Environment.............................................. 41
Section 5.11. Use of Proceeds.......................................... 42
Section 5.12. Ranking of Obligations................................... 42
Section 5.13. Taxes.................................................... 42
Section 5.14. Wholly Owned Status...................................... 42
Section 5.15. New Subsidiaries......................................... 42
ARTICLE VI
NEGATIVE COVENANTS.................................. 42
Section 6.01. Liens.................................................... 42
Section 6.02. Debt..................................................... 44
Section 6.03. Mergers, Etc..............................................45
Section 6.04. Leases................................................... 45
Section 6.05. Sale and Leaseback....................................... 45
Section 6.06. Sale of Assets........................................... 45
Section 6.07. Investments.............................................. 46
Section 6.08. Guaranties, Etc.......................................... 46
Section 6.09. Transactions With Affiliates............................. 47
Section 6.10. Land Inventory........................................... 47
Section 6.11. Total Inventory.......................................... 47
Section 6.12. Senior Debt ............................................. 47
Section 6.13. Amendment or Modification of Indenture................... 47
Section 6.14. UHIC..................................................... 48
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ARTICLE VII
FINANCIAL COVENANTS................................... 48
Section 7.01. Minimum Consolidated Tangible Net Worth.................. 48
Section 7.02. Leverage Ratio........................................... 48
Section 7.03. Interest Coverage Ratio.................................. 48
Section 7.04. Permitted Senior Debt.................................... 48
Section 7.05. Fixed Charge Coverage Ratio.............................. 48
Section 7.06. Land Inventory........................................... 49
ARTICLE VIII
EVENTS OF DEFAULT................................... 49
Section 8.01. Events of Default........................................ 49
Section 8.02. Set Off.................................................. 52
ARTICLE IX
GUARANTY....................................... 52
Section 9.01. Guaranty................................................. 52
Section 9.02. No Impairment of Guaranty................................ 53
Section 9.03. Continuation and Reinstatements etc...................... 54
Section 9.04. Limitation on Guaranteed Amount.......................... 54
ARTICLE X
AGENCY PROVISIONS.................................... 55
Section 10.01. Authorization and Action................................ 55
Section 10.02. Liability of Agent...................................... 55
Section 10.03. Rights of Agent as a Bank.............................. 56
Section 10.04. Independent Credit Decisions............................ 56
Section 10.05. Indemnification......................................... 57
Section 10.06. Successor Agent......................................... 57
Section 10.07. Sharing of Payments, Etc................................ 58
Section 10.08. Withholding Tax Matters................................. 58
ARTICLE XI
MISCELLANEOUS..................................... 59
Section 11.01. Amendments, Etc......................................... 59
Section 11.02. Notices, Etc............................................ 59
Section 11.03. No Waiver............................................... 60
Section 11.04. Costs, Expenses, and Taxes.............................. 60
Section 11.05. Integration............................................. 61
Section 11.06. Indemnity............................................... 61
Section 11.07. Governing Law........................................... 61
Section 11.08 Severability of Provisions.............................. 61
Section 11.09 Counterparts............................................ 61
Section 11.10 Headings................................................ 61
Section 11.11 Submission to Jurisdiction.............................. 61
Section 11.12 Jury Trial Waiver....................................... 62
Section 11.13 Government Regulation................................... 62
Section 11.14 No Fiduciary Duty....................................... 62
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Section 11.15. Confidentiality......................................... 62
Section 11.16. Termination of Existing Credit Agreement................ 62
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS............ 63
Section 12.01. Successors and Assigns.................................. 63
Section 12.02. Participations.......................................... 63
Section 12.03. Assignments............................................. 64
Section 12.04. Dissemination of Information............................ 65
Section 12.05. Tax Treatment........................................... 65
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LIST OF EXHIBITS
Exhibit Description Reference
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Exhibit A Form of Note 2.10
Schedule to Note
Exhibit B Summary of Opinion of Counsel for 3.01(5)
Borrower and Delaware Guarantors
Exhibit C Summary of Opinion of Illinois
Counsel for Borrower 3.01(5)
Exhibit D Summary of Opinion of Counsel for
Agent 3.01(6)
Exhibit E Summary of Opinion of Local Counsel for 3.01(10)
Beazer Homes Corp.
Exhibit F List of Subsidiaries of Borrower 4.10
Exhibit G Assignment Agreement 12.03(b)
Exhibit H Indenture 1.01
Schedule 6.02 Existing Debt 6.02
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CREDIT AGREEMENT dated as of October 22, 1996 among BEAZER HOMES USA,
INC., a Delaware corporation (the "Borrower"), BEAZER MORTGAGE CORPORATION, a
Delaware corporation, BEAZER HOMES CORP., a Tennessee corporation, BEAZER HOMES
SALES ARIZONA INC., a Delaware corporation, BEAZER REALTY CORP., a Georgia
corporation, BEAZER/SQUIRES REALTY, INC., a North Carolina corporation, PANITZ
HOMES REALTY, Inc., a Florida corporation, BEAZER HOMES HOLDING CORP., a
Delaware corporation, BEAZER HOMES TEXAS HOLDINGS, INC., a Delaware corporation,
and BEAZER HOMES TEXAS, L.P., a Delaware limited partnership (individually an
"Original Guarantor" and collectively the "Original Guarantors") and THE FIRST
NATIONAL BANK OF CHICAGO ("First Chicago"), THE FIRST NATIONAL BANK OF BOSTON,
BANK ONE, ARIZONA, NA, GUARANTY FEDERAL BANK, F.S.B., BANK OF AMERICA ILLINOIS,
COMERICA BANK, SUNTRUST BANK and THE FIRST NATIONAL BANK OF CHICAGO as Agent for
the Banks hereunder.
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. DEFINED TERMS. As used in this Agreement, the
following terms have the following meanings (terms defined in the singular shall
have the same meaning when used in the plural and vice versa):
"ABR Loan" means any Loan when and to the extent that the interest
rate therefor is determined by reference to the Alternate Base Rate.
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which the
Borrower or any of its Subsidiaries (i) acquires any going concern or all or
substantially all of the assets of any firm, corporation or division thereof,
whether through purchase of assets, merger or otherwise or (ii) directly or
indirectly acquires (in one transaction or as the most recent transaction in a
series of transactions) at least a majority (in number of votes) of the
securities of a corporation which have ordinary voting power for the election of
directors (other than securities having such power only by reason of the
happening of a contingency) or a majority (by percentage or voting power) of the
outstanding partnership interests of a partnership.
"Affiliate" means any Person (1) which directly or indirectly
controls, or is controlled by, or is under common control with, the Borrower or
a Subsidiary; (2) which directly or indirectly beneficially owns or holds five
percent (5%) or more of any class of voting stock of the Borrower or any
Subsidiary; or (3) five percent (5%) or more of the voting stock of which is
directly or indirectly beneficially owned or held by the Borrower or a
Subsidiary. The term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether
through the ownership of voting securities, by contract or otherwise.
"Agent" means The First National Bank of Chicago.
"Aggregate Commitments" means the aggregate Commitments of all the
Banks, as reduced from time to time pursuant to the terms of this Agreement.
"Agreement" means this Credit Agreement, as amended, supplemented, or
modified from time to time.
"Alternate Base Rate" means a fluctuating rate per annum equal to the
higher of (i) the corporate base rate of interest announced by the Agent from
time to time, changing when and as said rate changes, or (ii) the sum of 1/2 of
1% plus the Federal Funds Rate then in effect.
"Applicable ABR Margin" means, as at any date of determination, the
margin indicated in Section 2.05 as then applicable to ABR Loans and Swing Line
Loans (under Section 2.07(a)(i)).
"Applicable Commitment Rate" means, as at any date of determination,
the rate per annum indicated in Section 2.05 as then applicable in the
determination of the commitment fee (under Section 2.09).
"Applicable LIBOR Margin" means, as at any date of determination, the
margin indicated in Section 2.05 as then applicable to LIBOR Loans (under
Section 2.07(a)(ii)).
"Applicable Margin(s)" means the Applicable ABR Margin and/or the
Applicable LIBOR Margin, as the case may be.
"Borrowing" means a borrowing consisting of Loans of the same type
made, renewed or converted on the same day.
"Borrowing Base" means, with respect to an Inventory Valuation Date
for which it is to be determined, an amount equal to the sum of (i) ninety
percent (90%) of the unencumbered Receivables, (ii) eighty percent (80%) of the
book value of unencumbered Housing Units Under Contract, (iii) seventy percent
(70%) of the book value of unencumbered Speculative Housing Units, and (iv)
fifty percent (50%) of the book value of unencumbered Finished Lots. The term
"unencumbered" means that such asset is not subject to any Lien (except for
Liens permitted under Sections 6.01(1), (2) or (6)).
"Borrowing Base Certificate" means a written certificate in a form
acceptable to the Majority Banks setting
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forth the amount of the Borrowing Base with respect to the fiscal quarter most
recently completed, certified as true and correct by the Chief Financial Officer
of the Borrower.
"Business Day" means (i) with respect to any borrowing, payment or
rate selection of LIBOR Loans, a day (other than a Saturday or Sunday) on which
banks generally are open in Chicago and New York for the conduct of
substantially all of their commercial lending activities and on which dealings
in United States dollars are carried on in the London interbank market and (ii)
for all other purposes, a day (other than a Saturday or Sunday) on which banks
generally are open in Chicago for the conduct of substantially all of their
commercial lending activities.
"Capital Lease" means all leases which have been or should be
capitalized on the books of the lessee in accordance with GAAP.
"Change of Control" means any of the following: (i) the sale, lease,
conveyance or other disposition of all or substantially all of the assets of the
Borrower or (except for an Internal Reorganization) of a Significant Guarantor
or Significant Subsidiary, as an entirety or substantially as an entirety to any
Person or "group" (within the meaning of Section 13(d)(3) of the Exchange Act)
in one or a series of transactions; (ii) the acquisition of fifty percent (50%)
or more of the aggregate voting power of all classes of Common Equity of the
Borrower or (except for an Internal Reorganization) of a Significant Guarantor
or Significant Subsidiary in one transaction or a series of related
transactions; (iii) the liquidation or dissolution of the Borrower or (except
for an Internal Reorganization) of a Significant Guarantor or Significant
Subsidiary; (iv) any transaction or a series of related transactions (as a
result of a tender offer, merger, consolidation or otherwise but excluding an
Internal Reorganization) that results in, or that is in connection with, (a) any
Person, including, a "group" (within the meaning of Section 13(d)(3) of the
Exchange Act) acquiring "beneficial ownership" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of fifty percent (50%) or more of the
aggregate voting power of all classes of Common Equity of the Borrower, a
Significant Guarantor or a Significant Subsidiary, or of any Person that
possesses "beneficial ownership" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of fifty percent (50%) or more of the aggregate
voting power of all classes of Common Equity of the Borrower, a Significant
Guarantor or a Significant Subsidiary, or (b) less than fifty percent (50%)
(measured by the aggregate voting power of all classes) of the Common Equity of
the Borrower being registered under Section 12(b) or 12(g) of the Exchange Act;
(v) a majority of the Board
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of Directors of the Borrower, a Significant Guarantor or a Significant
Subsidiary, not being comprised of persons who (a) were members of the Board of
Directors of such Borrower, Significant Guarantor or Significant Subsidiary, as
of the date of this Agreement ("Original Directors"), or (b) were nominated for
election or elected to the Board of Directors of such Borrower, Significant
Guarantor, or Significant Subsidiary, with the affirmative vote of at least a
majority of the directors who themselves were Original Directors (as defined in
the Indenture) or who were similarly nominated for election or elected; or (vi)
with respect to any Significant Guarantor or Significant Subsidiary which is not
a corporation, any loss of the right or power to control the activities,
directly, or indirectly through one or more intermediaries, or both. Nothing
herein contained shall modify or otherwise affect the provisions of Section
6.06.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and the regulations and published interpretations thereof.
"Commitment" has the meaning assigned to such term in Section 2.01.
"Common Equity" has the meaning assigned to such term in the
Indenture.
"Commonly Controlled Entity" means an entity, whether or not
incorporated, which is under common control with the Borrower within the meaning
of Section 414(b) or 414(c) of the Code.
"Consolidated Debt" means the Debt of the Borrower and its
Subsidiaries determined on a consolidated basis.
"Consolidated Tangible Assets" has the meaning assigned to such term
in the Indenture.
"Consolidated Tangible Net Worth" has the meaning assigned to such
term in the Indenture.
"Debt" means, without duplication, with respect to any Person (1)
indebtedness or liability for borrowed money, including, without limitation,
subordinated indebtedness (other than trade accounts payable and accruals
incurred in the ordinary course of business); (2) obligations evidenced by
bonds, debentures, notes, or other similar instruments; (3) obligations for the
deferred purchase price of property (including, without limitation, seller
financing of any Inventory) or services, PROVIDED, HOWEVER, that Debt shall not
include obligations with respect to options to purchase real property that have
not been exercised; (4) obligations as lessee under Capital Leases to the
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extent that the same would, in accordance with GAAP, appear as liabilities in
the Borrower's consolidated balance sheet; (5) current liabilities in respect of
unfunded vested benefits under Plans and incurred withdrawal liability under any
Multiemployer Plan; (6) reimbursement obligations under letters of credit
(including contingent obligations with respect to letters of credit not yet
drawn upon); (7) obligations under acceptance facilities; (8) all guaranties,
endorsements (other than for collection or deposit in the ordinary course of
business), and other contingent obligations to purchase, to provide funds for
payment, to supply funds to invest in any other Person or entity, or otherwise
to assure a creditor against loss, provided, however, that "Debt" shall not
include guaranties of performance obligations; (9) obligations secured by any
Liens on any property of such Person, whether or not the obligations have been
assumed; and (10) net liabilities under interest rate swap, exchange or cap
agreements. A Person's Debt shall also include, without duplication, its
applicable share of the Debt of any joint venture or partnership in which it
holds an interest.
"Default" means any of the events specified in Section 8.01, whether
or not any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"EBITDA" means, for any period, on a consolidated basis for the
Borrower and its Subsidiaries, the sum of the amounts for such period of (i) Net
Income, PLUS (ii) charges against income for foreign, federal, state and local
taxes, PLUS (iii) Interest Expense, PLUS (iv) depreciation, PLUS (v)
amortization expense, including, without limitation, amortization of goodwill
and other intangible assets and amortization of deferred compensation expense,
PLUS (vi) extraordinary losses, MINUS (vii) interest income, MINUS (viii)
extraordinary gains (and any unusual gains arising in or outside of the ordinary
course of business not included in extraordinary gains that have been included
in the determination of Net Income).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published interpretations
thereof.
"Eurocurrency Reserve Requirement" means, for any Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on
"Eurocurrency liabilities" (as such term is used in Regulation D) but without
benefit or credit of proration, exemptions, or offsets that might otherwise be
available from time to time under Regulation D.
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Without limiting the effect of the foregoing, the Eurocurrency Reserve
Requirement shall reflect any other reserves required to be maintained against
(1) any category of liabilities that includes deposits by reference to which the
LIBOR Interest Rate for LIBOR Loans is to be determined; or (2) any category of
extension of credit or other assets that include LIBOR Loans.
"Event of Default" means any of the events specified in Section 8.01,
provided that any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Existing Credit Agreement" means that certain Credit Agreement dated
as of January 20, 1995, as amended, among the Borrower, certain of the Original
Guarantors, First Chicago (individually and as agent), The First National Bank
of Boston and Bank One, Arizona, N.A.
"Extension Request" has the meaning assigned to that term in Section
2.19(a).
"Federal Funds Rate" means, for each day, a fluctuating interest rate
per annum equal to the weighted average of the rates on overnight Federal Funds
transactions with members of the Federal Reserve System arranged by Federal
Funds brokers, as published for such day (or, if such day is not a Business Day,
for the immediately preceding Business Day) by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a Business Day,
the average of the quotations at approximately 10:00 A.M. Chicago time on such
day on such transactions received by the Agent from three Federal Funds brokers
of recognized standing selected by the Agent in its sole discretion.
"Finished Lots" means Lots in respect of which a building permit, from
the applicable local governmental authority, has been or could be obtained;
PROVIDED, HOWEVER, that the term "Finished Lots" shall not include any Land upon
which the construction of a Housing Unit has commenced.
"GAAP" means generally accepted accounting principles in the United
States in effect from time to time (subject to the provisions of Section 1.02).
"Guarantor" means an Original Guarantor and any Person that, pursuant
to Section 5.15, guarantees the Obligations.
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"Guaranty" means the guaranty of the Obligations by each Guarantor
under the provisions of Article IX contained herein or under a guaranty of the
Obligations delivered under Section 5.15.
"Housing Unit" means a single family dwelling, whether detached or
attached (including condominiums but excluding mobile homes), including the Land
on which such dwelling is located, that is (or, upon completion of construction
thereof, will be) available for sale; the term "Housing Unit" includes a
Speculative Housing Unit.
"Housing Unit Closing" means a closing of the sale of a Housing Unit
by the Borrower or a Subsidiary to a BONA FIDE purchaser for value that is not
an Affiliate.
"Housing Unit Under Contract" means a Housing Unit owned by the
Borrower or a Subsidiary as to which the Borrower or such Subsidiary has a BONA
FIDE contract of sale, in a form customarily employed by the Borrower or such
Subsidiary and reasonably satisfactory to the Majority Banks, entered into not
more than 15 months prior to the date of determination with a Person who is not
an Affiliate, under which contract no defaults then exist and not less than
$1,000.00 toward the purchase price has been paid; PROVIDED, HOWEVER, that in
the case of any Housing Unit the purchase of which is to be financed in whole or
in part by a loan insured by the Federal Housing Administration or guaranteed by
the Veterans Administration, the required minimum downpayment shall be the
amount (if any) required under the rules of the relevant agency.
"Indenture" means the Indenture dated as of March 2, 1994 among the
Borrower, the guarantors named therein, and Continental Bank, National
Association, as Trustee with respect to the 9% Senior Notes due 2004, a copy of
which is annexed hereto as EXHIBIT H.
"Interest Deficit" has the meaning assigned to that term in
Section 2.08(b) hereof.
"Interest Expense" means, for any period, the total interest expense
of the Borrower and its Subsidiaries, whether paid directly or amortized through
cost of sales (including the interest component of Capital Leases).
"Interest Period" means, with respect to any LIBOR Loan, the period
commencing on the date such Loan is made, converted or renewed, and ending, as
the Borrower may select pursuant to Section 2.03, on the numerically
corresponding day in the first, second, third or sixth calendar month
thereafter, except that each such Interest Period that commences on the last
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Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar month;
provided that all of the foregoing provisions relating to Interest Periods are
subject to the following:
(a) No Interest Period may extend beyond the Termination Date; and
(b) If an Interest Period would end on a day that is not a Business
Day, such Interest Period shall be extended to the next Business Day unless
such Business Day would fall in the next calendar month, in which event
such Interest Period shall end on the immediately preceding Business Day.
"Internal Reorganization" means any reorganization between or among
the Borrower and any Subsidiary or Subsidiaries or between or among any
Subsidiary and one or more other Subsidiaries or any combination thereof by way
of liquidations, mergers, consolidations, conveyances, assignments, sales,
transfers and other dispositions of all or substantially all of the assets of a
Subsidiary (whether in one transaction or in a series of transactions); PROVIDED
THAT (a) the Borrower shall preserve and maintain its status as a validly
existing corporation and (b) all assets, liabilities, obligations and guarantees
of any Subsidiary party to such reorganization will continue to be held by such
Subsidiary or be assumed by the Borrower or a Wholly-Owned Subsidiary of the
Borrower.
"Inventory" means all Housing Units, Lots, goods, merchandise and
other personal property wherever located to be used for or incorporated into any
Housing Unit.
"Inventory Valuation Date" means the last day of the most recent
fiscal quarter of the Borrower with respect to which the Borrower is required to
have delivered a Borrowing Base Certificate pursuant to Section 5.08(6) hereof.
"Land" means land owned by the Borrower or a Subsidiary, which land is
being developed or is held for future development or sale.
"Lending Office" means, with respect to any Bank, for each type of
Loan, the Lending Office of such Bank (or of an affiliate of such Bank)
designated for such type of Loan on the signature pages hereof or such other
office or branch of such Bank (or of an affiliate of such Bank) as that Bank may
from time to time specify to the Borrower and the Agent as the office or branch
at which its Loans of such type are to be made and maintained.
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"LIBOR Interest Rate" means, for each LIBOR Loan for the relevant
Interest Period, the rate per annum (rounded upward, if necessary, to the
nearest one-sixteenth of 1%) determined by the Agent to be equal to the quotient
of (a) the London Interbank Offered Rate for such LIBOR Loan for such Interest
Period divided by (b) one minus the Eurocurrency Reserve Requirement for such
Interest Period.
"LIBOR Loan" means any Loan when and to the extent that the interest
rate therefor is determined by reference to the LIBOR Interest Rate.
"Lien" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), or preference, priority, or other security agreement or preferential
arrangement, charge, or encumbrance of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction to evidence any of the
foregoing).
"Loan(s)" means a loan made by a Bank pursuant to this Agreement,
including (unless the context otherwise indicates) a Swing Line Loan. Each such
Loan (other than a Swing Line Loan) shall be an ABR Loan or a LIBOR Loan.
"Loan Document(s)" means this Agreement, the Notes and any and all
documents delivered hereunder or pursuant hereto.
"London Interbank Offered Rate" means, with respect to a LIBOR Loan
for the relevant Interest Period, the rate determined by the Agent to be the
rate at which deposits in U.S. Dollars are offered by First Chicago to
first-class banks in the London interbank market at approximately 11:00 A.M.
(London time) two (2) Business Days prior to the first day of such Interest
Period, in the approximate amount of First Chicago's relevant LIBOR Loan and
having a maturity approximately equal to such Interest Period.
"Lots" means all Land owned by the Borrower and/or a Subsidiary which
is zoned by the municipality in which such real property is located for
residential building and use, and with respect to which the Borrower or such
Subsidiary has obtained all necessary approvals for its subdivision for Housing
Units; PROVIDED, HOWEVER, that the term "Lots" shall not include any Land upon
which the construction of a Housing Unit has commenced.
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"Majority Banks" means at any time the Banks holding at least
sixty-six and two-thirds percent (66 2/3%) of the then aggregate unpaid
principal amount of the Notes held by the Banks (including in such amount any
participation held by such Bank as a result of its purchase thereof pursuant to
Section 10.07), or, if no such principal amount is then outstanding, Banks
having at least sixty-six and two-thirds percent (66 2/3%) of the Aggregate
Commitments.
"Multiemployer Plan" means a plan described in Section 4001(a)(3) of
ERISA in respect of which the Borrower, a Subsidiary or a Commonly Controlled
Entity is an "employer" as defined in Section 3(5) of ERISA.
"Net Income" means, for any period, the net earnings (or loss) after
taxes of the Borrower and its Subsidiaries on a consolidated basis for such
period.
