EXHIBIT 10.7
$200,000,000.00
FIFTH
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
Dated as of December 27, 1996
among
STANDARD PACIFIC CORP.
as the Company,
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
and
SEVERAL FINANCIAL INSTITUTIONS FROM TIME TO TIME,
as the Banks,
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as the Agent
TABLE OF CONTENTS
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Page
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I. RECITALS........................................................................................ 1
II. AGREEMENT...................................................................................... 3
ARTICLE 1: DEFINITIONS AND ACCOUNTING TERMS........................................................ 3
1.1 Defined Terms..................................................................... 3
1.2 Use of Defined Terms.............................................................. 19
1.3 Accounting Terms.................................................................. 19
1.4 Exhibits.......................................................................... 19
ARTICLE 2: RECITALS................................................................................ 19
ARTICLE 3: BORROWING PROCEDURES AND LETTER OF CREDIT SUBLIMIT...................................... 20
3.1 Disbursement of Loan Proceeds..................................................... 20
3.2 Reference Rate Borrowings......................................................... 23
3.3 IBOR Borrowing.................................................................... 23
3.4 Redesignation of Borrowings....................................................... 24
3.5 Calculation of Borrowing Base..................................................... 25
3.6 Borrowing Base.................................................................... 28
3.7 Payments by the Banks to the Agent................................................ 28
3.8 Sharing of Payments, Etc.......................................................... 28
3.9 Letter of Credit Sublimit......................................................... 29
3.9.1 Amount and Terms of the Credit............................................ 29
3.9.2 Standby Letters of Credit................................................. 29
3.9.3 Request for Credit........................................................ 31
3.9.4 Issuance Fees............................................................. 31
3.9.5 Conditions Precedent to Issuance of Letters of Credit..................... 31
3.9.6 Subsidiary Letters of Credit.............................................. 32
3.10 Term Loan Conversion Option....................................................... 33
ARTICLE 4: PAYMENTS AND FEES....................................................................... 35
4.1 Principal and Interest............................................................ 35
4.2 Unused Fee........................................................................ 38
4.3 Commitment Fee.................................................................... 38
4.4 Late Payments..................................................................... 38
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4.5 Taxes............................................................................. 39
4.6 Illegality........................................................................ 39
4.7 Increased Costs and Reduction of Return........................................... 40
4.8 Funding Losses.................................................................... 40
4.9 Inability to Determine Rates...................................................... 41
4.10 Reserves on IBOR Rate Loans....................................................... 41
4.11 Certificates of Banks............................................................. 42
4.12 Substitution of Banks............................................................. 42
4.13 Survival.......................................................................... 42
4.14 Manner and Treatment of Payments.................................................. 42
4.15 Change in Capital Requirements; Additional Costs.................................. 43
4.16 Mandatory Prepayment.............................................................. 43
4.17 Agency Fee And Other Consideration Payable To Agent............................... 43
4.18 Maturity Date Extension Option.................................................... 44
ARTICLE 5: SECURITY................................................................................ 45
5.1 Unsecured Credit.................................................................. 45
ARTICLE 6: CONDITIONS.............................................................................. 45
6.1 Conditions to Disbursement of First Borrowings.................................... 45
6.2 Conditions for Subsequent Borrowings or for a Redesignation of Borrowings......... 46
6.3 Any Borrowing..................................................................... 46
ARTICLE 7: REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................... 46
7.1 Incorporation, Qualification, Powers and Capital Stock............................ 46
7.2 Execution, Delivery and Performance of Loan Documents............................. 47
7.3 Compliance with Laws and Other Requirements....................................... 48
7.4 Subsidiaries...................................................................... 48
7.5 Affiliated Partnerships........................................................... 49
7.6 Financial Statements of the Company and the Subsidiaries.......................... 49
7.7 No Material Adverse Change........................................................ 50
7.8 Tax Liability..................................................................... 50
7.9 Litigation........................................................................ 50
7.10 Pension Plan...................................................................... 50
7.11 Regulations U and X; Investment Company Act....................................... 50
7.12 No Default........................................................................ 51
7.13 Borrowing Base.................................................................... 51
7.14 Borrowing Base Components......................................................... 51
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ARTICLE 8: COVENANTS OF THE COMPANY................................................................ 51
8.1 Consolidated Tangible Net Worth................................................... 51
8.2 Leverage Covenants................................................................ 52
8.3 Payment of Taxes and Other Potential Liens........................................ 52
8.4 Preservation of Existence......................................................... 52
8.5 Maintenance of Properties......................................................... 53
8.6 Maintenance of Insurance.......................................................... 53
8.7 Mergers........................................................................... 53
8.8 Books and Records................................................................. 53
8.9 Inspection Rights................................................................. 54
8.10 Reporting Requirements............................................................ 54
8.11 Liens............................................................................. 57
8.12 Prepayment of Indebtedness........................................................ 58
8.13 Bank Approval of Joint Ventures................................................... 58
8.14 Compliance with Laws and Other Requirements....................................... 58
8.15 Change in Nature of Business...................................................... 59
8.16 Pension Plan...................................................................... 59
8.17 Dividends and Subordinated Debt................................................... 59
8.18 Disposition of Properties......................................................... 60
8.19 Limitation on New Operating Subsidiaries or Affiliated Partnerships.............. 60
8.20 Operating Subsidiaries of Panel Concepts, Inc..................................... 60
8.21 Maintenance of General Liability, Workers Compensation and Subsidence Insurance... 60
8.22 Transfers to Saddleback Inns of the Americas...................................... 62
8.23 Management........................................................................ 62
