$900,000,000 REVOLVING CREDIT FACILITY
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
by and among
X. XXXXXXXXX ENTERPRISES, INC.
(as the Borrower)
HOVNANIAN ENTERPRISES, INC.
(as a Guarantor)
and
THE LENDERS PARTY HERETO
and
PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent
Bank of America, N.A.
Wachovia Bank, National Association,
as
Syndication Agents
and
Bank One, NA, KeyBank, National Association and The Royal Bank of Scotland
plc,
as
Documentation Agents
PNC Capital Markets, LLC,
Wachovia Securities, Inc., and
Banc of America Securities LLC
as
Joint Lead Arrangers and Joint Book Runners
Guaranty Bank, SunTrust Bank, U.S. Bank National Association
as
Co-Managing Agents
Washington Mutual Bank, FA, Comerica Bank, BNP Paribas, Calyon New York
Branch
as
Co-Agents
Amended and Restated June 18, 2004
TABLE OF CONTENTS
Section
Page
1. CERTAIN DEFINITIONS 1
1.1 Certain Definitions. 1
1.2 Construction. 19
1.2.1. Number; Inclusion. 19
1.2.2. Determination. 20
1.2.3. Agent's Discretion and Consent. 20
1.2.4. Documents Taken as a Whole. 20
1.2.5. Headings. 20
1.2.6. Implied References to this Agreement. 20
1.2.7. Persons. 20
1.2.8. Modifications to Documents. 20
1.2.9. From, To and Through. 20
1.2.10. Shall; Will. 20
1.3 Accounting Principles. 20
2. REVOLVING CREDIT AND SWING LOAN FACILITIES 21
2.1 Revolving Credit Commitments. 21
2.1.1. Revolving Credit Loans. 21
2.1.2. Swing Loan Commitment. 21
2.1.3 Voluntary Reduction of Commitment 22
2.2 Nature of Lenders' Obligations with Respect to Revolving Credit
Loans. 22
2.3 Commitment Fees. 22
2.4 Revolving Credit Loan Requests; Swing Loan Requests. 22
2.4.1. Revolving Credit Loan Requests. 22
2.4.2. Swing Loan Requests. 23
2.5 Making Revolving Credit Loans and Swing Loans. 23
2.5.1. Generally. 23
2.5.2. Making Swing Loans. 24
2.6 Swing Loan Note. 24
2.7 Use of Proceeds. 24
2.8 Borrowings to Repay Swing Loans. 24
2.9 Letter of Credit Subfacility. 24
2.9.1. Issuance of Letters of Credit. 25
2.9.2. Letter of Credit Fees. 25
2.9.3. Disbursements, Reimbursement. 25
2.9.4. Repayment of Participation Advances. 26
2.9.5. Documentation. 27
2.9.6. Determinations to Honor Drawing Requests. 27
2.9.7. Nature of Participation and Reimbursement Obligations. 27
2.9.8. Indemnity. 28
2.9.9. Liability for Acts and Omissions. 29
2.9.10. Sharing Letter of Credit Documentation. 29
2.10 Extension by Lenders of the Expiration Date. 30
2.10.1. Requests; Approval by All Lenders. 30
2.10.2. Approval by 80% Lenders. 30
2.11 Designation of Subsidiaries and Release of Guarantors. 31
2.11.1. Release of Guarantors. 31
2.11.2. Designation of Non-Restricted Person. 31
2.11.3. Automatic Designation of Non-Restricted Person. 31
2.11.4. Designation of Restricted Subsidiary. 32
2.12 Increase in Commitments. 32
2.12.1 Increasing Lenders and New Lenders. 32
2.12.2 Treatment of Outstanding Loans and Letters of Credit. 33
3. INTEREST RATES 33
3.1 Interest Rate Options. 33
3.1.1. Revolving Credit Interest Rate Options. 34
3.1.2. Rate Quotations. 34
3.2 Interest Periods. 34
3.3 Interest After Default. 34
3.3.1. Default Rate. 34
3.3.2. Acknowledgment. 35
3.4 LIBO-Rate Unascertainable; Illegality; Increased Costs; Deposits Not
Available. 35
3.4.1. Unascertainable. 35
3.4.2. Illegality; Increased Costs; Deposits Not Available. 35
3.4.3. Agent's and Lender's Rights. 35
3.5 Selection of Interest Rate Options. 36
4. PAYMENTS 36
4.1 Payments. 36
4.2 Pro Rata Treatment of Lenders. 36
4.3 Interest Payment Dates. 37
4.4 Voluntary Prepayments. 37
4.4.1. Right to Prepay. 37
4.4.2. Replacement of a Lender. 38
4.4.3. Change of Lending Office. 38
4.5 Mandatory Payments. 38
4.6 Additional Compensation in Certain Circumstances. 38
4.6.1. Increased Costs or Reduced Return Resulting from Taxes,
Reserves, Capital Adequacy Requirements, Expenses, Etc. 39
4.6.2. Indemnity. 39
4.7 Notes. 40
4.8 Settlement Date Procedures. 40
5. REPRESENTATIONS AND WARRANTIES 40
5.1 Representations and Warranties. 40
5.1.1. Organization and Qualification. 40
5.1.2. Subsidiaries. 41
5.1.3. Power and Authority. 41
5.1.4. Validity and Binding Effect. 41
5.1.5. No Conflict. 41
5.1.6. Litigation. 42
5.1.7. Title to Properties. 42
5.1.8. Financial Statements. 42
5.1.9. Use of Proceeds; Margin Stock. 43
5.1.10. Full Disclosure. 43
5.1.11. Taxes. 43
5.1.12. Consents and Approvals. 43
5.1.13. No Event of Default; Compliance with Instruments. 44
5.1.14. Patents, Trademarks, Copyrights, Licenses, Etc. 44
5.1.15. Insurance. 44
5.1.16. Compliance with Laws. 44
5.1.17. Burdensome Restrictions. 44
5.1.18. Investment Companies; Regulated Entities. 44
5.1.19. Plans and Benefit Arrangements. 44
5.1.20. Employment Matters. 45
5.1.21. Environmental Matters. 45
5.1.22. Senior Debt Status. 46
5.1.23 Anti-Terrorism Laws. 46
5.2 Continuation of Representations. 47
6. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT 47
6.1 First Loans and Letters of Credit. 47
6.1.1. Officer's Certificate. 47
6.1.2. Incumbency Certificate. 47
6.1.3. Delivery of Loan Documents . 48
6.1.4. Opinion of Counsel. 48
6.1.5. Legal Details. 48
6.1.6. Payment of Fees. 48
6.1.7. Consents. 48
6.1.8. Officer's Certificate Regarding MACs. 48
6.1.9. No Actions or Proceedings. 48
6.1.10 Lien Search. 48
6.2 Each Additional Loan or Letter of Credit. 48
7. COVENANTS 49
7.1 Affirmative Covenants. 49
7.1.1. Preservation of Existence, Etc. 49
7.1.2. Payment of Liabilities, Including Taxes, Etc. 49
7.1.3. Maintenance of Insurance. 49
7.1.4. Maintenance of Properties and Leases. 50
7.1.5. Maintenance of Patents, Trademarks, Etc. 50
7.1.6. Visitation Rights. 50
7.1.7. Keeping of Records and Books of Account. 50
7.1.8. Plans and Benefit Arrangements. 50
7.1.9. Compliance with Laws. 51
7.1.10. Use of Proceeds. 51
7.1.11 Anti-Terrorism Laws. 51
7.2 Negative Covenants. 51
7.2.1. Indebtedness. 51
7.2.2. Liens. 51
7.2.3. Loans and Investments. 52
7.2.4. Liquidations, Mergers, Consolidations, Acquisitions. 52
7.2.5. Dispositions of Assets or Subsidiaries; Sale and Leaseback. 52
7.2.6. Restricted Payments; Restricted Investments. 53
7.2.7. Subsidiaries, Partnerships and Joint Ventures. 53
7.2.8. Continuation of or Change in Business. 54
7.2.9. Plans and Benefit Arrangements. 54
7.2.10. Borrowing Base. 54
7.2.11. Minimum ATNW. 54
7.2.12. Leverage Ratio. 54
7.2.13. Fixed Charge Coverage Ratio. 54
7.2.14. Inventory Limits. 54
7.2.15. Fiscal Year. 55
7.2.16. Changes in Subordinated Debt Documents. 55
7.3 Reporting Requirements. 55
7.3.1. Quarterly Financial Statements. 55
7.3.2. Annual Financial Statements. 55
7.3.3. Certificates of the Borrower. 56
7.3.4. Notice of Default. 57
7.3.5. Notice of Litigation. 57
7.3.6. Notice of Change in Debt Rating. 57
7.3.7. Budgets, Forecasts, Other Reports and Information. 57
7.3.8. Notices Regarding Plans and Benefit Arrangements. 57
8. DEFAULT 58
8.1 Events of Default. 58
8.1.1. Payments Under Loan Documents. 59
8.1.2. Breach of Warranty. 59
8.1.3. Breach of Certain Negative Covenants. 59
8.1.4. Breach of Other Covenants. 59
8.1.5. Defaults in Other Agreements or Indebtedness. 59
8.1.6. Final Judgments or Orders. 59
8.1.7. Loan Document Unenforceable. 59
8.1.8. Uninsured Losses; Proceedings Against Assets. 60
8.1.9. Notice of Lien or Assessment. 60
8.1.10. Insolvency. 60
8.1.11. Events Relating to Plans and Benefit Arrangements. 60
8.1.12. Cessation of Business. 61
8.1.13. Change of Control. 61
8.1.14. Involuntary Proceedings. 61
8.1.15. Voluntary Proceedings. 61
8.2 Consequences of Event of Default. 61
8.2.1. Events of Default Other Than Bankruptcy, Insolvency or
Reorganization Proceedings. 62
8.2.2. Bankruptcy, Insolvency or Reorganization Proceedings. 62
8.2.3. Set-off. 62
8.2.4. Suits, Actions, Proceedings. 63
8.2.5. Application of Proceeds. 63
8.2.6. Other Rights and Remedies. 63
9. THE AGENT 63
9.1 Appointment. 63
9.2 Delegation of Duties. 63
9.3 Nature of Duties; Independent Credit Investigation. 64
9.4 Actions in Discretion of Agent; Instructions From the Lenders. 64
9.5 Reimbursement and Indemnification of Agent by the Borrower. 65
9.6 Exculpatory Provisions; Limitation of Liability. 65
9.7 Reimbursement and Indemnification of Agent by Lenders. 66
9.8 Reliance by Agent. 66
9.9 Notice of Default. 67
9.10 Notices. 67
9.11 Lenders in Their Individual Capacities; Agents in its Individual
Capacity. 67
9.12 Holders of Notes. 67
9.13 Equalization of Lenders. 68
9.14 Successor Agent. 68
9.15 Agent's Fees. 68
9.16 Availability of Funds. 68
9.17 Calculations. 69
9.18 Beneficiaries. 69
10. MISCELLANEOUS 69
10.1 Modifications, Amendments or Waivers. 69
10.1.1. Increase of Commitment. 69
10.1.2. Extension of Payment; Reduction of Principal, Interest or Fees;
Modification of Terms of Payment. 70
10.1.3. Miscellaneous 70
10.2 No Implied Waivers; Cumulative Remedies; Writing Required. 70
10.3 Reimbursement and Indemnification of Lenders by the Borrower; Taxes.
70
10.4 Holidays. 71
10.5 Funding by Branch, Subsidiary or Affiliate. 71
10.5.1. Notional Funding. 71
10.5.2. Actual Funding. 72
10.6 Notices. 72
10.7 Severability. 73
10.8 Governing Law. 73
10.9 Prior Understanding. 73
10.10 Duration; Survival. 73
10.11 Successors and Assigns. 73
10.12 Confidentiality. 75
10.12.1. General. 75
10.12.2. Sharing Information With Affiliates of the Lenders. 75
10.13 Counterparts. 75
10.14 Agent's or Lender's Consent. 75
10.15 Exceptions. 76
10.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL. 76
10.17 Certifications From Lenders and Participants. 76
10.17.1 Tax Withholding Clause. 76
10.18 Joinder of Guarantors. 77
10.19 Concerning Agent Terms. 77
10.20 Ratification of Notes and Loan Documents and Existing Obligations.
78
10.21 No Reliance on Agent's Customer Identification Program. 78
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
SCHEDULE 1.1(A) - APPLICABLE MARGIN
SCHEDULE 1.1(B) - COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES
SCHEDULE 1.1(C) - LISTING OF RESTRICTED SUBSIDIARIES, JOINT VENTURES,
MORTGAGE SUBSIDIARIES AND NON-RESTRICTED PERSONS AND CORPORATE OFFICE
SUBSIDIARIES
SCHEDULE 1.1(E) - INCOME PRODUCING PROPERTIES
SCHEDULE 1.1(P) - PERMITTED LIENS
SCHEDULE 2.9.2(A) - FLEET LETTERS OF CREDIT
SCHEDULE 2.9.1(B) - EXISTING LETTERS OF CREDIT
SCHEDULE 5.1.2 - SUBSIDIARIES
SCHEDULE 5.1.12 - CONSENTS AND APPROVALS
EXHIBITS
EXHIBIT 1.1(A) - ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT 1.1(G)(1) - GUARANTY AGREEMENT
EXHIBIT 1.1(G)(2) - GUARANTOR JOINDER
EXHIBIT 1.1(R) - REVOLVING CREDIT NOTE
EXHIBIT 1.1(S) - SWING LOAN NOTE
EXHIBIT 2.4.1 - LOAN REQUEST
EXHIBIT 2.4.2 - SWING LOAN REQUEST
EXHIBIT 2.12.1-1 - REVOLVING CREDIT COMMITMENT INCREASE AGREEMENT
EXHIBIT 2.12.1-2 - LENDER JOINDER AND ASSUMPTION AGREEMENT
EXHIBIT 7.3.3.1 - QUARTERLY COMPLIANCE CERTIFICATE
EXHIBIT 7.3.3.2 - BORROWING BASE CERTIFICATE
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
THIS FOURTH AMENDED AND RESTATED CREDIT AGREEMENT is dated June 18, 2004
and is made by and among X. XXXXXXXXX ENTERPRISES, INC., a California
corporation (the "Borrower"), HOVNANIAN ENTERPRISES, INC., a Delaware
corporation ("Hovnanian" and a "Guarantor"), the LENDERS (as hereinafter
defined), and PNC BANK, NATIONAL ASSOCIATION, in its capacity as
administrative agent for the Lenders under this Agreement (hereinafter
referred to in such capacity as the "Agent").
WITNESSETH:
WHEREAS, the Lenders provided a $590,000,000 revolving credit facility to
the Borrower pursuant to an Amended and Restated Credit Agreement dated
June 19, 2003 among the parties hereto (the "Prior Credit Agreement");
WHEREAS, the Borrower and the Lenders have agreed that the Prior Credit
Agreement be amended and restated as provided herein;
WHEREAS, the revolving credit provided hereunder shall be used to refinance
existing indebtedness, provide for letters of credit and provide working
capital and funds for general corporate purposes;
NOW, THEREFORE, the parties hereto, in consideration of their mutual
covenants and agreements hereinafter set forth and intending to be legally
bound hereby, covenant and agree as follows:
1. CERTAIN DEFINITIONS
1.1 Certain Definitions.
In addition to words and terms defined elsewhere in this Agreement, the
following words and terms shall have the following meanings, respectively,
unless the context hereof clearly requires otherwise:
Additional Lender shall have the meaning assigned to that term in Section
10.11(b) Successors and Assigns.
Adjusted Operating Income shall mean for any period the sum of (x)
consolidated net income of Hovnanian for such period, (y) to the extent
deducted in arriving at such net income, consolidated income taxes,
consolidated interest expense, Letter of Credit Fees, depreciation,
amortization, non-cash valuation charges or adjustments and (z) cash
distributions received by any Loan Party from Non-Restricted Persons during
such period. Adjusted Operating Income shall exclude net income or loss of
Non-Restricted Persons.
Adjusted Tangible Net Worth (or ATNW) shall mean (x) consolidated
shareholders equity of Hovnanian minus, without duplication (y) (i)
Intangibles, (ii) the Dollar amount of Restricted Investments and (iii)
equity (comprising "cost" according to GAAP minus the amount of debt
secured by applicable mortgages) in residential inventory properties
purchased with the proceeds of, and secured by, Purchase Money Mortgages,
all as calculated and consolidated in accordance with GAAP.
Affiliate as to any Person shall mean any other Person (i)which directly or
indirectly controls, is controlled by, or is under common control with such
Person, (ii)which beneficially owns or holds 10% or more of any class of
the voting or other equity interests of such Person, or (iii) 10% or more
of any class of voting interests or other equity interests of which is
beneficially owned or held, directly or indirectly, by such Person.
Control, as used in this definition, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management
or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise, including the power to elect a
majority of the directors or trustees of a corporation or trust, as the
case may be.
Agent shall mean PNC Bank, National Association, and its successors and
assigns.
Agent's Fees shall have the meaning assigned to that term in Section 9.15
[Agent's Fees].
Agent's Letters shall have the meaning assigned to that term in Section
9.15 [Agent's Fees].
Agreement shall mean this Credit Agreement, as the same may be supplemented
or amended from time to time, including all schedules and exhibits.
Annual Statements shall have the meaning assigned to that term in Section
5.1.8((i) [Historical Statements]).
Anti-Terrorism Laws shall mean any Laws relating to terrorism or money
laundering, including Executive Order No. 13224, the USA Patriot Act, the
Laws comprising or implementing the Bank Secrecy Act, and the Laws
administered by the United States Treasury Department's Office of Foreign
Asset Control (as any of the foregoing Laws may from time to time be
amended, renewed, extended, or replaced).
Applicable Commitment Fee Rate shall mean the percentage rate per annum
based on the Leverage Ratio then in effect according to the pricing grid on
Schedule 1.1(A) below the heading "Commitment Fee." The Applicable
Commitment Fee Rate shall be computed in accordance with the parameters set
forth on Schedule 1.1(A).
Applicable Letter of Credit Fee Rate shall mean the Applicable Margin under
the Revolving Credit LIBO-Rate Option less 12.5 basis points.
Applicable Margin shall mean, as applicable:
(A) the percentage spread to be added to Base Rate under the Revolving
Credit Base Rate Option based on the Leverage Ratio and level of Debt
Rating then in effect according to the pricing grid on Schedule 1.1(A)
below the heading "Base Rate Margin,"
(B) the percentage spread to be added to LIBO-Rate under the Revolving
Credit LIBO-Rate Option based on the Leverage Ratio and level of Debt
Rating then in effect according to the pricing grid on Schedule 1.1(A)
below the heading "Libor Margin".
The Applicable Margin shall be computed in accordance with the parameters
set forth on Schedule 1.1(A).
Assignee Lender shall have the meaning assigned to such term in Section
2.10.2 [Approval by 80% Lenders].
Assignment and Assumption Agreement shall mean an Assignment and Assumption
Agreement by and among a Purchasing Lender, a Transferor Lender and the
Agent, as Agent and on behalf of the remaining Lenders, substantially in
the form of Exhibit 1.1(A).
Authorized Officer shall mean those individuals, designated by written
notice to the Agent from the Borrower, authorized to execute notices,
reports and other documents on behalf of the Loan Parties required
hereunder. The Borrower may amend such list of individuals from time to
time by giving written notice of such amendment to the Agent.
Average Daily Usage Percentage for any period shall mean the average daily
ratio (expressed as a percentage) of the following for such period: (1) the
Revolving Facility Usage to (2) the Revolving Credit Commitments.
Base Rate shall mean the greater of (i) the interest rate per annum
announced from time to time by the Agent at its Principal Office as its
then prime rate, which rate may not be the lowest rate then being charged
commercial borrowers by the Agent, or (ii)the Federal Funds Open Rate plus
1/2% per annum.
Base Rate Option shall mean the Revolving Credit Base Rate Option.
Benefit Arrangement shall mean at any time an "employee benefit plan,"
within the meaning of Section 3(3) of ERISA, which is neither a Plan nor a
Multiemployer Plan and which is maintained, sponsored or otherwise
contributed to by the Borrower.
Blocked Person shall have the meaning assigned to such term in Section
5.1.23.
Borrower shall mean X. Xxxxxxxxx Enterprises, Inc., a corporation organized
and existing under the laws of the State of California and wholly-owned by
Hovnanian.
Borrowing Base shall mean at any time, the Dollar amount equal to the sum
of the following items, each owned free and clear of all Liens (except
Permitted Liens of the type described in items (i), (ii), (iii), (iv), (v)
and (vi) of the definition of "Permitted Liens") by the Borrower, Hovnanian
or a Restricted Subsidiary:
(i) 100% of Excess Cash;
(ii) 95% of Sold Homes;
(iii) 70% of Unsold Homes; and
(iv) 55% of Finished Lots and Land Under Development;
provided however that the Borrowing Base shall exclude in all events the
Dollar amount of property located outside of the United States of America;
Unentitled Land;
(iii) any residential or commercial property owned by Hovnanian or any
Subsidiary which is leased or held for purposes of leasing primarily to
unaffiliated third parties; and
(iv) properties subject to any Purchase Money Mortgage.
The determination of the Agent in respect of the Borrowing Base shall be
conclusive absent manifest error.
Borrowing Base Certificate shall mean the Borrowing Base Certificate in the
form of Exhibit 7.3.3.2 duly completed and delivered by the Borrower
pursuant to Section 7.3.3.2 [Borrowing Base Certificate].
Borrowing Date shall mean, with respect to any Loan, the date for the
making thereof or the renewal or conversion thereof at or to the same or a
different Interest Rate Option, which shall be a Business Day.
Borrowing Tranche shall mean specified portions of Loans outstanding as
follows: (i)any Loans to which a LIBO-Rate Option applies which become
subject to the same Interest Rate Option under the same Loan Request by the
Borrower and which have the same Interest Period shall constitute one
Borrowing Tranche, and (ii)all Loans to which a Base Rate Option applies
shall constitute one Borrowing Tranche.
Business Day shall mean any day other than a Saturday or Sunday or a legal
holiday on which commercial banks are authorized or required to be closed
for business at the Principal Office and if the applicable Business Day
relates to any Loan to which the LIBO-Rate Option applies, such day must
also be a day on which dealings are carried on in the London interbank
market.
Capital Stock Retirement shall mean any repurchase, redemption, acquisition
or retirement of any capital stock or other ownership interest of Hovnanian
or of any warrants, options or other rights to purchase such capital stock
or other ownership interest; provided that "Capital Stock Retirement" shall
not include the conversion or exchange of any of the foregoing into shares
of capital stock of Hovnanian.
Closing Date shall mean June 18, 2004, which shall be the date hereof.
Commitment shall mean as to any Lender its Revolving Credit Commitment and,
in the case of the Agent, its Revolving Credit Commitment and its Swing
Loan Commitment; and Commitments shall mean the aggregate of the Revolving
Credit Commitments of all of the Lenders, including the Swing Loan
Commitment of the Agent.
Commitment Fee shall have the meaning assigned to that term in Section 2.3
[Commitment Fees].
Compliance Certificate shall have the meaning assigned to such term in
Section 7.3.3 [Certificates of the Borrower].
Contamination shall mean the presence or release or threat of release of
Regulated Substances in, on, under or emanating to or from any of the
Property, which pursuant to Environmental Laws requires notification or
reporting to an Official Body, or which pursuant to Environmental Laws
requires the investigation, cleanup, removal, remediation, containment,
abatement of or other response action or which otherwise constitutes a
violation of Environmental Laws.
Corporate Office Subsidiary shall mean any Subsidiary that owns, as its
primary asset, an office building which is occupied, in whole or in part,
by Hovnanian or one or more of its Subsidiaries. Any such Corporate
Office Subsidiary may be a Restricted Subsidiary or Non-Restricted Person
in accordance with the terms of this Agreement. The Corporate Office
Subsidiaries as of the date hereof are identified as such on Exhibit
1.1(C).
Debt Rating shall mean the rating of Hovnanian's senior unsecured long-term
debt by each of Standard & Poor's, Xxxxx'x and Fitch.
Default Rate shall have the meaning assigned to that term in Section 3.3.l
[Default Rate].
Dividends shall mean any dividend or distribution by a Person in respect of
its capital stock or ownership interests, whether in cash, property or
securities.
Dollar, Dollars, U.S. Dollars and the symbol $ shall mean lawful money of
the United States of America.
Drawing Date shall mean each date that an amount is paid by the Letter of
Credit Lender under any Letter of Credit.
Dwelling Unit shall mean a residential housing unit held for sale by a Loan
Party.
Environmental Complaint shall mean any written complaint by any Person or
Official Body setting forth a cause of action for personal injury or
property damage, natural resource damage, contribution or indemnity for
response costs, civil or administrative penalties, criminal fines or
penalties, or declaratory or equitable relief arising under any
Environmental Laws or under any order, notice of violation, citation,
subpoena, request for information or other written notice or demand of any
type issued by an Official Body pursuant to any Environmental Laws.
Environmental Laws shall mean all federal, state, local and foreign Laws
and any consent decrees, settlement agreements, judgments, orders,
directives, policies or programs issued by or entered into with an Official
Body pertaining or relating to: (i)pollution or pollution control;
(ii)protection of human health or the environment; (iii)employee safety in
the workplace; (iv)the presence, use, management, generation, manufacture,
processing, extraction, treatment, recycling, refining, reclamation,
labeling, transport, storage, collection, distribution, disposal or release
or threat of release of Regulated Substances; (v)the presence of
Contamination; (vi)the protection of endangered or threatened species; and
(vii) the protection of Environmentally Sensitive Areas.
Environmentally Sensitive Area shall mean (i) any wetland as defined by
applicable Environmental Laws; (ii) any area designated as a coastal zone
pursuant to applicable Laws, including Environmental Laws; (iii) any area
of historic or archeological significance or scenic area as defined or
designated by applicable Laws, including Environmental Laws; (iv)habitats
of endangered species or threatened species as designated by applicable
Laws, including Environmental Laws; or (v) a floodplain or other flood
hazard area as defined pursuant to any applicable Laws.
ERISA shall mean the Employee Retirement Income Security Act of 1974, as
the same may be amended or supplemented from time to time, and any
successor statute of similar import, and the rules and regulations
thereunder, as from time to time in effect.
ERISA Group shall mean, at any time, the Borrower and any entity (whether
or not incorporated) that is under common control with the Borrower within
the meaning of Section 4001 of ERISA, or the Borrower l and all other
entities which, together with the Borrower, are treated as a single
employer under Sections 414 (b) or (c) of the Internal Revenue Code.
Event of Default shall mean any of the events described in Section 8.1
[Events of Default] and referred to therein as an "Event of Default."
Excess Cash shall mean cash that would appear on a consolidated balance
sheet of Hovnanian (to the extent not pledged or encumbered in any way) in
excess of $10,000,000.
Executive Order No. 13224 shall mean the Executive Order No. 13224 on
Terrorist Financing, effective September 24, 2001, as the same has been,
or shall hereafter be, renewed, extended, amended or replaced.
Existing Lenders shall have the meaning assigned to such term in Section
2.12 [Increases in Revolving Credit Commitments.]
Existing Related Business shall mean any mortgage services, income property
management and title insurance businesses as such businesses are operated
as of the Closing Date.
Expiration Date shall mean, with respect to the Revolving Credit
Commitments, July 30, 2008 as such may be extended pursuant to Section 2.10
[Extension by Lenders of the Expiration Date].
Extending Lender shall have the meaning assigned to such term in
Section 2.10.2 [Approval by 80% Lender].
Federal Funds Effective Rate for any day shall mean the rate per annum
(based on a year of 360 days and actual days elapsed and rounded upward to
the nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York
(or any successor) on such day as being the weighted average of the rates
on overnight federal funds transactions arranged by federal funds brokers
on the previous trading day, as computed and announced by such Federal
Reserve Bank (or any successor) in substantially the same manner as such
Federal Reserve Bank computes and announces the weighted average it refers
to as the "Federal Funds Effective Rate" as of the date of this Agreement;
provided, if such Federal Reserve Bank (or its successor) does not announce
such rate on any day, the "Federal Funds Effective Rate" for such day shall
be the Federal Funds Effective Rate for the last day on which such rate was
announced.
Federal Funds Open Rate shall mean the rate per annum determined by the
Agent in accordance with its usual procedures (which determination shall be
conclusive absent manifest error) to be the "open" rate for federal funds
transactions as of the opening of business for federal funds transactions
among members of the Federal Reserve System arranged by federal funds
brokers on such day, as quoted by Xxxxxx Guybutler, any successor entity
thereto, or any other broker selected by the Agent, as set forth on the
applicable Telerate display page; provided, however; that if such day is
not a Business Day, the Federal Funds Open Rate for such day shall be the
"open rate" on the immediately preceding Business Day, or if no such rate
shall be quoted by a Federal funds broker at such time, such other rate as
determined by the Agent in accordance with its usual procedures.
Financial Projections shall have the meaning assigned to that term in
Section 5.1.8((ii)) [Financial Projections].
Finished Lots and Land Under Development shall mean the Dollar amount of
the lower of (x) actual cost (including land costs and capitalized expenses
relating thereto) or (y) the market value (determined in accordance with
GAAP) of any land owned by a Loan Party that has been granted Preliminary
Approvals until a time which is the earlier of when (x) it is "Unsold
Homes" and (y) it is "Sold Homes".
Fitch shall mean Fitch IBCA, Duff & Xxxxxx, a division of Fitch, Inc., and
its sucessors.
Fixed Charge Coverage Ratio shall mean the ratio, as of any date of
determination, of (x) Adjusted Operating Income for the prior twelve (12)
months to (y) four (4) multiplied by Fixed Charges for the most-recently
ended fiscal quarter.
Fixed Charges shall mean the sum of (i) interest cost incurred on all
Senior Homebuilding Indebtedness over the past fiscal quarter; (ii)
interest cost incurred on the Subordinated Debt over the past fiscal
quarter; (iii) 50% of the interest cost incurred on all Purchase Money
Mortgages over the past fiscal quarter; (iv) Letter of Credit Fees accrued
over the past fiscal quarter; and (v) the interest component of capitalized
leases over the past fiscal quarter.
GAAP shall mean generally accepted accounting principles as are in effect
from time to time, subject to the provisions of Section 1.3 [Accounting
Principles], and applied on a consistent basis both as to classification of
items and amounts.
Governmental Acts shall have the meaning assigned to that term in Section
2.9.8 [Indemnity].
Guarantor shall mean each of the parties to the Guaranty Agreement (and
designated as a "Guarantor" on Schedule 1.1(C)) and each other Person which
joins the Guaranty Agreement as a Guarantor after the date hereof pursuant
to Section 10.18 [Joinder of Guarantors]. As of the Closing Date,
Hovnanian shall be a Guarantor and all Restricted Subsidiaries other than
the Borrower shall be Guarantors.
Guarantor Joinder shall mean a joinder by a Person as a Guarantor under the
Guaranty Agreement in the form of Exhibit 1.1(G)(2).