"Note(s)" means the promissory notes described in Section 2.10 hereof.
"Notice of Assignment" has the meaning assigned to that term in
Section 12.03(b) hereof.
"Obligations" means (a) the due and punctual payment of principal of
and interest on the Loans and the Notes, and (b) the due and punctual payment of
fees, expenses, reimbursements, indemnifications and other present and future
monetary obligations of the Borrower or any Guarantor to the Banks or to any
Bank, the Agent or any indemnified party under the Loan Documents.
"Participant" has the meaning assigned to that term in Section
12.02(a) hereof.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Acquisition" means any Acquisition (other than by means of
a hostile takeover, hostile tender offer or other similar hostile transaction)
of a business or entity engaged primarily in the business of home building;
provided that, immediately after giving effect to such Acquisition, no Default
or Event of Default has occurred and is continuing.
"Permitted Senior Debt" means all Debt of the Borrower and its
Subsidiaries referred to in Sections 6.02(1), (2) and (8); provided, however,
that, to the extent that any of the Debt referred to in Section 6.02(8) is
secured by assets that would have been included in the Borrowing Base if such
assets were not
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encumbered, the Permitted Senior Debt shall be reduced by the lesser of (i) the
amount of such secured Debt or (ii) the amount by which the Borrowing Base would
have increased if such assets were not so encumbered.
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, limited liability company, unincorporated
association, joint venture, governmental authority, or other entity of whatever
nature.
"Plan" means any pension plan which is covered by Title IV of ERISA
and in respect of which (a) the Borrower or a Subsidiary or a Commonly
Controlled Entity is an "employer" as defined in Section 3(5) of ERISA and (b)
the Borrower or a Subsidiary has any material liability; PROVIDED, HOWEVER, that
the term "Plan" shall not include any Multiemployer Plan.
"Principal Office" means, with respect to the Agent, the Principal
Office of the Agent designated as such on the signature pages hereof or such
other office of the Agent as the Agent may from time to time specify to the
Borrower and the Banks as its Principal Office.
"Prohibited Transaction" means any transaction set forth in Section
406 of ERISA or Section 4975 of the Code that could subject the Borrower or any
Subsidiary to any material liability.
"Prospectus" means the prospectus dated February 23, 1994, relating to
the Senior Notes.
"Purchaser" has the meaning assigned to that term in Section 12.03(a)
hereof.
"Receivables" means the net proceeds payable to, but not yet received
by, the Borrower or a Subsidiary following a Housing Unit Closing.
"Refinancing Debt" means Debt that refunds, refinances or extends any
Debt ("Refinanced Debt") described in Schedule 6.02 hereto, but only to the
extent that (i) the Refinancing Debt is subordinated to or PARI PASSU with the
Obligations to the same extent as such Refinanced Debt, if at all, (ii) the
Refinancing Debt is scheduled to mature no earlier than the earlier of (A) the
current maturity date of such Refinanced Debt or (B) a date seven (7) years
after the date of this Agreement, (iii) such Refinancing Debt is in an aggregate
amount that is equal to or less than the sum of (A) the aggregate amount then
outstanding under the Refinanced Debt, PLUS (B) accrued and unpaid interest on
such Refinanced Debt, PLUS (C) reasonable fees and expenses incurred in
obtaining such Refinancing Debt, it being understood
-11-
that this clause (iii) shall not preclude the Refinancing Debt from being a part
of a Debt financing that includes other or additional Debt otherwise permitted
herein, (iv) such Refinancing Debt is Incurred (as defined in the Indenture) by
the same Person that initially Incurred such Refinanced Debt or by another
Person of which the Person that initially Incurred such Refinanced Debt is a
Subsidiary, and (v) such Refinancing Debt is Incurred within 60 days after such
Refinanced Debt is so refunded, refinanced or extended.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto
or other regulation or official interpretation of said Board of Governors
relating to reserve requirements applicable to member banks of the Federal
Reserve System.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying margin
stocks applicable to member banks of the Federal Reserve System.
"Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by foreign lenders for the purpose of purchasing or carrying
margin stock (as defined therein).
"Rejecting Bank" has the meaning assigned to such term in Section
2.19(b).
"Replacement Bank" has the meaning assigned to such term in Section
2.20.
"Reportable Event" means any of the events set forth in Section 4043
of ERISA with respect to a Plan (excluding any such event with respect to which
the PBGC has waived the 30-day notice requirement).
"Senior Debt" means the Senior Notes or, if the Senior Notes are
refinanced, the Refinancing Debt with respect thereto.
"Senior Debt Ratings" means the publicly announced ratings by Moody's
Investors Service, Inc. or Standard & Poor's Corporation (whichever rating is
higher) on the Borrower's Senior Debt, changing if and when such rating(s)
change. In the event
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that the two ratings differ by more than one gradation, the rating one step
below the higher shall apply.
"Senior Notes" means the 9% Senior Notes due 2004 of the Borrower
issued in the original principal amount of $115,000,000 pursuant to the
Indenture.
"Significant Guarantor" means, at any date of determination thereof,
any Guarantor that (together with its Subsidiaries) accounts for five percent
(5%) or more of the Consolidated Tangible Assets as of the last day of the most
recent fiscal quarter then ended and of the net revenues for the twelve-month
period ending on the last day of the most recent fiscal quarter then ended, in
each case of the Borrower and its Subsidiaries taken as a whole. Such
percentage shall be determined on the basis of financial reports that shall be
available not later than 25 days (or, in the case of the last fiscal quarter of
the fiscal year, 35 days) following the end of such fiscal quarter.
"Significant Subsidiary" means, at any date of determination thereof,
any Subsidiary that (together with its Subsidiaries) accounts for five percent
(5%) or more of the Consolidated Tangible Assets as of the last day of the most
recent fiscal quarter then ended and of the net revenues for the twelve-month
period ending on the last day of the most recent fiscal quarter then ended, in
each case of the Borrower and its Subsidiaries taken as a whole. Such
percentage shall be determined on the basis of financial reports that shall be
available not later than 25 days (or, in the case of the last fiscal quarter of
the fiscal year, 35 days) following the end of such fiscal quarter.
"Speculative Housing Unit" means any Housing Unit owned by the
Borrower or a Subsidiary that is not a Housing Unit Under Contract.
"Subsidiary" means, as to the Borrower or a Guarantor, in the case of
a corporation, a corporation of which shares of stock having ordinary voting
power (other than stock having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of
such corporation are at the time owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by the Borrower or such Guarantor, as the case may be, or in the case of an
entity which is not a corporation, the activities of which are controlled
directly, or indirectly through one or more intermediaries, or both, by the
Borrower or such Guarantor, as the case may be.
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"Swing Line Bank" means First Chicago or any Purchaser to which First
Chicago assigns the Swing Line Commitment in accordance with Section 12.03
hereof.
"Swing Line Commitment" means the commitment of the Swing Line Bank to
make Swing Line Loans pursuant to Section 2.21(a) hereof. The Swing Line
Commitment is in the amount of $5,000,000.
"Swing Line Loan" has the meaning assigned to such term in Section
2.21(a).
"Termination Date" means October 21, 1999.
"Transferee" has the meaning assigned to that term in Section 12.04.
"UHIC" means United Housing Insurance Corporation, a Vermont
corporation and Wholly Owned Subsidiary of the Borrower.
"Wholly Owned Subsidiary" of any Person means (i) a Subsidiary, of
which one hundred percent (100%) of the outstanding Common Equity (except for
directors' qualifying shares or certain minority interests owned by other
Persons solely due to local law requirements that there be more than one
stockholder, but which interest is not in excess of what is required for such
purpose) is owned directly by such Person or through one or more other Wholly
Owned Subsidiaries of such Person, or (ii) any entity other than a corporation
in which such Person, directly or indirectly, owns all of the outstanding Common
Equity of such entity.
SECTION 1.02. ACCOUNTING TERMS. (a) All accounting terms not
specifically defined herein shall be construed in accordance with GAAP
consistent with those applied in the preparation of the financial statements
referred to in Section 4.04, and all financial data submitted pursuant to this
Agreement shall be prepared in accordance with such principles.
(b) Notwithstanding anything to the contrary contained in this
Agreement, in determining the Borrower's compliance with the provisions of
Article VII hereof, GAAP shall not include modifications of generally accepted
accounting principles that become effective after the date hereof.
ARTICLE II
AMOUNTS AND TERMS OF THE LOANS
SECTION 2.01. REVOLVING CREDIT. (a) Each Bank severally agrees, on
the terms and conditions hereinafter set
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forth, to make Loans (other than Swing Line Loans) to the Borrower from time to
time during the period from the date of this Agreement up to but not including
the Termination Date in an aggregate principal amount not to exceed at any time
outstanding the amount set opposite such Bank's name on the signature pages of
this Agreement (such Bank's obligations to make Loans (other than Swing Line
Loans) in such amounts, as reduced or otherwise modified from time to time
pursuant to the terms of this Agreement, being herein referred to as such Bank's
"Commitment") subject to the limitations set forth in Section 2.01(b).
(b) The aggregate amount of Permitted Senior Debt at any one time
outstanding may not exceed the Borrowing Base as of the most recent Inventory
Valuation Date, and no Loan (including a Swing Line Loan) shall be made that
would have the effect of increasing the then outstanding amount of the Permitted
Senior Debt to an amount exceeding such Borrowing Base, provided that a Loan
shall not be deemed to have increased the amount of the Permitted Senior Debt to
the extent that the proceeds of such Loan are immediately used to repay a Swing
Line Loan theretofore included in the Permitted Senior Debt. No Loans shall be
made at any time that any Swing Line Loan is outstanding, except for Loans that
are used, on the day on which made, to repay in full the outstanding principal
balance of the Swing Line Loans.
(c) Each Borrowing which shall not utilize the Commitment in full
shall be in an amount not less than One Million Dollars ($1,000,000) and, if in
excess thereof, in integral multiples of One Million Dollars ($1,000,000). Each
Borrowing shall consist of a Loan made by each Bank in the proportion which that
Bank's Commitment bears to the Aggregate Commitments. Within the limits of the
Aggregate Commitments, the Borrower may borrow, repay pursuant to Section 2.11,
and reborrow under this Section 2.01. On such terms and conditions, the Loans
may be outstanding as ABR Loans or LIBOR Loans. Each type of Loan shall be made
and maintained at such Bank's Lending Office for such type of Loan. The failure
of any Bank to make any requested Loan to be made by it on the date specified
for such Loan shall not relieve any other Bank of its obligation (if any) to
make such Loan on such date, but no Bank shall be responsible for the failure of
any other Bank to make such Loans to be made by such other Bank. The provisions
of this Section 2.01(c) shall not apply to Swing Line Loans.
SECTION 2.02. REDUCTION OF AGGREGATE COMMITMENTS. The Borrower shall
have the right, upon at least three (3) Business Days' prior notice to the
Agent, to terminate in whole or reduce in part the unused portion of the
Aggregate Commitments, provided that each partial reduction shall be in the
amount of at least Five Million Dollars ($5,000,000), and provided further that
no reduction shall be permitted if, after giving effect thereto, and
-15-
to any prepayment made therewith, the outstanding and unpaid principal amount of
the Loans shall exceed the Aggregate Commitments. Each reduction in part of the
unused portion of each Bank's Commitment shall be made in the proportion that
such Bank's Commitment bears to the total amount of the Aggregate Commitments.
Any Commitment, once reduced or terminated, may not be reinstated.
SECTION 2.03. NOTICE AND MANNER OF BORROWING. The Borrower shall
give the Agent notice of any Loans under this Agreement, on the Business Day of
each ABR Loan, and at least three (3) Business Days before each LIBOR Loan,
specifying: (1) the date of such Loan; (2) the amount of such Loan; (3) the
type of Loan (whether an ABR Loan or a LIBOR Loan); and (4) in the case of a
LIBOR Loan, the duration of the Interest Period applicable thereto. Each such
notice shall be accompanied by a Borrowing Base Certificate dated as at the date
of such notice. All notices given by the Borrower under this Section 2.03 shall
be irrevocable and shall be given not later than 9:00 A.M. Chicago time on the
day specified above for such notice. The Agent shall notify each Bank of each
such notice (including any notice provided for in Section 2.20(d)) not later
than 11:00 A.M. Chicago time on the date it receives such notice from the
Borrower if such notice is received by the Agent at or before 9:00 A.M. Chicago
time. In the event such notice from the Borrower is received after 9:00 A.M.
Chicago time, it shall be treated as if received on the next succeeding Business
Day, and the Agent shall notify each Bank of such notice as soon as practicable
but not later than 11:00 A.M. Chicago time on the next succeeding Business Day.
Not later than 1:00 P.M. Chicago time on the date of such Loans, each Bank will
make available to the Agent in immediately available funds, such Bank's PRO RATA
share of such Loans. After the Agent's receipt of such funds, on the date of
such Loans and upon fulfillment of the applicable conditions set forth in
Article III, the Agent will make such Loans available to the Borrower in
immediately available funds by crediting the amount thereof to the Borrower's
account with the Agent. The provisions of this Section 2.03 shall not apply to
Swing Line Loans.
SECTION 2.04. NON-RECEIPT OF FUNDS BY AGENT. (a) Unless the Agent
shall have received notice from a Bank prior to the date (in the case of a LIBOR
Loan), or by 12:00 noon Chicago time on the date (in the case of an ABR Loan),
on which such Bank is to provide funds to the Agent for a Loan to be made by
such Bank that such Bank will not make available to the Agent such funds, the
Agent may assume that such Bank has made such funds available to the Agent on
the date of such Loan in accordance with Section 2.03 and the Agent in its sole
discretion may, but shall not be obligated to, in reliance upon such assumption,
make available to the Borrower on such date a corresponding amount.
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If and to the extent such Bank shall not have given the notice provided for
above and shall not have made such funds available to the Agent, such Bank
agrees to repay to the Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the Agent, at
the Federal Funds Rate for three Business Days and thereafter at the Alternate
Base Rate. If such Bank shall repay to the Agent such corresponding amount,
such amount so repaid shall constitute such Bank's Loan for purposes of this
Agreement. If such Bank does not pay such corresponding amount forthwith upon
Agent's demand therefor, the Agent shall promptly notify the Borrower, and the
Borrower shall immediately pay such corresponding amount to the Agent with
interest thereon, for each day from the date such amount is made available to
the Borrower until the date such amount is repaid to the Agent, at the rate of
interest applicable at the time to such proposed Loan. Nothing set forth in
this Section shall affect the rights of the Borrower with respect to any Bank
that defaults in the performance of its obligation to make a Loan hereunder.
(b) Unless the Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Banks hereunder that the
Borrower will not make such payment in full, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date and the Agent
in its sole discretion may, but shall not be obligated to, in reliance upon such
assumption, cause to be distributed to each Bank on such due date an amount
equal to the amount then due such Bank. If and to the extent the Borrower shall
not have so made such payment in full to the Agent, each Bank shall repay to the
Agent forthwith on demand such amount distributed to such Bank together with
interest thereon, for each day from the date such amount is distributed to such
Bank until the date such Bank repays such amount to the Agent, at the Federal
Funds Rate for three Business Days and thereafter at the Alternate Base Rate.
(c) The provisions of this Section 2.04 shall not apply to Swing Line
Loans.
SECTION 2.05. DETERMINATION OF APPLICABLE MARGINS AND APPLICABLE
COMMITMENT RATE. (a) The Applicable Margins and the Applicable Commitment Rate
shall be determined by reference to the Senior Debt Rating in accordance with
the following table:
Senior Debt Applicable Applicable Applicable
Rating LIBOR Margin ABR Margin Commitment Rate
- ----------- ------------ ---------- ---------------
BB+/Ba1 or higher 1.25 -0- 0.300
BB/Ba2 1.50 0.125 0.350
BB-/Ba3 or B+/B1 1.75 0.375 0.375
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Lower or no Senior 2.25 0.875 0.425
Debt Rating
(b) The Applicable ABR Margin and the Applicable Commitment
Rate shall be adjusted, as applicable from time to time, effective on
the first Business Day after any change in the Senior Debt Ratings.
The Applicable LIBOR Margin in respect of any LIBOR Loan shall be
adjusted, as applicable from time to time, effective on the first day
of the Interest Period for such LIBOR Loan after any change in the
Senior Debt Ratings.
SECTION 2.06. CONVERSIONS AND RENEWALS. The Borrower may
elect from time to time to convert all or a part of one type of Loan
into another type of Loan or to renew all or part of a Loan by giving
the Agent notice at least one (1) Business Day before conversion into
an ABR Loan, and at least three (3) Business Days before the
conversion into or renewal of a LIBOR Loan, specifying: (1) the
renewal or conversion date; (2) the amount of the Loan to be converted
or renewed; (3) in the case of conversions, the type of Loan to be
converted into; and (4) in the case of renewals of or a conversion
into a LIBOR Loan, the duration of the Interest Period applicable
thereto; PROVIDED that (a) the minimum principal amount of each Loan
of each Bank outstanding after a renewal or conversion shall be One
Million Dollars ($1,000,000) in the case of a LIBOR Loan, and Two
Hundred Fifty Thousand Dollars ($250,000) in the case of an ABR Loan;
and (b) LIBOR Loans may be converted on a Business Day that is not the
last day of the Interest Period for such Loan only if the Borrower
pays on the date of conversion all amounts due pursuant to Section
2.17 hereof; and (c) the Borrower may not renew a LIBOR Loan or
convert an ABR Loan into a LIBOR Loan at any time that a Default has
occurred that is continuing. Each such notice shall be accompanied by
a Borrowing Base Certificate dated as at the date of such notice. All
conversions and renewals shall be made in the proportion that each
Bank's Loan bears to the total amount of all the Banks' Loans. All
notices given by the Borrower under this Section 2.06 shall be
irrevocable and shall be given not later than 9:00 A.M. Chicago time
on the day which is not less than the number of Business Days
specified above for such notice. The Agent shall notify each Bank of
each such notice not later than 11:00 A.M. Chicago time on the date it
receives such notice from the Borrower if such notice is received by
the Agent at or before 9:00 A.M. Chicago time. In the event such
notice from the Borrower is received after 9:00 A.M. Chicago time, it
shall be treated as if received on the next succeeding Business Day,
and the Agent shall notify each Bank of such notice as soon as
practicable but not later than 11:00 A.M. Chicago time on the next
succeeding Business Day. Notwithstanding the foregoing, if the
Borrower shall fail to give the Agent the notice as specified above
for the renewal or conversion of a LIBOR Loan prior to the end of the
Interest Period with respect thereto, such LIBOR Loan shall
automatically be converted into an ABR Loan on the last day of the
Interest Period for such Loan.
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The provisions of this Section 2.06 shall not apply to Swing Line
Loans.
SECTION 2.07. INTEREST. (a) The Borrower shall pay
interest to the Agent for the account of each Bank on the outstanding
and unpaid principal amount of the Loans at the following rates:
(i) If an ABR Loan or Swing Line Loan, then at a rate
per annum equal to the sum of (A) the Applicable ABR Margin
in effect from time to time as interest accrues and (B) the
Alternate Base Rate in effect from time to time as interest
accrues; and
(ii) if a LIBOR Loan, then at a rate per annum for the
Interest Period applicable to such LIBOR Loan equal to the
sum of (A) the Applicable LIBOR Margin in effect on the
first day of such Interest Period and (B) the LIBOR Interest
Rate determined for such Interest Period.
(b) Any change in the interest rate based on the Alternate
Base Rate resulting from a change in the Alternate Base Rate shall be
effective as of the opening of business on the day on which such
change in the Alternate Base Rate becomes effective. Interest on each
LIBOR Loan shall be calculated on the basis of a year of 360 days for
the actual number of days elapsed. Interest on each ABR Loan and
Swing Line Loan shall be calculated on the basis of a year of 365 days
for the actual number of days elapsed.
(c) Interest on the Loans shall be paid (in an amount set
forth in a statement delivered by the Agent to the Borrower, PROVIDED,
HOWEVER, that the failure of the Agent to deliver such statement shall
not limit or otherwise affect the obligations of the Borrower
hereunder) in immediately available funds to the Agent at its
Principal Office for the account of the applicable Lending Office of
each Bank as follows:
(1) For each ABR Loan and Swing Line Loan on the first day of
each calendar month commencing on the first such date after
such Loan;
(2) For each LIBOR Loan, on the last day of the Interest Period
with respect thereto, except that, if such Interest Period
is longer than three months, interest shall also be paid on
the last day of the third month of such Interest Period; and
(3) If not sooner paid, then on the Termination Date or such
earlier date as the Loans may be due or declared due
hereunder.
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(d) Any principal amount of any Loan not paid when due (at maturity,
by acceleration, or otherwise) shall bear interest thereafter until paid in
full, payable on demand, at a rate per annum equal to the Alternate Base Rate or
the applicable LIBOR Interest Rate, as the case may be, for such Loan in effect
from time to time as interest accrues, plus the Applicable Margin in effect from
time to time as interest accrues, plus two percent (2%) per annum.
SECTION 2.08. INTEREST RATE DETERMINATION. (a) The Agent shall
determine each London Interbank Offered Rate, as applicable. The Agent shall
give prompt notice to the Borrower and the Banks of the applicable interest rate
determined by the Agent pursuant to the terms of this Agreement.
(b) If the provisions of this Agreement or any Note would at any time
require payment by the Borrower to a Bank of any amount of interest in excess of
the maximum amount then permitted by the law applicable to any Loan, the
interest payments to such Bank shall be reduced to the extent necessary so that
such Bank shall not receive interest in excess of such maximum amount. If, as a
result of the foregoing a Bank shall receive interest payments hereunder or
under a Note in an amount less than the amount otherwise provided hereunder,
such deficit (hereinafter called "Interest Deficit") will cumulate and will be
carried forward (without interest) until the termination of this Agreement.
Interest otherwise payable to a Bank hereunder and under a Note for any
subsequent period shall be increased by the maximum amount of the Interest
Deficit that may be so added without causing such Bank to receive interest in
excess of the maximum amount then permitted by the law applicable to the Loans.
The amount of the Interest Deficit relating to the Loans shall be treated as a
prepayment premium (to the extent permitted by law) and paid in full at the time
of any optional prepayment by the Borrower to the Banks of all the Loans at that
time outstanding pursuant to Section 2.11 hereof. The amount of the Interest
Deficit relating to the Loans at the time of any complete payment of the Loans
at that time outstanding (other than an optional prepayment thereof pursuant to
Section 2.11 hereof) shall be canceled and not paid.
SECTION 2.09. FEES. (a) The Borrower shall pay to the Agent upon
the execution of this Agreement, for the account of each Bank, a one time,
nonrefundable loan fee equal to the percentage of such Bank's Commitment
provided for in the offer letters dated August 20, 1996 from First Chicago to
the Banks. The Agent shall deliver to each Bank its applicable loan fee
promptly upon the Agent's receipt thereof.