8.24 Investments in Standard Pacific Savings........................................... 62
8.25 Total Borrowing Base Home Building Indebtedness Not to Exceed Borrowing Base...... 63
ARTICLE 9: EVENTS OF DEFAULT AND REMEDIES UPON DEFAULT............................................. 63
9.1 Events of Default................................................................. 63
9.2 Remedies Upon Event of Default.................................................... 65
9.3 Notice of Default................................................................. 66
ARTICLE 10: THE AGENT............................................................................... 67
10.1 Appointment and Authorization..................................................... 67
10.2 Delegation of Duties.............................................................. 67
10.3 Liability of Agent................................................................ 67
10.4 Reliance by Agent................................................................. 68
10.5 Notice of Default................................................................. 68
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10.6 Credit Decision................................................................... 69
10.7 Indemnification................................................................... 69
10.8 Agent in Individual Capacity...................................................... 70
10.9 Successor Agent................................................................... 70
10.10 Withholding Tax................................................................... 70
10.11 Collateral Matters................................................................ 72
10.12 Performance by the Agent.......................................................... 73
10.13 Actions........................................................................... 73
10.14 Co-Agent.......................................................................... 73
ARTICLE 11: MISCELLANEOUS.......................................................................... 73
11.1 Amendments and Waivers............................................................ 73
11.2 Costs, Expenses and Taxes......................................................... 75
11.3 No Waiver; Cumulative Remedies.................................................... 75
11.4 Payments Set Aside................................................................ 75
11.5 Successors and Assigns............................................................ 76
11.6 Assignments, Participations, etc.................................................. 76
11.7 Set-off........................................................................... 79
11.8 Automatic Debits.................................................................. 79
11.9 Notification of Addresses, Lending Offices, Etc................................... 79
11.10 Survival of Representations and Warranties........................................ 80
11.11 Notices........................................................................... 80
11.12 Indemnity by the Company.......................................................... 80
11.13 Integration and Severability...................................................... 80
11.14 Counterparts...................................................................... 81
11.15 No Third Parties Benefited........................................................ 81
11.16 Section Headings.................................................................. 81
11.17 Further Acts by the Company....................................................... 81
11.18 Time of the Essence............................................................... 81
11.19 Governing Law..................................................................... 81
11.20 Reference and Arbitration......................................................... 81
11.21 Effectiveness of this Agreement................................................... 82
LIST OF EXHIBITS
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Exhibit "A-1" - Revolving Note
Exhibit "A-2" - Term Note
Exhibit "B" - Borrowing Base Certificate
Exhibit "C-1" - Request for Borrowing
Exhibit "C-2" - Request for Letter of Credit
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Exhibit "D" - Request for Redesignation of Borrowing
Exhibit "E" - Continuing Guaranty (Standard Pacific of Texas, Inc.)
Exhibit "F" - Subsidiaries
Exhibit "G" - Form of Legal Opinion
Exhibit "H" - Form of Assignment and Acceptance Agreement
Exhibit "I" - Form of Letter re Financial Statements
Exhibit "J" - Continuing Guaranty (Standard Pacific Corp.)
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FIFTH AMENDED AND RESTATED
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REVOLVING CREDIT AGREEMENT
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This Fifth Amended and Restated Revolving Credit Agreement
("Agreement") is entered into as of December 27, 1996, by and among STANDARD
PACIFIC CORP., a Delaware corporation (the "Company"), the several financial
institutions from time to time party to this Agreement (collectively, the
"Banks" and individually, a "Bank"), and BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, a national banking association, as agent for the Banks
("BofA" and the "Agent"), and is made with reference to the facts set forth
below.
I. RECITALS
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1. On or about July 8, 1986, Standard-Pacific Corp., a Delaware
corporation ("SP Corp."), and Security Pacific National Bank, a national banking
association ("Security Pacific"), entered into that certain Revolving Credit
Agreement dated as of July 8, 1986, and the other "Loan Documents" described
therein (collectively, the "Original Loan Documents"). In December, 1986, SP
Corp. was converted from a corporation to a limited partnership under the laws
of the State of Delaware, known as Standard Pacific, L.P. ("Predecessor"). At
such time, substan tially all of the assets and liabilities of SP Corp., and
certain of its subsidiaries, were transferred to Predecessor. On or about March
13, 1987, Security Pacific and Predecessor entered into that certain Amended and
Restated Revolving Credit Agreement dated as of March 13, 1987 (the "First
Amended Credit Agreement"), and the other "Loan Documents" described therein
(the "First Amended Revolving Loan Documents"), in order to revise the Original
Loan Documents in light of the change in the nature of the borrowing entity.
The First Amended Credit Agreement and the First Amended Revolving Loan
Documents were subsequently modified by amendments and letter agreements.
2. On or about December 31, 1991, Security Pacific and the Company
(which succeeded to the assets and liabilities of Predecessor) entered into that
certain Second Amended and Restated Revolving Credit Agreement dated as of
December 31, 1991 (the "Second Amended Credit Agreement"), and the other "Loan
Documents" described therein (the "Second Amended Revolving Loan Documents"),
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in order to revise the First Amended Revolving Loan Documents in light of the
change in the nature of the borrowing entity. The Second Amended Credit
Agreement and the Second Amended Revolving Loan Documents have previously been
modified by that certain First Amendment to Second Amended and Restated
Revolving Credit Documents dated January 20, 1992, by and between Security
Pacific and the Company, and that certain Amendment to Loan Documents dated as
of June 22, 1992, by and between the Company and Security Pacific.
3. BofA merged with Security Pacific and thereby succeeded to all of
Security Pacific's right, title and interest in, under and to the Second Amended
Credit Agreement and the Second Amended Revolving Loan Documents.
4. The Second Amended Credit Agreement and the Second Amended
Revolving Loan Documents have previously been modified by (i) that certain
Second Amendment to Second Amended and Restated Revolving Credit Agreement dated
as of October 1, 1992, by and between the Company and BofA, (ii) that certain
Third Amendment to Second Amended and Restated Revolving Credit Agreement dated
as of March 17, 1993, by and between the Company and BofA, (iii) that certain
Fourth Amendment to Second Amended and Restated Revolving Credit Agreement dated
as of October 12, 1993, by and between the Company and BofA, and (iv) that
certain Fifth Amendment to Second Amended and Restated Revolving Credit
Agreement dated as of December 29, 1993, by and between the Company and BofA.