Guaranty of any Person shall mean any obligation of such Person
guaranteeing or in effect guaranteeing any Indebtedness of any other Person
in any manner, whether directly or indirectly.
Guaranty Agreement shall mean the Amended and Restated Guaranty and
Suretyship Agreement dated the Closing Date in the form attached as Exhibit
1.1(G)(1) hereto and executed and delivered by each of the Guarantors to
the Agent for the benefit of the Lenders, as supplemented by joinders
delivered from time to time in respect of new Guarantors.
Hedge Agreement shall mean, as to any Person, any swap, cap, collar or
similar arrangement entered into by such Person providing for protection
against fluctuations in interest rates or currency exchange rates or the
exchange of nominal interest obligations, either generally or under
specific contingencies.
Hedge Agreement Termination Value shall mean, in respect of any one or more
Hedge Agreements, after taking into account the effect of any legally
enforceable netting agreement relating to such Hedge Agreements, (a) for
any date on or after the date such Hedge Agreements have been closed out
ant termination value(s) determined in accordance therewith, such
termination value(s), and (b) for any date prior to the date referenced in
clause (a), the amount(s) determined as the xxxx-to-market or other readily
available quotations provided by any recognized dealer in such Hedge
Agreements (which may include a Lender or any Affiliate of a Lender).
High Leverage Period shall mean any fiscal quarter for which the Leverage
Ratio as of the end date of such quarter (1) exceeds 2.15 to 1.00 on such
date and such date is on or before October 31, 2004, or (2) exceeds 2.10 to
1.0 and such date is after October 31, 2004.
Historical Statements shall have the meaning assigned to that term in
Section 5.1.8((i)) [Historical Statements].
Homebuilding Indebtedness shall mean the sum of (x) Senior Homebuilding
Indebtedness and (y) Subordinated Debt.
Hovnanian shall mean Hovnanian Enterprises, Inc., a Delaware corporation,
shares of whose Class A Common Stock are registered pursuant to the
Securities Exchange Act of 1934.
Indebtedness shall mean, as to any Person at any time, any and all
indebtedness, obligations or liabilities (whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, or
joint or several) of such Person for or in respect of: (i)borrowed money,
(ii)amounts raised under or liabilities in respect of any note purchase or
acceptance credit facility, (iii)reimbursement obligations (contingent or
otherwise) under any letter of credit, (iv) all net obligations under any
Hedge Agreement (measured as the Hedge Agreement Termination Value thereof)
(v)any other transaction (including forward sale or purchase agreements,
capitalized leases and conditional sales agreements) having the commercial
effect of a borrowing of money entered into by such Person to finance its
operations or capital requirements (but not including trade payables and
accrued expenses incurred in the ordinary course of business which are not
more than ninety (90) days past due or that are being contested in good
faith by appropriate proceedings), if and to the extent any of any of the
foregoing in this item (v) would appear as a liability on the balance sheet
of such Person prepared on a consolidated basis in accordance with GAAP, or
(vi)any Guaranty of Indebtedness for borrowed money.
Ineligible Security shall mean any security which may not be underwritten
or dealt in by member banks of the Federal Reserve System under Section 16
of the Laundering Act of 1933 (12 U.S.C. Section 24, Seventh), as amended.
Insolvency Proceeding shall mean, with respect to any Person, (a)a case,
action or proceeding with respect to such Person (i)before any court or any
other Official Body under any bankruptcy, insolvency, reorganization or
other similar Law now or hereafter in effect, or (ii)for the appointment of
a receiver, liquidator, assignee, custodian, trustee, sequestrator,
conservator (or similar official) of any Loan Party or otherwise relating
to the liquidation, dissolution, winding-up or relief of such Person, or
(b)any general assignment for the benefit of creditors, composition,
marshaling of assets for creditors, or other, similar arrangement in
respect of such Person's creditors generally or any substantial portion of
its creditors undertaken under any Law.
Intangibles shall mean all patents, patent applications, copyrights,
trademarks, tradenames, goodwill, organization expenses and other like
items of Hovnanian and its Subsidiaries which are treated as intangibles
under GAAP.
Interest Period shall mean the period of time selected by the Borrower in
connection with (and to apply to) any election permitted hereunder by the
Borrower to have Revolving Credit Loans bear interest under the LIBO-Rate
Option. Subject to the last sentence of this definition, such period shall
be one, two, three or six Months if Borrower selects the LIBO-Rate Option.
Such Interest Period shall commence on the effective date of such Interest
Rate Option, which shall be (i) the Borrowing Date if the Borrower is
requesting new Loans, or (ii) the date of renewal of or conversion to the
LIBO-Rate Option if the Borrower is renewing or converting to the LIBO-Rate
Option applicable to outstanding Loans. Notwithstanding the second
sentence hereof: (A) any Interest Period which would otherwise end on a
date which is not a Business Day shall be extended to the next succeeding
Business Day unless such Business Day falls in the next calendar month, in
which case such Interest Period shall end on the next preceding Business
Day, and (B) the Borrower shall not select, convert to or renew an Interest
Period for any portion of the Loans that would end after the Expiration
Date.
Interest Rate Option shall mean any LIBO-Rate Option or Base Rate Option.
Internal Revenue Code shall mean the Internal Revenue Code of 1986, as the
same may be amended or supplemented from time to time, and any successor
statute of similar import, and the rules and regulations thereunder, as
from time to time in effect.
Investment shall mean any loan or advance to or on behalf of, or purchase,
acquisition or ownership of any stock, bonds, notes or securities of, or
any partnership interest (whether general or limited) or limited liability
company interest in, or any other similar investment or interest in, or any
capital contribution made to, any other Person, or any agreement to become
or remain liable to do any of the foregoing.
Investment in Related Business shall mean the Investments by any of
Hovnanian and the Restricted Subsidiaries in (i) income-producing
properties other than those listed on Schedule 1.1E; or (ii ) Existing
Related Businesses.
Investment Grade Level shall mean, with respect to the rating of
Hovnanian's senior unsecured long-term debt by any of Standard & Poor's,
Moody's or Fitch, a rating at or above the following level by such rating
agency:
Rating Agency Minimum Level for "Investment
Grade"
Rating
Standard & Poor's BBB-
Moody's Baa3
Fitch BBB-
Investment Grade Period shall mean the period commencing on the date on
which the Borrower delivers to the Administrative Agent evidence
satisfactory to the Administrative Agent that Hovnanian's senior unsecured
long-term debt is rated at or above the Investment Grade Level by at least
two of any of the three rating agencies listed below and shall terminate on
the date on which Hovnanian's senior unsecured long-term debt cease to be
rated at the Investment Grade Level or higher by at least two of such
rating agencies: (1) Xxxxx'x, (2) Standard & Poor's and (3) Fitch.
Joint Ventures shall mean any Person in whom a Loan Party has an ownership
interest and which is not a "Subsidiary" as defined in this Agreement.
Each of the Joint Ventures as of the Closing Date is listed on Schedule
1.1(C).
Keep-Well Agreement shall have the meaning assigned to such term in the
definition of Senior Homebuilding Indebtedness.
Labor Contracts shall mean all employment agreements, employment contracts,
collective bargaining agreements and other agreements among any Loan Party
or Subsidiary of a Loan Party and its employees.
Law shall mean any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, opinion, release, ruling, order,
injunction, writ, decree, bond, judgment, authorization or approval, lien
or award of or settlement agreement with any Official Body.
Letter of Credit shall have the meaning assigned to that term in Section
2.9.1 [Issuance of Letters of Credit].
Letter of Credit Lender shall have the meaning assigned to that term in
Section 2.9.1 [Issuance of Letters of Credit].
Letter of Credit Borrowing shall have the meaning assigned to such term in
Section 2.9.3.4 [Disbursements, Reimbursement].
Letter of Credit Fee shall have the meaning assigned to that term in
Section 2.9.2 [Letter of Credit Fees].
Letter of Credit Outstandings shall mean at any time the sum of (i)the
aggregate undrawn face amount of outstanding Letters of Credit and (ii)the
aggregate amount of all unpaid and outstanding Reimbursement Obligations
and Letter of Credit Borrowings.
Leverage Ratio shall mean the ratio of (x)(i) Homebuilding Indebtedness
minus (ii) Excess Cash to (y) Adjusted Tangible Net Worth.
LIBO-Rate shall mean, with respect to the Loans comprising any Borrowing
Tranche to which the LIBO-Rate Option applies for any Interest Period, the
interest rate per annum determined by the Agent by dividing (the resulting
quotient rounded upwards, if necessary, to the nearest 1/100th of 1% per
annum) (i)the rate of interest determined by the Agent in accordance with
its usual procedures (which determination shall be conclusive absent
manifest error) to be the average of the London interbank offered rates for
U.S. Dollars quoted by the British Bankers' Association as set forth on
Moneyline Telerate (or appropriate successor or, if the British Bankers'
Association or its successor ceases to provide such quotes, a comparable
replacement determined by the Agent) display page 3750 (or such other
display page on the Moneyline Telerate service as may replace display page
3750) two (2) Business Days prior to the first day of such Interest Period
for an amount comparable to such Borrowing Tranche and having a borrowing
date and a maturity comparable to such Interest Period by (ii)a number
equal to 1.00 minus the LIBO-Rate Reserve Percentage. The LIBO-Rate may
also be expressed by the following formula:
LIBO-Rate = Average of London interbank offered rates quoted
by BBA or appropriate successor as shown on
Moneyline Telerate Service display page 3750
1.00 - LIBO-Rate Reserve Percentage
The LIBO-Rate shall be adjusted with respect to any Loan to which the LIBO-
Rate Option applies that is outstanding on the effective date of any change
in the LIBO-Rate Reserve Percentage as of such effective date. The Agent
shall give prompt notice to the Borrower of the LIBO-Rate as determined or
adjusted in accordance herewith, which determination shall be conclusive
absent manifest error.
LIBO-Rate Option shall mean the Revolving Credit LIBO-Rate Option.
LIBO-Rate Reserve Percentage shall mean as of any day the maximum
percentage in effect on such day, as prescribed by the Board of Governors
of the Federal Reserve System (or any successor) for determining the
reserve requirements (including supplemental, marginal and emergency
reserve requirements) with respect to eurocurrency funding (currently
referred to as "Eurocurrency Liabilities").
Lien shall mean any mortgage, deed of trust, pledge, lien, security
interest, charge or other encumbrance or security arrangement of any nature
whatsoever, whether voluntarily or involuntarily given, including any
conditional sale or title retention arrangement, and any assignment,
deposit arrangement or lease intended as, or having the effect of,
security.
LLC Interests shall have the meaning assigned to such term in Section 5.1.2
[Subsidiaries ].
Loan Documents shall mean this Agreement, the Agent's Letters, the Notes,
the Guaranty Agreement, and any other instruments, certificates or
documents delivered or contemplated to be delivered hereunder or thereunder
or in connection herewith or therewith, as the same may be supplemented or
amended from time to time in accordance herewith or therewith, and Loan
Document shall mean any of the Loan Documents. Each of the Loan Documents
under the Prior Credit Agreement shall be Loan Documents hereunder.
Loan Parties shall mean the Borrower and the Guarantors.
Loan Request shall have the meaning assigned to that term in Section 2.5
[Revolving Credit Loan Requests; Swing Loan Requests].
Loans shall mean collectively all Revolving Credit Loans and Swing Loans
and
Loan shall mean separately, any Revolving Credit Loan or Swing Loan.
Material Adverse Change shall mean any set of circumstances or events which
(a)has or could reasonably be expected to have any material adverse effect
whatsoever upon the validity or enforceability of this Agreement or any
other Loan Document, (b)is or could reasonably be expected to be material
and adverse to the business, properties, assets, financial condition,
results of operations or business prospects of the Loan Parties taken as a
whole, (c)impairs materially or could reasonably be expected to impair
materially the ability of the Loan Parties taken as a whole to duly and
punctually pay or perform their material Indebtedness for borrowed money,
or (d)impairs materially or could reasonably be expected to impair
materially the ability of the Agent or any of the Lenders, to the extent
permitted, to enforce their legal remedies pursuant to this Agreement, the
Notes or the Guaranty Agreement.
Month, with respect to an Interest Period under the LIBO-Rate Option, shall
mean the interval between the days in consecutive calendar months
numerically corresponding to the first day of such Interest Period. If any
LIBO-Rate Interest Period begins on a day of a calendar month for which
there is no numerically corresponding day in the month in which such
Interest Period is to end, the final month of such Interest Period shall be
deemed to end on the last Business Day of such final month.
Moody's shall mean Xxxxx'x Investors Service, Inc. and its successors.
Mortgage Subsidiary shall mean each Subsidiary which is in the business of
making residential mortgage loans. Each of the Mortgage Subsidiaries as of
the Closing Date is listed on Schedule 1.1(C).
Multiemployer Plan shall mean any employee benefit plan which is a
"multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA.
New Lender shall have the meaning assigned to such term in Section 2.12
[Increases in Revolving Credit Commitments.]
Non-approving Lender shall have the meaning assigned to such term in
Section 2.10.2 [Approval by 80% Lenders].
Non-Restricted Person shall mean any (i) Joint Venture and (ii) Subsidiary
of Hovnanian which is not a Restricted Subsidiary. Each of the Non-
Restricted Persons as of the Closing Date is listed on Schedule 1.1(C).
Notes shall mean the Revolving Credit Notes and the Swing Note.
Notices shall have the meaning assigned to that term in Section 10.6
[Notices].
Obligation shall mean any obligation or liability of any of the Loan
Parties to the Agent or any of the Lenders, howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent, now or
hereafter existing, or due or to become due, under or in connection with
this Agreement, any Notes, the Letters of Credit, the Agent's Letters or
any other Loan Document.
Official Body shall mean any national, federal, state, local or other
government or political subdivision or any agency, authority, board,
bureau, central bank, commission, department or instrumentality of either,
or any court, tribunal, grand jury or arbitrator, in each case whether
foreign or domestic.
Participation Advance shall mean, with respect to any Lender, such Lender's
payment in respect of its participation in a Letter of Credit Borrowing
according to its Ratable Share pursuant to Section 2.9.4 [Repayment of
Participation Advances].
Partnership Interests shall have the meaning assigned to such term in
5.1.2. [Subsidiaries ].
PBGC shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA or any successor.
Permitted Acquisitions shall have the meaning assigned to such term in
Section 7.2.4 [Liquidations, Mergers, Consolidations, Acquisitions].
Permitted Investments shall mean a Loan Party's Investment in:
(a) (i) cash, marketable direct obligations of the United States of
America or any agency thereof, and certificates of deposit, demand
deposits, time deposits, or repurchase agreements issued by any bank with a
capital and surplus of at least $25,000,000 organized under the laws of the
United States of America or any state thereof, municipal securities with a
rating of A-1 or better by Standard & Poor's or P-1 by Moody's or F-1 by
Fitch provided that such obligations, certificates of deposit, demand
deposits, time deposits, and repurchase agreements have a maturity of less
than one year from the date of purchase;
(ii) investment grade commercial paper or debt having a maturity date of
one year or less from the date of purchase; and
(iii) funds holding assets primarily consisting of those described in
clause (i) hereof;
(b) loans or advances to employees of a Loan Party in the ordinary course
of business;
any Person that is or concurrently becomes a Loan Party;
(d) purchase money notes not exceeding $25,000,000 principal amount in
the aggregate received incident to sales of property by a Restricted
Subsidiary;
(e) trade credit extended on usual and customary terms in the ordinary
course of business;
(f) loans to officers and directors to the extent permitted by Section
7.2.6.2 [Restricted Investments];
(g) marketable securities costing at the time of purchase no more than
$3,000,000 in the aggregate of any one or more residential real estate
developers and which are registered under the Securities Exchange Act of
1934; and
(h) other Investments not in excess of $25,000,000 in the aggregate.
Permitted Liens shall mean:
(i) Liens for taxes, assessments or other governmental charges not yet
payable or being contested in good faith and as to which adequate reserves
shall have been established in accordance with GAAP;
(ii) Pledges or deposits made in the ordinary course of business to secure
payment of workers' compensation, or to participate in any fund in
connection with workers' compensation, unemployment insurance, old-age
pensions or other social security programs;
(iii) Mechanics', materialmen's, warehousemen's, carriers' or other like
liens arising in the ordinary course of business securing obligations which
are not overdue for a period longer than 30 days or which are being
contested in good faith by appropriate proceedings;
(iv) Good-faith pledges or deposits made in the ordinary course of
business to secure performance of bids, tenders, contracts (other than for
the repayment of borrowed money) or leases, not in excess of the aggregate
amount due thereunder, or to secure statutory obligations, or surety,
appeal, indemnity, performance or other similar bonds required in the
ordinary course of business;
(v) Encumbrances consisting of zoning restrictions, easements or other
restrictions on the use of real property, none of which materially impairs
the use of such property or the value thereof, and none of which is
violated in any material respect by existing or proposed structures or land
use;
(vi) Liens, security interests and mortgages in favor of the Agent for the
benefit of the Lenders;
(vii) Liens on property leased by any Loan Party or Subsidiary of a Loan
Party under capital and operating leases not prohibited by this Agreement
securing obligations of such Loan Party or Subsidiary to the lessor under
such leases;
(viii) Any Lien existing on the date of this Agreement and described
on Schedule 1.1(P), provided that the principal amount secured thereby is
not hereafter increased, and no additional assets become subject to such
Lien;
(ix) Purchase Money Mortgages and Purchase Money Security Interests and
Liens on the real property owned by Hovnanian or a Corporate Office
Subsidiary and occupied primarily by employees of Hovnanian or its
subsidiaries, including Liens on the real property which serves as
Hovnanian's headquarters in Red Bank, New Jersey securing Indebtedness not
to exceed in aggregate $25,000,000 principal amount; and
(x) The following, (A)if the validity or amount thereof is being
contested in good faith by appropriate and lawful proceedings diligently
conducted so long as levy and execution thereon have been stayed and
continue to be stayed or (B)if a final judgment is entered and such
judgment is discharged within thirty (30) days of entry, and they do not in
the aggregate materially impair the ability of any Loan Party to perform
its Obligations hereunder or under the other Loan Documents:
(1) Claims or Liens for taxes, assessments or charges due and payable and
subject to interest or penalty, provided that the applicable Loan Party
maintains such reserves or other appropriate provisions as shall be
required by GAAP and pays all such taxes, assessments or charges forthwith
upon the commencement of proceedings to foreclose any such Lien;
(2) Claims, Liens or encumbrances upon, and defects of title to, real or
personal property, including any attachment of personal or real property or
other legal process prior to adjudication of a dispute on the merits;
(3) Claims or Liens of mechanics, materialmen, warehousemen, carriers, or
other statutory nonconsensual Liens;
(4) Liens resulting from final judgments or orders described in Section
8.1.6 [Final Judgments or Orders];
(xi) Liens, security interests, mortgages, or deeds of trust on real
estate in conjunction with purchase contracts for the purchase of the land
comprising such real estate, which secure future payments due to the land
sellers at the time of the sale of the homes on such land and which are
contingent on the sale price of such homes, including (a) adjustments to
the land purchase price, (b) profit participations, (c) community marketing
fees and community enhancement fees, and (d) reimbursable costs paid by the
land developer; and
(xii) Other Liens securing obligations not in excess of $5,000,000 in the
aggregate.
Person shall mean any individual, corporation, partnership, limited
liability company, association, joint-stock company, trust, unincorporated
organization, joint venture, government or political subdivision or agency
thereof, or any other entity.
Plan shall mean at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or is subject to
the minimum funding standards under Section 412 of the Internal Revenue
Code in respect of which the Borrower or any member of the ERISA Group is
an "employer" as defined in Section 3(5) of ERISA.
PNC Bank shall mean PNC Bank, National Association, its successors and
assigns.
Potential Default shall mean any event or condition which with notice,
passage of time or a determination by the Agent or the Required Lenders, or
any combination of the foregoing, would constitute an Event of Default.
Preliminary Approvals shall mean the following: (i) in New Jersey, as
defined in the Municipal Land Use Law (N.J.S.A. 40:55D-1 et seq.) and (ii)
for states other than New Jersey, a point in time equivalent thereto.
Principal Office shall mean the main banking office of the Agent in
Pittsburgh, Pennsylvania or such other location so designated by the Agent.
Prior Credit Agreement shall have the meaning assigned to such term in the
preamble to this Agreement.
Prohibited Transaction shall mean any prohibited transaction as defined in
Section 4975 of the Internal Revenue Code or Section 406 of ERISA for which
neither an individual nor a class exemption has been issued by the United
States Department of Labor.
Property shall mean all real property, both owned and leased, of any Loan
Party or Subsidiary of a Loan Party.
Purchase Money Mortgage shall mean any non-recourse mortgages granted to
secure Indebtedness of any Loan Party.
Purchase Money Security Interest shall mean Liens upon tangible personal
property securing loans to any Loan Party or deferred payments by such Loan
Party or Subsidiary for the purchase of such tangible personal property and
excluding Purchase Money Mortgages.
Purchasing Lender shall mean a Lender which becomes a party to this
Agreement by executing an Assignment and Assumption Agreement.
Ratable Share shall mean so long as any Commitments are outstanding the
proportion that a Lender's Commitment (excluding the Swing Loan Commitment)
bears to the Commitments (excluding the Swing Loan Commitment) of all of
the Lenders and after all Commitments have been terminated, the proportion
that a Lender's Revolving Credit Loans outstanding bears to all Revolving
Credit Loans outstanding of all of the Lenders.
Regulated Substances shall mean, without limitation, any substance,
material or waste, regardless of its form or nature, defined under
Environmental Laws as a "hazardous substance," "pollutant," "pollution,"
"contaminant," "hazardous or toxic substance," "extremely hazardous
substance," "toxic chemical," "toxic substance," "toxic waste," "hazardous
waste," "special handling waste," "industrial waste," "residual waste,"
"solid waste," "municipal waste," "mixed waste," "infectious waste,"
"chemotherapeutic waste," "medical waste," or "regulated substance" or any
other material, substance or waste, regardless of its form or nature, which
otherwise is regulated by Environmental Laws.
Regulation U shall mean Regulation U, T or X as promulgated by the Board of
Governors of the Federal Reserve System, as amended from time to time.
Reimbursement Obligation shall mean the obligation of the Borrower to
reimburse a Letter of Credit Lender for draws under a Letter of Credit
issued by such Lender under this Agreement, except to the extent such
obligation is represented by a Revolving Credit Loan.
Reportable Event shall mean a reportable event described in Section 4043 of
ERISA and regulations thereunder with respect to a Plan other than those
events as to which the 30-day notice is waived under the PBGC regulations.
Required Lenders shall mean (i)if there are no Loans, Reimbursement
Obligations or Letter of Credit Borrowings outstanding, Lenders whose
Commitments (excluding the Swing Loan Commitments) aggregate at least 66
2/3% of the Revolving Credit Commitments of all of the Lenders, or
(ii) if there are Loans, Reimbursement Obligations, or Letter of Credit
Borrowings outstanding, any Lender or group of Lenders if the sum of the
Loans (excluding the Swing Loans), Reimbursement Obligations and Letter of
Credit Borrowings of such Lenders then outstanding aggregates at least 66
2/3% of the total principal amount of all of the Loans (excluding the Swing
Loans), Reimbursement Obligations and Letter of Credit Borrowings then
outstanding.
Reimbursement Obligations and Letter of Credit Borrowings shall be deemed,
for purposes of this definition, to be in favor of the Agent and not a
participating Lender if such Lender has not made its Participation Advance
in respect thereof and shall be deemed to be in favor of such Lender to the
extent of its Participation Advance if it has made its Participation
Advance in respect thereof.
Required Environmental Notices shall mean all notices, reports, plans,
forms or other filings which pursuant to Environmental Laws, Required
Environmental Permits or at the request or direction of an Official Body
either must be submitted to an Official Body or which otherwise must be
maintained.
Required Environmental Permits shall mean all permits, licenses, bonds,
consents, programs, approvals or authorizations required under
Environmental Laws to own, occupy or maintain the Property or which
otherwise are required for the operations and business activities of the
Loan Parties.
Required Share shall have the meaning assigned to such term in Section 4.8
[Settlement Date Procedures].
Restricted Investment shall mean a Loan Party's Investment that
constitutes a Subsidiary Investment in any Non-Restricted Person or any
Investment in Related Business.
Restricted Payments shall mean (i) Dividends and Capital Stock Retirement
payments after January 31, 2001 by Hovnanian or otherwise to the
shareholders of Hovnanian; and(ii) Payments (whether in the form of
principal payments, note repurchases or similar items) to the holder of
Subordinated Debt made on or after January 31, 2001; provided, however,
with respect to this item (ii), a refinancing of the Subordinated Debt to
the extent consisting of the repayment of the Subordinated Debt and the
incurring of new "Subordinated Debt" within 60 days of such repayment shall
not constitute a "Restricted Payment".
Restricted Subsidiaries shall mean any Subsidiary that has not been
designated a Non-Restricted Person as of the Closing Date or in accordance
with Section 2.11 [Designation of Subsidiaries and Release of Guarantors].
Each of the Restricted Subsidiaries as of the Closing Date is listed on
Schedule 1.1(C).
Revolving Credit Base Rate Option shall mean the option of the Borrower to
have Revolving Credit Loans bear interest at the rate and under the terms
and conditions set forth in Section 3.1.1((i)) [Revolving Credit Base Rate
Option].
Revolving Credit Commitment shall mean, as to any Lender at any time, the
amount set forth opposite its name on Schedule 1.1(B) in the column labeled
"Amount of Commitment for Revolving Credit Loans" or on Schedule I to the
Assignment and Assumption Agreement pursuant to which such Lender became a
party hereto, and Revolving Credit Commitments shall mean the aggregate
Revolving Credit Commitments of all of the Lenders.
Revolving Credit Commitment Increase Date shall have the meaning assigned
to such term in Section 2.12 [Increases in Revolving Credit Commitments.]
Revolving Credit LIBO-Rate Option shall mean the option of the Borrower to
have Revolving Credit Loans bear interest at the rate and under the terms
and conditions set forth in Section 3.1.1(ii) [Revolving Credit LIBO-Rate
Option].
Revolving Credit Loans shall mean collectively and Revolving Credit Loan
shall mean separately all Revolving Credit Loans or any Revolving Credit
Loan made by the Lenders or one of the Lenders to the Borrower pursuant to
Section 2.1 [Revolving Credit Commitments] or 2.9.3 [Disbursements,
Reimbursement].
Revolving Credit Note shall mean any Revolving Credit Note of the Borrower
in the form of Exhibit 1.1(R), issued by the Borrower payable to the order
of each Lender (unless a Lender requests that the Borrower not issue a Note
to such Lender) in a face amount equal to such Lender's Revolving Credit
Commitment pursuant to Section 4.7 [Notes] evidencing the Revolving Credit
Loans to such Lender, together with all amendments, extensions, renewals,
replacements, refinancings or refundings thereof in whole or in part.
Revolving Facility Usage shall mean at any time the sum of the Revolving
Credit Loans outstanding, Swing Loans outstanding and the Letter of Credit
Outstandings.
SEC shall mean the Securities and Exchange Commission or any governmental
agencies substituted therefor.
Senior Homebuilding Indebtedness shall mean the sum (without duplication)
of (a) outstanding principal amount of the Obligations, (b) letters of
credit (whether or not issued under this Agreement), (c) Guaranties by any
Loan Party of any obligation of any Person which is not a Restricted
Subsidiary or Hovnanian, (d) Senior Notes, (e) surety bonds (or similar
products) issued by bonding companies in lieu of cash payments or cash
deposits on contracts for any Loan Party to acquire land inventory in
respect of which a Loan Party is obligated and (f) other Indebtedness of
Hovnanian or a Restricted Subsidiary which is permitted under this
Agreement; provided however, that "Senior Homebuilding Indebtedness" shall
not include (i) obligations of Hovnanian under the First Restated Keep-Well
Agreement dated as of March 7, 2003 previously provided to Guaranty Bank,
as agent for the benefit of X. Xxxxxxxxx Mortgage Inc. and X. Xxxxxxxxx
American Mortgage, L.L.C. (ii) obligations of Hovnanian under any similar
Keep-Well Agreement provided in conjunction with any existing or new
mortgage warehouse facility or mortgage conduit facility, provided that
such Keep-Well Agreement is approved by the Agent in its sole discretion,
(each such agreement identified in clause (i) and (ii), and any
modifications thereto, or any supplement or replacement thereof which has a
similar effect or which provides for recourse to the Loan Parties, each
shall be referred to as a "Keep-Well Agreement"), (iii) debt secured by
Purchase Money Security Interests and Purchase Money Mortgages and (iv)
Subordinated Debt.
Senior Notes shall mean the (i) $150,000,000 principal amount 10 1/2%
Senior Notes of the Borrower and guaranteed by Hovnanian due October 2007;
(ii) $100,000,000 principal amount 8.0% Senior Notes of the Borrower due
April 2012 and guaranteed by Hovnanian; (iii) $215,000,000 principal
amount 6.50% Senior Notes of the Borrower due January 2014 and guaranteed
by Hovnanian; (iv) $150,000,000 principal amount 6.375% Senior Notes of the
Borrower due 2014 and guaranteed by Hovnanian; and (v) other notes sold or
guaranteed by Hovnanian or the Borrower from time to time after the Closing
Date on terms not materially less favorable to the Lenders (as determined
by the Agent) as those described in clauses (i) and (ii) above.
Settlement Date shall mean the date selected from time to time by the Agent
(after consulting the Borrower) on which the Agent elects to effect
settlement pursuant to Section 4.8 [Settlement Date Procedures].
Sold Homes shall mean the Dollar amount of the capitalized construction
costs of any Dwelling Unit upon which a third party purchaser has paid a
cash deposit pursuant to an enforceable agreement of sale. Such cost shall
include the proportional costs of the land under the Dwelling Unit, site
improvements and soft costs incurred to date.
Standard & Poor's shall mean Standard & Poor's Ratings Services, a division
of The XxXxxx-Xxxx Companies, Inc., and its successors.
Subordinated Debt shall mean (i) the $150,000,000 principal amount 8.875%
Senior Subordinated Notes due in April 2012; (ii) the $150,000,000
principal amount 7.75% Senior Subordinated Notes due in 2013; and (iii) any
other unsecured indebtedness of the Borrower, Hovnanian, or any other Loan
Party which is subordinated by its terms to the prior payment in full of
the Obligations evidenced by this Agreement, the Notes and the Letters of
Credit, as may be outstanding from time to time, in a manner no less
favorable to the Lenders than the terms of the Subordinated Debt described
in clause (i) above and which contain covenants that are not materially
less favorable to Hovnanian, the Borrower or any other Loan Party than
those contained in the Subordinated Debt described in clause (i) above.