(b) The Borrower agrees to pay to the Agent for the account of each
Bank (subject to adjustment in the case of the
-20-
Swing Line Bank as hereinafter provided) a commitment fee on the average daily
unused portion of such Bank's Commitment (in an amount set forth in a statement
delivered by the Agent to the Borrower, PROVIDED, HOWEVER, that the failure of
the Agent to deliver such statement shall not limit or otherwise affect the
obligations of the Borrower hereunder) from the date of this Agreement until the
Termination Date at the Applicable Commitment Rate, payable in arrears on the
first day of each January, April, July and October during the term of such
Bank's Commitment, commencing January 1, 1997, and ending on the Termination
Date. The commitment fees shall be calculated on the basis of a year of 365
days for the actual number of days elapsed. Upon receipt of any commitment
fees, the Agent will promptly thereafter cause to be distributed such payments
to the Banks in the proportion that each Bank's unused Commitment bears to the
unused Aggregate Commitments (subject to adjustment in the case of the Swing
Line Bank as hereinafter provided). For purposes of determining the commitment
fee payable to the Swing Line Bank, the unused portion of such Bank's Commitment
shall be reduced dollar-for-dollar by the amount of any Swing Line Loans then
outstanding.
(c) The Borrower shall pay to the Agent and First Chicago Capital
Markets, Inc. such additional fees as are specified in a separate fee letter
from the Agent and First Chicago Capital Markets, Inc. to the Borrower dated
August 13, 1996, accepted by the Borrower on August 15, 1996.
SECTION 2.10. NOTES. All Loans made by each Bank under this
Agreement shall be evidenced by, and repaid with interest in accordance with, a
single promissory note of the Borrower in substantially the form of EXHIBIT A
hereto, duly completed, dated the date of this Agreement, and payable to such
Bank for the account of its applicable Lending Office, such Note to represent
the obligation of the Borrower to repay the Loans. Each Bank is hereby
authorized by the Borrower to endorse on the schedule attached to the Note held
by it the amount and type of each Loan and each renewal, conversion, and payment
of principal amount received by such Bank for the account of its applicable
Lending Office on account of its Loans, which endorsement shall, in the absence
of manifest error, be conclusive as to the outstanding balance of the Loans made
by such Bank; PROVIDED, HOWEVER, that the failure to make such notation with
respect to any Loan or renewal, conversion, or payment shall not limit or
otherwise affect the obligations of the Borrower under this Agreement or the
Note held by such Bank. All Loans shall be repaid on the Termination Date.
SECTION 2.11. PREPAYMENTS. (a) The Borrower may, upon at least one
(1) Business Day's prior notice to the Agent in the case of ABR Loans and at
least three (3) Business Days' prior notice to the Agent in the case of LIBOR
Loans, prepay
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(including, without limitation, all amounts payable pursuant to the terms of
Section 2.17 hereof) the Notes in whole or in part with accrued interest to the
date of such prepayment on the amount prepaid, PROVIDED that (1) each partial
payment shall be in a principal amount of not less than One Million Dollars
($1,000,000) in the case of a LIBOR Loan and Two Hundred Fifty Thousand Dollars
($250,000) in the case of an ABR Loan; and (2) LIBOR Loans may be prepaid only
on the last day of the Interest Period for such Loans; PROVIDED, HOWEVER, that
such prepayment of LIBOR Loans may be made on any other Business Day if the
Borrower pays at the time of such prepayment all amounts due pursuant to Section
2.17 hereof. Upon receipt of any such prepayments, the Agent will promptly
thereafter cause to be distributed such prepayment to each Bank for the account
of its applicable Lending Office pro rata to each Bank in the proportion that
its Commitment bears to the Aggregate Commitments, except that prepayments of
Swing Line Loans shall be made solely to the Swing Line Bank.
(b) The Borrower shall immediately upon a Change in Control prepay
the Notes in full and all accrued interest to the date of such prepayment, and
in the case of LIBOR Loans all amounts due pursuant to Section 2.17 hereof.
SECTION 2.12. METHOD OF PAYMENT. The Borrower shall make each
payment under this Agreement and under the Notes not later than 11:00 A.M.
Chicago time on the date when due in lawful money of the United States to the
Agent for the account of the applicable Lending Office of each Bank (or, in the
case of Swing Line Loans, for the account of the Swing Line Bank) in immediately
available funds. The Agent will promptly thereafter cause to be distributed (1)
such payments of principal and interest with respect to Loans (other than Swing
Line Loans) in like funds to each Bank for the account of its applicable Lending
Office pro rata to each Bank in the proportion that its Commitment bears to the
Aggregate Commitments, (2) such payments of principal and interest with respect
to Swing Line Loans solely to the Swing Line Bank and (3) other fees payable to
any Bank to be applied in accordance with the terms of this Agreement. If any
such payment is not received by a Bank on the Business Day on which the Agent
received such payment (or the following Business Day if the Agent's receipt
thereof occurs after 2:00 P.M. (Chicago time)), such Bank shall be entitled to
receive from the Agent interest on such payment at the Federal Funds Rate for
three Business Days and thereafter at the Alternate Base Rate (which interest
payment shall not be an obligation for the Borrower's account, including under
Section 11.04 or Seciton 11.06). The Borrower hereby authorizes each Bank, if
and to the extent payment is not made when due under this Agreement or under the
Notes, to charge from time to time against any account of the Borrower with such
Bank any amount as due. Whenever any payment
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to be made under this Agreement or under the Notes shall be stated to be due on
a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall be included in the
computation of the payment of interest and the commitment fee, as the case may
be, except, in the case of a LIBOR Loan, if the result of such extension would
be to extend such payment into another calendar month, such payment shall be
made on the immediately preceding Business Day.
SECTION 2.13. USE OF PROCEEDS. (a) The proceeds of the Loans
hereunder shall be used by the Borrower for working capital and general
corporate purposes of the Borrower and the Guarantors to the extent permitted in
this Agreement and to repay Swing Line Loans, and the initial Loans hereunder
shall be used to pay in full all outstanding principal and all accrued and
unpaid interest and fees under the Existing Credit Agreement. The Borrower will
not, directly or indirectly, (1) use any part of such proceeds for the purpose
of repaying the Senior Notes or for purchasing or carrying any margin stock
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System or to extend credit to any Person for the purpose of purchasing
or carrying any such margin stock, or for any purpose which violates, or is
inconsistent with, Regulation X of such Board of Governors or (2) except as
otherwise permitted in Section 2.13(b), use any part of such proceeds to pay all
or any part of the purchase price or other costs of any one or more
Acquisitions.
(b) The Borrower may use proceeds of the Loans to pay the purchase
price or other costs of any one or more Permitted Acquisitions, provided that
(1) within thirty (30) days after any such use of the proceeds, the Borrower
shall deliver to the Agent a certificate of the President or the Chief Financial
Officer of the Borrower, reasonably satisfactory to the Agent, certifying the
amount of proceeds so used and the purposes for which such proceeds were used,
and (2) in no event shall the proceeds used for such purposes exceed $50,000,000
with respect to any single Permitted Acquisition without the prior written
consent of the Majority Banks.
SECTION 2.14. YIELD PROTECTION. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law), or any interpretation thereof, or the compliance
of any Bank therewith,
(i) subjects any Bank or any applicable Lending Office to any tax,
duty, charge or withholding on or from payments due from the
Borrower (excluding federal taxation of the overall net income of
any Bank or
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applicable Lending Office), or changes the basis of taxation of
payments to any Bank in respect of its Loans or other amounts due
it hereunder, or
(ii) imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit
extended by, any Bank or any applicable Lending Office (other
than reserves and assessments taken into account in determining
the interest rate applicable to LIBOR Loans), or
(iii) imposes any other condition the result of which is to increase
the cost to any Bank or any applicable Lending Office of making,
funding or maintaining loans or reduces any amount receivable by
any Bank or any applicable Lending Office in connection with
loans, or requires any Bank or any applicable Lending Office to
make any payment calculated by reference to the amount of loans
held or interest received by it, by an amount deemed material by
such Bank,
then, within fifteen (15) days of demand by such Bank, the Borrower shall pay
such Bank that portion of such increased expense incurred or reduction in an
amount received which such Bank reasonably determines is attributable to making,
funding and maintaining its Loans and its Commitment.
SECTION 2.15. CHANGES IN CAPITAL ADEQUACY REGULATIONS. If a Bank
determines the amount of capital required or expected to be maintained by such
Bank, any Lending Office of such Bank or any corporation controlling such Bank
is increased as a result of a Change, then, within 10 days of demand by such
Bank, the Borrower shall pay such Bank the amount necessary to compensate for
any shortfall in the rate of return on the portion of such increased capital
which such Bank determines is attributable to this Agreement, its Loans or its
obligation to make Loans hereunder (after taking into account such Bank's
policies as to capital adequacy); PROVIDED, HOWEVER, that a Bank shall impose
such cost upon the Borrower only if such Bank is generally imposing such cost on
its other borrowers having similar credit arrangements. "Change" means (i) any
change after the date of this Agreement in the Risk-Based Capital Guidelines or
(ii) any adoption of or change in any other law, governmental or
quasi-governmental rule, regulation, policy, guideline, interpretation, or
directive (whether or not having the force of law) after the date of this
Agreement which affects the amount of capital required or expected to be
maintained by any Bank or any Lending Office or any corporation controlling any
Bank. "Risk-Based
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Capital Guidelines" means (i) the risk-based capital guidelines in effect in the
United States on the date of this Agreement, including transition rules, and
(ii) the corresponding capital regulations promulgated by regulatory authorities
outside the United States implementing the July 1988 report of the Basle
Committee on Banking Regulation and Supervisory Practices Entitled
"International Convergence of Capital Measurements and Capital Standards,"
including transition rules, and any amendments to such regulations adopted prior
to the date of this Agreement.
SECTION 2.16. AVAILABILITY OF LIBOR LOANS. If any Bank determines
that maintenance of its LIBOR Loans at the Lending Office selected by the Bank
would violate any applicable law, rule, regulation, or directive, whether or not
having the force of law (and it is not reasonably possible for the Bank to
designate an alternate Lending Office without being adversely affected thereby),
or if the Majority Banks determine that (i) deposits of a type and maturity
appropriate to match fund LIBOR Loans are not available or (ii) the interest
rate applicable to LIBOR Loans does not accurately reflect the cost of making or
maintaining such LIBOR Loans, then the Agent shall suspend the availability of
LIBOR Loans and require any LIBOR Loans to be repaid.
SECTION 2.17. FUNDING INDEMNIFICATION. If any payment of a LIBOR
Loan occurs on a date which is not the last day of the applicable Interest
Period, whether because of acceleration, prepayment or otherwise, or a LIBOR
Loan is not made on the date specified by the Borrower for any reason other than
default by the Banks, the Borrower will indemnify each Bank for any loss or cost
incurred by it resulting therefrom, including, without limitation, any loss or
cost in liquidating or employing deposits required to fund or maintain the LIBOR
Loan.
SECTION 2.18. BANK STATEMENTS; SURVIVAL OF INDEMNITY. To the extent
reasonably possible, each Bank shall designate an alternate Lending Office with
respect to its LIBOR Loans to reduce any liability of the Borrower to such Bank
under Sections 2.14 and 2.15 or to avoid the unavailability of LIBOR Loans.
Each Bank shall deliver a written statement of such Bank as to the amount due,
if any, under Sections 2.14, 2.15 or 2.17. Such written statement shall set
forth in reasonable detail the calculations upon which such Bank determined such
amount and shall be final, conclusive and binding on the Borrower in the absence
of manifest error. Determination of amounts payable under such Sections in
connection with a LIBOR Loan shall be calculated as though each Bank funded its
LIBOR Loan through the purchase of a deposit of the type and maturity
corresponding to the deposit used as a reference in determining the LIBOR Rate
applicable to such Loan, whether in fact that is the case or not. Unless
otherwise provided herein, the amount specified in the
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written statement shall be payable on demand after receipt by the Borrower of
the written statement. The obligations of the Borrower under Sections 2.14,
2.15 and 2.17 shall survive payment of the Obligations and termination of this
Agreement.
SECTION 2.19. EXTENSION OF TERMINATION DATE. (a) The Borrower may
request a one-year extension of the Termination Date by submitting a request for
an extension to the Agent no more than 27 months nor less than 25 months prior
to the then scheduled Termination Date. At the time of or prior to the delivery
of such request, the Borrower shall propose to the Agent the amount of the fees
that the Borrower would agree to pay with respect to such one-year extension if
approved by the Banks. Promptly upon (but not later than five Business Days
after) the Agent's receipt and approval of the extension request and fee
proposal (as so approved, the "Extension Request"), the Agent shall deliver to
each Bank a copy of, and shall request each Bank to approve, the Extension
Request. Each Bank approving the Extension Request shall deliver its written
approval no later than 30 days after such Bank's receipt of the Extension
Request. If the approval of each of the Banks is received by the Agent within
30 days of the receipt by them of the Extension Request (or as otherwise
provided in Section 2.19(b)), the Agent shall promptly so notify the Borrower
and each Bank in writing, and the Termination Date shall be extended by one
year, and in such event the Borrower may thereafter request one (but not more
than one) further extension of the then scheduled Termination Date in accordance
with this Section 2.19. If any of the Banks does not deliver to the Agent such
Bank's written approval to any Extension Request within such 30-day period, the
Termination Date shall not be extended, except as otherwise provided in Section
2.19(b).
(b) If (i) any Bank (but not more than one Bank) ("Rejecting Bank")
shall not approve an Extension Request, (ii) all rights and obligations (from
and after the date of the assignment described below) of such Rejecting Bank
under this Agreement and under the other Loan Documents (including, without
limitation, its Commitment and all Loans owing to it) shall have been assigned,
within 90 days following the Bank's receipt of such Extension Request, in
accordance with Section 2.20, to one or more Replacement Banks who shall have
approved in writing such Extension Request at the time of such assignment, and
(iii) no other Bank shall have given written notice to the Agent of such Bank's
withdrawal of its approval of the Extension Request, the Agent shall promptly so
notify the Borrower and each Bank, and the Termination Date shall be extended by
one year, and in such event the Borrower may thereafter request one (but not
more than one) further extension as provided in Section 2.19(a).
(c) Within ten days of the Agent's notice to the Borrower that all of
the Banks have approved an Extension Request
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(whether pursuant to Section 2.19(a) or 2.19(b)), the Borrower shall pay to the
Agent for the account of each Bank the applicable extension fees specified in
the Extension Request.
SECTION 2.20. REPLACEMENT OF CERTAIN BANKS. In the event a Bank
("Affected Bank"): (i) shall have requested compensation from the Borrower
under Sections 2.14 or 2.15 to recover additional costs incurred by such Bank
that are not being incurred generally by the other Banks, (ii) shall have
delivered a notice pursuant to Section 2.16 claiming that such Bank is unable to
extend LIBOR Loans to the Borrower for reasons not generally applicable to the
other Banks, (iii) shall have invoked Section 11.13 or (iv) is a Rejecting Bank
pursuant to Section 2.19, then, in any such case, the Borrower or the Agent may
make written demand on such Affected Bank (with a copy to the Agent in the case
of a demand by the Borrower and a copy to the Borrower in the case of a demand
by the Agent) for the Affected Bank to assign, and, if a Replacement Bank (as
hereinafter defined) notifies the Affected Bank of its willingness to purchase
the Affected Bank's interest and the Agent and the Borrower consent thereto in
writing, then such Affected Bank shall assign pursuant to one or more duly
executed assignment and acceptance agreements in substantially and in all
material respects in the form and substance of EXHIBIT G five (5) Business Days
after the date of such demand, to one or more financial institutions that comply
with the provisions of Section 12.03(a) that the Borrower or the Agent, as the
case may be, shall have engaged for such purpose ("Replacement Bank"), all of
such Affected Bank's rights and obligations (from and after the date of such
assignment) under this Agreement and the other Loan Documents (including,
without limitation, its Commitment and all Loans owing to it) in accordance with
Section 12.03. The Agent agrees, upon the occurrence of such events with
respect to an Affected Bank and upon the written request of the Borrower, to use
its reasonable efforts to obtain the commitments from one or more financial
institutions to act as a Replacement Bank. As a condition to any such
assignment, the Affected Bank shall have concurrently received, in cash, all
amounts due and owing to the Affected Bank hereunder or under any other Loan
Document, including, without limitation, the aggregate outstanding principal
amount of the Loans owed to such Bank, together with accrued interest thereon
through the date of such assignment, amounts payable under Sections 2.14 and
2.15 with respect to such Affected Bank and the fees payable to such Affected
Bank under Section 2.09(b); PROVIDED that upon such Affected Bank's replacement,
such Affected Bank shall cease to be a party hereto but shall continue to be
entitled to the benefits of Sections 2.14, 2.15, 2.17, 11.04 and 11.06, as well
as to any fees accrued for its account hereunder and not yet paid, and shall
continue to be obligated under Section 10.05 with respect to obligations and
liabilities accruing prior to the replacement of such Affected Bank.
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SECTION 2.21. SWING LINE. (a) The Swing Line Bank agrees, on the
terms and conditions hereinafter set forth, to make loans ("Swing Line Loans")
to the Borrower from time to time during the period from the date of this
Agreement, up to but not including the Termination Date, in an aggregate
principal amount not to exceed at any time outstanding the lesser of (i) the
Swing Line Commitment or (ii) the amount by which the Swing Line Bank's
Commitment under Section 2.01 exceeds the outstanding principal amount of the
Loans made by the Swing Line Bank pursuant to Section 2.01, subject to the
limitations set forth in Section 2.01(b).
(b) Each Swing Line Loan which shall not utilize the Swing Line
Commitment in full shall be in an amount not less than One Million Dollars
($1,000,000) and, if in excess thereof, in integral multiples of One Million
Dollars ($1,000,000). Within the limits of the Swing Line Commitment, the
Borrower may borrow, repay and reborrow under this Section 2.21.
(c) The Borrower shall give the Swing Line Bank notice of any request
for a Swing Line Loan not later than 2:00 p.m. Chicago time on the Business Day
of such Swing Line Loan, specifying the amount of such requested Swing Line
Loan. Each such notice shall be accompanied by a Borrowing Base Certificate
dated as of the date of such notice (and by the notice provided for in Section
2.21(d)). All notices given by the Borrower under this Section 2.21(c) shall be
irrevocable. Upon fulfillment of the applicable conditions set forth in Article
III, the Swing Line Bank will make the Swing Line Loan available to the Borrower
in immediately available funds by crediting the amount thereof to the Borrower's
account with the Swing Line Bank.
(d) On the first Business Day following the making of a Swing Line
Loan, such Swing Line Loan shall be paid in full from the proceeds of a Loan
made pursuant to Section 2.01. Each notice given by the Borrower under Section
2.21(c) shall include, or, if it does not include, shall be deemed to include an
irrevocable notice under Section 2.03 requesting the Banks to make an ABR Loan
on the next succeeding Business Day in the full amount of such Swing Line Loan.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01. CONDITIONS PRECEDENT TO THE INITIAL LOAN. The
obligation of each Bank to make its initial Loan to the Borrower is subject to
the conditions precedent that the Agent shall have received on or before the day
of such Loan each of the following, in form and substance satisfactory to the
Agent
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and its counsel and (except for the Notes) in sufficient copies for each Bank:
(1) NOTES. A Note payable to each Bank duly executed by the
Borrower;
(2) EVIDENCE OF ALL CORPORATE ACTION BY THE BORROWER. Certified
copies of all corporate action taken by the Borrower, including resolutions of
its Board of Directors, authorizing the execution, delivery and performance of
the Loan Documents to which it is a party and each other document to be
delivered pursuant to this Agreement;
(3) INCUMBENCY AND SIGNATURE CERTIFICATE OF BORROWER. A certificate
of the Secretary or Assistant Secretary of the Borrower certifying the names and
true signatures of the officers of the Borrower authorized to sign the Loan
Documents to which it is a party and the other documents to be delivered by the
Borrower under this Agreement;
(4) ARTICLES OF INCORPORATION OF BORROWER. Copies of the articles of
incorporation of the Borrower, together with all amendments, and a certificate
of good standing, all certified by the appropriate governmental officer in its
jurisdiction of incorporation;
(5) OPINIONS OF COUNSEL FOR BORROWER. A favorable opinion of Paul,
Hastings, Janofsky & Walker LLP, counsel for the Borrower and for the Guarantors
that are Delaware Persons, in substantially the form of EXHIBIT B and as to such
other matters as the Agent may reasonably request and of Katten Muchin & Zavis,
Illinois counsel for the Borrower, in substantially the form of EXHIBIT C and as
to such other matters as the Agent may reasonably request;
(6) OPINION OF COUNSEL FOR AGENT. A favorable opinion of Sidley &
Austin, counsel for the Agent, in substantially the form of EXHIBIT D hereto;
(7) EVIDENCE OF ALL CORPORATE OR PARTNERSHIP ACTION BY GUARANTORS.
With respect to each corporate Guarantor, certified (as of the date of this
Agreement) copies of all corporate action taken by such Guarantor, including
resolutions of its Board of Directors, authorizing the execution, delivery, and
performance of the applicable Guaranty, and with respect to each limited
partnership Guarantor, partnership action taken by such Guarantor, including any
and all necessary partnership consents authorizing the execution, delivery, and
performance of the applicable Guaranty;
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(8) ARTICLES OF INCORPORATION OF GUARANTORS. Copies of the articles
of incorporation of each corporate Guarantor, together with all amendments, and
a certificate of good standing, all certified by the appropriate governmental
officer in its jurisdiction of incorporation; PROVIDED, HOWEVER, that, if a
certificate of good standing is not currently available, the Guarantor shall
deliver other reasonably satisfactory evidence of its good standing and, within
thirty (30) days, shall deliver a certificate of good standing;
(9) INCUMBENCY AND SIGNATURE CERTIFICATE OF GUARANTORS. A
certificate (dated as of the date of this Agreement) of the Secretary or
Assistant Secretary of each corporate Guarantor or the general partner of each
partnership Guarantor certifying the names and true signatures of the officers
of each such corporate Guarantor and the representative of each partnership
Guarantor authorized to sign the Guaranty;
(10) OPINION OF COUNSEL FOR CERTAIN GUARANTORS. With respect to
Beazer Homes Corp., a favorable opinion of Tennessee counsel in substantially
the form of EXHIBIT E hereto, and as to such other matters as the Agent may
reasonably request;
(11) PARTNERSHIP AGREEMENT. A true and complete copy of the limited
partnership agreement of each limited partnership Guarantor, including without
limitation, any and all amendments and modifications thereto, and any and all
filed partnership certificates;
(12) OTHER DOCUMENTS. Such other and further documents as any Bank
or its counsel may have reasonably requested.
