EXHIBIT 10.1
EXECUTION COPY
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF JANUARY 28, 2005
AMONG
M.D.C. HOLDINGS, INC.
as Borrower
AND
THE LENDERS NAMED HEREIN
AND
JPMORGAN CHASE BANK, N.A.
as Administrative Agent
AND
WACHOVIA BANK, NATIONAL ASSOCIATION
as Syndication Agent
AND
BNP PARIBAS, CITICORP NORTH AMERICA, INC., GUARANTY BANK, THE ROYAL
BANK OF SCOTLAND PLC, SUNTRUST BANK,
and U.S. BANK NATIONAL ASSOCIATION
as Documentation Agents
AND
BANK OF AMERICA, N.A., CALIFORNIA BANK & TRUST, COMERICA BANK,
KEYBANK NATIONAL ASSOCIATION and WASHINGTON MUTUAL BANK, FA
as Managing Agents
AND
AMSOUTH BANK, MIZUHO CORPORATE BANK, LTD., PNC BANK NATIONAL
ASSOCIATION and RBC CENTURA BANK
as Co-Agents
J.P. MORGAN SECURITIES, INC.
Sole Arranger and Sole Bookmanager
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS..................................................................................... 1
ARTICLE II THE CREDITS.................................................................................... 21
2.1 Commitment............................................................................... 21
2.2 Required Payments........................................................................ 21
2.3 Ratable Loans............................................................................ 21
2.4 Types of Advances........................................................................ 21
2.5 Fees; Reduction and Increase in Commitment............................................... 21
2.6 Minimum Amount of Each Advance........................................................... 25
2.7 Optional Principal Payments.............................................................. 25
2.8 Method of Selecting Types and Interest Periods for New Advances.......................... 25
2.9 Conversion and Continuation of Outstanding Advances...................................... 26
2.10 Changes in Interest Rate, etc............................................................ 26
2.11 Determination of Applicable LIBOR Rate Margin and Applicable Unused Commitment
Rate..................................................................................... 26
2.12 Rates Applicable After Event of Default.................................................. 28
2.13 Method of Payment........................................................................ 29
2.14 Notes; Telephonic Notices................................................................ 29
2.15 Interest Payment Dates; Interest Basis................................................... 29
2.16 Notification of Advances, Interest Rates, Prepayments and Commitment Reductions.......... 30
2.17 Lending Installations.................................................................... 30
2.18 Non-Receipt of Funds by Administrative Agent............................................. 30
2.19 Swing Line............................................................................... 30
2.20 Withholding Tax Exemption................................................................ 32
2.21 Extension of Facility Maturity Date...................................................... 33
2.22 Term Out Period.......................................................................... 34
2.23 Replacement of Certain Lenders........................................................... 35
ARTICLE III CHANGE IN CIRCUMSTANCES....................................................................... 36
3.1 Yield Protection......................................................................... 36
3.2 Changes in Capital Adequacy Regulations.................................................. 38
3.3 Availability of Types of Advances........................................................ 38
3.4 Funding Indemnification.................................................................. 38
3.5 Lender Statements; Survival of Indemnity................................................. 38
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ARTICLE IV THE LETTER OF CREDIT FACILITY.................................................................. 39
4.1 Facility Letters of Credit............................................................... 39
4.2 Limitations.............................................................................. 39
4.3 Conditions............................................................................... 40
4.4 Procedure for Issuance of Facility Letters of Credit..................................... 40
4.5 Duties of LC Issuer...................................................................... 42
4.6 Participation............................................................................ 43
4.7 Compensation for Facility Letters of Credit.............................................. 45
4.8 LC Issuer Reporting Requirements......................................................... 45
4.9 Indemnification; Nature of LC Issuer's Duties............................................ 46
4.10 Facility LC Collateral Account........................................................... 47
4.11 Obligations of LC Issuer and Other Lenders............................................... 48
ARTICLE V CONDITIONS PRECEDENT............................................................................ 48
5.1 Initial Advance.......................................................................... 48
5.2 Each Advance............................................................................. 50
ARTICLE VI REPRESENTATIONS AND WARRANTIES................................................................. 51
6.1 Existence and Standing................................................................... 51
6.2 Authorization and Validity............................................................... 51
6.3 No Conflict; Government Consent.......................................................... 51
6.4 Financial Statements..................................................................... 52
6.5 Material Adverse Change.................................................................. 52
6.6 Taxes.................................................................................... 52
6.7 Litigation and Contingent Obligations.................................................... 52
6.8 Subsidiaries............................................................................. 53
6.9 ERISA.................................................................................... 53
6.10 Accuracy of Information.................................................................. 53
6.11 Regulation U............................................................................. 53
6.12 Material Agreements...................................................................... 53
6.13 Labor Disputes and Acts of God........................................................... 53
6.14 Ownership................................................................................ 53
6.15 Operation of Business.................................................................... 54
6.16 Laws; Environment........................................................................ 54
6.17 Investment Company Act................................................................... 55
6.18 Public Utility Holding Company Act....................................................... 55
6.19 Subordinated Indebtedness................................................................ 55
6.20 Indenture Provisions..................................................................... 55
6.21 SDN List Designation..................................................................... 55
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ARTICLE VII AFFIRMATIVE COVENANTS......................................................................... 55
7.1 Financial Reporting...................................................................... 55
7.2 Use of Proceeds.......................................................................... 58
7.3 Notice of Event of Default............................................................... 58
7.4 Conduct of Business...................................................................... 58
7.5 Taxes.................................................................................... 58
7.6 Insurance................................................................................ 59
7.7 Compliance with Laws..................................................................... 59
7.8 Maintenance of Properties................................................................ 59
7.9 Inspection............................................................................... 59
7.10 Environment.............................................................................. 59
7.11 New Guarantors........................................................................... 59
7.12 Change in Schedules...................................................................... 60
ARTICLE VIII NEGATIVE COVENANTS........................................................................... 60
8.1 Dividends; Repurchase of Stock........................................................... 60
8.2 Indebtedness............................................................................. 60
8.3 Merger................................................................................... 62
8.4 Sale of Assets........................................................................... 62
8.5 Investments and Acquisitions............................................................. 63
8.6 Liens.................................................................................... 65
8.7 Affiliates............................................................................... 67
8.8 Modifications to Certain Indebtedness.................................................... 67
8.9 Amendments of Indenture or Senior Notes.................................................. 68
8.10 Negative Pledge.......................................................................... 68
ARTICLE IX FINANCIAL COVENANTS............................................................................ 68
9.1 Consolidated Tangible Net Worth Test..................................................... 68
9.2 Leverage Test; Interest Coverage Test.................................................... 69
9.3 Consolidated Tangible Net Worth Floor.................................................... 70
ARTICLE X EVENTS OF DEFAULT............................................................................... 70
10.1 Representations and Warranties........................................................... 70
10.2 Non-payment.............................................................................. 71
10.3 Other Defaults........................................................................... 71
10.4 Other Indebtedness....................................................................... 71
10.5 Bankruptcy............................................................................... 71
10.6 Receiver................................................................................. 72
10.7 Judgment................................................................................. 72
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10.8 Unfunded Liabilities..................................................................... 72
10.9 Withdrawal Liability..................................................................... 72
10.10 Increased Contributions.................................................................. 72
10.11 Change in Control........................................................................ 73
10.12 Dissolution.............................................................................. 73
10.13 Guaranty................................................................................. 73
10.14 Consolidated Tangible Net Worth Covenant................................................. 73
10.15 No Defaults.............................................................................. 73
ARTICLE XI ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES................................................. 74
11.1 Acceleration; Remedies................................................................... 74
11.2 Amendments............................................................................... 75
11.3 Preservation of Rights................................................................... 76
ARTICLE XII GENERAL PROVISIONS............................................................................ 77
12.1 Survival of Representations.............................................................. 77
12.2 Governmental Regulation.................................................................. 77
12.3 Taxes.................................................................................... 77
12.4 Headings................................................................................. 77
12.5 Entire Agreement......................................................................... 77
12.6 Nature of Obligations; Benefits of this Agreement........................................ 77
12.7 Expenses; Indemnification................................................................ 77
12.8 Numbers of Documents..................................................................... 78
12.9 Accounting............................................................................... 78
12.10 Severability of Provisions............................................................... 78
12.11 Nonliability of Lenders and LC Issuer.................................................... 78
12.12 CHOICE OF LAW............................................................................ 78
12.13 Arbitration.............................................................................. 79
12.14 CONSENT TO JURISDICTION.................................................................. 80
12.15 WAIVER OF JURY TRIAL..................................................................... 80
12.16 Confidentiality.......................................................................... 80
12.17 USA PATRIOT ACT.......................................................................... 81
ARTICLE XIII ADMINISTRATIVE AGENT......................................................................... 81
13.1 Appointment; Nature of Relationship...................................................... 81
13.2 Powers................................................................................... 81
13.3 General Immunity......................................................................... 82
13.4 No Responsibility for Loans, Recitals, etc............................................... 82
13.5 Action on Instructions of Lenders........................................................ 82
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13.6 Employment of Agents and Counsel......................................................... 82
13.7 Reliance on Documents; Counsel........................................................... 83
13.8 Agent's Reimbursement and Indemnification................................................ 83
13.9 Notice of Default........................................................................ 83
13.10 Rights as a Lender and LC Issuer......................................................... 84
13.11 Lender Credit Decision................................................................... 84
13.12 Successor Administrative Agent........................................................... 84
13.13 Agent and Arranger Fees.................................................................. 85
13.14 Delegation to Affiliates................................................................. 85
13.15 Co-Agents, Co-Documentation Agents, Co-Managing Agents, Syndication Agent, etc........... 85
ARTICLE XIV RATABLE PAYMENTS.............................................................................. 86
14.1 Ratable Payments......................................................................... 86
ARTICLE XV BENEFIT OF AGREEMENT, ASSIGNMENTS; PARTICIPATIONS.............................................. 86
15.1 Successors and Assigns................................................................... 86
15.2 Participations........................................................................... 87
15.3 Assignments.............................................................................. 87
15.4 Dissemination of Information............................................................. 89
15.5 Tax Treatment............................................................................ 89
ARTICLE XVI NOTICES....................................................................................... 89
16.1 Giving Notice............................................................................ 89
16.2 Change of Address........................................................................ 89
ARTICLE XVII COUNTERPARTS................................................................................. 89
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LIST OF SCHEDULES AND EXHIBITS
EXHIBITS:
Exhibit A Form of Guaranty
Exhibit B Form of Note
Exhibit C Form of Commitment and Acceptance
Exhibit D Form of Borrowing Notice
Exhibit E Form of Opinion of General Counsel
Exhibit F Form of Compliance Certificate of Authorized Officer (Financial
Covenant Tests)
Exhibit G Form of Assignment and Assumption Agreement
SCHEDULES:
Schedule 1 Non-Guarantor Subsidiaries
Schedule 2 Commitments
Schedule 4.4 Existing Letters of Credit
Schedule 6.3 Required Orders, Consents and Approvals
Schedule 6.8 Subsidiaries
Schedule 8.2 Existing Indebtedness
Schedule 8.6 Existing Liens
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AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of January
28, 2005, among M.D.C. HOLDINGS, INC., a Delaware corporation, as Borrower, the
Lenders listed on the signature pages of this Agreement, JPMORGAN CHASE BANK,
N.A. (successor by merger to Bank One, NA), as Administrative Agent and BANK
ONE, ARIZONA, N.A. (solely for the purposes set forth in Section 4.4(f)).
RECITALS
A. M.D.C. Holdings, Inc., as borrower, JPMorgan Chase Bank, N.A.
(successor by merger to Bank One, NA), as administrative agent and certain
lenders are party to a certain Credit Agreement dated April 8, 2004 (the "Prior
Credit Agreement").
B. The parties hereto desire to increase the amount of the Aggregate
Commitment and otherwise amend and restate the Prior Credit Agreement in its
entirety.
NOW THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"AAA" is defined in Section 12.13.
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which
Borrower or any Guarantor (i) acquires any going concern or all or substantially
all of the assets of any firm, corporation or division thereof, whether through
purchase of assets, merger or otherwise or (ii) directly or indirectly acquires
(in one transaction or as the most recent transaction in a series of
transactions) at least a majority (in number of votes) of the securities of a
corporation which have ordinary voting power for the election of directors
(other than securities having such power only by reason of the happening of a
contingency) or a majority (by percentage or voting power) of the outstanding
partnership or other ownership interests of a partnership, joint venture,
limited liability company or other similar business organization.
"Additional Lender" is defined in Section 2.5(d)(i).
"Adjusted Consolidated Tangible Net Worth" means, at any date, (a)
Consolidated Tangible Net Worth, plus (b) the lesser of (i) fifty percent (50%)
of the Subordinated Indebtedness of Borrower and Guarantors (taken as a whole on
a consolidated basis) and (ii) $100,000,000.
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"Administrative Agent" means JPMorgan Chase Bank, N.A. (successor by
merger to Bank One, NA), in its capacity as administrative agent for Lenders
pursuant to Article XIII, and not in its individual capacity as a Lender, and
any successor Administrative Agent appointed pursuant to Article XIII.
"Advance" means a borrowing hereunder consisting of the aggregate amount
of the several Loans made by Lenders (or Swing Line Advances made by Swing Line
Lender) to Borrower of the same Type and, in the case of a LIBOR Advance, for
the same Interest Period.
"Affected Lender" is defined in Section 2.23.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person beneficially
owns (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934,
as amended) 10% or more of any class of voting securities (or other ownership
interests) of the controlled Person or possesses, directly or indirectly, the
power to direct or cause the direction of the management or policies of the
controlled Person, whether through ownership of stock, by contract or otherwise.
"Aggregate Commitment" means the aggregate of the Commitments of all
Lenders, as increased or reduced from time to time pursuant to the terms hereof.
As of the date of this Agreement, the Aggregate Commitment is $1,058,000,000.
"Agreement" means this Credit Agreement, as it may be amended or modified
and in effect from time to time.
"Agreement Accounting Principles" is defined in Section 12.9.
"Alternate Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (i) the Prime Rate for such day and (ii) the sum of (a)
the Federal Funds Effective Rate for such day plus (b) 1/2 of 1% per annum.
"Applicable Letter of Credit Rate" means, as at any date of determination,
a rate per annum equal to the Applicable LIBOR Rate Margin.
"Applicable LIBOR Rate Margin" means, as at any date of determination, the
margin indicated in Section 2.11 as then applicable in the determination of
LIBOR Rates.
"Applicable Unused Commitment Rate" means, as at any date of
determination, the rate per annum indicated in Section 2.11 as then applicable
in the determination of the Unused Commitment Fee under Section 2.5(a).
"Arranger" means J.P. Morgan Securities Inc.
"Article" means an article of this Agreement unless another document is
specifically referenced.
"Assignment and Assumption" is defined in Section 15.3.1.
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"Authorized Officer" means any one or more of the Chairman, President,
Senior Vice President or any Vice President, Chief Financial Officer, Treasurer,
or other officer of Borrower or a Guarantor, as applicable, acting singly or
together, in accordance with the applicable resolutions and bylaws of Borrower
or such Guarantor.
"Available Credit" means, at any date with respect to any Lender, the
amount (if any) by which such Lender's Commitment exceeds the sum of (i) the
outstanding principal balance of such Lender's Loans as of such date, plus (ii)
such Lender's ratable share (determined in accordance with Section 4.6) of the
Facility LC Obligations as of such date, plus (iii) an amount equal to such
Lender's ratable share of the outstanding Swing Line Advances.
"Average Daily Outstandings" means, for any quarter (or portion thereof),
the sum of (i) the outstanding principal balance of the Loans (including the
outstanding principal balance of the Swing Line Advances) plus (ii) the
outstanding amount of the Facility Letters of Credit, all calculated for each
day during the quarter (or portion thereof) for which the Unused Commitment Fee
is being computed, divided by the number of days in that quarter (or portion
thereof).
"Bank One, Arizona" means Bank One, Arizona, N.A., in its capacity as an
LC Issuer under Section 4.4(f).
"Bank One, Arizona LCs" is defined in Section 4.4(f).
"Borrower" means M.D.C. Holdings, Inc., a Delaware corporation, its
successors and assigns.
"Borrowing Base" means, with respect to an Inventory Valuation Date for
which it is to be determined, an amount equal to the sum (without duplication)
of the following assets of Borrower and each Guarantor (but only to the extent
that such assets are not subject to any Liens other than Permitted Liens):
(i) the Receivables, multiplied by ninety percent (90%); plus
(ii) the book value of Presold Units, multiplied by ninety percent
(90%); plus
(iii) the book value of Spec Units, multiplied by eighty percent
(80%); plus
(iv) the book value of Model Units, multiplied by seventy percent
(70%); plus
(v) the book value of Finished Lots, multiplied by seventy percent
(70%); plus
(vi) the book value of Land Under Development, multiplied by fifty
percent (50%); plus
(vii) the book value of Entitled Land, multiplied by thirty percent
(30%);
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provided, however, that the aggregate (without duplication) of the amounts
calculated pursuant to clauses (v), (vi) and (vii) shall not exceed at any time
forty percent (40%) of the Borrowing Base.
"Borrowing Base Certificate" means a written certificate in a form
acceptable to Administrative Agent setting forth the amount of the Borrowing
Base with respect to the calendar month most recently completed, certified as
true and correct by an Authorized Officer of Borrower.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Borrowing Notice" is defined in Section 2.8.
"Business Day" means (i) with respect to any borrowing, payment or rate
selection of LIBOR Advances, a day (other than a Saturday or Sunday) on which
banks generally are open in 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 and New York for the conduct of substantially all
of their commercial lending activities.
"Capitalized Lease" of a Person means any lease of Property by such Person
as lessee which would be capitalized on a balance sheet of such Person prepared
in accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.
"Cash Equivalents" means:
(a) U.S. Treasury bills and notes;
(b) GNMA securities;
(c) debt insured by other agencies guaranteed by the full faith and
credit of the United States of America;
(d) commercial paper rated either "A1" or better by S&P or "P1" by
Moody's;
(e) Dutch Auction Preferred Stocks (DAP) rated either "AA" or better
by S&P or "Aa2" or better by Moody's;
(f) certificates of deposit issued by commercial banks, savings
banks or savings and loan associations whose short-term debt is rated
either "A1" or better by S&P or "P1" or better by Moody's, or if such an
institution is a subsidiary whose short-term debt is unrated, then its
parent corporation must have such a rating;
4
(g) bankers acceptances issued by financial institutions that meet
the requirements for certificates of deposit;
(h) deposits in institutions having the same qualifications required
for investments in certificates of deposit;
(i) repurchase agreements collateralized by any otherwise acceptable
collateral as defined above; and
(j) money market accounts a majority of whose assets are composed of
items described by any of the foregoing clauses (a) through (i) through
brokerage firms deemed acceptable by Borrower's management.
"Change in Control" means (a) as to Borrower, the acquisition by any
Person, or two or more Persons acting in concert, of beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934) of 50% or more of the outstanding
shares of voting stock of Borrower, or (b) as to any Guarantor, the acquisition
by any Person (except Borrower or one or more of the Guarantors), or two or more
Persons acting in concert of any beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of any of the outstanding shares of voting stock of such
Guarantor.
"Co-Agent" means each entity identified as such on the cover page of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Co-Documentation Agent" means each entity identified as such on the cover
page of this Agreement.
"Collateral Shortfall Amount" is defined in Section 11.1(a).
"Co-Managing Agent" means each entity identified as such on the cover page
of this Agreement.
"Commitment" means, for each Lender, the obligation of such Lender to make
Loans, and to participate in the Facility Letters of Credit in accordance with
Section 4.6(a), not exceeding the amount set forth in Schedule 2 or as set forth
in any Commitment and Acceptance delivered pursuant to Section 2.5(d) or as set
forth in any Assignment and Assumption relating to any assignment that has
become effective pursuant to Section 15.3.3, as such amount may be modified from
time to time pursuant to the terms hereof.
"Commitment and Acceptance" is defined in Section 2.5(d)(i).
"Consolidated Indebtedness" means, at any date, the outstanding amount of
all Indebtedness (including without limitation any Subordinated Indebtedness) of
Borrower and Guarantors, without duplication, (taken as a whole on a
consolidated basis in conformity with
5
Agreement Accounting Principles). "Consolidated Indebtedness" shall specifically
exclude Indebtedness of any Non-Guarantor Subsidiary.
"Consolidated Interest Expense" means for any period, without duplication,
the aggregate amount of interest which, in conformity with Agreement Accounting
Principles, would be set opposite the caption "interest expense" or any like
caption on a consolidated income statement for Borrower and Guarantors
(specifically excluding the Non-Guarantor Subsidiaries), including, without
limitation, imputed interest included on Capitalized Lease Obligations, all
commissions, discounts and other fees and charges owed with respect to Letters
of Credit and bankers' acceptance financing, the net costs associated with Rate
Hedging Obligations, amortization of other financing fees and expenses, the
interest portion of any deferred payment obligation, amortization of discount or
premiums, if any, and all other noncash interest expense, other than interest
and other charges amortized to cost of sales. Consolidated Interest Expense
includes, with respect to Borrower and Guarantors (specifically excluding the
Non-Guarantor Subsidiaries), without duplication, all interest included as a
component of cost of sales for such period.
"Consolidated Interest Incurred" means for any period, without
duplication, the aggregate amount of interest which, in conformity with
Agreement Accounting Principles, would be set opposite the caption "interest
expense" or any like caption on a consolidated income statement for Borrower and
Guarantors (specifically excluding the Non-Guarantor Subsidiaries), including,
without limitation, imputed interest included on Capitalized Lease Obligations,
all commissions, discounts and other fees and charges owed with respect to
Letters of Credit and bankers' acceptance financing, the net costs associated
with Rate Hedging Obligations, amortization of other financing fees and
expenses, the interest portion of any deferred payment obligation, amortization
of discount or premium, if any, and all other noncash interest expense other
than interest and other charges amortized to cost of sales. Consolidated
Interest Incurred includes, with respect to Borrower and Guarantors, without
duplication, all capitalized interest for such period, all interest attributable
to discontinued operations for such period to the extent not set forth on the
income statement under the caption "interest expense" or any like caption, and
all interest actually paid by Borrower or any Guarantor (specifically excluding
the Non-Guarantor Subsidiaries) under any contingent obligation during such
period.
"Consolidated Net Income" means, for any period, the net income (or loss)
of Borrower on a consolidated basis for such period taken as a single accounting
period, determined in conformity with Agreement Accounting Principles.
"Consolidated Senior Debt Borrowings" means, at any date, with respect to
Borrower and Guarantors, without duplication (taken as a whole on a consolidated
basis), the outstanding principal amount of all obligations described in clauses
(i), (iv) or (viii) of the definition of "Indebtedness" (including the
Obligations and the Senior Debt) calculated in accordance with Agreement
Accounting Principles but excluding (i) Indebtedness of any Non-Guarantor
Subsidiary, (ii) Indebtedness of Borrower to a Guarantor, a Guarantor to
Borrower or a Guarantor to another Guarantor, (iii) any Subordinated
Indebtedness and (iv) Indebtedness secured by collateral having a value in
excess of the amount of such Indebtedness.
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"Consolidated Tangible Net Worth" means, at any date, (a) the
stockholders' equity of Borrower determined on a consolidated basis in
conformity with Agreement Accounting Principles less (i) its consolidated
Intangible Assets, and less (ii) loans and advances to directors, officers and
employees of Borrower but excluding (A) loans for purposes of exercising options
to purchase capital stock in Borrower to the extent not otherwise netted out in
the determination of stockholders' equity, and (B) any arms-length mortgage
loans made by any Subsidiary in the ordinary course of such Subsidiary's
business, and (C) any advances made to employees in the ordinary course of
business for travel and other items, and (D) other such loans and advances not
to exceed $5,000,000 in the aggregate outstanding at any one time, all
determined as of such date less (b) the Net Worth of the Non-Guarantor
Subsidiaries (taken as a whole on a consolidated basis). For purposes of this
definition "Intangible Assets" means the amount (to the extent reflected in
determining such consolidated stockholders' equity) of (1) all write-ups in the
book value of any asset owned by Borrower or any Subsidiary, (2) any amount,
however designated on the balance sheet, representing the excess of the purchase
price paid for assets or stock acquired over the value assigned thereto on the
books of Borrower or any Subsidiary, (3) all unamortized debt discount,
goodwill, patents, trademarks, service marks, trade names, copyrights,
organization or developmental expenses and other intangible items, and (4) all
items that would be considered intangible assets under Agreement Accounting
Principles.
"Consolidated Tangible Net Worth Test" is defined in Section 9.1.
"Controlled Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with Borrower, a Guarantor or any of their respective
Subsidiaries, are treated as a single employer under Section 414 of the Code.
"Conversion/Continuation Notice" is defined in Section 2.9.
"Coverage Test Failure Quarter" is defined in Section 9.2(b).
"Dividend" means (i) any dividend paid or declared by Borrower or any
Guarantor, as applicable; (ii) any purchase, redemption, retirement or other
acquisition by Borrower or any Guarantor, as applicable, for value, or the
setting aside of any funds or issuance of any warrants for such purpose, of any
of the capital stock of Borrower or such Guarantor, as applicable, now or
hereafter outstanding or any interest therein; and (iii) as to any Guarantor,
any distribution of assets, properties, cash, rights, obligations or other
consideration or securities of such Guarantor, directly or indirectly, to
Borrower.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"EBITDA" means, for any period, without duplication, the following, all as
determined on a consolidated basis for Borrower and Guarantors (specifically
excluding the Non-Guarantor Subsidiaries) in conformity with Agreement
Accounting Principles,
(i) the sum of the amounts for such period of (a) Consolidated Net
Income (specifically excluding for purposes of this definition net income
of the Non-Guarantor Subsidiaries but including, however, any dividends
and reimbursements of taxes paid by any Non-Guarantor Subsidiary to
Borrower or any Guarantor), (b) Consolidated Interest
7
Expense, (c) charges against income for all federal, state and local
taxes, (d) depreciation expense, (e) amortization expense, (f) other
non-cash charges and expenses, and (g) any losses arising outside of the
ordinary course of business which have been included in the determination
of such Consolidated Net Income, less
(ii) any gains arising outside of the ordinary course of business
which have been included in the determination of such Consolidated Net
Income.
"Entitled Land" means parcels of land owned by Borrower or any Guarantor
which are zoned for the construction of single-family dwellings, whether
detached or attached (excluding mobile homes); provided, however, that the term
"Entitled Land" shall not include Land under Development, Finished Lots or any
real property upon which the construction of Housing Units has commenced (as
described in the definition of "Housing Unit").
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"Event of Default" means an event described in Article X after the
expiration of any applicable cure or notice period provided in Article X.
"Excluded Taxes" is defined in Section 3.1(i).
"Existing Letters of Credit" means, collectively, the Bank One, Arizona
LCs and the Other Existing LCs.
"Extension Request" is defined in Section 2.21(a).
"Facility Increase Request" is defined in Section 2.5(d)(i).
"Facility LC Collateral Account" is defined in Section 4.10.
"Facility LC Obligations" means, at any date, the sum of (i) the aggregate
undrawn face amount of all outstanding Facility Letters of Credit, plus (ii) the
aggregate amount paid by an LC Issuer on any Facility Letters of Credit to the
extent (if any) not reimbursed by Borrower or by Lenders under Section 4.4.
"Facility Letter of Credit" means each Existing Letter of Credit and any
Letter of Credit issued by the LC Issuer for the account of Borrower or any
Guarantor in accordance with Article IV.
"Facility Letter of Credit Fee" means a fee, payable with respect to each
Facility Letter of Credit issued by the LC Issuer, in an amount per annum equal
to the product of (i) the Applicable Letter of Credit Rate (determined as of the
date on which the quarterly installment of such fee is due) and (ii) the face
amount of such Facility Letter of Credit. The Applicable Letter of Credit Rate
shall be adjusted, as applicable, from time to time, effective on the first
January 1, April 1, June 1 or October 1 to occur on or after any change in the
Applicable LIBOR Rate Margin.
8
"Facility Maturity Date" means April 7, 2009, as the same may be extended
as provided in Section 2.21.
"Facility Rating" means the publicly announced ratings by Moody's and S&P
on Borrower's Indebtedness evidenced by this Agreement and the Notes; provided,
however, (i) in the event of a difference in such ratings between S&P and
Moody's when both of such ratings are BBB- and Baa3 or better, the Facility
Rating shall be the higher of the two ratings, (ii) in the event of a difference
in such ratings between S&P and Moody's when one of such ratings is BB+ or Ba1,
the Facility Rating shall be the lower of the two ratings and (iii) in the event
Moody's or S&P (but not both) publicly announces such a rating, such rating
shall be the Facility Rating. The Facility Rating shall change if and when such
rating(s) change.
"Facility Termination Date" means the earlier of (i) the Facility Maturity
Date, or (ii) the last day of the Term Out Period (if applicable) then in
effect, as calculated pursuant to Section 2.22.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10:00 a.m., Chicago
time, for such day on such transactions received by Administrative Agent from
three (3) Federal funds brokers of recognized standing selected by
Administrative Agent in its sole discretion.
"Financial Covenant Test" means each of the Consolidated Tangible Net
Worth Test and the Leverage Test. The covenant set forth in Section 9.3 shall
not constitute a Financial Covenant Test.
"Finished Lots" means parcels of land owned by Borrower or any Guarantor
which are duly recorded and platted for the construction of single-family
dwelling units, whether detached or attached (but excluding mobile homes) and
zoned for such use, with respect to which all requisite governmental consents
and approvals required for a building permit to be issued have been, or could
be, obtained; provided, however, that the term "Finished Lots" shall not include
any real property upon which the construction of a Housing Unit has commenced
(as described in the definition of "Housing Unit").
"Floating Rate" means, for any day, a rate per annum equal to the
Alternate Base Rate for such day.
"Floating Rate Advance" means an Advance which bears interest at the
Floating Rate.
"Floating Rate Loan" means a Loan which bears interest at the Floating
Rate.
"Fund" means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.
9
"GAAP" means generally accepted accounting principles in effect from time
to time, consistently applied.
"Guarantors" means RICHMOND AMERICAN HOMES OF CALIFORNIA, INC., a Colorado
corporation, RICHMOND AMERICAN HOMES OF MARYLAND, INC., a Maryland corporation,
RICHMOND AMERICAN HOMES OF NEVADA, INC., a Colorado corporation, RICHMOND
AMERICAN HOMES OF VIRGINIA, INC., a Virginia corporation, RICHMOND AMERICAN
HOMES OF ARIZONA, INC., a Delaware corporation, RICHMOND AMERICAN HOMES OF
COLORADO, INC., a Delaware corporation, RICHMOND AMERICAN HOMES OF WEST
VIRGINIA, INC., a Colorado corporation, RAH OF FLORIDA, INC. (formerly known as
Richmond American Homes of California (Inland Empire), Inc.), a Colorado
corporation, RICHMOND AMERICAN HOMES OF UTAH, INC., a Colorado corporation,
RICHMOND AMERICAN HOMES OF TEXAS, INC., a Colorado corporation, RICHMOND
AMERICAN HOMES OF FLORIDA, LP, a Colorado limited partnership, RICHMOND AMERICAN
HOMES OF DELAWARE, INC., a Colorado corporation, RICHMOND AMERICAN HOMES OF
ILLINOIS, INC., a Colorado corporation, RICHMOND AMERICAN HOMES OF NEW JERSEY,
INC., a Colorado corporation, RICHMOND AMERICAN HOMES OF PENNSYLVANIA, INC., a
Colorado corporation, M.D.C. LAND CORPORATION, a Colorado corporation, RICHMOND
AMERICAN CONSTRUCTION, INC., a Delaware corporation, RAH TEXAS HOLDINGS, LLC, a
Colorado limited liability company and RAH OF TEXAS, LP, a Colorado limited
partnership, and their successors and assigns, and any Subsidiary that shall
hereafter become a Guarantor in accordance with Section 7.11 hereof, and any
successors and assigns of any of the foregoing. "Guarantor" means any one of the
Guarantors.
"Guaranty" means the Amended and Restated Guaranty, in substantially the
form of Exhibit A hereto, duly executed by the Guarantors, as the same may be
supplemented, amended or modified and in effect from time to time.
"Housing Unit" means a single-family dwelling (where construction has
commenced), whether detached or attached (including condominiums but excluding
mobile homes), including the parcel of land on which such dwelling is located,
that is or will be available for sale by Borrower or a Guarantor. The
construction of a Housing Unit shall be deemed to have commenced upon
commencement of the trenching for the foundation of the Housing Unit. Each
"Housing Unit" is either a Presold Unit, a Spec Unit or a Model Unit.
"Housing Unit Closing" means a closing of the sale of a Housing Unit by
Borrower or a Guarantor to a bona fide purchaser for value.
"Increase Date" is defined in Section 2.5(d)(ii).
"Indebtedness" of a Person means, without duplication, such Person's
(i) obligations for borrowed money,
(ii) obligations representing the deferred purchase price of
Property or services (other than (A) trade accounts payable and accrued
expenses arising or occurring
10
in the ordinary course of such Person's business, and (B) obligations
evidenced by the Permitted Liens described in clause (vi) of the
definition of Permitted Liens),
(iii) obligations, whether or not assumed, secured by Liens on, or
payable out of the proceeds or production from, Property now or hereafter
owned or acquired by such Person (other than the obligations evidenced by
the Permitted Liens described in clause (vi) of the definition of
Permitted Liens),
(iv) obligations which are evidenced by notes, bonds, debentures, or
other similar instruments,
(v) Capitalized Lease Obligations,
(vi) net liabilities under Rate Hedging Obligations,
(vii) all liabilities and obligations of others of the kind
described in clauses (i) through (vi) and (viii) that such Person has
guaranteed, or that are secured by Liens on Property now or hereafter
owned or acquired by such Person (other than the obligations evidenced by
the Permitted Liens described in clause (vi) of the definition of
Permitted Liens) or that are otherwise the legal liability of such Person,
(viii) reimbursement obligations for which such Person is obligated
with respect to a Letter of Credit (which shall be included in the face
amount of such Letter of Credit, whether or not such reimbursement
obligations are due and payable), provided, however, that Letters of
Credit supporting performance obligations shall not be included in
Indebtedness unless and until such Letter of Credit is drawn upon, and
(ix) a pro rata share of the Indebtedness of any joint venture in
which such Person holds an interest.