5. On or about February 28, 1995, BofA and the other "Banks" which
were a party thereto and the Company entered into that certain Third Amended and
Restated Revolving Credit Agreement dated as of February 28, 1995 (the "Third
Amended Credit Agreement"), and the other "Loan Documents" described therein
(the "Third Amended Revolving Loan Documents") in order to amend and restate the
Second Amended Credit Agreement and Second Amended Revolving Loan Documents in
light of certain changes and modifications to the terms thereof.
6. On or about December 31, 1992, the Company and BofA entered into
that certain Amended and Restated Line of Credit Agreement pursuant to which
BofA agreed, subject to the terms and conditions thereof, to provide the Company
a $2,000,000 letter of credit facility (such agreement, as subsequently amended
and modified to date, being referred to herein as the "Prior L/C Line
Agreement").
7. On or about March 15, 1996, the Company, BofA and NBD
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BANK, a Michigan banking corporation ("NBD"), entered into that certain Fourth
Amended and Restated Revolving Credit Agreement dated as of March 15, 1996 (the
"Fourth Amended Credit Agreement") and the other "Loan Documents" described
therein (the "Fourth Amended Revolving Loan Documents") in order to amend and
restate the Third Amended Credit Agreement and the Third Amended Revolving Loan
Documents and incorporate the Prior L/C Line Agreement therein. NBD subsequently
assigned all their rights and obligations under the Loan Documents to First
National Bank of Chicago ("First Chicago"). First Chicago's interest under the
Fourth Amended Credit Agreement will be paid off with the first disbursement
under this Agreement; and it is contemplated by the parties that (at least
initially), as of the effective date of this Agreement, BofA will be the only
"Bank" that is a party to this Agreement. Other Banks may, and likely will, be
added to this Agreement after the effective date hereof, in accordance with the
provisions of this Agreement.
8. The Company and BofA desire to amend and restate the Fourth
Amended Credit Agreement and the Fourth Amended Revolving Loan Documents, as
amended, in order to make certain amendments thereto.
II. AGREEMENT
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NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed by and among
the Company, the Banks and the Agent that the Fourth Amended Credit Agreement is
hereby amended and restated in its entirety so as to provide as follows:
ARTICLE 1: DEFINITIONS AND ACCOUNTING TERMS.
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1.1 Defined Terms. As used in this Agreement, the following terms
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shall have the meanings set forth respectively after each:
"Account" means the Company's general account no. 14263-50021
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maintained with BofA, and any future similar account with BofA.
"Affiliate" means any Person (1) which directly, or indirectly
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through one or more intermediaries, controls, or is controlled by, or is
under common control with, the Company or any Subsidiary, as the context
may require, or (2) which owns beneficially or of record 10% or more of the
voting
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stock of the Company. The term "control" means the possession, directly or
indirectly, of the power to cause the direction of the management and
policies of a Person, whether through the ownership of voting securities or
partnership interests, by contract, family relationship or otherwise.
"Affiliated Partnership" means any general or limited partnership
----------------------
or joint venture in which the Company, any Subsidiary, or any other
Affiliate is a partner or joint venturer.
"Agent" means BofA when acting in its capacity as the Agent under
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any of the Loan Documents, and any successor agent.
"Agent-Related Persons" means the Agent and any successor agent
---------------------
(pursuant to the terms of Section 10.9) together with their respective
------------
Affiliates and the directors, officers, agents, employees and attorneys-in-
fact of such Persons and Affiliates.
"Agreement" means this Fifth Amended and Restated Revolving
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Credit Agreement, either as originally executed or as it may from time to
time be supplemented, modified or amended.
"Applicable Maturity Date" means:
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(a) With respect to the Revolving Loans, the Revolving Loans
Maturity Date (other than with respect to a Revolving Note held by a
Bank which does not extend the maturity date of such Note pursuant to
Section 4.18, in which case the Applicable Maturity Date for such
Revolving Note held by such non-renewing Bank shall be the Non-
Renewing Bank Revolving Loan Maturity Date); and
(b) With respect to the Term Loan (and the Term Notes
evidencing such Term Loan), the Term Loan Maturity Date.
"Assignee" shall have the meaning set forth in Section 11.6.
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"Assignment and Acceptance" shall have the meaning set forth in
-------------------------
Section 11.6.
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"Attorney Costs" means and includes all reasonable fees and
--------------
disbursements of any law firm or other external counsel, the allocated cost
of
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internal legal services and all disbursement of internal legal counsel.
"Banking Day" means any Monday, Tuesday, Wednesday, Thursday or
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Friday on which banks (including the Banks) are open for business in
California.
"Banks" means Bank of America National Trust and Savings
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Association, a national banking association, and the additional financial
institutions from time to time party to this Agreement, any of their
successors and assigns (including any Assignee), or any one or more of
them.
"Base Amount" shall have the meaning set forth in Section 8.1.
----------- -----------
"Borrowing" means each of the Loans to be made by the Banks to
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the Company as provided in Article 3.
"Borrowing Base" has the meaning set forth in Section 3.5(b).
-------------- --------------
"Borrowing Base Certificate" means a written calculation of the
--------------------------
Borrowing Base, substantially in the form of Exhibit "B" attached hereto
-----------
and made a part hereof, signed by a Responsible Official of the Company and
properly completed to provide all information required to be included
thereon.
"Capital Adequacy Regulation" means any guideline, request or
---------------------------
directive of any central bank or other Governmental Authority, or any other
law, rule or regulation, whether or not having the force of law, in each
case, regarding capital adequacy of any bank or of any corporation
controlling a bank.
"Closing Date" means the time and Banking Day on which the
------------
conditions precedent specified in Section 11.21 are satisfied or waived as
-------------
provided therein, or shall be as otherwise specified in Section 11.21.