SECTION 3.02. CONDITIONS PRECEDENT TO ALL LOANS. The obligation of
each Bank to make each Loan (including the initial Loan and, in the case of the
Swing Line Bank, any Swing Line Loan) shall be subject to the further conditions
precedent that (except as hereinafter provided) on the date of such Loan:
(1) The following statements shall be true and the Agent shall have
received a certificate signed by a duly authorized officer of the
Borrower dated the date of such Loan, stating that:
(a) The representations and warranties contained in Article IV of
this Agreement, are correct on and as of the date of such Loan as
though made on and as of such date; and
(b) No Default or Event of Default has occurred and is continuing, or
would result from such Loan;
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(2) The Agent shall have received such other approvals, opinions, or
documents as any Bank through the Agent may reasonably request; and
(3) Such other and further documents as any Bank or its counsel may have
reasonably requested. All matters incident to the making of such Loan
shall be satisfactory to the Banks and their counsel.
Notwithstanding the foregoing, in the case of a Loan (provided for in
Section 2.21(d)) made to repay a Swing Line Loan, the satisfaction of the
foregoing conditions with respect to such Swing Line Loan shall constitute
satisfaction of such conditions with respect to the Loan made on the next
succeeding Business Day to repay such Swing Line Loan.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower and each of the Guarantors, jointly and severally,
represent and warrant that:
SECTION 4.01. INCORPORATION, FORMATION, GOOD STANDING, AND DUE
QUALIFICATION. The Borrower, each Subsidiary, and each of the Guarantors is (in
the case of a corporation) a corporation duly incorporated or (in the case of a
limited partnership) a limited partnership duly formed, validly existing, and in
good standing under the laws of the jurisdiction of its incorporation or
formation; has the power and authority to own its assets and to transact the
business in which it is now engaged or proposed to be engaged in; and is duly
qualified and in good standing under the laws of each other jurisdiction in
which such qualification is required.
SECTION 4.02. POWER AND AUTHORITY. The execution, delivery and
performance by the Borrower and the Guarantors of the Loan Documents to which
each is a party have been duly authorized by all necessary corporate or
partnership action, as the case may be, and do not and will not (1) require any
consent or approval of the stockholders of such corporation, or partners of such
partnership; (2) contravene such corporation's charter or bylaws, or such
partnership's partnership agreement; (3) violate, in any material respect, any
provision of any law, rule, regulation (including, without limitation,
Regulations U and X of the Board of Governors of the Federal Reserve System),
order, writ, judgment, injunction, decree, determination, or award presently in
effect having applicability to such corporation or partnership; (4) result in a
breach of or constitute a default under any indenture or loan or credit
agreement or any other
-31-
material agreement, lease, or instrument to which such corporation or
partnership is a party or by which it or its properties may be bound or
affected; (5) result in, or require, the creation or imposition of any Lien,
upon or with respect to any of the properties now owned or hereafter acquired by
such corporation or partnership; and (6) cause such corporation or partnership
to be in default, in any material respect, under any such law, rule, regulation,
order, writ, judgment, injunction, decree, determination, or award or any such
indenture, agreement, lease or instrument.
SECTION 4.03. LEGALLY ENFORCEABLE AGREEMENT. This Agreement is, and
each of the other Loan Documents when delivered under this Agreement will be
legal, valid, and binding obligations of the Borrower or each Guarantor, as the
case may be, enforceable against the Borrower or each Guarantor, as the case may
be, in accordance with their respective terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency, and other
similar laws affecting creditors' rights generally.
SECTION 4.04. FINANCIAL STATEMENTS. The consolidated balance sheet
of the Borrower and its Subsidiaries as at June 30, 1996, and the consolidated
statements of operations, cash flow and changes to stockholders' equity of the
Borrower and its Subsidiaries for the period of three fiscal quarters ended June
30, 1996, are complete and correct and fairly present as at such date the
financial condition of the Borrower and its Subsidiaries and the results of
their operations for the periods covered by such statements, all in accordance
with GAAP consistently applied (subject to year-end adjustments), and since June
30, 1996, there has been no material adverse change in the condition (financial
or otherwise), business, or operations of the entities for which combined
financial statements have been furnished to the Banks. There are no liabilities
of the Borrower or any Subsidiary, fixed or contingent, which are material but
are not reflected in the financial statements or in the notes thereto, other
than liabilities arising in the ordinary course of business since June 30, 1996.
No information, exhibit, or report furnished by the Borrower to any Bank in
connection with the negotiation of this Agreement taken together, contained any
material misstatement of fact or omitted to state a material fact or any fact
necessary to make the statements contained therein not materially misleading.
SECTION 4.05. LABOR DISPUTES AND ACTS OF GOD. Neither the business
nor the properties of the Borrower or any Subsidiary or any Guarantor are
affected by any fire, explosion, accident, strike, lockout, or other labor
dispute, drought, storm, hail, earthquake, embargo, act of God or of the public
enemy, or other casualty (whether or not covered by insurance), materially and
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adversely affecting such business or properties or the operation of the Borrower
or such Subsidiary or such Guarantor.
SECTION 4.06. OTHER AGREEMENTS. Neither the Borrower nor any
Significant Subsidiary nor any Significant Guarantor is a party to any
indenture, loan, or credit agreement, or to any lease or other agreement or
instrument or subject to any charter, corporate or other restriction which could
have a material adverse effect on the business, properties, assets, operations,
or conditions, financial or otherwise, of the Borrower or any Significant
Subsidiary or any Significant Guarantor, or the ability of the Borrower or any
Significant Guarantor to carry out its obligations under the Loan Documents to
which it is a party. Neither the Borrower nor any Significant Subsidiary nor
any Significant Guarantor is in default in any material respect in the
performance, observance, or fulfillment of any of the obligations, covenants, or
conditions contained in any agreement or instrument material to its business to
which it is a party.
SECTION 4.07. LITIGATION. There is no pending or, to the knowledge
of the Borrower or any Guarantor, threatened action or proceeding against or
affecting the Borrower or any Significant Subsidiary or any Significant
Guarantor before any court, governmental agency, or arbitrator, which may, in
any one case or in the aggregate, materially adversely affect the financial
condition, operations, properties, or business of the Borrower or any
Significant Subsidiary or any Significant Guarantor or the ability of the
Borrower or any Significant Guarantor to perform its obligation under the Loan
Documents to which it is a party.
SECTION 4.08. NO DEFAULTS ON OUTSTANDING JUDGMENTS OR ORDERS. The
Borrower, each Significant Subsidiary and each Significant Guarantor have
satisfied all judgments, and neither the Borrower nor any Significant Subsidiary
nor any Significant Guarantor is in default with respect to any judgment, writ,
injunction, decree, rule, or regulation of any court, arbitrator, or federal,
state, municipal, or other governmental authority, commission, board, bureau,
agency, or instrumentality, domestic or foreign.
SECTION 4.09. OWNERSHIP AND LIENS. The Borrower and each Subsidiary
and each Guarantor have title to, or valid leasehold interests in, all of their
respective properties and assets, real and personal, including the properties
and assets and leasehold interests reflected in the financial statements
referred to in Section 4.04 (other than any properties or assets disposed of in
the ordinary course of business), and none of the properties and assets owned by
the Borrower or any Subsidiary or any Guarantor and none of their leasehold
interests is subject to
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any Lien, except such as may be permitted pursuant to Section 6.01 of this
Agreement.
SECTION 4.10. SUBSIDIARIES AND OWNERSHIP OF STOCK. Set forth in
Exhibit F hereto is a complete and accurate list of the Subsidiaries of the
Borrower, showing the jurisdiction of incorporation or formation of each and
showing the percentage of the Borrower's ownership of the outstanding stock or
partnership interest of each Subsidiary. All of the outstanding capital stock
of each such corporate Subsidiary has been validly issued, is fully paid and
nonassessable, and is owned by the Borrower free and clear of all Liens. The
limited partnership agreement of each such limited partnership Subsidiary is in
full force and effect and has not been amended or modified. Each of the
Guarantors is a Wholly Owned Subsidiary of the Borrower.
SECTION 4.11. ERISA. The Borrower and each Subsidiary and each
Guarantor are in compliance in all material respects with all applicable
provisions of ERISA. Neither a Reportable Event nor a Prohibited Transaction
has occurred and is continuing with respect to any Plan; no notice of intent to
terminate a Plan has been filed, nor has any Plan been terminated; no
circumstances exist which constitute grounds entitling the PBGC to institute
proceedings to terminate, or appoint a trustee to administer, a Plan, nor has
the PBGC instituted any such proceedings; neither the Borrower nor any Commonly
Controlled Entity has completely or partially withdrawn from a Multiemployer
Plan under circumstances that could subject the Borrower or any Subsidiary to
material withdrawal liability; the Borrower and each Commonly Controlled Entity
have met their minimum funding requirements under ERISA with respect to all of
their Plans and the present value of all vested benefits under each Plan does
not materially exceed the fair market value of all Plan assets allocable to such
benefits, as determined on the most recent valuation date of the Plan and in
accordance with the provisions of ERISA; and neither the Borrower nor any
Commonly Controlled Entity has incurred any material liability to the PBGC under
ERISA.
SECTION 4.12. OPERATION OF BUSINESS. The Borrower, each Subsidiary
and each Guarantor possess all licenses, permits, franchises, patents,
copyrights, trademarks, and trade names, or rights thereto, to conduct their
respective businesses substantially as now conducted and as presently proposed
to be conducted and the Borrower and each of its Subsidiaries and each Guarantor
are not in violation of any valid rights of others with respect to any of the
foregoing.
SECTION 4.13. TAXES. All income tax liabilities or income tax
obligations of the Borrower, each Subsidiary and each Guarantor have been paid
or have been accrued by or reserved for
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by the Borrower. The Borrower constitutes the parent of an affiliated group of
corporations for purposes of filing a consolidated United States federal income
tax return.
SECTION 4.14. LAWS; ENVIRONMENT. The Borrower, each Subsidiary and
each Guarantor have duly complied, and their businesses, operations, assets,
equipment, property, leaseholds, or other facilities are in compliance, in all
material respects, with the provisions of all federal, state, and local
statutes, laws, codes, and ordinances and all rules and regulations promulgated
thereunder (including without limitation those relating to the environment,
health and safety). The Borrower, each Subsidiary and each Guarantor have been
issued and will maintain all required federal, state, and local permits,
licenses, certificates, and approvals relating to (1) air emissions; (2)
discharges to surface water or groundwater; (3) noise emissions; (4) solid or
liquid waste disposal; (5) the use, generation, storage, transportation, or
disposal of toxic or hazardous substances or hazardous wastes (intended hereby
and hereafter to include any and all such materials listed in any federal,
state, or local law, code, or ordinance and all rules and regulations
promulgated thereunder as hazardous); or (6) other environmental, health or
safety matters. Neither the Borrower nor any Subsidiary nor any Guarantor has
received notice of, or has actual knowledge of any violations of any federal,
state, or local environmental, health, or safety laws, codes or ordinances or
any rules or regulations promulgated thereunder with respect to its businesses,
operations, assets, equipment, property, leaseholds, or other facilities.
Except in accordance with a valid governmental permit, license, certificate or
approval, there has been no material emission, spill, release, or discharge into
or upon (1) the air; (2) soils, or any improvements located thereon; (3) surface
water or groundwater; or (4) the sewer, septic system or waste treatment,
storage or disposal system servicing the premises, of any toxic or hazardous
substances or hazardous wastes at or from the premises; and accordingly the
premises of the Borrower, each Subsidiary and each Guarantor have not been
adversely affected, in any material respect, by any toxic or hazardous
substances or wastes. There has been no complaint, order, directive, claim,
citation, or notice by any governmental authority or any person or entity with
respect to violations of law or damages by reason of Borrower's or any
Subsidiary's (1) air emissions; (2) spills, releases, or discharges to soils or
improvements located thereon, surface water, groundwater or the sewer, septic
system or waste treatment, storage or disposal systems servicing the premises;
(3) noise emissions; (4) solid or liquid waste disposal; (5) use, generation,
storage, transportation, or disposal of toxic or hazardous substances or
hazardous waste; or (6) other environmental, health or safety matters affecting
the Borrower, any Subsidiary or any Guarantor or its business, operations,
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assets, equipment, property, leaseholds, or other facilities. Neither the
Borrower nor any Subsidiary nor any Guarantor has any material indebtedness,
obligation, or liability, absolute or contingent, matured or not matured, with
respect to the storage, treatment, cleanup, or disposal of any solid wastes,
hazardous wastes, or other toxic or hazardous substances (including without
limitation any such indebtedness, obligation, or liability with respect to any
current regulation, law, or statute regarding such storage, treatment, cleanup,
or disposal).
SECTION 4.15. INVESTMENT COMPANY ACT. Neither the Borrower nor any
Subsidiary thereof is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 4.16. PUBLIC UTILITY HOLDING COMPANY ACT. Neither the
Borrower nor any Subsidiary is a "holding company" or a "subsidiary company" of
a "holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
ARTICLE V
AFFIRMATIVE COVENANTS
So long as any Note shall remain unpaid or any Bank shall have any
Commitment under this Agreement, the Borrower and each Guarantor will:
SECTION 5.01. MAINTENANCE OF EXISTENCE. Preserve and maintain, and
cause each Subsidiary to preserve and maintain (except for a Subsidiary that
ceases to maintain its existence solely as a result of an Internal
Reorganization), its corporate or limited partnership existence and good
standing in the jurisdiction of its incorporation or formation and qualify and
remain qualified to transact business in each jurisdiction in which such
qualification is required.
SECTION 5.02. MAINTENANCE OF RECORDS. Keep and cause each Subsidiary
to keep, adequate records and books of account, in which complete entries will
be made in accordance with GAAP consistently applied, reflecting all financial
transactions of the Borrower and its Subsidiaries.
SECTION 5.03. MAINTENANCE OF PROPERTIES. Maintain, keep, and
preserve, and cause each Subsidiary to maintain, keep, and preserve, all of its
properties (tangible and intangible) necessary or useful in the proper conduct
of its business in good working order and condition, ordinary wear and tear
excepted.
SECTION 5.04. CONDUCT OF BUSINESS. Continue, and cause each
Subsidiary to continue (except in the case of a Subsidiary that ceases to engage
in business solely as a result
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of an Internal Reorganization), to engage in a business of the same general type
and in the same manner as conducted by it on the date of this Agreement.
SECTION 5.05. MAINTENANCE OF INSURANCE. Maintain, and cause each
Subsidiary to maintain, insurance with financially sound reputable insurance
companies or associations (or, in the case of insurance for construction
warranties and builder default protection for buyers of Housing Units from the
Borrower or any of its Subsidiaries, UHIC) in such amounts and covering such
risks as are usually carried by companies engaged in the same or a similar
business and similarly situated, which insurance may provide for reasonable
deductibility from coverage thereof.
SECTION 5.06. COMPLIANCE WITH LAWS. Comply, and cause each
Subsidiary to comply, in all material respects with all applicable laws, rules,
regulations, and orders, such compliance to include, without limitation, paying
before the same become delinquent all taxes, assessments and governmental
charges imposed upon it or upon its property, other than any such taxes,
assessments and charges being contested by the Borrower in good faith which will
not have a material adverse effect on the financial condition of the Borrower.
SECTION 5.07. RIGHT OF INSPECTION. At any reasonable time and from
time to time, permit any Bank or any agent or representative thereof to examine
and make copies of and abstracts from the records and books of account of, and
visit the properties of, the Borrower and any Subsidiary, and to discuss the
affairs, finances, and accounts of the Borrower and any Subsidiary with any of
their respective officers and directors and the Borrower's independent
accountants.
SECTION 5.08. REPORTING REQUIREMENTS. Furnish to the Agent for
delivery to each of the Banks:
(1) QUARTERLY FINANCIAL STATEMENTS. As soon as available and in any
event within sixty (60) days after the end of each of the first three quarters
of each fiscal year of the Borrower, an unaudited condensed consolidated balance
sheet of the Borrower and its Subsidiaries as of the end of such quarter,
unaudited condensed consolidated statements of operations and cash flow of the
Borrower and its Subsidiaries for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, and unaudited
condensed consolidated statements of changes in stockholders' equity of the
Borrower and its Subsidiaries for the portion of the fiscal year ended with the
last day of such quarter, all in reasonable detail and stating in comparative
form the respective figures for the corresponding date and period in the
previous fiscal year and all prepared in accordance with GAAP consistently
applied and
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certified by the chief financial officer of the Borrower (subject to year-end
adjustments); statements in the form of the Borrower's quarterly 10-Q report to
the Securities and Exchange Commission that are consistent with the foregoing
requirements shall satisfy such requirements;
(2) ANNUAL FINANCIAL STATEMENTS. As soon as available and in any
event within ninety (90) days after the end of each fiscal year of the Borrower,
a consolidated balance sheet of the Borrower and its Subsidiaries as of the end
of such fiscal year, consolidated statements of operations and cash flow of the
Borrower and its Subsidiaries for such fiscal year, and consolidated statements
of changes in stockholders' equity of the Borrower and its Subsidiaries for such
fiscal year, all in reasonable detail and stating in comparative form the
respective figures for the corresponding date and period in the prior fiscal
year and all prepared in accordance with GAAP consistently applied and
accompanied by an opinion thereon acceptable to the Agent by Ernst & Young or
other independent accountants selected by the Borrower and acceptable to the
Agent; statements in the form of the Borrower's annual 10-K report to the
Securities and Exchange Commission that are consistent with the foregoing
requirements shall satisfy such requirements;
(3) FINANCIAL PROJECTIONS. On August 15, 1997 and each anniversary
thereof, two-year financial projections (including a consolidated income
statement, balance sheet and statement of cash flows for the Borrower and its
Subsidiaries) broken down by quarters;
(4) VARIANCE ANALYSIS. (a) Within sixty (60) days of the end of
each of the first three fiscal quarters of each fiscal year of the Borrower, a
quarterly variance analysis comparing actual quarterly results versus projected
quarterly results for the fiscal quarter most recently ended (including
consolidated income statements of the Borrower and its Subsidiaries, an analysis
of revenues, closings and operating profits of the Borrower and each Subsidiary
on a state by state basis, and such other items as are requested by any of the
Banks), together with a written explanation of material variances.
(b) Within ninety (90) days after the end of each fiscal year of
the Borrower, a quarterly variance analysis comparing actual quarterly results
versus projected quarterly results for the fiscal year most recently ended
(including consolidated income statements of the Borrower and its Subsidiaries
accompanied by an opinion thereon acceptable to the Agent by Ernst & Young or
other independent accountants selected by the Borrower and acceptable to the
Agent, an analysis of revenues, closings and operating profits of the Borrower
and each Subsidiary on a state by state basis, and such other items as are
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requested by any of the Banks), together with a written explanation of material
variances.
(5) MANAGEMENT LETTERS. Promptly upon receipt thereof, copies of any
reports submitted to the Borrower or any Subsidiary by independent certified
public accountants in connection with examination of the financial statements of
the Borrower or any Subsidiary made by such accountants.
(6) BORROWING BASE CERTIFICATE. Within twenty-five (25) days (or, in
the case of the last quarter of the fiscal year, thirty-five (35) days) after
the end of each fiscal quarter, a Borrowing Base Certificate, with respect to
the Inventory Valuation Date occurring on the last day of such fiscal quarter.
(7) COMPLIANCE CERTIFICATE. Within sixty (60) days after the end of
each of the first three quarters, and within ninety (90) days after the end of
each fourth quarter, of each fiscal year of the Borrower, a certificate of the
President or chief financial officer of the Borrower certifying (a) the
Borrower's compliance with all financial covenants including, without
limitation, those set forth in Sections 6.10 and 6.11 and Article VII hereof,
which certificate shall set forth in reasonable detail the computation thereof
and (b) certifying that to the best of his knowledge no Default or Event of
Default has occurred and is continuing, or if a Default or Event of Default has
occurred and is continuing, a statement as to the nature thereof and the action
which is proposed to be taken with respect thereto;
(8) PRODUCTION MONITOR SUMMARY. Within twenty (20) days after the
end of each calendar month, a certificate of the President or Chief Operating
Officer of the Borrower certifying the Inventory as at such date which lists by
state of location each item of Inventory, in the following categories: (a)
pre-foundation, (b) foundation, (c) framed, (d) being finished, and (e) model
homes; such summary shall include a delineation of sold or unsold items in each
category;
(9) LAND BANK INVENTORY. Within sixty (60) days after the end of
each calendar quarter, a certificate of the President or Chief Operating Officer
of the Borrower certifying the Land as at such date, which lists by state of
location all Land, delineating Finished Lots, other Lots and estimated
undeveloped Lots.
(10) ACCOUNTANT'S REPORT. Simultaneously with the delivery of the
annual financial statements referred to in Section 5.08(2), a certificate of the
independent public accountants who audited such statements to the effect that,
in
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making the examination necessary for the audit of such statements, they have
obtained no knowledge of any condition or event which constitutes a Default or
Event of Default, or if such accountants shall have obtained knowledge of any
such condition or event, specifying in such certificate each such condition or
event of which they have knowledge and the nature and status thereof;
(11) NOTICE OF LITIGATION. Promptly after the commencement thereof,
notice of all actions, suits, and proceedings before any court or governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign, affecting the Borrower or any Subsidiary which, if determined adversely
to the Borrower or such Subsidiary, would reasonably be expected to result in a
judgment against the Borrower or such Subsidiary in excess of $1,000,000 or
would reasonably be expected to have a material adverse effect on the financial
condition, properties, or operations of the Borrower or such Subsidiary;
(12) NOTICE OF DEFAULTS AND EVENTS OF DEFAULT. As soon as possible
and in any event within ten (10) days after the occurrence of each Default or
Event of Default, a written notice setting forth the details of such Default or
Event of Default and the action which is proposed to be taken by the Borrower
with respect thereto;
(13) ERISA REPORTS. As soon as possible, and in any event within
thirty (30) days after the Borrower knows or has reason to know that any
circumstances exist that constitute grounds entitling the PBGC to institute
proceedings to terminate a Plan subject to ERISA with respect to the Borrower or
any Commonly Controlled Entity, and promptly but in any event within two (2)
Business Days of receipt by the Borrower or any Commonly Controlled Entity of
notice that the PBGC intends to terminate a Plan or appoint a trustee to
administer the same, and promptly but in any event within five (5) Business Days
of the receipt of notice concerning the imposition of withdrawal liability in
excess of $50,000 with respect to the Borrower or any Commonly Controlled
Entity, the Borrower will deliver to each Bank a certificate of the chief
financial officer of the Borrower setting forth all relevant details and the
action which the Borrower proposes to take with respect thereto;
(14) REPORTS TO OTHER CREDITORS. Promptly after the furnishing
thereof, copies of any statement, report, document, notice, certificate, and
correspondence furnished to any other party pursuant to the terms of any
indenture, loan, credit, or similar agreement and not otherwise required to be
furnished to the Bank pursuant to any other clause of this Section 5.08;
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(15) PROXY STATEMENTS, ETC. Promptly after the sending or filing
thereof, copies of all proxy statements, financial statements, and reports which
the Borrower or any Subsidiary sends to its stockholders, and copies of all
regular, periodic, and special reports, and all registration statements which
the Borrower or any Subsidiary files with the Securities and Exchange Commission
or any governmental authority which may be substituted therefor, or with any
national securities exchange; and
(16) GENERAL INFORMATION. Such other information respecting the
condition or operations, financial or otherwise, of the Borrower or any
Subsidiary as any Bank may from time to time reasonably request.