Subsidiary of any Person at any time, shall mean a corporation,
partnership, limited liability company or other entity (x) whose assets and
liabilities are consolidated with Hovnanian in accordance with GAAP (except
for joint ventures or similar arrangements which would not be considered
"Subsidiaries" of a Loan Party but for the application of FASB
Interpretation No. 46 regarding consolidation issued by the Financial
Accounting Standards Board (FASB) in January, 2003 )and (y) of which shares
of stock or other ownership interests having ordinary voting power (other
than stock or such other ownership interests having such power only by
reason of the happening of a contingency) to elect a majority of the board
of directors or other managers of such corporation, partnership or other
entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or
both, by such Person. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a
Subsidiary or Subsidiaries of Hovnanian.
Subsidiary Investment shall mean with respect to any Subsidiary or Joint
Venture the sum of (x) loans to such Person by Hovnanian or a Restricted
Subsidiary and (y) Hovnanian's or a Restricted Subsidiary's share of equity
in such Person.
Subsidiary Shares shall have the meaning assigned to that term in Section
5.1.2 [Subsidiaries].
Swing Loan Commitment shall mean PNC Bank's commitment to make Swing Loans
to the Borrower pursuant to Section 2.1.2 [Swing Loan Commitment] hereof in
an aggregate principal amount of up to $30,000,000.
Swing Loan Note shall mean the Swing Loan Note of the Borrower in the form
of Exhibit 1.1(S) evidencing the Swing Loans, together with all amendments,
extensions, renewals, replacements, refinancings or refundings thereof in
whole or in part.
Swing Loan Request shall mean a request for Swing Loans made in accordance
with Section 2.4.2 [ Swing Loan Requests] hereof.
Swing Loans shall mean collectively and Swing Loan shall mean separately
all Swing Loans or any Swing Loan made by PNC Bank to the Borrower pursuant
to Section 2.1.2 [Swing Loan Commitment] hereof.
Transferor Lender shall mean the selling Lender pursuant to an Assignment
and Assumption Agreement.
Unentitled Land shall mean the Dollar value of land owned by a Loan Party
which has not been granted Preliminary Approvals, calculated at the lower
of (x) the actual cost (including land costs and capital expenses relating
thereto) or (y) the market value (as determined in accordance with GAAP)
thereof.
Unsold Dwelling Units shall mean the number of Dwelling Units owned by a
Loan Party comprising from time to time "Unsold Homes".
Unsold Homes shall mean the Dollar amount of capitalized construction costs
of any Dwelling Unit being built by a Loan Party for which the construction
of slab (or foundation) has been completed and upon which no cash deposit
has been paid pursuant to an enforceable agreement of sale. Such Dollar
amount shall include the proportional costs of the land under the Dwelling
Unit, site improvements and soft costs actually incurred to date.
USA Patriot Act shall mean the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism
Act of 2001, Public Law 107-56, as the same has been, or shall hereafter
be, renewed, extended, amended or replaced.
1.2 Construction.
Unless the context of this Agreement otherwise clearly requires, the
following rules of construction shall apply to this Agreement and each of
the other Loan Documents:
1.2.1. Number; Inclusion.
references to the plural include the singular, the plural, the part and the
whole; "or" has the inclusive meaning represented by the phrase "and/or,"
and "including" has the meaning represented by the phrase "including
without limitation";
1.2.2. Determination.
references to "determination" of or by the Agent or the Lenders shall be
deemed to include good-faith estimates by the Agent or the Lenders (in the
case of quantitative determinations) and good-faith beliefs by the Agent or
the Lenders (in the case of qualitative determinations) and such
determination shall be conclusive absent manifest error;
1.2.3. Agent's Discretion and Consent.
whenever the Agent or the Lenders are granted the right herein to act in
its or their sole discretion or to grant or withhold consent such right
shall be exercised in good faith;
1.2.4. Documents Taken as a Whole.
the words "hereof," "herein," "hereunder," "hereto" and similar terms in
this Agreement or any other Loan Document refer to this Agreement or such
other Loan Document as a whole and not to any particular provision of this
Agreement or such other Loan Document;
1.2.5. Headings.
the section and other headings contained in this Agreement or such other
Loan Document and the Table of Contents (if any) preceding this Agreement
or such other Loan Document are for reference purposes only and shall not
control or affect the construction of this Agreement or such other Loan
Document or the interpretation thereof in any respect;
1.2.6. Implied References to this Agreement.
article, section, subsection, clause, schedule and exhibit references are
to this Agreement or other Loan Document, as the case may be, unless
otherwise specified;
1.2.7. Persons.
reference to any Person includes such Person's successors and assigns but,
if applicable, only if such successors and assigns are permitted by this
Agreement or such other Loan Document, as the case may be, and reference to
a Person in a particular capacity excludes such Person in any other
capacity;
1.2.8. Modifications to Documents.
reference to any agreement (including this Agreement and any other Loan
Document together with the schedules and exhibits hereto or thereto),
document or instrument means such agreement, document or instrument as
amended, modified, replaced, substituted for, superseded or restated;
1.2.9. From, To and Through.
relative to the determination of any period of time, "from" means "from and
including," "to" means "to but excluding," and "through" means "through and
including"; and
1.2.10. Shall; Will.
references to "shall" and "will" are intended to have the same meaning.
1.3 Accounting Principles.
Except as otherwise provided in this Agreement, all computations and
determinations as to accounting or financial matters and all financial
statements to be delivered pursuant to this Agreement shall be made and
prepared in accordance with GAAP (including principles of consolidation
where appropriate), and all accounting or financial terms shall have the
meanings ascribed to such terms by GAAP; provided, however, that all
accounting terms used in Section 7.2 [Negative Covenants] (and all defined
terms used in the definition of any accounting term used in Section 7.2
[Negative Covenants] shall have the meaning given to such terms (and
defined terms) under GAAP as in effect on the date hereof applied on a
basis consistent with those used in preparing the Annual Statements
referred to in Section 5.1.8((i)) [Historical Statements]. In the event of
any change after the date hereof in GAAP, and if such change would result
in the inability to determine compliance with the financial covenants set
forth in Section 7.2 [Negative Covenants] based upon the Loan Parties'
regularly prepared financial statements by reason of the preceding
sentence, then the parties hereto agree to endeavor, in good faith, to
agree upon an amendment to this Agreement that would adjust such financial
covenants in a manner that would not affect the substance thereof, but
would allow compliance therewith to be determined in accordance with the
Loan Parties' financial statements at that time.
2. REVOLVING CREDIT AND SWING LOAN FACILITIES
2.1 Revolving Credit Commitments.
2.1.1. Revolving Credit Loans.
Subject to the terms and conditions hereof and relying upon the
representations and warranties herein set forth, each Lender severally
agrees to make Revolving Credit Loans to the Borrower at any time or from
time to time on or after the date hereof to the Expiration Date provided
that after giving effect to such Loan (a) the aggregate amount of Revolving
Credit Loans from such Lender shall not exceed such Lender's Revolving
Credit Commitment minus such Lender's Ratable Share of the Letter of Credit
Outstandings and its Ratable Share of the outstanding Swing Loans and (b)
the Borrower shall be in compliance with the covenant contained in the
first sentence of Section 7.2.10 [Borrowing Base] (provided that the
requirements of such Section 7.2.10 shall apply only if the Investment
Grade Period is not in effect). Within such limits of time and amount and
subject to the other provisions of this Agreement, the Borrower may borrow,
repay and reborrow pursuant to this Section2.1.
The Borrower promises to repay the aggregate outstanding principal
amount of the Revolving Credit Loans in full on the Expiration Date and to
discharge and fulfill when required all other of the Obligations.
2.1.2. Swing Loan Commitment.
Subject to the terms and conditions hereof and relying upon the
representations and warranties herein set forth, PNC Bank shall make swing
loans (the "Swing Loans") to the Borrower at any time or from time to time
after the date hereof to, but not including, the Expiration Date, in an
aggregate principal amount up to but not in excess of the Swing Loan
Commitment. The Swing Loan Commitment is a sublimit of the Revolving
Credit Commitments and the Revolving Facility Usage shall not exceed the
Revolving Credit Commitments of all the Lenders. Within such limits of
time and amount and subject to the other provisions of this Agreement, the
Borrower may borrow, repay and reborrow pursuant to this Section 2.1.2.
Swing Loans shall, at the option of PNC Bank after consultation with the
Borrower, be repaid by the proceeds of a Revolving Credit Loan deemed to
have been made for such purpose pursuant to Section 2.8 [Borrowings to
Repay Swing Loans] and shall be subject to the provisions of Section 4.8
[Settlement Date Procedures].
2.1.3 Voluntary Reduction of Commitment
The Borrower shall have the right at any time after the Closing Date (i)
upon five (5) days' prior written notice to the Agent to permanently reduce
(ratably among the Lenders in proportion to their Ratable Shares) the
Revolving Credit Commitments, in a minimum amount of $500,000 and whole
multiples of $100,000 (provided that in no event shall the aggregate
Revolving Credit Commitments be reduced to an amount less than
$450,000,000) or (ii) at any time upon prepayment in full of the
Obligations, terminate completely the Commitments, without penalty or
premium except as hereinafter set forth, provided that any such reduction
or termination shall be accompanied by prepayment of the Notes, together
with outstanding Commitment Fees, and the full amount of interest accrued
on the principal sum to be prepaid (and all amounts referred to in Section
4.6.2 [Indemnity] hereof), to the extent that the aggregate amount thereof
then outstanding exceeds the Commitments as so reduced or terminated. Any
notice to reduce the Revolving Credit Commitments under this Section 2.1.
shall be irrevocable.
2.2 Nature of Lenders' Obligations with Respect to Revolving Credit
Loans.
Each Lender shall be obligated to participate in each request for Revolving
Credit Loans pursuant to Section 2.4 [Revolving Credit Loan Requests; Swing
Loan Requests] in accordance with its Ratable Share. The aggregate of each
Lender's Revolving Credit Loans outstanding hereunder to the Borrower at
any time shall never exceed its Revolving Credit Commitment minus its
Ratable Share of the Letter of Credit Outstandings minus its Ratable Share
of Swing Loans outstanding. The obligations of each Lender hereunder are
several. The failure of any Lender to perform its obligations hereunder
shall not affect the Obligations of the Borrower to any other party nor
shall any other party be liable for the failure of such Lender to perform
its obligations hereunder. The Lenders shall have no obligation to make
Revolving Credit Loans hereunder on or after the Expiration Date.
2.3 Commitment Fees.
Accruing from the date hereof until the Expiration Date, the Borrower
agrees to pay to the Agent for the account of each Lender, as consideration
for such Lender's Revolving Credit Commitment hereunder, a nonrefundable
commitment fee (the "Commitment Fee") equal to the Applicable Commitment
Fee Rate (computed on the basis of a year of 365 or 366 days, as the case
may be, and actual days elapsed) on the average daily difference between
the amount of (i)such Lender's Revolving Credit Commitment as the same may
be constituted from time to time and the (ii)the sum of such Lender's
Revolving Credit Loans outstanding (plus, in the case of PNC Bank, its
Swing Loans outstanding) plus its Ratable Share of Letter of Credit
Outstandings. All Commitment Fees shall be payable quarterly in arrears on
the fifteenth (15) day of each calendar quarter (for the calendar quarter
most recently ended) after the date hereof and on the Expiration Date or
upon acceleration of the Obligations.
2.4 Revolving Credit Loan Requests; Swing Loan Requests.
2.4.1. Revolving Credit Loan Requests.
Except as otherwise provided herein, the Borrower may from time to time
prior to the Expiration Date request that the Lenders make Revolving Credit
Loans, or renew or convert the Interest Rate Option applicable to existing
Revolving Credit Loans or pursuant to Section 3.2 [Interest Periods], by
delivering to the Agent, not later than 11:00 a.m., Eastern time, (i)three
(3) Business Days prior to the proposed Borrowing Date with respect to the
making of Revolving Credit Loans to which the LIBO-Rate Option applies or
the conversion to or the renewal of the LIBO-Rate Option for any Loans; and
(ii) on the day of either the proposed Borrowing Date with respect to the
making of a Revolving Credit Loan to which the Base Rate Option applies or
the last day of the preceding Interest Period with respect to the
conversion to the Base Rate Option for any Loan, of a duly completed
request therefor substantially in the form of Exhibit 2.4.1 or a request by
telephone promptly confirmed in writing by letter or facsimile in such form
(each, a "Loan Request"), it being understood that the Agent may rely on
the authority of any individual making such a telephonic request without
the necessity of receipt of such written confirmation. Each Loan Request
shall be irrevocable and shall specify (i)the proposed Borrowing Date;
(ii) the aggregate amount of the proposed Loans comprising each Borrowing
Tranche, which shall be in integral multiples of $500,000 and not less than
$2,500,000 for each Borrowing Tranche to which the LIBO-Rate Option applies
and which shall be in integral multiples of $100,000 and not less than
$500,000 for Borrowing Tranches to which the Base Rate Option applies;
(iii)whether the LIBO-Rate Option or Base Rate Option shall apply to the
proposed Loans comprising the applicable Borrowing Tranche; and (iv)in the
case of a Borrowing Tranche to which the LIBO-Rate Option applies, an
appropriate Interest Period for the Loans comprising such Borrowing
Tranche.
2.4.2. Swing Loan Requests.
Except as otherwise provided herein, the Borrower may from time to time
prior to the Expiration Date request that PNC Bank make Swing Loans by
delivery to PNC Bank not later than 2:00 p.m. Eastern time on the proposed
Borrowing Date of a duly completed request therefor substantially in the
form of Exhibit 2.4.2 hereto or a request by telephone promptly confirmed
in writing by letter or facsimile (each, a "Swing Loan Request"), it being
understood that the Agent may rely on the authority of any individual
making such a telephonic request without the necessity of receipt of such
written confirmation. Each Swing Loan Request shall be irrevocable and
shall specify the proposed Borrowing Date and the principal amount of such
Swing Loan, which shall be not less than $100,000.
2.5 Making Revolving Credit Loans and Swing Loans.
2.5.1. Generally.
The Agent shall, promptly after receipt by it of a Loan Request pursuant to
Section 2.4.1 [Revolving Credit Loan Requests], but not later than 12:00
noon, Eastern time, notify the Lenders of its receipt of such Loan Request
specifying: (i)the proposed Borrowing Date and the time and method of
disbursement of the Revolving Credit Loans requested thereby; (ii)the
amount and type of each such Revolving Credit Loan and the applicable
Interest Period (if any); and (iii)the apportionment among the Lenders of
such Revolving Credit Loans as determined by the Agent in accordance with
Section 2.2 [Nature of Lenders' Obligations with Respect to Revolving
Credit Loans]. Each Lender shall remit the principal amount of each
Revolving Credit Loan to the Agent such that the Agent is able to, and the
Agent shall, to the extent the Lenders have made funds available to it for
such purpose and subject to Section 6.2 [Each Additional Loan or Letter of
Credit], fund such Revolving Credit Loans to the Borrower in U.S. Dollars
and immediately available funds at the Principal Office prior to 2:30 p.m.,
Eastern time, on the applicable Borrowing Date, provided that if any Lender
fails to remit such funds to the Agent in a timely manner, the Agent may
elect in its sole discretion to fund with its own funds the Revolving
Credit Loans of such Lender on such Borrowing Date, and such Lender shall
be subject to the repayment obligation in Section 9.16 [Availability of
Funds].
2.5.2. Making Swing Loans.
Subject to the other provisions of this Agreement, PNC Bank shall, after
receipt by it of a Swing Loan Request pursuant to Section 2.4.2 [Swing Loan
Requests], fund such Swing Loan to the Borrower in Dollars and immediately
available funds at the Principal Office as soon as reasonably practicable
after receipt by PNC Bank of said Swing Loan Request but in any event by
the close of business on the same Business Day.
2.6 Swing Loan Note.
The obligation of the Borrower to repay the unpaid principal amount of the
Swing Loans made to it by PNC Bank together with interest thereon shall, if
requested by PNC Bank, be evidenced by the Swing Loan Note dated the
Closing Date payable to the order of PNC Bank in a face amount equal to the
Swing Loan Commitment.
2.7 Use of Proceeds.
The proceeds of the Revolving Credit Loans shall be used to refinance
existing indebtedness and provide for Letters of Credit and provide working
capital and funds for general corporate purpose for the Borrower, Hovnanian
and the Restricted Subsidiaries, all in accordance with Section 7.1.10 [Use
of Proceeds].
2.8 Borrowings to Repay Swing Loans.
PNC Bank may, at its option, and upon consultation with the Borrower,
exercisable at any time for any reason whatsoever, demand that each Lender
shall make a Revolving Credit Loan in an amount equal to such Lender's
Ratable Share of the aggregate principal amount of the outstanding Swing
Loans made in accordance with Section 2.5.2 [Making Swing Loans], plus, if
PNC Bank so requests, accrued interest thereon, provided that no Lender
shall be obligated in any event to make Revolving Credit Loans in excess of
its Revolving Credit Commitment minus its Ratable Share of Letters of
Credit Outstanding minus its Ratable Share of Swing Loans outstanding.
Revolving Credit Loans made pursuant to the preceding sentence shall bear
interest at the Base Rate Option and shall be deemed to have been properly
requested in accordance with Section 2.4.1 [Revolving Credit Loan Requests]
without regard to any of the requirements of that provision. PNC Bank
shall provide notice to the Lenders (which may be telephonic or written
notice by letter, facsimile or telex) that such Revolving Credit Loans are
to be made under this Section 2.8 and of the apportionment among the
Lenders, and the Lenders shall be unconditionally obligated to fund such
Revolving Credit Loans (whether or not the conditions specified in Section
2.4.1 [Revolving Credit Loan Requests] or Section 6.2 [Each Additional Loan
or Letter of Credit] are then satisfied) by the time PNC Bank so requests,
which shall not be earlier than three o'clock (3:00) p.m. Eastern time on
the Business Day next after the date the Lenders receive such notice from
PNC Bank.
2.9 Letter of Credit Subfacility.
2.9.1. Issuance of Letters of Credit.
Subject to the terms and conditions hereof and relying on the
representations and warranties herein set forth, Fleet National Bank agrees
to continue outstanding until expiration each of the Letters of Credit
issued by it and listed on Schedule 2.9.1(A) and to be a Letter of Credit
Lender solely with respect to such Letters of Credit; provided that, upon
consummation of the merger between Bank of America and Fleet National Bank,
Bank of America shall automatically become the Letter of Credit Lender with
respect to such Letters of Credit and Fleet National Bank shall cease to be
a Letter of Credit Lender hereunder. The Borrower may request the issuance
of a letter of credit (each a "Letter of Credit") on behalf of itself or
another Loan Party by the Agent or any Lender which issues a Letter of
Credit hereunder (such Lender, with respect to the issuance of the Letter
of Credit so requested by the Borrower, being a "Letter of Credit Lender")
by delivering to the Agent and the Letter of Credit Lender a completed
application and agreement for letters of credit in such form as the Letter
of Credit Lender and the Agent may specify from time to time by no later
than 10:00 a.m., Eastern time, at least three (3) Business Days, or such
shorter period as may be agreed to by the Letter of Credit Lender, in
advance of the proposed date of issuance. Each letter of credit issued by
any Lender and described on Schedule 2.9.1(B) shall be deemed to be a
"Letter of Credit" hereunder as of the Closing Date. Subject to the terms
and conditions hereof and in reliance on the agreements of the other
Lenders set forth in this Section 2.9, the Letter of Credit Lender will
issue a Letter of Credit. Each Letter of Credit shall have a maximum stated
maturity of no later than one (1) Business Day prior to the Expiration Date.
For purposes of this subsection, "stated maturity" is the expiration date of
the Letter of Credit without giving effect to any future extension thereof
under an automatic renewal provision, provided that such automatic renewal
provision permits the Letter of Credit Lender to elect not to extend by
giving written notice of cancellation to the beneficiary. In no event shall
Letter of Credit Outstandings exceed, at any one time, $400,000,000.
2.9.2. Letter of Credit Fees.
The Borrower shall pay (i)to the Agent for the ratable account of the
Lenders a fee (the "Letter of Credit Fee") equal to the Applicable Letter
of Credit Fee Rate (computed on the daily average Letter of Credit
Outstandings) and (ii)to the Agent on behalf of each respective Letter of
Credit Lender for its own account a fronting fee for Letters of Credit
issued by such Letter of Credit Lender equal to .125% per annum (computed
on the basis of a year of 365 or 366 days, as the case may be, and actual
days elapsed) and shall be payable quarterly in arrears commencing with the
fifteenth (15) day of each calendar quarter following issuance of each
Letter of Credit and on the Expiration Date. The Borrower shall also pay
to the Letter of Credit Lender for the Letter of Credit Lender's sole
account the Letter of Credit Lender's then in effect customary fees and
administrative expenses payable with respect to the Letters of Credit as
the Letter of Credit Lender may generally charge or incur from time to time
in connection with the issuance, maintenance, modification (if any),
assignment or transfer (if any), negotiation, and administration of Letters
of Credit.
2.9.3. Disbursements, Reimbursement.
2.9.3.1 Immediately upon the issuance of each Letter of Credit, each
Lender shall be deemed to, and hereby irrevocably and unconditionally
agrees to, purchase from the Letter of Credit Lender a participation in
such Letter of Credit and each drawing thereunder in an amount equal to
such Lender's Ratable Share of the maximum amount available to be drawn
under such Letter of Credit and the amount of such drawing, respectively.
2.9.3.2 In the event of any request for a drawing on or before 11:00
a.m. under a Letter of Credit by the beneficiary or transferee thereof, the
Letter of Credit Lender shall promptly notify the Agent upon such request.
Provided that it shall have received such notice, the Agent will promptly
notify the Borrower and each Lender thereof, and the Borrower shall be
deemed to have requested that Revolving Credit Loans be made by the Lenders
in an amount equal to the amount so paid by the Letter of Credit Lender
under the Base Rate Option to be disbursed on the Drawing Date under such
Letter of Credit, subject to the amount of the unutilized portion of the
Revolving Credit Commitment and not subject to the conditions set forth in
Section 6.2 [Each Additional Loan or Letter of Credit]. Any notice given
by the Letter of Credit Lender or the Agent pursuant to this Section
2.9.3.2 may be oral if immediately confirmed in writing; provided that the
lack of such an immediate confirmation shall not affect the conclusiveness
or binding effect of such notice.
2.9.3.3 Each Lender shall upon any notice pursuant to Section 2.9.3.2
[Disbursements, Reimbursement] make available to the Agent on behalf of the
Letter of Credit Lender an amount in immediately available funds equal to
its Ratable Share of the amount of the drawing, whereupon the participating
Lenders shall (subject to Section 2.9.3.4 [Disbursements, Reimbursement])
each be deemed to have made a Revolving Credit Loan under the Base Rate
Option to the Borrower in that amount. If any Lender so notified fails to
make available to the Agent for the account of the Agent on behalf of the
Letter of Credit Lender the amount of such Lender's Ratable Share of such
amount by no later than two o'clock (2:00) p.m., Eastern time on the
Drawing Date, then interest shall accrue on such Lender's obligation to
make such payment from the Drawing Date to the date on which such Lender
makes such payment (i) at a rate per annum equal to the Federal Funds
Effective Rate during the first three days following the Drawing Date and
(ii) at a rate per annum equal to the rate applicable to Loans under the
Revolving Credit Base Rate Option on and after the fourth day following the
Drawing Date. The Agent will promptly give notice of the occurrence of the
Drawing Date, but failure of the Agent to give any such notice on the
Drawing Date or in sufficient time to enable any Lender to effect such
payment on such date shall not relieve such Lender from its obligation
under this Section 2.9.3.3.
2.9.3.4 With respect to any unreimbursed drawing that is not converted
into Revolving Credit Loans under the Base Rate Option to the Borrower in
whole or in part as contemplated by Section 2.9.3.2 [Disbursements,
Reimbursement], the Borrower shall be deemed to have incurred from the
Agent a borrowing (each a "Letter of Credit Borrowing") in the amount of
such drawing. Such Letter of Credit Borrowing shall be due and payable on
demand (together with interest) and shall bear interest at the rate per
annum applicable to the Revolving Credit Loans under the Base Rate Option.
Each Lender's payment to the Agent pursuant to Section 2.9.3.3
[Disbursements, Reimbursement] shall be deemed to be a payment in respect
of its participation in such Letter of Credit Borrowing and shall
constitute a "Participation Advance" from such Lender in satisfaction of
its participation obligation under Section 2.9.3 [Disbursements,
Reimbursement].
2.9.4. Repayment of Participation Advances.
2.9.4.1 Upon (and only upon) receipt by the Agent on behalf of the
Letter of Credit Lender of immediately available funds from the Borrower
(i)in reimbursement of any payment made by the on behalf of the Letter of
Credit Lender under the Letter of Credit with respect to which any Lender
has made a Participation Advance to the Agent on behalf of the Letter of
Credit Lender or (ii)in payment of interest on such a payment made by the
Agent under such a Letter of Credit, the Agent will pay to each Lender, in
the same funds as those received by the Agent, the amount of such Lender's
Ratable Share of such funds, except the Agent shall retain the amount of
the Ratable Share of such funds of any Lender that did not make a
Participation Advance in respect of such payment by Agent. If the Letter
of Credit Lender receives any such payment prior to 1:00 p.m. on a Business
Day and does not make payment to any such Lender which has made such a
Participation Advance on the same Business Day, then such Lender shall be
entitled to receive such Letter of Credit Lender interest at the Federal
Funds Effective Rate for each day until such payment is made to such
Lender.
2.9.4.2 If the Agent or the Letter of Credit Lender is required at any
time to return to any Loan Party, or to a trustee, receiver, liquidator,
custodian, or any official in any Insolvency Proceeding, any portion of the
payments made by any Loan Party pursuant to Section 2.9.4.1 [Repayment of
Participation Advances] in reimbursement of a payment made under the Letter
of Credit or interest or fee thereon, each Lender shall, on demand of the
Agent on behalf of the Letter of Credit Lender, forthwith return to the
Agent the amount of its Ratable Share of any amounts so returned by the
Agent or such Letter of Credit Lender plus interest thereon from the date
such demand is made to the date such amounts are returned by such Lender to
the Agent, at a rate per annum equal to the Federal Funds Effective Rate in
effect from time to time.
2.9.5. Documentation.
Each Loan Party agrees to be bound by the terms of the Letter of Credit
Lender's application and agreement for letters of credit and the Letter of
Credit Lender's written regulations and customary practices relating to
letters of credit, though such interpretation may be different from such
Loan Party's own. In the event of a conflict between such application or
agreement and this Agreement, this Agreement shall govern. It is
understood and agreed that, except in the case of gross negligence or
willful misconduct, the Letter of Credit Lender shall not be liable for any
error, negligence and/or mistakes, whether of omission or commission, in
following any Loan Party's instructions or those contained in the Letters
of Credit or any modifications, amendments or supplements thereto.
2.9.6. Determinations to Honor Drawing Requests.
In determining whether to honor any request for drawing under any Letter of
Credit by the beneficiary thereof, the Letter of Credit Lender shall be
responsible only to determine that the documents and certificates required
to be delivered under such Letter of Credit have been delivered and that
they comply on their face with the requirements of such Letter of Credit.
2.9.7. Nature of Participation and Reimbursement Obligations.
Each Lender's obligation in accordance with this Agreement to make the
Revolving Credit Loans or Participation Advances, as contemplated by
Section 2.9.3 [Disbursements, Reimbursement], as a result of a drawing
under a Letter of Credit, and the obligations of the Borrower to reimburse
the Agent upon a draw under a Letter of Credit, shall be absolute,
unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Section 2.9 [Letter of Credit
Subfacility] under all circumstances, including the following
circumstances:
(i) any set-off, counterclaim, recoupment, defense or other right which
such Lender may have against the Agent, any Loan Party or any other Person
for any reason whatsoever;
(ii) the failure of any Loan Party or any other Person to comply, in
connection with a Letter of Credit Borrowing, with the conditions set forth
in Section 2.1 [Revolving Credit Commitments], 2.4 [Revolving Credit Loan
Requests; Swing Loan Requests], 2.4.2 [Swing Loan Requests] or 6.2 [Each
Additional Loan or Letter of Credit], if applicable, or as otherwise set
forth in this Agreement for the making of a Revolving Credit Loan, it being
acknowledged that such conditions are not required for the making of a
Letter of Credit Borrowing and the obligation of the Lenders to make
Participation Advances under Section 2.9.3 [Disbursements, Reimbursement];
(iii) any lack of validity or enforceability of any Letter of Credit;
(iv) the existence of any claim, set-off, defense or other right which any
Loan Party or any Lender may have at any time against a beneficiary or any
transferee of any Letter of Credit (or any Persons for whom any such
transferee may be acting), the Agent, the Letter of Credit Lender or any
Lender or any other Person or, whether in connection with this Agreement,
the transactions contemplated herein or any unrelated transaction
(including any underlying transaction between any Loan Party or
Subsidiaries of a Loan Party and the beneficiary for which any Letter of
Credit was procured);
(v) any draft, demand, certificate or other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect even if the Letter of Credit Lender has been notified thereof;
(vi) payment by the Letter of Credit Lender under any Letter of Credit
against presentation of a demand, draft or certificate or other document
which does not comply with the terms of such Letter of Credit;
(vii) any adverse change in the business, operations, properties, assets,
condition (financial or otherwise) or prospects of any Loan Party or
Subsidiaries of a Loan Party;
(viii) any breach of this Agreement or any other Loan Document by any
party thereto;
(ix) the occurrence or continuance of an Insolvency Proceeding with
respect to any Loan Party;
(x) the fact that an Event of Default or a Potential Default shall have
occurred and be continuing;
(xi) the fact that the Expiration Date shall have passed or this Agreement
or the Commitments hereunder shall have been terminated; and
(xii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing.
2.9.8. Indemnity.
In addition to amounts payable as provided in Section 9.5 [Reimbursement
and Indemnification of Agent by the Borrower], the Borrower hereby agrees
to protect, indemnify, pay and save harmless the Agent and any Letter of
Credit Lender from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including reasonable fees,
expenses and disbursements of counsel and allocated costs of internal
counsel) which the Agent or any Letter of Credit Lender may incur or be
subject to as a consequence, direct or indirect, of the issuance of any
Letter of Credit, other than as a result of (A) the gross negligence or
willful misconduct of the Agent or any Letter of Credit Lender as
determined by a final judgment of a court of competent jurisdiction or
(B) the wrongful dishonor by the Letter of Credit Lender of a proper demand
for payment made under any Letter of Credit, except if such dishonor
resulted from any act or omission, whether rightful or wrongful, of any
present or future de jure or de facto government or governmental authority
(all such acts or omissions herein called "Governmental Acts").