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"Co-Agent" means one of the Banks which is designated in writing
--------
by the Agent to serve as Co-Agent hereunder (subject to Section 10.14
hereof).
"Commitment" means, with respect to the Revolving Loans: [AS TO
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BOFA, A PERCENTAGE OBLIGATION OF 100% AND $200,000,000 IN THE
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AGGREGATE.] As Banks are added to this Agreement, or withdraw from this
Agreement, and assignments are made by the Banks in accordance with Section
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11.6 hereof, or if the Term Loan conversion option is exercised in
----
accordance with Section 3.10, the amount of each Bank's Commitment shall
change in accordance with that Bank's Pro Rata Share of the Total Aggregate
Commitments. The Assignment and Acceptances executed by the Banks, and the
records maintained by the Agent, shall be presumptive evidence of each
Bank's Commitment, as each such Bank's Commitment may change from time to
time in accordance with the terms of this Agreement.
"Company" means Standard Pacific Corp., a Delaware corporation,
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and its successors and assigns.
"Completed Unit" means a Unit as to which either (or both) of the
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following has occurred: (a) a notice of completion has been filed or
recorded in the appropriate real estate records, or (b) all necessary
construction has been completed in order to obtain a certificate of
occupancy (whether or not such certificate of occupancy has actually been
obtained).
"Consolidated Debt" means, at any time of determination thereof,
-----------------
all indebtedness (including Subordinated Debt), liabilities (including
liabilities as a general partner) and other obligations (including
contingent debt obligations and obligations as a guarantor) of the Company
and its consolidated Subsidiaries, that, in conformity with generally
accepted accounting principles applied on a consistent basis, should be
included in determining total liabilities shown on the liability side of a
consolidated balance sheet of the Company and its consolidated
Subsidiaries.
"Consolidated Tangible Net Worth" means, as of any time of
-------------------------------
determination, the sum of the following with respect to the Company and the
consolidated Subsidiaries determined and consolidated in conformity with
generally accepted accounting principles applied on a consistent basis:
(a) the amount of stated capital (excluding the cost of
treasury shares), additional paid-in capital and retained earnings
(or, in the case of a deficit in additional paid-in capital or
retained earnings, minus the amount of the deficit), minus
----- -----
(b) the carrying value of intangible assets, such as
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deferred costs associated with goodwill, patents, franchises,
organizational expenses and the like (but excluding receivables, pre-
---------
paid expenses, the capitalized value of leases and all costs that are
specifically identifiable or are identifiable on a rational and
consistent basis with the unexpired service value of tangible assets
and excluding the carrying value of intangible assets, such as
---------
deferred costs associated with goodwill, patents, franchises,
organizational expenses and the like recorded by Standard Pacific
Savings, Standard Pacific Financing, Inc., and Standard Pacific
Financing, L.P.).
"Designated IBOR Market" means BofA's Grand Cayman branch, Grand
----------------------
Cayman, British West Indies, or such other regular established market
outside the United States of America by and among banks for the
solicitation, offer and acceptance of dollar deposits in such banks as may
from time to time be designated by the Agent.
"Dollars" or "$" means United States dollars.
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"Eligible Assignee" means (i) a commercial bank organized under
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the laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000, (ii) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development (the "OECD"), or a
political subdivision of any such country, and having a combined capital
and surplus of at least $100,000,000, provided that such bank is acting
through a branch or agency located in the United States, and (iii) a Person
that is primarily engaged in the business of commercial banking and that is
(A) a Subsidiary of a Bank, (B) a Subsidiary of a Person of which a Bank is
a Subsidiary, or (C) a Person of which a Bank is a Subsidiary.
"Entitled Land" means (a) land where all requisite zoning
-------------
requirements and land use requirements have been satisfied, and all
requisite approvals have been obtained from all applicable Governmental
Authorities (other than approvals which are simply ministerial and non-
discretionary in nature), in order to develop the land as a residential
housing project and construct Units thereon, and (b) as to land located in
California, land which satisfies the requirements of subparagraph (a)
immediately above, and which is subject to a currently effective vesting
---
tentative map (unless a county or city where the land is located does not
grant vesting tentative maps) which has
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received all necessary approvals by all applicable Governmental Agencies.
"ERISA" means the Employee Retirement Income Security Act of
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1974, and any regulations issued pursuant thereto, as now or from time to
time hereafter in effect.
"Escrow Proceeds Receivable" means funds due to the Company held
--------------------------
at an escrow company following the sale and conveyance of title of a Unit
to a buyer.
"Events of Default" has the meaning set forth for that term in
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Section 9.1.
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"Extension Request" means a written request from the Company to
-----------------
extend the Term Loan Election Date pursuant to Section 3.10.5 or to extend
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the Revolving Loans Maturity Date pursuant to Section 4.18.
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"FDIC" means the Federal Deposit Insurance Corporation, and any
----
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate set forth in
------------------
the weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including
any such successor, "H.15(519)") on the preceding Banking Day opposite the
caption "Federal Funds (Effective)"; or, if for any relevant day such rate
is not so published on any such preceding Banking Day, the rate for such
day will be the arithmetic mean as determined by the Agent of the rates for
the last transaction in overnight Federal funds arranged prior to 9:00 a.m.
(New York City time) on that day by each of three leading brokers of
Federal funds transactions in New York City selected by the Agent.
"Fixed Rate Option Requests" means the combined number of IBOR
--------------------------
Borrowings made in any specified period of time.
"FRB" means the Board of Governors of the Federal Reserve System,
---
and any Governmental Authority succeeding to any of its principal
functions.
"GAAP" means generally accepted accounting principals.
----
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"GAAP Value" means, with respect each property constituting part
----------
of the Company's Real Estate Inventory, the GAAP basis asset value for such
property or asset.
"Government Securities" means readily marketable direct
---------------------
obligations of the United States of America or obligations fully guaranteed
by the United States of America.