SECTION 5.09. SUBSIDIARY REPORTING REQUIREMENTS. In the event any of
the following statements are prepared with respect to any Subsidiary, then upon
written request from any Bank, furnish to the Agent for delivery to each of the
Banks the following with respect to any Subsidiary:
(1) QUARTERLY FINANCIAL STATEMENTS. An unaudited balance sheet of
such Subsidiary as of the end of most recently completed fiscal quarter,
statements of operations and cash flow of such Subsidiary for the period
commencing at the end of the previous fiscal year and ending with the end of
such quarter, and statements of changes in stockholders' equity of such
Subsidiary for the portion of the fiscal year ended with the last day of such
quarter, all in reasonable detail and stating in comparative form the respective
figures for the corresponding date and period in the previous fiscal year and
all prepared in accordance with GAAP consistently applied and certified by the
chief financial officer of such Subsidiary (subject to year-end adjustments);
(2) ANNUAL FINANCIAL STATEMENTS. A balance sheet of such Subsidiary
as of the end of such fiscal year, statements of operations and cash flow of
such Subsidiary for such fiscal year, and statements of changes in stockholders'
equity of such Subsidiary for such fiscal year, all in reasonable detail and
stating in comparative form the respective figures for the corresponding date
and period in the prior fiscal year and all prepared in accordance with GAAP
consistently applied and as to the consolidated statements accompanied by an
opinion thereon acceptable to the Agent by Ernst & Young or other independent
accountants selected by the Borrower and acceptable to the Agent.
SECTION 5.10. ENVIRONMENT. Be and remain, and cause each Subsidiary
to be and remain, in compliance with the provisions of all federal, state, and
local environmental, health, and safety laws, codes and ordinances, and all
rules and regulations issued thereunder; notify the Agent promptly of any
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notice of a hazardous discharge or environmental complaint received from any
governmental agency or any other party (and the Agent shall notify the Banks
promptly following its receipt of any such notice from the Borrower); notify the
Agent promptly of any hazardous discharge from or affecting its premises (and
the Agent shall notify the Banks promptly following its receipt of any such
notice from the Borrower); promptly contain and remove the same, in compliance
with all applicable laws; promptly pay any fine or penalty assessed in
connection therewith; permit any Bank to inspect the premises, to conduct tests
thereon, and to inspect all books, correspondence, and records pertaining
thereto; and at such Bank's request, and at the Borrower's expense, provide a
report of a qualified environmental engineer, satisfactory in scope, form, and
content to the Majority Banks, and such other and further assurances reasonably
satisfactory to the Majority Banks that the condition has been corrected.
SECTION 5.11. USE OF PROCEEDS. Use the proceeds of the Loans solely
as provided in Section 2.13 hereof.
SECTION 5.12. RANKING OF OBLIGATIONS. Ensure that at all times its
Obligations under the Loan Documents shall be and constitute unconditional
general obligations of the Borrower ranking at least PARI PASSU with all its
other unsecured Debt.
SECTION 5.13. TAXES. Pay and cause each Subsidiary to pay when due
all taxes, assessments and governmental charges and levies upon it or its
income, profits or property, except those which are being contested in good
faith by appropriate proceedings and with respect to which adequate reserves
have been set aside.
SECTION 5.14. WHOLLY OWNED STATUS. Ensure that at all times each of
the Guarantors is a Wholly Owned Subsidiary of the Borrower.
SECTION 5.15. NEW SUBSIDIARIES. Within thirty (30) days after the
date on which any Person shall become a Subsidiary, cause such Subsidiary to
execute and deliver to the Agent, for the benefit of the Banks, a guaranty of
the Obligations in the form of Article IX and an opinion of counsel, certified
copies of resolutions, articles of incorporation, incumbency certificates and
other documents with respect to such Subsidiary and its guaranty substantially
similar to the documents delivered pursuant to Section 3.01 with respect to the
Original Guarantors and Guaranty, all of which shall be reasonably satisfactory
to the Majority Banks in form and substance. UHIC shall not be required to
deliver a Guaranty.
ARTICLE VI
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NEGATIVE COVENANTS
So long as any Note shall remain unpaid or any Bank shall have any
Commitment under this Agreement, the Borrower and each Guarantor will not:
SECTION 6.01. LIENS. Create, incur, assume, or suffer to exist, or
permit any Subsidiary to create, incur, assume, or suffer to exist, any Lien,
upon or with respect to any of its properties, now owned or hereafter acquired,
except the following:
(1) Liens for taxes or assessments or other government charges or
levies if not yet due and payable or, if due and payable, if they are being
contested in good faith by appropriate proceedings and for which appropriate
reserves are maintained;
(2) Liens imposed by law, such as mechanics', materialmen's,
landlords', warehousemen's, and carriers' Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are not
past due for more than ninety (90) days or which are being contested in good
faith by appropriate proceedings and for which appropriate reserves have been
established;
(3) Liens under workers' compensation, unemployment insurance, Social
Security, or similar legislation;
(4) Liens, deposits, or pledges to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money), Capital
Leases (permitted under the terms of this Agreement), public or statutory
obligations, surety, stay, appeal, indemnity, performance, or other similar
bonds, or other similar obligations arising in the ordinary course of business;
(5) Judgment and other similar Liens arising in connection with any
court proceeding, provided the execution or other enforcement of such Liens is
effectively stayed and the claims secured thereby are being actively contested
in good faith and by appropriate proceedings;
(6) Easements, rights-of-way, restrictions, and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use, and enjoyment by the Borrower or any Subsidiary of the property
or assets encumbered thereby in the normal course of its business or materially
impair the value of the property subject thereto;
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(7) Purchase-money Liens on any property hereafter acquired or the
assumption of any Lien on property existing at the time of such acquisition (and
not created in contemplation of such acquisition), or a Lien incurred in
connection with any conditional sale or other title retention or a Capital
Lease; provided that
(a) Any property subject to any of the foregoing is acquired by the
Borrower or any Subsidiary in the ordinary course of its respective
business and the Lien on any such property attaches to such asset
concurrently or within ninety (90) days after the acquisition thereof;
(b) The obligation secured by any Lien so created, assumed, or existing
shall not exceed eighty percent (80%) of the lesser of the cost or the
fair market value as of the time of acquisition of the property
covered thereby to the Borrower or Subsidiary acquiring the same;
(c) Each Lien shall attach only to the property so acquired and fixed
improvements thereon;
(8) Liens incurred in the ordinary course of business not otherwise
permitted by this covenant, provided that the Debt secured by such Lien is
permitted by the provisions of Sections 6.02(1), (5), (6) or (7); and
(9) Any Lien securing an obligation not exceeding $500,000.
SECTION 6.02. DEBT. Create, incur, assume or suffer to exist, or
permit any Subsidiary to create, incur, assume or suffer to exist, any Debt,
except:
(1) Debt of the Borrower and any Guarantor under this Agreement or the
Notes;
(2) Existing Debt described in Schedule 6.02 and Refinancing Debt;
(3) Debt of the Borrower or any Guarantor subordinated on terms
satisfactory to all the Banks to the Borrower's obligations under this
Agreement and the Notes;
(4) Debt of the Borrower to any Guarantor or of any Guarantor to the
Borrower or another Guarantor;
(5) Debt of UHIC to the Borrower or any Guarantor (subject to the
limitations on Investments in UHIC set forth in Section 6.14);
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(6) Trade accounts payable and accruals arising or occurring in the
ordinary course of business;
(7) Debt of the Borrower or any Guarantor under letters of credit and
performance bonds of the Borrower and/or any Guarantor arising in the
ordinary course of business which shall not exceed in the aggregate at
any one time $75,000,000; and
(8) Debt of the Borrower and all Guarantors not otherwise permitted by
this covenant in an aggregate amount outstanding at any one time up to
$40,000,000.
SECTION 6.03. MERGERS, ETC. Wind up, liquidate or dissolve itself,
reorganize, merge or consolidate with or into, or convey, sell, assign,
transfer, lease, or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to any Person, or acquire all or substantially all
the assets or the business of any Person, or permit any Subsidiary to do so,
except (1) for any Permitted Acquisition, (2) that any Subsidiary (other than
UHIC) may merge into or transfer assets to the Borrower as a result of an
Internal Reorganization or otherwise and (3) that any Subsidiary (other than
UHIC) may merge into or consolidate with or transfer assets to any other
Subsidiary (other than UHIC) as a result of an Internal Reorganization or
otherwise.
SECTION 6.04. LEASES. Create, incur, assume, or suffer to exist, or
permit any Subsidiary to create, incur, assume, or suffer to exist, any
obligation as lessee for the rental or hire of any real or personal property,
except (1) Capital Leases permitted by Section 6.01(8); (2) leases existing on
the date of this Agreement and any extension or renewals thereof; (3) leases
between the Borrower and any Subsidiary or between any Subsidiaries; (4)
operating leases entered into in the ordinary course of business; and (5) any
lease of property having a value of $500,000 or less.
SECTION 6.05. SALE AND LEASEBACK. Sell, transfer or otherwise
dispose of, or permit any Subsidiary to sell, transfer, or otherwise dispose of,
any real or personal property to any Person and thereafter directly or
indirectly lease back the same or similar property, except for the sale and
leaseback of model homes.
SECTION 6.06. SALE OF ASSETS. Sell, lease, assign, transfer, or
otherwise dispose of, or permit any Subsidiary to sell, lease, assign, transfer,
or otherwise dispose of, any of its now owned or hereafter acquired assets
(including, without limitation, shares of stock and indebtedness of
subsidiaries,
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receivables, and leasehold interests), except: (1) Inventory disposed of in the
ordinary course of business; (2) the sale or other disposition of assets no
longer used or useful in the conduct of its business; (3) the sale and leaseback
of model homes, or (4) that any Subsidiary (other than UHIC) may sell, lease,
assign, or otherwise transfer its assets to the Borrower or any Wholly Owned
Subsidiary (other than UHIC) in connection with an Internal Reorganization or
otherwise.
SECTION 6.07. INVESTMENTS. Make, or permit any Subsidiary to make,
any loan or advance to any Person, or purchase or otherwise acquire, or permit
any Subsidiary to purchase or otherwise acquire, any capital stock, assets
(other than assets acquired in the ordinary course of business), obligation, or
other securities of, make any capital contribution to, or otherwise invest in or
acquire any interest in any Person including, without limitation, any hostile
takeover, hostile tender offer or similar hostile transaction (collectively,
"Investments"), except: (1) a direct obligation of the United States or any
agency thereof with maturities of one year or less from the date of acquisition;
(2) commercial paper of a domestic issuer rated at least "A-1" by Standard &
Poor's Corporation or "P-1" by Moody's Investors Service, Inc.; (3) certificates
of deposit with maturities of one year or less from the date of acquisition
issued by any commercial bank or federal savings bank having capital and surplus
in excess of $250,000,000; (4) stock, obligation, or securities received in
settlement of debts (created in the ordinary course of business) owing to the
Borrower or any Subsidiary provided such issuance is approved by the board of
directors of the issuer thereof; (5) a loan or advance from the Borrower to a
Subsidiary, or from a Subsidiary to a Subsidiary, or from a Subsidiary to the
Borrower (subject, however, to the limitations set forth in Section 6.14 in the
case of Investments in UHIC); (6) any Permitted Acquisition; (7) an Investment
in a Wholly Owned Subsidiary, which Investment is, or constitutes a part of, an
Internal Reorganization (subject, however, to the limitations set forth in
Section 6.14 in the case of Investments in UHIC); (8) Investments in UHIC to the
extent permitted in Section 6.14; or (9) any Investment of $500,000 or less.
SECTION 6.08. GUARANTIES, ETC. Assume, guarantee, endorse, or
otherwise be or become directly or contingently responsible or liable, or permit
any Subsidiary to assume, guarantee, endorse, or otherwise be or become directly
or contingently responsible or liable (including, but not limited to, an
agreement to purchase any obligation, stock, assets, goods, or services, or to
supply or advance any funds, assets, goods, or services, or an agreement to
maintain or cause such Person to maintain a minimum working capital or net worth
or otherwise to assure the creditors of any Person against loss),
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for obligations of any Person, except: (1) guaranties by endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business; (2) guaranties of performance obligations in the
ordinary course of business; (3) guaranties of any obligation of $500,000 or
less, PROVIDED, HOWEVER, that neither the Borrower nor any Subsidiary shall
guarantee an obligation of UHIC; and (4) that the Borrower or any Subsidiary or
any Guarantor may, whether as a result of an Internal Reorganization or
otherwise, guarantee the Debt permitted by Section 6.02 hereof of any other
Subsidiary (other than UHIC) or Guarantor or of the Borrower.
SECTION 6.09. TRANSACTIONS WITH AFFILIATES. Enter into any
transaction, including, without limitation, the purchase, sale, or exchange of
property or the rendering of any service, with any Affiliate, or permit any
Subsidiary to enter into any transaction, including, without limitation, the
purchase, sale, or exchange of property or the rendering of any service, with
any Affiliate, except in the ordinary course of and pursuant to the reasonable
requirements of the Borrower's or such Guarantor's or any Subsidiary's business
and upon fair and reasonable terms no less favorable to the Borrower or such
Guarantor or any Subsidiary than would obtain in a comparable arm's-length
transaction with a Person not an Affiliate (which exception shall include the
payment of insurance premiums to UHIC for the purchase of construction
warranties and builder default protection for buyers of Housing Units from the
Borrower or any of its Subsidiaries); PROVIDED, HOWEVER, that the transactions
with Affiliates described in Section 4.17(d)(v) of the Indenture, transactions
involving the purchase, sale or exchange of property having a value of $500,000
or less, and transactions otherwise permitted by this Agreement, shall not be
prohibited by this Section 6.09.
SECTION 6.10. LAND INVENTORY. Permit the ratio of (i) the sum of the
number of Finished Lots and the reasonably estimated number of Finished Lots
that will be developed on other Land, all determined as at the end of the most
recent four (4) full fiscal quarters for which financial results have been
reported, to (ii) the number of Housing Unit Closings for the prior four (4)
full fiscal quarters, to exceed 2.5 to 1.0.
SECTION 6.11. HOUSING INVENTORY. Permit the number of Speculative
Housing Units, as at the end of any fiscal quarter, to exceed the greater of (a)
the number of Housing Unit Closings occurring during the period of twelve (12)
months ending on the last day of such fiscal quarter, multiplied by thirty
percent (30%) or (b) the number of Housing Unit Closings occurring during the
period of six (6) months ending on the last day of such fiscal quarter,
multiplied by seventy percent (70%).
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SECTION 6.12. SENIOR DEBT. Repay in whole or in part the principal
of the Senior Debt, except pursuant to Section 6.02(2) hereof.
SECTION 6.13. AMENDMENT OR MODIFICATION OF INDENTURE. Amend or
modify, or permit any amendment or modification of, the Indenture (other than
those provided for in clauses (i), (ii), (iii), (v) or (vi) of Section 10.01(a)
of the Indenture).
SECTION 6.14. UHIC. Permit any of the following: (i) the assets of
UHIC to exceed $5,000,000 at any time; (ii) the aggregate amount of all
Investments in UHIC by the Borrower and its Subsidiaries to exceed $2,000,000;
or (iii) UHIC to engage in any business other than the issuance of construction
warranties and builder default protection for buyers of Housing Units from the
Borrower or any of its Subsidiaries.
ARTICLE VII
FINANCIAL COVENANTS
So long as any Note shall remain unpaid or any Bank shall have any
Commitment under this Agreement:
SECTION 7.01. MINIMUM CONSOLIDATED TANGIBLE NET WORTH. The Borrower
will maintain at all times a Consolidated Tangible Net Worth of not less than
$150,000,000, plus an amount equal to fifty percent (50%) of the cumulative Net
Income of the Borrower earned after September 30, 1996 (excluding any quarter in
which there is a loss) and 100% of the net proceeds of capital stock issued by
the Borrower or its Subsidiaries after June 30, 1996.
SECTION 7.02. LEVERAGE RATIO. The Borrower will maintain at all
times a ratio of Consolidated Debt to Consolidated Tangible Net Worth of not
greater than 2.0 to 1.0.
SECTION 7.03. INTEREST COVERAGE RATIO. The Borrower shall maintain a
ratio of (i) EBITDA to (ii) interest incurred, whether capitalized or expensed
directly, of at least 1.75 to 1.00, which ratio shall be determined as of the
last day of each fiscal quarter for the four-quarter period ending on such day.
SECTION 7.04. PERMITTED SENIOR DEBT. The Borrower will not permit
the outstanding amount of the Permitted Senior Debt to exceed the Borrowing
Base.
SECTION 7.05. FIXED CHARGE COVERAGE RATIO. The Borrower shall
maintain a ratio of (i) EBITDA to (ii) the sum of (A) interest incurred, whether
capitalized or expensed directly, plus (B) required principal payments (other
than balloon payments
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on long-term Debt), (C) scheduled principal payments on Capital Lease
obligations (other than balloon payments on long-term Capital Leases) and (D)
dividends paid with respect to any one or more classes of preferred stock of the
Borrower, of at least 1.5 to 1.0 which ratio shall be determined as of the last
day of each fiscal quarter for the four-quarter period ending on such day.
SECTION 7.06. LAND INVENTORY. The Borrower shall not permit the book
value of Land to exceed Consolidated Tangible Net Worth.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.01. EVENTS OF DEFAULT. If any of the following events
shall occur:
(1) The Borrower shall fail to pay (a) the principal of any Note, or
any amount of a commitment or other fee, as and when due and payable or (b)
interest on any Note or any amount of any commitment fee or other fee within
five (5) Business Days after the same is due and payable;
(2) Any representation or warranty made or deemed made by the
Borrower or by any Guarantor in any Loan Document or which is contained in any
certificate, document, opinion, or financial or other statement furnished at any
time under or in connection with this Agreement shall prove to have been
incorrect, incomplete, or misleading in any material respect on or as of the
date made or deemed made;
(3) The Borrower or any Guarantor shall fail to perform or observe
any term, covenant, or agreement contained in Articles V, VI or VII hereof, and
such failure shall continue for a period of thirty (30) consecutive days;
(4) The Borrower or any Significant Subsidiary or any Significant
Guarantor shall (a) fail to pay (within the applicable cure period, if any) any
amount in respect of indebtedness for borrowed money equal to or in excess of
$5,000,000 in the aggregate (other than the Notes) of the Borrower or such
Significant Subsidiary or such Significant Guarantor, as the case may be, or any
interest or premium thereon, when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise); or (b) fail to perform or
observe any term, covenant, or condition on its part to be performed or observed
(within the applicable cure period, if any) under any agreement or instrument
relating to any such indebtedness, when required to be performed or observed, if
the effect of such failure to perform or observe is to accelerate, or
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permit the acceleration of after the giving of notice or passage of time, or
both, the maturity of such indebtedness, whether or not such failure to perform
or observe shall be waived by the holder of such indebtedness, or any such
indebtedness shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment), prior to the stated
maturity thereof;
(5) The Borrower or any Significant Subsidiary or any Significant
Guarantor (a) shall generally not pay, or shall be unable to pay, or shall admit
in writing its inability to pay its debts as such debts become due; or (b) shall
make an assignment for the benefit of creditors, or petition or apply to any
tribunal for the appointment of a custodian, receiver, or trustee for it or a
substantial part of its assets; or (c) shall commence any proceeding under any
bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, or
liquidation law or statute of any jurisdiction, whether now or hereafter in
effect; or (d) shall have had any such petition or application filed or any such
proceeding commenced against it in which an order for relief is entered or an
adjudication or appointment is made and which remains undismissed for a period
of forty (40) days or more; or (e) shall take any corporate action indicating
its consent to, approval of, or acquiescence in any such petition, application,
proceeding, or order for relief or the appointment of a custodian, receiver, or
trustee for all or any substantial part of its properties; or (f) shall suffer
any such custodianship, receivership, or trusteeship to continue undischarged
for a period of forty (40) days or more;
(6) One or more judgments, decrees, or orders for the payment of
money in excess of $10,000,000 in the aggregate shall be rendered against the
Borrower and/or any Subsidiary and/or any Guarantor, and such judgments,
decrees, or orders shall continue unsatisfied and in effect for a period of
twenty (20) consecutive days without being vacated, discharged, satisfied, or
stayed or bonded pending appeal;
(7) Any Guaranty hereunder shall at any time after its execution and
delivery and for any reason cease to be in full force and effect or shall be
declared null and void, or the validity or enforceability thereof shall be
contested by the Guarantor or the Guarantor shall deny it has any further
liability or obligation under, or shall fail to perform its obligations under,
the Guaranty (except to the extent that the foregoing occurs solely by reason of
the liquidation or dissolution of a Guarantor as a result of an Internal
Reorganization);
(8) Any Change of Control of the Borrower or any Subsidiary or any
Guarantor shall occur;
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(9) Any of the following events shall occur or exist with respect to
the Borrower, any Subsidiary or any Commonly Controlled Entity under ERISA: any
Reportable Event shall occur; complete or partial withdrawal from any
Multiemployer Plan shall take place; any Prohibited Transaction shall occur; a
notice of intent to terminate a Plan shall be filed, or a Plan shall be
terminated; or circumstances shall exist which constitute grounds entitling the
PBGC to institute proceedings to terminate a Plan, or the PBGC shall institute
such proceedings; and in each case above, such event or condition, together with
all other events or conditions described in this Section 8.01(9), if any, could
subject the Borrower or any Significant Guarantor or Significant Subsidiary to
any tax, penalty, or other liability which in the aggregate may exceed $500,000;
or
(10) If any federal, state, or local agency asserts a material claim
against the Borrower or any Significant Guarantor or Significant Subsidiary
and/or its assets, equipment, property, leaseholds, or other facilities for
damages or cleanup costs relating to a hazardous discharge or an environmental
complaint; PROVIDED, HOWEVER, that such claim shall not constitute a default if,
within fifteen (15) days of the occurrence giving rise to the claim, (a) the
Borrower can prove to the reasonable satisfaction of the Majority Banks that the
Borrower has commenced and is diligently pursuing either: (i) a cure or
correction of the event which constitutes the basis for the claim, and continues
diligently to pursue such cure or correction or (ii) proceedings for an
injunction, a restraining order or other appropriate emergent relief preventing
such agency or agencies from asserting such claim, which relief is granted
within thirty (30) days of the occurrence giving rise to the claim and the
injunction, order, or emergent relief is not thereafter resolved or reversed on
appeal or (iii) the defense against the claim through action in a court or
agency exercising jurisdiction over the claim; and (b) in any of the foregoing
events, the Borrower has posted a bond, letter of credit, or other security
satisfactory in form, substance, and amount to the Majority Banks and the agency
or entity asserting the claim to secure the correction of the event which
constitutes the basis for the claim in accordance with applicable laws;
then, and in any such event, the Agent shall at the request of, or may, with the
consent of, the Majority Banks, by notice to the Borrower, (1) declare the
Banks' obligation to make Loans (including, in the case of the Swing Line Bank,
Swing Line Loans) to be terminated, whereupon the same shall forthwith
terminate; and (2) declare the outstanding Notes, all interest thereon, and all
other amounts payable under this Agreement to be forthwith due and payable,
whereupon the Notes, all such interest, and all such amounts shall become and be
forthwith due and payable, without presentment, demand, protest, or further
notice of any
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kind, all of which are hereby expressly waived by the Borrower; PROVIDED,
HOWEVER, in the case of an event described in Section 8.01(5) hereof the
obligations of the Banks to make Loans (including, in the case of the Swing Line
Bank, Swing Line Loans) hereunder shall automatically terminate and the
Obligations shall immediately become due and payable without any election or
action on the part of the Agent or any Bank.