2.9.9. Liability for Acts and Omissions.
As between any Loan Party and the Agent or any Letter of Credit Lender,
such Loan Party assumes all risks of the acts and omissions of, or misuse
of the Letters of Credit by, the respective beneficiaries of such Letters
of Credit. In furtherance and not in limitation of the foregoing, neither
the Agent nor any Letter of Credit Lender shall be responsible for: (i)the
form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the application for an
issuance of any such Letter of Credit, even if it should in fact prove to
be in any or all respects invalid, insufficient, inaccurate, fraudulent or
forged (even if the Agent or any Letter of Credit Lender shall have been
notified thereof); (ii)the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any such
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)the failure of the beneficiary of any such Letter of Credit,
or any other party to which such Letter of Credit may be transferred, to
comply fully with any conditions required in order to draw upon such Letter
of Credit or any other claim of any Loan Party against any beneficiary of
such Letter of Credit, or any such transferee, or any dispute between or
among any Loan Party and any beneficiary of any Letter of Credit or any
such transferee; (iv)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)errors in interpretation
of technical terms; (vi)any loss or delay in the transmission or otherwise
of any document required in order to make a drawing under any such Letter
of Credit or of the proceeds thereof; (vii)the misapplication by the
beneficiary of any such Letter of Credit of the proceeds of any drawing
under such Letter of Credit; or (viii)any consequences arising from causes
beyond the control of the Agent or Letter of Credit Lender, including any
Governmental Acts, and none of the above shall affect or impair, or prevent
the vesting of, any of the Agent's or any Letter of Credit Lender's rights
or powers hereunder. Nothing in the preceding sentence shall relieve the
Agent or any Letter of Credit Lender from liability for the Agent's or any
Letter of Credit Lender's gross negligence or willful misconduct in
connection with actions or omissions described in such clauses (i) through
(viii) of such sentence.
In furtherance and extension and not in limitation of the specific
provisions set forth above, any action taken or omitted by the Agent or any
Letter of Credit Lender under or in connection with the Letters of Credit
issued by it or any documents and certificates delivered thereunder, if
taken or omitted in good faith, shall not put the Agent or any Letter of
Credit Lender under any resulting liability to any Loan Party or any
Lender.
2.9.10. Sharing Letter of Credit Documentation.
Each Letter of Credit Lender shall furnish to the Agent copies of any
letter of credit application and related documentation to which such Letter
of Credit Lender and a Loan Party are parties and promptly after issuance,
a copy of any Letter of Credit or amendment to any Letter of Credit issued
by such Lender.
2.10 Extension by Lenders of the Expiration Date.
2.10.1. Requests; Approval by All Lenders.
After delivery by the Borrower of the annual financial statements to be
provided under Section 7.3.2 [Annual Financial Statements] for the fiscal
year ending October 31, 2004 or any subsequent fiscal year, the Borrower
may request either a one-year or two-year extension (provided that any such
extension may not cause the remaining term of this Agreement to exceed 4
years) of the Expiration Date, by written notice to the Lenders made by May
30 of the year in which such financial statements are due, and the Lenders
agree to respond to the Borrower's request for an extension no later than
thirty (30) days following receipt of the request; provided, however, that
the failure of any Lender to respond within such time period shall not in
any manner constitute an agreement by such Lender to extend the Expiration
Date. If all Lenders elect to extend, the Expiration Date shall be
extended for a period of one year or two years, as requested by the
Borrower. If one or more Lenders decline to extend or do not respond to
Borrower's request, the provisions of Section 2.10.2 [Approval by 80%
Lenders] shall apply.
2.10.2. Approval by 80% Lenders.
In the event that one or more Lenders do not agree to extend the Expiration
Date or do not respond to Borrower's request for an extension within the
time required under Section 2.10.1 [Requests; Approval by All Lenders]
(each a "Non-approving Lender"), but 80% of the Lenders (measured by their
Ratable Shares and not per capita) agree to such extension within such time
(each such agreeing Lender being an "Extending Lender"), then the Borrower
may, at the Borrower's option, on or before July 31 of the year in which
the Borrower made its request for an extension, notify the Agent and the
Lenders that the Borrower intends to employ one or more of the following
three (3) options: (i) cause the Commitment of each Non-approving Lender
to be terminated (after which time such Non-approving Lender shall cease to
be a "Lender" hereunder) and cause the aggregate Commitments to be reduced
by the amount of such terminated Commitments, or (ii) require the Non-
approving Lenders to sell, and allow (upon prior notice to the Agent) the
Extending Lenders which have agreed to such extension within the time
required under Section 2.11.1 [Requests; Approval by All Lenders] or any
financial institution approved by the Agent and (absent an Event of
Default) the Borrower (each such Person referred to in this clause (ii)
being an "Assignee Lender") to purchase all of the outstanding Loans if
any, of the Non-approving Lenders and succeed to and assume the Commitments
and all other rights, interests and obligations of the Non-approving
Lenders under this Agreement and the other Loan Documents, or (iii) require
the Non-approving Lender to remain a Lender and require it to maintain its
Commitment and retain for such Non-approving Lender's Commitment the
"Expiration Date" established prior to the extension referred to in this
Section 2.10.2, all subject to the other provisions of this Agreement. Any
such purchase and assumption pursuant to clause (ii) above shall be
(1)pursuant to an Assignment and Assumption Agreement and (2)subject to and
in accordance with Section 10.11 [Successors and Assigns]. The Borrower
shall pay all amounts due and payable to the Non-approving Lender on the
effective date of such Assignment and Assumption Agreement. In the event
that the Agent shall become a Non-approving Lender, the provisions of this
Section 2.10 [Extension by Lenders of the Expiration Date] shall be subject
to Section 9.14 [Successor Agent]. In the event that the Borrower has
selected the option described in clause (ii) above and if the Loans and
Commitments of a Non-approving Lender are, nevertheless, not fully assigned
and assumed pursuant to this Section 2.10.2, or terminated or retained
pursuant to clause (i) or clause (iii) above, as applicable, on or before
August 31 of the year in which the Borrower made its request for an
extension, then the Expiration Date shall not be extended for any Lender.
Nothing in this Section 2.10.2 shall expand the options provided in Section
4.4.2 [Replacement of a Lender].
2.11 Designation of Subsidiaries and Release of Guarantors.
2.11.1. Release of Guarantors.
At any time when the Borrower wishes to cause the Lenders to release a
Guarantor from its obligations under the Guaranty Agreement (whether
directly or in connection with the designation of a Restricted Subsidiary
as a Non-Restricted Person), the consent of the Lenders shall be required
as described below and shall be subject to the other provisions of this
Section 2.11.
(a) For the release of (i) any Guarantor whose assets are principally
comprised of residential or commercial property which is leased or held for
the purposes of leasing to unaffiliated third parties or (ii) any Guarantor
in which any Loan Party (or Loan Parties in the aggregate) has, at the time
of such release, a Subsidiary Investment less than $100,000, or (iii)
Corporate Office Subsidiary incident to it becoming a Non-Restricted
Person, no consent of the Lenders shall be required and such request of the
Borrower shall be granted absent an Event of Default or Potential Default,
effective on the date specified by the Borrower which shall not be earlier
than five (5) Business Days after the receipt by the Agent of such request;
(b) For the release of any Guarantor (not described in item (a)(i)
hereof) in which any Loan Party (or Loan Parties in the aggregate) has, at
the time of such release, a Subsidiary Investment greater than or equal to
$100,000 and less than $1,000,000 (except Corporate Office Subsidiary, if
otherwise applicable), the consent of Required Lenders shall be required;
(c) For the release of Hovnanian or any Guarantor (not described in item
(a)(i) hereof) in which any Loan Party (or Loan Parties in the aggregate)
has, at the time of such release, a Subsidiary Investment greater than or
equal to $1,000,000 (except Corporate Office Subsidiary, if otherwise
applicable), the consent of 100% of the Lenders shall be required; and
(d) The designation of a Person as a Non-Restricted Person for any reason
shall not itself constitute a release of any Guarantor and any such release
of such Person from its Guaranty shall be in accordance with this Section
2.11.
2.11.2. Designation of Non-Restricted Person.
The Borrower may, by written notice delivered to the Agent, designate as a
Non-Restricted Person a Subsidiary formerly designated a Restricted
Subsidiary or a newly formed or acquired Subsidiary, subject to: (i) the
provisions of subsection 2.11.1 hereof in relation to Guaranties, (ii) the
requirements of Section 7 [Covenants] and in particular Section 7.2.10
[Borrowing Base] (provided that the requirements of such Section 7.2.10
shall apply only if the Investment Grade Period is not in effect); and
(iii) the requirement that such designation not cause an Event of Default
or Potential Default. Such designation shall be effective on the date
specified by the Borrower which shall not be earlier than five (5) Business
Days after the receipt by the Agent of such notice.
2.11.3. Automatic Designation of Non-Restricted Person.
Upon the occurrence of any event described in Section 8.1.10 [Insolvency],
Section 8.1.14 [Involuntary Proceedings], Section 8.1.15 [Voluntary
Proceedings], or the winding-up or termination of business, with respect to
any Restricted Subsidiary, such Subsidiary shall automatically become a
Non-Restricted Person. Such designation as a Non-Restricted Person shall,
with respect such Person's obligations under the Guaranty Agreement, if
any, be subject to the requirements of Section 2.11.1 [Release of
Guarantors] and such Subsidiary shall continue to be a Guarantor until such
time as it is released from the Guaranty Agreement pursuant to such
Section. The release of any Subsidiary which is a Guarantor from its
obligations under the Guaranty Agreement pursuant to Section 2.11.1
[Release of Guarantors] shall automatically cause such Subsidiary to be a
Non-Restricted Person.
2.11.4. Designation of Restricted Subsidiary.
The Borrower may by written notice delivered to the Agent designate as a
Restricted Subsidiary a Subsidiary formerly designated a Non-Restricted
Person or a newly formed or acquired Subsidiary. Such designation is
subject to (i) compliance with Section 10.18 [Joinder of Guarantors]; (ii)
the requirements of Section 7 [Covenants] and in particular Section 7.2.10
[Borrowing Base] (provided that the requirements of such Section 7.2.10
shall apply only if the Investment Grade Period is not in effect); and
(iii) the requirement that such designation not cause an Event of Default
or Potential Default. Such designation shall be effective on the date
specified by the Borrower which shall not be earlier than five (5) Business
Days after the receipt by the Agent of such notice.
2.12 Increase in Commitments.
2.12.1 Increasing Lenders and New Lenders.
The Borrower may, at any time prior to the second anniversary of the
Closing Date, request that (1) the current Lenders (the "Existing Lenders")
increase their Revolving Credit Commitments (any Existing Lender which
elects to increase its Revolving Credit Commitment shall be referred to as
an "Increasing Lender") or (2) one or more new banks (each a "New Lender")
join this Agreement and provide a Revolving Credit Commitment hereunder,
subject to the following terms and conditions:
(i) No Obligation to Increase. No Existing Lender shall be obligated to
increase its Revolving Credit Commitment and any increase in the Revolving
Credit Commitment by any Existing Lender shall be in the sole discretion of
such Existing Lender.
(ii) Defaults. There shall exist no Events of Default or Potential
Default on the effective date of such increase (the "Revolving Credit
Commitment Increase Date") after giving effect to such increase.
(iii) Aggregate Revolving Credit Commitments. After giving effect to such
increase, the total Revolving Credit Commitments shall not exceed
$1,000,000,000.
(iv) Minimum Revolving Credit Commitments. After giving effect to such
increase, the amount of the Revolving Credit Commitments provided by each
of the New Lenders and each of the Increasing Lenders shall be at least
$20,000,000; and
(v) Resolutions; Opinion. The Loan Parties shall deliver to the
Administrative Agent on or before the Revolving Credit Commitment Increase
Date the following documents in a form reasonably acceptable to the
Administrative Agent: (1) certifications of their corporate secretaries
with attached resolutions certifying that the increase in the Revolving
Credit Commitment has been approved by such Loan Parties, and (2) an
opinion of counsel addressed to the Agent and the Lenders addressing the
authorization and execution of the Loan Documents by, and enforceability of
the Loan Documents against, the Loan Parties.
(vi) Notes. The Borrower shall execute and deliver (1) to each Increasing
Lender a replacement Note (except if such Increasing Lender requests that
it not receive a Note) reflecting the new amount of such Increasing
Lender's Revolving Credit Commitment after giving effect to the increase
(and the prior Note issued to such Increasing Lender shall be deemed to be
terminated) and (2) to each New Lender a Note (except if such New Lender
requests that it not receive a Note) reflecting the amount of such New
Lenders' Revolving Credit Commitment.
(vii) Approval. The Administrative Agent shall have approved of such
increase and the Increasing Lender or New Lender, as the case may be, that
is providing such increase.
(viii) Increasing Lenders. If any portion of the increase in
Revolving Credit Commitments is being provided by one or more Increasing
Lenders, then such Increasing Lenders shall confirm their agreement to
increase their Revolving Credit Commitment pursuant to a Revolving Credit
Commitment Increase Agreement in substantially the form of Exhibit 2.12.1-1
attached hereto signed by them and the Loan Parties and delivered to the
Agent at least five (5) Business Days before the Revolving Credit
Commitment Increase Date.
(ix) New Lenders--Joinder. If the Borrower desires that one or more New
Lenders provide all or a portion of such increase in Revolving Credit
Commitments, then each New Lender, the Loan Parties and the Administrative
Agent shall execute a Lender Joinder and Assumption Agreement in
substantially the form of Exhibit 2.12.1-2 hereto, pursuant to which the
New Lender shall join and become a party to this Agreement and the other
Credit Documents effective on the Revolving Credit Revolving Credit
Commitment Increase Date with a Revolving Credit Commitment in the amount
set forth in Schedule I to such Lender Joinder and Assumption Agreement.
2.12.2 Treatment of Outstanding Loans and Letters of Credit.
2.12.2.1 Repayment of Outstanding Loans; Borrowing of New Loans.
On the Revolving Credit Commitment Increase Date, the Borrower shall repay
all Loans outstanding on the Revolving Credit Commitment Increase Date,
subject to the Borrower's indemnity obligations under Section 4.6.2
[Indemnity] provided that it may borrow new Loans with a Borrowing Date on
the Revolving Credit Commitment Increase Date. Each of the Lenders shall
participate in any new Loans made on or after the Revolving Credit
Commitment Increase Date in accordance with their respective Ratable Shares
after giving effect to the increase in Revolving Credit Commitments
contemplated by this Section 2.12.
2.12.2.2 Outstanding Letters of Credit.
On the Commitment Increase Date, each Increasing Lender and each New Lender
(a) will be deemed to have purchased a participation in each then
outstanding Letter of Credit equal to its Ratable Share of each such Letter
of Credit and the participation of each other Lender in each such Letter of
Credit shall be adjusted accordingly and (b) will acquire, (and will pay to
the Administrative Agent, for the account of each Lender, in immediately
available funds, an amount equal to) its Ratable Share of all outstanding
Participation Advances.
3. INTEREST RATES
3.1 Interest Rate Options.
The Borrower shall pay interest in respect of the outstanding unpaid
principal amount of the Loans as selected by it from the Base Rate Option
or LIBO-Rate Option set forth below applicable to the Loans, it being
understood that, subject to the provisions of this Agreement, the Borrower
may select different Interest Rate Options and different Interest Periods
to apply simultaneously to the Loans comprising different Borrowing
Tranches and may convert to or renew one or more Interest Rate Options with
respect to all or any portion of the Loans comprising any Borrowing
Tranche, provided that there shall not be at any one time outstanding more
than ten (10) Borrowing Tranches in the aggregate among all of the Loans,
and provided further that only the Base Rate Option shall apply to the
Swing Loans. If at any time the designated rate applicable to any Loan
made by any Lender exceeds such Lender's highest lawful rate, the rate of
interest on such Lender's Loan shall be limited to such Lender's highest
lawful rate.
3.1.1. Revolving Credit Interest Rate Options.
The Borrower shall have the right to select from the following Interest
Rate Options applicable to the Revolving Credit Loans (subject to the
provisions above regarding Swing Loans):
(i) Revolving Credit Base Rate Option: A fluctuating rate per annum
(computed on the basis of a year of 365 or 366 days, as the case may be,
and actual days elapsed) equal to the Base Rate plus the Applicable Margin,
such interest rate to change automatically from time to time effective as
of the effective date of each change in the Base Rate; or
(ii) Revolving Credit LIBO-Rate Option: A rate per annum (computed on the
basis of a year of 360 days and actual days elapsed) equal to the LIBO-Rate
plus the Applicable Margin.
3.1.2. Rate Quotations.
The Borrower may call the Agent on or before the date on which a Loan
Request is to be delivered to receive an indication of the rates then in
effect, but it is acknowledged that such projection shall not be binding on
the Agent or the Lenders nor affect the rate of interest which thereafter
is actually in effect when the election is made.
3.2 Interest Periods.
At any time when the Borrower shall select, convert to or renew a LIBO-Rate
Option, the Borrower shall notify the Agent thereof at least three (3)
Business Days prior to the effective date of such LIBO-Rate Option by
delivering a Loan Request. The notice shall specify an Interest Period
during which such Interest Rate Option shall apply. Notwithstanding the
preceding sentence, in the case of the renewal of a LIBO-Rate Option at the
end of an Interest Period, the first day of the new Interest Period shall
be the last day of the preceding Interest Period, without duplication in
payment of interest for such day.
3.3 Interest After Default.
3.3.1. Default Rate.
To the extent permitted by Law, upon the occurrence of an Event of Default
under Section 8.1.1 [Payment Under Loan Documents], Section 8.1.10
[Insolvency], Section 8.1.14 [Involuntary Proceedings], Section 8.1.15
[Voluntary Proceedings] or the Obligations are accelerated under this
Agreement and until such time such Event of Default shall have been cured
or waived, each Obligation hereunder shall bear interest at a rate per
annum equal to the sum of the rate of interest applicable under the
Revolving Credit Base Rate Option plus an additional 3.0% per annum from
the time such Obligation becomes due and payable and until it is paid in
full (the "Default Rate").
3.3.2. Acknowledgment.
The Borrower acknowledges that the increase in rate referred to in Section
3.3.1 [Default Rate] reflects, among other things, the fact that such Loans
or other amounts have become a substantially greater risk given their
default status and that the Lenders are entitled to additional compensation
for such risk; and all such interest shall be payable by Borrower upon
demand by Agent.
3.4 LIBO-Rate Unascertainable; Illegality; Increased Costs; Deposits Not
Available.
3.4.1. Unascertainable.
If on any date on which a LIBO-Rate would otherwise be determined, the
Agent shall have determined that:
(i) adequate and reasonable means do not exist for ascertaining such
LIBO-Rate, or
(ii) a contingency has occurred which materially and adversely affects the
London interbank eurodollar market relating to the LIBO-Rate, the Agent
shall have the rights specified in Section 3.4.3 [Agent's and Lender's
Rights].
3.4.2. Illegality; Increased Costs; Deposits Not Available.
If at any time any Lender shall have determined that:
(i) the making, maintenance or funding of any Loan to which a LIBO-Rate
Option applies has been made impracticable or unlawful by compliance by
such Lender in good faith with any Law or any interpretation or application
thereof by any Official Body or with any request or directive of any such
Official Body (whether or not having the force of Law), or
(ii) such LIBO-Rate Option will not adequately and fairly reflect the cost
to such Lender of the establishment or maintenance of any such Loan, or
(iii) after making all reasonable efforts, deposits of the relevant amount
in Dollars for the relevant Interest Period for a Loan, or to banks
generally, to which a LIBO-Rate Option applies, respectively, are not
available to such Lender with respect to such Loan, or to banks generally,
in the interbank eurodollar market, then the Agent shall have the rights
specified in Section 3.4.3 [Agent's and Lender's Rights].
3.4.3. Agent's and Lender's Rights.
In the case of any event specified in Section 3.4.1 [Unascertainable]
above, the Agent shall promptly so notify the Lenders and the Borrower
thereof, and in the case of an event specified in Section 3.4.2
[Illegality; Increased Costs; Deposits Not Available] above, such Lender
shall promptly so notify the Agent and endorse a certificate to such notice
as to the specific circumstances of such notice, and the Agent shall
promptly send copies of such notice and certificate to the other Lenders
and the Borrower. Upon such date as shall be specified in such notice
(which shall not be earlier than the date such notice is given), the
obligation of (A)the Lenders, in the case of such notice given by the
Agent, or (B)such Lender, in the case of such notice given by such Lender,
to allow the Borrower to select, convert to or renew a LIBO-Rate Option
shall be suspended until the Agent shall have later notified the Borrower,
or such Lender shall have later notified the Agent, of the Agent's or such
Lender's, as the case may be, determination that the circumstances giving
rise to such previous determination no longer exist. If at any time the
Agent makes a determination under Section 3.4.1 [Unascertainable] and the
Borrower has previously notified the Agent of its selection of, conversion
to or renewal of a LIBO-Rate Option and such Interest Rate Option has not
yet gone into effect, such notification shall be deemed to provide for
selection of, conversion to or renewal of the Base Rate Option otherwise
available with respect to such Loans. If any Lender notifies the Agent of
a determination under Section 3.4.2 [Illegality; Increased Costs; Deposits
Not Available], the Borrower shall, subject to the Borrower's
indemnification Obligations under Section 4.6.2 [Indemnity], as to any Loan
of the Lender to which a LIBO-Rate Option applies, on the date specified in
such notice either convert such Loan to the Base Rate Option otherwise
available with respect to such Loan or prepay such Loan in accordance with
Section 4.4 [Voluntary Prepayments]. Absent due notice from the Borrower
of conversion or prepayment, such Loan shall automatically be converted to
the Base Rate Option otherwise available with respect to such Loan upon
such specified date.
3.5 Selection of Interest Rate Options.
If the Borrower fails to select a new Interest Period to apply to any
Borrowing Tranche of Loans under the LIBO-Rate Option at the expiration of
an existing Interest Period applicable to such Borrowing Tranche in
accordance with the provisions of Section 3.2 [Interest Periods], the
Borrower shall be deemed to have converted such Borrowing Tranche to the
Revolving Credit Base Rate Option, commencing upon the last day of the
existing Interest Period.
4. PAYMENTS
4.1 Payments.
All payments and prepayments to be made in respect of principal, interest,
Commitment Fees, Letter of Credit Fees, Agent's Fees or other fees or
amounts due from the Borrower hereunder shall be payable prior to eleven
o'clock (11:00) a.m., Eastern time, on the date when due without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived by the Borrower, and without set-off, counterclaim or
other deduction of any nature, and an action therefor shall immediately
accrue. Such payments shall be made to the Agent at the Principal Office
for the account of PNC Bank with respect to the Swing Loans and for the
ratable accounts of the Lenders with respect to the Revolving Credit Loans
in Dollars and in immediately available funds, and the Agent shall promptly
distribute such amounts to the Lenders in immediately available funds,
provided that in the event payments are received by eleven o'clock (11:00)
a.m., Eastern time, by the Agent with respect to the Loans and such
payments are not distributed to the Lenders on the same day received by the
Agent, the Agent shall pay the Lenders the Federal Funds Effective Rate
with respect to the amount of such payments for each day held by the Agent
and not distributed to the Lenders. The Agent's and each Lender's
statement of account, ledger or other relevant record shall, in the absence
of manifest error, be conclusive as the statement of the amount of
principal of and interest on the Loans and other amounts owing under this
Agreement and shall be deemed an "account stated."
4.2 Pro Rata Treatment of Lenders.
Each borrowing shall be allocated to each Lender according to its Ratable
Share, and each selection of, conversion to or renewal of any Interest Rate
Option and each payment or prepayment by the Borrower with respect to
principal, interest, Commitment Fees, Letter of Credit Fees, or other fees
(except for the Agent's Fees) or amounts due from the Borrower hereunder to
the Lenders with respect to the Loans, shall (except as provided in Section
3.4.3 [Agent's and Lender's Rights] in the case of an event specified in
Sections 3.4 [LIBO-Rate Unascertainable; Illegality, Increased Costs,
Deposits Not Available], 4.4.2 [Replacement of a Lender] or 4.6 [Additional
Compensation in Certain Circumstances]) be made in proportion to the
applicable Loans outstanding from each Lender and, if no such Loans are
then outstanding, in proportion to the Ratable Share of each Lender.
Notwithstanding any of the foregoing, each borrowing or payment or
prepayment by the Borrower of principal, interest, fees or other amounts
from the Borrower with respect to Swing Loans shall be made by or to PNC
Bank according to Section 2 [Revolving Credit and Swing Loan Facilities].
4.3 Interest Payment Dates.
Interest on Loans to which the Base Rate Option applies shall be due and
payable in arrears on the first Business Day of each calendar month after
the date hereof and on the Expiration Date or upon acceleration of the
Loan. Interest on Loans to which the LIBO-Rate Option applies shall be due
and payable on the last day of each Interest Period for those Loans and, if
such Interest Period is longer than three (3) Months, also on the 90th day
of such Interest Period. Interest on mandatory prepayments of principal
under Section 4.5 [Mandatory Payments] shall be due on the date such
mandatory prepayment is due. Interest on the principal amount of each Loan
or other monetary Obligation shall be due and payable on demand after such
principal amount or other monetary Obligation becomes due and payable
(whether on the stated maturity date, upon acceleration or otherwise).
4.4 Voluntary Prepayments.
4.4.1. Right to Prepay.
The Borrower shall have the right at its option at any time and from time
to time to prepay the Loans in whole or part without premium or penalty
(except as provided in Section 4.4.2 [Replacement of a Lender] below or in
Section 4.6 [Additional Compensation in Certain Circumstances]).
Whenever the Borrower desires to prepay any part of the Loans, it shall
provide a prepayment notice to the Agent no later than (A) 11:00 a.m.,
Eastern time, at least two (2) Business Days prior to the date of
prepayment of the Revolving Credit Loans to which the LIBO-Rate Option
applies, (B) 11:00 a.m., Eastern time, on the date of prepayment of
Revolving Credit Loans to which the Base Rate Option applies or (C) 2:00
p.m., Eastern time, on the date of prepayment of Swing Loans, setting forth
the following information:
(x) the date, which shall be a Business Day, on which the proposed
prepayment is to be made;
(y) a statement indicating the application of the prepayment between the
Swing Loans and the Revolving Credit Loans; and
(z) the total principal amount of such prepayment, which shall not be
less than (i) $100,000 and in increments of $100,000 for any Swing Loans,
(ii) $500,000 and in increments of $100,000 for any Revolving Credit Loan
to which the Base Rate Option applies or (iii) $2,500,000 and in increments
of $500,000 for any Revolving Credit Loan to which the LIBO-Rate Option
applies.
All prepayment notices shall be irrevocable. The principal amount of the
Loans for which a prepayment notice is given, together with interest on
such principal amount except with respect to Loans to which the Base Rate
Option applies, shall be due and payable on the date specified in such
prepayment notice as the date on which the proposed prepayment is to be
made. Except as provided in Section 3.4.3 [Agent's and Lender's Rights],
if the Borrower prepays a Loan but fails to specify the applicable
Borrowing Tranche which the Borrower is prepaying, the prepayment shall be
applied first to Swing Loans, then to Loans to which the Base Rate Option
applies, and then to Loans to which the LIBO-Rate Option applies. Any
prepayment hereunder shall be subject to the Borrower's Obligation to
indemnify the Lenders under Section 4.6.2 [Indemnity].
4.4.2. Replacement of a Lender.
In the event any Lender (i) gives notice under Section 3.4 [LIBO-Rate
Unascertainable; Illegality; Increased Costs; Deposits Not Available] or
Section 4.6.1 [Increased Costs or Reduced Return Resulting from Taxes,
Reserves, Capital Adequacy Requirements, Expenses, Etc.], (ii)does not fund
Revolving Credit Loans because the making of such Loans would contravene
any Law applicable to such Lender, or (iii)becomes subject to the control
of an Official Body (other than normal and customary supervision), then the
Borrower shall have the right at its option, with the consent of the Agent,
which shall not be unreasonably withheld, to prepay the Loans of such
Lender in whole, together with all interest accrued thereon, and terminate
such Lender's Commitment within ninety (90) days after (x)receipt of such
Lender's notice under Section 3.4 [LIBO-Rate Unascertainable; Illegality;
Increased Costs; Deposits Not Available] or 4.6.1 [Increased Costs or
Reduced Return Resulting from Taxes, Reserves, Capital Adequacy
Requirements, Expenses, Etc.], (y)the date such Lender has failed to fund
Revolving Credit Loans because the making of such Loans would contravene
Law applicable to such Lender, or (z)the date such Lender became subject to
the control of an Official Body, as applicable; provided that the Borrower
shall also pay to such Lender at the time of such prepayment any amounts
required under Section 4.6 [Additional Compensation in Certain
Circumstances] and any accrued interest due on such amount and any related
fees; provided, further, the remaining Lenders shall have no obligation
hereunder to increase their Commitments. Notwithstanding the foregoing,
the Agent may only be replaced subject to the requirements of Section 9.14
[Successor Agent].
4.4.3. Change of Lending Office.
Each Lender agrees that upon the occurrence of any event giving rise to
increased costs or other special payments under Section 3.4.2 [Illegality;
Increased Costs; Deposits Not Available] or 4.6.1 [Increased Costs or
Reduced Return Resulting from Taxes, Reserves, Capital Adequacy
Requirements, Expenses, Etc.] with respect to such Lender, it will if
requested by the Borrower, use reasonable efforts (subject to overall
policy considerations of such Lender) to designate another lending office
for any Loans or Letters of Credit affected by such event, provided that
such designation is made on such terms that such Lender and its lending
office suffer no economic, legal or regulatory disadvantage, with the
object of avoiding the consequence of the event giving rise to the
operation of such Section. Nothing in this Section 4.4.3 [Change of
Lending Office] shall affect or postpone any of the Obligations of the
Borrower or any other Loan Party or the rights of the Agent or any Lender
provided in this Agreement.
4.5 Mandatory Payments.
The Borrower shall make mandatory payments of principal (together with
accrued interest thereon) to the Agent to the extent by which Revolving
Facility Usage exceeds at any time the Commitments (as they may be reduced
pursuant to Section 2.1. [Voluntary Reduction of Commitment], Section
2.10.2 [Approval by 80% Lenders] or otherwise) within three (3) Business
Days after such excess is calculated.
4.6 Additional Compensation in Certain Circumstances.
4.6.1. Increased Costs or Reduced Return Resulting from Taxes,
Reserves, Capital Adequacy Requirements, Expenses, Etc.
If any Law, guideline or interpretation or any change in any Law, guideline
or interpretation or application thereof by any Official Body charged with
the interpretation or administration thereof or compliance with any request
or directive (whether or not having the force of Law) of any central bank
or other Official Body:
(i) subjects any Lender to any tax or changes the basis of taxation
(including in both cases withholding taxes) with respect to this Agreement,
the Notes, the Loans or payments by the Borrower of principal, interest,
Commitment Fees, or other amounts due from the Borrower hereunder (except
for taxes on the overall net income of such Lender),
(ii) imposes, modifies or deems applicable any reserve, special deposit or
similar requirement against credits or commitments to extend credit
extended by, or assets (funded or contingent) of, deposits with or for the
account of, or other acquisitions of funds by, any Lender, or
(iii) imposes, modifies or deems applicable any capital adequacy or similar
requirement (A)against assets (funded or contingent) of, or letters of
credit, other credits or commitments to extend credit extended by, any
Lender, or (B)otherwise applicable to the obligations of any Lender under
this Agreement, and the result of any of the foregoing is to increase the
cost to, reduce the income receivable by, or impose any expense upon any
Lender with respect to this Agreement, or the making, maintenance or
funding of any part of the Loans (or, in the case of any capital adequacy
or similar requirement, to have the effect of reducing the rate of return
on any Lender's capital, taking into consideration such Lender's customary
policies with respect to capital adequacy) by an amount which such Lender
in its sole discretion deems to be material, such Lender shall from time to
time notify the Borrower and the Agent of the amount determined in good
faith (using any averaging and attribution methods employed in good faith)
by such Lender to be necessary to compensate such Lender for such increase
in cost, reduction of income, additional expense or reduced rate of return.