Indebtedness includes, without limitation, in the case of Borrower, the
Obligations (subject to clause (viii) above) and the obligations evidenced by
the Senior Notes and the documents executed in connection therewith.
"Indenture" means that certain Senior Debt Securities Indenture, dated as
of December 3, 2002 (the "Base Indenture"), as supplemented by (i) that certain
Supplemental Indenture dated December 3, 2002 relating to the issuance of the
7.0% Senior Notes (as that term is defined in the definition of "Senior Notes"),
(ii) that certain Supplemental Indenture dated May 19, 2003 relating to the
issuance of the 5.5% Senior Notes (as that term is defined in the definition of
"Senior Notes"), (iii) that certain Second Supplemental Indenture dated
September 29, 2003 relating to the 7.0% Senior Notes, (iv) that certain Second
Supplemental Indenture dated September 29, 2003 relating to the 5.5% Senior
Notes, (v) that certain Third Supplemental Indenture dated February 12, 2004
relating to the 7.0% Senior Notes, (vi) that certain Third Supplemental
Indenture dated as of February 12, 2004 relating to the 5.5% Senior Notes and
(vii) that certain Supplemental Indenture dated as of October 6, 2004 relating
to Medium Term Senior Notes in the maximum principal amount of $500,000,000,
including the 5.375% Medium Term Senior Notes (as that term is defined in the
definition of "Senior Notes"), all between
11
Borrower and U.S. Bank National Association and pursuant to which the Senior
Notes were issued.
"Interest Coverage Test" is defined in Section 9.2(b).
"Interest Period" means, with respect to a LIBOR Advance, a period of one,
two, three or six months commencing on a Business Day selected by Borrower
pursuant to this Agreement. Such Interest Period shall end on (but exclude) the
day which corresponds numerically to such date one, two, three or six months
thereafter, provided, however, that if there is no such numerically
corresponding day in such next, second, third or sixth succeeding month, such
Interest Period shall end on the last Business Day of such next, second, third
or sixth succeeding month. If an Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall end on the next
succeeding Business Day, provided, however, that if said next succeeding
Business Day falls in a new calendar month, such Interest Period shall end on
the immediately preceding Business Day. No Interest Period shall extend beyond
the Facility Termination Date (or, if the provisions of Section 2.21(c) apply,
the Previous Maturity Date).
"Inventory Valuation Date" means the last day of the most recent calendar
month with respect to which a Borrower is required to have delivered a Borrowing
Base Certificate pursuant to Section 7.1(vi) hereof.
"Investment" of a Person means any loan, advance, extension of credit
(other than accounts receivable arising in the ordinary course of business), or
contribution of capital by such Person to any other Person or any investment in,
or purchase or other acquisition of, the stock, partnership, joint venture or
limited liability company interests, notes, debentures or other securities of
any other Person made by such Person.
"Investment Grade Rating" means a Facility Rating of Baa3 (or higher) from
Moody's or BBB- (or higher) from S&P or, if there is no Facility Rating, a
Senior Public Debt Rating of Baa3 (or higher) from Moody's or BBB- (or higher)
from S&P.
"Issuance Date" means the date on which a Facility Letter of Credit is
issued, amended or extended.
"JPMorgan Chase Bank" means JPMorgan Chase Bank, N.A. (successor by merger
to Bank One, NA), in its individual capacity, and its successors and assigns.
"Land Under Development" means parcels of land owned by Borrower or any
Guarantor which are zoned for the construction of single-family dwelling units,
whether attached or detached (excluding mobile homes) and upon which the
construction of site improvements has commenced and is proceeding; provided,
however, that the term "Land Under Development" shall not include (i) Finished
Lots, (ii) Entitled Land, (iii) any real property upon which the construction of
a Housing Unit has commenced, or (iv) vacant land held by Borrower or any
Guarantor for future development or sale and designated as inactive land in the
footnotes to Borrower's or such Guarantor's financial statements.
"LC Issuer" means (i) solely with respect to the Bank One, Arizona LCs,
Bank One, Arizona, (ii) solely with respect to the Other Existing LCs, the Prior
LC Issuers, and (iii) with
12
respect to all Facility Letters of Credit issued after the date hereof, JPMorgan
Chase Bank or such other Lender as Borrower, Administrative Agent and such other
Lender may agree upon, that may from time to time issue Facility Letters of
Credit.
"Lenders" means the lending institutions listed on the signature pages of
this Agreement and their respective successors and assigns.
"Lending Installation" means, with respect to a Lender or Administrative
Agent, any office, branch, banking subsidiary of the holding company of a Lender
or Administrative Agent, or banking Affiliate of such Lender or Administrative
Agent located in each event in the United States.
"Letter of Credit" means a letter of credit or similar instrument which is
issued by a financial institution upon the application of a Person or upon which
such Person is an account party or for which such Person is in any way liable.
"Leverage Ratio" means, at any date, the ratio (expressed as a percentage)
of (i) Consolidated Indebtedness to (ii) the sum of Consolidated Indebtedness
and Adjusted Consolidated Tangible Net Worth.
"Leverage Test" is defined in Section 9.2(a).
"LIBOR Advance" means an Advance which bears interest at a LIBOR Rate.
"LIBOR Base Rate" means, with respect to a LIBOR Advance for the relevant
Interest Period, the applicable British Bankers' Association London interbank
offered rate for deposits in U.S. dollars as reported by any generally
recognized financial information service as of 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period, and having a
maturity equal to such Interest Period.
"LIBOR Loan" means a Loan which bears interest at a LIBOR Rate.
"LIBOR Rate" means, with respect to a LIBOR Advance for the relevant
Interest Period, the sum of (i) the quotient of (a) the LIBOR Base Rate
applicable to such Interest Period, divided by (b) one minus the Reserve
Requirement (expressed as a decimal) applicable to such Interest Period, plus
(ii) the Applicable LIBOR Rate Margin. The LIBOR Rate shall be rounded to the
next higher multiple of 1/16 of 1% if the rate is not such a multiple.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment (the purpose of which is to grant a security
interest), deposit arrangement (the purpose of which is to grant a security
interest), encumbrance or other security agreement or arrangement of any kind or
nature whatsoever the purpose of which is to grant a security interest, whether
or not filed or recorded or otherwise perfected (including the interest of a
vendor or lessor under any conditional sale, any Capitalized Lease or any lease
deemed to constitute a security interest or any other title retention
agreement).
"Loan" means, with respect to a Lender, such Lender's portion of any
Advance. For purposes of a Swing Line Advance, Swing Line Lender's portion of
such Advance is 100%.
13
"Loan Documents" means this Agreement, the Notes, any Reimbursement
Agreements and the Guaranty.
"Material Adverse Effect" means a material adverse effect, based on
commercially reasonable standards, on (i) the business, Property, condition
(financial or otherwise), or results of operations of Borrower and Guarantors,
taken as a whole, (ii) the ability of Borrower to perform its obligations under
the Loan Documents, or (iii) the validity or enforceability under applicable law
of any of the Loan Documents or the rights or remedies of Administrative Agent,
Lenders or any LC Issuer thereunder (other than as to clause (iii), a Material
Adverse Effect resulting solely from the acts or omissions of Administrative
Agent and/or any Lender(s)). Items disclosed by Borrower in its form 10-Q and
form 10-K or any other filings with the Securities and Exchange Commission shall
not be deemed to have a Material Adverse Effect solely because of such
disclosure, and the existence and content of such disclosure shall not be prima
facie evidence of a Material Adverse Effect.
"Model Unit" means a Housing Unit constructed initially for inspection by
prospective purchasers that is not intended to be sold until all or
substantially all other Housing Units in the applicable subdivision are sold.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement as described in Section 3(37) of
ERISA to which Borrower, any Guarantor or any member of the Controlled Group is
a party to which more than one employer is obligated to make contributions.
"Net Worth" means, at any date as to each Non-Guarantor Subsidiary (taken
as a whole on a consolidated basis), the sum of (A) all stockholders' equity of
such Non-Guarantor Subsidiary, less (B) all loans or advances made by such
Subsidiary to Borrower or any Guarantor and outstanding at such date, all as
determined in conformity with Agreement Accounting Principles.
"New Lender" is defined in Section 2.5(d)(i).
"Non-Guarantor Subsidiary" means each Subsidiary of Borrower that is not a
Guarantor. The Non-Guarantor Subsidiaries as of the date of this Agreement are
listed on Schedule 1.
"Non-Recourse Indebtedness" with respect to any Person means Indebtedness
of such Person (i) for which the sole legal recourse for collection of principal
and interest on such Indebtedness is against the specific property identified in
the instruments evidencing or securing such Indebtedness and such property was
acquired with the proceeds of such Indebtedness or such Indebtedness was
incurred within ninety (90) days after the acquisition of such property and for
which no other assets of such Person may be realized upon in collection of
principal or interest on such Indebtedness, or (ii) that refinances Indebtedness
described in clause (i) and for which the recourse is limited to the same extent
described in clause (i).
14
"Note" means a promissory note, in substantially the form of Exhibit B
hereto, duly executed by Borrower and payable to the order of a Lender in the
amount of its Commitment, including any amendment, modification, renewal or
replacement of such promissory note.
"Obligations" means all unpaid principal of and accrued and unpaid
interest on the Notes, the Facility LC Obligations, all accrued and unpaid fees
and all expenses, reimbursements, indemnities and other obligations of Borrower
to Lenders or to any Lender, Administrative Agent, any LC Issuer or any
indemnified party hereunder arising under the Loan Documents.
"Other Existing LCs" is defined in Section 4.4(g).
"Participants" is defined in Section 15.2.1.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Permitted Leverage Ratio" means, at the date hereof, 55%, as such amount
may hereafter be adjusted from time to time as provided in Sections 9.2(b) and
9.2(c).
"Permitted Liens" means, as to Borrower or any Guarantor, any of the
following:
(i) Liens for taxes, assessments or governmental charges or levies
on Borrower's or such Guarantor's Property if the same (A) shall not at
the time be delinquent or thereafter can be paid without penalty, or (B)
are being contested in good faith and by appropriate proceedings and for
which adequate reserves shall have been established on Borrower's or such
Guarantor's books in accordance with Agreement Accounting Principles.
(ii) Liens imposed by law, such as carriers', warehousemen's,
mechanics' and materialmen's Liens and other similar Liens arising in the
ordinary course of business with respect to amounts that either (A) are
not yet delinquent, or (B) are delinquent but are being contested in a
timely manner in good faith by appropriate proceedings and for which
adequate reserves shall have been established on Borrower's or Guarantor's
books in accordance with Agreement Accounting Principles.
(iii) Utility easements, rights of way, zoning restrictions,
covenants, reservations, and such other burdens, encumbrances or charges
against real property, or other minor irregularities of title, as are of a
nature generally existing with respect to properties of a similar
character and which do not in any material way interfere with the use
thereof or the sale thereof in the ordinary course of business of Borrower
or such Guarantor.
(iv) Easements, dedications, assessment district or similar Liens in
connection with municipal financing and other similar encumbrances or
charges, in each case reasonably necessary or appropriate for the
development of real property of Borrower or such Guarantor, and which are
granted in the ordinary course of the business of Borrower or such
Guarantor, and which in the aggregate do not materially burden or impair
the fair market value or use of such real property (or the project to
which it is related) for the purposes for which it is or may reasonably be
expected to be held.
15
(v) Any option or right of first refusal to purchase real property
granted to the master developer or the seller of real property that arises
as a result of the non-use or non-development of such real property by
Borrower or such Guarantor.
(vi) Any agreement or contract to participate in the income or
revenue or to pay lot premiums, in each case derived from the sale of
Housing Units and granted in the ordinary course of business to the seller
of the real property upon which the Housing Unit is constructed.
"Person" means any natural person, corporation, firm, joint venture,
partnership, limited liability company, association, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.
"Plan" means an employee pension benefit plan which is covered by Title IV
of ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which Borrower, any Guarantor or any member of the Controlled Group
may have any liability.
"Presold Unit" means a Housing Unit owned by Borrower or any Guarantor
that is subject to a bona fide written agreement between Borrower or such
Guarantor and a third Person purchaser for sale in the ordinary course of
Borrower's or such Guarantor's business of such Housing Unit and the related
lot, accompanied by a cash earnest money deposit or down payment in an amount
that is customary, and subject only to ordinary and customary contingencies to
the purchaser's obligation to buy the Housing Unit and related lot.
"Previous Maturity Date" is defined in Section 2.21(c).
"Prime Rate" means the per annum rate announced by the Lender acting as
the Administrative Agent from time to time as its "prime rate" (it being
acknowledged that such announced rate may not necessarily be the lowest rate
charged by the Lender acting as Administrative Agent to any of its customers),
which Prime Rate shall change simultaneously with any change in such announced
rate.
"Prior Credit Agreement" is defined in Recital A.
"Prior LC Issuers" means those Lenders party to the Prior Credit Agreement
that have issued the Other Existing LCs.
"Prior Lenders" means the "Lenders" as defined in the Prior Credit
Agreement.
"Property" of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned, leased or
operated by such Person.
"Public Indebtedness" means Indebtedness evidenced by notes, debentures,
or other similar instruments issued after the date of this Agreement pursuant to
either (i) a registered public offering or (ii) a private placement of such
instruments in accordance with an exemption from registration under the
Securities Act of 1933 and/or the Securities Exchange Act of 1934 or similar
law.
16
"Purchasers" is defined in Section 15.3.1.
"Rate Hedging Obligations" of a Person means any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts and warrants, and (ii) any and all
cancellations, buy backs, reversals, terminations or assignments of any of the
foregoing.
"Receivables" means the net proceeds payable to, but not yet received by,
Borrower or any Guarantor following a Housing Unit Closing.
"Refinancing Indebtedness" means Indebtedness that refunds, refinances or
extends any Indebtedness (or that refunds, refinances or extends any refund,
refinancing or extension of such Indebtedness), but only to the extent that
(i) the Refinancing Indebtedness is subordinated to or pari passu
with the Obligations (or a Guarantor's obligations under its Guaranty, as
applicable) to the same extent as the Indebtedness being refunded,
refinanced or extended,
(ii) the Refinancing Indebtedness is scheduled to mature no earlier
than the then current maturity date of such Indebtedness,
(iii) such Refinancing Indebtedness is in an aggregate amount that
is equal to or less than the sum of the aggregate amount then outstanding
plus all amounts committed but undisbursed under the Indebtedness being
refunded, refinanced or extended,
(iv) the Person or Persons liable for the payment of such
Refinancing Indebtedness are the same Person or Persons (or successor(s)
thereto) that were liable for the Indebtedness being refunded, refinanced
or extended when such Indebtedness was initially incurred, and
(v) such Refinancing Indebtedness is incurred within 120 days after
the Indebtedness being refunded, refinanced or extended is so refunded,
refinanced or extended.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or other
regulation or official interpretation of said Board of Governors relating to
reserve requirements applicable to member banks of the Federal Reserve System.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or other
regulation or official
17
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.
"Reimbursement Agreement" means, with respect to a Facility Letter of
Credit, such form of application therefor and form of reimbursement agreement
therefor (whether in a single or several documents, taken together) as an LC
Issuer may employ in the ordinary course of business for its own account, with
such modifications thereto as may be agreed upon by such LC Issuer and Borrower
and as are not materially adverse (in the reasonable judgment of such LC Issuer
and Administrative Agent) to the interests of Lenders; provided, however, in the
event of any conflict between the terms of any Reimbursement Agreement and this
Agreement, the terms of this Agreement shall control.
"Rejecting Lender" is defined in Section 2.21(b).
"Related Business" means any of the following lines of business or
business activity of the type conducted by Borrower, Guarantors and their
Subsidiaries on the date hereof: (i) the home building business, (ii) the
residential mortgage loan business, (iii) the real estate development business,
(iv) the title insurance agency and settlement business, and (v) the insurance
agency business.
"Replacement Lender" is defined in Section 2.23.
"Reportable Event" means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such Section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within thirty (30)
days of the occurrence of such event; provided, however, that a failure to meet
the minimum funding standard of Section 412 of the Code and of Section 302 of
ERISA shall be a Reportable Event regardless of the issuance of any such waiver
of the notice requirement in accordance with either Section 4043(a) of ERISA or
waiver of the funding requirements under Section 412(d) of the Code.
"Required Lenders" means Lenders in the aggregate having at least 66-2/3%
of the Aggregate Commitment or, if the Aggregate Commitment has been terminated,
Lenders in the aggregate holding at least 66-2/3% of the aggregate unpaid
principal amount of the outstanding Advances.
"Reserve Requirement" means, with respect to an Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities (as defined therein).
"S&P" means Standard & Poor's Ratings Services.
"SEC Filing" means any form 10-K, form 10-Q or form 8-K of Borrower
hereafter filed by Borrower with the Securities and Exchange Commission and
delivered to Administrative Agent pursuant to Section 7.1(xii).
18
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Senior Debt" means the Senior Notes or, if the Senior Notes are
refinanced, the Refinancing Indebtedness with respect thereto.
"Senior Notes" means (a) the 7.0% Senior Notes due 2012 of Borrower issued
in the original principal amount of $150,000,000 pursuant to the Indenture (the
"7% Senior Notes"), (b) the 5.5% Senior Notes due 2013 of Borrower issued in the
original principal amounts of $150,000,000 and $200,000,000, respectively,
pursuant to the Indenture (the "5.5% Senior Notes") and (c) the 5.375% Medium
Term Senior Notes due 2014 of Borrower issued in the original principal amount
of $250,000,000 pursuant to the Indenture (the "5.375% Medium Term Senior
Notes").
"Senior Public Debt Rating" means the publicly announced ratings by
Moody's and S&P on Borrower's Senior Debt or other Public Indebtedness of
Borrower that is pari passu with the Obligations; provided, however, (i) in the
event of a difference in such ratings between S&P and Moody's when each of such
ratings is BBB- and Baa3 or better, the Senior Public Debt Rating shall be the
higher of the two ratings, (ii) in the event of a difference in such ratings
between S&P and Moody's when one of such ratings is BB+ or Ba1, the Senior
Public Debt Rating shall be the lower of the two ratings and (iii) in the event
Moody's or S&P (but not both) publicly announces such a rating, such rating
shall be the Senior Public Debt Rating. The Senior Public Debt Rating shall
change if and when such rating(s) change.
"Significant Subsidiary" means any Non-Guarantor Subsidiary that has a Net
Worth equal to or exceeding $1,000,000.00.
"Single Employer Plan" means a Plan maintained by Borrower, any Guarantor
or any member of the Controlled Group for employees of Borrower, any Guarantor
or any member of the Controlled Group.
"Spec Unit" means any Housing Unit owned by Borrower or any Guarantor that
is not a Presold Unit or a Model Unit.
"Subordinated Indebtedness" means any Indebtedness of Borrower or any
Guarantor (a) which has a maturity date that is later than the Facility Maturity
Date and (b) the payment of which Indebtedness is subordinated to payment of the
Obligations or to such Guarantor's Guaranty of the Obligations (as applicable)
to the satisfaction of the Required Lenders. Subordinated Indebtedness shall
specifically not include Indebtedness of any Guarantor to Borrower or Borrower
to any Guarantor.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power for the election of the
board of directors of which shall at the time be beneficially owned (within the
meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended)
directly or indirectly, by such Person or by one or more of its Subsidiaries or
by such Person and one or more of its Subsidiaries, or (ii) any partnership,
association, joint venture, limited liability company or similar business
organization more than 50% of the ownership interests having ordinary voting
power of which shall at the time be so
19
owned or controlled. Unless otherwise expressly provided, all references herein
to a "Subsidiary" shall mean a direct or indirect Subsidiary of Borrower.
"Substantial Portion" means, with respect to the Property of Borrower and
Guarantors, taken as a whole, Property which represents more than 10% of
Consolidated Tangible Net Worth, as would be shown in the consolidated financial
statements of Borrower as of the beginning of the fiscal quarter in which such
determination is made.
"Swing Line Advances" has the meaning set forth in Section 2.19.
"Swing Line Advance Maturity Date" means that day that is the second
Business Day following the date in which a Swing Line Advance was funded by
Swing Line Lender.
"Swing Line Lender" means JPMorgan Chase Bank.
"Syndication Agent" means each entity identified as such on the cover page
of this Agreement.
"Term Out Date" is defined in Section 2.22(a).
"Term Out Period" means the period of time commencing on the Term Out Date
and expiring on the Facility Termination Date.
"Transferee" is defined in Section 15.4.
"Type" means, with respect to any Advance, its nature as a Floating Rate
Advance or LIBOR Advance.
"Unfunded Liabilities" means the amount (if any) by which the present
value of all vested nonforfeitable benefits under all Single Employer Plans
exceeds the fair market value of the assets of such Plans allocable to such
benefits, all determined as of the then most recent valuation date for such
Plans, using the actuarial methods and assumptions utilized in the actuarial
report for each such Plan as of such date.
"Unmatured Event of Default" means an event which but for the lapse of
time or the giving of notice, or both, would constitute an Event of Default.
"Unused Commitment" means, at any date with respect to any Lender, the
amount (if any) by which such Lender's Commitment exceeds the sum of (i) the
outstanding principal balance of such Lender's Loans as of such date (including,
in the case of Swing Line Lender, the Swing Line Advances), plus (ii) such
Lender's ratable share (determined in accordance with Section 4.6) of the
outstanding amount of the Facility Letters of Credit.
"Unused Commitment Fee" means a fee payable by Borrower to each Lender
with respect to such Lender's Unused Commitment, calculated in accordance with
Section 2.5(a).
"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of the
outstanding voting securities (or the power to elect the board of directors) of
which shall at the time be
20
beneficially owned (within the meaning of Rule 13d-3 of the Securities Exchange
Act of 1934, as amended) directly or indirectly, by such Person or one or more
Wholly-Owned Subsidiaries of such Person, or by such Person and one or more
Wholly-Owned Subsidiaries of such Person, or (ii) any partnership, association,
joint venture, limited liability company or similar business organization 100%
of the ownership interests having ordinary voting power of which shall at the
time be so owned or controlled.
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms.
ARTICLE II
THE CREDITS
2.1 Commitment. From and including the date of this Agreement and prior to
the Facility Termination Date, each Lender severally agrees, on the terms and
conditions set forth in this Agreement, to make Loans to Borrower and to
participate in Facility Letters of Credit (as provided in Article IV) from time
to time in amounts not to exceed in the aggregate at any one time outstanding
the amount of its Commitment; provided, however, that (i) a Lender shall not be
required to make any Loan or Loans in excess of the amount of such Lender's then
Available Credit, and (ii) at any time at which Borrower does not have an
Investment Grade Rating, the aggregate principal amount of all Consolidated
Senior Debt Borrowings outstanding at any time and from time to time shall not
exceed the Borrowing Base determined as of the most recent Inventory Valuation
Date. The Commitments to lend hereunder shall expire on the Facility Termination
Date.
2.2 Required Payments. Any outstanding Advances and all other unpaid
Obligations shall be paid in full by Borrower on the Facility Termination Date.
Additionally, if for any reason at any time either (i) the principal amount of
all Advances plus the aggregate amount of the Facility LC Obligations
outstanding exceeds the Aggregate Commitment, or (ii) at any time at which
Borrower does not have an Investment Grade Rating, the aggregate principal
amount of all Consolidated Senior Debt Borrowings exceeds the Borrowing Base
determined as of the most recent Inventory Valuation Date, then Borrower shall,
within five (5) Business Days after notice from Administrative Agent, make a
payment to Administrative Agent for the benefit of Lenders in an amount equal to
such excess principal amount.
2.3 Ratable Loans. Each Advance hereunder, including without limitation,
any Advance made by Lenders pursuant to Section 2.19(d), but excluding Swing
Line Advances, shall consist of Loans made by the several Lenders ratably in
proportion to the ratio that their respective Commitments bear to the Aggregate
Commitment. Swing Line Advances shall consist of Loans made by Swing Line
Lender.
2.4 Types of Advances. The Advances may be Floating Rate Advances or LIBOR
Advances, or a combination thereof, selected by Borrower in accordance with
Sections 2.8 and 2.9.
2.5 Fees; Reduction and Increase in Commitment.
21
(a) Unused Commitment Fee. Borrower agrees to pay to Administrative
Agent for the account of Lenders an Unused Commitment Fee, at a rate per
annum equal to the Applicable Unused Commitment Rate, calculated on the
basis of a 360-day year in accordance with this Section from the date
hereof and to and including the Facility Termination Date, and payable
quarterly in arrears on the first day of each January, April, July and
October hereafter and on the Facility Termination Date. For each quarter
(or portion thereof), the Unused Commitment Fee shall be equal to (A) the
average daily Aggregate Commitment during such quarter (or portion
thereof) minus (B) the Average Daily Outstandings for such quarter (or
portion ----- thereof), with the resulting number multiplied by (C) the
Applicable Unused Commitment Rate, and the final product divided by (D)
four (4). Each Lender (including Swing Line Lender) shall be entitled to a
share of the Unused Commitment Fee in the proportion that (x) such
Lender's average daily Unused Commitment for such quarter (or portion
thereof) bears to (y) the average daily aggregate Unused Commitments of
all Lenders for such quarter (or portion thereof). If the Unused
Commitment Fee is being computed for less than a full quarter, the number
used in clause (D) above shall be computed on a daily basis for the number
of days for which the fee is being computed. The Unused Commitment Fee
shall continue to be payable during the Term Out Period. All accrued
Unused Commitment Fees shall be payable on the effective date of any
termination of the obligations of Lenders to make Loans hereunder.
(b) Extension Fee. If the Facility Maturity Date is extended
pursuant to the provisions of Section 2.21, then Borrower shall pay an
extension fee for each such extension as provided in Section 2.21(d).
(c) Reductions in Aggregate Commitment. Borrower may permanently
reduce the Aggregate Commitment in whole, or in part ratably among Lenders
(in proportion to the ratio that their respective Commitment bear to the
Aggregate Commitment) in integral multiples of $5,000,000 at any time or
from time to time, upon at least three (3) Business Days' written notice
to Administrative Agent, which notice shall specify the amount of any such
reduction; provided, however, that the amount of the Aggregate Commitment
may not be reduced below the sum of (i) the aggregate principal amount of
the outstanding Advances plus (ii) the Facility LC Obligations.
(d) Increases in Aggregate Commitment.
(i) Subject to the provisions of this Section 2.5(d)(i) and Section
2.5(d)(v), Borrower may, at any time and from time to time, request
("Facility Increase Request"), by notice to Administrative Agent,
Administrative Agent's approval of an increase of the Aggregate Commitment
within the limitations hereinafter set forth, which Facility Increase
Request shall set forth the amount of such requested increase. Within
twenty (20) days of such Facility Increase Request, Administrative Agent
shall advise Borrower of its approval or disapproval thereof; failure to
so advise Borrower shall constitute disapproval. Upon approval of
Administrative Agent, the Aggregate Commitment may be so increased either
by having financial institutions (other than Lenders then holding a
Commitment hereunder) approved by Borrower and Administrative Agent ("New
Lenders") become Lenders hereunder and/or by having any one or more of
Lenders then
22
holding a Commitment hereunder (at their respective election in their sole
discretion) that have been approved by Borrower and Administrative Agent
increase the amount of their Commitments (any such Lender that elects to
increase its Commitment and any New Lender being hereinafter referred to
as a "Additional Lender"), provided that (A) unless otherwise agreed by
Borrower and Administrative Agent, the Commitment of any New Lender shall
not be less than $10,000,000 (and, if in excess thereof, in integral
multiples of $5,000,000), (B) unless otherwise agreed by Borrower and
Administrative Agent, the increase in the Commitment of any Lender shall
be not less than $10,000,000 (and, if in excess thereof, in integral
multiples of $5,000,000); (C) the Aggregate Commitment shall not exceed
$1,250,000,000; (D) Borrower and each Additional Lender shall have
executed and delivered a commitment and acceptance (the "Commitment and
Acceptance") substantially in the form of Exhibit C hereto, and
Administrative Agent shall have accepted and executed the same; (E)
Borrower shall have executed and delivered to Administrative Agent a Note
or Notes payable to the order of each Additional Lender, each such Note to
be in the amount of such Additional Lender's Commitment or increased
Commitment (as applicable); (F) Borrower shall have delivered to
Administrative Agent an opinion of counsel and certificate of Borrower's
general counsel (substantially similar to the forms of opinion attached
hereto as Exhibit E, modified to apply to the increase in the Aggregate
Commitment and each Note and Commitment and Acceptance executed and
delivered in connection therewith); (G) Guarantors shall have consented in
writing to the new Commitments or increases in Commitments (as applicable)
and shall have agreed that their Guaranties continue in full force and
effect; and (H) Borrower and each Additional Lender shall otherwise have
executed and delivered such other instruments and documents as
Administrative Agent shall have reasonably requested in connection with
such new Commitment or increase in the Commitment (as applicable). The
form and substance of the documents required under clauses (D) through (H)
above shall be fully acceptable to Administrative Agent. Administrative
Agent shall promptly provide written notice to Lenders following any such
increase in the Aggregate Commitment hereunder and shall promptly furnish
to Lenders copies of the documents required under clauses (D), (F), (G)
and (H) above.
(ii) On the effective date of any increase in the Aggregate
Commitment pursuant to the provisions hereof ("Increase Date"), which
Increase Date shall be mutually agreed upon by Borrower, each Additional
Lender and Administrative Agent, each Additional Lender shall make a
payment to Administrative Agent in an amount sufficient, upon the
application of such payments by all Additional Lenders to the reduction of
the outstanding Floating Rate Advances held by Lenders, to cause the
principal amount outstanding under the Floating Rate Loans made by all
Lenders (including any Additional Lender) to be in the proportion of their
respective Commitments (as of such Increase Date). Borrower hereby
irrevocably authorizes each Additional Lender to fund to Administrative
Agent the payment required to be made pursuant to the immediately
preceding sentence for application to the reduction of the outstanding
Floating Rate Loans held by each Lender, and each such payment shall
constitute a Floating Rate Loan hereunder. Such Additional Lender shall
not participate in any LIBOR Advances that are outstanding on the Increase
Date, but, if Borrower shall at any time on or after such Increase Date
convert or continue any LIBOR Advance outstanding on such Increase Date,
Borrower shall be deemed to repay such LIBOR
23
Advance on the date of the conversion or continuation thereof and then to
reborrow as a LIBOR Advance a like amount on such date so that each
Additional Lender shall make a LIBOR Loan on such date in its pro rata
share of such LIBOR Advance. Each Additional Lender shall also make a Loan
in the amount of its pro rata share of all Advances made on or after such
Increase Date and shall otherwise have all of the rights and obligations
of a Lender hereunder on and after such Increase Date. Notwithstanding the
foregoing, upon the occurrence of an Event of Default prior to the date on
which an Additional Lender is holding Loans equal to its pro rata share of
all Advances hereunder, such Additional Lender shall, upon notice from
Administrative Agent, on or after the date on which the Obligations are
accelerated or become due following such Event of Default, pay to
Administrative Agent (for the account of the other Lenders, to which
Administrative Agent shall pay their pro rata shares upon receipt) a sum
equal to such Additional Lender's pro rata share of each Advance then
outstanding with respect to which such Additional Lender does not then
hold a Loan equal to its pro rata share thereof.
(iii) On the Increase Date and the making of the Loans by an
Additional Lender in accordance with the provisions of the first sentence
of Section 2.5(d)(ii), such Additional Lender shall also be deemed to have
irrevocably and unconditionally purchased and received, without recourse
or warranty, from Lenders party to this Agreement immediately prior to the
Increase Date, an undivided interest and participation in any Facility
Letter of Credit then outstanding, ratably, such that all Lenders
(including each Additional Lender) hold participation interests in each
such Facility Letter of Credit in the proportion of their respective
Commitments (as so increased).
(iv) Nothing contained herein shall constitute, or otherwise be
deemed to be, a commitment or agreement on the part of any Lender to
increase its Commitment hereunder at any time or a commitment or agreement
on the part of Borrower or Administrative Agent to give or grant any
Lender the right to increase its Commitment hereunder at any time.
(v) Notwithstanding anything to the contrary contained herein,
Borrower may not request an increase in the Aggregate Commitment during
the Term Out Period, and, if Borrower has requested an increase in the
Aggregate Commitment prior to the Term Out Period but the Term Out Period
commences prior to the effective date of such increase, such increase
shall not take effect. Notwithstanding anything to the contrary contained
herein, no increase of the Aggregate Commitment may be effected under this
Section 2.5(d) if (x) an Unmatured Event of Default or Event of Default
shall be in existence on the effective date of such increase or would
occur after giving effect thereto or (y) any representation or warranty
made or deemed made by Borrower in any Loan Document or any Guarantor in
any Guaranty is not (or would not be) true or correct in any material
respect on the effective date of such increase (except to the extent any
such representation or warranty is stated to relate solely to an earlier
date, in which case such representation or warranty shall be true and
correct on and as of such earlier date).
24
2.6 Minimum Amount of Each Advance. Except with respect to Swing Line
Advances, each Advance shall be in the minimum amount of $2,000,000 (and in
multiples of $1,000,000 if in excess thereof).
2.7 Optional Principal Payments. Borrower may at any time or from time to
time pay, without penalty or premium, all Floating Rate Advances outstanding
with respect to Borrower, or, in a minimum aggregate amount of $1,000,000 or any
integral multiple of $500,000 in excess thereof (except with respect to Swing
Line Advances), any portion of the outstanding Floating Rate Advances upon one
(1) Business Day's prior notice to Administrative Agent. Borrower may, (i) upon
one (1) Business Days' prior notice to Administrative Agent, pay, without
penalty or premium, any LIBOR Advance in full on the last day of the Interest
Period for such LIBOR Advance, and (ii) upon three (3) Business Days' prior
notice to Administrative Agent, prepay any LIBOR Advance in full prior to the
last day of the Interest Period for such LIBOR Advance, provided that Borrower
shall also pay at the time of such prepayment all amounts payable with respect
thereto pursuant to Section 3.4 hereof.