SECTION 8.02. SET OFF. Upon the occurrence and during the
continuance of any Event of Default, each Bank is hereby authorized at any time
and from time to time, without notice to the Borrower (any such notice being
expressly waived by the Borrower), to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Bank to or for the credit or the
account of the Borrower against any and all of the obligations of the Borrower
now or hereafter existing under this Agreement or the Bank's Note or any other
Loan Document, irrespective of whether or not the Agent or such Bank shall have
made any demand under this Agreement or such Bank's Note or such other Loan
Document and although such obligations may be unmatured. Each Bank agrees
promptly to notify the Borrower (with a copy to the Agent) after any such
set-off and application, provided that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of each Bank
under this Section 8.02 are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which each Bank may have.
ARTICLE IX
GUARANTY
SECTION 9.01. GUARANTY. (a) Each of the Guarantors unconditionally
and irrevocably guarantees the due and punctual payment and performance of the
Obligations. Each of the Guarantors further agrees that the Obligations may be
extended or renewed, in whole or in part, without notice or further assent from
it, and it will remain bound upon this Guaranty notwithstanding any extension or
renewal of any Obligation.
(b) Each of the Guarantors waives presentation to, demand for payment
from and protest to the Borrower or any other Guarantor of any of the
Obligations, and also waives notice of protest for nonpayment. The Obligations
of the Guarantors hereunder shall not be affected by (i) the failure of the
Agent or any Bank to assert any claim or demand or to enforce any right or
remedy against the Borrower or any other Guarantor under the provisions of this
Agreement or any other agreement or otherwise; (ii) any extension or renewal of
any provision hereof or thereof;
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(iii) any rescission, waiver, compromise, acceleration, amendment or
modification of any of the terms or provisions of any Loan Document or any other
agreement; (iv) the release, exchange, waiver or foreclosure of any security
held by the Agent or any Bank for the Obligations or any of them; (v) the
failure of the Agent or any Bank to exercise any right or remedy against any
other guarantor of the Obligations; or (vi) the release or substitution of any
Guarantor.
(c) Each of the Guarantors further agrees that this Guaranty
constitutes a guaranty of performance and of payment when due and not just of
collection, and waives any right to require that any resort be had by the Agent
or any Bank to any security held for payment of the Obligations or to any
balance of any deposit, account or credit on the books of a Bank in favor of the
Borrower or any other Guarantor, or to any other Person.
(d) Each of the Guarantors hereby expressly assumes all
responsibilities to remain informed of the financial condition of the Borrower
and each other Guarantor and any circumstances affecting the ability of the
Borrower to perform under this Agreement. Each Guarantor acknowledges that it
will receive direct and indirect benefits from the Loans contemplated by this
Agreement and that the Banks required as a condition to entering into this
Agreement, and in order to secure the prompt and complete payment, observance
and performance of the Obligations, that each Guarantor shall make this
Guaranty.
(e) Each of the Guarantors' guaranty shall not be affected by the
genuineness, validity, regularity or enforceability of the Obligations, the
Notes or any other instrument evidencing any Obligations, or by the existence,
validity, enforceability, perfection, or extent of any collateral therefor or by
any other circumstance relating to the Obligations which might otherwise
constitute a defense to this Guaranty. The Agent makes no representation or
warranty in respect of any such circumstances and has no duty or responsibility
whatsoever to the Guarantors in respect of the management and maintenance of the
Obligations or any such collateral.
SECTION 9.02. NO IMPAIRMENT OF GUARANTY. The Obligations of the
Guarantors hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason, including, without limitation, any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense or set-off, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
Obligations or otherwise. Without limiting the generality of the foregoing, the
Obligations of the Guarantors hereunder shall not be discharged or impaired or
otherwise affected by the failure of the Agent or any Bank to
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assert any claim or demand or to enforce any remedy under this Agreement or any
other agreement, by any waiver or modification of any provision thereof, by any
default, failure or delay, willful or otherwise, in the performance of the
Obligations, or by any other act or thing or omission or delay to do any other
act or thing which may or might in any manner or to any extent vary the risk of
the Guarantors or would otherwise operate as a discharge of the Guarantors as a
matter of law, unless and until the Obligations are paid in full and the
Commitments have been terminated.
SECTION 9.03. CONTINUATION AND REINSTATEMENTS ETC. (a) Each of the
Guarantors further agrees that its guaranty hereunder shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of principal or of interest on any Obligation is rescinded or must
otherwise be restored by the Agent or any Bank upon the bankruptcy or
reorganization of the Borrower or a Guarantor, or otherwise. In furtherance of
the provisions of this Article IX, and not in limitation of any other right
which the Agent or any Bank may have at law or in equity against the Borrower or
the Guarantors by virtue hereof, upon failure of the Borrower to pay any
Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice or otherwise, each of the Guarantors hereby promises
to and will, upon receipt of written demand by the Agent on behalf of the Banks,
forthwith pay or cause to be paid to the Agent on behalf of the Banks in cash an
amount equal to the unpaid amount of all the Obligations, and thereupon the
Banks shall assign such Obligation, together with all security interests, if
any, then held by the Agent in respect of such Obligation, to the Guarantor or
Guarantors making such payment.
(b) Upon payment by any Guarantor of any sums to the Agent on behalf
of the Banks hereunder, all rights of such Guarantor against the Borrower,
arising as a result thereof by way of right of subrogation or otherwise, shall
in all respects be subordinate and junior in right of payment to the prior final
and indefeasible payment in full of all the Obligations to the Agent on behalf
of the Banks. If any amount shall be paid to such Guarantor for the account of
the Borrower, such amount shall be held in trust for the benefit of the Banks
and shall forthwith be paid to the Agent on behalf of the Banks to be credited
and applied to the Obligations, whether matured or unmatured.
SECTION 9.04. LIMITATION ON GUARANTEED AMOUNT. Notwithstanding any
other provision of this Article IX, the amount guaranteed by any Guarantor
hereunder shall be limited to the extent, if any, required so that its
obligations under this Article IX shall not be subject to avoidance under
Section 548 of the Bankruptcy Code or to being set aside or annulled under any
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applicable state law relating to fraud on creditors. In determining the
limitations, if any, on the amount of such Guarantor's obligations hereunder
pursuant to the preceding sentence, any rights of subrogation or contribution
which such Guarantor may have under this Article IX or applicable law shall be
taken into account.
ARTICLE X
AGENCY PROVISIONS
SECTION 10.01. AUTHORIZATION AND ACTION. Each Bank hereby
irrevocably appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement as are delegated to
the Agent by the terms hereof, together with such powers as are reasonably
incidental thereto. The duties of the Agent shall be mechanical and
administrative in nature and the Agent shall not by reason of this Agreement be
a trustee or fiduciary for any Bank. The Agent shall have no duties or
responsibilities except those expressly set forth herein. As to any matters not
expressly provided for by this Agreement (including, without limitation,
enforcement or collection of the Notes), the Agent shall not be required to act
or to refrain from acting except upon the instructions of the Majority Banks or,
to the extent required under Section 11.01, all Banks (and shall be fully
protected in so acting or so refraining from acting), and such instructions
shall be binding upon all Banks and all holders of Notes; PROVIDED, HOWEVER,
that the Agent shall not be required to take any action which exposes the Agent
to personal liability or which is contrary to this Agreement or applicable law.
The Agent shall administer the Loan in the same manner that it would administer
a comparable loan held 100% for its own account.
SECTION 10.02. LIABILITY OF AGENT. Neither the Agent nor any of its
directors, officers, agents, or employees shall be liable for any action taken
or omitted to be taken by it or them under or in connection with this Agreement
in the absence of its or their own gross negligence or willful misconduct.
Without limiting the generality of the foregoing, the Agent (1) may treat the
payee of any Note as the holder thereof until the Agent receives written notice
of the assignment or transfer thereof signed by such payee and in form
satisfactory to the Agent; (2) may consult with legal counsel (including counsel
for the Borrower), independent public accountants and other experts selected by
it and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants, or
experts; (3) makes no warranty or representation to any Bank and shall not be
responsible to any Bank for any statements, warranties, or representations made
in or in connection with this Agreement; (4)
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shall not have any duty to ascertain or to inquire as to the performance or
observance of any terms, covenants, or conditions of this Agreement on the part
of the Borrower, or to inspect the property (including the books and records) of
the Borrower; (5) shall not be responsible to any Bank for the due execution,
legality, validity, enforceability, genuineness, perfection, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; and (6) shall incur no liability under or in respect of this Agreement
by acting upon any notice, consent, certificate or other instrument or writing
(which may be sent by telegram, telefax, or facsimile transmission) reasonably
believed by it to be genuine and signed or sent by the proper party or parties.
SECTION 10.03. RIGHTS OF AGENT AS A BANK. With respect to its
Commitment, the Loans made by it and the Note issued to it, the Agent shall have
the same rights and powers under this Agreement as any other Bank and may
exercise the same as though it were not the Agent; and the term "Bank" or
"Banks" shall, unless otherwise expressly indicated, include the Agent in its
individual capacity. The Agent, each Bank and each of their respective
Affiliates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with, the Borrower,
any of its Subsidiaries and any Person who may do business with or own
securities of the Borrower or any Subsidiary, all as if the Agent were not the
Agent and without any duty to account therefor to the other Banks.
SECTION 10.04. INDEPENDENT CREDIT DECISIONS. Each Bank acknowledges
that it has, independently and without reliance upon the Agent or any other Bank
and based on such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement. Each Bank
also acknowledges that it will, independently and without reliance upon the
Agent or any other Bank and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement. The Agent shall promptly
provide the Banks with copies of all notices of default and other formal notices
sent or received in accordance with Section 11.02 of this Agreement, any written
notice relating to changes in the Borrower's debt ratings that affect the Senior
Debt Rating received from the Borrower or a ratings agency and any other
documents or notices received by the Agent with respect to the Agreement and
requested in writing by any Bank. Except for notices, reports and other
documents and information expressly required to be furnished to the Banks by the
Agent hereunder, the Agent shall have no duty or responsibility to provide any
Bank with any credit or other information concerning the affairs, financial
condition or business of the Borrower or any of its
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Subsidiaries (or any of their Affiliates) which may come into possession of the
Agent or any of its Affiliates.
SECTION 10.05. INDEMNIFICATION. The Banks severally agree to
indemnify the Agent in its capacity as Agent and not as a Bank (to the extent
not reimbursed by the Borrower), ratably according to the respective amounts of
their Commitments, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against the Agent in any way relating to or arising out of this
Agreement or any action taken or omitted by the Agent under this Agreement,
provided that no Bank shall be liable for any portion of any of the foregoing
(i) resulting from the Agent's gross negligence or willful misconduct, (ii) on
account of a strictly internal or regulatory matter relating to the Agent (such
as relating to legal lending limit violation by the Agent), or (iii) in
connection with a breach of an express agreement made by the Agent to a Bank
under this Agreement. Without limitation of the foregoing, each Bank severally
agrees to reimburse the Agent (to the extent not reimbursed by the Borrower)
promptly upon demand for its ratable share of any reasonable out-of-pocket
expenses (including counsel fees) incurred by the Agent in connection with the
preparation, administration, or enforcement of, or legal advice in respect of
rights or responsibilities under, this Agreement; provided, however, that no
Bank shall be required to reimburse the Agent for any such expenses incurred (i)
resulting from the Agent's gross negligence or willful misconduct, (ii) on
account of a strictly internal or regulatory matter relating to the Agent (such
as relating to legal lending limit violation by the Agent), or (iii) in
connection with a breach of an express agreement made by the Agent to a Bank
under this Agreement.
SECTION 10.06. SUCCESSOR AGENT. (a) The Agent may resign at any
time by giving at least sixty (60) days' prior written notice thereof to the
Banks and the Borrower and may be removed at any time with or without cause by
the Majority Banks. Upon any such resignation or removal, the Majority Banks
shall have the right to appoint a successor Agent, subject to Section 10.06(b).
If no successor Agent shall have been so appointed by the Majority Banks, and
shall have accepted such appointment, within thirty (30) days after the retiring
Agent's giving of notice of resignation or the Majority Banks' removal of the
retiring Agent, then the retiring Agent may, on behalf of the Banks, appoint a
successor Agent, which shall be a commercial bank or federal savings bank
organized under the laws of the United States of America or of any State
thereof, subject to Section 10.06(b). Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights,
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powers, privileges and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations under this Agreement. After
any retiring Agent's resignation or removal hereunder as Agent, the provisions
of this Article X shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement.
(b) The appointment of any successor Agent that is not a Bank shall
be subject to the prior written approval of the Borrower, which approval shall
not be unreasonably withheld.
SECTION 10.07. SHARING OF PAYMENTS, ETC. If any Bank shall obtain
any payments (whether voluntary, involuntary, through the exercise of any right
of set-off, or otherwise) on account of the Note held by it in excess of its
ratable share of payments on account of the Notes obtained by all the Banks,
such Bank shall purchase from the other Banks such participations in the Notes
held by them as shall be necessary to cause such purchasing Bank to share the
excess payment ratably with each of the other Banks, PROVIDED, HOWEVER, that if
all or any portion of such excess payment is thereafter recovered from such
purchasing Bank, such purchase from each Bank shall be rescinded and each Bank
shall repay to the purchasing Bank the purchase price to the extent of such
recovery together with an amount equal to such Bank's ratable share (according
to the proportion of (1) the amount of such Bank's required repayment to (2) the
total amount so recovered from the purchasing Bank) of any interest or other
amount paid or payable by the purchasing Bank in respect of the total amount so
recovered. The Borrower agrees that any Bank so purchasing a participation from
another Bank pursuant to this Section 10.07 may, to the fullest extent permitted
by law, exercise all its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Bank were the direct creditor
of the Borrower in the amount of such participation.
SECTION 10.08. WITHHOLDING TAX MATTERS. Each Bank which is a
Non-United States Person agrees to execute and deliver to the Agent for delivery
to the Borrower, before the first scheduled payment date in each year, either
(i) three United States Internal Revenue Service Forms 1001 or (ii) three United
States Internal Revenue Service Forms 4224 together with three United States
Internal Revenue Service Forms W-9, or any successor forms, as appropriate,
properly completed and claiming complete or partial, as the case may be,
exemption from withholding and deduction of United States federal taxes. Each
Bank which is a Non-United States Person represents and warrants to the Borrower
and to the Agent that, at the date of this Agreement, (i) its Lending Offices
are entitled to receive payments of principal, interest, and fees hereunder
without
-58-
deduction or withholding for or on account of any taxes imposed by the United
States or any political subdivision thereof and (ii) it is permitted to take the
actions described in the preceding sentence under the laws and any applicable
double taxation treaties of the jurisdictions specified in the preceding
sentence. Each Bank which is a Non-United States Person further agrees that, to
the extent any form claiming complete or partial exemption from withholding and
deduction of United States federal taxes delivered under this Section 10.08 is
found to be incomplete or incorrect in any material respect, such Bank shall
execute and deliver to the Agent a complete and correct replacement form.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. AMENDMENTS, ETC. No amendment, modification,
termination, or waiver of any provision of any Loan Document to which the
Borrower is a party, nor consent to any departure by the Borrower from any Loan
Document to which it is a party, shall in any event be effective unless the same
shall be in writing and signed by the Majority Banks and the Borrower, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given; PROVIDED, HOWEVER, that no amendment,
waiver or consent shall, unless in writing and signed by all the Banks and the
Borrower, do any of the following: (1) increase the Commitments of the Banks or
the Swing Loan Commitment of the Swing Line Bank or subject the Banks to any
additional obligations; (2) reduce the principal of, or interest on, the Notes
or any fees (other than the Agent's fees) hereunder; (3) postpone any date fixed
for any payment of principal of, or interest on, the Notes or any fees (other
than the Agent's fees) hereunder; (4) change the percentage of the Commitments
or of the aggregate unpaid principal amount of the Notes or the number of Banks
which shall be required for the Banks or any of them to take action hereunder
(including, without limitation, any change in the number of Banks required to
extend the Termination Date under the provisions of Section 2.19); (5) release
any Significant Guarantor; or (6) amend, modify or waive any provision of
Article X or this Section 11.01; and, PROVIDED FURTHER, that no amendment,
waiver, or consent shall, unless in writing and signed by the Agent or the Swing
Line Bank (as applicable) in addition to the Banks required above to take such
action, affect the rights or duties of the Agent or the Swing Line Bank (as
applicable) under any of the Loan Documents.
SECTION 11.02. NOTICES, ETC. All notices and other communications
provided for under this Agreement and under the other Loan Documents to which
the Borrower is a party shall be in
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writing (including telegraphic, telex, and facsimile transmissions) and mailed
or transmitted or hand delivered, if to the Borrower, a Guarantor, a Bank or the
Agent at its respective address set forth on the signature pages hereof; or, as
to each party, at such other address as shall be designated by such party in a
written notice to all other parties complying as to delivery with the terms of
this Section 11.02. Except as is otherwise provided in this Agreement, all such
notices and communications shall be effective when deposited in the mails or
delivered to the telegraph company, or transmitted, answerback received, or hand
delivered, respectively, addressed as aforesaid, except that notices to the
Agent pursuant to the provisions of Article II shall not be effective until
received by the Agent or, in the case of Section 2.21, the Swing Line Bank.
SECTION 11.03. NO WAIVER. No failure or delay on the part of any
Bank or the Agent in exercising any right, power, or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right, power, or remedy preclude any other or further exercise thereof or
the exercise of any other right, power, or remedy hereunder. The making of a
Loan notwithstanding the existence of a Default or Event of Default shall not
constitute any waiver or acquiescence of such Default or Event of Default, and
the making of any Loan notwithstanding any failure or inability to satisfy the
conditions precedent to such Loan shall not constitute any waiver or
acquiescence with respect to such conditions precedent with respect to any
subsequent Loans. The rights and remedies provided herein are cumulative, and
are not exclusive of any other rights, powers, privileges, or remedies, now or
hereafter existing, at law, in equity or otherwise.
SECTION 11.04. COSTS, EXPENSES, AND TAXES. The Borrower agrees to
reimburse the Agent for any reasonable costs, internal charges and out-of-pocket
expenses (including reasonable fees and time charges of attorneys for the Agent,
which attorneys may be employees of the Agent) paid or incurred by the Agent in
connection with the preparation, negotiation, execution, delivery, review,
amendment, modification and administration of the Loan Documents and the
collection of the Loans and enforcement of the Loan Documents. In addition, the
Borrower shall pay any and all stamp and other taxes and fees payable or
determined to be payable in connection with the execution, delivery, filing, and
recording of any of the Loan Documents and the other documents to be delivered
under any such Loan Documents, and agrees to hold the Agent and each of the
Banks harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or failing to pay such taxes and fees. This
provision shall survive termination of this Agreement.
-60-
SECTION 11.05. INTEGRATION. This Agreement (including the Borrower's
obligation to pay the fees of the Agent and First Chicago Capital Markets, Inc.
as provided in Section 2.09(c) and the letter referred to therein) and the Loan
Documents contain the entire agreement between the parties relating to the
subject matter hereof and supersede all oral statements and prior writings with
respect thereto.
SECTION 11.06. INDEMNITY. The Borrower hereby agrees to defend,
indemnify, and hold each Bank harmless from and against all claims, damages,
judgments, penalties, costs, and expenses (including attorney fees and court
costs now or hereafter arising from the aforesaid enforcement of this clause)
arising directly or indirectly from the activities of the Borrower and its
Subsidiaries, its predecessors in interest, or third parties with whom it has a
contractual relationship, or arising directly or indirectly from the violation
of any environmental protection, health, or safety law, whether such claims are
asserted by any governmental agency or any other person. This indemnity shall
survive termination of this Agreement.
SECTION 11.07. GOVERNING LAW. This Agreement and the Notes shall be
governed by, and construed in accordance with, the laws of the State of Illinois
(without regard to principles of conflict of law) but giving effect to federal
laws applicable to national banks.
SECTION 11.08. SEVERABILITY OF PROVISIONS. Any provision of any Loan
Document which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of such Loan
Document or affecting the validity or enforceability of such provision in any
other jurisdiction.
SECTION 11.09. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the different parties to this Agreement in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
Agreement.
SECTION 11.10. HEADINGS. Article and Section headings in the Loan
Documents are included in such Loan Documents for the convenience of reference
only and shall not constitute a part of the applicable Loan Documents for any
other purpose.
SECTION 11.11. SUBMISSION TO JURISDICTION. The Borrower, each
Subsidiary, and each Guarantor hereby submits to the nonexclusive jurisdiction
of the United States District Court for the Northern District of Illinois and of
any Illinois State
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court sitting in The City of Chicago for purposes of all legal proceedings which
may arise hereunder or under the Notes. The Borrower, each Subsidiary, and each
Guarantor irrevocably waives to the fullest extent permitted by law, any
objection which it may have or hereafter have to the laying of the venue of any
such proceeding brought in such a court, and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum. The
Borrower, each Subsidiary, and each Guarantor hereby consents to process being
served in any such proceeding by the mailing of a copy thereof by registered or
certified mail, postage prepaid, to its address specified in Section 11.02
hereof or in any other manner permitted by law.
SECTION 11.12. JURY TRIAL WAIVER. THE BORROWER, EACH SUBSIDIARY,
EACH GUARANTOR, THE AGENT, AND EACH BANK HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR
COUNTERCLAIM, WHETHER IN CONTRACT OR TORT, AT LAW OR IN EQUITY, ARISING OUT OF
OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE LOAN DOCUMENTS. NO OFFICER OF
ANY BANK OR OF THE AGENT HAS AUTHORITY TO WAIVE, CONDITION, OR MODIFY THIS
PROVISION.