Such notice shall set forth in reasonable detail the basis for such
determination, provided however, that any such determination shall be
conclusive and binding absent manifest error. Such amount shall be due and
payable by the Borrower to such Lender ten (10) Business Days after such
notice is given.
4.6.2. Indemnity.
In addition to the compensation required by Section 4.6.1 [Increased Costs
or Reduced Return Resulting from Taxes, Reserves, Capital Adequacy
Requirements, Expenses, Etc.], the Borrower shall indemnify each Lender
against all liabilities, losses or expenses (including actual loss of
margin, any loss or expense incurred in liquidating or employing deposits
from third parties and any loss or expense incurred in connection with
funds acquired by a Lender to fund or maintain Loans subject to a LIBO-Rate
Option) which such Lender sustains or incurs as a consequence of any:
(i) payment, prepayment, conversion or renewal of any Loan to which a
LIBO-Rate Option applies on a day other than the last day of the
corresponding Interest Period (whether or not such payment or prepayment is
mandatory, voluntary or automatic and whether or not such payment or
prepayment is then due),
(ii) attempt by the Borrower to revoke (expressly, by later inconsistent
notices or otherwise) in whole or part any Loan Requests under Section 2.4
[Revolving Credit Loan Requests; Swing Loan Requests] or Section 3.2
[Interest Periods] or notice relating to prepayments under Section 4.4
[Voluntary Prepayments], or
(iii) default by the Borrower in the performance or observance of any
covenant or condition contained in this Agreement or any other Loan
Document, including any failure of the Borrower to pay when due (by
acceleration or otherwise) any principal, interest, Commitment Fee, Letter
of Credit Fees, or any other amount due hereunder.
If any Lender sustains or incurs any such loss or expense, it shall from
time to time notify the Borrower of the amount determined in good faith by
such Lender (which determination may include such assumptions, allocations
of costs and expenses and averaging or attribution methods as such Lender
shall deem reasonable) to be necessary to indemnify such Lender for such
loss or expense. Such notice shall set forth in reasonable detail the
basis for such determination. Such amount shall be due and payable by the
Borrower to such Lender ten (10) Business Days after such notice is given.
4.7 Notes.
The Revolving Credit Loans made by each Lender shall (unless a Lender
requests that the Borrower not issue a Note to such Lender) be evidenced by
a Revolving Credit Note.
4.8 Settlement Date Procedures.
The Borrower may borrow, repay and reborrow Swing Loans and PNC Bank may
make Swing Loans as provided in Section 2.1.2 [Swing Loan Commitment]
hereof. On any Business Day, the Agent may notify each Lender of its
Ratable Share of the total of the Revolving Credit Loans and the Swing
Loans (each a "Required Share"). Prior to 2:30 p.m., Eastern time, on the
date following the date of such notice, each Lender shall pay to the Agent
the amount equal to the difference between its Required Share and its
Revolving Credit Loans, and the Agent shall pay to each Lender its Ratable
Share of all payments made by the Borrower to the Agent with respect to the
Revolving Credit Loans. The Agent shall also effect settlement in
accordance with the foregoing sentence on the proposed Borrowing Dates for
Revolving Credit Loans and on any date when payments of principal of any
Loan is required to be paid by any Loan Party hereunder and may at its
option, and in consultation with the Borrower, effect settlement on any
other Business Day. These settlement procedures are established solely as
a matter of administrative convenience, and nothing contained in this
Section 4.8 shall relieve the Lenders of their obligations to fund
Revolving Credit Loans on dates other than a Settlement Date pursuant to
Section 2.8 [Borrowings to Repay Swing Loans]. The Agent may at any time
at its option for any reason whatsoever require each Lender to pay
immediately to the Agent such Lender's Ratable Share of the outstanding
Revolving Credit Loans and each Lender may at any time require the Agent to
pay immediately to such Lender its Ratable Share of all payments made by
the Borrower to the Agent with respect to the Revolving Credit Loans.
5. REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties.
The Borrower and Hovnanian, jointly and severally, represent and warrant to
the Agent and to each of the Lenders as follows:
5.1.1. Organization and Qualification.
Each of the Borrower and Hovnanian is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization and each other Loan Party is a corporation, partnership or
limited liability company duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization except to the
extent the failure to do so could not, individually or in the aggregate,
reasonably be expected to cause a Material Adverse Change. Each Loan Party
has the lawful power to own or lease its properties and to engage in the
business it presently conducts or proposes to conduct. Each Loan Party is
duly licensed or qualified and in good standing in each jurisdiction where
the failure to obtain them could, individually or in the aggregate,
reasonably be expected to cause a Material Adverse Change.
5.1.2. Subsidiaries.
As of the Closing Date, Schedule 5.1.2 states the name of each of
Hovnanian's Subsidiaries and its jurisdiction of incorporation. Hovnanian
and each Loan Party has good and marketable title to all of the Subsidiary
Shares, Partnership Interests and LLC Interests it purports to own, free
and clear in each case of any Lien. All Subsidiary Shares, Partnership
Interests and LLC Interests have been validly issued, and all Subsidiary
Shares are fully paid and nonassessable. All capital contributions and
other consideration required to be made or paid in connection with the
issuance of the Partnership Interests and LLC Interests have been made or
paid, as the case may be. Schedule 5.1.2 also sets forth, as to each of
Hovnanian's Subsidiaries, the percentage ownership of each owner of: the
issued and outstanding shares (referred to herein as the "Subsidiary
Shares") if such Subsidiary is a corporation, its outstanding partnership
interests (the "Partnership Interests") if such Subsidiary is a partnership
and its outstanding limited liability company interests (the "LLC
Interests") if such Subsidiary is a limited liability company. Schedule
5.1.2 also footnote the controlling interests of each Subsidiary if such
controlling interest is held by a Person other than Hovnanian or a
Subsidiary of Hovnanian.
5.1.3. Power and Authority.
Each Loan Party has full power to enter into, execute, deliver and carry
out this Agreement and the other Loan Documents to which it is a party, to
incur the Indebtedness contemplated by the Loan Documents and to perform
its Obligations under the Loan Documents to which it is a party, and all
such actions have been duly authorized by all necessary proceedings on its
part.
5.1.4. Validity and Binding Effect.
This Agreement has been duly and validly executed and delivered by each
Loan Party, and each other Loan Document which any Loan Party is required
to execute and deliver on or after the date hereof will have been duly
executed and delivered by such Loan Party on the required date of delivery
of such Loan Document. This Agreement and each other Loan Document
constitutes, or will constitute, legal, valid and binding obligations of
each Loan Party which is or will be a party thereto on and after its date
of delivery thereof, enforceable against such Loan Party in accordance with
its terms, except to the extent that enforceability of any of such Loan
Document may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforceability of creditors'
rights generally or limiting the right of specific performance.
5.1.5. No Conflict.
Neither the execution and delivery of this Agreement or the other Loan
Documents by any Loan Party nor the consummation of the transactions herein
or therein contemplated or compliance with the terms and provisions hereof
or thereof by any of them will conflict with, constitute a default under or
result in any breach of (i)the terms and conditions of the certificate of
incorporation, bylaws, certificate of limited partnership, partnership
agreement, certificate of formation, limited liability company agreement or
other organizational documents of any Loan Party or (ii)any Law or any
material agreement or instrument or order, writ, judgment, injunction or
decree to which any Loan Party is a party or by which it is bound or to
which it is subject, or result in the creation or enforcement of any Lien,
charge or encumbrance whatsoever upon any property (now or hereafter
acquired) of any Loan Party (other than Liens granted under the Loan
Documents) which could, individually or in the aggregate, reasonably be
expected to cause a Material Adverse Change.
5.1.6. Litigation.
There are no actions, suits, proceedings or investigations pending or, to
the knowledge of any Loan Party, threatened against such Loan Party at law
or equity before any Official Body which individually or in the aggregate
may result in any Material Adverse Change. None of the Loan Parties is in
violation of any order, writ, injunction or any decree of any Official Body
which may result in any Material Adverse Change.
5.1.7. Title to Properties.
Each Loan Party has good and marketable title to or a valid leasehold
interest in all properties, assets and other rights which it purports to
own or lease or which are reflected as owned or leased on its books and
records, free and clear of all Liens and encumbrances, except Permitted
Liens, and subject to the terms and conditions of the applicable leases.
All leases of property are in full force and effect without the necessity
for any consent which has not previously been obtained upon consummation of
the transactions contemplated hereby.
5.1.8. Financial Statements.
(i) Historical Statements. The Borrower has delivered to the Agent
copies of Hovnanian's audited consolidated year-end financial statements
for and as of the end of the fiscal year ended October 31, 2003 (the
"Annual Statements") and unaudited consolidated quarter-end financial
statements for and as of the end of the fiscal quarter ended January 31,
2004. (The Annual Statements are also sometimes referred to as the
"Historical Statements"). The Historical Statements were compiled from the
books and records maintained by Hovnanian's management, are correct and
complete and fairly represent the consolidated financial condition of
Hovnanian and its Subsidiaries as of their dates and the results of
operations for the fiscal periods then ended and have been prepared in
accordance with GAAP consistently applied. The Historical Statements
accurately reflect the liabilities of Hovnanian and its Subsidiaries.
(ii) Financial Projections. The Borrower has delivered to the Agent and
the Lenders financial projections of Hovnanian and its Subsidiaries for the
period ending October 31, 2008 derived from various assumptions of
Hovnanian's management (the "Financial Projections"). The Financial
Projections represent a reasonable range of possible results in light of
the history of the business, present and foreseeable conditions and the
intentions of Hovnanian's management (it being understood that actual
results may vary materially from the Financial Projections).
(iii) Accuracy of Financial Statements. As of the Closing Date, neither
Hovnanian nor any Subsidiary of Hovnanian has any liabilities, contingent
or otherwise, or forward or long-term commitments that are required by GAAP
to be, but are not, disclosed in the Historical Statements or in the notes
thereto, and except as disclosed therein there are no unrealized or
anticipated losses from any commitments of Hovnanian or any Subsidiary of
Hovnanian which may cause a Material Adverse Change. Since October 31,
2003, no Material Adverse Change has occurred.
5.1.9. Use of Proceeds; Margin Stock.
5.1.9.1 General.
The Loan Parties intend to use the proceeds of the Loans in accordance with
Sections 2.7 [Use of Proceeds] and 7.1.10 [Use of Proceeds].
5.1.9.2 Margin Stock.
None of the Loan Parties engages or intends to engage principally, or as
one of its important activities, in the business of extending credit for
the purpose, immediately, incidentally or ultimately, of purchasing or
carrying margin stock (within the meaning of Regulation U). No part of the
proceeds of any Loan has been or will be used, immediately, incidentally or
ultimately, to purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying any margin stock or to
refund Indebtedness originally incurred for such purpose, or for any
purpose which entails a violation of or which is inconsistent with the
provisions of the regulations of the Board of Governors of the Federal
Reserve System. None of the Loan Parties holds or intends to hold margin
stock in such amounts that more than 25% of the reasonable value of the
assets of such Loan Party are or will be represented by margin stock.
5.1.10. Full Disclosure.
Neither this Agreement nor any other Loan Document, nor any certificate,
statement, agreement or other documents furnished to the Agent or any
Lender in connection herewith or therewith, contains any untrue statement
of a material fact or omits to state a material fact necessary in order to
make the statements contained herein and therein, in light of the
circumstances under which they were made, not misleading. There is no fact
known to any Loan Party which materially adversely affects the business,
property, assets, financial condition, results of operations or business
prospects of the Loan Parties taken as a whole which has not been set forth
in this Agreement or in the certificates, statements, agreements or other
documents furnished in writing to the Agent and the Lenders prior to or at
the date hereof in connection with the transactions contemplated hereby.
5.1.11. Taxes.
All federal, state, local and other tax returns required to have been filed
with respect to the Loan Parties have been filed, and payment or adequate
provision has been made for the payment of all taxes, fees, assessments and
other governmental charges which have or may become due pursuant to said
returns or to assessments received, except to the extent that such taxes,
fees, assessments and other charges are not material or are being contested
in good faith by appropriate proceedings diligently conducted and for which
such reserves or other appropriate provisions, if any, as shall be required
by GAAP shall have been made. There are no agreements or waivers extending
the statutory period of limitations applicable to any federal income tax
return of any Loan Party for any period.
5.1.12. Consents and Approvals.
No consent, approval, exemption, order or authorization of, or a
registration or filing with, any Official Body or any other Person is
required by any Law or any agreement in connection with the execution,
delivery and carrying out of this Agreement and the other Loan Documents by
any Loan Party, except as listed on Schedule 5.1.12, all of which shall
have been obtained or made on or prior to the Closing Date except as
otherwise indicated on Schedule 5.1.12
5.1.13. No Event of Default; Compliance with Instruments.
No event has occurred and is continuing and no condition exists or will
exist after giving effect to the borrowings or other extensions of credit
to be made on the Closing Date under or pursuant to the Loan Documents
which constitutes an Event of Default or Potential Default. None of the
Loan Parties is in violation of (i) any term of its certificate of
incorporation, bylaws, certificate of limited partnership, partnership
agreement, certificate of formation, limited liability company agreement or
other organizational documents or (ii) any material agreement or instrument
to which it is a party or by which it or any of its properties may be
subject or bound where such violation would constitute a Material Adverse
Change.
5.1.14. Patents, Trademarks, Copyrights, Licenses, Etc.
Each Loan Party owns or possesses all the material patents, trademarks,
service marks, trade names, copyrights, licenses, registrations,
franchises, permits and rights necessary to own and operate its properties
and to carry on its business as presently conducted and planned to be
conducted by such Loan Party, without known possible, alleged or actual
material conflict with the rights of others.
5.1.15. Insurance.
No notice has been given or claim made and no grounds exist to cancel or
avoid any of insurance policies of the type described in Section 7.1.3
[Maintenance of Insurance] or to reduce the coverage provided thereby.
5.1.16. Compliance with Laws.
The Loan Parties are in compliance in all material respects with all
applicable Laws (other than Environmental Laws which are specifically
addressed in Section 5.1.21 [Environmental Matters]) in all jurisdictions
in which any Loan Party is presently or will be doing business except where
the failure to do so would not constitute a Material Adverse Change.
5.1.17. Burdensome Restrictions.
None of the Loan Parties is bound by any contractual obligation, or subject
to any restriction in any organization document, or any requirement of Law
which could reasonably be expected to constitute a Material Adverse Change.
5.1.18. Investment Companies; Regulated Entities.
None of the Loan Parties is an "investment company" registered or required
to be registered under the Investment Company Act of 1940 or under the
"control" of an "investment company" as such terms are defined in the
Investment Company Act of 1940 and shall not become such an "investment
company" or under such "control." None of the Loan Parties is subject to
any other Federal or state statute or regulation limiting its ability to
incur Indebtedness for borrowed money (other than Regulation X of the Board
of Governors of the Federal Reserve System).
5.1.19. Plans and Benefit Arrangements.
(i) Except where the liability that could reasonably be expected to
result therefrom would not, individually or in the aggregate, result in a
Material Adverse Change, (a) the Loan Parties and each other member of the
ERISA Group are in compliance in all material respects with any applicable
provisions of ERISA with respect to all Plans and, as to the Borrower,
Benefit Arrangements; (b) there has been no Prohibited Transaction with
respect to any such Benefit Arrangement or any Plan which could result in
any material liability of the Loan Parties or any other member of the ERISA
Group; (c) the Loan Parties and all other members of the ERISA Group have
made when due any and all payments required to be made under any agreement
relating to a Multiemployer Plan or any Law pertaining thereto; (d) with
respect to each Plan the Loan Parties and each other member of the ERISA
Group (i)have fulfilled in all respects their obligations under the minimum
funding standards of ERISA, (ii)have not incurred any liability to the
PBGC, except for premiums in the ordinary course which are not overdue and
(iii)have not had asserted against them any penalty for failure to fulfill
the minimum funding requirements of Section 302 of ERISA; and (e) all Plans
and Benefit Arrangements have been administered in material compliance with
their terms and applicable Law.
(ii) Except where the liability that could reasonably be expected to
result therefrom would not, individually or in the aggregate, result in a
Material Adverse Change, no event requiring notice to the PBGC under
Section 302(f)(4)(A) of ERISA has occurred or is reasonably expected to
occur with respect to any Plan, and no amendment with respect to which
security is required under Section 307 of ERISA has been made or is
reasonably expected to be made to any Plan.
(iii) Except where the liability that could reasonably be expected to
result therefrom would not, individually or in the aggregate, result in a
Material Adverse Change, neither the Loan Parties nor any other member of
the ERISA Group has incurred or reasonably expects to incur any material
withdrawal liability under Section 4201 of ERISA to any Multiemployer Plan
or under Section 4063 or 4064 of ERISA to any Plan;. Neither the Loan
Parties nor any other member of the ERISA Group has been notified by any
Multiemployer Plan or Plan that such Multiemployer Plan or Plan has been
terminated within the meaning of Sections 4041 A or 4064, respectively, of
ERISA and, to the best knowledge of the Borrower, no Multiemployer Plan is
reasonably expected to be reorganized or terminated, within the meaning of
Title IV of ERISA.
(iv) To the best knowledge of Borrower, neither the Borrower nor any other
member of the ERISA Group has, within the preceding five years, entered
into a transaction to which either Section 4069 or Section 4212(c) of ERISA
could apply so as to subject Borrower or other member of the ERISA Group to
a liability, except where the liability that could reasonably be expected
to result therefrom would not result in a Material Adverse Change.
5.1.20. Employment Matters.
Each of the Loan Parties is in compliance with the Labor Contracts and all
applicable Federal, state and local labor and employment Laws including
those related to equal employment opportunity and affirmative action, labor
relations, minimum wage, overtime, child labor, medical insurance
continuation, worker adjustment and relocation notices, immigration
controls and worker and unemployment compensation, where such failure to
comply would constitute a Material Adverse Change. There are no
outstanding grievances, arbitration awards or appeals therefrom arising out
of the Labor Contracts or current or threatened strikes, picketing,
handbilling or other work stoppages or slowdowns at facilities of any of
the Loan Parties which in any case would constitute a Material Adverse
Change.
5.1.21. Environmental Matters.
None of the Loan Parties has received any Environmental Complaint,
including but not limited to those from any Official Body or private Person
alleging that such Loan Party or any prior owner, operator or occupant of
any of the Property is a potentially responsible party under the
Comprehensive Environmental Response, Cleanup and Liability Act, 42 U.S.C.
S 9601, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. S
6901, et seq. or any analogous state or local Law, which could reasonably
be expected to constitute a Material Adverse Change and none of the Loan
Parties has any reason to believe that such an Environmental Complaint
might be received. There are no pending or, to any Loan Party's knowledge,
threatened Environmental Complaints relating to any Loan Party or, to any
Loan Party's knowledge, any prior owner, operator or occupant of any of the
Properties pertaining to, or arising out of, any Contamination or
violations of Environmental Laws or Required Environmental Permits which
could reasonably be expected to constitute a Material Adverse Change.
5.1.22. Senior Debt Status.
The Obligations of each Loan Party under this Agreement, the Guaranty
Agreement and each of the other Loan Documents to which it is a party do
rank and will rank at least pari passu in priority of payment with all
other Indebtedness of such Loan Party except Indebtedness of such Loan
Party to the extent secured by Permitted Liens. There is no Lien upon or
with respect to any of the properties or income of any Loan Party which
secures Indebtedness or other obligations of any Person except for
Permitted Liens.
5.1.23 Anti-Terrorism Laws.
None of the Loan Parties nor or any Affiliate of any Loan Party, is in
violation of any Anti-Terrorism Law or engages in or conspires to engage in
any transaction that evades or avoids, or has the purpose of evading or
avoiding, or attempts to violate, any of the prohibitions set forth in any
Anti-Terrorism Law.
5.1.23.1 Executive Order No. 13224.
None of the Loan Parties, nor or any Affiliate of any Loan Party, or their
respective agents acting or benefiting in any capacity in connection
with the Loans, Letters of Credit or other transactions hereunder, is any
of the following (each a "Blocked Person"):
(i) a Person that is listed in the annex to, or is otherwise subject to
the provisions of, the Executive Order No. 13224;
(ii) a Person owned or controlled by, or acting for or on behalf of, any
Person that is listed in the annex to, or is otherwise subject to the
provisions of, the Executive Order No. 13224;
(iii) a Person or entity with which any Lender is prohibited from dealing
or otherwise engaging in any transaction by any Anti-Terrorism Law;
(iv) a Person or entity that commits, threatens or conspires to commit or
supports "terrorism" as defined in the Executive Order No. 13224;
(v) a Person or entity that is named as a "specially designated
national" on the most current list published by the U.S. Treasury
Department Office of Foreign Asset Control at its official website or any
replacement website or other replacement official publication of such list,
or
(vi) a Person or entity who is affiliated or associated with a person or
entity listed above.
No Loan Party or to the knowledge of any Loan Party, any of its agents
acting in any capacity in connection with the Loans, Letters of Credit or
other transactions hereunder (i) conducts any business or engages in making
or receiving any contribution of funds, goods or services to or for the
benefit of any Blocked Person, or (ii) deals in, or otherwise engages in
any transaction relating to, any property or interests in property blocked
pursuant to the Executive Order No. 13224.
5.2 Continuation of Representations.
The Borrower and Hovnanian make the representations and warranties in this
Section 5 on the date hereof and on the Closing Date and each date
thereafter on which a Loan is made or a Letter of Credit is issued as
provided in and subject to Sections 6.1 [First Loans and Letters of Credit]
and 6.2 [Each Additional Loan or Letter of Credit].
6. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT
The obligation of each Lender to make Loans and of the Agent and the Letter
of Credit Lenders to issue Letters of Credit hereunder is subject to the
performance by each of the Loan Parties of its Obligations to be performed
hereunder at or prior to the making of any such Loans or issuance of such
Letters of Credit and to the satisfaction of the following further
conditions:
6.1 First Loans and Letters of Credit.
On the Closing Date:
6.1.1. Officer's Certificate.
The representations and warranties of each of the Loan Parties contained in
Section 5 [Representation and Warranties] and in each of the other Loan
Documents shall be true and correct on and as of the Closing Date with the
same effect as though such representations and warranties had been made on
and as of such date (except representations and warranties which relate
solely to an earlier date or time, which representations and warranties
shall be true and correct on and as of the specific dates or times referred
to therein), and each of the Loan Parties shall have performed and complied
with all covenants and conditions hereof and thereof, no Event of Default
or Potential Default shall have occurred and be continuing or shall exist;
and there shall be delivered to the Agent for the benefit of each Lender a
certificate of each of the Loan Parties, dated the Closing Date and signed
by the Chief Executive Officer, President or Chief Financial Officer of
each of the Loan Parties, to each such effect.
6.1.2. Incumbency Certificate.
There shall be delivered to the Agent for the benefit of each Lender a
certificate dated the Closing Date and signed by the Secretary or an
Assistant Secretary or the managing member (or equivalent), as the case may
be, of each of the Loan Parties, certifying as appropriate as to:
(i) all action taken by each Loan Party in connection with this Agreement
and the other Loan Documents;
(ii) the names of the officer or officers authorized to sign this
Agreement and the other Loan Documents and the true signatures of such
officer or officers and specifying the Authorized Officers permitted to act
on behalf of each Loan Party for purposes of this Agreement and the true
signatures of such officers, on which the Agent and each Lender may
conclusively rely; and
(iii) as to Hovnanian and the Borrower only, copies of its organizational
documents, including its certificate of incorporation, bylaws, certificate
of limited partnership, partnership agreement, certificate of formation,
and limited liability company agreement as in effect on the Closing Date
certified by the appropriate state official where such documents are filed
in a state office together with certificates from the appropriate state
officials as to the continued existence and good standing of such Loan
Party in each state where organized, all as acceptable to the Agent.
6.1.3. Delivery of Loan Documents .
The Notes, the Guaranty Agreement and the other Loan Documents shall have
been duly executed and delivered by Hovnanian to the Agent on or before the
date hereof for the benefit of the Lenders.
6.1.4. Opinion of Counsel.
There shall be delivered to the Agent for the benefit of each Lender a
written opinion of Xxxxx Xxxxxxxx, Esquire, in-house counsel for the Loan
Parties, dated the Closing Date and in form and substance satisfactory to
the Agent and its counsel.
6.1.5. Legal Details.
All legal details and proceedings in connection with the transactions
contemplated by this Agreement and the other Loan Documents shall be in
form and substance satisfactory to the Agent and counsel for the Agent, and
the Agent shall have received all such other counterpart originals or
certified or other copies of such documents and proceedings in connection
with such transactions, in form and substance satisfactory to the Agent and
said counsel, as the Agent or said counsel may reasonably request.
6.1.6. Payment of Fees.
The Borrower shall have paid or caused to be paid to the Agent for itself
and for the account of the Lenders to the extent not previously paid, all
commitment and other fees accrued through the Closing Date and the costs
and expenses for which the Agent and the Lenders are entitled to be
reimbursed.
6.1.7. Consents.
All material consents required to effectuate the transactions contemplated
hereby as set forth on Schedule 5.1.12 shall have been obtained.
6.1.8. Officer's Certificate Regarding MACs.
Since October 31, 2003, no Material Adverse Change shall have occurred, and
there shall have been delivered to the Agent for the benefit of each Lender
a certificate dated the Closing Date and signed by the Chief Executive
Officer, President or Chief Financial Officer of each Loan Party to each
such effect.
6.1.9. No Actions or Proceedings.
No action, proceeding, investigation, regulation or legislation shall have
been instituted, threatened or proposed before any court, governmental
agency or legislative body to enjoin, restrain or prohibit, or to obtain
damages in respect of, this Agreement, the other Loan Documents or the
consummation of the transactions contemplated hereby or thereby.
6.1.10 Lien Search.
The Borrower shall have delivered satisfactory results of a lien search to
the Agent evidencing no liens on Hovnanian or the Borrower which are not
Permitted Liens.
6.2 Each Additional Loan or Letter of Credit.
At the time of making any Loans or issuing any Letters of Credit other than
Loans made or Letters of Credit issued on the Closing Date and after giving
effect to the proposed extensions of credit: the representations and
warranties of the Loan Parties contained in Section 5 [Representations and
Warranties] and in the other Loan Documents shall be true and correct in
all material respects on and as of the date of such additional Loan or
Letter of Credit with the same effect as though such representations and
warranties had been made on and as of such date (except representations and
warranties which expressly relate solely to an earlier date or time, which
representations and warranties shall be true and correct in all material
respects on and as of the specific dates or times referred to therein); no
Event of Default or Potential Default shall have occurred and be continuing
or shall exist; and the Borrower shall have delivered to the Agent a duly
executed and completed Loan Request or application for a Letter of Credit
as the case may be.
7. COVENANTS
7.1 Affirmative Covenants.
The Borrower and Hovnanian, jointly and severally, covenant and agree that
until payment in full of the Loans, Reimbursement Obligations and Letter of
Credit Borrowings, and interest thereon, expiration or termination of all
Letters of Credit, satisfaction of all of the Loan Parties' other
Obligations under the Loan Documents and termination of the Commitments,
they shall, and shall cause the other Loan Parties to, comply at all times
with the following affirmative covenants:
7.1.1. Preservation of Existence, Etc.
Each Loan Party shall maintain its legal existence as a corporation,
limited partnership or limited liability company and its license or
qualification and good standing in each jurisdiction in which its ownership
or lease of property or the nature of its business makes such license or
qualification necessary, except as otherwise expressly permitted in Section
7.2.4 [Liquidations, Mergers, Consolidations, Acquisitions] and except
where failure to do so could not reasonably be expected to constitute a
Material Adverse Change with respect to the Borrower or Hovnanian or with
respect to the Loan Parties taken as a whole.
7.1.2. Payment of Liabilities, Including Taxes, Etc.
Each Loan Party shall duly pay and discharge all material liabilities to
which it is subject or which are asserted against it, promptly as and when
the same shall become due and payable, including all material taxes,
assessments and governmental charges upon it or any of its properties,
assets, income or profits, prior to the date on which penalties attach
thereto, except to the extent that such liabilities, including taxes,
assessments or charges, are being contested in good faith and by
appropriate and lawful proceedings diligently conducted and for which such
reserve or other appropriate provisions, if any, as shall be required by
GAAP shall have been made, or to the extent that failure to discharge any
such liabilities would not result in any additional liability which would
adversely affect to a material extent the financial condition of the
Borrower or Hovnanian or of the Loan Parties taken as a whole, provided
that the Loan Parties will pay all such liabilities forthwith upon the
commencement of proceedings to foreclose any Lien which may have attached
as security therefor.
7.1.3. Maintenance of Insurance.
Each Loan Party shall insure its properties and assets against loss or
damage by fire and such other insurable hazards as such assets are commonly
insured (including fire, extended coverage, property damage, workers'
compensation, public liability, flood and business interruption insurance)
and against other risks (including errors and omissions) in such amounts as
similar properties and assets are insured by prudent companies in similar
circumstances carrying on similar businesses, and with reputable and
financially sound insurers, including self-insurance to the extent
customary.
7.1.4. Maintenance of Properties and Leases.
Each Loan Party shall maintain in good repair, working order and condition
(ordinary wear and tear excepted) in accordance with the general practice
of other businesses of similar character and size, all of those properties
necessary to its business, and from time to time, such Loan Party will make
or cause to be made all appropriate repairs, renewals or replacements
thereof.
7.1.5. Maintenance of Patents, Trademarks, Etc.
Each Loan Party shall maintain in full force and effect all patents,
trademarks, service marks, trade names, copyrights, licenses, franchises,
permits and other authorizations necessary for the ownership and operation
of its properties and business if the failure so to maintain the same would
constitute a Material Adverse Change.
7.1.6. Visitation Rights.
Each Loan Party shall permit any of the officers or authorized employees or
representatives of the Agent or (at the expense of such Lender) any of the
Lenders to visit and inspect any of its properties and to examine and make
excerpts from its books and records and discuss its business affairs,
finances and accounts with its officers, all in such detail and at such
times and as often as any of the Lenders may reasonably request, provided
that each Lender shall provide the Borrower and the Agent with reasonable
notice prior to any visit or inspection. In the event any Lender desires
to conduct an audit of any Loan Party, such Lender shall make a reasonable
effort to conduct such audit contemporaneously with any audit to be
performed by the Agent.
7.1.7. Keeping of Records and Books of Account.
The Loan Parties shall maintain and keep proper books of record and account
which enable Hovnanian and its Subsidiaries to issue financial statements
in accordance with GAAP and as otherwise required by applicable Laws of any
Official Body having jurisdiction over Hovnanian or any Subsidiary of
Hovnanian, and in which full, true and correct entries shall be made in all
material respects of all its dealings and business and financial affairs.