2.8 Method of Selecting Types and Interest Periods for New Advances.
Borrower shall select the Type of Advance and, in the case of each LIBOR
Advance, the Interest Period applicable to each Advance from time to time.
Borrower shall give Administrative Agent irrevocable notice (a "Borrowing
Notice") in the form of Exhibit D not later than (a) noon, Chicago time, one (1)
Business Day before the Borrowing Date of each Floating Rate Advance (except a
Swing Line Advance), (b) noon, Chicago time, three (3) Business Days before the
Borrowing Date of each LIBOR Advance, and (c) 2:00 p.m., Chicago time, on the
Borrowing Date of each Swing Line Advance, specifying:
(i) the Borrowing Date, which shall be a Business Day, of such
Advance,
(ii) whether the Advance is a Swing Line Advance,
(iii) the aggregate amount of such Advance,
(iv) except in the case of a Swing Line Advance, the Type of Advance
selected; provided, however, that the aggregate number of LIBOR Advances
outstanding at any one time shall not exceed five (5), and
(v) in the case of each LIBOR Advance, the Interest Period
applicable thereto.
Not later than noon, Chicago time, on each Borrowing Date, each Lender shall
make available its Loan or Loans, in funds immediately available in Chicago to
Administrative Agent at its address specified pursuant to Article XVI.
Administrative Agent will make the funds so received from Lenders available to
the applicable Borrower at Administrative Agent's aforesaid address.
Disbursements of Advances (other than Swing Line Advances) may be made not more
frequently than one time per Business Day. Disbursements of all Swing Line
Advances to Borrower may be made not more frequently than one time per Business
Day, or on a more frequent basis as Swing Line Lender may agree. Interest on all
Advances shall be calculated on the basis of a 360-day year, based on the actual
days elapsed.
25
2.9 Conversion and Continuation of Outstanding Advances. Floating Rate
Advances shall continue as Floating Rate Advances unless and until such Floating
Rate Advances are converted into LIBOR Advances. Each LIBOR Advance shall
continue as a LIBOR Advance until the end of the then applicable Interest Period
therefor, at which time such LIBOR Advance shall be automatically converted into
a Floating Rate Advance unless Borrower shall have given Administrative Agent a
Conversion/Continuation Notice requesting that, at the end of such Interest
Period, such LIBOR Advance either continues as a LIBOR Advance for the same or
another Interest Period or be repaid. Subject to the terms of Section 2.6,
Borrower may elect from time to time to convert all or any part of an Advance of
any Type into any other Type or Types of Advances; provided, however, that any
conversion of any LIBOR Advance may be made on, and only on, the last day of the
Interest Period applicable thereto, and further provided that the aggregate
number of LIBOR Advances outstanding at any one time shall not exceed five (5).
Borrower shall give Administrative Agent irrevocable notice (a
"Conversion/Continuation Notice") of each conversion of an Advance or
continuation of a LIBOR Advance not later than noon, Chicago time, at least one
(1) Business Day, in the case of a conversion into a Floating Rate Advance, or
three (3) Business Days, in the case of a conversion into or continuation of a
LIBOR Advance, prior to the date of the requested conversion or continuation,
specifying:
(i) the requested date which shall be a Business Day, of such
conversion or continuation;
(ii) the aggregate amount and Type of the Advance which is to be
converted or continued; and
(iii) the amount and Type(s) of Advance(s) into which such Advance
is to be converted or continued and, in the case of a conversion into or
continuation of a LIBOR Advance, the Interest Period applicable thereto.
2.10 Changes in Interest Rate, etc. Each Floating Rate Advance shall bear
interest on the outstanding principal amount thereof, for each day from and
including the date such Advance is made or is converted from a LIBOR Advance
into a Floating Rate Advance pursuant to Section 2.9 to but excluding the date
it becomes due or is converted into a LIBOR Advance pursuant to Section 2.9
hereof, at a rate per annum equal to the Floating Rate for such day. Changes in
the rate of interest on any Advance maintained as a Floating Rate Advance will
take effect simultaneously with each change in the Floating Rate. Each LIBOR
Advance shall bear interest from and including the first day of the Interest
Period applicable thereto to (but not including) the last day of such Interest
Period at the interest rate determined as applicable to such LIBOR Advance. No
Interest Period may end after the Facility Termination Date.
2.11 Determination of Applicable LIBOR Rate Margin and Applicable Unused
Commitment Rate.
(a) Pricing Grid. The Applicable LIBOR Rate Margin and the
Applicable Unused Commitment Rate shall be determined by reference to (i)
the Facility Rating or,
26
if no Facility Rating exists, by reference to the Senior Public Debt
Rating, and (ii) the Leverage Ratio in accordance with the following
table:
27
LEVEL I LEVEL II LEVEL III LEVEL IV
- ------------------------- ------------ ---------------- ------------- -------------------------
Facility Rating or Senior
Public Debt Rating BBB+/Baa1 or BBB/Baa2 BBB-/Baa3 BB+/Ba1 or below or no
higher Facility Rating or
Senior Public Debt Rating
Leverage Ratio Less than or Greater than 30% Greater than Greater than 50% and
equal to 30% and less than or 40% and less less than or equal to 55%
equal to 40% than or equal
to 50%
Applicable LIBOR Rate 0.875% 1.00% 1.25% 1.50%
Margin
Applicable Unused 0.175% 0.20% 0.25% 0.30%
Commitment Rate
In the event of a difference of one level between (x) the Leverage
Ratio and (y) the Facility Rating or Senior Public Debt Rating (as
applicable), the lower pricing shall apply; if the difference is more than
one level, the level that is one level lower than the higher pricing shall
apply.
(b) Adjustment. The Applicable Unused Commitment Rate shall be
adjusted, as applicable from time to time, effective on (i) the first
Business Day after any change in the Facility Rating or the Senior Public
Debt Rating, as applicable or (ii) the fifth (5th) Business Day following
the delivery by Borrower, pursuant to Section 7.1(i) or (ii), of annual or
quarterly financial statements evidencing a change in the Leverage Ratio.
The Applicable LIBOR Rate Margin in respect of any LIBOR Advance shall be
adjusted, as applicable from time to time, effective on the first day of
the Interest Period for any LIBOR Advance after (i) any change in the
Facility Rating or the Senior Public Debt Rating, as applicable, or (ii)
the fifth (5th) Business Day following the delivery by Borrower, pursuant
to Section 7.1(i) or (ii), of annual or quarterly financial statements
evidencing a change in the Leverage Ratio.
2.12 Rates Applicable After Event of Default. Notwithstanding anything to
the contrary contained in Section 2.8, 2.9 or 2.10, during the continuance of an
Event of Default the Required Lenders may, at their option, by notice to
Borrower (which notice may be revoked at the option of the Required Lenders
notwithstanding any provision of Section 11.2 requiring unanimous consent of
Lenders to changes in interest rates), declare that no Advance may be made as,
converted into or continued as a LIBOR Advance. Notwithstanding anything to the
contrary contained in Section 2.8, 2.9 or 2.10, during the continuance of an
Unmatured Event of Default the Required Lenders may, at their option, by notice
to Borrower (which notice may be revoked at the option of the Required Lenders
notwithstanding any provision of Section 11.2
28
requiring unanimous consent of Lenders to changes in interest rates), declare
that no Advance may be made as or converted into a LIBOR Advance. During the
continuance of an Event of Default, the Required Lenders may, at their option,
by notice to Borrower (which notice may be revoked at the option of the Required
Lenders notwithstanding any provision of Section 11.2 requiring unanimous
consent of Lenders to changes in interest rates), declare that (i) each LIBOR
Advance shall bear interest for the remainder of the applicable Interest Period
at the rate otherwise applicable to such Interest Period plus 2% per annum and
(ii) each Floating Rate Advance shall bear interest at a rate per annum equal to
the Floating Rate otherwise applicable to the Floating Rate Advance plus 2% per
annum.
2.13 Method of Payment. All payments of the Obligations hereunder shall be
made, without setoff, deduction, or counterclaim, in immediately available funds
to Administrative Agent at Administrative Agent's address specified pursuant to
Article XVI, or at any other Lending Installation of Administrative Agent
specified in writing by Administrative Agent to Borrower, by 1:00 p.m. (local
time at the place of receipt) on the date when due (or with respect to Swing
Line Advances, in accordance with Section 2.19), and, except for Swing Line
Advances shall be applied ratably by Administrative Agent among Lenders, in
proportion to the ratio that each Lender's Commitment bears to the Aggregate
Commitment. Each payment delivered to Administrative Agent for the account of
any Lender shall be delivered promptly by Administrative Agent to such Lender in
the same type of funds that Administrative Agent received at its address
specified pursuant to Article XVI or at any Lending Installation specified in a
notice received by Administrative Agent from such Lender. If Administrative
Agent receives, for the account of a Lender, a payment from Borrower and fails
to remit such payment to such Lender on the Business Day such payment is
received (if received by 1:00 p.m., Chicago time, by Administrative Agent) or on
the next Business Day (if received after 1:00 p.m., Chicago time, by
Administrative Agent), Administrative Agent shall pay to such Lender interest on
such payment at a rate per annum equal to the Federal Funds Effective Rate for
each day for which such payment is so delayed.
2.14 Notes; Telephonic Notices. Each Lender is hereby authorized to record
the principal amount of each of its Loans and each repayment on the schedule
attached to its Note; provided, however, that the failure to so record shall not
affect Borrower's obligations under such Note. Borrower hereby authorizes
Administrative Agent to extend, convert or continue Advances, effect selections
of Types of Advances and to transfer funds based on telephonic notices made by
any person or persons who Administrative Agent in good faith believes to be
acting on behalf of Borrower. Borrower agrees to deliver promptly to
Administrative Agent a written confirmation, if such confirmation is requested
by Administrative Agent, of each telephonic notice signed by an Authorized
Officer of Borrower. If the written confirmation differs in any material respect
from the action taken by Administrative Agent, the records of Administrative
Agent shall govern absent manifest error.
2.15 Interest Payment Dates; Interest Basis. Interest accrued on each
Advance shall be payable on the first day of each calendar month, commencing
with the first such date to occur after the date hereof, and on any date on
which the Advance is prepaid, whether due to acceleration or otherwise. Interest
shall be payable for the day an Advance is made but not for the day of any
payment on the amount paid if payment is received prior to noon (local time at
the place of receipt). If any payment of principal of or interest on an Advance
shall become due on a
29
day which is not a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall be included in
computing interest in connection with such payment.
2.16 Notification of Advances, Interest Rates, Prepayments and Commitment
Reductions. Promptly after receipt thereof, Administrative Agent will notify
each Lender of the contents of each Aggregate Commitment reduction notice,
Borrowing Notice, Conversion/Continuation Notice, and repayment notice received
by it hereunder. Administrative Agent will notify each Lender of the interest
rate applicable to each LIBOR Advance promptly upon determination of such
interest rate and will give each Lender prompt notice of each change in the
Floating Rate, the Applicable LIBOR Rate Margin or the Applicable Unused
Commitment Rate.
2.17 Lending Installations. Each Lender may book its Loans at any Lending
Installation selected by such Lender and may change its Lending Installation
from time to time. All terms of this Agreement shall apply to any such Lending
Installation and the Notes shall be deemed held by each Lender for the benefit
of such Lending Installation. Each Lender may, by written or telex notice to
Administrative Agent and Borrower, designate a Lending Installation through
which Loans will be made by it and for whose account Loan payments are to be
made.
2.18 Non-Receipt of Funds by Administrative Agent. Unless Borrower or a
Lender, as the case may be, notifies Administrative Agent prior to the date on
which such payment is due to Administrative Agent of (i) in the case of a
Lender, the proceeds of a Loan or (ii) in the case of Borrower, a payment of
principal, interest, fees or other amounts due under the Loan Documents to
Administrative Agent for the account of Lenders, that it does not intend to make
such payment, Administrative Agent may assume that such payment has been made.
Administrative Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such assumption. If
Borrower or such Lender, as the case may be, has not in fact made such payment
to Administrative Agent, the recipient of such payment shall, on demand by
Administrative Agent, repay to Administrative Agent the amount so made available
together with interest thereon in respect of each day during the period
commencing on the date such amount was so made available by Administrative Agent
until the date Administrative Agent recovers such amount at a rate per annum
equal to (a) in the case of payment by a Lender, the Federal Funds Effective
Rate for such day or (b) in the case of payment by Borrower, the interest rate
applicable to the relevant Advance.
2.19 Swing Line. Notwithstanding the minimum amount of an Advance that may
be requested and the minimum amount of an Advance repaid under this Agreement,
Lenders desire to permit Advances to Borrower in amounts that may be less than
the minimum Advance amounts required under Section 2.6, and Lenders desire to
permit Borrower to repay such Advances in amounts that may be less than the
minimum repayment amounts required under Section 2.7. Such Advances made
pursuant to this Section 2.19 shall be deemed to be Advances for purposes of
this Agreement and are referred to herein as "Swing Line Advances." Swing Line
Advances shall be requested, advanced, and repaid in accordance with the
provisions and limitations of this Agreement relating to all Advances, subject
to the following:
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(a) Aggregate Limit. The aggregate amount of all outstanding Swing
Line Advances shall not exceed at any one time $30,000,000. The Swing Line
Advances and the purchase by Lenders of interests therein pursuant to
Section 2.19(d) below shall also be subject to the limitations contained
in Section 2.1.
(b) Interest. Swing Line Advances bear interest at the greater of
(i) the Alternate Base Rate, minus 0.50% per annum and (ii) a rate equal
to the LIBOR Rate for a one-month Interest Period if such rate had been
selected by Borrower on the date Borrower requested such Swing Line
Advance (the use of such LIBOR Rate in determining interest shall not
affect the Swing Line Maturity Date of any Swing Line Advance or cause any
Swing Line Advance to constitute a LIBOR Advance).
(c) Funding Swing Line Advances. Swing Line Advances shall be funded
by Swing Line Lender pursuant to the procedures set forth in Section 2.8
of this Agreement. The principal amount of each Swing Line Advance,
together with all accrued interest, shall be repaid by Borrower to Swing
Line Lender in same day funds by 4:00 p.m. (or such later time as may be
acceptable to Swing Line Lender), Chicago time, on the Swing Line Advance
Maturity Date.
(d) Repayment of Swing Line Advances. If Borrower fails to pay any
Swing Line Advances on the applicable Swing Line Advance Maturity Date,
then such Advances shall no longer be Swing Line Advances, but shall
continue to be Floating Rate Advances for purposes of this Agreement. Each
Lender shall be deemed to have irrevocably and unconditionally purchased
and received from Swing Line Lender an undivided interest and
participation (ratably in proportion to the ratio that such Lender's
Commitment bears to the Aggregate Commitment) in such Advances. In such
event, as of 11:59 p.m., Chicago time, on the Swing Line Advance Maturity
Date, Administrative Agent shall notify each Lender of the total principal
amount of all matured Swing Line Advances and each Lender's ratable share
thereof. Upon receipt of such notice, each Lender shall promptly and
unconditionally pay to Administrative Agent for the account of Swing Line
Lender the amount of such Lender's share (ratably in proportion to the
ratio that such Lender's Commitment bears to the Aggregate Commitment) of
such payment in same day funds, and Administrative Agent shall promptly
pay such amount, and any other amounts received by Administrative Agent
for Swing Line Lender's account pursuant to this Section 2.19(d), to Swing
Line Lender. If Administrative Agent so notifies such Lender prior to
10:00 a.m., Chicago time, on any Business Day, such Lender shall make
available to Administrative Agent for the account of Swing Line Lender,
such Lender's share of the amount of such payment on such Business Day in
same day funds. If Administrative Agent notifies such Lender after 10:00
a.m., Chicago time, on any Business Day, such Lender shall make available
to Administrative Agent for the account of Swing Line Lender such Lender's
share of the amount of such payment on the next succeeding Business Day in
same day funds. If and to the extent such Lender shall not have so made
its share of the amount of such payment available to Administrative Agent
for the account of Swing Line Lender, such Lender agrees to pay to
Administrative Agent for the account of Swing Line Lender forthwith on
demand such amount, together with interest thereon, for each day from the
date such payment was first due until the date such amount is paid to
Administrative Agent for the account of Swing
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Line Lender, at the Federal Funds Effective Rate. The failure of any
Lender to make available to Administrative Agent for the account of Swing
Line Lender such Lender's share of any such payment shall not relieve any
other Lender of its obligation hereunder to make available to
Administrative Agent for the account of Swing Line Lender its share of any
payment on the date such payment is to be made.
(e) Advances. The payments made by Lenders to Swing Line Lender in
reimbursement of Swing Line Advances shall constitute, and Borrower hereby
expressly acknowledges and agrees that such payments shall constitute,
Advances hereunder to Borrower and such payments shall for all purposes be
treated as Advances to Borrower (notwithstanding that the amounts thereof
may not comply with the provisions of Section 2.6 and 2.7). Such Advances
shall be Floating Rate Advances, subject to Borrower's rights under
Article II hereof.
2.20 Withholding Tax Exemption. At least five (5) Business Days prior to
the first date on which interest or fees are payable hereunder for the account
of any Lender, each Lender (if any) that is not incorporated under the laws of
the United States of America, or a state thereof (each, a "Non-U.S. Lender"),
agrees that it will deliver to Borrower and Administrative Agent two (2) duly
completed copies of United States Internal Revenue Service Form W-8BEN or
W-8ECI, certifying in either case that such Lender is entitled to receive
payments under this Agreement and the Notes without deduction or withholding of
any United States federal taxes and an Internal Revenue Service Form W-8 or W-9,
certifying that such Lender is entitled to a complete exemption from United
States backup withholding tax. Each Non-U.S. Lender further undertakes to
deliver to Borrower and Administrative Agent (x) renewals or additional copies
of such form (or a successor form) on or before the date that such form expires
or becomes obsolete and (y) after the occurrence of any event requiring a change
in the most recent forms so delivered by it, additional forms or amendments
thereto or extensions or renewals thereof as may be reasonably requested by
Borrower or Administrative Agent. All forms or amendments or renewals provided
for in the preceding sentence shall certify that such Lender is entitled to
receive payments under this Agreement and the Notes without deduction or
withholding of any United States federal taxes, unless an event (including
without limitation any change in treaty, law or regulation) has occurred prior
to the date on which any such delivery would otherwise be required which renders
all such forms inapplicable or which would prevent such Lender from duly
completing and delivering any such form with respect to it and such Lender
advises Borrower and Administrative Agent that it is not capable of receiving
payments without any deduction or withholding of United States federal tax.
If a Lender does not provide duly executed forms to Borrower and
Administrative Agent within the time periods set forth in the preceding
paragraph, Borrower or Administrative Agent shall (to the extent Borrower has
not already done so) withhold taxes from payments to such Lender at the
applicable statutory rates and Borrower shall not be required to pay any
additional amounts as a result of such withholding. Upon the reasonable request
of Borrower or Administrative Agent, each Lender that has not provided the forms
or other documents, as provided above, on the basis of being a "United States
person," shall submit to Borrower and Administrative Agent a certificate or
other evidence to the effect that it is such a "United States person."
32
2.21 Extension of Facility Maturity Date.
(a) Extension Requests. Borrower may request a one-year extension of
the Facility Maturity Date by submitting a request for an extension to
Administrative Agent no more than 48 months nor less than 46 months prior
to the then scheduled Facility Maturity Date. At the time of or prior to
the delivery of such request, Borrower shall propose to Administrative
Agent the amount of the fees that Borrower agrees to pay with respect to
such one-year extension if approved by Lenders (such request for an
extension, together with the fee proposal, being herein referred to as the
"Extension Request"). Promptly upon (but not later than five (5) Business
Days after) receipt of the Extension Request, Administrative Agent shall
notify each Lender of the contents thereof and shall request each Lender
to approve the Extension Request. Each Lender approving the Extension
Request shall deliver its written approval no later than sixty (60) days
after the date of the Extension Request. If the approval of all Lenders is
received by Administrative Agent within sixty (60) days after the date of
the Extension Request (or as otherwise provided in Section 2.21(b)),
Administrative Agent shall promptly so notify Borrower and each Lender,
and the Facility Maturity Date shall be extended by one (1) year, and in
such event Borrower may thereafter request further extension(s) of the
then scheduled Facility Maturity Date in accordance with this Section
2.21. If any Lender does not deliver to Administrative Agent such Lender's
written approval to any Extension Request within sixty (60) days after the
date of such Extension Request, the Facility Maturity Date shall not be
extended, except as otherwise provided in Section 2.21(b) or 2.21(c).
(b) Rejecting Lenders/Full Assignment. If (i) any Lenders whose pro
rata shares of the Aggregate Commitment do not exceed 25% of the Aggregate
Commitment ("Rejecting Lenders") shall not approve an Extension Request,
(ii) all rights and obligations of such Rejecting Lenders under this
Agreement and under the other Loan Documents (including, without
limitation, their Commitment and all Loans owing to them) shall have been
assigned, within ninety (90) days following such Extension Request, in
accordance with Section 2.23, to one or more Replacement Lenders who shall
have approved in writing such Extension Request at the time of such
assignment, and (iii) no other Lender shall have given written notice to
Administrative Agent of such Lender's withdrawal of its approval of the
Extension Request, Administrative Agent shall promptly so notify Borrower
and each Lender, and the Facility Maturity Date shall be extended by one
(1) year, and in such event Borrower may thereafter request further
extension(s) as provided in Section 2.21(a).
(c) Rejecting Lenders/No Full Assignment. If (i) one or more
Rejecting Lenders shall not approve an Extension Request, (ii) the
provisions of clause (ii) of Section 2.21(b) do not apply and (iii) no
other Lender shall have given written notice to Administrative Agent of
such Lender's withdrawal of its approval of the Extension Request,
Administrative Agent shall promptly notify Borrower and each Lender and
any Replacement Lender, and the Facility Maturity Date shall be extended
by one (1) year (subject to the limitations set forth in this Section
2.21(c)), and in such event Borrower may thereafter request further
extension(s) as provided in Section 2.21(a); provided, however, that (A)
the Aggregate Commitment shall be automatically reduced, effective as
33
of the Facility Maturity Date as determined prior to such extension (the
"Previous Maturity Date") and shall equal the aggregate Commitments of
Lenders who are not Rejecting Lenders and Lenders who are Replacement
Lenders; (B) all rights and obligations of such Rejecting Lenders under
this Agreement and under the other Loan Documents (including, without
limitation, their Commitment and all Loans owing to them) shall either be
(1) assigned to Replacement Lenders pursuant to Section 2.21(b), or (2)
terminated, effective as of the Previous Maturity Date (or such earlier
date as Borrower and Administrative Agent may designate, in which case the
reduction of the Aggregate Commitment provided for in clause (A) above
shall occur on such earlier date); (C) if and to the extent such Rejecting
Lender's Commitment is assigned to one or more Replacement Lenders, such
assignment shall be effected in accordance with the provisions of Section
2.23; and (D) if and to the extent such Rejecting Lender's Commitment is
terminated, Borrower shall pay to Administrative Agent on the date of such
termination, solely for the account of such Rejecting Lender, all amounts
due and owing such Rejecting Lender hereunder or under any other Loan
Document, including without limitation the aggregate outstanding principal
amount of the Loans owed to such Rejecting Lender with respect to the
terminated Commitment, together with accrued interest thereon through the
date of such termination, all amounts payable under Sections 3.1 and 3.2
with respect to such Rejecting Lender and all fees payable to such
Rejecting Lender hereunder with respect to the terminated Commitment (and
payment of such amount may not be waived except with the consent of each
Rejecting Lender, as more specifically provided in Section 11.2(i)); and
upon such Rejecting Lender's termination, such Rejecting Lender shall
cease to be a party hereto but shall continue to be entitled to the
benefits of Article III and Section 12.7, as well as to any fees accrued
hereunder and not yet paid, and shall continue to be obligated under
Section 13.8 with respect to obligations and liabilities accruing prior to
such termination of such Rejecting Lender's Commitment.
(d) Approval of Extension. Within ten (10) days after Administrative
Agent's notice to Borrower that all (or some, as applicable) of Lenders
have approved an Extension Request (whether pursuant to Section 2.21(a),
(b) or (c)), Borrower shall pay to Administrative Agent for the account of
each Lender approving the extension and each Replacement Lender an
extension fee in the amount provided in the Extension Request.
(e) No Default. Notwithstanding anything to the contrary contained
herein, no extension of the Facility Maturity Date may be effected under
this Section 2.21 if (x) an Unmatured Event of Default or Event of Default
shall be in existence on the effective date of such extension or would
occur after giving effect thereto or (y) any representation or warranty
made or deemed made by Borrower or any Guarantor in any Loan Document is
not (or would not be) true or correct in any material respect on the
effective date of such increase (except to the extent any such
representation or warranty is stated to relate solely to an earlier date,
in which case such representation or warranty shall be true and correct on
and as of such earlier date).
2.22 Term Out Period.
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(a) Commencement of Term Out Period. If pursuant to the provisions
of Section 9.1 or 9.2(e) the Term Out Period shall commence (the date of
commencement thereof (as provided in Section 9.1 or 9.2(e), as applicable)
is herein referred to as the "Term Out Date"), and the provisions of this
Section 2.22 shall apply.
(b) Term Out Period. From and after three (3) calendar months after
the Term Out Date, the Aggregate Commitment (and each Lender's Commitment)
in effect as of the Term Out Date shall be reduced on the first day after
the end of each three-month period by a percentage of such Aggregate
Commitment amount (or such Lender's Commitment amount) as follows:
Percentage Percentage
of Commitment of Commitment
Period Reduction Remaining
- ------------------------ ------------- -------------
3 calendar months after
Term Out Date 16.666% 83.334%
6 calendar months after
Term Out Date 16.667% 66.667%
9 calendar months after
Term Out Date 16.667% 50.000%
12 calendar months after
Term Out Date 16.666% 33.334%
15 calendar months after
Term Out Date 16.667% 16.667%
18 calendar months after
Term Out Date 16.667% 0%
The commencement of the Term Out Period shall not extend the Facility
Termination Date.
2.23 Replacement of Certain Lenders. In the event a Lender (the "Affected
Lender"):
(i) shall have requested compensation from Borrower under Sections
3.1 or 3.2 to cover additional costs incurred by such Lender that are not
being incurred generally by the other Lenders, or
(ii) shall have delivered a notice pursuant to Section 3.3 that such
Affected Lender is unable to extend LIBOR Loans for reasons not generally
applicable to the other Lenders, or
(iii) is a Rejecting Lender pursuant to Section 2.21,
35
then, in any such case, and at any time after such event occurs, Borrower
or Administrative Agent may make written demands on such Affected Lender
(with a copy to Administrative Agent in the case of a demand by Borrower
and a copy to Borrower in the case of a demand by Administrative Agent)
for the Affected Lender to assign, and such Affected Lender shall assign,
pursuant to one or more duly executed assignment agreements in
substantially the form provided for in Section 15.3.1, within five (5)
Business Days after the date of such demand, to one or more financial
institutions that comply with the provisions of Section 15.3, and that are
selected by Borrower or Administrative Agent, that are reasonably
acceptable to Administrative Agent and Borrower, that Borrower and/or
Administrative Agent, as the case may be, shall have engaged for such
purpose (each, a "Replacement Lender"), all of such Affected Lender's
rights and obligations under this Agreement and the other Loan Documents
(including, without limitation, its Commitment and all Loans owing to it)
in accordance with Section 15.3. If any Affected Lender fails to execute
and deliver such assignment agreements within thirty (30) days after
demand, then such Affected Lender shall have no further right to receive
any amounts payable under Sections 3.1 and 3.2 with respect to such
Affected Lender.
Administrative Agent agrees, upon the occurrence of such events with
respect to an Affected Lender and upon written request of Borrower, to use its
reasonable efforts to obtain the commitments from one or more financial
institutions to act as a Replacement Lender. Administrative Agent is authorized,
but shall not be obligated to, execute one or more of such assignment agreements
as attorney-in-fact for any Affected Lender failing to execute and deliver the
same within five (5) Business Days after the date of such demand. Further, with
respect to such assignment, the Affected Lender shall have concurrently
received, in cash, all amounts due and owing to the Affected Lender hereunder or
under any other Loan Document, including without limitation the aggregate
outstanding principal amount of the Loans owed to such Lender, together with
accrued interest thereon through the date of such assignment, amounts payable
under Sections 3.1 and 3.2 with respect to such Affected Lender and all fees
payable to such Affected Lender hereunder; provided that, upon such Affected
Lender's replacement, such Affected Lender shall cease to be a party hereto but
shall continue to be entitled to the benefits of Article III and Section 12.7,
as well as to any fees accrued hereunder and not yet paid, and shall continue to
be obligated under Section 13.8 with respect to obligations and liabilities
accruing prior to the replacement of such Affected Lender.
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1 Yield Protection. If, on or after the date of this Agreement, the
adoption or phase-in of any law or any governmental or quasi-governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law), or any change in the interpretation or administration thereof by any
governmental or quasi-governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by any
Lender or applicable Lending Installation or LC Issuer with any request or
directive
36
(whether or not having the force of law) of any such authority, central bank or
comparable agency:
(i) subjects any Lender or any applicable Lending Installation or LC
Issuer to any tax, duty, charge or withholding on or from payments due
from Borrower (excluding any taxes imposed on, or based on, or determined
by reference to the net income of any Lender or applicable LC Issuer or
Lending Installation, including, without limitation, franchise taxes,
alternative minimum taxes and any branch profits tax (collectively,
"Excluded Taxes")), any taxes imposed on, or based on, or determined by
reference to or changes the basis of taxation of payments to any Lender or
LC Issuer in respect of its Loans, Facility Letters of Credit or
participations therein or other amounts due it hereunder (except for
Excluded Taxes) 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 Lender or any applicable Lending Installation or LC Issuer (other
than reserves and assessments taken into account in determining the
interest rate applicable to LIBOR Rates), or
(iii) imposes any other condition or requirement the result of which
is to increase the cost to any Lender or any applicable Lending
Installation or LC Issuer of making, funding or maintaining loans or
reduces any amount receivable by any Lender or any applicable Lending
Installation in connection with loans, or requires any Lender or any
applicable Lending Installation or LC Issuer to make any payment
calculated by reference to the amount of loans held or interest or fees
received by it, by an amount deemed material by such Lender,
then, within fifteen (15) days after demand by such Lender, Borrower shall
pay such Lender that portion of such increased expense incurred or
reduction in an amount received which such Lender or LC Issuer determines
is attributable to making, funding and maintaining its Loans and its
Commitment or issuing or participating in Facility Letters of Credit;
provided, however, that Borrower shall not be required to increase any
such amounts payable to any Lender in respect of clause (i) above (1) if
such Lender or LC Issuer fails to comply with the requirements of Section
2.20 hereof or (2) to the extent that such Lender or LC Issuer determines,
in its sole reasonable discretion, that it can, after notice from
Borrower, through reasonable efforts, eliminate or reduce the amount of
tax liabilities payable (without additional costs or expenses unless
Borrower agrees to bear such costs or expenses) or other disadvantages or
risks (economic or otherwise) to such Lender or LC Issuer or
Administrative Agent. If any Lender or LC Issuer receives a refund in
respect of any amount described in clause (i), (ii) and (iii) above for
which such Lender or LC Issuer has received payment from Borrower
hereunder, such Lender or LC Issuer shall promptly notify Borrower of such
refund and such Lender or LC Issuer shall repay the amount of such refund
to Borrower, provided that Borrower, upon the request of such Lender or LC
Issuer, agrees to return such refund to such Lender or LC Issuer in the
event such Lender or LC Issuer is required to repay such refund. The
determination as to whether any Lender or LC Issuer has received a refund
shall be made by such Lender or LC Issuer and such determination shall be
conclusive absent manifest error.
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3.2 Changes in Capital Adequacy Regulations. If a Lender or LC Issuer
determines the amount of capital required or expected to be maintained by such
Lender or LC Issuer, any Lending Installation of such Lender or LC Issuer or any
corporation controlling such Lender or LC Issuer is increased as a result of a
Change, then, within fifteen (15) days after demand by such Lender or LC Issuer,
Borrower shall pay such Lender or LC Issuer the amount necessary to compensate
for any shortfall in the rate of return on the portion of such increased capital
which such Lender or LC Issuer determines is attributable to this Agreement, its
Loans or its obligation to make Loans hereunder, or its issuance or maintenance
of or participation in, or commitment to issue, to maintain or to participate
in, the Facility Letters of Credit hereunder (after taking into account such
Lender's or LC Issuer's policies as to capital adequacy). "Change" means (i) any
change after the date of this Agreement in the Risk-Based Capital Guidelines or
(ii) any adoption or phase-in 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 Lender, LC Issuer, Lending Installation or any corporation
controlling any Lender or LC Issuer. "Risk-Based Capital Guidelines" means (A)
the risk-based capital guidelines in effect in the United States on the date of
this Agreement, including transition rules, and (B) the corresponding capital
regulations promulgated by regulatory authorities outside the United States
implementing the July 1988 report of the Basle Committee on Banking Regulation
and Supervisory Practices Entitled "International Convergence of Capital
Measurements and Capital Standards," including transition rules, and any
amendments to such regulations adopted prior to the date of this Agreement.
3.3 Availability of Types of Advances. If any Lender determines and
notifies Administrative Agent that maintenance of any of such Lender's LIBOR
Loans at a suitable Lending Installation would violate any applicable law, rule,
regulation or directive, whether or not having the force of law, Administrative
Agent shall suspend the availability of the affected Type of Advance and require
any LIBOR Advances of the affected Type to be repaid; or if the Required Lenders
determine and notify Administrative Agent that (i) deposits of a type or
maturity appropriate to match fund LIBOR Advances are not available,
Administrative Agent shall suspend the availability of the affected Type of
Advance with respect to any LIBOR Advances made after the date of any such
determination, or (ii) an interest rate applicable to a Type of Advance does not
accurately reflect the cost of making a LIBOR Advance of such Type, then, if for
any reason whatsoever the provisions of Section 3.1 are inapplicable,
Administrative Agent shall suspend the availability of the affected Type of
Advance with respect to any LIBOR Advance made after the date of any such
determination.