SECTION 11.13. GOVERNMENTAL REGULATION. Anything contained in this
Agreement to the contrary notwithstanding, no Bank shall be obligated to extend
credit to the Borrower in violation of any limitation or prohibition provided by
any applicable statute or regulation.
SECTION 11.14. NO FIDUCIARY DUTY. The relationship between the
Borrower and the Banks and the Agent shall be solely that of borrower and
lender. Neither the Agent nor any Bank shall have any fiduciary
responsibilities to the Borrower. Neither the Agent nor any Bank undertakes any
responsibility to the Borrower to review or inform the Borrower of any matter in
connection with any phase of the Borrower's business or operations.
SECTION 11.15. CONFIDENTIALITY. Each Bank agrees to hold any
confidential information which it may receive from the Borrower pursuant to this
Agreement in confidence, except for disclosure (i) to other Banks and their
respective affiliates, (ii) to legal counsel, accountants, and other
professional advisors to that Bank or to a Transferee, (iii) to regulatory
officials, (iv) to any Person as requested pursuant to or as required by law,
regulation, or legal process, (v) to any Person in connection with any legal
proceeding to which that Bank is a party, and (vi) permitted by Section 12.04.
SECTION 11.16. TERMINATION OF EXISTING CREDIT AGREEMENT. The
Borrower, those Guarantors that are parties to the Existing Credit Agreement and
those Banks that are parties to
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the Existing Credit Agreement acknowledge and agree that, upon payment, from the
initial Loans hereunder, of the outstanding principal balance and all accrued
and unpaid interest and fees under the Existing Credit Agreement, the Existing
Credit Agreement shall terminate, and the parties thereto shall have no further
rights or obligations thereunder.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
SECTION 12.01. SUCCESSORS AND ASSIGNS. The terms and provisions of
the Loan Documents shall be binding upon and inure to the benefit of the
Borrower and the Agent and the Banks and their respective successors and
assigns, except that (i) the Borrower shall not have the right to assign its
rights or obligations under the Loan Documents without the consent of all Banks
and (ii) any assignment by any Bank must be made in compliance with Section
12.03. Notwithstanding clause (ii) of this Section, any Bank may at any time,
without the consent of the Borrower or the Agent, pledge all or any portion of
its rights under this Agreement and its Notes to a Federal Reserve Bank as
security for an obligation of such pledgor or of an affiliated entity to such
Federal Reserve Bank; PROVIDED, HOWEVER, that no such pledge shall release the
pledgor Bank from its obligations hereunder. The Agent may treat the payee of
any Note as the owner thereof for all purposes hereof unless and until such
payee complies with Section 12.03 in the case of an assignment thereof. Any
assignee or transferee of a Note agrees by acceptance thereof to be bound by all
the terms and provisions of the Loan Documents. Any request, authority or
consent of any Person, who at the time of making such request or giving such
authority or consent is the holder of any Note, shall be conclusive and binding
on any subsequent holder, transferee or assignee of such Note or of any Note or
Notes issued in exchange thereof.
SECTION 12.02. PARTICIPATIONS. (A) PERMITTED PARTICIPANTS; EFFECT.
Any Bank may, in the ordinary course of its business and in accordance with
applicable law, at any time sell to one or more banks or other entities
("Participants") participating interests in any Loan owing to such Bank, any
Note held by such Bank, any Commitment of such Bank (which may include, in the
case of the Swing Line Bank, the Swing Line Commitment) or any other interest of
such Bank under the Loan Documents in an amount not less than Five Million
Dollars ($5,000,000). In the event of any such sale by a Bank of participating
interests to a Participant, such Bank's obligations under the Loan Documents
shall remain unchanged, such Bank shall remain solely responsible to the other
parties hereto for the
-63-
performance of such obligations, such Bank shall remain the holder of any such
Note for all purposes under the Loan Documents, all amounts payable by the
Borrower under this Agreement shall be determined as if such Bank had not sold
participating interests, and the Borrower and the Agent shall continue to deal
solely and directly with such Bank in connection with such Bank's rights and
obligations under the Loan Documents.
(B) VOTING RIGHTS. Each Bank shall with respect to its Participants,
if any, retain the sole right to approve, without the consent of any
Participant, any amendment, modification or waiver of any provision of the Loan
Documents other than any amendment, modification or waiver with respect to any
Loan or Commitment (or Swing Line Commitment, if applicable) in which such
Participant has an interest which forgives principal, interest or fees (other
than Agent's fees) or reduces the interest rate or fees (other than Agent's
fees) payable with respect to any such Loan or Commitment (or Swing Line
Commitment, if applicable), postpones any date fixed for any regularly scheduled
payment of principal of, or interest or fees (other than Agent's fees) on, any
such Loan or Commitment (or Swing Line Commitment, if applicable) or releases
any Significant Guarantor.
(C) BENEFIT OF SET-OFF. The Borrower agrees that each Participant
shall be deemed to have the rights of set-off provided in Sections 2.12 and 8.02
in respect of its participating interest in amounts owing under the Loan
Documents to the same extent as if the amount of its participating interest were
owing directly to it as a Bank under the Loan Documents, provided that each Bank
shall retain the right of set-off provided in Sections 2.12 and 8.02 with
respect to the amount of participating interests sold to each Participant. The
Banks agree to share with each Participant, and each Participant, by exercising
the right of set-off provided in Section 2.12 or 8.02, agrees to share with each
Bank, any amount received pursuant to the exercise of its right of set-off, such
amounts to be shared in accordance with Section 10.07 as if each Participant
were a Bank.
SECTION 12.03. ASSIGNMENTS. (A) PERMITTED ASSIGNMENTS. Any Bank
may, in the ordinary course of its business and in accordance with applicable
law, at any time assign to one or more banks or other entities ("Purchasers")
all, or any part (but in an amount not less than Five Million Dollars
($5,000,000) of its Commitment and Loans, which may include, in the case of a
Purchaser of an interest from the Swing Line Bank, the Swing Line Commitment and
Swing Line Loans), of its rights and obligations under the Loan Documents,
PROVIDED, HOWEVER, that, based upon facts and circumstances existing at the time
of any such assignment, such assignment does not result in an event described in
Sections 2.14, 2.15, or 2.16 hereof. Such assignment shall be
-64-
substantially in the form of EXHIBIT G hereto or in such other form as may be
agreed to by the parties thereto. The consent of the Borrower and the Agent
shall be required prior to an assignment becoming effective with respect to a
Purchaser which is not a Bank or an Affiliate thereof; PROVIDED, HOWEVER, that
if an Event of Default has occurred and is continuing, the consent of the
Borrower shall not be required. Such consent shall not be unreasonably
withheld.
(B) EFFECT; EFFECTIVE DATE. Upon (i) delivery to the Agent of a
notice of assignment, substantially in the form attached as Exhibit 1 to
EXHIBIT G hereto (a "Notice of Assignment"), together with any consents
required by Section 12.03; and (ii) payment (by either the assignor or the
assignee) of a $4,000.00 fee (or, in the case of an assignment to the
assignor's Affiliate or by reason of the provisions of Section 2.19, a $2,000
fee) to the Agent for processing such assignment, such assignment shall
become effective on the effective date specified in such Notice of
Assignment. The Notice of Assignment shall contain a representation by the
Purchaser to the effect that none of the consideration used to make the
purchase of the Commitment and Loans under the applicable assignment
agreement are "plan assets" as defined under ERISA and that the rights and
interests of the Purchaser in and under the Loan Documents will not be "plan
assets" under ERISA. On and after the effective date of such assignment,
such Purchaser shall for all purposes be a Bank party to this Agreement and
shall have all the rights and obligations of a Bank under the Loan Documents,
to the same extent as if it were an original party hereto, and no further
consent or action by the Borrower, the Banks or the Agent shall be required
to release the transferor Bank with respect to the percentage of the
Aggregate Commitments and Loans (and, if
applicable, Swing Line Commitments and Swing Line Loans) assigned to such
Purchaser. Upon the consummation of any assignment to a Purchaser pursuant
to this Section 12.03(b), the transferor Bank, the Agent and the Borrower
shall make appropriate arrangements so that replacement Notes are issued to
such transferor Bank and new Notes or, as appropriate, replacement Notes, are
issued to such Purchaser, in each case in principal amounts reflecting their
Commitment, as adjusted pursuant to such assignment.
SECTION 12.04. DISSEMINATION OF INFORMATION. The Borrower authorizes
each Bank to disclose to any Participant or Purchaser or any other Person
acquiring an interest in the Loan Documents by operation of law (each a
"Transferee") and any prospective Transferee any and all information in such
Bank's possession concerning the creditworthiness of the Borrower, each
Subsidiary, or each Guarantor, provided that such Transferee or prospective
Transferee agrees to be subject to Section 11.15 to the same effect as if it
were a Bank.
SECTION 12.05. TAX TREATMENT. If any interest in any Loan Document
is transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the transferor
Bank shall cause such Transferee, concurrently with the effectiveness of such
transfer to comply with the provisions of Section 10.08.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first written.
BEAZER HOMES USA, INC.
By: /s/ David Weiss
--------------------------------------
Name: David S. Weiss
------------------------------------
Title: Executive V.P
-----------------------------------
Address for Notices
5775 Peachtree Dunwoody Road
Suite C-550
Atlanta, Georgia 30342
Attention: President
Tel: (404) 250-3420
Fax: (404) 250-3428
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BEAZER MORTGAGE CORPORATION
By: /s/ David Weiss
--------------------------------------
Name: David S. Weiss
------------------------------------
Title: Vice President
-----------------------------------
BEAZER HOMES CORP.
By: /s/ David Weiss
--------------------------------------
Name: David S. Weiss
------------------------------------
Title: Vice President
-----------------------------------
BEAZER HOMES SALES ARIZONA INC.
By: /s/ David Weiss
--------------------------------------
Name: David S. Weiss
------------------------------------
Title: Vice President
-----------------------------------
BEAZER REALTY CORP.
By: /s/ David Weiss
--------------------------------------
Name: David S. Weiss
------------------------------------
Title: Vice President
-----------------------------------
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BEAZER/SQUIRES REALTY, INC.
By: /s/ David Weiss
--------------------------------------
Name: David S. Weiss
------------------------------------
Title: Vice President
-----------------------------------
PANITZ HOMES REALTY INC.
By: /s/ David Weiss
--------------------------------------
Name: David S. Weiss
------------------------------------
Title: Vice President
-----------------------------------
BEAZER HOMES HOLDINGS CORP.
By: /s/ David Weiss
--------------------------------------
Name: David S. Weiss
------------------------------------
Title: Vice President
-----------------------------------
BEAZER HOMES TEXAS HOLDINGS, INC.
By: /s/ David Weiss
--------------------------------------
Name: David S. Weiss
------------------------------------
Title: Vice President
-----------------------------------
BEAZER HOMES TEXAS, L.P.
By: BEAZER HOMES TEXAS HOLDINGS,
INC., its general partner
By: /s/ David Weiss
--------------------------------------
Name: David S. Weiss
------------------------------------
Title: Vice President
-----------------------------------
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Address for Notices to all
--------------------------
Guarantors
----------
c/o Beazer Homes USA, Inc.
5775 Peachtree Dunwoody Road
Suite C-550
Atlanta, Georgia 30342
Attention: President
Tel: (404) 250-3420
Fax: (404) 250-3428
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THE FIRST NATIONAL BANK OF CHICAGO
Commitment:
$27,500,000
By: /s/ James Benko
--------------------------------
James Benko
Assistant Vice President
Addresses for Notices
---------------------
The First National Bank of Chicago
One First National Plaza
Mail Suite 0151
Chicago, Illinois 60670
Attn: Mr. James Benko
Telephone: (312) 732-5067
Telecopy: (312) 732-1117
Lending Office for ABR Loans
----------------------------
The First National Bank of Chicago
One First National Plaza
Mail Suite 0318
Chicago, Illinois 60670
Attention: Mr. Michael Dowling
Telephone: (312) 732-2517
Telecopy: (312) 732-1582
Lending Office for LIBOR Loans
------------------------------
The First National Bank of Chicago
One First National Plaza,
Mail Suite 0318
Chicago, Illinois 60670
Attention: Mr. Michael Dowling
Telephone: (312) 732-2517
Telecopy: (312) 732-1582
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THE FIRST NATIONAL BANK OF BOSTON
Commitment:
$25,000,000
By: /s/ [illegible]
--------------------------------------
Name:
------------------------------------
Title: Vice President
-----------------------------------
Addresses for Notices
---------------------
The First National Bank of Boston
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, GA 30346
Attn: Mr. Nicholas Whiting
Telephone: (770) 390-6580
Telecopier: (770) 390-8434
Lending Office for ABR Loans
----------------------------
The First National Bank of Boston
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, GA 30346
Attn: Ms. Cheryl Geoffrion
Telephone: (770) 390-6577
Telecopy: (770) 390-8434
Lending Office for LIBOR Loans
------------------------------
The First National Bank of Boston
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, GA 30346
Attn: Ms. Cheryl Geoffrion
Telephone: (770) 390-6577
Telecopy: (770) 390-8434
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BANK ONE, ARIZONA, NA
Commitment:
$25,000,000
By: /s/ [illegible]
--------------------------------------
Name: [illegible]
------------------------------------
Title: Assistant Vice President
-----------------------------------
Addresses for Notices
---------------------
Bank One, Arizona, NA
Western Region Real Estate
National Accounts, A383
241 N. Central
P.O. Box 29542
Phoenix, AZ 85038
Attn: Ms. Jennifer J. Pescatore
Telephone: (602) 221-2402
Telecopy: (602) 221-1372
Lending Office for ABR Loans
----------------------------
Bank One, Arizona, NA
Western Region Real Estate, A909
241 N. Central
Phoenix, AZ 85038
Attn: Ms. Karen Hummel
Telephone: (602) 221-1431
Telecopy: (602) 221-1116
Lending Office for LIBOR Loans
------------------------------
Bank One, Arizona, NA
Western Region Real Estate, A909
241 N. Central
Phoenix, AZ 85038
Attn: Ms. Karen Hummel
Telephone: (602) 221-1431
Telecopy: (602) 221-1116
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GUARANTY FEDERAL BANK, F.S.B.
Commitment:
By: /s/ Randy Reid
--------------------------------------
$20,000,000 Name: Randy Reid
------------------------------------
Title: Vice President
-----------------------------------
Address for Notices
-------------------
Guaranty Federal Bank F.S.B.
8333 Douglas Avenue
Dallas, TX 75225
Attn: Mr. Randy Reid
Telephone: (214)360-2735
Telecopy: (214)360-1661
Lending Office for ABR Loans
----------------------------
Guaranty Federal Bank F.S.B.
8333 Douglas Avenue
Dallas, TX 75225
Attn: Ms. Martha Fleming
Telephone: (214) 360-8905
Telecopy: (214) 360-4854
Lending Office for LIBOR Loans
------------------------------
Guaranty Federal Bank F.S.B.
8333 Douglas Avenue
Dallas, TX 75225
Attn: Ms. Martha Fleming
Telephone: (214) 360-8905
Telecopy: (214) 360-4854
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BANK OF AMERICA ILLINOIS
Commitment:
By: /s/ Mark W. Lariviere
--------------------------------------
$17,500,000 Name: Mark W. Lariviere
------------------------------------
Title: Vice President
-----------------------------------
Addresses for Notices
---------------------
Bank of America Illinois
Commercial Real Estate Services
Group - Illinois
231 S. LaSalle Street
Chicago, IL 60697
Attn: Mr. Mark W. Lariviere
Telephone: (312) 828-2513
Telecopy: (312) 828-3950
Lending Office for ABR Loans
----------------------------
Bank of America Illinois
231 S. LaSalle Street
Chicago, IL 60697
Attn: George Hernandez
Telephone: (312) 828-4160
Telecopy: (312) 828-3950
Lending Office for LIBOR Loans
------------------------------
Bank of America Illinois
231 S. LaSalle Street
Chicago, IL 60697
Attn: George Hernandez
Telephone: (312) 828-4160
Telecopy: (312) 828-3950
-73-
COMERICA BANK
Commitment: By: /s/ David Campbell
---------------------------
David J. Campbell
$17,500,000 Vice President
Address for Notices
-------------------
Comerica Bank
500 Woodward Avenue, MC: 3256
Detroit, MI 48226
Attn: Mr. David J. Campbell
Telephone: (313)222-9306
Telecopy: (313)222-9295
Lending Office for ABR Loans
----------------------------
Comerica Bank
500 Woodward Avenue, MC: 3256
Detroit, MI 48226
Attn: Ms. Betsy Branson
Telephone: (313) 222-5878
Telecopy: (313) 222-3697
Lending Office for LIBOR Loans
------------------------------
Comerica Bank
500 Woodward Avenue, MC: 3256
Detroit, MI 48226
Attn: Ms. Betsy Branson
Telephone: (313) 222-5878
Telecopy: (313) 222-3697
-74-
SUNTRUST BANK, ATLANTA
By: /s/ Willem Jan O. Hattink
--------------------------------------
$17,500,000 Name: Willem Jan O. Hattink
------------------------------------
Title: Group Vice President
-----------------------------------
By: /s/ Mike Smith
--------------------------------------
Name: Mike Smith
------------------------------------
Title: Bank Officer
-----------------------------------
Address for Notices
-------------------
SunTrust Bank, Atlanta
25 Park Place
P.O. Box 4418
Atlanta, GA 30303
Attn: Mr. R. Michael Dunlap
Telephone: (404) 724-3890
Telecopy: (404) 588-8833
Address for ABR Loans
---------------------
SunTrust Bank, Atlanta
25 Park Place
P.O. Box 4418
Atlanta, GA 30303
Attn: Ms. Stephanie Creech
Telephone: (404) 581-1601
Telecopy: (404) 588-8833
Address for LIBOR Loans
-----------------------
SunTrust Bank, Atlanta
25 Park Place
P.O. Box 4418
Atlanta, GA 30303
Attn: Ms. Stephanie Creech
Telephone: (404) 581-1601
Telecopy: (404) 588-8833
-75-
Exhibit A
NOTE
$_______________________________ October 22, 1996
FOR VALUE RECEIVED, the undersigned, BEAZER HOMES USA, INC., a
Delaware corporation (the "Borrower") HEREBY PROMISES TO PAY to the order of
_______________________ (the "Bank") to THE FIRST NATIONAL BANK OF CHICAGO, as
Agent, at the Agent's Office located at One First National Plaza, Chicago, IL,
for the account of the applicable Lending Office of the Bank, in lawful money of
the United States and in immediately available funds, the principal amount of
_________________ Dollars ($_______) or the aggregate unpaid principal amount
of all Loans made to the Borrower by the Bank pursuant to the Credit Agreement
and outstanding on the Termination Date, whichever is less, and to pay interest
from the date of this Note, in like money, at said office for the account of the
applicable Lending Office, at the time and at a rate per annum as provided in
the Credit Agreement. The Bank is hereby authorized by the Borrower to endorse
on the schedule attached to the Note held by it the amount and type of each Loan
and each renewal, conversion, and payment of principal amount received by the
Bank for the account of the applicable Lending Office on account of its Loans,
which endorsement shall, in the absence of manifest error, be conclusive as to
the outstanding balance of the Loans made by the Bank; PROVIDED, HOWEVER, that
the failure to make such notation with respect to any Loan or renewal,
conversion, or payment shall not limit or otherwise affect the obligations of
the Borrower hereunder.
This Note is one of the Notes referred to in, and is entitled to the
benefits of, the Credit Agreement, dated as of October 22, 1996, between the
Borrower, the Guarantors, the Bank and certain other banks parties thereto
(which, as it may be amended, modified, renewed or extended from time to time,
is herein called the "Credit Agreement"). Terms used herein which are defined
in the Credit Agreement shall have their defined meanings when used herein. The
Credit Agreement, among other things, contains provisions for acceleration of
the maturity of this Note upon the happening of certain stated events and also
for prepayments on account of principal hereof prior to the maturity of this
Note upon the terms and conditions specified in the Credit Agreement.
The Borrower hereby agrees to pay all reasonable costs and expenses
(including reasonable attorney's fees and expenses) paid or incurred by the
holder of this Note in the collection of any principal or interest payable under
this Note or the enforcement of this Note or any other Loan Documents.
This Note shall be governed by the laws of the State of Illinois.
BEAZER HOMES USA, INC.
By:________________________________
Name: _____________________________
Title: ____________________________
SCHEDULE TO NOTE
Unpaid Name of
Amount of Principal Person
Date Made Type of Principal Balance of Making
or Paid Loan Paid Note Notation
- ---------- ------- --------- --------- --------
Exhibit B
The opinion of Paul, Hastings, Janofsky & Walker LLP, to be
rendered pursuant to Section 3.01(5) of the Credit Agreement dated as of October
22 1996 (the "Credit Agreement"; any capitalized term used herein and not
otherwise defined herein shall have the meaning assigned to such term in the
Credit Agreement) among Beazer Homes USA, Inc., the Original Guarantors parties
thereto, the banks whose names appear on the signature pages thereof and The
First National Bank of Chicago, as Agent, shall be substantially to the
following effect:
a) The Borrower and each of Beazer Mortgage Corporation, a
Delaware corporation, Beazer Homes Corp., a Tennessee corporation, Beazer Homes
Sales Arizona Inc., a Delaware corporation, Beazer Homes Holding Corp., a
Delaware corporation, Beazer Homes Texas Holdings, Inc., a Delaware corporation
and Beazer Homes Texas, L.P., a Delaware limited partnership (collectively the
"Guarantors") is a corporation duly incorporated (or, in the case of Beazer
Homes Texas, L.P., a partnership duly formed), validly existing, and in good
standing under the laws of the jurisdiction of its incorporation or formation
and has all requisite power and authority, corporate or otherwise, to conduct
its business, to own its properties and to execute and deliver, and to perform
all of its obligations under the Loan Documents.
b) The execution and delivery by the Borrower and each Guarantor
of the Loan Documents and the performance of their respective obligations
thereunder have been duly authorized by all necessary corporate or other action
and do not and will not (i) require any consent or approval of its stockholders,
(ii) violate any provision of any law, rule or regulation (including, without
limitation, Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System), or, to our knowledge, any order, writ, judgment, injunction,
decree, determination or award presently in effect having applicability to it
which violation would (x) impair its ability to perform its obligations under
the Loan Documents or (y) have a material adverse effect on its financial
condition, properties, or operations, or on its charter or by-laws, (iii) to our
knowledge, result in a breach of or constitute a default under any indenture or
lease or loan or credit agreement or any other material agreement or instrument
to which it is a party or by which it or its properties may be bound or
affected, or (iv) to our knowledge, result in, or require, the creation or
imposition of any Lien upon any of the properties now owned or hereafter
acquired by it.
c) No authorization, consent, approval, license, exemption of or
filing or registration with any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, is or will be
necessary for
the valid execution, delivery or performance by the Borrower and each Guarantor
of the Loan Documents.
d) Except as have been disclosed to the Agent and the Banks in
writing, there are to our knowledge no actions, suits or proceedings pending or
threatened against the Borrower or any Subsidiary or their properties before any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, the probable outcome of which would have a
material adverse effect on the consolidated financial condition, properties, or
operations of the Borrower and its Subsidiaries taken as a whole.