7.1.8. Plans and Benefit Arrangements.
The Loan Parties shall, and shall cause each member of the ERISA Group that
is a Subsidiary to, and shall use its reasonable best efforts to cause each
other member of the ERISA Group to, comply with ERISA, the Internal Revenue
Code and other applicable Laws applicable to Plans and, as to the Borrower,
Benefit Arrangements, except where such failure, alone or in conjunction
with any other failure, would not result in a Material Adverse Change.
Without limiting the generality of the foregoing, the Loan Parties shall
cause all of their Plans and shall use reasonable best efforts to cause all
Plans maintained by any member of the ERISA Group, to be funded in
accordance with the minimum funding requirements of ERISA and shall make,
and cause each Subsidiary to, and shall use its reasonable best efforts to
cause each member of the ERISA Group to make, in a timely manner, all
contributions due to Plans and Multiemployer Plans except where such
failure, alone or in conjunction with any other failure, would not result
in a Material Adverse Change.
7.1.9. Compliance with Laws.
Each Loan Party shall comply with all applicable Laws, including all
Environmental Laws, in all respects, provided that it shall not be deemed
to be a violation of this Section 7.1.9 if any failure to comply with any
Law would not result in fines, penalties, remediation costs, other similar
liabilities or injunctive relief which in the aggregate would constitute a
Material Adverse Change.
7.1.10. Use of Proceeds.
The Loan Parties will use the Letters of Credit and the proceeds of the
Loans only for general corporate purposes and for working capital for the
Borrower, Hovnanian and the Restricted Subsidiaries.
7.1.11 Anti-Terrorism Laws.
The Loan Parties and their respective Affiliates and agents shall not (i)
conduct any business or engage in any transaction or dealing with any
Blocked Person, including the making or receiving any contribution of
funds, goods or services to or for the benefit of any Blocked Person, (ii)
deal in, or otherwise engage in any transaction relating to, any property
or interests in property blocked pursuant to the Executive Order No. 13224;
or (iii) engage in or conspire to engage in any transaction that evades or
avoids, or has the purpose of evading or avoiding, or attempts to violate,
any of the prohibitions set forth in the Executive Order No. 13224, the USA
Patriot Act or any other Anti-Terrorism Law. The Borrower shall deliver to
Lenders any certification or other evidence requested from time to time by
any Lender in its sole discretion, confirming Borrower's compliance with
this Section 8.1.14.
7.2 Negative Covenants.
The Borrower and Hovnanian, jointly and severally, covenant and agree that
until payment in full of the Loans, Reimbursement Obligations and Letter of
Credit Borrowings and interest thereon, expiration or termination of all
Letters of Credit, satisfaction of all of the Loan Parties' other
Obligations hereunder and termination of the Commitments, they shall, and
shall cause the other Loan Parties to, comply with the following negative
covenants:
7.2.1. Indebtedness.
7.2.1.1 Each of the Loan Parties shall not at any time create, incur,
assume or suffer to exist any secured indebtedness, except Indebtedness
secured by Permitted Liens.
7.2.1.2 Omitted.
7.2.1.3 For so long as a Keep-Well Agreement is in effect, the Loan
Parties shall not permit any Mortgage Subsidiary to incur or suffer to
exist any Indebtedness if, after giving effect thereto, the ratio of (x)
all Indebtedness of the Mortgage Subsidiaries to (y) equity plus the amount
of any loans made by any of the Loan Parties to, or Guaranties provided by
any of the Loan Parties on behalf of such Mortgage Subsidiary exceeds 12.0-
to-1.0.
7.2.2. Liens.
Each of the Loan Parties shall not at any time create, incur, assume or
suffer to exist any Lien on any of its property or assets, tangible or
intangible, now owned or hereafter acquired, or agree or become liable to
do so, except Permitted Liens.
7.2.3. Loans and Investments.
Each of the Loan Parties shall not, at any time, make or suffer to remain
outstanding any Investment except Permitted Investments and, to the extent
permitted by Section 7.2.6 [Restricted Payments; Restricted Investments],
Restricted Investments.
7.2.4. Liquidations, Mergers, Consolidations, Acquisitions.
Each of the Loan Parties shall not dissolve, liquidate or wind-up its
affairs, or become a party to any merger or consolidation, or acquire by
purchase, lease or otherwise all or substantially all of the assets or
capital stock of any other Person, provided that
(1) any Loan Party other than the Borrower or Hovnanian may consolidate
or merge into another Loan Party (or any Person that concurrently becomes a
Loan Party) which is wholly-owned by one or more of the other Loan Parties,
and
(2) any Loan Party may consolidate or merge with a Person who is not a
Loan Party if the common stockholders of Hovnanian prior to such
transaction maintain at least 50% of the voting control (direct or
indirect) of the combined entity after consummation of the transaction, and
(3) any Loan Party may acquire, whether by purchase or by merger, (A)all
or substantially all of the ownership interests of another Person or (B)all
or substantially all of assets of another Person or of a business or
division of another Person (each, a "Permitted Acquisition"), provided that
each of the following requirements is met:
(i) if the Loan Parties are acquiring the ownership interests in such
Person, and such Person is, or concurrently will be, designated a
Restricted Subsidiary, such Person shall execute a Guarantor Joinder and
join this Agreement as a Guarantor pursuant to Section 10.18 [Joinder of
Guarantors] and the Borrower shall have otherwise complied with Section
2.11.4 [Designation of Restricted Subsidiary] on or before the date of such
Permitted Acquisition;
(ii) if such Person's shares are registered as "public" shares under
applicable law, the board of directors or other equivalent governing body
of such Person shall have approved such Permitted Acquisition;
(iii) the business acquired, or the business conducted by the Person whose
ownership interests are being acquired, as applicable, shall comply with
Section 7.2.8 [Continuation of or Change in Business]; and
(iv) no Potential Default or Event of Default shall exist immediately
prior to and after giving effect to such Permitted Acquisition.
(4) the Loan Parties may make, whether by purchase or merger or
otherwise, Permitted Investments and, to the extent permitted by Section
7.2.6 [Restricted Investments and Restricted Payments], Restricted
Investments and Restricted Payments;
(5) the Loan Parties may liquidate or wind-up Restricted Subsidiaries of
Hovnanian which are not individually material to Hovnanian, the Borrower or
to the Loan Parties taken as a whole; provided that the Loan Parties shall
satisfy the requirements of Section 2.11 [Designation of Subsidiaries and
Release of Guarantors], to the extent applicable;
(6) the Loan Parties may effectuate any sale permitted by Section 7.2.5
as a merger or consolidation; and
(7) for the avoidance of doubt, any Loan Party may effect or allow the
liquidation or winding-up of any Non-Restricted Person.
7.2.5. Dispositions of Assets or Subsidiaries; Sale and Leaseback.
7.2.5.1 Each of the Loan Parties shall not sell, convey, assign,
lease, abandon or otherwise transfer or dispose of, voluntarily or
involuntarily, any of its properties or assets, tangible or intangible
(including sale, assignment, discount or other disposition of accounts,
contract rights, chattel paper, equipment or general intangibles with or
without recourse or of capital stock, shares of beneficial interest,
partnership interests or limited liability company interests of a
Subsidiary of such Loan Party, but excluding Investments in Non-Restricted
Persons), except:
(i) any sale, transfer or lease of assets in the ordinary course of
business which are no longer necessary or required in the conduct of such
Loan Party's business;
(ii) any sale, transfer or lease of assets to a Loan Party;
(iii) any sale, transfer or lease of assets in the ordinary course of
business which are replaced by substitute assets acquired not in violation
of this Agreement; or
(iv) any sale and leaseback permitted by Section 7.2.5.2.
7.2.5.2 The Loan Parties shall not, directly or indirectly, sell,
transfer or otherwise dispose of real and/or personal property with a view
directly or indirectly to the leasing back of the same or of any similar
property except for (i) sales and leasebacks of sample model homes and
their contents; (ii) sales and leasebacks of any office buildings and their
contents, or (iii) sales and leasebacks in the normal course of business.
7.2.6. Restricted Payments; Restricted Investments.
7.2.6.1 The Loan Parties shall not pay or make Restricted Payments or
Restricted Investments from and after January 31, 2001 which exceed in the
aggregate the sum of:
(i) $45,000,000;
(ii) 50% of net income of Hovnanian (calculated and consolidated in
accordance with GAAP) for all fiscal quarters commencing on February 1,
2001 and thereafter; and
(iii) 50% of the proceeds (less costs of issuance) of any issuance or sale
of equity of Hovnanian to any Person other than a Loan Party during all
fiscal quarters commencing on February 1, 2001 and thereafter.
7.2.6.2 Each of the Loan Parties shall not enter into or carry out any
transaction with any Affiliate (including purchasing property or services
from or selling property or services to any Affiliate of any Loan Party or
other Person but excluding transactions between Loan Parties) unless such
transaction is not otherwise prohibited by this Agreement, is entered into
in the ordinary course of business upon fair and reasonable arm's-length
terms and is in accordance with all applicable Law. Without limiting the
foregoing, the aggregate amount of all Indebtedness for owed or borrowed
money owing to any Loan Party by any officer or director, or relative
thereof, shall not exceed $1,000,000 in the aggregate owing at any one time
and all such Indebtedness shall bear interest at a rate not less than the
coupon rate on six month U.S. Treasury bills as of the date such
Indebtedness is incurred.
7.2.6.3 The Loan Parties shall not pay or make any Restricted Payment
in respect of Dividends or Subordinated Debt if an Event of Default or
Potential Default exists at the time of such payment or would exist after
giving effect thereto.
7.2.7. Subsidiaries, Partnerships and Joint Ventures.
Each of the Loan Parties shall not own or create directly or indirectly any
Subsidiaries other than (i) any Subsidiary which has executed the Guaranty
Agreement as Guarantor on the Closing Date, (ii) any Subsidiary formed or
acquired after the Closing Date which joins the Guaranty Agreement as a
Guarantor pursuant to Section 10.18 [Joinder of Guarantors] or (iii) any
Non-Restricted Person.
7.2.8. Continuation of or Change in Business.
Each of the Loan Parties shall not engage in any business other than the
homebuilding business or Existing Related Businesses.
7.2.9. Plans and Benefit Arrangements.
Each of the Loan Parties shall not engage in a Prohibited Transaction with
any Plan, Benefit Arrangement or Multiemployer Plan which, alone or in
conjunction with any other circumstances or set of circumstances, results
in liability under ERISA, except where the liability that could reasonably
be expected to result therefrom would not result in a Material Adverse
Change.
7.2.10. Borrowing Base.
At any time that the Investment Grade Period is not in effect, the Loan
Parties shall not permit Senior Homebuilding Indebtedness minus the face
amount of outstanding letters of credit (whether "Letters of Credit" or
not) in respect of which a Loan Party is obligated and which is issued to
guaranty or assure the installation of site improvements on (or appurtenant
to) land owned by a Loan Party to exceed the Borrowing Base. Pursuant
thereto, the Borrower shall make (or cause to be made), on the Business Day
following the date on which any such excess is calculated, payments of
principal of Senior Homebuilding Indebtedness sufficient to reduce to zero
($0) on such date any such excess.
7.2.11. Minimum ATNW.
The Loan Parties shall not permit Adjusted Tangible Net Worth to be less
than the sum of: (i) $378,759,200 and (ii) 50% of Hovnanian's consolidated
net income (calculated and consolidated in accordance with GAAP) for each
fiscal quarter commencing on May 1, 2003 and thereafter in which net income
was earned (as opposed to a net loss) and (iii) 50% of the proceeds (less
costs of issuance) of any issuance or sale of equity of Hovnanian to any
Person other than a Loan Party during each fiscal quarter commencing on May
1, 2003 and thereafter.
7.2.12. Leverage Ratio.
The Loan Parties shall not permit the Leverage Ratio to exceed the
following ratios during the following periods:
Period Maximum Ratio
Closing Date through October 31, 2004 2.40 to 1.00
On and after November 1, 2004 2.25 to 1.00
7.2.13. Fixed Charge Coverage Ratio.
The Loan Parties shall not permit the Fixed Charge Coverage Ratio to be
less than the 1.75 to 1.0 for each of any two (2) consecutive fiscal
quarters if the second such fiscal quarter constitutes a High Leverage
Period.
7.2.14. Inventory Limits.
At any time when the Investment Grade Period is not in effect, the Loan
Parties shall not permit:
(i) The Dollar value of Unentitled Land to exceed twenty percent (20%) of
the sum of Adjusted Tangible Net Worth and the principal amount of the
Subordinated Debt, as calculated as of the end of each fiscal quarter;
(ii) The Dollar value of Finished Lots and Land under Development plus
Unentitled Land to exceed the sum of Adjusted Tangible Net Worth and the
principal amount of the Subordinated Debt, as calculated as of the end of
each fiscal quarter; or
(iii) The number of Unsold Dwelling Units existing as of the end of any
fiscal quarter to exceed 25% of the number of Dwelling Units conveyed by
any Person who is a Loan Party on the date of determination or any Person
that was acquired and merged or consolidated with and into a Person who is
a Loan Party on the date of determination to third party purchasers within
the previous twelve (12) months.
7.2.15. Fiscal Year.
The Loan Parties shall not change their fiscal year from the twelve-month
period ending October 31.
7.2.16. Changes in Subordinated Debt Documents.
The Loan Parties shall not amend or modify any provisions of the documents
relating to the Subordinated Debt without providing at least ten (10)
calendar days' prior written notice to the Agent and the Lenders, and, if
the same would adversely affect the interests of the Agent and the Lenders,
obtaining the prior written consent of the Required Lenders. No Loan Party
shall directly or indirectly make any payment on the Subordinated Debt
which would violate the provisions of any applicable subordination
agreement or provision. Neither the Senior Notes nor the Subordinated Debt
shall become secured.
7.3 Reporting Requirements.
The Borrower and Hovnanian, jointly and severally, covenant and agree that
until payment in full of the Loans, Reimbursement Obligations and Letter of
Credit Borrowings and interest thereon, expiration or termination of all
Letters of Credit, satisfaction of all of the Loan Parties' other
Obligations hereunder and under the other Loan Documents and termination of
the Commitments, they shall, and shall cause the other Loan Parties to,
furnish or cause to be furnished to the Agent and each of the Lenders:
7.3.1. Quarterly Financial Statements.
As soon as available and in any event within fifty-five (55) calendar days
after the end of each of the first three fiscal quarters in each fiscal
year of Hovnanian, financial statements of Hovnanian, consisting of a
consolidated and consolidating balance sheet as of the end of such fiscal
quarter and related consolidated and consolidating statements of income,
stockholders' equity and cash flows for the fiscal quarter then ended and
the fiscal year through that date, all in reasonable detail and certified
(subject to normal year-end audit adjustments) by the Chief Executive
Officer, President, Treasurer or Chief Financial Officer or principal
accounting officer of Hovnanian as having been prepared in accordance with
GAAP, consistently applied, and setting forth in comparative form the
respective financial statements for the corresponding date and period in
the previous fiscal year. The Loan Parties will be deemed to have complied
with the delivery requirements of this Section 7.3.1 if within fifty-five
(55) days after the end of their fiscal quarter, the Borrower delivers to
the Agent and each of the Lenders a copy of Hovnanian's Form 10-Q as filed
with the SEC and the financial statements contained therein meets the
requirements described in this Section 7.3.1.
7.3.2. Annual Financial Statements.
As soon as available and in any event within ninety (90) days after the end
of each fiscal year of Hovnanian, financial statements of Hovnanian
consisting of a consolidated balance sheet as of the end of such fiscal
year, and related consolidated statements of income, stockholders' equity
and cash flows for the fiscal year then ended, all in reasonable detail and
setting forth in comparative form the financial statements as of the end of
and for the preceding fiscal year, and certified by independent certified
public accountants of nationally recognized standing satisfactory to the
Agent. The certificate or report of accountants shall be free of
qualifications (other than any consistency qualification that may result
from a change in the method used to prepare the financial statements as to
which such accountants concur) and shall not indicate the occurrence or
existence of any event, condition or contingency which would materially
impair the prospect of payment or performance of any covenant, agreement or
duty of any Loan Party under any of the Loan Documents or cause or
constitute an Event of Default. The Loan Parties will be deemed to have
complied with the delivery requirements of this Section 7.3.2 if within
ninety (90) days after the end of Hovnanian's fiscal year, the Borrower
delivers to the Agent and each of the Lenders a copy of Hovnanian's Annual
Report and Form 10-K as filed with the SEC and the financial statements and
separately delivers the above-referenced certification of public
accountants.
7.3.3. Certificates of the Borrower.
7.3.3.1 Compliance Certificate. Concurrently with the financial
statements of Hovnanian furnished to the Agent and to the Lenders pursuant
to Sections 7.3.1 [Quarterly Financial Statements] and 7.3.2 [Annual
Financial Statements]:
(a) a certificate of the Borrower signed by the Chief Executive Officer,
President, Treasurer or Chief Financial Officer or principal accounting
officer of the Borrower, in the form of Exhibit 7.3.3.1 (each a "Compliance
Certificate"), to the effect that, except as described pursuant to Section
7.3.3.2 [Borrowing Base Certificate], (i)the representations and warranties
of the Borrower contained in Section 5.1 [Representations and Warranties]
and in the other Loan Documents are true and correct in all material
respects on and as of the date of such certificate with the same effect as
though such representations and warranties had been made on and as of such
date (except representations and warranties which expressly relate solely
to an earlier date or time), (ii)no Event of Default or Potential Default
exists and is continuing on the date of such certificate and
(iii)containing calculations in sufficient detail to demonstrate compliance
as of the date of such financial statements with all financial covenants
contained in Section 7.2 [Negative Covenants].
(b) summary consolidated financial statements for each of (i) the Non-
Restricted Persons as a group and (ii) the Borrower, Hovnanian and the
Restricted Subsidiaries as a group; provided that the statements provided
in footnote 20 entitled "Financial Information of Subsidiary Issuer and
Subsidiary" of the Borrower's consolidated financial statements in Form 10-
K and in footnote 16 in Form 10-Q shall be deemed to satisfy this
requirement;
(c) summary financial statements for each Joint Venture in which any Loan
Party has a Subsidiary Investment greater than an amount equal to 2% of
Adjusted Tangible Net Worth as of the last day of the previous fiscal
quarter of Hovnanian; and
(d) to the extent not previously disclosed in writing to the Agent and
the Lenders, a report of any changes to Schedule 1.1(C) including changes
arising under Section 2.11 [Designation of Subsidiaries and Release of
Guarantors].
7.3.3.2 Borrowing Base Certificate.
As soon as available, but not later than fifty-five (55) days after the end
of each month, a Borrowing Base Certificate as of the end of such month,
appropriately completed, executed and delivered by an Authorized Officer,
together with a certificate of the Borrower signed by the Chief Executive
Officer, President, Treasurer or Chief Financial Officer or principal
accounting officer of the Borrower, in the form of Exhibit 7.3.3.2, to the
effect that, except as described pursuant to Section 7.3.4 [Notice of
Default], no Event of Default or Potential Default exists and is continuing
on the date of such Borrowing Base Certificate; provided, however, the
Borrowing Base Certificate delivered with respect to the month of October,
in any year, may be in draft form, subject to change as a result of the
year-end audit, but in no event shall be executed and delivered in final
form later than ninety (90) days after the end of such fiscal year. The
Borrower shall be required to deliver a Borrowing Base Certificate as of
the end of a month even if the Investment Grade Period is in effect as of
such month-end.
7.3.4. Notice of Default.
Promptly after any officer of any Loan Party has learned of the occurrence
of an Event of Default or Potential Default, a certificate signed by the
Chief Executive Officer, President or Chief Financial Officer or principal
accounting officer of such Loan Party setting forth the details of such
Event of Default or Potential Default and the action which such Loan Party
proposes to take with respect thereto.
7.3.5. Notice of Litigation.
Promptly after the commencement thereof, notice of all actions, suits,
proceedings or investigations before or by any Official Body or any other
Person against any Loan Party that involve a claim or series of claims in
excess of $1,000,000 which is not covered by insurance or which could
reasonably be expected to constitute a Material Adverse Change.
7.3.6. Notice of Change in Debt Rating.
Within two (2) Business Days after Standard & Poor's, Xxxxx'x or Fitch
announces a change in Hovnanian's Debt Rating, notice of such change.
Hovnanian will deliver together with such notice a copy of any written
notification which Hovnanian received from the applicable rating agency
regarding such change of Debt Rating.
7.3.7. Budgets, Forecasts, Other Reports and Information.
Promptly upon their becoming available to any Loan Party:
(i) any reports, notices or proxy statements generally distributed by
Hovnanian to its stockholders,
(ii) regular or periodic reports, including Forms 10-K, 10-Q and 8-K,
registration statements and prospectuses, filed by Hovnanian with the SEC,
and
(iii) such other reports and information as any of the Lenders may from
time to time reasonably request. The Loan Parties shall also notify the
Lenders promptly of the enactment or adoption of any Law which could
reasonably be expected to constitute a Material Adverse Change.
7.3.8. Notices Regarding Plans and Benefit Arrangements.
7.3.8.1 Certain Events.
Promptly after learning of the occurrence thereof, notice (including the
nature of the event and, when known, any action taken or threatened by the
Internal Revenue Service or the PBGC with respect thereto) of any of the
following events, or services of such events, if, individually or in the
aggregate, any liabilities or penalties resulting from such event(s) could
reasonably be expected to result in a Material Adverse Change:
(i) any Reportable Event with respect to any Plan,
(ii) any Prohibited Transaction which could subject any Loan Party or any
other member of the ERISA Group to a civil penalty assessed pursuant to
Section 502(i) of ERISA or a tax imposed by Section 4975 of the Internal
Revenue Code in connection with any Plan, any Benefit Arrangement or any
trust created thereunder,
(iii) any withdrawal from a Multiemployer Plan by the Borrower or any other
member of the ERISA Group under Title IV of ERISA or assertion by a
Multiemployer Plan that such a withdrawal has occurred,
(iv) any cessation of operations (by any Loan Party or any other member of
the ERISA Group) at a facility in the circumstances described in Section
4062(e) of ERISA,
(v) withdrawal by any Loan Party or any other member of the ERISA Group
from a Plan in the circumstances described in Section 4063 of ERISA or the
termination of such Plan in the circumstances described in Section 4064 of
ERISA,
(vi) a failure to make any required contribution to a Plan or the creation
of any Lien in favor of the PBGC or a Plan,
(vii) the adoption of an amendment to a Plan requiring the provision of
security to such Plan pursuant to Section 307 of ERISA, or
(viii) the distress termination of a Plan, under Title IV of ERISA,
which has insufficient assets to pay all liabilities.
7.3.8.2 Notices of Involuntary Termination and Annual Reports.
Promptly after receipt thereof, copies of (a)all notices received by any
Loan Party or any other member of the ERISA Group of the PBGC's intent to
terminate any Plan administered or maintained by the Borrower or any member
of the ERISA Group, or to have a trustee appointed to administer any such
Plan; and (b)at the request of the Agent or any Lender each annual report
(IRS Form 5500 series) and all accompanying schedules, the most recent
actuarial reports, the most recent financial information concerning the
financial status of each Plan administered or maintained by any Loan Party
or any other member of the ERISA Group, and schedules showing the amounts
contributed to each such Plan by or on behalf of the Borrower or any other
member of the ERISA Group in which any of their personnel participate or
from which such personnel may derive a benefit, and each Schedule B
(Actuarial Information) to the annual report filed by any Loan Party or any
other member of the ERISA Group with the Internal Revenue Service with
respect to each such Plan.
7.3.8.3 Notice of Voluntary Termination.
Where a termination of any Plan would result in a Material Adverse Change,
promptly upon the filing thereof, copies of any Form 5310, or any successor
or equivalent form to Form 5310, filed with the PBGC in connection with the
termination of any Plan.
8. DEFAULT
8.1 Events of Default.
An Event of Default shall mean the occurrence or existence of any one or
more of the following events or conditions (whatever the reason therefor
and whether voluntary, involuntary or effected by operation of Law):
8.1.1. Payments Under Loan Documents.
The Borrower shall fail to pay (i)any principal of any Loan (including
scheduled installments, mandatory prepayments or the payment due at
maturity), Reimbursement Obligation or Letter of Credit Borrowing when such
principal is due hereunder or (ii)any interest on any Loan, Reimbursement
Obligation or Letter of Credit Borrowing or any other amount owing
hereunder or under the other Loan Documents within three (3) Business Days
after such interest or other amount becomes due in accordance with the
terms hereof or thereof;
8.1.2. Breach of Warranty.
Any representation or warranty made at any time by any of the Loan Parties
herein or by any of the Loan Parties in any other Loan Document, or in any
certificate, other instrument or statement furnished pursuant to the
provisions hereof or thereof, shall prove to have been false or misleading
in any material respect as of the time it was made or furnished;
8.1.3. Breach of Certain Negative Covenants.
Any of the Loan Parties shall default in the observance or performance of
any covenant contained in Sections 7.2.10 [Borrower Base], 7.2.11 [Minimum
ATNW], 7.2.12 [Leverage Ratio], 7.2.13 [Fixed Charge Coverage Ratio] or
7.2.14 [Inventory and Land Purchase Limits];
8.1.4. Breach of Other Covenants.
Any of the Loan Parties shall default in the observance or performance of
any other covenant, condition or provision hereof or of any other Loan
Document and such default shall continue unremedied for a period of thirty
(30) Business Days after notice to the Borrower from the Agent;
8.1.5. Defaults in Other Agreements or Indebtedness.
A default or event of default shall occur at any time under the terms of
any other agreement involving borrowed money or the extension of credit or
any other Indebtedness under which any Loan Party may be obligated as a
borrower or guarantor in excess of $1,000,000 in the aggregate, and such
breach, default or event of default consists of the failure to pay (beyond
any period of grace permitted with respect thereto, whether waived or not)
any Indebtedness when due (whether at stated maturity, by acceleration or
otherwise) or if such breach or default permits or causes the acceleration
of any Indebtedness (whether or not such right shall have been waived) or
the termination of any commitment to lend;
8.1.6. Final Judgments or Orders.
Any final judgments or orders for the payment of money in excess of
$1,000,000 in the aggregate shall be entered against any Loan Party by a
court having jurisdiction, which judgment is not discharged, vacated,
bonded or stayed pending appeal within a period of thirty (30) days from
the date of entry;
8.1.7. Loan Document Unenforceable.
Any of the Loan Documents shall cease to be legal, valid and binding
agreements enforceable against the party executing the same or such party's
successors and assigns (as permitted under the Loan Documents) in
accordance with the respective terms thereof or shall in any way be
terminated (except in accordance with its terms or as permitted under the
Loan Documents) or become or be declared ineffective or inoperative or
shall in any way be challenged or contested or cease to give or provide the
respective Liens, security interests, rights, titles, interests, remedies,
powers or privileges intended to be created thereby;
8.1.8. Uninsured Losses; Proceedings Against Assets.
Any of the Loan Parties' assets are attached, seized, levied upon or
subjected to a writ or distress warrant; or such come within the possession
of any receiver, trustee, custodian or assignee for the benefit of
creditors and the same is not cured within thirty (30) days thereafter and
any of the foregoing could reasonably be expected to constitute a Material
Adverse Change;
8.1.9. Notice of Lien or Assessment.
A notice of Lien or assessment in excess of $1,000,000 which is not a
Permitted Lien is filed of record with respect to all or any part of any of
the Loan Parties' assets by the United States, or any department, agency
or instrumentality thereof, or by any state, county, municipal or other
governmental agency, including the PBGC, or any taxes or debts owing at any
time or times hereafter to any one of these becomes payable and the same is
not paid within thirty (30) days after the same becomes payable;
8.1.10. Insolvency.
Any of (i) Hovnanian, (ii) the Borrower or (iii) Restricted Subsidiaries
owning as of the date of any event described in this Section 8.1.10 three
percent (3%) or more of the Dollar value of all of the assets of all of the
Subsidiaries of Hovnanian taken as a whole ceases to be solvent or admits
in writing its inability to pay its debts as they mature;
8.1.11. Events Relating to Plans and Benefit Arrangements.
Any of the following occurs: (i)any Reportable Event with respect to a
Plan, which the Agent reasonably determines in good faith constitutes
grounds for the termination of any Plan by the PBGC or the appointment of a
trustee to administer or liquidate any Plan, shall have occurred and be
continuing; (ii)proceedings shall have been instituted or other action
taken to terminate any Plan, or a termination notice shall have been filed
with respect to any Plan; (iii)a trustee shall be appointed to administer
or liquidate any Plan; (iv)the PBGC shall give notice of its intent to
institute proceedings to terminate any Plan or Plans or to appoint a
trustee to administer or liquidate any Plan; and, in the case of the
occurrence of (i), (ii), (iii) or (iv) above, the Agent reasonably
determines in good faith that the amount of any Loan Party's liability is
likely to exceed 10% of its Consolidated Tangible Net Worth; (v)any
"accumulated funding deficiency" (as defined in Section 302 of ERISA) shall
exist with respect to any Plan, or any Lien in favor of the PBGC or a Plan
shall arise on the assets of the Borrower or any other member of the ERISA
Group, (vi)any Loan Party or any other member of the ERISA Group shall make
any amendment to a Plan with respect to which security is required under
Section 307 of ERISA; (vii)any Loan Party or any other member of the ERISA
Group shall incur any liability in connection with a withdrawal from a
Multiemployer Plan; (viii)any Loan Party or any other member of the ERISA
Group shall withdraw under Section 4063 of ERISA (or shall be deemed under
Section 4062(e) of ERISA to withdraw) from a Plan; or (ix)any applicable
Law is adopted, changed or interpreted by any Official Body with respect to
or otherwise affecting one or more Plans, Multiemployer Plans or Benefit
Arrangements and, with respect to any of the events specified in (v), (vi),
(vii), (viii) or (ix), the Agent reasonably determines in good faith that
any such occurrence, together with all other such events, would be
reasonably likely to result in a Material Adverse Change;
8.1.12. Cessation of Business.
Any Loan Party ceases to conduct its business as contemplated, except as
expressly permitted under Section 7.2.4 [Liquidations, Mergers,
Consolidations, Acquisitions] or Section 7.2.5 [Dispositions of Assets or
Subsidiaries; Sale and Leaseback], or any Loan Party is enjoined,
restrained or in any way prevented by court order from conducting all or
any material part of its business and such injunction, restraint or other
preventive order is not dismissed within thirty (30) days after the entry
thereof and any of the foregoing could reasonably be expected to constitute
a Material Adverse Change;
8.1.13. Change of Control.
(i) Any person or group of persons (within the meaning of Sections 13(d)
or 14(a) of the Securities Exchange Act of 1934, as amended) shall have
acquired beneficial ownership of (within the meaning of Rule 13d-3
promulgated by the SEC under said Act) 40% or more of the voting capital
stock of Hovnanian; or (ii)within a period of twelve (12) consecutive
calendar months, individuals who were directors of the Borrower on the
first day of such period, or who were nominated by a majority of such
directors, shall cease to constitute a majority of the board of directors
of the Borrower;
8.1.14. Involuntary Proceedings.
A proceeding shall have been instituted in a court having jurisdiction
seeking a decree or order for relief in respect of any of (i) Hovnanian,
(ii) the Borrower or (iii) Restricted Subsidiaries owning as of the date of
any event described in this Section 8.1.14 three percent (3%) or more of
the Dollar value of all of the assets of all of the Subsidiaries of
Hovnanian taken as a whole in an involuntary case under any applicable
bankruptcy, insolvency, reorganization or other similar law now or
hereafter in effect, or for the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator, conservator (or similar
official) of any Loan Party for any substantial part of its property, or
for the winding-up or liquidation of its affairs, and such proceeding shall
remain undismissed or unstayed and in effect for a period of sixty (60)
consecutive days or such court shall enter a decree or order granting any
of the relief sought in such proceeding; or
8.1.15. Voluntary Proceedings.
Any of (i) Hovnanian, (ii) the Borrower or (iii) Restricted Subsidiaries
owning as of the date of any event described in this Section 8.1.15 three
percent (3%) or more of the Dollar value of all of the assets of all of the
Subsidiaries of Hovnanian taken as a whole shall commence a voluntary case
under any applicable bankruptcy, insolvency, reorganization or other
similar law now or hereafter in effect, shall consent to the entry of an
order for relief in an involuntary case under any such law, or shall
consent to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator, conservator (or other similar
official) of itself or for any substantial part of its property or shall
make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any action in
furtherance of any of the foregoing.