"Governmental Authority" means any nation or government, any
----------------------
state or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"Guarantor" means Standard Pacific of Texas, Inc., Saddleback
---------
Inns of the Americas if the events specified in Section 8.22 occur, and
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their successors and assigns.
"Guaranty" means the continuing guaranty, in the form of Exhibit
--------
"E" attached hereto, either as originally executed or as it may from time
to time be supplemented, modified, amended, restated or extended, to be
executed and delivered by the Guarantor to the Banks.
"Guaranty of the Subsidiary Letters of Credit" means a guaranty
--------------------------------------------
of the Company guaranteeing all indebtedness and obligations arising under
or relating to the Subsidiary Letters of Credit, substantially in the form
of Exhibit J hereto.
"Home Building Debt" means, as of any time of determination, all
------------------
indebtedness, liabilities and other obligations of the Company and the
consolidated Subsidiaries (excluding all indebtedness, liabilities and
other obligations of Standard Pacific Savings, F.A., Standard Pacific
Financing, Inc., and Standard Pacific Financing, L.P.) that, in conformity
with generally accepted accounting principles applied on a consistent
basis, should be included in determining total liabilities shown on the
liability side of a consolidated balance sheet of the Company and the
consolidated Subsidiaries.
"Home Building Net Worth" means the Consolidated Tangible
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Net Worth of the Company, less the Tangible Net Worth of Standard Pacific
----
Savings, Standard Pacific Financing, Inc., and Standard Pacific Financing,
L.P..
"IBOR Banking Day" means any Banking Day on which dealings in
----------------
dollar deposits are conducted by and between banks in the Designated IBOR
Market.
"IBOR Base Rate" means, for the IBOR Period for any IBOR
--------------
Borrowing, the rate of interest per annum (determined solely by the Agent
and rounded upward to the next 1/100 of 1%) at which BofA's Grand Cayman
Branch, Grand Cayman, British West Indies (or such other office as may be
designated for such purpose by BofA), would offer U.S. dollar deposits in
the approximate amount of BofA's Pro Rata Share of such IBOR Borrowing and
for periods comparable to those of the applicable IBOR Period to major
banks in the offshore U.S. dollar inter-bank market. The determination of
the IBOR Base Rate by the Agent shall be conclusive in the absence of
manifest error.
"IBOR Borrowing" means any portion of the Loan Proceeds
--------------
designated or redesignated by the Company as an IBOR Borrowing pursuant to
Article 3.
"IBOR Lending Office" means the office or branch of each Bank so
-------------------
designated on the signature pages of this Agreement, or such other office
or branch of each Bank as it may hereafter designate, by written notice to
the Company, as its IBOR Lending Office.
"IBOR Market" means a regular established market located outside
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the United States of America by and among banks for the solicitation, offer
and acceptance of dollar deposits in such banks.
"IBOR Obligations" means eurocurrency liabilities as defined in
----------------
Regulation D.
"IBOR Period" means, as to each IBOR Borrowing, the period
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commencing on the date specified by the Company pursuant to Sections 3.3 or
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3.4 and ending 14 days, 30 days, 60 days, 90 days, 180 days, 270 days or
---
360 days thereafter, as designated by the Company in the applicable Request
for Borrowing or Request for Redesignation of Borrowing, provided that:
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(a) the first day in any IBOR Period shall be an IBOR
Banking Day;
(b) any IBOR Period that would otherwise end on a day that
is not an IBOR Banking Day shall be extended to the next succeeding
IBOR Banking Day unless such IBOR Banking Day falls in another
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calendar month, in which case such IBOR Period shall end on the next
preceding IBOR Banking Day; and
(c) No IBOR Period shall extend beyond the Applicable
Maturity Date.
"IBOR Rate" means, for any IBOR Period for any IBOR Borrowing,
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the rate (rounded upward to the next 1/100 of 1%) obtained by dividing (i)
the IBOR Base Rate for such IBOR Period, by (ii) a percentage equal to 100%
minus the IBOR Reserve Percentage for such IBOR Period.
"IBOR Rate Spread" means the additional component of interest,
----------------
expressed as a percentage per annum, to be added to the IBOR Rate in
determining the applicable rate of interest for IBOR Borrowings. The
applicable IBOR Rate Spread shall be based on the Company's current senior
long term debt ratings as published by Standard & Poors and Xxxxx'x
Investor Services as determined by the following pricing grid:
For Revolving Loans
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S&P/Xxxxx'x Rating Applicable IBOR Rate Spread
------------------ ---------------------------
(greater than BB+/Ba1 1.375%
or equal to) = BB/Ba2 1.500%
(less than) BB-/Ba3 1.675%
For Term Loan
-------------
S&P/Xxxxx'x Rating Applicable IBOR Rate Spread
------------------ ---------------------------
(greater than BB+/Ba1 1.875%
or equal to) = BB/Ba2 2.000%
(less than) BB-/Ba3 2.125%
In the event of a difference in rating between Standard & Poors and Xxxxx'x
Investor Services, the lower rating shall prevail for purposes of
determining the
-11-
applicable IBOR Rate Spread. As of the date of this Agreement, the Company
is currently rated BB/Ba2 by Standard & Poors and Xxxxx'x Investor
Services, respectively, and the applicable IBOR Rate Spread for Revolving
Loans as of the date of this Agreement is therefore 1.50%, and for the Term
Loan is 2.00%.
"IBOR Reserve Percentage" means, for the IBOR Period for any IBOR
-----------------------
Borrowing, the percentage in effect on the first day of such IBOR Period
under regulations issued from time to time by the FRB for determining the
reserve requirement (including any marginal reserve requirement) for each
Bank with respect to liabilities or assets consisting of or including
Eurocurrency liabilities (as defined in Regulation D of the FRB, as in
effect from time to time).