3.4 Funding Indemnification. If any payment of a LIBOR Advance occurs on a
date which is not the last day of the applicable Interest Period, whether
because of acceleration, prepayment or otherwise, or a LIBOR Advance is not made
on the date specified by Borrower for any reason other than default by Lenders,
Borrower will indemnify each Lender for any loss or cost or expense incurred by
it resulting therefrom, including, without limitation, any loss or cost in
liquidating or employing deposits acquired to fund or maintain the LIBOR
Advance.
3.5 Lender Statements; Survival of Indemnity. To the extent reasonably
possible, each Lender shall designate an alternate Lending Installation with
respect to its LIBOR Advances to reduce any liability of Borrower to such Lender
under Sections 3.1 and 3.2 or to avoid the
38
unavailability of a Type of Advance under Section 3.3, so long as such
designation is not disadvantageous to such Lender. Each Lender or LC Issuer
shall deliver a written statement of such Lender or LC Issuer as to the amount
due, if any, under Sections 3.1, 3.2 or 3.4. Such written statement shall set
forth in reasonable detail the calculations upon which such Lender or LC Issuer
determined such amount and shall be final, conclusive and binding on Borrower in
the absence of manifest error. Determination of amounts payable under such
Sections in connection with a LIBOR Advance shall be calculated as though each
Lender funded its LIBOR Advance through the purchase of a deposit of the type
and maturity corresponding to the deposit used as a reference in determining the
LIBOR Advance applicable to such Loan, whether in fact that is the case or not.
Unless otherwise provided herein, the amount specified in the written statement
shall be payable within three (3) Business Days after receipt by Borrower of the
written statement. The obligations of Borrower under Sections 3.1, 3.2 and 3.4
shall survive payment of the Obligations and termination of this Agreement.
ARTICLE IV
THE LETTER OF CREDIT FACILITY
4.1 Facility Letters of Credit. Each LC Issuer agrees, on the terms and
conditions set forth in this Agreement, to issue from time to time for the
account of Borrower or a Guarantor designated by Borrower, through such offices
or branches as it and Borrower may jointly agree, one or more Facility Letters
of Credit in accordance with this Article IV, during the period commencing on
the date hereof and ending on the Business Day prior to the Facility Termination
Date. Each Facility Letter of Credit shall be either (i) a standby letter of
credit to support obligations of Borrower or a Guarantor designated by Borrower,
contingent or otherwise, arising in the ordinary course of business, or (ii) a
documentary letter of credit in respect of the purchase of goods or services by
Borrower or such Guarantor in the ordinary course of business.
4.2 Limitations. No LC Issuer shall issue, amend or extend, at any time,
any Facility Letter of Credit:
(i) if the aggregate maximum amount then available for drawing under
Letters of Credit issued by such LC Issuer, after giving effect to the
Facility Letter of Credit or amendment or extension thereof requested
hereunder, shall exceed any limit imposed by law or regulation upon such
LC Issuer;
(ii) if, after giving effect to the Facility Letter of Credit or
amendment or extension thereof requested hereunder, the aggregate
principal amount of the Facility LC Obligations would exceed $350,000,000;
(iii) that, in the case of the issuance of a Facility Letter of
Credit, is in, or in the case of an amendment of a Facility Letter of
Credit, increases the face amount thereof by, an amount in excess of the
then Available Credit of all Lenders in the aggregate;
(iv) if, after giving effect to the Facility Letter of Credit or
amendment or extension thereof requested hereunder, at any time at which
Borrower does not have an
39
Investment Grade Rating the aggregate principal amount of all Consolidated
Senior Debt Borrowings would exceed the Borrowing Base determined as of
the most recent Inventory Valuation Date;
(v) if such LC Issuer receives written notice from Administrative
Agent at or before noon, Chicago time, on the proposed Issuance Date of
such Facility Letter of Credit that one or more of the conditions
precedent contained in Sections 5.1 or 5.2, as applicable, would not on
such Issuance Date be satisfied, unless such conditions are thereafter
satisfied and written notice of such satisfaction is given to such LC
Issuer by Administrative Agent;
(vi) that has an expiration date (taking into account any automatic
renewal provisions thereof) that is later than one (1) year after the
Issuance Date, or such later time as the LC Issuer may agree; provided,
however, in no event shall the expiration date be later than the Business
Day next preceding the scheduled Facility Termination Date; or
(vii) that is in a currency other than Dollars.
4.3 Conditions. In addition to being subject to the satisfaction of the
conditions contained in Sections 5.1 and 5.2, as applicable, the issuance of any
Facility Letter of Credit is subject to the satisfaction in full of the
following conditions:
(i) Borrower shall have delivered to the LC Issuer at such times and
in such manner as the LC Issuer may reasonably prescribe a Reimbursement
Agreement and such other documents and materials as may be reasonably
required pursuant to the terms thereof, and the proposed Facility Letter
of Credit shall be reasonably satisfactory to such LC Issuer in form and
content; and
(ii) as of the Issuance Date no order, judgment or decree of any
court, arbitrator or governmental authority shall enjoin or restrain such
LC Issuer from issuing the Facility Letter of Credit and no law, rule or
regulation applicable to such LC Issuer and no directive from and
governmental authority with jurisdiction over the LC Issuer shall prohibit
such LC Issuer from issuing Letters of Credit generally or from issuing
that Facility Letter of Credit.
4.4 Procedure for Issuance of Facility Letters of Credit.
(a) Request for Facility Letter of Credit. Borrower shall give the
LC Issuer and Administrative Agent not less than five (5) Business Days'
prior written notice of any requested issuance of a Facility Letter of
Credit under this Agreement. Such notice shall specify (i) the stated
amount of the Facility Letter of Credit requested, (ii) the requested
Issuance Date, which shall be a Business Day, (iii) the date on which such
requested Facility Letter of Credit is to expire, which date shall be in
compliance with the requirements of Section 4.2(vi), (iv) the purpose for
which such Facility Letter of Credit is to be issued (which shall be a
purpose permitted pursuant to Sections 4.1 and 7.2), and (v) the Person
for whose benefit the requested Facility Letter of Credit is to be issued.
At the time such request is made, Borrower shall also provide
Administrative Agent and the
40
LC Issuer with a copy of the form of the Facility Letter of Credit it is
requesting be issued.
(b) LC Issuer. Within two (2) Business Days after receipt of a
request for issuance of a Facility Letter of Credit in accordance with
Section 4.4(a), the LC Issuer shall approve or disapprove, in its
reasonable discretion, the form of such requested Facility Letter of
Credit, but the issuance of such approved Facility Letter of Credit shall
continue to be subject to the provisions of this Article IV. The LC Issuer
shall use reasonable efforts to notify Borrower of any changes in the LC
Issuer's policies or procedures that could reasonably be expected to
affect adversely the LC Issuer's approval of the form of any requested
Facility Letters of Credit.
(c) Confirmation of Issuance. Upon receipt of a request for issuance
of a Facility Letter of Credit in accordance with Section 4.4(a),
Administrative Agent shall determine, as of the close of business on the
day it receives such request, whether the issuance of such Facility Letter
of Credit would be permitted under the provisions of Sections 4.2(ii),
(iii) and (iv) and, prior to the close of business on the second Business
Day after Administrative Agent received such request, Administrative Agent
shall notify the LC Issuer and Borrower (in writing or by telephonic
notice confirmed promptly thereafter in writing) whether issuance of the
requested Facility Letter of Credit would be permitted under the
provisions of Sections 4.2(ii), (iii) and (iv). If Administrative Agent
notifies the LC Issuer and the applicable Borrower that such issuance
would be so permitted, then, subject to the terms and conditions of this
Article IV and provided that the applicable conditions set forth in
Sections 5.1 and 5.2 have been satisfied, the LC Issuer shall, on the
requested Issuance Date, issue the requested Facility Letter of Credit in
accordance with the LC Issuer's usual and customary business practices.
The LC Issuer shall give Administrative Agent written notice, or
telephonic notice confirmed promptly thereafter in writing, of the
issuance of a Facility Letter of Credit.
(d) Extension and Amendment. An LC Issuer shall not extend or amend
any Facility Letter of Credit unless the requirements of this Section 4.4
are met as though a new Facility Letter of Credit were being requested and
issued; provided, however, that if the Facility Letter of Credit, as
originally issued, sets forth such extension or amendment, then the LC
Issuer shall so extend or amend the Facility Letter of Credit upon the
request of Borrower given in the manner set forth in Section 4.4(a) and
upon satisfaction of the terms and conditions of Section 4.4(c).
(e) Other Letters of Credit. Any Lender may, but shall not be
obligated to, issue to Borrower or any Guarantor Letters of Credit (that
are not Facility Letters of Credit) for its own account, and at its own
risk. None of the provisions of this Article IV shall apply to any Letter
of Credit that is not a Facility Letter of Credit.
(f) Bank One, Arizona LCs. Bank One, Arizona issued prior to the
date of the Prior Credit Agreement, and there are currently outstanding
pursuant to the Prior Credit Agreement, those certain Letters of Credit
identified in Schedule 4.4 hereto as having been issued by Bank One,
Arizona (as the same may be extended or amended (but not increased) by
Bank One, Arizona in accordance with this Agreement, the "Bank One,
41
Arizona LCs"). The Bank One, Arizona LCs shall remain outstanding after
the date of this Agreement and, from and after the date of this Agreement,
shall constitute Facility Letters of Credit for all purposes under this
Agreement and shall be subject to all terms and conditions hereof. On the
date hereof, simultaneously with the payment made to the Prior Lenders
under Section 5.1(ix), the participation of the Prior Lenders in the Bank
One, Arizona LCs shall terminate and Bank One, Arizona shall be deemed to
have sold and transferred, and each Lender shall be deemed to have
irrevocably and unconditionally purchased and received from Bank One,
Arizona, in each case without further action on the part of any Person, an
undivided interest and participation (ratably in proportion to the ratio
that such Lender's Commitment bears to the Aggregate Commitment) in each
such Bank One, Arizona LCs. Each Lender severally agrees to fund any
disbursements by Bank One, Arizona pursuant to the Bank One, Arizona LCs
by funding in accordance with Section 4.6. Bank One, Arizona shall have
all of the rights, duties and obligations of the LC Issuer but solely with
respect to the Bank One, Arizona LCs. Bank One, Arizona shall not have the
right, duty or obligation to issue any Facility Letters of Credit other
than the Bank One, Arizona LCs heretofore issued and shall not increase
the face amount of any Bank One, Arizona LCs. Upon request by Borrower,
Bank One, Arizona may extend or otherwise amend (but without increasing
the face amount thereof) any Bank One, Arizona LCs, subject to and in
accordance with the provisions of this Agreement. Bank One, Arizona joins
in this Agreement solely for the purposes set forth in this Section 4.4(f)
and does not hold any Commitment or any other interest as a Lender
hereunder except the rights, duties and obligations as LC Issuer with
respect to the Bank One, Arizona LCs.
(g) Other Existing LCs. Pursuant to the Prior Credit Agreement,
certain of the Prior LC Issuers have issued prior to the date hereof, and
there are currently outstanding, those certain Letters of Credit
identified in Schedule 4.4 hereto as having been issued by the Prior LC
Issuers identified therein (as the same may be extended, amended or
increased by any such Prior LC Issuer in accordance with this Agreement,
the "Other Existing LCs"). The Other Existing LCs shall remain outstanding
after the date of this Agreement and, from and after the date of this
Agreement, shall constitute Facility Letters of Credit for all purposes
under this Agreement and shall be subject to all terms and conditions
hereof. On the date hereof, simultaneously with the payment made to the
Prior Lenders under Section 5.1(ix), the participation of the Prior
Lenders in the Other Existing LCs shall terminate and the Prior LC Issuers
that have issued such Other Existing LCs shall be deemed to have sold and
transferred, and each Lender shall be deemed to have irrevocably and
unconditionally purchased and received from such Prior LC Issuers, in each
case without further action on the part of any Person, an undivided
interest and participation (ratably in proportion to the ratio that such
Lender's Commitment bears to the Aggregate Commitment) in each such Other
Existing LCs. Each Lender severally agrees to fund any disbursements by
the Prior LC Issuers that have issued such Other Existing LCs pursuant to
the Other Existing LCs by funding in accordance with Section 4.6.
4.5 Duties of LC Issuer. Any action taken or omitted to be taken by an LC
Issuer under or in connection with any Facility Letter of Credit, if taken or
omitted in the absence of willful misconduct or gross negligence, shall not put
such LC Issuer under any resulting liability to any
42
Lender or, assuming that such LC Issuer has complied with the procedures
specified in Section 4.4, relieve any Lender of its obligations hereunder to
such LC Issuer. In determining whether to pay under any Facility Letter of
Credit, the LC Issuer shall have no obligation relative to Lenders other than to
confirm that any documents required to be delivered under such Facility Letter
of Credit appear to have been delivered in compliance and that they appear to
comply on their face with the requirements of such Facility Letter of Credit.
4.6 Participation.
(a) Proportionate Share of Lenders. Immediately upon issuance by an
LC Issuer of any Facility Letter of Credit in accordance with Section 4.4,
each Lender shall be deemed to have irrevocably and unconditionally
purchased and received from such LC Issuer, without recourse or warranty,
an undivided interest and participation (ratably in proportion to the
ratio that such Lender's Commitment bears to the Aggregate Commitment) in
such Facility Letter of Credit.
(b) Payment by LC Issuer. In the event that an LC Issuer makes any
payment under any Facility Letter of Credit and Borrower shall not have
repaid such amount to such LC Issuer on or before the date of such payment
by such LC Issuer, such LC Issuer shall promptly so notify Administrative
Agent, which shall promptly so notify each Lender. Upon receipt of such
notice, each Lender severally agrees that it shall promptly and
unconditionally pay to Administrative Agent for the account of such LC
Issuer the amount of such Lender's share (ratably in proportion to the
ratio that such Lender's Commitment bears to the Aggregate Commitment) of
such payment in same day funds, and Administrative Agent shall promptly
pay such amount, and any other amounts received by Administrative Agent
for such LC Issuer's account pursuant to this Section 4.6(b), to such LC
Issuer. If Administrative Agent so notifies such Lender prior to 10:00
a.m., Chicago time, on any Business Day, such Lender shall make available
to Administrative Agent for the account of such LC Issuer such Lender's
share of the amount of such payment on such Business Day in same day
funds. If and to the extent such Lender shall not have so made its share
of the amount of such payment available to Administrative Agent for the
account of such LC Issuer, such Lender agrees to pay to Administrative
Agent for the account of such LC Issuer forthwith on demand such amount,
together with interest thereon, for each day from the date such payment
was first due until the date such amount is paid to Administrative Agent
for the account of such LC Issuer, at the Federal Funds Effective Rate.
The failure of any Lender to make available to Administrative Agent for
the account of such LC Issuer such Lender's share of any such payment
shall not relieve any other Lender of its obligation hereunder to make
available to Administrative Agent for the account of such LC Issuer its
share of any payment on the date such payment is to be made.
(c) Advances. The payments made by Lenders to an LC Issuer in
reimbursement of amounts paid by it under a Facility Letter of Credit
shall constitute, and Borrower hereby expressly acknowledges and agrees
that such payments shall constitute, Advances hereunder to Borrower and
such payments shall for all purposes be treated as Advances to Borrower
(notwithstanding that the amounts thereof may not comply with
43
the provisions of Section 2.6). Such Advances shall be Floating Rate Advances,
subject to Borrower's rights under Article II hereof.
(d) Copies of Documents. Upon the request of Administrative Agent or
any Lender, an LC Issuer shall furnish to the requesting Administrative
Agent or Lender copies of any Facility Letter of Credit or Reimbursement
Agreement to which such LC Issuer is party and such other documentation as
may reasonably be requested by Administrative Agent or a Lender.
(e) Obligations of Lenders. The obligations of Lenders to make
payments to Administrative Agent for the account of an LC Issuer with
respect to a Facility Letter of Credit shall be irrevocable, not subject
to any qualification or exception whatsoever and shall be made in
accordance with, but not subject to, the terms and conditions of this
Agreement under all circumstances notwithstanding:
(i) any lack of validity or enforceability of this Agreement,
any Facility Letter of Credit (except where due to the gross
negligence or willful misconduct of the LC Issuer), or any of the
other Loan Documents;
(ii) the existence of any claim, setoff, defense or other
right which Borrower may have at any time against a beneficiary
named in a Facility Letter of Credit or any transferee of any
Facility Letter of Credit (or any Person for whom any such
transferee may be acting), such LC Issuer, Administrative Agent, any
Lender, or any other Person, whether in connection with this
Agreement, any Facility Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including any
underlying transactions between Borrower or any Subsidiary and the
beneficiary named in any Facility Letter of Credit) other than the
defense of payment in accordance with this Agreement or a defense
based on the gross negligence or willful misconduct of the LC
Issuer;
(iii) any draft, certificate or any other document presented
under the Facility Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect of any statement
therein being untrue or inaccurate in any respect so long as the
payment by the LC Issuer under such Facility Letter of Credit
against presentation of such draft, certificate or other document
shall not have constituted gross negligence or willful misconduct;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents;
44
(v) any failure by Administrative Agent or the LC Issuer to
make any reports required pursuant to Section 4.8; or
(vi) the occurrence of any Event of Default or Unmatured Event
of Default.
4.7 Compensation for Facility Letters of Credit.
(a) Payment of Facility Letter of Credit Fee. Borrower agrees to pay
to Administrative Agent, in the case of each outstanding Facility Letter
of Credit (including without limitation the Existing Letters of Credit),
the Facility Letter of Credit Fee therefor, payable in quarterly
installments in arrears, not later than five (5) Business Days following
Administrative Agent's delivery to Borrower of each quarterly statement of
Facility Letter of Credit Fees provided for in paragraph (c) below,
commencing with the calendar quarter next following the Issuance Date or,
in the case of the Existing Letters of Credit, next following the date
hereof. The initial installment of the Facility Letter of Credit Fees for
the Existing Letters of Credit shall be a pro rata portion of the annual
Facility Letter of Credit Fee for the period commencing on the date hereof
and ending on the day preceding such payment date. The initial installment
of the Facility Letter of Credit Fee for any Facility Letter of Credit
hereafter issued shall be a pro rata portion of the annual Facility Letter
of Credit Fee for the period commencing on the Issuance Date and ending on
the day preceding such payment date. Facility Letter of Credit Fees shall
be calculated, on a pro rata basis for the period to which such payment
applies, for actual days that will elapse during such period, on the basis
of a 360-day year. Administrative Agent shall promptly remit such Facility
Letter of Credit Fees, when paid, as follows: (i) to the LC Issuer as an
issuance fee in an amount equal to the product of (A) 0.125% per annum and
(B) the face amount of the Facility Letters of Credit with respect to
which such Facility Letters of Credit Fees have been paid, and (ii) the
balance of such Facility Letter of Credit Fees to Lenders (including the
LC Issuer) (ratably in the proportion that each Lender's Commitment bears
to the Aggregate Commitment).
(b) Amounts Owed to LC Issuer. An LC Issuer shall have the right to
receive solely for its own account, and in addition to the issuance fee
provided for in Section 4.7(a)(i), such amounts as Borrower may agree, in
writing, to pay for such LC Issuer's out-of-pocket costs of issuing and
servicing Facility Letters of Credit.
(c) Quarterly Statement. Administrative Agent shall, with reasonable
promptness following receipt from all LC Issuers of the reports provided
for in Section 4.8 for the months of March, June, September and December,
respectively, deliver to Borrower a quarterly statement of the Facility
Letter of Credit Fees then due and payable.
4.8 LC Issuer Reporting Requirements. Each LC Issuer shall, no later than
the third (3rd) Business Day following the last day of each month, provide to
Administrative Agent a schedule of the Facility Letters of Credit issued by it,
in form and substance reasonably satisfactory to Administrative Agent, showing
the Issuance Date, account party, original face amount, amount (if any) paid
thereunder, expiration date and the reference number of each Facility Letter of
Credit outstanding at any time during such month (and whether such Facility
45
Letter of Credit is a performance Letter of Credit or financial Letter of
Credit) and the aggregate amount (if any) payable by Borrower to such LC Issuer
during the month pursuant to Section 3.2. Copies of such reports shall be
provided promptly to each Lender and Borrower by Administrative Agent.
4.9 Indemnification; Nature of LC Issuer's Duties.
(a) Indemnity. In addition to amounts payable as elsewhere provided
in this Article IV, Borrower hereby agrees to protect, indemnify, pay and
hold harmless Administrative Agent and each Lender and LC Issuer from and
against any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable attorneys' fees) arising from
the claims of third parties against Administrative Agent, LC Issuer or
Lender as a consequence, direct or indirect, of (i) the issuance of any
Facility Letter of Credit for Borrower other than, in the case of an LC
Issuer, as a result of its willful misconduct or gross negligence, or (ii)
the failure of an LC Issuer issuing a Facility Letter of Credit for
Borrower to honor a drawing under such Facility Letter of Credit as a
result of any act or omission, whether rightful or wrongful, of any
present or future de jure or de facto government or governmental
authority.
(b) Assumption of Risk. As among Borrower, Lenders, Administrative
Agent and LC Issuer, Borrower assumes all risks of the acts and omissions
of, or misuse of Facility Letters of Credit by, the respective
beneficiaries of such Facility Letters of Credit. In furtherance and not
in limitation of the foregoing, neither the LC Issuer nor Administrative
Agent nor any Lender shall be responsible:
(i) for the form, validity, sufficiency, accuracy, genuineness
or legal effect of any document submitted by any party in connection
with the application for and issuance of the Facility Letters of
Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged;
(ii) for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign a
Facility Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid
or ineffective for any reason;
(iii) for failure of the beneficiary of a Facility Letter of
Credit to comply fully with conditions required in order to draw
upon such Facility Letter of Credit;
(iv) for errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher;
(v) for errors in interpretation of technical terms;
46
(vi) for any loss or delay in the transmission or otherwise of
any document required in order to make a drawing under any Facility
Letter of Credit or of the proceeds thereof;
(vii) for the misapplication by the beneficiary of a Facility
Letter of Credit of the proceeds of any drawing under such Facility
Letter of Credit; and
(viii) for any consequences arising from causes beyond the
control of Administrative Agent, the LC Issuer and Lenders
including, without limitation, any act or omission, whether rightful
or wrongful, of any present or future de jure or de facto government
or governmental authority. None of the above shall affect, impair,
or prevent the vesting of any of the LC Issuer's rights or powers
under this Section 4.9.
(c) Good Faith. In furtherance and extension and not in limitation
of the specific provisions hereinabove set forth, any action taken or
omitted by an LC Issuer under or in connection with the Facility Letters
of Credit or any related certificates, if taken or omitted in good faith
under commercially reasonable standards, shall not put such LC Issuer,
Administrative Agent or any Lender under any resulting liability to
Borrower or relieve Borrower of any of its obligations hereunder to any
such Person.
(d) Certain Acts of LC Issuer. Notwithstanding anything to the
contrary contained in this Section 4.9, Borrower shall have no obligation
to indemnify an LC Issuer under this Section 4.9 in respect of any
liability incurred by such LC Issuer arising primarily out of the willful
misconduct or gross negligence of such LC Issuer, as determined by a court
of competent jurisdiction, or out of the wrongful dishonor by such LC
Issuer of a proper demand for payment made under the Facility Letters of
Credit issued by such LC Issuer, unless such dishonor was made at the
request of Borrower.
4.10 Facility LC Collateral Account. Borrower agrees that it will, upon
the request of Administrative Agent and until the final expiration date of any
Facility Letter of Credit and thereafter as long as any amount is payable to any
LC Issuer or Lender in respect of any Facility Letter of Credit, maintain a
special collateral account pursuant to arrangements satisfactory to
Administrative Agent (the "Facility LC Collateral Account") at Administrative
Agent's office at the address specified pursuant to Article XVI, in the name of
Borrower but under the sole dominion and control of Administrative Agent, for
the ratable benefit of Lenders and in which Borrower shall have no interest
other than as set forth in Section 11.1. Borrower hereby pledges, assigns and
grants to Administrative Agent, on behalf of and for the ratable benefit of
Lenders, a security interest in all of Borrower's right, title and interest in
and to all funds which may from time to time be on deposit in the Facility LC
Collateral Account to secure the prompt and complete payment and performance of
the Facility LC Obligations and any other amounts in respect of any Facility
Letter of Credit or Reimbursement Agreement as shall from time to time have
become due and payable by Borrower to any Lender or LC Issuer under the Loan
Documents. Administrative Agent will invest any funds on deposit from time to
time in the Facility LC Collateral Account in certificates of deposit of the
Lender acting as Administrative
47
Agent and having a maturity not exceeding 30 days. Nothing in this Section 4.10
shall (i) obligate Borrower to deposit any funds in the Facility LC Collateral
Account other than as required in Section 11.1 or (ii) obligate Administrative
Agent to require Borrower to make deposits in the Facility LC Collateral Account
or limit the right of Administrative Agent to release any funds held in the
Facility LC Collateral Account, in each case other than as required by Section
11.1.
4.11 Obligations of LC Issuer and Other Lenders. Except to the extent that
a Lender shall have agreed to be designated as an LC Issuer, no Lender shall
have any obligation to accept or approve any request for, or to issue, amend or
extend, any Letter of Credit, and the obligations of the LC Issuer to issue,
amend or extend any Facility Letter of Credit are expressly limited by and
subject to the provisions of this Article IV.
ARTICLE V
CONDITIONS PRECEDENT
5.1 Initial Advance. Lenders shall not be required to make the initial
Advance hereunder, and the LC Issuer shall not be required to issue the initial
Facility Letter of Credit hereunder, unless Borrower has paid to Administrative
Agent (a) the fees for the account of Lenders set forth in Arranger's letter to
Lenders dated December 22, 2004 and (b) the fees for the account of
Administrative Agent and Arranger set forth in the letter agreement dated
December 22, 2004 (and accepted by Borrower on December 22, 2004) herewith among
Administrative Agent, Arranger and Borrower, and Borrower has furnished to
Administrative Agent:
(i) Subject to the provisions of the last paragraph of this Section
5.1, copies of the articles or certificate of incorporation of Borrower,
together with all amendments, and a certificate of good standing, all
certified by the appropriate governmental officer in the jurisdiction of
incorporation, and any other information required by Section 326 of the
USA PATRIOT ACT or necessary for Administrative Agent or any Lender to
verify the identity of Borrower as required by Section 326 of the USA
PATRIOT ACT.
(ii) Subject to the provisions of the last paragraph of this Section
5.1, copies of the articles or certificate of incorporation of each
Guarantor that is a corporation, together with all amendments, certified
by an authorized officer of such Guarantor and a certificate of good
standing from the appropriate governmental officer in the jurisdiction of
incorporation.
(iii) Subject to the provisions of the last paragraph of this
Section 5.1, copies, certified by the Secretary or Assistant Secretary of
Borrower and each Guarantor that is a corporation, of each such
corporation's by-laws and of its Board of Directors' resolutions (and
48
resolutions of other bodies, if any are deemed necessary by counsel
for any Lender), or, in the case of each Guarantor that is not a
corporation, other appropriate consents and approvals, authorizing the
execution of the Loan Documents.
(iv) Subject to the provisions of the last paragraph of this Section
5.1, for each Guarantor that is a limited liability company or limited
partnership (A) a copy of the certificate or articles of formation or
certificate of limited partnership (as applicable), certified by the
appropriate officer of such Guarantor's manager, managing member or
general partner, (B) a certificate of good standing from the appropriate
governmental officer in the jurisdiction of formation and (C) a copy,
certified by the appropriate officer of such Guarantor or of such
Guarantor's manager, managing member or general partner, of such
Guarantor's operating agreement or limited partnership, as applicable.
(v) Subject to the provisions of the last paragraph of this Section
5.1, incumbency certificates, executed by the Secretary or Assistant
Secretary of Borrower and each Guarantor (or, in the case of a Guarantor
that is not a corporation, the appropriate officer of such Guarantor or of
its manager, managing member or general partner), which shall identify by
name and title and bear the signature of the officers of the such
corporation (or other applicable entity) authorized to sign the applicable
Loan Documents and (if applicable) to make borrowings hereunder and to
request, apply for and execute Reimbursement Agreements with respect to
Facility Letters of Credit hereunder, upon which certificates
Administrative Agent, Lenders and the LC Issuer shall be entitled to rely
until informed of any change in writing by Borrower or the applicable
Guarantor.
(vi) A written opinion of General Counsel of Borrower, addressed to
Administrative Agent and Lenders in substantially the form of Exhibit E
hereto.
(vii) Notes payable to the order of each of Lenders.
(viii) The Guaranty duly executed by the Guarantors.
(ix) Such written money transfer instructions, in form acceptable to
Administrative Agent, addressed to Administrative Agent and signed by an
Authorized Officer, as Administrative Agent may have reasonably requested.
(x) Evidence satisfactory to Administrative Agent of payment in full
(which payment may be made from the proceeds of the initial Advance
hereunder) of all principal sums outstanding under the
49
Prior Credit Agreement, all accrued and unpaid interest and fees,
and amounts (if any) payable under Section 3.4 of the Prior Credit
Agreement.
(xi) Such other documents as any Lender or LC Issuer or their
respective counsel may have reasonably requested.
In the case of the documents (other than good standing certificates and
resolutions) provided for in subsections (i), (ii), (iii), (iv) and (v),
Borrower may furnish, in lieu of the documentation specified in such
subsections, a certificate or certificates of a secretary or assistant secretary
or other applicable officer to the effect that the documents furnished pursuant
to the Prior Credit Agreement remain in full force and effect and have not been
amended or (if they have been amended) including copies of such amendments.
5.2 Each Advance. Lenders shall not be required to make any Advance (other
than (a) the conversion of an Advance of one Type to an Advance of another Type
that does not increase the aggregate amount of outstanding Advances and (b)
Advances pursuant to Section 2.19(d)), unless on the applicable Borrowing Date,
and an LC Issuer shall not be required to issue, amend or extend a Facility
Letter of Credit unless on the applicable Issuance Date:
(i) There exists no Event of Default or Unmatured Event of Default.
(ii) The representations and warranties contained in Article VI are
true and correct in all material respects as of such Borrowing Date or
Issuance Date except to the extent any such representation or warranty is
stated to relate solely to an earlier date, in which case such
representation or warranty shall be true and correct in all material
respects on and as of such earlier date and except for changes permitted
by this Agreement. Solely for purposes of this Section 5.2, the
representations and warranties in Sections 6.5 and 6.7 relate solely to
the date of this Agreement.
(iii) After the making of such Advance or issuance of such Facility
Letter of Credit, (A) the principal amount of all Advances plus the
aggregate amount of the Facility LC Obligations outstanding shall not
exceed the Aggregate Commitment, and (B) at any time at which Borrower
does not have an Investment Grade Rating, the aggregate principal amount
of all Consolidated Senior Debt Borrowings shall not exceed the Borrowing
Base (determined as of the most recent Inventory Valuation Date).
(iv) Borrower shall have delivered to Administrative Agent, within
the time period specified in Section 2.8, a duly completed Borrowing
Notice in substantially the form of Exhibit D hereto.
(v) All legal matters incident to (A) the making of such Advance
shall be reasonably satisfactory to Administrative Agent and its counsel
and (B) the issuance of such Facility Letter of Credit shall be reasonably
satisfactory to Administrative Agent, such LC Issuer and their respective
counsel.
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Each Borrowing Notice with respect to each such Advance and each request
for a Facility Letter of Credit shall constitute a representation and warranty
by Borrower that the conditions contained in Sections 5.2(i) and (ii) have been
satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lenders and Administrative Agent that:
6.1 Existence and Standing. Borrower is a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation and has all requisite authority to conduct its business in each
jurisdiction in which its business is conducted (except to the extent that a
failure to maintain such existence, good standing or authority would not
reasonably be expected to have and does not have a Material Adverse Effect).
Each Guarantor is a corporation, limited liability company or limited
partnership (as applicable) duly incorporated or formed, validly existing and in
good standing under the laws of its jurisdiction of incorporation or formation
and has all requisite authority to conduct its business in each jurisdiction in
which its business is conducted (except to the extent that a failure to maintain
such existence, good standing or authority would not reasonably be expected to
have and does not have a Material Adverse Effect).
6.2 Authorization and Validity. Borrower has the corporate power and
authority to execute and deliver the Loan Documents and to perform its
obligations hereunder and thereunder. The execution and delivery by Borrower of
the Loan Documents and the performance of its obligations thereunder have been
duly authorized and the Loan Documents constitute legal, valid and binding
obligations of Borrower enforceable against Borrower in accordance with their
terms, subject to bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and general principles of equity.
Each Guarantor has the corporate, limited liability company or limited
partnership (as applicable) power and authority to execute and deliver the
Guaranty delivered by it and to perform its obligations thereunder. The
execution and delivery by each Guarantor of such Guaranty and the performance of
its obligations thereunder have been duly authorized, and each Guaranty
constitutes the legal, valid and binding obligations of such Guarantor
enforceable against such Guarantor in accordance with its terms, subject to
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally and general principles of equity.
6.3 No Conflict; Government Consent. Neither the execution and delivery by
Borrower or Guarantors of the Loan Documents, nor the consummation of the
transactions herein contemplated, nor compliance with the provisions hereof or
thereof will violate in any material respect any law, rule, regulation, order,
writ, judgment, injunction, decree or award binding on Borrower or any Guarantor
or Borrower's or a Guarantor's certificate of incorporation, bylaws, certificate
or articles of formation, operating agreement, certificate of limited
partnership, or limited partnership agreement or the provisions of any indenture
(including without limitation the Indenture), instrument or agreement to which
Borrower or any Guarantor is a party or is subject, or by which it, or its
Property, is bound, or conflict with or constitute a default
51
thereunder, or result in the creation or imposition of any Lien in, of or on the
Property of Borrower or any Guarantor pursuant to the terms of any such
indenture, instrument or agreement. Except as set forth on Schedule 6.3 hereto,
no order, consent, approval, license, authorization, or validation of, or
filing, recording or registration with, or exemption by, any governmental or
public body or authority, or any subdivision thereof, is required to authorize,
or is required in connection with the execution, delivery and performance of, or
the legality, validity, binding effect or enforceability of, any of the Loan
Documents.