8.2 Consequences of Event of Default.
8.2.1. Events of Default Other Than Bankruptcy, Insolvency or
Reorganization Proceedings.
If an Event of Default specified under Sections 8.1.1 [Payments Under Loan
Documents] through 8.1.13 [Change of Control] shall occur and be
continuing, the Lenders and the Agent shall be under no further obligation
to make Loans or issue Letters of Credit, as the case may be, and the Agent
may, and upon the request of the Required Lenders, shall (i)by written
notice to the Borrower, declare the unpaid principal amount of the Loan
then outstanding and all interest accrued thereon, any unpaid fees and all
other Indebtedness of the Borrower to the Lenders hereunder and thereunder
to be forthwith due and payable, and the same shall thereupon become and be
immediately due and payable to the Agent for the benefit of each Lender
without presentment, demand, protest or any other notice of any kind, all
of which are hereby expressly waived, and (ii)require the Borrower to, and
the Borrower shall thereupon, deposit in an interest-bearing account with
the Agent, as cash collateral for its Obligations under the Loan Documents,
an amount equal to the maximum amount currently or at any time thereafter
available to be drawn on all outstanding Letters of Credit, and the
Borrower hereby pledges to the Agent and the Lenders, and grants to the
Agent and the Lenders a security interest in, all such cash as security for
such Obligations. Upon the curing of all existing Events of Default, the
Agent shall return such cash collateral to the Borrower; and
8.2.2. Bankruptcy, Insolvency or Reorganization Proceedings.
If an Event of Default specified under Section 8.1.14 [Involuntary
Proceedings] or 8.1.15 [Voluntary Proceedings] shall occur, the Lenders
shall be under no further obligations to make Loans or issue Letters of
Credit hereunder and the unpaid principal amount of the Loans then
outstanding and all interest accrued thereon, any unpaid fees and all other
Indebtedness of the Borrower to the Lenders hereunder and thereunder shall
be immediately due and payable, without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived and the
Borrower shall upon such occurrence, deposit in an interest-bearing account
with the Agent, as cash collateral for its Obligations under the Loan
Documents, an amount equal to the maximum amount currently or at any time
thereafter available to be drawn on all outstanding Letters of Credit, and
the Borrower hereby pledges to the Agent and the Lenders, and grants to the
Agent and the Lenders a security interest in, all such cash as security for
such Obligations; and
8.2.3. Set-off.
If an Event of Default shall occur and be continuing, any Lender to whom
any Obligation is owed by any Loan Party hereunder or under any other Loan
Document or any participant of such Lender which has agreed in writing to
be bound by the provisions of Section 9.13 [Equalization of Lenders] and
any branch, Subsidiary or Affiliate of such Lender or participant anywhere
in the world shall have the right, in addition to all other rights and
remedies available to it, without notice to such Loan Party, to set-off
against and apply to the then unpaid balance of all past-due Loans and all
other past-due Obligations of the Borrower and the other Loan Parties
hereunder or under any other Loan Document any debt owing to, and any other
funds held in any manner for the account of, the Borrower or such other
Loan Party by such Lender or participant or by such branch, Subsidiary or
Affiliate, including all funds in all deposit accounts (whether time or
demand, general or special, provisionally credited or finally credited, or
otherwise) now or hereafter maintained by the Borrower or such other Loan
Party for its own account (but not including funds held in custodian or
trust accounts) with such Lender or participant or such branch, Subsidiary
or Affiliate; and
8.2.4. Suits, Actions, Proceedings.
If an Event of Default shall occur and be continuing, and whether or not
the Agent shall have accelerated the maturity of Loans pursuant to any of
the foregoing provisions of this Section 8.2 [Consequences of Event of
Default], the Agent or any Lender, if owed any amount with respect to the
Loans, may proceed to protect and enforce its rights by suit in equity,
action at law and/or other appropriate proceeding, whether for the specific
performance of any covenant or agreement contained in this Agreement or the
other Loan Documents, including as permitted by applicable Law the
obtaining of the ex parte appointment of a receiver, and, if such amount
shall have become due, by declaration or otherwise, proceed to enforce the
payment thereof or any other legal or equitable right of the Agent or such
Lender; and
8.2.5. Application of Proceeds.
From and after the date on which the Agent has taken any action pursuant to
this Section 8.2 [Consequences of Event of Default] and until all
Obligations of the Loan Parties have been paid in full, any and all
proceeds received by the Agent from the exercise of any remedy by the
Agent, shall be applied as follows:
(i) first, to reimburse the Agent and the Lenders for out-of-pocket
costs, expenses and disbursements, including reasonable attorneys' and
paralegals' fees and legal expenses, incurred by the Agent or the Lenders
in connection with collection of any Obligations of any of the Loan Parties
under any of the Loan Documents;
(ii) second, to the repayment of all Indebtedness then due and unpaid of
the Loan Parties to the Lenders incurred under this Agreement or any of the
other Loan Documents, whether of principal, interest, fees, expenses or
otherwise, in such manner as the Agent may determine in its discretion; and
(iii) the balance, if any, as required by Law.
8.2.6. Other Rights and Remedies.
In addition to all of the rights and remedies contained in this Agreement
or in any of the other Loan Documents, the Agent shall have all of the
rights and remedies under applicable Law, all of which rights and remedies
shall be cumulative and non-exclusive, to the extent permitted by Law. The
Agent may, and upon the request of the Required Lenders shall, exercise all
post-default rights granted to the Agent and the Lenders under the Loan
Documents or applicable Law.
9. THE AGENT
9.1 Appointment.
Each Lender hereby irrevocably designates, appoints and authorizes PNC Bank
to act as Agent for such Lender under this Agreement and to execute and
deliver or accept on behalf of each of the Lenders the other Loan
Documents. Each Lender hereby irrevocably authorizes the Agent to take
such action on its behalf under the provisions of this Agreement and the
other Loan Documents and any other instruments and agreements referred to
herein, and to exercise such powers and to perform such duties hereunder as
are specifically delegated to or required of the Agent by the terms hereof,
together with such powers as are reasonably incidental thereto. PNC Bank
agrees to act as the Agent on behalf of the Lenders to the extent provided
in this Agreement.
9.2 Delegation of Duties.
The Agent may perform any of its duties hereunder by or through agents or
employees (provided such delegation does not constitute a relinquishment of
its duties as Agent) and, subject to Sections 9.5 [Reimbursement and
Indemnification of Agent by the Borrower] and 9.6 [Exculpatory Provisions;
Limitation of Liability], shall be entitled to engage and pay for the
advice or services of any attorneys, accountants or other experts
concerning all matters pertaining to its duties hereunder and to rely upon
any advice so obtained.
9.3 Nature of Duties; Independent Credit Investigation.
The Agent shall have no duties or responsibilities except those expressly
set forth in this Agreement and no implied covenants, functions,
responsibilities, duties, obligations, or liabilities shall be read into
this Agreement or otherwise exist. The duties of the Agent shall be
mechanical and administrative in nature; the Agent shall not have by reason
of this Agreement a fiduciary or trust relationship in respect of any
Lender; and nothing in this Agreement, expressed or implied, is intended to
or shall be so construed as to impose upon the Agent any obligations in
respect of this Agreement except as expressly set forth herein. Without
limiting the generality of the foregoing, the use of the term "agent" in
this Agreement with reference to the Agent is not intended to connote any
fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable Law. Instead, such term is used merely as a
matter of market custom, and is intended to create or reflect only an
administrative relationship between independent contracting parties. Each
Lender expressly acknowledges (i)that the Agent has not made any
representations or warranties to it and that no act by the Agent hereafter
taken, including any review of the affairs of any of the Loan Parties,
shall be deemed to constitute any representation or warranty by the Agent
to any Lender; (ii)that it has made and will continue to make, without
reliance upon the Agent, its own independent investigation of the financial
condition and affairs and its own appraisal of the creditworthiness of each
of the Loan Parties in connection with this Agreement and the making and
continuance of the Loans hereunder; and (iii)except as expressly provided
herein, that the Agent shall have no duty or responsibility, either
initially or on a continuing basis, to provide any Lender with any credit
or other information with respect thereto, whether coming into its
possession before the making of any Loan or at any time or times
thereafter.
9.4 Actions in Discretion of Agent; Instructions From the Lenders.
The Agent agrees, upon the written request of the Required Lenders, to take
or refrain from taking any action of the type specified as being within the
Agent's rights, powers or discretion herein, provided that the Agent shall
not be required to take any action which exposes the Agent to personal
liability or which is contrary to this Agreement or any other Loan Document
or applicable Law. In the absence of a request by the Required Lenders,
the Agent shall have authority, in its sole discretion, to take or not to
take any such action, unless this Agreement specifically requires the
consent of the Required Lenders or all of the Lenders. Any action taken or
failure to act pursuant to such instructions or discretion shall be binding
on the Lenders, subject to Section 9.6 [Exculpatory Provisions; Limitation
of Liability]. Subject to the provisions of Section 9.6 [Exculpatory
Provisions; Limitation of Liability], no Lender shall have any right of
action whatsoever against the Agent as a result of the Agent acting or
refraining from acting hereunder in accordance with the instructions of the
Required Lenders, or in the absence of such instructions, in the absolute
discretion of the Agent.
9.5 Reimbursement and Indemnification of Agent by the Borrower.
The Borrower unconditionally agrees to pay or reimburse the Agent and hold
the Agent harmless against (a)liability for the payment of all reasonable
out-of-pocket costs, expenses and disbursements, including fees and
expenses of counsel (including the allocated costs of staff counsel),
incurred by the Agent (i)in connection with the development, negotiation,
preparation, printing, execution, administration, syndication,
interpretation and performance of this Agreement and the other Loan
Documents, (ii)relating to any requested amendments, waivers or consents
pursuant to the provisions hereof, (iii)in connection with the enforcement
of this Agreement or any other Loan Document or collection of amounts due
hereunder or thereunder or the proof and allowability of any claim arising
under this Agreement or any other Loan Document, whether in bankruptcy or
receivership proceedings or otherwise, and (iv)in any workout or
restructuring or in connection with the protection, preservation, exercise
or enforcement of any of the terms hereof or of any rights hereunder or
under any other Loan Document or in connection with any foreclosure,
collection or bankruptcy proceedings, and (b)all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against the Agent, in its capacity as such, in any
way relating to or arising out of this Agreement or any other Loan
Documents or any action taken or omitted by the Agent hereunder or
thereunder, provided that the Borrower shall not be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements if the same results from
the Agent's gross negligence or willful misconduct, or if the Borrower was
not given notice of the subject claim and the opportunity to participate in
the defense thereof, at its expense (except that the Borrower shall remain
liable to the extent such failure to give notice does not result in a loss
to the Borrower), or if the same results from a compromise or settlement
agreement entered into without the consent of the Borrower, which shall not
be unreasonably withheld. In addition, after the occurrence and during the
continuance of an Event of Default, the Borrower agrees to reimburse and
pay all reasonable out-of-pocket expenses of the Agent's regular employees
and agents engaged periodically to perform audits of the Loan Parties'
books, records and business properties.
9.6 Exculpatory Provisions; Limitation of Liability.
Neither the Agent nor any of its directors, officers, employees, agents,
attorneys or Affiliates shall (a)be liable to any Lender for any action
taken or omitted to be taken by it or them hereunder, or in connection
herewith including pursuant to any Loan Document, unless caused by its or
their own gross negligence or willful misconduct, (b)be responsible in any
manner to any of the Lenders for the effectiveness, enforceability,
genuineness, validity or the due execution of this Agreement or any other
Loan Documents or for any recital, representation, warranty, document,
certificate, report or statement herein or made or furnished under or in
connection with this Agreement or any other Loan Documents, or (c)be under
any obligation to any of the Lenders to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions
hereof or thereof on the part of the Loan Parties, or the financial
condition of the Loan Parties, or the existence or possible existence of
any Event of Default or Potential Default. No claim may be made by any of
the Loan Parties, any Lender, the Agent or any of their respective
Subsidiaries against the Agent, any Lender or any of their respective
directors, officers, employees, agents, attorneys or Affiliates, or any of
them, for any special, indirect or consequential damages or, to the fullest
extent permitted by Law, for any punitive damages in respect of any claim
or cause of action (whether based on contract, tort, statutory liability,
or any other ground) based on, arising out of or related to any Loan
Document or the transactions contemplated hereby or any act, omission or
event occurring in connection therewith, including the negotiation,
documentation, administration or collection of the Loans, and each of the
Loan Parties (for itself and on behalf of each of its Subsidiaries), the
Agent and each Lender hereby waive, release and agree never to xxx upon any
claim for any such damages, whether such claim now exists or hereafter
arises and whether or not it is now known or suspected to exist in its
favor. Each Lender agrees that, except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Agent
hereunder or given to the Agent for the account of or with copies for the
Lenders, the Agent and each of its directors, officers, employees, agents,
attorneys or Affiliates shall not have any duty or responsibility to
provide any Lender with credit or other information concerning the
business, operations, property, condition (financial or otherwise),
prospects or creditworthiness of the Loan Parties which may come into the
possession of the Agent or any of its directors, officers, employees,
agents, attorneys or Affiliates.
9.7 Reimbursement and Indemnification of Agent by Lenders.
Each Lender agrees to reimburse and indemnify the Agent (to the extent not
reimbursed by the Borrower and without limiting the obligation of the
Borrower to do so) in proportion to its Ratable Share from and against all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements, including attorneys' fees and
disbursements (including the allocated costs of staff counsel), and costs
of appraisers and environmental consultants, of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against the
Agent, in its capacity as such, in any way relating to or arising out of
this Agreement or any other Loan Documents or any action taken or omitted
by the Agent hereunder or thereunder, provided that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
(a)if the same results from the Agent's gross negligence or willful
misconduct, or (b)if such Lender was not given notice of the subject claim
and the opportunity to participate in the defense thereof, at its expense
(except that such Lender shall remain liable to the extent such failure to
give notice does not result in a loss to the Lender), or (c)if the same
results from a compromise and settlement agreement entered into without the
consent of such Lender, which shall not be unreasonably withheld. In
addition, each Lender agrees promptly upon demand to reimburse the Agent
(to the extent not reimbursed by the Borrower and without limiting the
obligation of the Borrower to do so) in proportion to its Ratable Share for
all amounts due and payable by the Borrower to the Agent in connection with
the Agent's periodic audit of the Loan Parties' books, records and business
properties.
9.8 Reliance by Agent.
The Agent shall be entitled to rely upon any writing, telegram, telex or
teletype message, electronic mail, resolution, notice, consent,
certificate, letter, cablegram, statement, order or other document or
conversation by telephone or otherwise believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or
Persons, and upon the advice and opinions of counsel and other professional
advisers selected by the Agent. The Agent shall be fully justified in
failing or refusing to take any action hereunder unless it shall first be
indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.
9.9 Notice of Default.
The Agent shall not be deemed to have knowledge or notice of the occurrence
of any Potential Default or Event of Default unless the Agent has received
written notice from a Lender or the Borrower referring to this Agreement,
describing such Potential Default or Event of Default and stating that such
notice is a "notice of default."
9.10 Notices.
The Agent shall promptly send to each Lender a copy of all notices received
from the Borrower pursuant to the provisions of this Agreement or the other
Loan Documents promptly upon receipt thereof. The Agent shall promptly
notify the Borrower and the other Lenders of each change in the Base Rate
and the effective date thereof.
9.11 Lenders in Their Individual Capacities; Agents in its Individual
Capacity.
With respect to its Revolving Credit Commitment, the Revolving Credit Loans
made by it and any other rights and powers given to it as a Lender
hereunder or under any of the other Loan Documents, the Agent shall have
the same rights and powers hereunder as any other Lender and may exercise
the same as though it were not the Agent, and the term "Lender" and
"Lenders" shall, unless the context otherwise indicates, include the Agent
in its individual capacity. PNC Bank and its Affiliates and each of the
Lenders and their respective Affiliates may, without liability to account,
except as prohibited herein, make loans to, issue letters of credit for the
account of, acquire equity interests in, accept deposits from, discount
drafts for, act as trustee under indentures of, and generally engage in any
kind of banking, trust, financial advisory, underwriting or other business
with, the Loan Parties and their Affiliates, in the case of the Agent, as
though it were not acting as Agent hereunder and in the case of each
Lender, as though such Lender were not a Lender hereunder, in each case
without notice to or consent of the other Lenders. The Lenders acknowledge
that, pursuant to such activities, the Agent or its Affiliates may
(i)receive information regarding the Loan Parties or any of their
Subsidiaries or Affiliates (including information that may be subject to
confidentiality obligations in favor of the Loan Parties or such Subsidiary
or Affiliate) and acknowledge that the Agent shall be under no obligation
to provide such information to them, and (ii)accept fees and other
consideration from the Loan Parties for services in connection with this
Agreement and otherwise without having to account for the same to the
Lenders.
9.12 Holders of Notes.
The Agent may deem and treat any payee of any Note as the owner thereof for
all purposes hereof unless and until written notice of the assignment or
transfer thereof shall have been filed with the Agent. Any request,
authority or consent of any Person who at the time of making such request
or giving such authority or consent is the holder of any Note shall be
conclusive and binding on any subsequent holder, transferee or assignee of
such Note or of any Note or Notes issued in exchange therefor.
9.13 Equalization of Lenders.
The Lenders and the holders of any participations in any Commitments or
Loans or other rights or obligations of a Lender hereunder agree among
themselves that, with respect to all amounts received by any Lender or any
such holder for application on any Obligation hereunder or under any such
participation, whether received by voluntary payment, by realization upon
security, by the exercise of the right of set-off or banker's lien, by
counterclaim or by any other non-pro rata source, equitable adjustment will
be made in the manner stated in the following sentence so that, in effect,
all such excess amounts will be shared ratably among the Lenders and such
holders in proportion to their interests in payments on the Loans, except
as otherwise provided in Section 3.4.3 [Agent's and Lender's Rights], 4.4.2
[Replacement of a Lender] or 4.6 [Additional Compensation in Certain
Circumstances]. The Lenders or any such holder receiving any such amount
shall purchase for cash from each of the other Lenders an interest in such
Lender's Loans in such amount as shall result in a ratable participation by
the Lenders and each such holder in the aggregate unpaid amount of the
Loans, provided that if all or any portion of such excess amount is
thereafter recovered from the Lender or the holder making such purchase,
such purchase shall be rescinded and the purchase price restored to the
extent of such recovery, together with interest or other amounts, if any,
required by law (including court order) to be paid by the Lender or the
holder making such purchase.
9.14 Successor Agent.
The Agent (i)may resign as Agent or (ii)shall resign if such resignation is
requested by the Required Lenders (if the Agent is a Lender, the Agent's
Loans and its Commitment shall be considered in determining whether the
Required Lenders have requested such resignation) or required by Section
4.4.2 [Replacement of a Lender], in either case of (i) or (ii) by giving
not less than thirty (30) days' prior written notice to the Borrower. If
the Agent shall resign under this Agreement, then either (a)the Required
Lenders shall appoint from among the Lenders a successor agent for the
Lenders, subject to the consent of the Borrower, such consent not to be
unreasonably withheld, or (b)if a successor agent shall not be so appointed
and approved within the thirty (30) day period following the Agent's notice
to the Lenders of its resignation, then the Agent shall appoint from among
the Lenders, with the consent of the Borrower, such consent not to be
unreasonably withheld, a successor agent who shall serve as Agent until
such time as the Required Lenders appoint and the Borrower consents to the
appointment of a successor agent. Upon its appointment pursuant to either
clause (a) or (b) above, such successor agent shall succeed to the rights,
powers and duties of the Agent, and the term "Agent" shall mean such
successor agent, effective upon its appointment, and the former Agent's
rights, powers and duties as Agent shall be terminated without any other or
further act or deed on the part of such former Agent or any of the parties
to this Agreement. After the resignation of any Agent hereunder, the
provisions of this Section 9 shall inure to the benefit of such former
Agent and such former Agent shall not by reason of such resignation be
deemed to be released from liability for any actions taken or not taken by
it while it was an Agent under this Agreement.
9.15 Agent's Fees.
The Borrower shall pay to the Agents nonrefundable fees (the "Agent's
Fees") under the terms of a letters (the "Agent's Letters") between the
Borrower and Agents, as amended from time to time.
9.16 Availability of Funds.
The Agent may assume that each Lender has made or will make the proceeds of
a Loan available to the Agent unless the Agent shall have been notified by
such Lender on or before the later of (1)the close of Business on the
Business Day preceding the Borrowing Date with respect to such Loan or two
(2) hours before the time on which the Agent actually funds the proceeds of
such Loan to the Borrower (whether using its own funds pursuant to this
Section 9.16 or using proceeds deposited with the Agent by the Lenders and
whether such funding occurs before or after the time on which Lenders are
required to deposit the proceeds of such Loan with the Agent). The Agent
may, in reliance upon such assumption (but shall not be required to), make
available to the Borrower a corresponding amount. If such corresponding
amount is not in fact made available to the Agent by such Lender, the Agent
shall be entitled to recover such amount on demand from such Lender (or, if
such Lender fails to pay such amount forthwith upon such demand from the
Borrower) together with interest thereon, in respect of each day during the
period commencing on the date such amount was made available to the
Borrower and ending on the date the Agent recovers such amount, at a rate
per annum equal to (i) the Federal Funds Effective Rate during the first
three (3) days after such interest shall begin to accrue and (ii) the
applicable interest rate in respect of such Loan after the end of such
three-day period.
9.17 Calculations.
In the absence of gross negligence or willful misconduct, the Agent shall
not be liable for any error in computing the amount payable to any Lender
whether in respect of the Loans, fees or any other amounts due to the
Lenders under this Agreement. In the event an error in computing any
amount payable to any Lender is made, the Agent, the Borrower and each
affected Lender shall, forthwith upon discovery of such error, make such
adjustments as shall be required to correct such error, and any
compensation therefor will be calculated at the Federal Funds Effective
Rate.
9.18 Beneficiaries.
Except as expressly provided herein, the provisions of this Section 9 [The
Agent] are solely for the benefit of the Agent and the Lenders, and the
Loan Parties shall not have any rights to rely on or enforce any of the
provisions hereof. In performing its functions and duties under this
Agreement, the Agent shall act solely as agent of the Lenders and does not
assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for any of the Loan Parties.
10. MISCELLANEOUS
10.1 Modifications, Amendments or Waivers.
With the written consent of the Required Lenders, the Agent, acting on
behalf of all the Lenders, and the Borrower, on behalf of the Loan Parties,
may from time to time enter into written agreements amending or changing
any provision of this Agreement or any other Loan Document or the rights of
the Lenders or the Loan Parties hereunder or thereunder, or may grant
written waivers or consents to a departure from the due performance of the
Obligations of the Loan Parties hereunder or thereunder. Any such
agreement, waiver or consent made with such written consent shall be
effective to bind all the Lenders and the Loan Parties; provided, that,
without the written consent of all the Lenders, no such agreement, waiver
or consent may be made which will:
10.1.1. Increase of Commitment.
Increase the amount of the aggregate Revolving Credit Commitments;
10.1.2. Extension of Payment; Reduction of Principal, Interest or Fees;
Modification of Terms of Payment.
Subject to Section 2.10 [Extension by Lenders of the Expiration Date], but
whether or not any Loans are outstanding, extend the time for payment of
principal or interest of any Loan (excluding the due date of any mandatory
prepayment of a Loan or any mandatory Commitment reduction in connection
with such a mandatory prepayment hereunder except for mandatory reductions
of the Commitments on the Expiration Date), the Commitment Fee or any other
fee payable to any Lender, or reduce the principal amount of or the rate of
interest borne by any Loan or reduce the Commitment Fee or any other fee
payable to any Lender, or otherwise directly affect the terms of payment of
the principal of or interest of any Loan, the Commitment Fee or any other
fee payable to any Lender;
10.1.3. Miscellaneous
Amend Section 2.11.1 [Release of Guarantors], 4.2 [Pro Rata Treatment of
Lenders], 9.6 [Exculpatory Provisions; Limitation of Liability], 9.13
[Equalization of Lenders] or this Section 10.1 [Modifications, Amendments
or Waivers] change the pro rata treatment of the Lenders, change the
definition of Required Lenders, or change any requirement providing for the
Lenders or the Required Lenders to authorize the taking of any action
hereunder;
provided, that no agreement, waiver or consent which would modify the
interests, rights or obligations of the Agent in its capacity as Agent
shall be effective without the written consent of the Agent and provided
further, that no provision of Sections 2.1.2 [Swing Loan Commitment], 2.4.2
[Swing Loan Requests], 2.5.2 [Making Swing Loans], 2.6 [Swing Loan Note],
2.8 [Borrowings to Repay Swing Loans] and 4.8 [Settlement Date Procedures]
may be amended or modified without the consent of PNC Bank.
10.2 No Implied Waivers; Cumulative Remedies; Writing Required.
No course of dealing and no delay or failure of the Agent or any Lender in
exercising any right, power, remedy or privilege under this Agreement or
any other Loan Document shall affect any other or future exercise thereof
or operate as a waiver thereof, nor shall any single or partial exercise
thereof or any abandonment or discontinuance of steps to enforce such a
right, power, remedy or privilege preclude any further exercise thereof or
of any other right, power, remedy or privilege. The rights and remedies of
the Agent and the Lenders under this Agreement and any other Loan Documents
are cumulative and not exclusive of any rights or remedies which they would
otherwise have. Any waiver, permit, consent or approval of any kind or
character on the part of any Lender of any breach or default under this
Agreement or any such waiver of any provision or condition of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing.
10.3 Reimbursement and Indemnification of Lenders by the Borrower; Taxes.
The Borrower agrees unconditionally upon demand to pay or reimburse to each
Lender (other than the Agent, as to which the Borrower's Obligations are
set forth in Section 9.5 [Reimbursement and Indemnification of Agent by the
Borrower]) and to save such Lender harmless against (i)liability for the
payment of all reasonable out-of-pocket costs, expenses and disbursements
(including fees and expenses of counsel (including allocated costs of staff
counsel) for each Lender except with respect to (a) and (b) below),
incurred by such Lender (a)in connection with the administration and
interpretation of this Agreement, and other instruments and documents to be
delivered hereunder, (b)relating to any amendments, waivers or consents
pursuant to the provisions hereof, (c)in connection with the enforcement of
this Agreement or any other Loan Document, or collection of amounts due
hereunder or thereunder or the proof and allowability of any claim arising
under this Agreement or any other Loan Document, whether in bankruptcy or
receivership proceedings or otherwise, and (d)in any workout or
restructuring or in connection with the protection, preservation, exercise
or enforcement of any of the terms hereof or of any rights hereunder or
under any other Loan Document or in connection with any foreclosure,
collection or bankruptcy proceedings, or (ii)all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against such Lender, in its capacity as such, in
any way relating to or arising out of this Agreement or any other Loan
Documents or any action taken or omitted by such Lender hereunder or
thereunder, provided that the Borrower shall not be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements (A)if the same results
from such Lender's gross negligence or willful misconduct, or (B)if the
Borrower was not given notice of the subject claim and the opportunity to
participate in the defense thereof, at its expense (except that the
Borrower shall remain liable to the extent such failure to give notice does
not result in a loss to the Borrower), or (C)if the same results from a
compromise or settlement agreement entered into without the consent of the
Borrower, which shall not be unreasonably withheld. The Borrower agrees
unconditionally to pay all stamp, document, transfer, recording or filing
taxes or fees and similar impositions now or hereafter determined by the
Agent or any Lender to be payable in connection with this Agreement or any
other Loan Document, and the Borrower agrees unconditionally to save the
Agent and the Lenders harmless from and against any and all present or
future claims, liabilities or losses with respect to or resulting from any
omission to pay or delay in paying any such taxes, fees or impositions.
10.4 Holidays.
Whenever payment of a Loan to be made or taken hereunder shall be due on a
day which is not a Business Day such payment shall be due on the next
Business Day (except as provided in Section 3.2 [Interest Periods] with
respect to Interest Periods under the LIBO-Rate Option) and such extension
of time shall be included in computing interest and fees, except that the
Loans shall be due on the Business Day preceding the Expiration Date if the
Expiration Date is not a Business Day. Whenever any payment or action to
be made or taken hereunder (other than payment of the Loans) shall be
stated to be due on a day which is not a Business Day, such payment or
action shall be made or taken on the next following Business Day, and such
extension of time shall not be included in computing interest or fees, if
any, in connection with such payment or action.
10.5 Funding by Branch, Subsidiary or Affiliate.
10.5.1. Notional Funding.
Each Lender shall have the right from time to time, without notice to the
Borrower, to deem any branch, Subsidiary or Affiliate (which for the
purposes of this Section 10.5 shall mean any corporation or association
which is directly or indirectly controlled by or is under direct or
indirect common control with any corporation or association which directly
or indirectly controls such Lender) of such Lender to have made, maintained
or funded any Loan to which the LIBO-Rate Option applies at any time,
provided that immediately following (on the assumption that a payment were
then due from the Borrower to such other office), and as a result of such
change, the Borrower would not be under any greater financial obligation
(including pursuant to Section 4.6 [Additional Compensation in Certain
Circumstances]) than it would have been in the absence of such change.
Notional funding offices may be selected by each Lender without regard to
such Lender's actual methods of making, maintaining or funding the Loans or
any sources of funding actually used by or available to such Lender.