"Interest Differential" means, with respect to any prepayment or
---------------------
redesignation of an IBOR Rate Loan on a day other than the last day of the
applicable IBOR Period and with respect to any failure to borrow an IBOR
Rate Loan on the date or in the amount specified in any Request for
Borrowing or any Request for Redesignation of Borrowing, (a) the IBOR Rate
payable (or, with respect to a failure to borrow, the IBOR Rate which would
have been payable) with respect to the IBOR Rate Loan minus (b) the IBOR
-----
Rate on, or as near as practicable to the date of, the prepayment or
failure to borrow for an IBOR Rate Loan with an IBOR Period commencing on
such date and ending on the last day of the IBOR Period of the IBOR
Borrowing so prepaid or which would have been borrowed on such date. The
determination of the Interest Differential by the Agent shall be conclusive
in the absence of manifest error.
"Interest Payment Date" means the first day of any month.
---------------------
"Investment" means any investment by the Company or any
----------
Subsidiary in Standard Pacific Savings, whether by acquisition of stock or
debt, or by loan, advance, transfer of property out of the ordinary course
of business, capital contribution, payment pursuant to a guaranty or any
other contingent liability of the Company in respect of liabilities of
Standard Pacific Savings, extension of credit on terms other than those
normal in the business of the Company or such Subsidiary, or otherwise.
"Issuing Bank" means BofA in its individual capacity as a bank
------------
issuing Letters of Credit under this Agreement.
"Laws" means, collectively, all international, foreign, federal,
----
-12-
state and local statutes, treaties, rules, regulations, ordinances, codes
and administrative or judicial precedents.
"L/C Commitment" has the meaning set forth in Section 3.9.1.
-------------- -------------
"L/C Commitment Termination Date" has the meaning set forth in
-------------------------------
Section 3.9.1.
-------------
"L/C Obligations" has the meaning set forth in Section 3.9.1.
--------------- -------------
"Letters of Credit" has the meaning set forth in Section
----------------- -------
3.9.2(a).
--------
"Letter of Credit Subsidiaries" has the meaning set forth in
-----------------------------
Section 3.9.6.
-------------
"Loan" or "Loans" means each of the Revolving Loans or the Term
---- -----
Loan, or the Revolving Loans and the Term Loan, collectively, as the
context reasonably requires.
"Loan Documents" means, collectively, this Agreement, each Note,
--------------
the Guaranty and the Guaranty of the Subsidiary Letters of Credit.
"Loan Proceeds" means the proceeds of the Loans, in the aggregate
-------------
principal amount of up to $200,000,000.
"Lots Under Development" means Entitled Land where physical site
----------------------
improvement has commenced.
"Majority Banks" means, at any time, if BofA is the only Bank,
--------------
BofA, and, if there is more than one Bank, at least two Banks then holding
in excess of 66-2/3% of the then aggregate unpaid principal amount of the
Loans, or, if no such principal amount is then outstanding, at least two
Banks then having in excess of 66-2/3% of the Total Aggregate Commitment.
"Material" means, in connection with the Company, its
--------
Subsidiaries, and the Loan and the Loan Documents, such circumstances or
facts which the Banks in the exercise of their discretion could be expected
to rely upon in determining whether to enter into or to continue lending
under this Agreement or which could have a bearing on any actions
undertaken by the
-13-
Banks. Such Material circumstances or facts shall include, without
limitation, such circumstances or facts as would alter, enlarge, restrict
or otherwise affect the rights and liabilities otherwise existing between
the parties to the Agreement or any other Loan Document.
"Model Unit" means a Completed Unit to be used as a model home in
----------
connection with the sale of Units in a residential housing project.
"Non-Renewing Bank Revolving Loan Maturity Date" means the
----------------------------------------------
maturity date of the Revolving Note held by a Bank which does not extend
such maturity date in response to a request for such extension by the
Company pursuant to Section 4.18.
------------
"Non-Renewing Bank Term Loan Election Date" means, with respect
-----------------------------------------
to any non-renewing Bank, the Term Loan Election Date in effect immediately
prior to the extension of the Term Loan Election Date by some but not all
of the Banks pursuant to Section 3.10.5 hereof.
"Note" means any of the Revolving Notes and/or Term Notes.
----
"Obligations" means all obligations of every nature of the
-----------
Company from time to time owed to the Banks under the Loan Documents.
"Opinion of Counsel" means the favorable written legal opinion of
------------------
Xxxxxx, Xxxx & Xxxxxxxx, as counsel to the Company and the Subsidiaries, to
this Agreement, substantially in the form of Exhibit "G" attached hereto,
together with copies of all factual certificates and legal opinions upon
which such counsel has relied.
"Other Taxes" means any present or future stamp or documentary
-----------
taxes or any other excise or property taxes, charges or similar levies
which arise from any payment made hereunder or from the execution, delivery
or registration of, or otherwise with respect to, this Agreement or any
other Loan Documents.
"Participant" shall have the meaning set forth in Section 11.6.
----------- ------------
"Person" means any entity, whether an individual, trustee,
------
corporation, general partnership, limited partnership, limited liability
company,
-14-
joint stock company, trust, unincorporated organization, bank, business
association, firm, joint venture, Governmental Authority or otherwise.
"Plan" means any employee benefit plan subject to ERISA and
----
maintained by the Company and/or any Subsidiary or to which the Company
and/or any Subsidiary is required to contribute on behalf of its employees.
"Pro Rata Share" means, as to any Bank at any time, the
--------------
percentage equivalent (expressed as a decimal, rounded to the ninth decimal
place as determined by the Agent) at such time of such Bank's Commitment
divided by the combined Commitments of all Banks.
"Real Estate Inventory" means Unentitled Land, Entitled Land,
---------------------
Lots Under Development, Units Under Construction, and Completed Units
(including Model Units) owned by the Company.