6.4 Financial Statements. The December 31, 2003 consolidated and
consolidating financial statements of Borrower (and its Subsidiaries) delivered
to Lenders were prepared pursuant to the rules and regulations of the Securities
and Exchange Commission. Such statements fairly present, in all material
respects, the financial condition and operations of Borrower and its
Subsidiaries on a consolidated or consolidating basis (as applicable) at such
date and the results of their operations for the period then ended on a
consolidated or consolidating basis (as applicable). The September 30, 2004
consolidated and consolidating financial statements of Borrower (and its
Subsidiaries) delivered to Lenders were prepared pursuant to the rules and
regulations of the Securities and Exchange Commission. Such statements fairly
present, in all material respects, the financial condition and operations of
Borrower and its Subsidiaries on a consolidated or consolidating basis (as
applicable) at such date and the results of their operations for the period then
ended on a consolidated or consolidating basis (as applicable), subject to final
audit adjustments.
6.5 Material Adverse Change. Since the date of the financial statements of
Borrower described in Section 6.4, there has been no change in the business,
Property, condition (financial or otherwise) or results of operations of
Borrower and Guarantors (taken as a whole) that has had or would reasonably be
expected to have a Material Adverse Effect. The foregoing representation and
warranty is made solely as of the date of this Agreement.
6.6 Taxes. Borrower and each Guarantor have filed all United States
federal income tax returns and all other material tax returns which are required
to be filed and have paid all taxes due pursuant to said returns or pursuant to
any assessment received by Borrower or a Guarantor, except such taxes, if any,
as are being contested in good faith and as to which adequate reserves have been
provided. No tax Liens (except Permitted Liens) have been filed and no claims
are being asserted with respect to any such taxes that have had or would
reasonably be expected to have a Material Adverse Effect. The charges, accruals
and reserves on the books of Borrower and each Guarantor in respect of any taxes
or other governmental charges are adequate in accordance with Agreement
Accounting Principles.
6.7 Litigation and Contingent Obligations. Except as set forth in
Borrower's form 10-K report for the period ending December 31, 2003 or
Borrower's form 10-Q report for the period ending September 30, 2004 or (with
respect to any litigation, arbitration, governmental investigation, proceeding
or inquiry commenced after the date hereof) in any SEC Filing, there is no
litigation, arbitration, governmental investigation, proceeding or inquiry
pending or, to the knowledge of any Authorized Officer, threatened against or
affecting Borrower or any Guarantor that has had or would reasonably be expected
to have a Material Adverse Effect. Other than any liability incident to such
litigation, arbitration or proceedings, neither Borrower nor any Guarantor have
any material contingent obligations not provided for or disclosed in the
financial
52
statements (whether quarterly or annual) of Borrower and Guarantors that have
been most recently delivered by Borrower and Guarantors to Administrative Agent
that has had or would reasonably be expected to have a Material Adverse Effect.
6.8 Subsidiaries. Schedule 6.8 hereto contains an accurate list of all of
the Subsidiaries of Borrower, setting forth their respective jurisdictions of
incorporation or formation and the percentage of their respective capital stock,
membership or partnership interests owned by Borrower or its Subsidiaries. All
of the issued and outstanding shares of capital stock of those Subsidiaries that
are corporations have been duly authorized and validly issued and are fully paid
and non-assessable. All of the Non-Guarantor Subsidiaries are listed on Schedule
1 hereto.
6.9 ERISA. The Unfunded Liabilities of all Single Employer Plans do not in
the aggregate exceed $5,000,000. The withdrawal liabilities to Multiemployer
Plans of the Guarantor, Borrower and any other member of the Controlled Group do
not, and are not reasonably expected to, exceed $5,000,000 in the aggregate.
Each Plan complies in all material respects with all applicable requirements of
law and regulations, no Reportable Event has occurred with respect to any Plan,
neither Borrower, nor any Guarantor nor any other member of the Controlled Group
has withdrawn from any Multiemployer Plan or initiated steps to do so, and no
steps have been taken to terminate any Plan.
6.10 Accuracy of Information. All factual information heretofore or
contemporaneously furnished in writing by or on behalf of Borrower or any
Guarantor to Administrative Agent or any LC Issuer for purposes of or in
connection with this Agreement or any transaction contemplated hereby is, and
all other such factual information hereafter furnished in writing by or on
behalf of Borrower or any Guarantor to Administrative Agent or any LC Issuer
will be, true and accurate (taken as a whole), in all material respects, on the
date as of which such information is dated or certified and not incomplete by
omitting to state any material fact necessary to make such information (taken as
a whole) not misleading at such time.
6.11 Regulation U. Neither Borrower, nor any Guarantor nor any Subsidiary
is engaged principally, or as one of its important activities, in the business
of extending credit for the purpose of purchasing or carrying Margin Stock (as
defined in Regulation U).
6.12 Material Agreements. Neither Borrower nor any Guarantor is in default
in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in (i) any agreement to which it is a party,
or (ii) any agreement or instrument evidencing or governing Indebtedness, which
default has had or would reasonably be expected to have a Material Adverse
Effect.
6.13 Labor Disputes and Acts of God. Neither the business nor the Property
of Borrower or of any Guarantor is affected by any fire, explosion, accident,
strike, lockout, or other labor dispute, drought, storm, hail, earthquake,
embargo, act of God or of the public enemy, or other casualty (whether or not
covered by insurance), which has had or would reasonably be expected to have a
Material Adverse Effect.
6.14 Ownership. Borrower 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
53
assets and leasehold interests reflected in the financial statements referred to
in Section 6.4 (except to the extent that (i) such properties or assets have
been disposed of in the ordinary course of business or (ii) the failure to have
such title has not had and would not reasonably be expected to have a Material
Adverse Effect).
6.15 Operation of Business. Borrower 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, with such exceptions as
have not had and would not reasonably be expected to have a Material Adverse
Effect.
6.16 Laws; Environment. Except as set forth in Borrower's form 10-K report
for the period ending December 31, 2003 or Borrower's form 10-Q report for the
period ending September 30, 2004 or (with respect to matters arising after the
date hereof) in any SEC Filing, (a) Borrower and each Guarantor have duly
complied, and their businesses, operations and Property are in compliance, in
all material respects, with the provisions of all federal, state, and local
statutes, laws, codes, and ordinances and all rules and regulations promulgated
thereunder (including without limitation those relating to the environment,
health and safety); (b) Borrower and each Guarantor have been issued all
required federal, state, and local permits, licenses, certificates, and
approvals relating to (1) air emissions; (2) discharges to surface water or
groundwater; (3) solid or liquid waste disposal; (4) the use, generation,
storage, transportation, or disposal of toxic or hazardous substances or
hazardous wastes (intended hereby and hereafter to include any and all such
materials listed in any federal, state, or local law, code, or ordinance and all
rules and regulations promulgated thereunder as hazardous); or (5) other
environmental, health or safety matters; (c) except in accordance with a valid
governmental permit, license, certificate or approval, to the best knowledge of
Borrower, there has been no material emission, spill, release, or discharge into
or upon (1) the air; (2) soils, or any improvements located thereon; (3) surface
water or groundwater; or (4) the sewer, septic system or waste treatment,
storage or disposal system servicing any Property of Borrower or a Guarantor, of
any toxic or hazardous substances or hazardous wastes at or from such Property;
(d) neither Borrower nor any Guarantor has received notice of any written
complaint, order, directive, claim, citation, or notice from any governmental
authority or any person or entity with respect to violations of law or damage by
reason of Borrower's or any Guarantor's (1) air emissions; (2) spills, releases,
or discharges to soils or improvements located thereon, surface water,
groundwater or the sewer, septic system or waste treatment, storage or disposal
systems servicing any Property; (3) solid or liquid waste disposal; (4) use,
generation, storage, transportation, or disposal of toxic or hazardous
substances or hazardous waste; or (5) other environmental, health or safety
matters affecting Borrower or any Guarantor or its business, operation or
Property; and (e) neither Borrower 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). A matter will not constitute a breach of this
Section 6.16 unless it is reasonably likely to result in a Material Adverse
Effect.
54
6.17 Investment Company Act. Neither Borrower nor any Guarantor is an
"investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended.
6.18 Public Utility Holding Company Act. Neither Borrower nor any
Guarantor nor any Subsidiary is a "holding company" or a "subsidiary company" of
a "holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
6.19 Subordinated Indebtedness. There is no Subordinated Indebtedness
outstanding as of the date of this Agreement.
6.20 Indenture Provisions. Each Guarantor is a Restricted Subsidiary, as
that term is defined in the Indenture. Each Guarantor is a Wholly-Owned
Subsidiary of Borrower.
6.21 SDN List Designation. Neither Borrower nor any of its Subsidiaries is
an entity named on the Specially Designated National and Blocked Persons (SDN)
list issued by the Office of Foreign Asset Control of the Department of the
Treasury of the United States of America.
ARTICLE VII
AFFIRMATIVE COVENANTS
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
7.1 Financial Reporting. Borrower will maintain, and each Guarantor will
maintain, a system of accounting established and administered in accordance with
GAAP, and furnish to Lenders:
(i) Within 100 days after the close of each fiscal year, (A) an
unqualified (or qualified as reasonably acceptable to Administrative
Agent) audited consolidated financial statements of Borrower certified by
one of the "Big Four" accounting firms or other nationally recognized
independent certified public accountants, reasonably acceptable to
Lenders, prepared in accordance with GAAP on a consolidated basis,
including balance sheets as of the end of such fiscal year and statements
of income and retained earnings and a statement of cash flows, in each
case setting forth in comparative form the figures for the preceding
fiscal year, and (B) unaudited financial statements, prepared in
accordance with GAAP (excluding footnotes) on a consolidating basis for
Borrower (and its Subsidiaries), including balance sheets as of the end of
such fiscal year and statements of income and retained earnings and a
statement of cash flows, in each case setting forth in comparative form
the figures for the preceding fiscal year.
55
(ii) Within sixty (60) days after the close of the first three (3)
quarterly periods of each fiscal year, for Borrower, on a consolidated
basis and on a consolidating basis, unaudited financial statements,
including balance sheets as of the end of such period, statements of
income and retained earnings, and a statement of cash flows for the
portion of the fiscal year ending with such fiscal period, all certified
by an Authorized Officer. All such balance sheets shall set forth in
comparative form figures for the preceding year end. All such income
statements shall reflect current period and year-to-date figures.
(iii) Annually, together with the financial statements described in
clause (i) above, a copy of the business plan of Borrower and each
Guarantor (on a consolidated basis) for the upcoming two (2) fiscal years,
including, as to Borrower, a consolidated balance sheet, statement of
income and projection of cash flows.
(iv) Within sixty (60) days of the end of each of the first three
quarterly periods of each fiscal year, a quarterly variance analysis
comparing actual quarterly results versus projected quarterly results for
the fiscal quarter most recently ended, including an analysis of revenues,
Housing Unit Closings and operating profits (by operating division) for
such period, and such other items as are reasonably requested by
Administrative Agent, together with a written explanation of material
variances.
(v) Within 100 days after the end of each fiscal year, a variance
analysis comparing actual annual results versus the business plan for the
fiscal year most recently ended, including an analysis of revenues,
Housing Unit Closings and operating profits (by operating division) for
such period, and such other items as are reasonably requested by
Administrative Agent, together with a written explanation of material
variances.
(vi) By the twenty-fifth day of each calendar month (and without
regard to whether Borrower has an Investment Grade Rating), a Borrowing
Base Certificate of an Authorized Officer of Borrower, with respect to the
Inventory Valuation Date occurring on the last day of the immediately
preceding calendar month.
(vii) Within sixty (60) days after the end of each quarterly period
of each fiscal year, a report identifying as to Borrower and its
Subsidiaries the inventory of real estate operations, including land and
Housing Units as of such date, designated in the same categories as are
identified in Borrower's corporate status report currently delivered to
Administrative Agent; such summary shall include a delineation of sold or
unsold items in each category.
(viii) Within sixty (60) days after the end of each of the first
three quarterly periods, and within one hundred (100) days after the end,
of each fiscal year, a certificate of an Authorized Officer of Borrower as
to Borrower's compliance with the Financial Covenant Tests in the form of
Exhibit F hereto.
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(ix) Within 270 days after the close of each fiscal year, a
statement of the Unfunded Liabilities of each Single Employer Plan,
certified as correct by an actuary enrolled under ERISA (which requirement
may be satisfied by the delivery of the most recent actuarial valuation of
each such Single Employer Plan).
(x) As soon as possible and in any event within ten (10) days after
Borrower knows that any Reportable Event has occurred with respect to any
Plan, a statement, signed by an Authorized Officer of Borrower, describing
said Reportable Event and the action which Borrower proposes to take with
respect thereto.
(xi) As soon as possible, and in any event within thirty (30) days
after 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 Borrower or any member
of the Controlled Group and promptly but in any event within two (2)
Business Days of receipt by Borrower, any Guarantor or any member of the
Controlled Group of notice that the PBGC intends to terminate a Plan or
appoint a trustee to administer the same, and promptly but in any event
within five (5) Business Days of the receipt of notice concerning the
imposition of withdrawal liability in excess of $500,000 with respect to
Borrower, any Guarantor or any member of the Controlled Group, a
certificate of an Authorized Officer setting forth all relevant details of
such event and the action which Borrower proposes to take with respect
thereto.
(xii) Promptly after the sending or filing thereof, copies of all
proxy statements, financial statements, SEC Filings (exclusive of exhibits
and form 8-K filings unless otherwise requested by Administrative Agent),
and reports which Borrower sends to its stockholders, and copies of all
regular (except form S-8), periodic, and special reports, and all
effective registration statements (exclusive of exhibits unless otherwise
requested by Administrative Agent) which Borrower is required to file with
the Securities and Exchange Commission or any governmental authority which
may be substituted therefor, or with any national securities exchange.
(xiii) Promptly after the commencement thereof, notice of all
actions, suits and proceedings before any court or governmental
department, commission, board, bureau, agency, or instrumentality,
domestic or foreign, affecting Borrower or a Guarantor (a) which, if
determined adversely to Borrower or Guarantor, could reasonably be
expected to have a Material Adverse Effect or (b) in which liability in
excess of $2,500,000 (in the aggregate with respect to any action, suit or
proceeding) is claimed and alleged against Borrower or such Guarantor.
(xiv) As soon as possible and in any event within ten (10) days
after receipt by Borrower or any Guarantor, a copy of (a) any written
notice or claim to the effect that Borrower or any Guarantor is or may be
liable to any Person as a result of the release of any toxic or hazardous
waste or substance into the
57
environment, and (b) any notice alleging any violation of any federal,
state or local environmental, health or safety law or regulation by
Borrower or any Guarantor which, in the case of either (a) or (b), could
reasonably be expected to have a Material Adverse Effect or could result
in liability to Borrower or any Guarantor in excess of $2,500,000 (in the
aggregate with respect to any notice or claim).
(xv) Promptly after the occurrence of any change in the business,
Property, condition (financial or otherwise) or results of operations of
Borrower and Guarantors (taken as a whole) that has had or would
reasonably be expected to have a Material Adverse Effect, notice thereof.
(xvi) Such other information (including non-financial information)
as Administrative Agent may from time to time reasonably request.
7.2 Use of Proceeds. Subject to the limitations contained in this
Agreement, Borrower will use the proceeds of Advances for its or any one or more
Guarantor's own acquisition, development and/or holding of real property and the
construction of improvements in connection with the home building or other
Related Businesses of Borrower or such Guarantor (including payment of
reimbursement obligations with respect to Facility Letters of Credit), general
corporate purposes, and to repay outstanding Advances (and, in the case of the
initial Advance, to repay amounts outstanding under the Prior Credit Agreement).
The Borrower will not, nor will it permit any Subsidiary to, use any of the
proceeds of the Advances to purchase or carry any "margin stock" (as defined in
Regulation U).
7.3 Notice of Event of Default. Borrower will give prompt notice in
writing to Administrative Agent of the occurrence of (i) any Event of Default or
Unmatured Event of Default and (ii) any other development, financial or
otherwise, that has had or would be reasonably expected to have a Material
Adverse Effect.
7.4 Conduct of Business. Except as otherwise permitted under this
Agreement, Borrower and each Guarantor will carry on and conduct business in the
same general manner and in substantially the same fields of enterprise as
presently conducted and to do all things necessary to remain duly incorporated,
validly existing and in good standing as a domestic corporation, limited
liability company or limited partnership (as applicable) in their respective
jurisdictions of incorporation or formation and maintain all requisite authority
to conduct business in each jurisdiction in which business is conducted;
provided, however, that nothing contained herein shall prohibit the dissolution
of any Guarantor as long as Borrower or another Guarantor succeeds to the
assets, liabilities and business of the dissolved Guarantor. Without limitation
of the foregoing, Borrower shall at all times engage principally in the Related
Businesses.
7.5 Taxes. Borrower and each Guarantor will pay prior to delinquency all
taxes, assessments and governmental charges and levies upon them or their
income, profits or Property, except (i) those that solely encumber property
abandoned or in the process of being abandoned and with respect to which there
is no recourse to Borrower or any Subsidiary; (ii) those that are being
contested in good faith by appropriate proceedings and with respect to which
adequate
58
reserves have been established in accordance with GAAP, and (iii) to the extent
that the failure to do so would not reasonably be expected to have and does not
have a Material Adverse Effect.
7.6 Insurance. Borrower and each Guarantor will maintain with financially
sound and reputable insurance companies insurance on all their Property in such
amounts and covering such risks as is consistent with sound business practice,
and Borrower will furnish to Administrative Agent upon request full information
as to the insurance carried.
7.7 Compliance with Laws. Borrower and each Guarantor will comply with all
laws, rules, regulations, orders, writs, judgments, injunctions, decrees or
awards to which it may be subject, except to the extent that the failure to do
so would not reasonably be expected to have and does not have a Material Adverse
Effect.
7.8 Maintenance of Properties. Borrower and each Guarantor will do all
things necessary to maintain, preserve, protect and keep its Property in good
repair, working order and condition, except to the extent that the failure to do
so would not reasonably be expected to have and does not have a Material Adverse
Effect.
7.9 Inspection. Borrower and each Guarantor will permit Administrative
Agent and Lenders, by their respective representatives and agents, to inspect
any of the Property, corporate (or partnership) books and financial records of
Borrower and such Guarantor to examine and make copies of the books of accounts
and other financial records of Borrower and such Guarantor, and to discuss the
affairs, finances and accounts of Borrower and such Guarantor with, and to be
advised as to the same by, their respective officers at such reasonable times
and intervals as Administrative Agent may designate.
7.10 Environment. Borrower and each Guarantor will (i) comply, in all
material respects, with the provisions of all federal, state, and local
environmental, health, and safety laws, codes and ordinances, and all rules and
regulations issued thereunder; (ii) promptly contain and remove or otherwise
remediate any hazardous discharge from or affecting the Property of Borrower or
any Guarantor, to the extent required by and in compliance with all applicable
laws; (iii) promptly pay any fine or penalty assessed in connection therewith or
contest the same in good faith; (iv) permit Administrative Agent to inspect such
Property, to conduct tests thereon, and to inspect all books, correspondence,
and records pertaining thereto at reasonable hours and places; and (v) at the
request of the Required Lenders, and at Borrower's expense, provide a report of
a qualified environmental engineer, satisfactory in scope, form, and content to
the Required Lenders, and such other and further assurances reasonably
satisfactory to the Required Lenders that any new condition or occurrence
hereafter identified in any SEC Filing has been corrected; provided that a
failure to comply with the provisions of clauses (i) through (v) of this Section
7.10 shall not constitute an Event of Default or an Unmatured Event of Default
unless such noncompliance has resulted in or is reasonably likely to result in a
Material Adverse Effect.
7.11 New Guarantors. If, as of the end of any calendar quarter, any
Subsidiary of Borrower (whether now existing or hereafter created or acquired
but excluding Lion Warranty Corporation, Lion Insurance Company, HomeAmerican
Mortgage Corporation, American Home Title & Escrow Company and American Home
Insurance Agency, Inc. and any other Subsidiary that is not in the homebuilding
business and is in a regulated business (such as insurance) ) that is
59
not a Guarantor shall be a Significant Subsidiary, then, unless the Required
Lenders shall otherwise consent in writing, Borrower shall, within forty-five
(45) days of the end of such quarter, (i) cause such Significant Subsidiary to
execute and deliver to Administrative Agent a Supplemental Guaranty in the form
attached to and provided for in the Guaranty, pursuant to which such Guarantor
shall become a party thereunder and (ii) deliver or cause to be delivered, by
and with respect to such Significant Subsidiary, certificates, opinions and
other documents substantially similar to those referred to in Sections 5.1(i),
(ii), (iii), (iv), (v) and (vi) and such other documents as any Lender or LC
Issuer or their respective counsel may reasonably request; all of the foregoing
shall be in form and substance satisfactory to Administrative Agent.
7.12 Change in Schedules. Promptly following the occurrence of but in any
event not later than forty-five (45) days following any quarter in which there
shall occur any event or circumstance as a result of which either of Schedules 1
or 6.8 ceases to be accurate in all material respects, Borrower shall furnish to
Administrative Agent the applicable revised Schedule and shall certify that such
revised Schedule is true, correct and complete in all material respects, and
such revised Schedule shall be substituted for the applicable Schedule
hereunder.
ARTICLE VIII
NEGATIVE COVENANTS
During the term of the Agreement, unless the Required Lenders shall
otherwise consent in writing:
8.1 Dividends; Repurchase of Stock. Borrower will not, directly or
indirectly, declare, make or pay, or incur any liability to make or pay, or
cause or permit to be declared, made or paid, any Dividend, or purchase, or
incur any obligation to purchase, any capital stock of Borrower either (a)
during the Term-Out Period or (b) if, prior to or after giving effect to the
declaration and payment of any Dividend or purchase of such stock, there shall
exist any Event of Default under this Agreement or any violation of any
Financial Covenant Test (without regard to whether the Term Out Period has
commenced).
8.2 Indebtedness. Neither Borrower nor any Guarantor will create, incur or
suffer to exist any Indebtedness, except, without duplication and without
duplication as to Borrower and Guarantors:
(i) The Loans.
(ii) Indebtedness existing on the date hereof (and not otherwise
permitted under this Section 8.2) and described in Schedule 8.2 hereto and
Refinancing Indebtedness with respect thereto.
(iii) Indebtedness of Borrower's mortgage lending and financial
asset management Subsidiaries.
(iv) Rate Hedging Obligations.
60
(v) Intercompany Indebtedness between Borrower, any Guarantor and/or
any Subsidiary (subject to the limitations contained in Section 8.5(vii)).
(vi) Trade accounts payable and accrued expenses arising or
occurring in the ordinary course of business.
(vii) Indebtedness constituting Capitalized Lease Obligations.
(viii) Indebtedness with respect to Letters of Credit (including
Facility Letters of Credit).
(ix) Indebtedness secured by purchase-money Liens permitted under
Section 8.6(iii).
(x) Subordinated Indebtedness.
(xi) Non-Recourse Indebtedness incurred in the ordinary course of
business.
(xii) Performance bonds, completion bonds, guarantees of
performance, and guarantees of Indebtedness of a special district entered
into in the ordinary course of business.
(xiii) Indebtedness of a Person existing as of the time of the
Acquisition of such Person by Borrower or any Guarantor, provided that,
after giving effect to such Acquisition, Borrower is in compliance with
the terms of this Agreement (including without limitation the Financial
Covenant Tests).
(xiv) Indebtedness evidenced by the Senior Notes and Refinancing
Indebtedness with respect thereto.
(xv) Public Indebtedness, so long as such Indebtedness is either
Subordinated Indebtedness or pari passu with the Obligations (or
Guarantors' obligations under the Guaranties, if applicable).
(xvi) Indebtedness of Borrower or a Guarantor secured by a Lien on
real property owned by Borrower or such Guarantor, where (A) the real
property is not related to Housing Units or Land Under Development, and
(B) the aggregate outstanding amount of such Indebtedness, plus all
amounts committed but undisbursed in connection with such Indebtedness,
does not exceed seventy-five percent (75%) of the fair market value of the
real property encumbered by such Lien.
(xvii) Indebtedness, except Public Indebtedness, not otherwise
permitted by this Section 8.2 in an aggregate amount outstanding at any
time not to exceed $60,000,000.
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(xviii) From and after, but not prior to, the first to occur of (A)
the Term Out Date and (B) the day that is two years prior to the Facility
Maturity Date (as the same may be extended pursuant to this Agreement),
Indebtedness secured by a Lien permitted under Section 8.6(xxi).
(xix) Indebtedness of Borrower which arises pursuant to a guarantee
of payment or collection executed by Borrower, guaranteeing the
Indebtedness of one or more Guarantors which is permitted under clauses
(i) through (xviii) of this Section 8.2.
8.3 Merger. Neither Borrower nor any Guarantor will merge or consolidate
with or into any other Person, unless:
(i) (A) any Guarantor is merging with any other Guarantor; (B) any
Guarantor is merging with Borrower, and Borrower is the continuing
corporation; (C) a Guarantor is merging with a Person that is not a
Subsidiary of Borrower and such transaction is in compliance with the
provisions of Section 8.4(b); or (D) a Non-Guarantor Subsidiary is merging
with Borrower or any Guarantor, and Borrower or a Guarantor, as
applicable, is the continuing corporation; and
(ii) no Event of Default shall exist or shall occur after giving
effect to such transaction; and
(iii) after giving effect to such transaction, Borrower shall be in
compliance with the Financial Covenant Tests; and
(iv) (a) the other Person to the transaction is in a Related
Business or (b) if not in a Related Business, such transaction is in
compliance with the provisions of Section 8.5(vii), and Borrower or a
Guarantor, if involved in the merger, is the continuing corporation; and
(v) the transaction is not otherwise prohibited under this
Agreement.
8.4 Sale of Assets.
(a) Neither Borrower nor any Guarantor will lease, sell or otherwise
dispose of its Property, in a single transaction or a series of
transactions, to any other Person (other than Borrower or another
Guarantor) except for (i) sales or leases in the ordinary course of
business, (ii) leases, sales or other dispositions of its Property that,
together with all other Property of Borrower and Guarantors previously
leased, sold or disposed of (other than in the ordinary course of
business) as permitted by this Section during the month in which any such
lease, sale or other disposition occurs, do not constitute a Material
Portion of the Property of Borrower and Guarantors (taken as a whole) and
(iii) transfers of assets by a Guarantor to another Guarantor (including
any Subsidiary that becomes a Guarantor by executing and delivering a
Guaranty to Administrative Agent at the time at which such assets are
transferred to such Subsidiary).
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(b) Borrower shall not sell or transfer or cause to be sold or
transferred (other than to Borrower or another Guarantor), in a single
transaction or a series of transactions (i) all or substantially all of
the assets of any Guarantor or (ii) such securities or other ownership
interests in a Guarantor as would result in such Guarantor ceasing to be a
Subsidiary of Borrower (whether by merger, consolidation, sale, assignment
or otherwise) unless (A) any such transaction is (and, if it were the sale
of all of the assets of such Guarantor, would be) in compliance with the
provisions of Section 8.4(a) and (B) following such transaction and the
release of such Guarantor provided for below, Borrower would be in
compliance with its obligations under this Agreement. Upon not less than
30 days' prior written request from Borrower, accompanied by a certificate
of Borrower certifying as to the foregoing, Administrative Agent shall
deliver, at the time of the consummation of such transaction, a release of
such Guarantor from its obligations under the Guaranty, and such entity
shall cease to be a Guarantor hereunder.
(c) For purposes of this Section 8.4, "Material Portion" means, with
respect to the Property of Borrower and Guarantors (taken as a whole),
Property which represents more than 25% of the book value of all assets of
Borrower and Guarantors (taken as a whole). If a Material Portion of the
Property of Borrower and Guarantors (taken as a whole) is leased, sold or
disposed of in violation of this Section 8.4, Borrower shall pay to
Administrative Agent for the benefit of Lenders at the time of such lease,
sale or disposal, all amounts owed by Borrower pursuant to Section 2.2,
taking into account the effect of such lease, sale or disposal.
8.5 Investments and Acquisitions. Neither Borrower nor any Guarantor will
make or suffer to exist any Investments (including without limitation, loans and
advances to, and other Investments in, Subsidiaries), or commitments therefor,
or to create any Subsidiary or to become or remain a partner in any partnership
or joint venture, or to make any Acquisition of any Person, except:
(i) Investments in Cash Equivalents.
(ii) Loans or advances made to officers, directors or employees of
Borrower or any Guarantor or any Subsidiary.
(iii) Carryback loans made in the ordinary course of business in
conjunction with the sale of Property of Borrower or such Guarantor.
(iv) Investments in interests in issuances of collateralized
mortgage obligations, mortgages, mortgage loan servicing or other mortgage
related assets.
(v) Investments in contract rights granted by, entitlements granted
by, interests in securities issued by, or tangible assets of, political
subdivisions or enterprises thereof related to the home building or real
estate operations of
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Borrower or any Guarantor or any Subsidiary, including without limitation
Investments in special districts as described in Section 8.2(xii).
(vi) Investments in existing Subsidiaries (subject, in the case of
Non-Guarantor Subsidiaries, to the provisions of Section 8.5(vii)) and
other Investments in existence on the date hereof.
(vii) Investments in (A) Non-Guarantor Subsidiaries or (B) other
Persons whose primary business is not a Related Business, in an amount (in
the aggregate for both clause (A) and clause (B)) outstanding at any one
time not to exceed 25% of Adjusted Consolidated Tangible Net Worth,
provided that retained earnings of such Non-Guarantor Subsidiaries and
Persons described in clause (B) shall not be deemed part of such
Investment.
(viii) The Acquisition of or Investment in a business or entity
engaged primarily in a Related Business, provided that (a) immediately
upon the consummation of any such Acquisition or Investment Borrower and
each Guarantor is in compliance with the terms, covenants and conditions
of this Agreement (including without limitation the Financial Covenant
Tests and the provisions of Section 8.5(vii)), and (b) Borrower shall
deliver to Administrative Agent a certificate, signed by an Authorized
Officer, certifying to the best knowledge of Borrower, that, on the date
of, and taking into account, the consummation of such Acquisition, and
based on the reasonable assumptions set forth in such Certificate, no
Event of Default has occurred and is continuing, and Borrower is in
compliance with the Financial Covenant Tests.
(ix) The creation of new Subsidiaries engaged primarily in a Related
Business (or the purpose of which is principally to preserve the use of a
name in which such business is conducted), subject to the limitations
contained in Section 8.5(vii).
(x) Stock, obligations or securities received in satisfaction of
debts owing to Borrower or any Guarantor in the ordinary course of
business.
(xi) Pledges or deposits in cash by Borrower or a Guarantor to
support surety bonds, performance bonds or guarantees of completion in the
ordinary course of business.
(xii) Loans representing intercompany Indebtedness between Borrower,
any Guarantor and/or any Subsidiary, subject to the limitations contained
in Section 8.5(vii).
(xiii) Investments pursuant to Borrower's or a Guarantor's
employment compensation plans or agreements.
(xiv) Payments on account of the purchase, redemption or other
acquisition or retirement for value, or any payment in respect of any
amendment (in anticipation of or in connection with any such retirement,
acquisition or
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defeasance) in whole or in part, of any shares of capital stock or other
securities of Borrower, but only to the extent the same is permitted under
the Indenture.
(xv) Investments, in addition to those enumerated in this Section
8.5, in an aggregate amount outstanding at any time not to exceed
$5,000,000.
8.6 Liens. Neither Borrower nor any Guarantor will create, incur, or
suffer to exist any Lien in, of or on the Property of Borrower or any Guarantor,
except:
(i) Permitted Liens.
(ii) Liens for taxes, assessments or governmental charges or levies
which solely encumber property abandoned or in the process of being
abandoned and with respect to which there is no recourse to Borrower or
any Guarantor or any Subsidiary.
(iii) Purchase-money Liens on any Property hereafter acquired or the
assumption of any Lien on Property existing at the time of such
acquisition (and not created in contemplation of such acquisition), or a
Lien incurred in connection with any conditional sale or other title
retention or a Capitalized Lease; provided that
(a) Any Property subject to any of the foregoing is acquired
by Borrower or any Guarantor in the ordinary course of its
respective business and the Lien on any such Property attaches to
such asset concurrently or within ninety (90) days after the
acquisition thereof;
(b) The obligation secured by any Lien so created, assumed, or
existing shall not exceed ninety percent (90%) of the cost the
Property covered thereby by Borrower or any Guarantor acquiring the
same; and
(c) Each Lien shall attach only to the Property so acquired.
(iv) Liens existing on the date hereof (and not otherwise permitted
under this Section 8.6) and described in Schedule 8.6 hereto and Liens
securing Refinancing Indebtedness with respect thereto, but only to the
extent such Liens encumber the same collateral in whole or in part as the
previous Liens securing the Indebtedness being refunded, refinanced or
extended.
(v) Liens incurred in the ordinary course of business not otherwise
permitted by this covenant, provided that the aggregate amount of
Indebtedness secured by such Liens outstanding at any time shall not
exceed $60,000,000.
(vi) Judgments and similar Liens arising in connection with court
proceedings; provided the execution or enforcement thereof is stayed and
the
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claim is being contested in good faith, with adequate reserves therefor
being maintained by Borrower or such Guarantor in accordance with GAAP.
(vii) Liens securing Non-Recourse Indebtedness of Borrower or any
Guarantor, where the amount of such Indebtedness is greater than fifty
percent (50%) of the fair market value of the Property encumbered by the
Liens.
(viii) Liens existing with respect to Indebtedness of a Person
acquired in an Acquisition permitted by this Agreement.
(ix) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or other
social security or retirement benefits, or similar legislation.
(x) Liens incurred or deposits made to secure the performance of
tenders, bids, leases, statutory obligations, surety and appeal bonds,
progress payments, government contracts, utility services and other
obligations of like nature in each case incurred in the ordinary course of
business.