10.5.2. Actual Funding.
Each Lender shall have the right from time to time to make or maintain any
Loan by arranging for a branch, Subsidiary or Affiliate of such Lender to
make or maintain such Loan subject to the last sentence of this Section
10.5.2. If any Lender causes a branch, Subsidiary or Affiliate to make or
maintain any part of the Loans hereunder, all terms and conditions of this
Agreement shall, except where the context clearly requires otherwise, be
applicable to such part of the Loans to the same extent as if such Loans
were made or maintained by such Lender, but in no event shall any Lender's
use of such a branch, Subsidiary or Affiliate to make or maintain any part
of the Loans hereunder cause such Lender or such branch, Subsidiary or
Affiliate to incur any cost or expenses payable by the Borrower hereunder
or require the Borrower to pay any other compensation to any Lender
(including any expenses incurred or payable pursuant to Section 4.6
[Additional Compensation in Certain Circumstances]) which would otherwise
not be incurred.
10.6 Notices.
Any notice, request, demand, direction or other communication (for purposes
of this Section 10.6 only, a "Notice") to be given to or made upon any
party hereto under any provision of this Agreement shall be given or made
by telephone or in writing (which includes means of electronic transmission
(i.e., "e-mail") or facsimile transmission or by setting forth such Notice
on a site on the World Wide Web (a "Website Posting") if Notice of such
Website Posting (including the information necessary to access such site)
has previously been delivered to the applicable parties hereto by another
means set forth in this Section 10.6 in accordance with this Section 10.6.
Any such Notice must be delivered to the applicable parties hereto at the
addresses and numbers set forth under their respective names on Schedule
1.1(B) hereof or in accordance with any subsequent unrevoked Notice from
any such party that is given in accordance with this Section 10.6. Any
Notice shall be effective:
(i) In the case of hand-delivery, when delivered;
(ii) If given by mail, four (4) days after such Notice is deposited with
the United States Postal Service, with first-class postage prepaid, return
receipt requested;
(iii) In the case of a telephonic Notice, when a party is contacted by
telephone, if delivery of such telephonic Notice is confirmed no later than
the next Business Day by hand delivery, a facsimile or electronic
transmission, a Website Posting or overnight courier delivery of a
confirmatory notice (received at or before noon on such next Business Day);
(iv) In the case of a facsimile transmission, when sent to the applicable
party's facsimile machine's telephone number if the party sending such
Notice receives confirmation of the delivery thereof from its own facsimile
machine;
(v) In the case of electronic transmission, when actually received;
(vi) In the case of a Website Posting, upon delivery of a Notice of such
posting (including the information necessary to access such web site) by
another means set forth in this Section 10.6; and
(vii) If given by any other means (including by overnight courier), when
actually received.
Any Lender giving a Notice to a Loan Party shall concurrently send a copy
thereof to the Agent, and the Agent shall promptly notify the other Lenders
of its receipt of such Notice.
10.7 Severability.
The provisions of this Agreement are intended to be severable. If any
provision of this Agreement shall be held invalid or unenforceable in whole
or in part in any jurisdiction, such provision shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or
enforceability thereof in any other jurisdiction or the remaining
provisions hereof in any jurisdiction.
10.8 Governing Law.
Each Letter of Credit and Section 2.10 [Letter of Credit Subfacility] shall
be subject to the Uniform Customs and Practice for Documentary Credits
(1993 Revision), International Chamber of Commerce Publication No. 500, as
the same may be revised or amended from time to time, and to the extent not
inconsistent therewith, the internal laws of the State of New Jersey
without regard to its conflict of laws principles, and the balance of this
Agreement shall be deemed to be a contract under the Laws of the State of
New Jersey and for all purposes shall be governed by and construed and
enforced in accordance with the internal laws of the State of New Jersey
without regard to its conflict of laws principles.
10.9 Prior Understanding.
This Agreement and the other Loan Documents supersede all prior
understandings and agreements, whether written or oral, between the parties
hereto and thereto relating to the transactions provided for herein and
therein, including any prior confidentiality agreements and commitments.
10.10 Duration; Survival.
All representations and warranties of the Borrower and Hovnanian contained
herein or made in connection herewith shall survive the making of Loans and
issuance of Letters of Credit and shall not be waived by the execution and
delivery of this Agreement, any investigation by the Agent or the Lenders,
the making of Loans, issuance of Letters of Credit, or payment in full of
the Loans. All covenants and agreements of the Borrower and Hovnanian
contained in Sections 7.1 [Affirmative Covenants], 7.2 [Negative Covenants]
and 7.3 [Reporting Requirements] herein shall continue in full force and
effect from and after the date hereof so long as the Borrower may borrow or
request Letters of Credit hereunder and until termination of the
Commitments and payment in full of the Loans and expiration or termination
of all Letters of Credit. All covenants and agreements of the Borrower
contained herein relating to the payment of principal, interest, premiums,
additional compensation or expenses and indemnification, including those
set forth in Section 4 [Payments] and Sections 9.5 [Reimbursement and
Indemnification of Agent by the Borrower], 9.7 [Reimbursement and
Indemnification of Agent by Lenders] and 10.3 [Reimbursement and
Indemnification of Lenders by Borrower; Taxes], shall survive payment in
full of the Loans, expiration or termination of the Letters of Credit and
termination of the Commitments.
10.11 Successors and Assigns.
10.11.1 This Agreement shall be binding upon and shall inure to the
benefit of the Lenders, the Agent, the Loan Parties a party hereto and
their respective successors and assigns, except that none of the Loan
Parties a party hereto may assign or transfer any of its rights and
obligations hereunder or any interest herein. Each Lender may, at its own
cost, make assignments of or sell participations in all or any part of its
Commitments and the Loans made by it to one or more banks or other
entities, subject to the consent of the Borrower and the Agent with respect
to any assignee, such consent not to be unreasonably withheld provided that
(1)no consent of the Borrower shall be required (A) if an Event of Default
exists and is continuing, (B) in the case of an assignment by a Lender to
an Affiliate of such Lender, or (C) in respect of the sale of a
participation and (2)any assignment by a Lender to a Person other than an
Affiliate of such Lender may not be made in amounts less than the lesser of
$10,000,000 or the amount of the assigning Lender's Commitment. In the
case of an assignment, upon receipt by the Agent of the Assignment and
Assumption Agreement, the assignee shall have, to the extent of such
assignment (unless otherwise provided therein), the same rights, benefits
and obligations as it would have if it had been a signatory Lender
hereunder, the Commitments shall be adjusted accordingly, and upon
surrender of any Note subject to such assignment, the Borrower shall
execute and deliver a new Note to the assignee, if such assignee requests
such a Note in an amount equal to the amount of the Revolving Credit
Commitment assumed by it and a new Revolving Credit Note to the assigning
Lender, if the assigning Lender requests such a Note, in an amount equal to
the Revolving Credit Commitment or retained by it hereunder. Any Lender
which assigns any or all of its Commitment or Loans to a Person other than
an Affiliate of such Lender shall pay to the Agent a service fee in the
amount of $3,500 for each assignment. In the case of a participation, the
participant shall only have the rights specified in Section 8.2.3 [Set-off]
(the participant's rights against such Lender in respect of such
participation to be those set forth in the agreement executed by such
Lender in favor of the participant relating thereto and not to include any
voting rights except with respect to changes of the type referenced in
Sections 10.1.1 [Increase of Commitment, Extension of Expiration Date], or
10.1.2 [Extension of Payment; Reduction of Principal, Interest or Fees;
Modification of Terms of Payment]), all of such Lender's obligations under
this Agreement or any other Loan Document shall remain unchanged, and all
amounts payable by any Loan Party hereunder or thereunder shall be
determined as if such Lender had not sold such participation.
10.11.2 Each Lender or assignee or participant of a Lender that is not
incorporated under the laws of the United States of America or a state
thereof (and, upon the written request of the Agent, each other Lender or
assignee or participant of a Lender) shall deliver to the Borrower and the
Agent a Withholding Certificate as described in Section 10.17 [Tax
Withholding Clause] relating to federal income tax withholding. Each
Lender may furnish any publicly available information concerning Hovnanian
or any Loan Party and any other information concerning Hovnanian or any
Loan Party in the possession of such Lender from time to time to assignees
and participants (including prospective assignees or participants),
provided that such assignees and participants agree to be bound by the
provisions of Section 10.12 [Confidentiality].
10.11.3 Notwithstanding any other provision in this Agreement, any
Lender may at any time pledge or grant a security interest in all or any
portion of its rights under this Agreement, its Note (if any) and the other
Loan Documents to any Federal Reserve Lender in accordance with Regulation
A of the FRB or U.S. Treasury Regulation 31 CFR Section 203.14 without
notice to or consent of the Borrower or the Agent. No such pledge or grant
of a security interest shall release the transferor Lender of its
obligations hereunder or under any other Loan Document.
10.12 Confidentiality.
10.12.1. General.
The Agent and the Lenders each agree to keep confidential all information
obtained from any Loan Party or its Subsidiaries which is nonpublic and
confidential or proprietary in nature (including any information the
Borrower specifically designates as confidential), except as provided
below, and to use such information only in connection with their respective
capacities under this Agreement and for the purposes contemplated hereby.
The Agent and the Lenders shall be permitted to disclose such information
(i)to outside legal counsel, accountants and other professional advisors
who need to know such information in connection with the administration and
enforcement of this Agreement, subject to agreement of such Persons to
maintain the confidentiality, (ii) to Xxxxx'x, Standard & Poor's and
similar rating agencies, (iii)to assignees and participants as contemplated
by Section 10.11 [Successors and Assigns], and prospective assignees and
participants subject to an agreement of such Persons to maintain the
confidentiality, (iv)to the extent requested by any bank regulatory
authority or, with notice to the Borrower, as otherwise required by
applicable Law or by any subpoena or similar legal process, or in
connection with any investigation or proceeding arising out of the
transactions contemplated by this Agreement, (v)if it becomes publicly
available other than as a result of a breach of this Agreement or becomes
available from a source not known to be subject to confidentiality
restrictions, or (vi)if the Borrower shall have consented to such
disclosure.
10.12.2. Sharing Information With Affiliates of the Lenders.
Each Loan Party a party hereto acknowledges that from time to time
financial advisory, investment banking and other services may be offered or
provided to the Borrower or one or more of its Affiliates (in connection
with this Agreement or otherwise) by any Lender or by one or more
Subsidiaries or Affiliates of such Lender and each of the Loan Parties a
party hereto hereby authorizes each Lender to share any information
delivered to such Lender by such Loan Party and its Subsidiaries pursuant
to this Agreement, or in connection with the decision of such Lender to
enter into this Agreement, to any such Subsidiary or Affiliate of such
Lender, it being understood that any such Subsidiary or Affiliate of any
Lender receiving such information shall be bound by the provisions of
Section 10.12 [Confidentiality] as if it were a Lender hereunder. Such
Authorization shall survive the repayment of the Loans and other
Obligations and the termination of the Commitments.
10.13 Counterparts.
This Agreement may be executed by different parties hereto on any number of
separate counterparts, each of which, when so executed and delivered, shall
be an original, and all such counterparts shall together constitute one and
the same instrument.
10.14 Agent's or Lender's Consent.
Whenever the Agent's or any Lender's consent is required to be obtained
under this Agreement or any of the other Loan Documents as a condition to
any action, inaction, condition or event, unless specifically otherwise
provided herein, the Agent and each Lender shall be authorized to give or
withhold such consent in its sole and absolute discretion and to condition
its consent upon the giving of additional collateral, the payment of money
or any other matter.
10.15 Exceptions.
The representations, warranties and covenants contained herein shall be
independent of each other, and no exception to any representation, warranty
or covenant shall be deemed to be an exception to any other representation,
warranty or covenant contained herein unless expressly provided, nor shall
any such exceptions be deemed to permit any action or omission that would
be in contravention of applicable Law.
10.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL.
EACH LOAN PARTY A PARTY HERETO HEREBY IRREVOCABLY CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF THE SUPERIOR COURT OF NEW JERSEY, LAW
DIVISION, MIDDLESEX COUNTY AND THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF NEW JERSEY AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS
UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY CERTIFIED
OR REGISTERED MAIL DIRECTED TO SUCH LOAN PARTY AT THE ADDRESSES PROVIDED
FOR IN SECTION 10.6 [NOTICES] AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED UPON ACTUAL RECEIPT THEREOF. EACH LOAN PARTY A PARTY HERETO
WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED
AGAINST IT AS PROVIDED HEREIN AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON
LACK OF JURISDICTION OR VENUE. EACH LOAN PARTY A PARTY HERETO, THE AGENT
AND THE LENDERS HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING
OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS AGREEMENT,
ANY OTHER LOAN DOCUMENT OR ANY COLLATERAL TO THE FULL EXTENT PERMITTED BY
LAW.
10.17 Certifications From Lenders and Participants.
10.17.1 Tax Withholding Clause.
Each Lender or assignee or participant of a Lender that is not incorporated
under the Laws of the United States of America or a state thereof (and,
upon the written request of the Agent, each other Lender or assignee or
participant of a Lender) agrees that it will deliver to each of the
Borrower and the Agent two (2) duly completed appropriate valid Withholding
Certificates (as defined under Subsection 1.1441-1(c)(16) of the Income Tax
Regulations ("Regulations")) certifying its status (i.e., U.S. or foreign
person) and, if appropriate, making a claim of reduced, or exemption from,
U.S. withholding tax on the basis of an income tax treaty or an exemption
provided by the Internal Revenue Code. Such delivery may be made by
electronic transmission as described in Subsection 1.1441-1(e)(4)(iv) of the
Regulations if the Agent establishes an electronic delivery system. The
term "Withholding Certificate" means a Form W-9; a Form W-8BEN; a Form W-
8ECI; a Form W-8IMY and the related statements and certifications as
required under Subsection 1.1441-1(e)(3) of the Regulations; a
statement described in S 1.871-14(c)(2)(v) of the Regulations;
or any other certificates under
the Code or Regulations that certify or establish the status of a
payee or beneficial owner as a U.S. or foreign person. Each Lender,
assignee or participant required to deliver to the Borrower and
the Agent a valid Withholding Certificate pursuant to the preceding
sentence shall deliver such valid Withholding Certificate as follows:
(A) each Lender which is a
party hereto on the Closing Date shall deliver such valid Withholding
Certificate at least five (5) Business Days prior to the first date on
which any interest or fees are payable by the Borrower hereunder for the
account of such Lender; (B) each assignee or participant shall deliver such
valid Withholding Certificate at least five (5) Business Days before the
effective date of such assignment or participation (unless the Agent in its
sole discretion shall permit such assignee or participant to deliver such
Withholding Certificate less than five (5) Business Days before such date
in which case it shall be due on the date specified by the Agent). Each
Lender, assignee or participant which so delivers a valid Withholding
Certificate further undertakes to deliver to each of the Borrower and the
Agent two (2) additional copies of such Withholding Certificate (or a
successor form) on or before the date that such Withholding Certificate
expires or becomes obsolete or after the occurrence of any event requiring
a change in the most recent Withholding Certificate so delivered by it, and
such amendments thereto or extensions or renewals thereof as may be
reasonably requested by the Borrower or the Agent. Notwithstanding the
submission of a Withholding Certificate claiming a reduced rate of, or
exemption from, United States withholding tax, the Agent shall be
entitled to withhold United States federal income taxes at the full
30% withholding rate if in its reasonable judgment it is required to
do so under the due diligence requirements imposed upon a withholding
agent under Subsection 1.1441-7(b) of the Regulations. Further, the
Agent is indemnified under Subsection 1.1461-1(e) of the Regulations
against any claims and demands of any Lender or assignee
or participant of a Lender for the amount of any tax it deducts and
withholds in accordance with regulations under Subsection 1441 of the Internal
Revenue Code.
10.17.2 USA Patriot Act.
Each Lender or assignee or participant of a Lender that is not incorporated
under the Laws of the United States of America or a state thereof (and is
not excepted from the certification requirement contained in Section 313 of
the USA Patriot Act and the applicable regulations because it is both (i)
an affiliate of a depository institution or foreign Lender that maintains a
physical presence in the United States or foreign country, and (ii) subject
to supervision by a banking authority regulating such affiliated depository
institution or foreign bank) shall deliver to the Agent the certification,
or, if applicable, recertification, certifying that such Lender is not a
"shell" and certifying to other matters as required by Section 313 of the
USA Patriot Act and the applicable regulations: (1) within 10 days after
the Closing Date, and (2) as such other times as are required under the USA
Patriot Act.
10.18 Joinder of Guarantors.
Any Subsidiary of Hovnanian which is required to join the Guaranty
Agreement as a Guarantor pursuant to Section 7.2.7 (Subsidiaries,
Partnerships and Joint Ventures) or which is to become, a Restricted
Subsidiary shall execute and deliver to the Agent (i)a Guarantor Joinder
pursuant to which it shall join as a Guarantor the Guaranty Agreement; and
(ii) at the request of the Agent, documents in the forms described in
Section 6.1 [First Loans and Letters of Credit] modified as appropriate to
relate to such new Guarantor. Hovnanian and Borrower shall deliver such
Guarantor Joinder and any related documents that the Agent may reasonably
request to the Agent after the formation thereof and its designation as a
Restricted Subsidiary; such Subsidiary shall not be a Restricted Subsidiary
until the delivery and effectiveness of the items required herein.
10.19 Concerning Agent Terms.
Notwithstanding anything contained herein which may be construed to the
contrary, none of the Syndication Agents, the Documentation Agents, Co-
Managing Agents and the Joint Lead Arrangers and Joint Book Runners shall
exercise any of the rights or have any of the responsibilities of the Agent
hereunder, or any other rights or responsibilities other than their
respective rights and responsibilities (if any) as Lenders hereunder.
10.20 Ratification of Notes and Loan Documents and Existing Obligations.
All of the terms, conditions, provisions and covenants in the Prior
Credit Agreement, the Notes and other Loan Documents delivered in
connection therewith, and all other documents delivered to the Agent and
the Lenders in connection with any of the foregoing documents and
obligations evidenced or secured thereby shall remain unaltered and in full
force and effect and are hereby ratified and confirmed in all respects,
except as specifically modified herein. This Agreement amends and
restates, and supersedes, the Prior Credit Agreement and is in no way
intended to constitute a novation of the "Obligations" under the Prior
Credit Agreement. On the date this Agreement becomes effective, and
subject to the satisfaction (or waiver by Agent in its sole discretion) of
all applicable conditions to advances hereunder, all sums owing under the
Prior Credit Agreement and the Loan Documents thereunder shall be deemed to
be outstanding and owing under, evidenced by, and governed by the terms of
this Agreement, the new Notes, and the other existing Loan Documents.
10.21 No Reliance on Agent's Customer Identification Program.
Each Lender acknowledges and agrees that neither such Lender, nor any of
its Affiliates, participants or assignees, may rely on the Agent to carry
out such Lender's, Affiliate's, participant's or assignee's customer
identification program, or other obligations required or imposed under or
pursuant to the USA Patriot Act or the regulations thereunder, including
the regulations contained in 31 CFR 103.121 (as hereafter amended or
replaced, the "CIP Regulations"), or any other Anti-Terrorism Law,
including any programs involving any of the following items relating to or
in connection with any of the Loan Parties, their Affiliates or their
agents, the Loan Documents or the transactions hereunder or contemplated
hereby: (1) any identity verification procedures, (2) any recordkeeping,
(3) comparisons with government lists, (4) customer notices or (5) other
procedures required under the CIP Regulations or such other Laws.
[SIGNATURES CONTINUED ON NEXT PAGE]
[SIGNATURE PAGE 1 OF 23 TO THE CREDIT AGREEMENT]
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
date first written.
X. XXXXXXXXX ENTERPRISES, INC.
By:
Name: J. Xxxxx Xxxxxx
Title: Executive Vice President and Chief Financial Officer
[SIGNATURE PAGE 2 OF 23 TO THE CREDIT AGREEMENT]
PNC BANK, NATIONAL ASSOCIATION
as Agent and as a Lender
By:
Name:
Title:
[SIGNATURE PAGE 3 OF 23 TO THE CREDIT AGREEMENT]
BANK OF AMERICA, N.A.
By:
Name:
Title:
[SIGNATURE PAGE 4 OF 23 TO THE CREDIT AGREEMENT]
WACHOVIA BANK, NATIONAL ASSOCIATION
By:
Name:
Title:
[SIGNATURE PAGE 5 OF 23 TO THE CREDIT AGREEMENT]
GUARANTY BANK
By:
Name:
Title:
[SIGNATURE PAGE 6 OF 23 TO THE CREDIT AGREEMENT]
KEYBANK NATIONAL ASSOCIATION
By:
Name:
Title: [SIGNATURE PAGE 7 OF 23 TO THE CREDIT AGREEMENT]
BANK ONE, NA
By:
Name:
Title:
[SIGNATURE PAGE 8 OF 23 TO THE CREDIT AGREEMENT]
AMSOUTH BANK
By:
Name:
Title:
[SIGNATURE PAGE 9 OF 23 TO THE CREDIT AGREEMENT]
COMERICA BANK
By:
Name:
Title:
[SIGNATURE PAGE 10 OF 23 TO THE CREDIT AGREEMENT]
SUNTRUST BANK
By:
Name:
Title:
[SIGNATURE PAGE 11 OF 23 TO THE CREDIT AGREEMENT]
NATIONAL CITY BANK
By:
Name:
Title:
[SIGNATURE PAGE 12 OF 23 TO THE CREDIT AGREEMENT]
WASHINGTON MUTUAL BANK, FA
By:
Name:
Title:
[SIGNATURE PAGE 13 OF 23 TO THE CREDIT AGREEMENT]
BNP PARIBAS
By:
Name:
Title:
and
By:
Name:
Title:
[SIGNATURE PAGE 14 OF 23 TO THE CREDIT AGREEMENT]
CALYON NEW YORK BRANCH
By:
Name:
Title:
and
By:
Name:
Title:
[SIGNATURE PAGE 15 OF 23 TO THE CREDIT AGREEMENT]
U.S. BANK NATIONAL ASSOCIATION
By:
Name:
Title:
[SIGNATURE PAGE 16 OF 23 TO THE CREDIT AGREEMENT]
THE ROYAL BANK OF SCOTLAND plc
By:
Name:
Title:
[SIGNATURE PAGE 17 OF 23 TO THE CREDIT AGREEMENT]
SOUTHTRUST BANK
By:
Name:
Title:
[SIGNATURE PAGE 18 OF 23 TO THE CREDIT AGREEMENT]
CALIFORNIA BANK & TRUST
By:
Name:
Title:
[SIGNATURE PAGE 19 OF 23 TO THE CREDIT AGREEMENT]
COMPASS BANK
By:
Name:
Title:
[SIGNATURE PAGE 20 OF 23 TO THE CREDIT AGREEMENT]
SOVEREIGN BANK
By:
Name:
Title:
[SIGNATURE PAGE 21 OF 23 TO THE CREDIT AGREEMENT]
UNION BANK OF CALIFORNIA
By:
Name:
Title:
[SIGNATURE PAGE 22 OF 23 TO THE CREDIT AGREEMENT]
Letter of Credit Lender:
FLEET NATIONAL BANK
By:
Name:
Title:
[SIGNATURE PAGE 23 OF 23 TO THE CREDIT AGREEMENT]
ACCEPTED AND AGREED:
HOVNANIAN ENTERPRISES, INC.
as a Guarantor
By:
Name: J. Xxxxx Xxxxxx
Title: Executive Vice President and
Chief Financial Officer
SCHEDULE 1.1(A)
PRICING GRID--
VARIABLE PRICING AND FEES
(expressed in basis points)
The following Grid shall apply during such time at the Investment Grade
Period is not in effect. If the Investment Grade Period is in effect, the
Applicable Margin and the Applicable Commitment Fee Rate shall be Level I.
Lev
el
Leverage Ratio
Commitment
Fee (1)
Revolving
Credit Base
Rate Spread
Revolving
Credit LIBO-
Rate Spread
I
Less than or
equal to 1.0 to
1.0
20
0
110
II
Greater than 1.0
to 1.0 but less
than or equal to
1.25 to 1.0
25
0
130
III
Greater than 1.0
to 1.25 but less
than or equal to
1.75 to 1.0
25
0
150
IV
Greater than
1.75 to 1.0 but
less or equal to
2.00
25
0
175
V
Greater than 2.0
to 1.0
30
0
200
(1) The Commitment Fee set forth in the grid at each level shall be
increased by 10 basis points for any calendar quarter if both (i) the
Average Daily Usage Percentage in such quarter is less than 25%, and (ii)
the Average Daily Usage Percentage in the immediately preceding calendar
quarter was less than 25%.
For purposes of determining the Applicable Margin and the Applicable
Commitment Fee Rate:
(a) The Applicable Margin and the Applicable Commitment Fee Rate shall be
determined on the Closing Date based on the Leverage Ratio computed as of
April 30, 2004 pursuant to a Compliance Certificate to be delivered on the
Closing Date.
(b) The Applicable Margin and the Applicable Commitment Fee Rate shall be
recomputed as of the end of each fiscal quarter ending after the Closing
Date based on the Leverage Ratio as of such quarter end. Any increase or
decrease in the Applicable Margin or the Applicable Commitment Fee Rate
computed as of a quarter end shall be effective on the date on which the
Compliance Certificate evidencing such computation is due to be delivered
under Section 7.3.3.
Lender Name (also Agent):
PNC Bank, National Association
Address for Notices:
Xxx Xxxxx Xxxxxx, 00xx Xxxxx
X. Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Address of Lending Office:
PNC Firstside Center
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$75,000,000
8.333%
Lender Name:
Bank of America, N.A.
Address for Notices:
000 X. XxXxxxx Xxxxxx
Mail Code IL 1-231-10-35
Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Address of Lending Office:
000 X. XxXxxxx Xxxxxx
Mail Code IL 1-231-10-30
Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$75,000,000
8.333%
Lender Name:
Wachovia Bank, National Association
Address for Notices:
Commercial Real Estate Group
0000 Xxxxxx Xxxxxx; 0xx Xxxxx
Xxxxx, XX 00000
Attention: Xxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Address of Lending Office:
Commercial Real Estate Group
0000 Xxxxxx Xxxxxx; 0xx Xxxxx
Xxxxx, XX 00000
Attention: Xxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$75,000,000
8.333%
Lender Name:
Bank One, NA
Address for Notices:
Xxx Xxxx Xxx Xxxxx
Xxxxx XX 0-0000
Xxxxxxx, XX 00000
Attention: F. Xxxx Xxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Address of Lending Office:
One Bank Xxx Xxxxx
Xxxxx X00-0000
Xxxxxxx, XX 00000
Attention: Xxxxxxxx Barcelona
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$70,000,000
7.778%
Lender Name:
KeyBank Real Estate Capital
Address for Notices
0 Xxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
KeyBank Real Estate Capital
0000 Xxxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxx Xxx Xxxxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Address of Lending Office:
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
OH-01-27-0839
Attention: Xxxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$68,000,000
7.556%
Lender Name:
The Royal Bank of Scotland plc
Address for Notices:
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Address of Lending Office:
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$63,000,000
7.000%
Lender Name:
Guaranty Bank
Address for Notices:
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Address of Lending Office:
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$57,000,000
6.333%
Lender Name:
SunTrust Bank
Address for Notices:
0000 Xxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Address of Lending Office:
00000 Xxxxxxxxxx Xxxxxxxx,
Xxxxxxxx, XX 00000
Attn: XxXxx Xxxxx
Telephone: 000-000-0000
Telecopy: 000-000-0000
$48,000,000
5.333%
Lender Name:
U.S. Bank National Association
Address for Notices:
US Bancorp
Commercial Real Estate
000 Xxxxxxxx Xxxx, 0xx Xxxxx
Xxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Address of Lending Office:
U.S. Bank National Association
000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$46,000,000
5.111%
Lender Name:
Washington Mutual Bank, FA
Address for Notices:
Home Builder Finance
000 Xxxxx Xxxxxx
Xxx. 000
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Address of Lending Office:
Home Builder Finance
000 Xxxxx Xxxxxx
Xxx. 000
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$45,000,000
5.000%
Lender Name:
Comerica Bank
Address for Notices:
000 Xxxxxxxx Xxxxxx
XX 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Address of Lending Office:
000 Xxxxxxxx Xxxxxx
XX 0000
Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$40,000,000
4.444%
Lender Name:
BNP PARIBAS
Address for Notices:
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Address of Lending Office:
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$37,000,000
4.111%
Lender Name:
CALYON New York Branch
Address for Notices:
0000 Xxxx Xxxxxx, Xxxxx 0000 Xxxx
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Address of Lending Office:
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx XX 00000
Attention: Xxxxxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$37,000,000
4.111%
Lender Name:
National City Bank
Address for Notices:
Xxx Xxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Address of Lending Office:
Xxx Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$29,000,000
3.222%
Lender Name:
SouthTrust Bank
Address for Notices:
000 00xx Xxxxxx, X.X. 6th Floor
Mail Code B024-AS-0022
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Address of Lending Office:
000 00xx Xxxxxx, X.X. 0xx Xxxxx
Mail Code B024-AS-0022
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$27,000,000
3.000%
Lender Name:
AmSouth Bank
Address for Notices:
0000 0xx Xxxxxx Xxxxx; AST-15
Xxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Address of Lending Office:
0000 0xx Xxxxxx Xxxxx; AST-15
Xxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$25,000,000
2.778%
Lender Name:
Union Bank of California
Address for Notices:
000 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Address of Lending Office:
00000 Xxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$23,000,000
2.556%
Lender Name:
California Bank & Trust
Address for Notices:
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Address of Lending Office:
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$20,000,000
2.222%
Lender Name:
Compass Bank
Address for Notices:
15 So. 00xx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Address of Lending Office:
15 So. 00xx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$20,000,000
2.222%
Lender Name:
Sovereign Bank
Address for Notices:
00 Xxxxx Xxxxxx, XX
XXX 00-00
Xxxxxx, XX 00000
Attention: T. Xxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Address of Lending Office:
00 Xxxxx Xxxxxx, XX
XXX 00-00
Xxxxxx, XX 00000
Attention: T. Xxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$20,000,000
2.222%
Total $900,000,000 100%
AGENT
Name: Xxxxxxx X. Xxxx, Senior Vice President
Address: PNC Bank, National Association
Xxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
BORROWER:
Name: X. XXXXXXXXX ENTERPRISES, INC.
Address: 00 Xxxxx 00, X.X. Xxx 000
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
GUARANTORS:
Name: [name of Guarantor]
Address: c/o X. Xxxxxxxxx Enterprises, Inc.
00 Xxxxx 00, X.X. Xxx 000
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
- i -
- v -
80
SCHEDULE 1.1(A) - 7
SCHEDULE 1.1(B)
COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES
(Amended and Restated June 18, 2004)
Part 1 Addresses Commitments of Lenders and Addresses for Notices to Lenders
Lender
Amount of
Commitment
for Revolving
Credit Loans
Ratable
Share
SCHEDULE 1.1(B) - 11
SCHEDULE 1.1(B)
COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES
(Amended and Restated June 18, 2004)
Part 1 Addresses of Agent, Borrower and Guarantors