"Reference Rate" means the higher of:
--------------
(a) the rate of interest publicly announced from time to
time by BofA in San Francisco, California, as its reference rate. It
is a rate set by BofA based upon various factors including BofA's
costs and desired return, general economic conditions, and other
factors, and is used as a reference point for pricing some loans,
which may be priced at, above, or below such announced rate; and
(b) 0.50% per annum above the latest Federal Funds Rate.
Any change in the Reference Rate shall take effect on the day specified in
the public announcement of such change.
"Reference Rate Borrowing" means any portion of the Loan Proceeds
------------------------
which is not designated or redesignated by the Company as an IBOR Borrowing
pursuant to Sections 3.3 or 3.4.
-------------------
"Reference Rate Spread" means the additional component of
---------------------
interest, expressed as a percentage per annum, to be added to the Reference
Rate in determining the applicable rate of interest for Reference
Borrowings. For the period beginning on the Closing Date and continuing
through the entire
-15-
term of the Loans, the Reference Rate Spread shall be equal to 0.00%.
"Regulation D" means Regulation D of the Board of Governors of
------------
the Federal Reserve System as now or from time to time hereafter in effect
and any other regulation issued in substitution therefor.
"Request for Borrowing" means a written request for a Borrowing
---------------------
substantially in the form of Exhibit "C-1" attached hereto, signed by a
Responsible Official of the Company and properly completed to provide all
information required to be included thereon.
"Request for Letter of Credit" means a written request for a
----------------------------
Letter of Credit substantially in the form of Exhibit "C-2" attached
hereto, signed by a Responsible Official of the Company and properly
completed to provide all information required to be included thereon.
"Request for Redesignation of Borrowing" means a written request
--------------------------------------
for redesignation of Borrowing substantially in the form of Exhibit "D"
attached hereto, signed by a Responsible Official of the Company and
properly completed to provide all information required to be included
thereon.
"Requirement of Law" means, as to any Person, any law (statutory
------------------
or common), treaty, rule or regulation or determination of an arbitrator or
of a Governmental Authority, in each case applicable to or binding upon the
Person or any of its property or to which the Person or any of its property
is subject.
"Responsible Official" means: (a) when used with reference to a
--------------------
Person other than an individual, any corporate officer of such Person,
general partner of such Person, corporate officer of a corporate general
partner of such Person, or corporate officer of a corporate general partner
of a partnership that is a general partner of such Person, or any other
responsible official thereof duly acting on behalf thereof, and (b) when
used with reference to a Person who is an individual, such Person. Any
document or certificate hereunder that is signed or executed by a
Responsible Official of another Person shall be conclusively presumed to
have been authorized by all necessary corporate, partnership and/or other
action on the part of such other Person.
"Revolving Loans" means all loans and Borrowings under this
---------------
Agreement, other than the Term Loan.
-16-
"Revolving Loans Maturity Date" means July 31, 1999, subject to
-----------------------------
extension pursuant to Section 4.18, or such other extended date as the
Banks may agree to in writing.
"Revolving Note" means each of the promissory notes,
--------------
substantially in the form of Exhibit "A-1" attached hereto and made a part
hereof, executed by the Company in favor of the Banks, each to the order of
the applicable Bank as payee to evidence such Bank's share of the Revolving
Loans, and each in the original principal amount of the applicable Bank's
Commitment such that the aggregate original principal amount of all
Revolving Notes is initially $200,000,000 (subject to reduction in
connection with a Term Loan conversion under Section 3.10 hereof, and as
otherwise provided herein), as originally executed or as the same may from
time to time be supplemented, modified, amended, renewed, extended or
refinanced (and any promissory note that may be issued in substitution or
exchange therefor).
"Senior Debt" means, at any time of determination thereof, all
-----------
indebtedness with respect to (i) the Loans and L/C Obligations, (ii) the
10.5% senior promissory notes, due March 1, 2000 (the "10.5% Senior
Notes"), except to the extent that they would not be included in the
Company's balance sheet in accordance with GAAP, (iii) any other senior
indebtedness of the Company to any Banks, and (iv) such other indebtedness
for borrowed money senior to or ranking in equal priority to the
Obligations.
"Special Circumstance" means the adoption of any Law or
--------------------
interpretation, or any change therein or thereof, or any change in the
interpretation, administration or application thereof by any Governmental
Authority, central bank or comparable authority, or compliance by the Banks
or their IBOR Lending Offices with any request or directive (whether or not
having the force of Law) of any Governmental Authority, central bank or
comparable authority, or the occurrence of circumstances affecting the
applicable certificate of deposit market or IBOR Market generally which are
beyond the reasonable control of the Banks.
"Standard Pacific Savings" means Standard Pacific Savings, F.A.
------------------------
"Subordinated Debt" means such indebtedness of the Company as is
-----------------
fully subordinated to the Obligations pursuant to a subordination agreement
-17-
approved in writing by the Majority Banks.
"Subsidiary" means (i) any corporation of which at least 50% of
----------
the outstanding securities of any class or classes (however designated)
having ordinary voting power to elect directors of the corporation is owned
by the Company and/or by one or more than one other Subsidiary, and (ii)
any partner ship, joint venture or limited liability company in which the
Company and/or any Subsidiary owns at least a 50% interest, or which is
otherwise controlled by the Company and/or any Subsidiary.
"Subsidiary Letters of Credit" has the meaning set forth in
----------------------------
Section 3.9.6.
-------------
"Swing Line Advances" means Borrowings initially funded by BofA
-------------------
in the manner provided in Section 3.1(h).
--------------
"Tangible Net Worth" means, as of any time of determination, the
------------------
sum of the following with respect to the entity in question determined in
conformity with generally accepted accounting principles applied on a
consistent basis:
(a) the amount of stated capital (excluding the cost of
treasury shares), additional paid-in capital and retained earnings
(or, in the case of a deficit in additional paid-in capital or
retained earnings, minus the amount of the deficit), minus
----- -----
(b) the carrying value of intangible assets, such as
deferred costs associated with goodwill, patents, franchises,
organizational expenses and the like (but excluding receivables, pre-
---------
paid expenses, the capitalized value of leases and all costs that are
specifically identifiable or are identifiable on a rational and
consistent basis with the unexpired service value of tangible assets).