(xi) Leases or subleases granted to others not materially
interfering with the ordinary course of business of Borrower or any
Guarantor.
(xii) Any interest in or title of a lessor to property subject to
any Capitalized Lease Obligations.
(xiii) Liens in favor of the trustee named therein arising under the
Indenture and liens for trustee's fees and similar costs under any
Refinancing Indebtedness of the Senior Notes.
(xiv) Any option, contract or other agreement to sell or purchase an
asset or participate in the income or revenue derived therefrom.
(xv) Any legal right of, or right granted in good faith to, a lender
or lenders to which Borrower or a Guarantor may be indebted to offset
against, or appropriate and apply to the payment of, such Indebtedness any
and all balances, credits, deposits, accounts, or monies of Borrower or a
Guarantor with or held by such lender or lenders.
(xvi) Any pledge or deposit of cash or property by Borrower or any
Guarantor in conjunction with obtaining surety and performance bonds and
letters of credit required to engage in constructing on-site and off-site
improvements or as otherwise required by political subdivisions or other
governmental authorities in the ordinary course of business.
(xvii) Liens incurred in the ordinary course of business as security
for Borrower's or any Guarantor's obligations with respect to
indemnification in favor of title insurance providers.
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(xviii) Letters of Credit, bonds or other assets pledged to secure
insurance in the ordinary course of business.
(xix) Liens on assets securing warehouse lines of credit and other
credit facilities to finance the operations of Borrower's mortgage lending
Subsidiaries and/or financial asset management Subsidiaries and Liens
related to issuances of CMOs and mortgage-related securities, so long as
such assets are owned by such mortgage lending Subsidiaries and financial
asset Subsidiaries.
(xx) Liens described in Section 8.2(xvi) securing the Indebtedness
described therein, so long as (i) each such Lien attaches only to the real
property described in Section 8.2(xvi) and (ii) the obligation secured by
such Lien is limited to repayment of the Indebtedness permitted under
Section 8.2(xvi).
(xxi) From and after, but not prior to, the first to occur of (A)
the Term Out Date and (B) the day that is two years prior to the Facility
Maturity Date (as the same may be extended pursuant to this Agreement),
Liens incurred in the ordinary course of business not otherwise permitted
by this covenant, provided that (1) the Liens encumber real property owned
by the obligor of the applicable Indebtedness, provided that Borrower or
any Guarantor may be the obligor of such Indebtedness and Borrower or any
Guarantor may guarantee such Indebtedness, and (2) the obligations secured
by any Lien shall not exceed eighty percent (80%) of the fair market value
of the real property encumbered thereby (if the obligations do not relate
to the construction of improvements on, or development of, the real
property) or eighty percent (80%) of the value of the real property
encumbered thereby as if all improvements to be located thereon have been
completed (if the obligations relate to the construction of improvements
on the real property), as applicable.
Notwithstanding anything herein to the contrary, neither Borrower nor any
Guarantor will, create, incur, or suffer to exist any Lien in, of or on the
capital stock of any Guarantor.
8.7 Affiliates. Neither Borrower nor any Guarantor will enter into any
transaction (including, without limitation, the purchase or sale of any Property
or service) with, or make any payment or transfer to, any Affiliate (other than
a Subsidiary) except (i) in the ordinary course of business and pursuant to the
reasonable requirements of Borrower's or such Guarantor's business and upon fair
and reasonable terms no less favorable to Borrower or such Guarantor than
Borrower or such Guarantor would obtain in a comparable arms-length transaction,
(ii) Investments permitted under Section 8.5, (iii) pursuant to employment
compensation plans and agreements, and (iv) with officers, directors and
employees of Borrower or any Subsidiary so long as the same are duly authorized
pursuant to the articles of incorporation or bylaws (or procedures conducted in
accordance therewith) of Guarantor or Borrower.
8.8 Modifications to Certain Indebtedness. Neither Borrower nor any
Guarantor will make any amendment or modification to the subordination
provisions of any indenture, note or other agreement evidencing or governing (i)
as to Borrower, any Subordinated Indebtedness, and
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(ii) as to any Guarantor, Indebtedness that has been subordinated to Guarantor's
obligations under the Guaranty.
8.9 Amendments of Indenture or Senior Notes. Neither Borrower nor any
Guarantor will amend or modify the Indenture or the Senior Notes, except for
amendments or modifications that do not (i) impose upon Borrower or any
Guarantor obligations not contained therein as of the date of this Agreement
(except as otherwise hereinafter provided), or (ii) otherwise adversely affect
Borrower or any Guarantor. Nothing contained in this Section 8.9 shall (a)
prohibit issuance by Borrower of additional Senior Notes pursuant to the
Indenture, provided the same does not violate any other provision of this
Agreement or (b) prohibit any Guarantor from guarantying the obligations of
Borrower under the Senior Notes and Indenture.
8.10 Negative Pledge. Neither Borrower nor any Guarantor will directly or
indirectly enter into any agreement (other than (A) this Agreement, (B) the
Indenture and any indenture or similar agreement executed in connection with any
Refinancing Indebtedness of the Senior Notes and (C) any indenture or similar
agreement executed in connection with any Public Indebtedness permitted under
Section 8.2(xv)) with any Person that prohibits or restricts or limits the
ability of Borrower or Guarantors to create, incur, pledge or suffer to exist
any Lien in favor of Lenders granted pursuant to the terms of this Agreement
upon any real property assets of Borrower or any Guarantor; provided, however,
that those agreements creating Liens permitted under Sections 8.6(iii), (iv),
(vii), (viii), (xix), (xx) and (xxi) may prohibit, restrict or limit other Liens
on those assets encumbered by the Liens created by such agreements.
ARTICLE IX
FINANCIAL COVENANTS
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
9.1 Consolidated Tangible Net Worth Test. Consolidated Tangible Net Worth
shall not be less than (i) $776,018,000 plus (ii) fifty percent (50%) of
consolidated net income of Borrower and the Guarantors earned after December 31,
2003 (excluding any quarter in which there is a loss but applying consolidated
net income of Borrower and the Guarantors thereafter first to such loss before
determining fifty percent (50%) of such amount for purposes of this calculation)
plus (iii) fifty percent (50%) of the net proceeds or other consideration
received by Borrower for capital stock issued by Borrower after December 31,
2003 (the foregoing covenant, as adjusted as provided in the next succeeding
sentence, is herein referred to as the "Consolidated Tangible Net Worth Test").
Notwithstanding the foregoing, in the event that Borrower shall at any time
engage in an Acquisition equaling or exceeding $100,000,000, the minimum
Consolidated Tangible Net Worth for the Consolidated Tangible Net Worth Test
shall be adjusted to the sum of (i) 80% of the Consolidated Tangible Net Worth
immediately following the closing of such Acquisition, (ii) an amount equal to
50% of the consolidated net income of Borrower and Guarantors earned after the
closing of such Acquisition (excluding any quarter in which there is a loss but
applying net income thereafter first to such loss before determining 50% of such
amount for purposes of this calculation) and (iii) 50% of the net
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proceeds or other consideration received by Borrower for any capital stock
issued after the closing of such Acquisition. Borrower's compliance with the
Consolidated Tangible Net Worth Test shall be measured on a quarterly basis,
based on the financial statements delivered to Administrative Agent pursuant to
Section 7.1. Borrower's failure to satisfy the Consolidated Tangible Net Worth
Test shall not constitute an Event of Default or an Unmatured Event of Default;
provided, however, that if Borrower fails to satisfy the Consolidated Tangible
Net Worth Test at the end of any fiscal quarter, then the Term Out Period shall
commence on the first day following such fiscal quarter as provided in Section
2.22.
9.2 Leverage Test; Interest Coverage Test.
(a) Leverage Test. The Leverage Ratio shall not exceed the then
applicable Permitted Leverage Ratio (the "Leverage Test").
(b) Interest Coverage Test. If at any time Borrower shall fail to
maintain, for two (2) consecutive fiscal quarters, a ratio, determined as
of the last day of each fiscal quarter for the four-quarter period ending
on such day, of (i) EBITDA for such period to (ii) Consolidated Interest
Incurred for such period, of at least 2.00 to 1.0 (the "Interest Coverage
Test"), then the Permitted Leverage Ratio for the same fiscal quarter with
respect to which Borrower shall have so failed the Interest Coverage Test
(i.e., the second of such two (2) consecutive fiscal quarters, which
quarter is herein referred to as the "Coverage Test Failure Quarter"),
shall be decreased as follows: (i) if the Permitted Leverage Ratio for the
fiscal quarter preceding the Coverage Test Failure Quarter was 55%, the
Permitted Leverage Ratio shall be decreased by 5% to 50%; and (ii) if the
Permitted Leverage Ratio for the fiscal quarter preceding the Coverage
Test Failure Quarter was less than 55%, the Permitted Leverage Ratio shall
be decreased by 2.5%.
(c) Adjustment of Permitted Leverage Ratio. If at any time at which
the Permitted Leverage Ratio is less than 55%, Borrower shall satisfy the
Interest Coverage Test (which for purposes of this Section 9.2(c) shall be
deemed satisfied only if, on the same day on which Borrower satisfies the
Interest Coverage Test, Borrower is also in compliance with the Leverage
Test), then the Permitted Leverage Ratio, effective as of the fiscal
quarter immediately following the fiscal quarter with respect to which
Borrower shall have so satisfied the Interest Coverage Test, shall be
increased as follows: (i) upon satisfaction of the Interest Coverage Test
on a date on which the Permitted Leverage Ratio is 50%, the Permitted
Leverage Ratio for the next fiscal quarter shall be increased to 55%; and
(ii) upon satisfaction of the Interest Coverage Test on a date on which
the Permitted Leverage Ratio is less than 50%, the Permitted Leverage
Ratio for the next fiscal quarter shall be increased by 2.5%. In no event
shall the Permitted Leverage Ratio exceed 55%.
(d) Effectiveness of Change in Permitted Leverage Ratio. Any
decrease of the Permitted Leverage Ratio provided for in this Section 9.2
shall be effective as of the Coverage Test Failure Quarter as provided in
Section 9.2(b), and the Permitted Leverage Ratio (as so decreased) shall
remain in effect thereafter unless and until adjusted as provided in
Section 9.2(b) or (c). Any increase in the Permitted Leverage Ratio shall
be effective as of the fiscal quarter next succeeding the fiscal quarter
in which Borrower
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satisfies the Interest Coverage Test as provided in Section 9.2(c), and
the Permitted Leverage Ratio (as so increased) shall remain in effect
thereafter unless and until adjusted as provided in Section 9.2(b) or (c)
(e) Measure of Compliance. Borrower's satisfaction of the Interest
Coverage Test shall be measured on a quarterly basis, based on the
financial statements delivered to Administrative Agent pursuant to Section
7.1. A failure to satisfy the Leverage Test or the Interest Coverage Test
shall not constitute an Event of Default or an Unmatured Event of Default;
provided, however, if Borrower fails to satisfy the Leverage Test for two
(2) consecutive fiscal quarters (the first of which may be the Coverage
Test Failure Quarter), then the Term Out Period shall commence on the day
following such fiscal quarter as provided in Section 2.22.
9.3 Consolidated Tangible Net Worth Floor. Consolidated Tangible Net Worth
shall not be less than (i) $485,011,000, plus (ii) an amount equal to 50% of the
quarterly consolidated net income of Borrower and Guarantors earned after
December 31, 2003 (excluding any quarter in which there is a loss but applying
consolidated net income thereafter first to such loss before determining 50% of
such amount for purposes of this calculation), plus (iii) 50% of the net
proceeds or other consideration received by Borrower for any capital stock
issued after December 31, 2003. Notwithstanding the foregoing, in the event that
Borrower shall at any time engage in an Acquisition equaling or exceeding
$100,000,000, the minimum Consolidated Tangible Net Worth requirement for this
covenant shall be adjusted to the sum of (i) 50% of Consolidated Tangible Net
Worth immediately following the closing of such Acquisition, (ii) an amount
equal to 50% of the consolidated net income of Borrower and Guarantors earned
after the closing of such Acquisition (excluding any quarter in which there is a
loss but applying net income thereafter first to such loss before determining
50% of such amount for purposes of this calculation) and (iii) 50% of the net
proceeds or other consideration received by Borrower for any capital stock
issued after the closing of such Acquisition. Borrower's compliance with the
foregoing covenant shall be measured on a quarterly basis, based on the
financial statements delivered to Administrative Agent pursuant to Section 7.1.
ARTICLE X
EVENTS OF DEFAULT
The occurrence of any one or more of the following events shall constitute
an Event of Default:
10.1 Representations and Warranties. Any representation or warranty made
or deemed made by or on behalf of Borrower or any Guarantor to Lenders, the LC
Issuer or Administrative Agent under or in connection with this Agreement, any
other Loan Document or any certificate or information delivered in connection
with this Agreement or any other Loan Document shall not be true and correct in
any material respect on the date as of which made, and, with respect to any
matter which is reasonably capable of being cured, Borrower or such Guarantor,
as applicable, shall have failed to cure the occurrence causing the
representation or warranty to be
70
materially untrue or incorrect within thirty (30) days after notice thereof by
Administrative Agent to Borrower.
10.2 Non-payment. Nonpayment of principal of any Note when due (including
without limitation non-payment under clause (D) of Section 2.21(c)), or
nonpayment of interest upon any Note or of any fees or other obligations under
any of the Loan Documents within five (5) days after billing therefor by
Administrative Agent or Lenders.
10.3 Other Defaults. The breach by Borrower (other than a breach which
constitutes an Event of Default under any other Section of this Article X) of
any of the terms or provisions of this Agreement which is not remedied within
thirty (30) days after notice thereof to Borrower.
10.4 Other Indebtedness.
(a) Failure of Borrower or any Guarantor to pay when due (after any
applicable grace period and after notice from the holder thereof) any
Indebtedness (other than Non-Recourse Indebtedness) equal to or exceeding
$10,000,000 (in the aggregate); or
(b) The default (after any applicable grace period and after notice
from the holder thereof) by Borrower or any Guarantor in the performance
of any term, provision or condition contained in any agreement under which
any Indebtedness (other than Non-Recourse Indebtedness) equal to or
exceeding $10,000,000 (in the aggregate) was created or is governed; or
(c) Any other event shall occur or condition exist (after any
applicable grace period and after notice from the holder thereof), the
effect of which is to cause, or to permit the holder or holders of any
Indebtedness (other than Non-Recourse Indebtedness) of Borrower or any
Guarantor equal to or exceeding $10,000,000 to cause such Indebtedness to
become due prior to its stated maturity; or
(d) Any Indebtedness (other than Non-Recourse Indebtedness) of
Borrower or any Guarantor equal to or exceeding $10,000,000 (in the
aggregate) shall be declared to be due and payable or required to be
prepaid (other than by a regularly scheduled payment) prior to the stated
maturity thereof (after any applicable grace period and after notice from
the holder thereof); or
(e) Borrower or any Guarantor shall not pay, or shall admit in
writing its inability to pay, its debts generally as they become due.
10.5 Bankruptcy. Borrower or any Guarantor shall:
(i) have an order for relief entered with respect to it under the
Federal bankruptcy laws as now or hereafter in effect;
(ii) make an assignment for the benefit of creditors;
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(iii) apply for, seek, consent to, or acquiesce in, the appointment
of a receiver, custodian, trustee, examiner, liquidator or similar
official for it or any Substantial Portion of the Property of Borrower and
Guarantors;
(iv) institute any proceeding seeking an order for relief under the
Federal bankruptcy laws as now or hereafter in effect or seeking to
adjudicate it a bankrupt or insolvent, or seeking dissolution, winding up,
liquidation, reorganization, arrangement, adjustment or composition of it
or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or fail to file, within the applicable
time period for the filing thereof, an answer or other pleading denying
the material allegations of any such proceeding filed against it; or
(v) fail to contest in good faith any appointment or proceeding
described in Section 10.6.
10.6 Receiver. A receiver, trustee, examiner, liquidator or similar
official shall be appointed for Borrower or any Guarantor or any Substantial
Portion of the Property of Borrower and Guarantors without the application,
approval or consent of Borrower or any Guarantor, or a proceeding described in
Section 10.5(iv) shall be instituted against Borrower or any Guarantor and such
appointment continues undischarged or such proceeding continues undismissed or
unstayed for a period of sixty (60) consecutive days.
10.7 Judgment. Borrower or any Guarantor shall fail within thirty (30)
days to pay, bond or otherwise discharge any judgment or order for the payment
of money in excess of $10,000,000 which has not been stayed on appeal or is not
otherwise being appropriately contested in good faith and for which contested
judgments adequate reserves are being maintained by Borrower or such Guarantor
in accordance with GAAP.
10.8 Unfunded Liabilities. The Unfunded Liabilities of all Single Employer
Plans shall exceed in the aggregate $5,000,000 or any Reportable Event shall
occur in connection with any Plan, which Reportable Event has had or would
reasonably be expected to have a Material Adverse Effect.
10.9 Withdrawal Liability. Borrower, any Guarantor or any member of the
Controlled Group shall have been notified by the sponsor of a Multiemployer Plan
that it has incurred withdrawal liability to such Multiemployer Plan in an
amount which, when aggregated with all other amounts required to be paid to
Multiemployer Plans by Borrower or any Guarantor or any other member of the
Controlled Group as withdrawal liability (determined as of the date of such
notification), exceeds $5,000,000 or requires payments exceeding $2,000,000 per
annum; provided, however, that such event shall not constitute an Event of
Default as long as Borrower, such Guarantor or the Controlled Group member, as
applicable, is contesting in good faith the imposition of withdrawal liability.
10.10 Increased Contributions. Borrower, any Guarantor, or any other
member of the Controlled Group shall have been notified by the sponsor of a
Multiemployer Plan that such Multiemployer Plan is in reorganization, if as a
result of such reorganization the aggregate
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annual contributions of Borrower, Guarantors and the other members of the
Controlled Group (taken as a whole) to all Multiemployer Plans which are then in
reorganization have been or will be increased over the amounts contributed to
such Multiemployer Plans for the respective plan years of each such
Multiemployer Plan immediately preceding the plan year in which the
reorganization occurs by an amount exceeding $5,000,000.
10.11 Change in Control. Any Change in Control shall occur.
10.12 Dissolution. The dissolution or liquidation of Borrower or any
Guarantor shall occur, except as permitted under Section 8.3.
10.13 Guaranty. The Guaranty shall fail to remain in full force or effect
with respect to any Guarantor or any action shall be taken by any Guarantor to
discontinue or to assert the invalidity or unenforceability of the Guaranty, or
any Guarantor shall fail to comply with any of the terms or provisions of the
Guaranty, or any Guarantor denies that it has any further liability under the
Guaranty or gives notice to such effect.
10.14 Consolidated Tangible Net Worth Covenant. The breach by Borrower of
the covenant contained in Section 9.3.
10.15 No Defaults. The occurrence of any of the following events shall
specifically not be an Event of Default or an Unmatured Event of Default under
this Agreement:
(a) The breach of any Financial Covenant Test (except that the
breach by Borrower of the covenant in Section 9.3 shall constitute an
Event of Default, notwithstanding that it also constitutes a breach of a
Financial Covenant Test).
(b) If any Guarantor shall apply for, seek, consent to, or acquiesce
in, the appointment of a receiver, custodian, trustee, examiner,
liquidator or similar official for it or for a Significant Amount of its
Property, or if a receiver, custodian, trustee, examiner, liquidator or
similar official shall be appointed for any Guarantor without its
application, approval or consent for it or for a Significant Amount of its
Property; provided, however, that upon the occurrence and during the
continuation of the foregoing, all Property of such Guarantor shall be
automatically excluded from the Borrowing Base; and provided further, that
upon any such appointment for any Property of any Guarantor that is not a
Significant Amount of its Property (which appointment shall not be an
Event of Default or Unmatured Event of Default under this Agreement), such
Property shall be automatically excluded from the Borrowing Base.
"Significant Amount" means, with respect to the Property of such Guarantor
and its Subsidiaries, taken as a whole, Property which represents more
than 10% of the book value of the assets of such Guarantor as would be
shown on the financial statements of such Guarantor as of the beginning of
the fiscal quarter in which such determination is made, all as determined
in accordance with Agreement Accounting Principles.
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ARTICLE XI
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
11.1 Acceleration; Remedies.
(a) If any Event of Default described in Section 10.5 or 10.6 occurs
with respect to Borrower, the obligations of Lenders to make Loans and of
any LC Issuer to issue Facility Letters of Credit hereunder shall
automatically terminate and the Obligations shall immediately become due
and payable without any election or action on the part of Administrative
Agent or any Lender or LC Issuer, Borrower will be and become thereby
unconditionally obligated, without any further notice, act or demand, to
pay to Administrative Agent an amount in immediately available funds,
which funds shall be held in the Facility LC Collateral Account, equal to
the difference of (x) the amount of Facility LC Obligations at such time,
less (y) the amount on deposit in the Facility LC Collateral Account at
such time which is free and clear of all rights and claims of third
parties and has not been applied as provided in paragraph (c) below (such
difference, the "Collateral Shortfall Amount"). If any other Event of
Default occurs, the Required Lenders may (or Administrative Agent with the
written consent of the Required Lenders shall) (i) terminate or suspend
the obligations of Lenders to make Loans and of each LC Issuer to issue
Facility Letters of Credit hereunder, or declare the Obligations to be due
and payable, or both, whereupon the Obligations shall become immediately
due and payable, without presentment, demand, protest or notice of any
kind, all of which Borrower hereby expressly waives and (ii) upon notice
to Borrower and in addition to the continuing right to demand payment of
all amounts payable under this Agreement, make demand on Borrower to pay,
and Borrower shall, forthwith upon such demand and without any further
notice or act, pay to Administrative Agent the Collateral Shortfall
Amount, which funds shall be deposited in the Facility LC Collateral
Account.
(b) If at any time while any Event of Default is continuing,
Administrative Agent determines that the Collateral Shortfall Amount at
such time is greater than zero, Administrative Agent may, and at the
direction of the Required Lenders shall, make demand on Borrower to pay,
and Borrower shall, forthwith upon such demand and without any further
notice or act, pay to Administrative Agent the Collateral Shortfall
Amount, which funds shall be deposited in the Facility LC Collateral
Account.
(c) Administrative Agent may, at any time or from time to time after
funds are deposited in the Facility LC Collateral Account, apply such
funds to the payment of the Facility LC Obligations and any other amounts
in respect of any Facility Letter of Credit or Reimbursement Agreement as
shall from time to time have become due and payable by Borrower to any
Lender or LC Issuer under the Loan Documents.
(d) At any time while any Event of Default is continuing, neither
Borrower nor any Person claiming on behalf of or through Borrower shall
have any right to withdraw any of the funds held in the Facility LC
Collateral Account. After all of the Obligations have been indefeasibly
paid in full and the Aggregate Commitment has been terminated, any funds
remaining in the Facility LC Collateral Account shall be returned
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by Administrative Agent to Borrower or paid to whomever may be legally
entitled thereto at such time.
(e) If, within five (5) days after acceleration of the maturity of
the Obligations or termination of the obligations of Lenders to make Loans
hereunder as a result of any Event of Default (other than any Event of
Default as described in Section 10.5 or 10.6 with respect to Borrower) and
before any judgment or decree for the payment of the Obligations due shall
have been obtained or entered, the Required Lenders (in their sole
discretion) shall so direct, Administrative Agent shall, by notice to
Borrower, rescind and annul such acceleration and/or termination.
(f) Upon the occurrence of any Event of Default and upon the
directive of the Required Lenders, Administrative Agent or (but only upon
directive of the Required Lenders) any Lender shall proceed to protect,
exercise and enforce the rights and remedies of Administrative Agent and
Lenders under the Loan Documents against Borrower, any Guarantor and any
other party and such other rights and remedies as are provided by law or
equity.
(g) The order and manner in which Lenders' rights and remedies are
to be exercised shall be determined by the Required Lenders in their sole
discretion, and all payments received by Administrative Agent and Lenders,
or any of them, shall be applied first to the costs and expenses
(including attorneys' fees and disbursements) of Administrative Agent and
of Lenders, and thereafter paid pro rata to each Lender in the same
proportions that each Lender's Commitment bears to the Aggregate
Commitment, without priority or preference among Lenders. Regardless of
how each Lender may treat payments for the purpose of its own accounting,
for the purpose of computing Borrower's obligations hereunder and under
the Notes, payments shall be applied first, to the costs and expenses of
Administrative Agent and Lenders, as set forth above, second, to the
payment of accrued and unpaid interest due under any Loan Documents to and
including the date of such application (ratably, and without duplication,
according to the accrued and unpaid interest due under each of the Loan
Documents), and third, to the payment of all other amounts (including
principal and fees) then owing to Administrative Agent or Lenders under
the Loan Documents. No application of payments will cure any Event of
Default, or prevent acceleration, or continued acceleration, of amounts
payable under the Loan Documents, or prevent the exercise, or continued
exercise, of rights or remedies of Lenders hereunder or thereunder or at
law or in equity.
11.2 Amendments. Subject to the provisions of this Article XI, the
Required Lenders (or Administrative Agent with the consent in writing of the
Required Lenders) and Borrower (in the case of the Loan Documents other than the
Guaranty) or Guarantors (in the case of the Guaranty) may enter into agreements
supplemental hereto or thereto for the purpose of adding or modifying any
provisions to the Loan Documents or changing in any manner the rights of Lenders
or Borrower (in the case of the Loan Documents other than the Guaranty) or
Guarantors (in the case of the Guaranty) or waiving any Event of Default
hereunder; provided, however, that (a) no such supplemental agreement shall,
without the consent of the Required Lenders, amend the definition of the term
"Borrowing Base" or the definition of any defined term contained in
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the definition of the term "Borrowing Base" and (b) no such supplemental
agreement shall, without the consent of each Lender affected thereby:
(i) Extend the maturity of any Loan or Note or forgive all or any
portion of the principal amount thereof, or reduce the rate of, or extend
the time of payment of, interest or fees thereon;
(ii) Release any Guarantor from any of its obligations under the
Guaranty (except as provided in Section 8.4(b));
(iii) Change the percentage specified in the definition of Required
Lenders;
(iv) Increase the amount of the Commitment of any Lender hereunder
(except as may be agreed by such Lender pursuant to Section 2.5(d)), or
permit Borrower to assign its rights under this Agreement;
(v) Amend the percentage set forth in Section 2.21(b); or
(vi) Amend this Section 11.2, Section 12.7 or Section 14.1.
No amendment of any provision of this Agreement relating to Administrative Agent
shall be effective without the written consent of Administrative Agent.
Administrative Agent may waive payment or reduce the amount of the fees referred
to in Section 13.13 or the fee required under Section 15.3.3 without obtaining
the consent of any other party to this Agreement. No amendment of any provision
of this Agreement relating to Facility Letters of Credit shall be effective
without the written consent of each LC Issuer affected thereby. No amendment of
any provision of this Agreement relating to Swing Line Advances shall be
effective without the written consent of the Swing Line Lender.
11.3 Preservation of Rights. No delay or omission of any Lender or LC
Issuer or Administrative Agent to exercise any right under the Loan Documents
shall impair such right or be construed to be a waiver of any Event of Default
or an acquiescence therein, and the making of a Loan or the issuance, amendment
or extension of a Facility Letter of Credit notwithstanding the existence of an
Event of Default or the inability of Borrower to satisfy the conditions
precedent to such Loan or Facility Letter of Credit shall not constitute any
waiver or acquiescence. Any single or partial exercise of any such right shall
not preclude other or further exercise thereof or the exercise of any other
right, and no waiver, amendment or other variation of the terms, conditions or
provisions of the Loan Documents whatsoever shall be valid unless in writing
signed by Lenders (and, if applicable, Administrative Agent) required pursuant
to Section 11.2, and then only to the extent in such writing specifically set
forth. All remedies contained in the Loan Documents or by law afforded shall be
cumulative and all shall be available to Administrative Agent, the LC Issuer and
Lenders until the Obligations have been paid in full.
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ARTICLE XII
GENERAL PROVISIONS
12.1 Survival of Representations. All representations and warranties of
Borrower contained in this Agreement shall survive delivery of the Notes and the
making of the Loans and the issuance, amendment or extension of any Facility
Letter of Credit herein contemplated.
12.2 Governmental Regulation. Anything contained in this Agreement to the
contrary notwithstanding, no Lender or LC Issuer shall be obligated to extend
credit to Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation effective after the date of this Agreement.
12.3 Taxes. Any recording, intangible, filing or stamp fees or taxes or
other similar assessments or charges made by any governmental or revenue
authority in respect of the Loan Documents shall be paid by Borrower, together
with interest and penalties, if any.
12.4 Headings. Section headings in the Loan Documents are for convenience
of reference only, and shall not govern the interpretation of any of the
provisions of the Loan Documents.
12.5 Entire Agreement. The Loan Documents and the letter agreement(s)
referred to in this Agreement embody the entire agreement and understanding
among Borrower, Guarantors, Administrative Agent and Lenders and supersede all
prior agreements and understandings among Borrower, Guarantors, Administrative
Agent, and Lenders relating to the subject matter thereof.
12.6 Nature of Obligations; Benefits of this Agreement.
(a) The respective obligations of Lenders hereunder are several and
not joint and no Lender shall be the partner or agent of any other (except
to the extent to which Administrative Agent is authorized to act as such).
The failure of any Lender to perform any of its obligations hereunder
shall not relieve any other Lender from any of its obligations hereunder.
(b) This Agreement shall not be construed so as to confer any right
or benefit upon any Person other than the parties to this Agreement and
their respective successors and assigns.
12.7 Expenses; Indemnification. Borrower shall reimburse Administrative
Agent for any reasonable outside attorneys' fees and costs paid or incurred by
Administrative Agent in connection with the preparation, negotiation, execution,
delivery, review, amendment, modification, and administration of the Loan
Documents. Borrower also agrees to reimburse Administrative Agent, Lenders and
each LC Issuer for any reasonable costs and out-of-pocket expenses (including
reasonable outside attorneys' fees and time charges of attorneys for
Administrative Agent, Lenders and such LC Issuer) paid or incurred by
Administrative Agent, any Lender or such LC Issuer in connection with the
collection and enforcement of the Loan Documents. Borrower further agrees to
indemnify Administrative Agent and each Lender and LC Issuer, and their
respective directors, officers and employees against all losses, claims,
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damages, penalties, judgments, liabilities and expenses (including, without
limitation, all expenses of litigation or preparation therefor whether or not
Administrative Agent or any Lender or LC Issuer is a party thereto) which any of
them may pay or incur arising out of or relating to this Agreement, the other
Loan Documents, the transactions contemplated hereby or thereby or the direct or
indirect application or proposed application of the proceeds of any Loan
hereunder (except to the extent the same is determined in a final non-appealable
judgment by a court of competent jurisdiction to have arisen from the gross
negligence or willful misconduct of the indemnified Person or the failure of the
indemnified Person to comply with regulatory requirements applicable to it). The
obligations of Borrower under this Section shall survive the termination of this
Agreement.
12.8 Numbers of Documents. All statements, notices, closing documents, and
requests hereunder shall be furnished to Administrative Agent with sufficient
counterparts so that Administrative Agent may furnish one to each of Lenders.
12.9 Accounting. Except as provided to the contrary herein, all accounting
terms used herein shall be interpreted and all accounting determinations
hereunder shall be made in accordance with GAAP applied on a basis consistent
with the consolidated audited financial statements of Borrower as of December
31, 1994 ("Agreement Accounting Principles"). If any change in GAAP from the
principles used in preparing such statements would have a material effect upon
the results of any calculation required by or compliance with any provision of
this Agreement, then such calculation shall be made or calculated and compliance
with such provision shall be determined using accounting principles used in
preparing the consolidated audited financial statements of Borrower as of
December 31, 1994. For purposes of determining compliance by the Borrower with
the covenants in this Agreement, the application of Financial Accounting
Standards Board Interpretation Number 46 shall be disregarded with respect to a
financial consolidation of any Person which is not a Subsidiary of the Borrower.
12.10 Severability of Provisions. Any provision in any Loan Document that
is held to be inoperative, unenforceable, or invalid in any jurisdiction shall,
as to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.
12.11 Nonliability of Lenders and LC Issuer. The relationship between
Borrower and Lenders and Administrative Agent shall be solely that of borrower
and lender. Neither Administrative Agent nor any Lender or LC Issuer shall have
any fiduciary responsibilities to Borrower. Neither Administrative Agent nor any
Lender or LC Issuer undertakes any responsibility to Borrower to review or
inform Borrower of any matter in connection with any phase of Borrower's
business or operations.
12.12 CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
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12.13 Arbitration. Subject to the provisions of this Section 12.13,
Borrower, Lenders and Administrative Agent agree to submit to binding
arbitration any and all claims, disputes and controversies between or among them
(and their respective employees, officers, directors, attorneys, and other
agents if permitted by law or a contract between them and such persons) relating
to this Agreement and the Loan Documents and the negotiation, execution,
collateralization, administration, repayment, modification, extension or
collection thereof or arising thereunder. Such arbitration shall proceed in
Chicago, Illinois, shall be governed by Illinois law and shall be conducted in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association (the "AAA"), as modified in this Section 12.13. Judgment upon the
award rendered by each arbitrator(s) may be entered in any court having
jurisdiction.
(a) Nothing in the preceding paragraph, nor the exercise of any
right to arbitrate thereunder, shall limit the right of any party hereto
(1) subject to provisions of applicable law, to exercise self-help
remedies such as setoff or repossession or other self-help remedies
provided in this Agreement or any other Loan Document; or (2) to obtain
provisional or ancillary remedies such as replevin, injunctive relief,
attachment, or appointment of a receiver from a court having jurisdiction,
before, during or after the pendency of any arbitration proceeding, or (3)
to defend or obtain injunctive or other equitable relief from a court of
competent jurisdiction against the foregoing or assert mandatory
counterclaims, if any, prior to and during the pendency of a determination
in arbitration of issues of performance, default, damages and other such
claims and disputes.