In rendering the foregoing opinion with respect to Beazer Homes
Corp., we have relied upon the opinion of Tune, Entrekin & White as to matters
of Tennessee law.
In rendering the foregoing opinion we express no opinion as to
the effect (if any) of any laws of any jurisdiction, except those of the General
Corporation Law and Revised Uniform Limited Partnership Act of the State of
Delaware, the Federal laws of the United States and, to the extent provided for
in the preceding paragraph, the laws of Tennessee.
We express no opinion with respect to Beazer Realty Corp., a
Georgia corporation, Beazer/Squires Realty, Inc., a North Carolina corporation
or Panitz Homes Realty, Inc., a Florida corporation.
Exhibit C
The opinion of Illinois counsel to be rendered pursuant to
Section 3.01(5) of the Credit Agreement dated as of October 22, 1996 (the
"Credit Agreement"; any capitalized term used herein and not otherwise defined
herein shall have the meaning assigned to such term in the Credit Agreement)
among Beazer Homes USA, Inc., the Guarantors parties thereto, the banks whose
names appear on the signature page thereof and The First National Bank of
Chicago, as Agent, shall be substantially to the following effect:
The Loan Documents, when executed and delivered by the parties
thereto, will constitute the legal, valid and binding obligations of the
Borrower and each Guarantor enforceable against it in accordance with their
respective terms, except as enforcement of such terms may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium, fraudulent
transfer or similar laws affecting creditors' rights generally or by general
equitable principles.
Counsel is a member of the Bar of the State of Illinois.
In rendering the foregoing opinion we express no opinion as to
the effect (if any) of any laws of any jurisdiction, except those of the State
of Illinois and the Federal laws of the United States.
Exhibit D
The First National Bank of Chicago,
as Agent
One First National Plaza
Chicago, Illinois 60670
Re: Credit Agreement dated as of October 22 1996 (the
"Credit Agreement") among Beazer Homes USA, Inc., the
Guarantors parties thereto, and each of the banks
("Banks") parties thereto
Ladies and Gentlemen:
We have acted as your special counsel in connection with the
Credit Agreement. Terms used in the Credit Agreement are used herein as defined
therein.
We have examined the opinions (the "Opinions") and other
documents delivered by the Borrower and the Guarantors pursuant to Article III
of the Credit Agreement. We have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the conformity to
the originals of all documents submitted to us as copies and the due authority
of all persons executing the same. We have relied as to factual matters on the
documents which we have reviewed, and as to matters of law covered by the
Opinions on such Opinions. We are qualified to practice law in the State of
Illinois and we do not purport to be experts on, or to express any opinion
herein concerning, the laws of any other jurisdiction.
Subject to the exceptions expressed in the preceding paragraph
and while we have not independently considered the matters covered by the
Opinions to the extent necessary to enable us to express the conclusions therein
stated, we are of the opinion that the Opinions and other documents
delivered pursuant to Article III of the Credit Agreement are substantially
responsive to the requirements of said Section. In that regard, we note that
such Section does not require the Opinions to address matters relating to Beazer
Realty Corp., a Georgia corporation, Beazer/Squires Realty, Inc., a North
Carolina corporation, or Panitz Homes Realty, Inc., a Florida corporation.
Very truly yours,
Exhibit E
The opinion of local counsel to be rendered pursuant to Section
3.01(10) of the Credit Agreement dated as of October 22, "Credit Agreement"; any
capitalized term used herein and not otherwise defined herein shall have the
meaning assigned to such term in the Credit Agreement) among Beazer Homes USA,
Inc., the Guarantors parties thereto, the banks whose names appear on the
signature page thereof and The First National Bank of Chicago, as Agent, shall
be substantially to the following effect:
a) The Guarantor is a corporation duly incorporated validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation, and has all requisite power and authority, corporate or
otherwise, to conduct its business, to own its properties and to execute and
deliver, and to perform all of its obligations under the Loan Documents.
b) The execution and delivery by the Guarantor of the Credit
Agreement and the performance of its obligations thereunder have been duly
authorized by all necessary corporate or other action and do not and will not
(i) require any consent or approval of its stockholders, or (ii) violate any
provision of any law, rule or regulation (including, without limitation,
Regulation G, T, U or X of the Board of Governors of the Federal Reserve
System), or, to our knowledge, any order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to it which
violation would (x) impair its ability to perform its obligations under the Loan
Documents (y) have a material adverse effect on its financial condition,
properties, or operations, or on its charter or by-laws.
c) No authorization, consent, approval, license, exemption of or
filing or registration with any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, is or will be
necessary for the valid execution, delivery or performance by the Guarantor of
the Credit Agreement.
d) Except as have been disclosed to the Agent and the Banks in
writing, there are to our knowledge no actions, suits or proceedings pending or
threatened against the Guarantor or its properties before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, the probable outcome of which would have a material adverse
effect on the consolidated financial condition, properties, or operations of the
Guarantor.
Counsel is a member of the Bar of the State of __________________.
In rendering the foregoing opinion we express no opinion as to
the effect (if any) of any laws of any jurisdiction, except those of the State
of ______________, and the Federal laws of the United States.
Exhibit F
Subsidiaries of Borrower
State of Borrower's
Subsidiary Incorporation % Ownership
- ---------- ------------- -----------
Beazer Mortgage Corporation Delaware 100%
Beazer Homes Corp. Tennessee 100%
Beazer Home Sales Arizona Inc. Delaware 100%
Beazer Realty Corp. Georgia 100%
Beazer/Squires Realty, Inc. North Carolina 100%
Panitz Homes Realty, Inc. Florida 100%
Beazer Homes Holdings Corp. Delaware 100%
Beazer Homes Texas Holdings, Inc. Delaware 100%
Beazer Homes Texas, L.P. Delaware 99%(1)
United Housing Insurance
Corporation Vermont 100%
____________________________
(1) The remaining 1% is held by Beazer Homes Texas Holdings, Inc.
Exhibit G
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement") between
_____________ (the "Assignor") and __________________ (the "Assignee") is dated
as of _____________, 19__. The parties hereto agree as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a Credit
Agreement (which, as it may be amended, modified, renewed or extended from time
to time, is herein called the "Credit Agreement") described in Item 1 of
Schedule 1 attached hereto ("Schedule 1"). Capitalized terms used herein and
not otherwise defined herein shall have the meanings attributed to them in the
Credit Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and
assigns to the Assignee, and the Assignee hereby purchases and assumes from the
Assignor, an interest in and to the Assignor's rights and obligations under the
Credit Agreement such that after giving effect to such assignment the Assignee
shall have purchased pursuant to this Assignment Agreement the percentage
interest specified in Item 3 of Schedule 1 of all outstanding rights and
obligations under the Credit Agreement relating to the facilities listed in Item
3 of Schedule 1 and the other Loan Documents. The Commitment (or Loans, if the
applicable Commitment has been terminated) purchased by the Assignee hereunder
is set forth in Item 3 of Schedule 1.
3. EFFECTIVE DATE. The effective date of this Assignment
Agreement (the "Effective Date") shall be the later of the date specified in
Item 3 of Schedule 1 or two Business Days (or such shorter period agreed to by
the Agent) after a Notice of Assignment substantially in the form of Exhibit 1
attached hereto has been delivered to the Agent. Such Notice of Assignment must
include any consents required to be delivered to the Agent by Section 12.03 of
the Credit Agreement (including the consent of the Agent). In no event will the
Effective Date occur if the payments required to be made by the Assignee to the
Assignor on the Effective Date under Sections 4 and 5 hereof are not made on the
proposed Effective Date. The Assignor will notify the Assignee of the proposed
Effective Date no later than the Business Day prior to the proposed Effective
Date. As of the Effective Date, (i) the Assignee shall have the rights and
obligations of a Bank under the Loan Documents with respect to the rights and
obligations assigned to the Assignee hereunder and (ii) the Assignor shall
relinquish its rights and be released from its corresponding obligations under
the Loan Documents with respect to the rights and obligations assigned to the
Assignee hereunder.
4. PAYMENTS, OBLIGATIONS. On and after the Effective Date, the
Assignee shall be entitled to receive from
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the Agent all payments of principal, interest and fees with respect to the
interest assigned hereby. The Assignee shall advance funds directly to the
Agent with respect to all Loans and reimbursement payments made on or after the
Effective Date with respect to the interest assigned hereby. [In consideration
for the sale and assignment of Loans hereunder, (i) the Assignee shall pay the
Assignor on the Effective Date, an amount equal to the principal amount of the
portion of all ABR Loans assigned to the Assignee hereunder and (ii) with
respect to each LIBOR Loan made by the Assignor and assigned to the Assignee
hereunder which is outstanding on the Effective Date, (a) on the last day of the
Interest Period therefor or (b) on such earlier date agreed to by the Assignor
and the Assignee or (c) on the date on which any such LIBOR Loan either becomes
due (by acceleration or otherwise) or is prepaid (the date as described in the
foregoing clauses (a), (b) or (c) being hereinafter referred to as the "Payment
Date"), the Assignee shall pay the Assignor an amount equal to the principal
amounts of the portion of such LIBOR Loan assigned to the Assignee which is
outstanding on the Payment Date. If the Assignor and the Assignee agree that
the Payment Date for such LIBOR Loan shall be the Effective Date, they shall
agree to the interest rate applicable to the portion of such Loan assigned
hereunder for the period from the Effective Date to the end of the existing
Interest Period applicable to such LIBOR Loan (the "Agreed Interest Rate") and
any interest received by the Assignee in excess of the Agreed Interest Rate
shall be remitted to the Assignor. In the event interest for the period from
the Effective Date to but not including the Payment Date is not paid by the
Borrower with respect to any LIBOR Loan sold by the Assignor to the Assignee
hereunder, the Assignee shall pay to the Assignor interest for such period on
the portion of such LIBOR Loan sold by the Assignor to the Assignee hereunder at
the applicable rate provided by the Credit Agreement. In the event a prepayment
of any LIBOR Loan which is existing on the Payment Date and assigned by the
Assignor to the Assignee hereunder occurs after the Payment Date but before the
end of the Interest Period applicable to such LIBOR Loan, the Assignee shall
remit to the Assignor the excess of the prepayment penalty paid with respect to
the portion of such LIBOR Loan assigned to the Assignee hereunder over the
amount which would have been paid if such prepayment penalty was calculated
based on the Agreed Interest Rate. The Assignee will also promptly remit to the
Assignor (i) any principal payments received from the Agent with respect to
LIBOR Loans prior to the Payment Date and (ii) any amounts of interest on Loans
and fees received from the Agent which relate to the portion of the Loans
assigned to the Assignee hereunder for periods prior to the Effective Date, in
the case of ABR Loans, or the Payment Date, in the case of LIBOR Loans, and not
previously paid by the Assignee to the Assignor.]* In the
*THE PARTIES MAY INSERT ALTERNATIVE PAYMENT PROVISIONS IN LIEU OF THE PAYMENT
TERMS INCLUDED IN THIS EXHIBIT.
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event that either party hereto receives any payment to which the other party
hereto is entitled under this Assignment Agreement, then the party receiving
such amount shall promptly remit it to the other party hereto.
5. FEES PAYABLE BY THE ASSIGNEE. [To the extent applicable, the
Assignee shall pay to the Assignor a fee on each day on which a payment of
interest or commitment fee is made under the Credit Agreement with respect to
the amounts assigned to the Assignee hereunder (other than a payment of interest
or commitment fee for the period prior to the Effective Date or, in the case of
LIBOR Loans, the Payment Date, which the Assignee is obligated to deliver to the
Assignor pursuant to Section 4 hereof). The amount of such fee shall be the
difference between (i) the interest or fee, as applicable, paid with respect to
the amounts assigned to the Assignee hereunder and (ii) the interest or fee, as
applicable, which would have been paid with respect to the amounts assigned to
the Assignee hereunder if each interest rate was ___ of 1% less than the
interest rate paid by the Borrower or if the commitment fee was _____ of 1% less
than the commitment fee paid by the Borrower, as applicable. In addition, the
Assignee agrees to pay ____% of the recordation fee required to be paid to the
Agent pursuant to the Credit Agreement in connection with this Assignment
Agreement.]*
*THE PARTIES MAY INSERT ALTERNATIVE PAYMENT PROVISIONS IN LIEU OF THE PAYMENT
TERMS INCLUDED IN THIS EXHIBIT.
6. REPRESENTATIONS OF THE ASSIGNOR: LIMITATIONS ON THE
ASSIGNOR'S LIABILITY. The Assignor represents and warrants that it is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any adverse claim created by the Assignor.
It is understood and agreed that the assignment and assumption hereunder are
made without recourse to the Assignor and that the Assignor makes no other
representation or warranty of any kind to the Assignee. Neither the Assignor
nor any of its officers, directors, employees, agents or attorneys shall be
responsible for (i) the due execution, legality, validity, enforceability,
genuineness, sufficiency or collectibility of any Loan Documents, including
without limitation, documents granting the Assignor and the other Banks a
security interest in assets of the Borrower, any Subsidiary, or any Guarantor,
(ii) any representation, warranty or statement made in or in connection with any
of the Loan Documents, (iii) the financial condition or creditworthiness of the
Borrower, any Subsidiary, or any Guarantor, (iv) the performance of or
compliance with any of the terms or provisions of any of the Loan Documents, (v)
inspecting any of the property, books or records of the Borrower, any
Subsidiary, or any
Guarantor, (vi) the validity, enforceability, perfection, priority, condition,
value or sufficiency of any collateral securing or purporting to secure the
Loans or (vii) any mistake,
error of judgment, or action taken or omitted to be taken in connection with the
Loans or the Loan Documents.
7. REPRESENTATIONS OF THE ASSIGNEE. The Assignee (i) confirms
that it has received a copy of the Credit Agreement, together with copies of
such financial statements requested by the Assignee and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment Agreement, (ii) agrees that it will,
independently and without reliance upon the Agent, the Assignor or any other
Bank and based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not taking
action under the Loan Documents, (iii) appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under the Loan
Documents as are delegated to the Agent by the terms thereof, together with such
powers as are reasonably incidental thereto, (iv) agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Bank, (v) agrees that its
payment instructions and notice instructions are as set forth in the attachment
to Schedule 1, (vi) confirms that none of the funds, monies, assets or other
consideration being used to make the purchase and assumption hereunder are "plan
assets" as defined under ERISA and that its rights, benefits and interests in
and under the Loan Documents will not be "plan assets" under ERISA, [and (vii)
attaches the forms prescribed by the Internal Revenue Service of the United
States certifying that the Assignee is entitled to receive payments under the
Loan Documents without deduction or withholding of any United States federal
income taxes]* and (viii) represents and warrants that the assignment hereunder
does not and will not, as of the effective date of such assignment, result in
any increased costs or expenses, including without limitation pursuant to
Section 2.14 or 2.15 of the Credit Agreement, payable by the Borrower or any
Guarantor.
*TO BE INSERTED IF THE ASSIGNEE IS NOT INCORPORATED UNDER THE LAWS OF THE UNITED
STATES, OR A STATE THEREOF.
8. INDEMNITY. The Assignee agrees to indemnify and hold the
Assignor harmless against any and all losses, costs and expenses (including,
without limitation, reasonable attorneys' fees) and liabilities incurred by the
Assignor in connection with or arising in any manner from the Assignee's
non-performance of the obligations assumed under this Assignment Agreement.
9. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the
Assignee shall have the right pursuant to Section 12.03 of the Credit Agreement
to assign the rights which are assigned to the Assignee hereunder to any entity
or person, provided that (i) any such subsequent assignment does not violate any
of the terms or conditions of the Loan Documents or any law, rule, regulation,
order, writ, judgment, injunction or decree and that
all consents required under the terms of the Loan Documents have been obtained
and (ii) unless the prior written consent of the Assignor is obtained, the
Assignee is not thereby released from its obligations to the Assignor hereunder,
if any remain unsatisfied, including, without limitation, its obligations under
Sections 4, 5 and 8 hereof.
10. REDUCTIONS OF AGGREGATE COMMITMENTS. If any reduction in
the Aggregate Commitments occurs between the date of this Assignment Agreement
and the Effective Date, the percentage interest specified in Item 3 of Schedule
1 shall remain the same, but the dollar amount purchased shall be recalculated
based on the reduced Commitment of the Assignor.
11. ENTIRE AGREEMENT. This Assignment Agreement and the
attached Notice of Assignment embody the entire agreement and understanding
between the parties hereto and supersede all prior agreements and understandings
between the parties hereto relating to the subject matter hereof.
12. GOVERNING LAW. This Assignment Agreement shall be governed
by and construed in accordance with, the laws of the State of Illinois without
regard to principles of conflict of laws.
13. NOTICES. Notices shall be given under this Assignment
Agreement in the manner set forth in the Credit Agreement. For the purpose
hereof the addresses of the parties hereto (until notice of a change is
delivered) shall be the addresses set forth in the attachment to Schedule 1.
IN WITNESS WHEREOF, the parties hereto have executed this
Assignment Agreement by their duly authorized officers as of the date first
above written.
[NAME OF ASSIGNOR]
By:________________________________
Title:_____________________________
[NAME OF ASSIGNEE]
By:________________________________
Title:_____________________________
SCHEDULE 1
to Assignment Agreement
1. Description and Date of Credit Agreement:
2. Date of Assignment Agreement: _________________, 19__
3. Amounts (As of Date of Item 2 above):
Facility Facility Facility
1* 2* 3*
-------- -------- --------
a. Total of Commitments
(Loans)** under
Credit Agreement $_______ $_______ $_______
b. Assignee's Percentage
of each Facility
purchased under the
Assignment
Agreement*** _______% _______% _______%
c. Amount of Assigned
Share in each Facility
purchased under the
Assignment Agreement $_______ $_______ $_______
d. Assignee's aggregate
Commitment Amount
(Loan Amount)***
Purchased Hereunder: $_______ $_______ $_______
e. Proposed Effective
Date: ________ ________ ________
Accepted and Agreed:
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By:___________________________ By:______________________
Title:________________________ Title:___________________
*Insert specific facility names per Credit Agreement
**If a Commitment has been terminated, insert outstanding Loans
in place of Commitment
***Percentage taken to 10 decimal places
Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT
Attach Assignor's Administrative Information Sheet, which must include
notice address for the Assignor and the Assignee and the ABR Loan Lending Office
address and the LIBOR Loan Lending Office address for the Assignee.
EXHIBIT 1
to Assignment Agreement
NOTICE
OF ASSIGNMENT
_______________________, 19__
To: [NAME OF BORROWER]*
______________________
______________________
[NAME OF AGENT]
______________________
______________________
From: [NAME OF ASSIGNOR] (the "Assignor")
[NAME OF ASSIGNEE] (the "Assignee")
1. We refer to that certain Credit Agreement (the "Credit Agreement")
described in Item I of Schedule 1 attached hereto ("Schedule 1"). Capitalized
terms used herein and not otherwise defined herein shall have the meanings
attributed to them in the Credit Agreement.
2. This Notice of Assignment (this "Notice") is given and delivered
to [the Borrower and]* the Agent pursuant to Section 12.03 of the Credit
Agreement.
3. The Assignor and the Assignee have entered into an Assignment
Agreement, dated as of __________, 19__ (the "Assignment"), pursuant to which,
among other things, the Assignor has sold, assigned, delegated and transferred
to the Assignee, and the Assignee has purchased, accepted and assumed from the
Assignor the percentage interest specified in Item 3 of Schedule 1 of all
outstanding rights and obligations under the Credit Agreement relating to the
facilities listed in Item 3 of Schedule 1. The Effective Date of the Assignment
shall be the later of the date specified in Item 5 of Schedule 1 or two Business
Days (or such shorter period as agreed to by the Agent) after this Notice of
Assignment and any consents and fees required by Section 12.03 of the Credit
Agreement have been delivered to the Agent, provided that the Effective Date
shall not occur if any condition precedent agreed to by the Assignor and the
Assignee has not been satisfied.
*TO BE INCLUDED ONLY IF CONSENT MUST BE OBTAINED FROM THE BORROWER PURSUANT TO
SECTION 12.03 OF THE CREDIT AGREEMENT.
4. The Assignor and the Assignee hereby give to the Borrower and the
Agent notice of the assignment and delegation referred to herein. The Assignor
will confer with the Agent before the date specified in Item 5 of Schedule 1 to
determine if the Assignment Agreement will become effective on such date
pursuant to Section 3 hereof, and will confer with the Agent to determine the
Effective Date pursuant to Section 3 hereof if it occurs thereafter. The
Assignor shall notify the Agent if the Assignment Agreement does not become
effective on any proposed Effective Date as a result of the failure to satisfy
the conditions precedent agreed to by the Assignor and the Assignee. At the
request of the Agent, the Assignor will give the Agent written confirmation of
the satisfaction of the conditions precedent.
5. The Assignor or the Assignee shall pay to the Agent on or before
the Effective Date the processing fee of $4,000.00 required by Section 12.03 of
the Credit Agreement.
6. If any Notes are outstanding on the Effective Date, the Assignor
and the Assignee request and direct that the Agent prepare and cause the
Borrower to execute and deliver new Notes or, as appropriate, replacement Notes,
to the Assignor and the Assignee. The Assignor and, if applicable, the Assignee
each agree to deliver to the Agent the original Note received by it from the
Borrower upon its receipt of a new Note (or replacement Note) in the appropriate
amount, whereupon such original Note shall be marked "canceled" and returned to
the Borrower.
7. The Assignee advises the Agent that notice and payment
instructions are set forth in the attachment to Schedule 1.
8. The Assignee hereby represents and warrants that none of the
funds, monies, assets or other consideration being used to make the purchase
pursuant to the Assignment Agreement are "plan assets" as defined under ERISA
and that its rights, benefits, and interests in and under the Loan Documents
will not be "plan assets" under ERISA.
9. The Assignee authorizes the Agent to act as its agent under the
Loan Documents in accordance with the terms thereof. The Assignee acknowledges
that the Agent has no duty to supply information with respect to the Borrower or
the Loan Documents to the Assignee until the Assignee becomes a party to the
Credit Agreement.*
*MAY BE ELIMINATED IF ASSIGNEE IS A PARTY TO THE CREDIT AGREEMENT PRIOR TO THE
EFFECTIVE DATE.
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NAME OF ASSIGNOR NAME OF ASSIGNEE
By:________________________ By:___________________________
Title:_____________________ Title:________________________
ACKNOWLEDGED [AND CONSENTED ACKNOWLEDGED [AND CONSENTED
TO] BY (NAME OF AGENT] TO] BY (NAME OF BORROWER]
By:________________________ By:___________________________
Title:_____________________ Title:________________________
[Attach photocopy of Schedule 1 to Assignment)