(b) Arbitration hereunder shall be before a three-person panel of
neutral arbitrators, consisting of one person from each of the following
categories: (1) an attorney who has practiced in the area of commercial
real estate law for at least ten (10) years; (2) a person with at least
ten (10) years' experience in real estate lending; and (3) a person with
at least ten (10) years' experience in the homebuilding industry. The AAA
shall submit a list of persons meeting the criteria outlined above for
each category of arbitrator, and the parties shall select one person from
each category in the manner established by the AAA.
(c) In any dispute between the parties that is arbitratable
hereunder, where the aggregate of all claims and the aggregate of all
counterclaims is an amount less than Fifty Thousand And No/100ths Dollars
($50,000), the arbitration shall be before a single neutral arbitrator to
be selected in accordance with the Commercial Rules of the American
Arbitration Association and shall proceed under the Expedited Procedures
of said Rules.
(d) In any arbitration hereunder, the arbitrators shall decide (by
documents only or with a hearing, at the arbitrators' discretion) any
pre-hearing motions which are substantially similar to pre-hearing motions
to dismiss for failure to state a claim or motions for summary
adjudication.
(e) In any arbitration hereunder, discovery shall be permitted in
accordance with the Illinois Code of Civil Procedure. Scheduling of such
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discovery may be determined by the arbitrators, and any discovery disputes
shall be finally determined by the arbitrators.
(f) The Illinois rules of evidence shall control the admission of
evidence at the hearing in any arbitration conducted hereunder; provided,
however, no error by the arbitrators in application of the rules of
evidence shall be grounds, as such, for vacating the arbitrators' award.
(g) Notwithstanding any AAA rule to the contrary, the arbitration
award shall be in writing and shall specify the factual and legal basis
for the award, including findings of fact and conclusions of law.
(h) Each party shall each bear its own costs and expenses and an
equal share of the arbitrators' costs and administrative fees of
arbitration.
12.14 CONSENT TO JURISDICTION. BORROWER AND EACH LENDER HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
ILLINOIS STATE COURT SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND BORROWER AND EACH LENDER
HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES
ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. NOTHING IN THIS SECTION 12.14 SHALL LIMIT THE RIGHT OF
ADMINISTRATIVE AGENT OR ANY LENDER OR LC ISSUER TO BRING PROCEEDINGS AGAINST
BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. SUBJECT TO THE PROVISIONS OF
SECTION 12.13, UNLESS PROHIBITED BY LAW, ANY JUDICIAL PROCEEDING BY BORROWER
AGAINST ADMINISTRATIVE AGENT OR ANY LENDER OR LC ISSUER OR ANY AFFILIATE OF
ADMINISTRATIVE AGENT OR ANY LENDER OR LC ISSUER INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
ANY LOAN DOCUMENT SHALL BE BROUGHT IN A COURT IN CHICAGO, ILLINOIS.
12.15 WAIVER OF JURY TRIAL. SUBJECT TO THE PROVISIONS OF SECTION 12.13,
BORROWER, ADMINISTRATIVE AGENT AND EACH LENDER AND LC ISSUER HEREBY WAIVE TRIAL
BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED
THEREUNDER.
12.16 Confidentiality. Each Lender and Administrative Agent agree to use
commercially reasonable efforts to keep confidential any financial reports and
other information from time to time supplied to them by Borrower hereunder to
the extent that such information is not and does not become publicly available
through or with the consent or acquiescence of
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Borrower, except for disclosure (i) to Administrative Agent and the other
Lenders or to a Transferee, (ii) to legal counsel, accountants, and other
professional advisors to a Lender, Administrative Agent or a Transferee, (iii)
to regulatory officials, (iv) to any Person as required by law, regulation, or
legal process, (v) to any Person in connection with any legal proceeding to
which that Lender is a party, and (vi) permitted by Section 15.4. Any Lender or
Administrative Agent disclosing such information shall use commercially
reasonable efforts to advise the Person to whom such information is disclosed of
the foregoing confidentiality agreement and to direct such Person to comply
therewith.
12.17 USA PATRIOT ACT. Each Lender that is subject to the requirements of
the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the "Act") hereby notifies Borrower that, pursuant to the requirements
of the Act, it is required to obtain, verify and record information that
identifies Borrower, which information includes the name and address of Borrower
and other information that will allow such Lender to identify Borrower in
accordance with the Act.
ARTICLE XIII
ADMINISTRATIVE AGENT
13.1 Appointment; Nature of Relationship. JPMorgan Chase Bank, N.A. is
hereby appointed by each Lender as its contractual representative (herein
referred to as "Administrative Agent") hereunder and under each other Loan
Document, and each Lender irrevocably authorizes Administrative Agent to act as
the contractual representative of such Lender with the rights and duties
expressly set forth herein and in the other Loan Documents. Administrative Agent
agrees to act as such contractual representative upon the express conditions
contained in this Article XIII. Notwithstanding the use of the defined term
"Administrative Agent," it is expressly understood and agreed that
Administrative Agent shall not have any fiduciary responsibilities to any Lender
by reason of this Agreement or any other Loan Document and that Administrative
Agent is merely acting as the contractual representative of Lenders with only
those duties as are expressly set forth in this Agreement and the other Loan
Documents. In its capacity as Lenders' contractual representative,
Administrative Agent (i) does not hereby assume any fiduciary duties to any
Lender, (ii) is a "representative" of Lenders within the meaning of the term
"secured party" as defined in the Illinois Uniform Commercial Code and (iii) is
acting as an independent contractor, the rights and duties of which are limited
to those expressly set forth in this Agreement and the other Loan Documents.
Each Lender hereby agrees not to assert any claim against Administrative Agent
on any agency theory or any other theory of liability for breach of fiduciary
duty, all of which claims each Lender hereby waives.
13.2 Powers. Administrative Agent shall have and may exercise such powers
under the Loan Documents as are specifically delegated to Administrative Agent
by the terms of each thereof, together with such powers as are reasonably
incidental thereto. Administrative Agent shall have no implied duties to
Lenders, or any obligation to Lenders to take any action thereunder except any
action specifically provided by the Loan Documents to be taken by Administrative
Agent.
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13.3 General Immunity. Neither Administrative Agent nor any of its
directors, officers, agents or employees shall be liable to Borrower, Lenders or
any Lender for any action taken or omitted to be taken by it or them hereunder
or under any other Loan Document or in connection herewith or therewith except
to the extent such action or inaction is determined in a final non-appealable
judgment by a court of competent jurisdiction to have arisen from the gross
negligence or willful misconduct of such Person.
13.4 No Responsibility for Loans, Recitals, etc. Neither Administrative
Agent nor any of its directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into, or verify (a) any
statement, warranty or representation made in connection with any Loan Document
or any borrowing hereunder; (b) the performance or observance of any of the
covenants or agreements of any obligor under any Loan Document, including,
without limitation, any agreement by an obligor to furnish information directly
to each Lender; (c) the satisfaction of any condition specified in Article V,
except receipt of items required to be delivered solely to Administrative Agent;
(d) except as otherwise provided in this Article XIII, the existence or possible
existence of any Event of Default or Unmatured Event of Default; (e) the
validity, enforceability, effectiveness, sufficiency or genuineness of any Loan
Document or any other instrument or writing furnished in connection therewith;
(f) the value, sufficiency, creation, perfection or priority of any Lien in any
collateral security; or (g) the financial condition of Borrower or any Guarantor
of any of the Obligations or of any of Borrower's or any such Guarantor's
respective Subsidiaries. Notwithstanding anything to the contrary herein,
Administrative Agent shall make available promptly after the date of this
Agreement to any Lender copies of all Loan Documents in its possession which are
requested by any such Lender. Administrative Agent shall also furnish to all
Lenders promptly copies of any notices of an Unmatured Event of Default or Event
of Default issued by Administrative Agent to Borrower and copies of financial
statements and compliance certificates required by this Agreement that are
received by Administrative Agent from Borrower (and not furnished directly by
Borrower to Administrative Agent). Promptly after any officer of Administrative
Agent that is responsible for administration of the Agreement has actual
knowledge of the occurrence of an Unmatured Event of Default or an Event of
Default hereunder, the Administrative Agent shall so notify Lenders.
13.5 Action on Instructions of Lenders. Administrative Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder and
under any other Loan Document in accordance with written instructions signed by
the Required Lenders (except as otherwise provided in Section 11.2), and such
instructions and any action taken or failure to act pursuant thereto shall be
binding on all Lenders. Lenders hereby acknowledge that Administrative Agent
shall be under no duty to take any discretionary action permitted to be taken by
it pursuant to the provisions of this Agreement or any other Loan Document
unless it shall be requested in writing to do so by the Required Lenders.
Administrative Agent shall be fully justified in failing or refusing to take any
action hereunder and under any other Loan Document unless it shall first be
indemnified to its satisfaction by Lenders pro rata against any and all
liability, cost and expense that it may incur by reason of taking or continuing
to take any such action.
13.6 Employment of Agents and Counsel. Administrative Agent may execute
any of its duties as Administrative Agent hereunder and under any other Loan
Document by or through employees, agents, and attorneys-in-fact and shall not be
answerable to Lenders, except as to
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money or securities received by it or its authorized agents, for the default or
misconduct of any such agents or attorneys-in-fact selected by it with
reasonable care. Administrative Agent shall be entitled to advice of counsel
concerning the contractual arrangement between Administrative Agent and Lenders
and all matters pertaining to Administrative Agent's duties hereunder and under
any other Loan Document.
13.7 Reliance on Documents; Counsel. Administrative Agent shall be
entitled to rely upon any Note, notice, consent, certificate, affidavit, letter,
telegram, facsimile, electronic mail message, statement, paper or document
believed by it to be genuine and correct and to have been signed or sent by the
proper person or persons, and, in respect to legal matters, upon the opinion of
counsel selected by Administrative Agent, which counsel may be employees of
Administrative Agent. For purposes of determining compliance with the conditions
specified in Sections 5.1 and 5.2, each Lender that has signed this Agreement
shall be deemed to have been given an opportunity to review, and either to have
(a) consented to, approved or accepted or to be satisfied with, or (b) to have
waived its right to disapprove, each document or other matter required
thereunder to be consented to or approved by or acceptable or satisfactory to a
Lender unless Administrative Agent shall have received notice from such Lender
prior to the applicable date specifying its objection thereto.
13.8 Agent's Reimbursement and Indemnification. Lenders agree to reimburse
and indemnify Administrative Agent ratably in proportion to their respective
Commitments (or, if the Commitments have been terminated, in proportion to the
then outstanding amount of the Loans held by the Lenders) their Commitments
immediately prior to such termination) (i) for any amounts not reimbursed by
Borrower or any Guarantor for which Administrative Agent is entitled to
reimbursement by Borrower or any Guarantor under the Loan Documents, (ii) for
any other expenses incurred by Administrative Agent on behalf of Lenders, in
connection with the preparation, execution, delivery, administration and
enforcement of the Loan Documents (including, without limitation, for any
expenses incurred by Administrative Agent in connection with any dispute between
Administrative Agent and any Lender or between two or more Lenders) that is not
reimbursed by Borrower and (iii) for any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever which may be imposed on, incurred by or
asserted against Administrative Agent in any way relating to or arising out of
the Loan Documents or any other document delivered in connection therewith or
the transactions contemplated thereby (including, without limitation, for any
such amounts incurred by or asserted against Administrative Agent in connection
with any dispute between Administrative Agent and any Lender or between two or
more Lenders), or the enforcement of any of the terms of the Loan Documents or
of any such other documents, provided that no Lender shall be liable for any of
the foregoing to the extent any of the foregoing is found in a final
non-appealable judgment by a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of Administrative Agent. The
obligations of Lenders under this Section 13.8 shall survive payment of the
Obligations and termination of this Agreement.
13.9 Notice of Default. Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Event of Default or Unmatured Event
of Default hereunder (other than a failure by Borrower to make a payment to
Administrative Agent hereunder) unless Administrative Agent has received written
notice from a Lender or Borrower referring to this
83
Agreement describing such Event of Default or Unmatured Event of Default and
stating that such notice is a "notice of default". In the event that
Administrative Agent receives such a notice, Administrative Agent shall give
prompt notice thereof to Lenders.
13.10 Rights as a Lender and LC Issuer. In the event Administrative Agent
is a Lender, Administrative Agent shall have the same rights and powers
hereunder and under any other Loan Document with respect to its Commitment and
its Loans as any Lender and may exercise the same as though it were not
Administrative Agent, and the term "Lender" or "Lenders" shall, at any time when
Administrative Agent is a Lender, unless the context otherwise indicates,
include Administrative Agent in its individual capacity. In the event
Administrative Agent is an LC Issuer, Administrative Agent shall have the rights
and powers of an LC Issuer hereunder and may exercise the same as though it were
not Administrative Agent, and the term "LC Issuer" shall, at any time when
Administrative Agent is an LC Issuer, unless the context otherwise indicates,
include and mean Administrative Agent in its capacity as an LC Issuer.
Administrative Agent and its Affiliates may accept deposits from, lend money to,
and generally engage in any kind of trust, debt, equity or other transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with Borrower or any of its Subsidiaries in which Borrower or such Subsidiary is
not restricted hereby from engaging with any other Person.
13.11 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon Administrative Agent, Arranger or any
other Lender and based on the financial statements prepared by Borrower and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will, independently and without
reliance upon Administrative Agent, Arranger or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement and the other Loan Documents. Except for any notice, report,
document or other information expressly required to be furnished to Lenders by
Administrative Agent or Arranger hereunder, neither Administrative Agent nor
Arranger shall have any duty or responsibility (either initially or on a
continuing basis) to provide any Lender with any notice, report, document,
credit information or other information concerning the affairs, financial
condition or business of Borrower or any of its Affiliates that may come into
the possession of Administrative Agent or Arranger (whether or not in their
respective capacity as Administrative Agent or Arranger) or any of their
Affiliates.
13.12 Successor Administrative Agent. Administrative Agent may resign at
any time by giving written notice thereof to Lenders and Borrower, such
resignation to be effective upon the appointment of a successor Administrative
Agent or, if no successor Administrative Agent has been appointed, sixty (60)
days after the retiring Administrative Agent gives notice of its intention to
resign. Administrative Agent may be removed at any time with or without cause by
written notice received by Administrative Agent from the Required Lenders, such
removal to be effective on the date specified by the Required Lenders. The
consent of Borrower shall be required prior to any removal of Administrative
Agent becoming effective; provided, however, that if an Event of Default has
occurred and is continuing, the consent of Borrower shall not be required. Upon
any such resignation or removal, the Required Lenders shall have the right to
appoint, on behalf of Borrower and Lenders, a successor Administrative Agent. If
no successor Administrative Agent shall have been so appointed by the Required
Lenders within 45 days after
84
the resigning Administrative Agent's giving notice of its intention to resign,
then the resigning Agent may appoint, on behalf of Borrower and Lenders, a
successor Administrative Agent. Notwithstanding the previous sentence,
Administrative Agent may at any time without the consent of Borrower or any
Lender, appoint any of its Affiliates which is a commercial bank as a successor
Administrative Agent hereunder. If Administrative Agent has resigned or been
removed and no successor Administrative Agent has been appointed, Lenders may
perform all the duties of Administrative Agent hereunder and Borrower shall make
all payments in respect of the Obligations to the applicable Lender and for all
other purposes shall deal directly with Lenders. No successor Administrative
Agent shall be deemed to be appointed hereunder until such successor
Administrative Agent has accepted the appointment. Any such successor
Administrative Agent shall be a commercial bank having capital and retained
earnings of at least $100,000,000. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the resigning or removed
Administrative Agent. Upon the effectiveness of the resignation or removal of
Administrative Agent, the resigning or removed Administrative Agent shall be
discharged from its duties and obligations hereunder and under the Loan
Documents. After the effectiveness of the resignation or removal of an
Administrative Agent, the provisions of this Article XIII shall continue in
effect for the benefit of such Administrative Agent in respect of any actions
taken or omitted to be taken by it while it was acting as Administrative Agent
hereunder and under the other Loan Documents. In the event that there is a
successor to Administrative Agent by merger, or Administrative Agent assigns its
duties and obligations to an Affiliate pursuant to this Section 13.12, then the
term "Prime Rate" as used in this Agreement shall mean the prime rate, base rate
or other analogous rate of the new Administrative Agent.
13.13 Agent and Arranger Fees. Borrower agrees to pay to Administrative
Agent and Arranger, for their respective accounts, the fees agreed to by
Borrower, Administrative Agent and Arranger pursuant to that certain letter
agreement dated December 22, 2004, or as otherwise agreed from time to time.
13.14 Delegation to Affiliates. Borrower and Lenders agree that
Administrative Agent may delegate any of its duties under this Agreement to any
of its Affiliates. Any such Affiliate (and such Affiliate's directors, officers,
agents and employees) which performs duties in connection with this Agreement
shall be entitled to the same benefits of the indemnification, waiver and other
protective provisions to which Administrative Agent is entitled under Articles
XII and XIII.
13.15 Co-Agents, Co-Documentation Agents, Co-Managing Agents, Syndication
Agent, etc. No Lender identified in this Agreement as a Co-Agent,
Co-Documentation Agent, Co-Managing Agent or Syndication Agent shall have any
right, power, obligation, liability, responsibility or duty under this Agreement
other than those applicable to all Lenders as such. Without limiting the
foregoing, none of such Lenders shall have or be deemed to have a fiduciary
relationship with any Lender. Each Lender hereby makes the same acknowledgments
with respect to such Lenders as it makes with respect to Administrative Agent in
Section 13.11.
85
ARTICLE XIV
RATABLE PAYMENTS
14.1 Ratable Payments. If any Lender (whether by setoff or otherwise) has
payment made to it upon its Loans (other than payments received pursuant to
Sections 3.1, 3.2 or 3.4) in a greater proportion than that received by any
other Lender, such Lender agrees, promptly upon demand, to purchase a portion of
the Loans held by the other Lenders so that after such purchase each Lender will
hold its ratable proportion of Loans. If any Lender, whether in connection with
common law right of setoff or amounts which might be subject to common law right
of setoff or otherwise, receives collateral or other protection for its
Obligations or such amounts which may be subject to setoff, such Lender agrees,
promptly upon demand, to take such action necessary such that all Lenders share
in the benefits of such collateral ratably in proportion to their Loans. In case
any such payment is prevented, restricted or otherwise impeded by legal process,
or otherwise, appropriate further adjustments shall be made.
ARTICLE XV
BENEFIT OF AGREEMENT, ASSIGNMENTS; PARTICIPATIONS
15.1 Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of Borrower and Lenders
and their respective successors and assigns permitted hereby, except that (i)
Borrower shall not have the right to assign its rights or obligations under the
Loan Documents without the prior written consent of each Lender, (ii) any
assignment by any Lender must be made in compliance with Section 15.3, and (iii)
any transfer by participation must be made in compliance with Section 15.2. Any
attempted assignment or transfer by any party not made in compliance with this
Section 15.1 shall be null and void, unless such attempted assignment or
transfer is treated as a participation in accordance with Section 15.3.2. The
parties to this Agreement acknowledge that clause (ii) of this Section 15.1
relates only to absolute assignments and this Section 15.1 does not prohibit
assignments creating security interests, including, without limitation, (x) any
pledge or assignment by any Lender of all or any portion of its rights under
this Agreement and any Note to a Federal Reserve Bank or (y) in the case of a
Lender which is a Fund, any pledge or assignment of all or any portion of its
rights under this Agreement and any Note to its trustee in support of its
obligations to its trustee; provided, however, that no such pledge or assignment
creating a security interest shall release the transferor Lender from its
obligations hereunder unless and until the parties thereto have complied with
the provisions of Section 15.3. Administrative Agent may treat the Person which
made any Loan or which holds any Note as the owner thereof for all purposes
hereof unless and until such Person complies with Section 15.3; provided,
however, that Administrative Agent may in its discretion (but shall not be
required to) follow instructions from the Person which made any Loan or which
holds any Note to direct payments relating to such Loan or Note to another
Person. Any assignee or transferee of the rights to any Loan or any Note agrees
by acceptance of such assignment 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 owner of
the rights to any Loan (whether
86
or not a Note has been issued in evidence thereof), shall be conclusive and
binding on any subsequent holder or assignee of the rights to such Loan.
15.2 Participations.
15.2.1 Permitted Participants; Effect. Any Lender may at any time
sell to one or more banks or other entities that are not, and that are not
Affiliates of a Person, in the home building business ("Participants")
participating interests in any Loan owing to such Lender, any Note held by such
Lender, any Commitment of such Lender or any other interest of such Lender under
the Loan Documents. In the event of any such sale by a Lender of participating
interests to a Participant, such Lender's obligations under the Loan Documents
shall remain unchanged, such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, such Lender shall remain
the owner of its Loans and the holder of any Note issued to it in evidence
thereof for all purposes under the Loan Documents, all amounts payable by
Borrower under this Agreement shall be determined as if such Lender had not sold
such participating interests, and Borrower and Administrative Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under the Loan Documents.
15.2.2 Voting Rights. Each Lender shall retain the sole right to
approve, and/or grant its consent to, without the consent of any Participant,
any amendment, modification or waiver of or other matter relating to any
provision of the Loan Documents.
15.2.3 Waiver of Setoff. Each Participant shall be deemed to have
waived any and all rights of setoff, including any common law right of setoff,
in respect of its participating interest in amounts owing under the Loan
Documents.
15.2.4 Benefit of Certain Provisions. Borrower agrees that each
Participant shall be entitled to the benefits of Sections 3.1, 3.2, 3.4 and
12.11 to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to Section 15.3, provided that (i) a Participant shall not
be entitled to receive any greater payment under Section 3.1 or 3.2 than the
Lender who sold the participating interest to such Participant would have
received had it retained such interest for its own account, unless the sale of
such interest to such Participant is made with the prior written consent of
Borrower, (ii) any Participant asserting any claim to the benefits described
herein shall assert the same through the Lender from which it acquired such
participation interest, and (iii) any Participant not incorporated under the
laws of the United States of America or any State thereof agrees to comply with
the provisions of Section 2.20 to the same extent as if it were a Lender.
15.3 Assignments.
15.3.1 Permitted Assignments. Any Lender may at any time assign to
one or more banks or other entities that are not, and are not Affiliates of a
Person, in the home building business ("Purchasers") all or any part of its
rights and obligations under the Loan Documents. Such assignment ("Assignment
and Assumption") shall be substantially in the form of Exhibit G or in such
other form as may be agreed to by the parties thereto. Each such assignment
shall either be in an amount equal to the entire applicable Commitment and Loans
of the assigning
87
Lender or (unless each of Borrower and Administrative Agent otherwise consents)
be in an aggregate amount not less than $2,000,000. The amount of the assignment
shall be based on the Commitment or outstanding Loans (if the Commitment has
been terminated) subject to the assignment, determined as of the date of such
assignment or as of the "Trade Date," if the "Trade Date" is specified in the
assignment.
15.3.2 Consents. The consent of Borrower shall be required prior to
an assignment becoming effective unless the Purchaser is a Lender, provided that
the consent of Borrower shall not be required if an Event of Default has
occurred and is continuing. The consent of Administrative Agent shall be
required prior to an assignment becoming effective unless the Purchaser is a
Lender. Any consent required under this Section 15.3.2 shall not be unreasonably
withheld or delayed.
15.3.3 Effect; Effective Date. Upon (i) delivery to Administrative
Agent of an assignment, together with any consents required by Sections 15.3.1
and 15.3.2, and (ii) payment by the assignee of a $5,000 fee to Administrative
Agent for processing such assignment (unless such fee is waived by
Administrative Agent), such assignment shall become effective on the effective
date specified in such assignment. The 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
constitutes "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 Lender party to this Agreement and any
other Loan Document executed by or on behalf of Lenders and shall have all the
rights and obligations of a Lender under the Loan Documents, to the same extent
as if it were an original party thereto, and the transferor Lender shall be
released with respect to the Commitment and Loans assigned to such Purchaser
without any further consent or action by Borrower, Lenders or Administrative
Agent. In the case of an assignment covering all of the assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be a
Lender hereunder but shall continue to be entitled to the benefits of, and
subject to, those provisions of this Agreement and the other Loan Documents
which survive payment of the Obligations and termination of the applicable
agreement. Any assignment or transfer by a Lender of rights or obligations under
this Agreement that does not comply with this Section 15.3 shall be treated for
purposes of this Agreement as a sale by such Lender of a participation in such
rights and obligations in accordance with Section 15.2. Upon the consummation of
any assignment to a Purchaser pursuant to this Section 15.3.3, the transferor
Lender, Administrative Agent and Borrower shall, if the transferor Lender or the
Purchaser desires that its Loans be evidenced by Notes, make appropriate
arrangements so that new Notes or, as appropriate, replacement Notes are issued
to such transferor Lender and new Notes or, as appropriate, replacement Notes,
are issued to such Purchaser, in each case in principal amounts reflecting their
respective Commitments, as adjusted pursuant to such assignment.
15.3.4 Register. Administrative Agent, acting solely for this
purpose as an agent of Borrower, shall maintain at one of its offices in
Chicago, Illinois a copy of each Assignment and Assumption delivered to it and a
register for the recordation of the names and addresses of Lenders, and the
Commitments of, and principal amounts of the Loans owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall
88
be conclusive, absent manifest error, and Borrower, Administrative Agent and
Lenders may treat each Person whose name is recorded in the Register pursuant to
the terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by Borrower at any reasonable time and from time to time upon
reasonable prior notice.
15.4 Dissemination of Information. Borrower authorizes each Lender 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 non-public information in such Lender's
possession concerning the creditworthiness of Borrower, Guarantors and their
Subsidiaries; provided that each Transferee and prospective Transferee agrees to
be bound by Section 12.16 of this Agreement.
15.5 Tax Treatment. If any interest in any Loan Document is transferred to
any Transferee which is organized under the laws of any jurisdiction other than
the United States or any State thereof, the transferor Lender shall cause such
Transferee, concurrently with the effectiveness of such transfer, to comply with
the provisions of Section 2.20.
ARTICLE XVI
NOTICES
16.1 Giving Notice. Except as otherwise permitted by Section 2.14 with
respect to borrowing notices, all notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by facsimile and addressed or delivered to such party at its address
set forth below its signature hereto or at such other address as may be
designated by such party in a notice to the other parties. Any notice, if mailed
and properly addressed with postage prepaid, shall be deemed given when
received; any notice, if transmitted by facsimile, shall be deemed given when
transmitted.
16.2 Change of Address. Borrower, Administrative Agent and any Lender and
LC Issuer may each change the address for service of notice upon it by a notice
in writing to the other parties hereto.
ARTICLE XVII
COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one agreement, and any of the parties hereto may
execute this Agreement by signing any such counterpart. This Agreement shall be
effective when it has been executed by Borrower, Administrative Agent, and all
Lenders and each party has notified Administrative Agent by telex or telephone,
that it has taken such action.
89
IN WITNESS WHEREOF, Borrower, Lenders, and Administrative Agent have
executed this Agreement as of the date first above written.
BORROWER:
M.D.C. HOLDINGS, INC.,
a Delaware corporation
By: /s/ John J. Heaney
----------------------------------
Name: John J. Heaney, Senior Vice President
3600 South Yosemite Suite 900
Denver, Colorado 80237
Attention: John J. Heaney
90
LENDERS:
JPMORGAN CHASE BANK, N.A. (successor by
merger to Bank One, NA), Individually, as
Administrative Agent and as LC Issuer
By: /s/ Kent A. Kaiser
----------------------------------
Name: Kent A. Kaiser
Title: Vice President
707 Travis, Floor 6
Houston, TX 77002
Attention: Kent A. Kaiser
91
SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
WACHOVIA BANK, NATIONAL ASSOCIATION
By: /s/ Timothy S. Blake
-------------------------------
Name: Timothy S. Blake
Title: Vice President
Address:
191 Peachtree Street, NE, 21st Floor
Atlanta, GA 30303
Attn: Brian A. Phillips
92
SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
GUARANTY BANK
By: /s/ Jim J. Johnson
-------------------------------
Name: Jim J. Johnson
Title: Senior Vice President
Address:
8333 Douglas Avenue, 2nd Floor
Dallas, TX 75225
Attn: Kim White
93
SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
SUNTRUST BANK
By: /s/ W. John Wendler
-------------------------------
Name: W. John Wendler
Title: Director
Address:
8330 Boone Boulevard
8th Floor
Vienna, VA 22182
Attn: W. John Wendler
and to:
10710 Midlothian Turnpike
Richmond, VA 22235
Attn: Decara Jeter
94
SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Christopher E. Erickson
-------------------------------
Name: Christopher E. Erickson
Title: Vice President
Address:
918 17th Street, 5th Floor
Denver, CO 80202
Attn: Christopher E. Erickson
95
SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
THE ROYAL BANK OF SCOTLAND PLC
By: /s/ David Apps
-------------------------------
Name: David Apps
Title: Senior Vice President
Address:
101 Park Avenue, 12th Floor
New York, NY 10178
Attn: David Apps
96
SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
CITICORP NORTH AMERICA, INC.
By: /s/ David Bouton
-------------------------------
Name: David Bouton
Title: Vice President
Address:
390 Greenwich Street, 1st Floor
New York, NY 10013
Attn: David Bouton
97
SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
KEYBANK NATIONAL ASSOCIATION
By: /s/ Jeff V. Aycock
-------------------------------
Name: Jeff V. Aycock, CFA
Title: Vice President
Address:
KeyBank Real Estate Capital
1200 Abernathy Road NE
Suite 1500
Atlanta, GA 30328
Attn: Jeff V. Aycock, Vice President
98
SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
WASHINGTON MUTUAL BANK, FA
By: /s/ Javier Berrera
-------------------------------
Name: Javier Berrera
Title: Vice President
Address:
5950 LaPlace Court
Suite 205
Carlsbad, CA 92008
Attn: Tom Griffin
99
SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
BANK OF AMERICA, N.A.
By: /s/ Kelley Prentiss
-------------------------------
Name: Kelley Prentiss
Title: Senior Vice President
Address:
231 South LaSalle Street
Mail Code: IL1-231-10-35
Chicago, IL 60604
Attn: Kelley Prentiss
100
SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
CALIFORNIA BANK & TRUST
By: /s/ Kirk K. Monroe
-------------------------------
Name: Kirk K. Monroe
Title: Senior Vice President
Address:
2000 S. Colorado Blvd., Suite 2-1200
Denver, CO 80222
Attn: Kirk Monroe
101
SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
COMERICA BANK
By: /s/ Jessica L. Kempf
-------------------------------
Name: Jessica L. Kempf
Title: Assistant Vice President
Address:
500 Woodward Avenue
7th Floor
Detroit, MI 48226
Attn: Jessica L. Kempf
102
SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
BNP PARIBAS
By: /s/ Janice S. H. Ho
------------------------------
Name: Janice S. H. Ho
Title: Director
By: /s/ Frederique Merhaut
------------------------------
Name: Frederique Merhaut
Title: Director
Address:
725 South Figueroa Street
Suite 2090
Los Angeles, CA 90017
Attn: Clive Bettles
103
SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
MIZUHO CORPORATE BANK, LTD.
By: /s/ Raymond Ventura
-------------------------------
Name: Raymond Ventura
Title: Senior Vice President
Address:
1251 Avenue of the Americas
New York, NY 10020
Attn: Ricky Simmons
104
SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
AMSOUTH BANK
By: /s/ Ronny Hudspeth
-------------------------------
Name: Ronny Hudspeth
Title: Senior Vice President
Address:
1900 5th Avenue North, RCL, BAC-15
Birmingham, AL 35203
Attention: Wanda Pate
105
SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
BANK OF THE WEST
By: /s/ Lynn Foster
-------------------------------
Name: Lynn Foster
Title: Senior Vice President
By: /s/ Chuck Weerasooriya
-------------------------------
Name: Chuck Weerasooriya, CFA
Title: Vice President
Address:
3000 Oak Road, Suite 400
Walnut Creek, CA 94597
Attn: Lynn Foster, Senior Vice President
& Manager - Loan Administration
106
SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Douglas G. Paul
-------------------------------
Name: Douglas G. Paul
Title: Sr. Vice President
Address:
Two Tower Center
18th Floor
East Brunswick, NJ 08816
Attn: Douglas Paul
107
SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
RBC CENTURA BANK,
A NORTH CAROLINA BANKING CORPORATION
By: /s/ Carolynn Alexander
-------------------------------
Name: Carolynn Alexander
Title: Vice President
Address:
RBC Builder Finance Syndications
11011 Richmond, Suite 850
Houston, TX 77042
Attn: Carolynn Alexander
108
SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
CITY NATIONAL BANK, A NATIONAL BANKING
ASSOCIATION
By: /s/ Mary Bowman
-------------------------------
Name: Mary Bowman
Title: Sr. Vice President
Address:
2001 North Main Street
Suite 200
Walnut Creek, CA 94596
Attn: Mary Bowman
109
SIGNATURE PAGE TO M.D.C. HOLDINGS, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
COMPASS BANK
By: /s/ H. Shaw Thomas
-------------------------------
Name: H. Shaw Thomas
Title: Senior Vice President
Address:
999 18th Street, Suite 2800
Denver, CO 80202
Attn: Larry Olsen
110
Bank One, Arizona, N.A. executes this Agreement solely for the purposes set
forth in Section 4.4(f).
BANK ONE, ARIZONA, N.A.
By: /s/ Kent A. Kaiser
-----------------------------
Name: Kent A. Kaiser
Title: Vice President
707 Travis, Floor 6
Houston, TX 77002
Attention: Kent A. Kaiser
EXHIBIT A
AMENDED AND RESTATED GUARANTY
TO: JPMORGAN CHASE BANK, N.A. (successor by merger to Bank One, NA), as
Administrative Agent for Lenders that are parties to the Amended and
Restated Credit Agreement dated as of January 28, 2005 (as amended,
supplemented or otherwise modified from time to time, the "Credit
Agreement"), among M.D.C. HOLDINGS, INC., a Delaware corporation, Lenders,
and Administrative Agent, and to Lenders. Capitalized terms not otherwise
defined herein shall have the meaning set forth in the Credit Agreement.
RECITALS
A. Pursuant to the Prior Credit Agreement, RICHMOND AMERICAN HOMES
OF CALIFORNIA, INC., a Colorado corporation, RICHMOND AMERICAN HOMES OF
MARYLAND, INC., a Maryland corporation, RICHMOND AMERICAN HOMES OF NEVADA, INC.,
a Colorado corporation, RICHMOND AMERICAN HOMES OF VIRGINIA, INC., a Virginia
corporation, RICHMOND AMERICAN HOMES OF ARIZONA, INC., a Delaware corporation,
RICHMOND AMERICAN HOMES OF COLORADO, INC., a Delaware corporation, RICHMOND
AMERICAN HOMES OF WEST VIRGINIA, INC., a Colorado corporation, RAH OF FLORIDA,
INC. (formerly known as Richmond American Homes of California (Inland Empire),
Inc.), a Colorado corporation, RICHMOND AMERICAN HOMES OF UTAH, INC., a Colorado
corporation, RICHMOND AMERICAN HOMES OF TEXAS, INC., a Colorado corporation,
RICHMOND AMERICAN HOMES OF FLORIDA, LP, a Colorado limited partnership, RICHMOND
AMERICAN HOMES OF DELAWARE, INC., a Colorado corporation, RICHMOND AMERICAN
HOMES OF ILLINOIS, INC., a Colorado corporation, RICHMOND AMERICAN HOMES OF NEW
JERSEY, INC., a Colorado corporation, RICHMOND AMERICAN HOMES OF PENNSYLVANIA,
INC., a Colorado corporation, M.D.C. LAND CORPORATION, a Colorado corporation,
RICHMOND AMERICAN CONSTRUCTION, INC., a Delaware corporation, RAH TEXAS
HOLDINGS, LLC, a Colorado limited liability company and RAH OF TEXAS, LP, a
Colorado limited partnership (hereinafter collectively called "Guarantors" and
individually a "Guarantor"), whose address is set forth after their signatures
below, have executed and delivered a certain Guaranty (the "Prior Guaranty")
dated April 8, 2004.
B. It is a condition under the Credit Agreement that Guarantors
shall execute and deliver this Amended and Restated Guaranty ("Guaranty")
amending and restating the Prior Guaranty.
NOW, THEREFORE, the Prior Guaranty is hereby amended and restated in
its entirety as follows:
FOR VALUABLE CONSIDERATION, Guarantors unconditionally, jointly and
severally, guarantee and promise to pay to Administrative Agent, for the benefit
of Lenders and their respective successors, endorsees, transferees and assigns,
or order, within one (1) business
2
day after demand, in lawful money of the United States, (i) the Notes, principal
and interest and all other sums payable thereunder, or at the election of
Administrative Agent any one or more installments thereof, in the event that
Borrower fails to punctually pay any one or more installments of the Note
(principal and/or interest), or any other sum payable thereunder at the time and
in the manner provided therein; and (ii) all other indebtedness of Borrower to
Administrative Agent or to any Lender arising under or in connection with the
Notes, the Credit Agreement or any Loan Documents (the indebtedness evidenced by
the Notes together with all other indebtedness specified above is hereinafter
collectively called the "Indebtedness").
1. The obligations of Guarantors hereunder are separate and independent of
the obligations of Borrower and of any other guarantor, and a separate action or
actions may be brought and prosecuted against any one or more of Guarantors
whether action is brought against Borrower or any other guarantor or whether
Borrower or any other guarantor is joined in any action or actions. The
obligations of Guarantors hereunder shall survive and continue in full force and
effect until payment in full of the Indebtedness is actually received by
Administrative Agent for the benefit of Lenders and the period of time has
expired during which any payment made by Borrower or any Guarantor to
Administrative Agent for the benefit of Lenders may be determined to be a
Preferential Payment (defined below), notwithstanding any release or termination
of Borrower's or any other guarantor's liability by express or implied agreement
with Administrative Agent or any Lender or by operation of law and
notwithstanding that the Indebtedness or any part thereof is deemed to have been
paid or discharged by operation of law or by some act or agreement of
Administrative Agent or Lenders. For purposes of this Guaranty, the Indebtedness
shall be deemed to be paid only to the extent that Administrative Agent, on
behalf of Lenders, actually receives immediately available funds.
2. Guarantors agree that to the extent Borrower or any Guarantor makes any
payment to Administrative Agent or Lenders in connection with the Indebtedness,
and all or any part of such payment is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid by Administrative
Agent or Lenders or paid over to a trustee, receiver or any other entity,
whether under any bankruptcy act or otherwise (any such payment is hereinafter
referred to as a "Preferential Payment"), then this Guaranty shall continue to
be effective or shall be reinstated, as the case may be, and, to the extent of
such payment or repayment by Administrative Agent or Lenders, the Indebtedness
or part thereof intended to be satisfied by such Preferential Payment shall be
revived and continued in full force and effect as if said Preferential Payment
had not been made.
3. Guarantors are providing this Guaranty at the instance and request of
Borrower to induce Administrative Agent and Lenders to extend or continue
financial accommodations to Borrower. Guarantors hereby represent and warrant
that Guarantors are and will continue to be fully informed about all aspects of
the financial condition and business affairs of Borrower that Guarantors deem
relevant to the obligations of Guarantors hereunder and hereby waive and fully
discharge Administrative Agent and each Lender from any and all obligations to
communicate to Guarantors any information whatsoever regarding Borrower or
Borrower's financial condition or business affairs. Guarantors acknowledge that
Borrower owns, directly or indirectly, all of the issued and outstanding shares
of stock of each Guarantor, that Guarantors and Borrower are engaged in related
businesses, and that Guarantors will derive substantial direct and indirect
benefit from the extension of credit by Lenders evidenced by the Indebtedness.
3
4. Guarantors authorize Administrative Agent and Lenders, without notice
or demand and without affecting Guarantors' liability hereunder, from time to
time, to: (a) renew, modify, compromise, extend, accelerate or otherwise change
the time for payment of, or otherwise change the terms of the Indebtedness or
any part thereof, including increasing or decreasing the rate of interest
thereon; (b) release, substitute or add any one or more endorsers, or other
guarantors; (c) take and hold security for the payment of this Guaranty or the
Indebtedness, and enforce, exchange, substitute, subordinate, waive or release
any such security; (d) proceed against such security and direct the order or
manner of sale of such security as Administrative Agent in its discretion may
determine; and (e) apply any and all payments from Borrower, any Guarantor or
any other guarantor, or recoveries from such security, in such order or manner
as Administrative Agent in its discretion may determine.
5. Guarantors waive and agree not to assert: (a) any right to require
Administrative Agent or Lenders to proceed against Borrower or any other
guarantor, to proceed against or exhaust any security for the Indebtedness, to
pursue any other remedy available to Administrative Agent and Lenders, or to
pursue any remedy in any particular order or manner; (b) the benefit of any
statute of limitations affecting Guarantors' liability hereunder or the
enforcement hereof; (c) demand, diligence, presentment for payment, protest and
demand, and notice of extension, dishonor, protest, demand, nonpayment and
acceptance of this Guaranty; (d) notice of the existence, creation or incurring
of new or additional indebtedness of Borrower to Administrative Agent or any
Lender; and (e) any defense arising by reason of any disability or other defense
of Borrower or by reason of the cessation from any cause whatsoever (other than
payment in full of all amounts demanded to be paid by Guarantors under this
Guaranty) of the liability of Borrower for the Indebtedness. Guarantors hereby
expressly consent to any impairment of collateral, including, but not limited
to, failure to perfect a security interest and release collateral and any such
impairment or release shall not affect Guarantors' obligations hereunder. Until
payment in full of the Indebtedness, Guarantors shall have no right of
subrogation and hereby waive any right to enforce any remedy which
Administrative Agent and Lenders now have, or may hereafter have, against
Borrower, and waive any benefit of, and any right to participate in, any
security now or hereafter held by Administrative Agent on behalf of Lenders.
6. (a) If from time to time Borrower shall have liabilities or obligations
to any Guarantor, whether absolute or contingent, joint, several, or joint and
several, such liabilities and obligations (the "Subordinated Indebtedness") and
any and all assignments as security, grants in trust, liens, mortgages, security
interests, other encumbrances, and other interests and rights securing such
liabilities and obligations shall at all times be fully subordinate to payment
and performance in full of the Obligations. Guarantors agree that such
liabilities and obligations of Borrower to Guarantors shall not be secured by
any assignment as security, grant in trust, lien, mortgage, security interest,
other encumbrance or other interest or right in any property, interests in
property, or rights to property of such Borrower. Guarantors and, by their
acceptance of this Guaranty, Administrative Agent and each Lender agree that (i)
so long as no Event of Default has occurred and is continuing, payments of
principal and interest on the Subordinated Indebtedness may be made by Borrower
and accepted by Guarantors as such payments become due; and (ii) after the
occurrence and during the continuation of an Event of Default, Borrower shall
not make and Guarantor shall not accept any payments with respect to the
Subordinated Indebtedness. If, notwithstanding the foregoing, subsequent to an
Event of Default, any
4
Guarantor receives any payment from Borrower, such payment shall be held in
trust by such Guarantor for the benefit of Administrative Agent and Lenders,
shall be segregated from the other funds of such Guarantor, and shall forthwith
be paid by such Guarantor to Administrative Agent for the benefit of Lenders and
applied to payment of the Obligations whether or not then due.
(b) In the event of any distribution, division, or application,
partial or complete, voluntary or involuntary, by operation of law or otherwise,
of all or any part of the assets of Borrower, or the proceeds thereof, to
creditors of Borrower, by reason of the liquidation, dissolution, or other
winding up of Borrower's business, or in the event of any receivership,
insolvency or bankruptcy proceedings by or against Borrower, or assignment for
the benefit of creditors, or of any proceedings by or against Borrower for any
relief under any bankruptcy or insolvency laws, or relating to the relief of
debtors, readjustment of indebtedness, reorganizations, arrangements,
compositions or extensions, or of any other event whereby it becomes necessary
or desirable to file or present claims against Borrower for the purpose of
receiving payment thereof, or on account thereof, then and in any such event,
any payment or distribution of any kind or character, either in cash or other
property, which shall be made or shall be payable with respect to any
Subordinated Indebtedness shall be paid over to Administrative Agent on behalf
of Lenders for application to the payment of the Obligations, whether due or not
due, and no payments shall be made upon or in respect of the Subordinated
Indebtedness unless and until the Obligations shall have been paid and satisfied
in full. In any such event, all claims of Administrative Agent and Lenders and
all claims of Guarantors shall, at the option of Administrative Agent and
Lenders, forthwith become due and payable without demand or notice.
(c) In the event of any distribution, division, or application,
partial or complete, voluntary or involuntary, by operation of law or otherwise,
of all or any part of the assets of Borrower, or the proceeds thereof, to
creditors of Borrower, by reason of the liquidation, dissolution, or other
winding up of Borrower's business, or in the event of any receivership,
insolvency or bankruptcy proceedings by or against Borrower, or assignment for
the benefit of creditors, or of any proceedings by or against Borrower for any
relief under any bankruptcy or insolvency laws, or relating to the relief of
debtors, readjustment of indebtedness, reorganizations, arrangements,
compositions or extensions, or of any other event whereby it becomes necessary
or desirable to file or present claims against Borrower for the purpose of
receiving payment thereof, or on account thereof, each of the Guarantors
irrevocably authorizes and empowers Administrative Agent, or any person
Administrative Agent may designate, to act as attorney for such Guarantor with
full power and authority in the name of such Guarantor, or otherwise, to make
and present such claims or proofs of claims against Borrower on account of the
Subordinated Indebtedness as Administrative Agent, or its appointee, may deem
expedient and proper and, if necessary, to vote such claims in any proceedings
and to receive and collect for the benefit of Lenders any and all dividends or
other payments and disbursements made thereon in whatever form they may be paid
or issued, and to give acquittance therefor and to apply same to the
Obligations, and Guarantors hereby agree, from time to time and upon request, to
make, execute and deliver to Administrative Agent such powers of attorney,
assignments, endorsements, proofs of claim, pleadings, verifications,
affidavits, consents, agreements or other instruments as may be requested by
Administrative Agent in order to enable Administrative Agent and Lenders to
enforce any and all claims upon, or with respect to, the Subordinated
5
Indebtedness, and to collect and receive any and all payments or distributions
which may be payable or deliverable at any time upon or with respect to the
Subordinated Indebtedness.
(d) Except as otherwise permitted herein, should any payment or
distribution or security or proceeds thereof be received by any Guarantor upon
or with respect to the Subordinated Indebtedness prior to the satisfaction of
the Obligations, such Guarantor will forthwith deliver the same to
Administrative Agent on behalf of Lenders in precisely the form as received
except for the endorsement or assignment of such Guarantor where necessary for
application on the Obligations, whether due or not due, and until so delivered
the same shall be held in trust by such Guarantor as property of Administrative
Agent on behalf of Lenders. In the event of the failure of any Guarantor to make
any such endorsement or assignment, Administrative Agent, or any of its officers
or employees, on behalf of Administrative Agent, is hereby irrevocably
authorized to make the same.
(e) Each Guarantor agrees to maintain in its records notations
satisfactory to Administrative Agent of the rights and priorities of
Administrative Agent and Lenders hereunder, and from time to time, upon request,
to furnish Administrative Agent for the benefit of Lenders with sworn financial
statements. Lenders and Administrative Agent may inspect the books of account
and any records of Guarantors at any time during business hours. Each Guarantor
agrees that any promissory note now or hereafter evidencing the Subordinated
Indebtedness shall be nonnegotiable and shall be marked with a specific
statement that the indebtedness thereby evidenced is subject to the provisions
of this Guaranty.
7. (a) The provisions of this Guaranty are severable, and in any action or
proceeding involving any state corporate law, or any state, federal or foreign
bankruptcy, insolvency, reorganization or other law affecting the rights of
creditors generally, if the obligations of any Guarantor under this Guaranty
would otherwise be held or determined to be avoidable, invalid or unenforceable
on account of the amount of such Guarantor's liability under this Guaranty,
then, notwithstanding any other provision of this Guaranty to the contrary, the
amount of such liability shall, without any further action by the Guarantors,
Administrative Agent or any Lender, be automatically limited and reduced to the
highest amount that is valid and enforceable as determined in such action or
proceeding (such highest amount determined hereunder being the relevant
Guarantor's "Maximum Liability"). This Paragraph 7(a) with respect to the
Maximum Liability of the Guarantors is intended solely to preserve the rights of
Administrative Agent hereunder to the maximum extent not subject to avoidance
under applicable law, and neither the Guarantor nor any other person or entity
shall have any right or claim under this Paragraph 7(a) with respect to the
Maximum Liability, except to the extent necessary so that the obligations of the
Guarantors hereunder shall not be rendered voidable under applicable law.
(b) Each of the Guarantors agrees that the Guaranteed Obligations
may at any time and from time to time exceed the Maximum Liability of each
Guarantor, and may exceed the aggregate Maximum Liability of all other
Guarantors, without impairing this Guaranty or affecting the rights and remedies
of Administrative Agent hereunder. Nothing in this Paragraph 7(b) shall be
construed to increase any Guarantor's obligations hereunder beyond its Maximum
Liability.
6
(c) In the event any Guarantor (a "Paying Guarantor") shall make any
payment or payments under this Guaranty or shall suffer any loss as a result of
any realization upon any collateral granted by it to secure its obligations
under this Guaranty, each other Guarantor (each a "Non-Paying Guarantor") shall
contribute to such Paying Guarantor an amount equal to such Non-Paying
Guarantor's "Pro Rata Share" of such payment or payments made, or losses
suffered, by such Paying Guarantor. For the purposes hereof, each Non-Paying
Guarantor's "Pro Rata Share" with respect to any such payment or loss by a
Paying Guarantor shall be determined as of the date on which such payment or
loss was made by reference to the ratio of (i) such Non-Paying Guarantor's
Maximum Liability as of such date (without giving effect to any right to
receive, or obligation to make, any contribution hereunder) or, if such
Non-Paying Guarantor's Maximum Liability has not been determined, the aggregate
amount of all monies received by such Non-Paying Guarantor from Borrower after
the date hereof (whether by loan, capital infusion or by other means) to (ii)
the aggregate Maximum Liability of all Guarantors hereunder (including such
Paying Guarantor) as of such date (without giving effect to any right to
receive, or obligation to make, any contribution hereunder), or to the extent
that a Maximum Liability has not been determined for any Guarantors, the
aggregate amount of all monies received by such Guarantors from Borrower after
the date hereof (whether by loan, capital infusion or by other means). Nothing
in this Paragraph 7(c) shall affect any Guarantor's several liability for the
entire amount of the Guaranteed Obligations (up to such Guarantor's Maximum
Liability). Each of the Guarantors covenants and agrees that its right to
receive any contribution under this Guaranty from a Non-Paying Guarantor shall
be subordinate and junior in right of payment to all the Guaranteed Obligations.
The provisions of this Paragraph 7(c) are for the benefit of both Administrative
Agent and Guarantors and may be enforced by any one, or more, or all of them in
accordance with the terms hereof.
8. It is not necessary for Administrative Agent or any Lender to inquire
into the powers of Borrower or the officers, directors, members, managers,
partners, trustees or agents acting or purporting to act on its behalf, and any
of the Indebtedness made or created in reliance upon the professed exercise of
such powers shall be guaranteed hereunder.
9. Each Guarantor agrees to deliver to Administrative Agent and Lenders
financial statements and other financial information relating to such Guarantor
in form and level of detail, and containing certifications, as required pursuant
to Section 7.1 of the Credit Agreement. Each Guarantor further agrees to comply
all covenants, representations and warranties in the Credit Agreement relating
to Guarantor.
10. Guarantors agree to pay all attorneys' fees and all other costs and
expenses which may be incurred by Administrative Agent or any Lender in
enforcing this Guaranty.
11. This Guaranty sets forth the entire agreement of Guarantors,
Administrative Agent and Lenders with respect to the subject matter hereof and
supersedes all prior oral and written agreements and representations by
Administrative Agent or any Lender to Guarantors. No modification or waiver of
any provision of this Guaranty or any right of Administrative Agent or any
Lender hereunder and no release of any Guarantor from any obligation hereunder
shall be effective unless in a writing executed by an authorized officer of
Administrative Agent and each Lender. There are no conditions, oral or
otherwise, on the effectiveness of this Guaranty.
7
12. This Guaranty shall inure to the benefit of Administrative Agent and
each Lender and their respective successors and assigns and shall be binding
upon each Guarantor and its successors and assigns. Administrative Agent and
each Lender may assign this Guaranty in whole or in part without notice.
13. THIS GUARANTY SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS
(AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO
FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
14. Subject to the provisions of this Paragraph 14, each Guarantor agrees,
and Lenders and Administrative Agent by accepting this Guaranty agree, that they
shall submit to binding arbitration any and all claims, disputes and
controversies between or among them (and their respective employees, officers,
directors, attorneys, and other agents if permitted by law or a contract between
them and such persons) relating to this Guaranty and the Loan Documents and the
negotiation, execution, collateralization, administration, repayment,
modification, extension or collection thereof or arising thereunder. Such
arbitration shall proceed in Chicago, Illinois, shall be governed by Illinois
law and shall be conducted in accordance with the Commercial Arbitration Rules
of the American Arbitration Association (the "AAA") as modified in this
Paragraph 14. Judgment upon the award rendered by each arbitrator(s) may be
entered in any court having jurisdiction.
(a) Nothing in the preceding paragraph, nor the exercise of any
right to arbitrate thereunder, shall limit the right of any party hereto (1)
subject to provisions of applicable law, to exercise self-help remedies such as
setoff or repossession or other self-help remedies provided in the Credit
Agreement or any other Loan Document; or (2) to obtain provisional or ancillary
remedies such as replevin, injunctive relief, attachment, or appointment of a
receiver from a court having jurisdiction, before, during or after the pendency
of any arbitration proceeding, or (3) to defend or obtain injunctive or other
equitable relief against the foregoing or assert mandatory counterclaims, if
any, prior to and during the pendency of a determination in arbitration of
issues of performance, default, damages and other such claims and disputes.
(b) Arbitration hereunder shall be before a three-person panel of
neutral arbitrators, consisting of one person from each of the following
categories: (1) an attorney who has practiced in the area of commercial real
estate law for at least ten (10) years; (2) a person with at least ten (10)
years' experience in real estate lending; and (3) a person with at least ten
(10) years' experience in the homebuilding industry. The AAA shall submit a list
of persons meeting the criteria outlined above for each category of arbitrator,
and the parties shall select one person from each category in the manner
established by the AAA.
(c) In any dispute between the parties that is arbitratable
hereunder, where the aggregate of all claims and the aggregate of all
counterclaims is an amount less than Fifty Thousand and No/100ths Dollars
($50,000.00), the arbitration shall be before a single neutral arbitrator to be
selected in accordance with the Commercial Rules of the American Arbitration
Association and shall proceed under the Expedited Procedures of said Rules.
8
(d) In any arbitration hereunder, the arbitrators shall decide (by
documents only or with a hearing, at the arbitrators' discretion) any
pre-hearing motions which are substantially similar to pre-hearing motions to
dismiss for failure to state a claim or motions for summary adjudication.
(e) In any arbitration hereunder, discovery shall be permitted in
accordance with the Illinois Code of Civil Procedure. Scheduling of such
discovery may be determined by the arbitrators, and any discovery disputes shall
be finally determined by the arbitrators.
(f) The Illinois rules of evidence shall control the admission of
evidence at the hearing in any arbitration conducted hereunder, provided,
however, no error by the arbitrators in application of the Rules of Evidence
shall be grounds, as such, for vacating the arbitrators' award.
(g) Notwithstanding any AAA rule to the contrary, the arbitration
award shall be in writing and shall specify the factual and legal basis for the
award, including findings of fact and conclusions of law.
(h) Each party shall each bear its own costs and expenses and an
equal share of the arbitrators' costs and administrative fees of arbitration.
15. GUARANTORS, AND LENDERS BY ACCEPTING THIS GUARANTY, HEREBY IRREVOCABLY
SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
ILLINOIS STATE COURT SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND ANY GUARANTOR, AND LENDERS
BY ACCEPTING THIS GUARANTY, HEREBY IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT
OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVE ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT
IS AN INCONVENIENT FORUM. NOTHING IN THIS PARAGRAPH 15 SHALL LIMIT THE RIGHT OF
ADMINISTRATIVE AGENT OR ANY LENDER OR LC ISSUER TO BRING PROCEEDINGS AGAINST ANY
GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION. SUBJECT TO THE PROVISIONS OF
PARAGRAPH 14, UNLESS PROHIBITED BY LAW, ANY JUDICIAL PROCEEDING BY ANY GUARANTOR
AGAINST ADMINISTRATIVE AGENT OR ANY LENDER OR LC ISSUER OR ANY AFFILIATE OF
ADMINISTRATIVE AGENT OR ANY LENDER OR LC ISSUER INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
THIS GUARANTY OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT IN A COURT IN CHICAGO,
ILLINOIS.
16. SUBJECT TO THE PROVISIONS OF PARAGRAPH 14, EACH GUARANTOR HEREBY
WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR
9
CONNECTED WITH THE GUARANTY, ANY OTHER LOAN DOCUMENT OR THE RELATIONSHIP
ESTABLISHED THEREUNDER.
17. Guarantors acknowledge that the rights and responsibilities of
Administrative Agent under this Guaranty with respect to any action taken by
Administrative Agent or the exercise or non-exercise by Administrative Agent of
any option, right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Guaranty shall, as between
Administrative Agent and Lenders, be governed by the Credit Agreement and by
such other agreements with respect thereto as may exist from time to time among
them, but, as between Administrative Agent and Guarantors, Administrative Agent
shall be conclusively presumed to be acting as agent for Lenders with full and
valid authority so to act or refrain from acting, and Guarantors shall not be
under any obligation or entitlement to make any inquiry respecting such
authority.
18. Pursuant to Section 7.11 of the Credit Agreement, additional
Subsidiaries shall become obligated as Guarantors hereunder (each as fully as
though an original signatory hereto) by executing and delivering to
Administrative Agent a supplemental guaranty in the form of Exhibit A attached
hereto (with blanks appropriately filled in), together with such additional
supporting documentation required pursuant to Section 7.11 of the Credit
Agreement.
IN WITNESS WHEREOF these presents are executed as of January 28, 2005.
GUARANTORS:
RICHMOND AMERICAN HOMES OF
CALIFORNIA, INC.
By:
---------------------------------------
Name: John J. Heaney
Title: Vice President
RICHMOND AMERICAN HOMES OF
MARYLAND, INC.
By:
---------------------------------------
Name: John J. Heaney
Title: Vice President
10
RICHMOND AMERICAN HOMES OF
NEVADA, INC.
By:
---------------------------------------
Name: John J. Heaney
Title: Vice President
RICHMOND AMERICAN HOMES OF
VIRGINIA, INC.
By:
---------------------------------------
Name: John J. Heaney
Title: Vice President
RICHMOND AMERICAN HOMES OF
ARIZONA, INC.
By:
---------------------------------------
Name: John J. Heaney
Title: Vice President
RICHMOND AMERICAN HOMES OF
COLORADO, INC.
By:
---------------------------------------
Name: John J. Heaney
Title: Vice President
RICHMOND AMERICAN HOMES OF WEST
VIRGINIA, INC.
By:
---------------------------------------
Name: John J. Heaney
Title: Vice President
11
RAH OF FLORIDA, INC. (formerly known as
Richmond American Homes of California (Inland
Empire), Inc.)
By:
------------------------------------------
Name: John J. Heaney
Title: Vice President
RICHMOND AMERICAN HOMES OF UTAH,
INC.
By:
------------------------------------------
Name: John J. Heaney
Title: Vice President
RICHMOND AMERICAN HOMES OF TEXAS,
INC.
By:
------------------------------------------
Name: John J. Heaney
Title: Vice President
RICHMOND AMERICAN HOMES OF
FLORIDA, LP.
By: RAH OF FLORIDA, INC. (formerly known
as Richmond American Homes of California
(Inland Empire), Inc.), its general
partner
By:
------------------------------------------
Name: John J. Heaney
Title: Vice President
RICHMOND AMERICAN HOMES OF
DELAWARE, INC.
By:
------------------------------------------
Name: John J. Heaney
Title: Vice President
12
RICHMOND AMERICAN HOMES OF
ILLINOIS, INC.
By:
-------------------------------------------
Name: John J. Heaney
Title: Vice President
RICHMOND AMERICAN HOMES OF
NEW JERSEY, INC.
By:
-------------------------------------------
Name: John J. Heaney
Title: Vice President
RICHMOND AMERICAN HOMES OF
PENNSYLVANIA, INC.
By:
-------------------------------------------
Name: John J. Heaney
Title: Vice President
M.D.C. LAND CORPORATION
By:
-------------------------------------------
Name: John J. Heaney
Title: Vice President
RICHMOND AMERICAN CONSTRUCTION,
INC.
By:
-------------------------------------------
Name: John J. Heaney
Title: Vice President
13
RAH TEXAS HOLDINGS, LLC
By:
-----------------------------------------
Name: John J. Heaney
Title: Vice President
RAH OF TEXAS, LP
By: Richmond American Homes of Texas, Inc.,
its general partner
By:
-----------------------------------------
Name: John J. Heaney
Title: Vice President
14
EXHIBIT A TO GUARANTY
FORM OF SUPPLEMENTAL GUARANTY
[Date]
JPMorgan Chase Bank, N.A., as Administrative Agent
for Lenders
Ladies and Gentlemen:
Reference is hereby made to (i) that certain Amended and Restated
Credit Agreement dated as of January 28, 2005, among M.D.C. Holdings, Inc., the
Lenders from time to time parties thereto ("Lenders"), and JPMorgan Chase Bank,
N.A., as Administrative Agent ("Administrative Agent") for Lenders (as amended,
restated, supplemented or otherwise modified from time to time, the "Credit
Agreement") and (ii) that certain Amended and Restated Guaranty, dated as of
January 28, 2005 , executed and delivered by the Guarantors parties thereto in
favor of Administrative Agent, for the benefit of Lenders (as amended, restated,
supplemented or otherwise modified from time to time, the "Guaranty"). Terms not
defined herein which are defined in the Credit Agreement shall have for the
purposes hereof the respective meanings provided therein.
In accordance with Section 7.11 of the Credit Agreement and
Paragraph 18 of the Guaranty, the undersigned, [GUARANTOR] ____________, a
corporation [limited partnership/limited liability company] organized under the
laws of ___________, hereby elects to be a "Guarantor" for all purposes of the
Credit Agreement and the Guaranty, respectively, effective from the date hereof.
Without limiting the generality of the foregoing, the undersigned
hereby agrees to perform all the obligations of a Guarantor under, and to be
bound in all respects by the terms of, the Guaranty, to the same extent and with
the same force and effect as if the undersigned were a direct signatory thereto.
This Supplemental Guaranty shall be construed in accordance with and
governed by the internal laws of the State of Illinois (but otherwise without
regard to the conflict of laws provisions).
IN WITNESS WHEREOF, this Supplemental Guaranty has been duly
executed by the undersigned as of the ____ day of ______, 200__.
[GUARANTOR]
By: ______________________________________
Name:
Title:
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EXHIBIT B
PROMISSORY NOTE
$______________ _______________, 2005
Chicago, Illinois
FOR VALUE RECEIVED, M.D.C. HOLDINGS, INC., a Delaware corporation
("Maker"), hereby promises and agrees to pay to the order of
__________________________________ ("Payee"), the principal sum of
_____________________________________ DOLLARS ($_____________) in lawful money
of the United States of America, or, if less than such principal amount, the
aggregate unpaid principal amount of all Advances made to Maker by the Payee
pursuant to the Credit Agreement hereinafter referenced. Such payment shall be
made on the Facility Termination Date, as defined in the Credit Agreement.
Maker shall pay interest from the date hereof on the unpaid principal
amount of this Note from time to time outstanding during the period from the
date hereof until such principal amount is paid in full at the rates, determined
in the manner, and on the dates or occurrences specified in the Credit Agreement
(as hereinafter defined).
This promissory note is one of the Notes referred to in the Amended and
Restated Credit Agreement dated as of January 28, 2005, among Maker, JPMorgan
Chase Bank, N.A., as Administrative Agent, and Lenders that are parties thereto
(as the same may be amended, modified, replaced, or renewed from time to time,
the "Credit Agreement") and is entitled to the benefits of the Credit Agreement
and the Loan Documents. Capitalized terms used in this Note without definition
shall have the same meanings as are ascribed to such terms in the Credit
Agreement.
Both principal and interest are payable to Administrative Agent for the
account of Payee pursuant to the terms of the Credit Agreement. All Advances
made by Payee pursuant to the Credit Agreement and all payments of the principal
amount of such Advances, shall be endorsed by the holder of this Note on the
schedule attached hereto. Failure to record such Advances or payment shall not
diminish any rights of Payee or relieve Makers of any liability hereunder or
under the Credit Agreement. This Note is subject to prepayment and its maturity
is subject to acceleration, in each case upon the terms provided in the Credit
Agreement.
This Note may not be modified or discharged orally, by course of dealing
or otherwise, but only by a writing duly executed by the holder hereof.
In the event that any action, suit or proceeding is brought by the holder
hereof to collect this Note, Maker agrees to pay and shall be liable for all
costs and expenses of collection, including without limitation, reasonable
attorneys' fees and disbursements.
Maker and all sureties, guarantors and/or endorsers hereof (or of any
obligation hereunder) and accommodation parties hereon (all of which, including
Maker, are each hereinafter called a "Surety") each: (a) waive any homestead or
exemption laws and right
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thereunder affecting the full collection of this Note; (b) waive any and all
formalities in connection with this Note to the maximum extent allowed by law,
including (but not limited to) demand, diligence, presentment for payment,
protest and demand, and notice of extension, dishonor, protest, demand and
nonpayment of this Note; and (c) consent that Holder may extend the time of
payment or otherwise modify the terms of payment of any part or the whole of the
debt evidenced by this Note, at the request of any other person liable hereon,
and such consent shall not alter nor diminish the liability of any person
hereon.
In addition, each Surety waives and agrees not to assert: (a) any right to
require the holder hereof to proceed against any other Surety, to proceed
against or exhaust any security for the Note, to pursue any other remedy
available to the holder hereof, or to pursue any remedy in any particular order
or manner; (b) the benefit of any statute of limitations affecting its liability
hereunder or the enforcement hereof; (c) the benefits of any legal or equitable
doctrine or principle of marshalling; (d) notice of the existence, creation or
incurring of new or additional indebtedness of Maker to the holder hereof; or
(e) any defense arising by reason of any disability or other defense of Maker or
by reason of the cessation from any cause whatsoever (other than payment in
full) of the liability of Maker for payment of this Note. Until payment in full
of this Note and the holder hereof has no obligation to make any further
advances of the proceeds hereof, no Surety shall have any right of subrogation
and each hereby waives any right to enforce any remedy which the holder hereof
now has, or may hereafter have, against Maker or any other Surety, and waives
any benefit of, and any right to participate in, any security now or hereafter
held by the holder hereof.
Maker agrees that to the extent any Surety makes any payment to the holder
hereof in connection with the indebtedness evidenced by this Note, and all or
any part of such payment is subsequently invalidated, declared to be fraudulent
or preferential, set aside or required to be repaid by Holder or paid over to a
trustee, receiver or any other entity, whether under any bankruptcy act or
otherwise (any such payment is hereinafter referred to as a "Preferential
Payment"), then the indebtedness of Maker under this Note shall continue or
shall be reinstated, as the case may be, and, to the extent of such payment or
repayment by the holder hereof, the indebtedness evidenced by this Note or part
thereof intended to be satisfied by such Preferential Payment shall be revived
and continued in full force and effect as if said Preferential Payment had not
been made.
This Note has been delivered in the City of Chicago and State of Illinois,
and shall be enforced under and governed by the laws of the State of Illinois
applicable to contracts made and to be performed entirely within said state,
without references to any choice or conflicts of law principles.
M.D.C. HOLDINGS, INC., a Delaware
corporation
By: _______________________________
Name: John J. Heaney
Title: Senior Vice President
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