"Taxes" means any and all present or future taxes, levies,
-----
imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Bank and the Agent, such
taxes (including income taxes or franchise taxes) as are imposed on or
measured by each Bank's net income.
"Term Loan" shall have the meaning set forth in Section 3.10.1.
--------- --------------
-18-
"Term Loan Conversion Date" has the meaning set forth in Section
-------------------------
3.10.1 hereof.
"Term Loan Election Date" means June 30, 1997, subject to
-----------------------
extension pursuant to section 3.10.5, or such other extended date as the
Banks may agree to in writing.
"Term Loan Maturity Date" means three (3) years from the Term
-----------------------
Loan Conversion Date, but in no event more than one (1) year after the
Revolving Loans Maturity Date.
"Term Note" means each of the promissory notes, substantially in
---------
the form of Exhibit "A-2" attached hereto and made a part hereof, executed
by the Company in favor of the Banks, each to the order of the applicable
Bank as payee to evidence each Bank's share of the Term Loan, and each in
the original principal amount of the applicable Bank's Pro Rata Share of
the Term Loan, as originally executed or as the same may from time to time
be supplemented, modified, amended, renewed, extended or refinanced (and
any promissory note that may be issued in substitution or exchange
therefor).
"Total Aggregate Commitment" means the total aggregate combined
--------------------------
Commitments of each of the Banks. The Total Aggregate Commitment
concurrently equals $200,000,000, and may decrease as provided in Sections
3.10 and 4.18.
"Total Borrowing Base Home Building Indebtedness" means the
-----------------------------------------------
aggregate of all Senior Debt, plus all reimbursement obligations and other
----
obligations under any and all letters of credit related to the Company's
home building operations, plus all unsecured obligations (excluding any
----
trade payables incurred in the ordinary course of business) of partnerships
or joint ventures in which the Company is a general partner, or otherwise
liable, plus the amount of all guaranties, suretyship agreements, or
----
similar agreements in which the Company agrees to answer for the
indebtedness or other financial obligations of another person or entity,
plus all unsecured indebtedness of the Company which is subordinate to the
----
Obligations. "Total Borrowing Base Home Building Indebtedness" shall not
---
include indebtedness which is fully secured by real property or
indebtedness which by its terms is non-recourse to the Company. The
Majority Banks in their sole and absolute discretion may
-19-
choose to exclude subordinated indebtedness from Total Borrowing Base Home
Building Indebtedness.
"Unencumbered Real Estate Inventory" means Real Estate Inventory
----------------------------------
which is not subject to or encumbered by any deed of trust, mortgage,
judgment lien, attachment lien or any other lien (other than liens which
have been bonded around so as to remove such liens as encumbrances against
the Real Estate Inventory in a manner satisfactory to the Agent and its
legal counsel, or liens which are permitted under Section 8.11(b) or
---------------
Section 8.11(c)).
-----------------
"Unentitled Land" means all land which is not Entitled Land.
---------------
"Unit" means single family residential housing units.
----
"Units Under Construction" means Units where on-site construction
------------------------
has commenced as evidenced by the pouring of foundations for such Units.
1.2 Use of Defined Terms. Any defined term used in the plural shall
--------------------
refer to all members of the relevant class, and any defined term used in the
singular shall refer to any of the members of the relevant class.
1.3 Accounting Terms. All accounting terms not specifically defined
----------------
in this Agreement shall be construed in conformity with, and all financial data
required to be submitted by this Agreement shall be prepared in conformity with,
generally accepted accounting principles applied on a consistent basis.
1.4 Exhibits. All exhibits to this Agreement, either as now existing
--------
or as the same may from time to time be supplemented, modified or amended, are
incorporated herein by this reference.
ARTICLE 2: RECITALS.
--------
This Agreement is made with reference to the following facts:
(a) The Company is primarily engaged in the business of
developing residential single-family housing projects.
-20-
(b) The Company has applied to the Banks for the Loans (i) to
finance or refinance the acquisition of land and the development and
construction of various residential single-family housing projects in
California and Texas, and (ii) for general working capital purposes.
(c) The Banks are willing to make the Loans to the Company on the
terms and conditions set forth in this Agreement and in the other Loan
Documents.
ARTICLE 3: BORROWING PROCEDURES AND LETTER OF CREDIT SUBLIMIT.
--------------------------------------------------
3.1 Disbursement of Loan Proceeds.
-----------------------------
(a) Subject to the terms and conditions set forth in this
Agreement, at any time and from time to time from the Closing Date through
the Banking Day immediately preceding the Revolving Loans Maturity Date
(or, in the case of a non-renewing Bank under Section 4.18, the Non-
Renewing Bank Revolving Loan Maturity Date), each Bank shall, according to
its Pro Rata Share, make Revolving Loans to the Company in such amounts as
the Company may request that do not exceed in the aggregate at any one time
outstanding, the Commitment of such Bank (less the Pro Rata Share of such
----
Bank's L/C Obligations, if any). Subject to the limitations set forth
herein, the Company may borrow, repay and reborrow under each Bank's
Commitment without premium or penalty. In no event shall the Banks be
obligated to make Revolving Loans to the Company at any time if, after
giving effect to such Loans, the provisions of Section 3.6 would be
-----------
violated.
(b) Unless the Agent otherwise consents, the aggregate amount of
each IBOR Borrowing shall be in an integral multiple of $100,000, but not
less than $1,000,000, and the aggregate amount of each Reference Rate
Borrowing shall be in an integral multiple of $10,000, but not less than
$100,000.
(c) The Loans made by the Banks pursuant to this Agreement shall
be evidenced by each Note.
(d) A Request for Borrowing shall be irrevocable upon receipt
-21-
by the Agent.
(e) Unless the Agent otherwise consents, no more than eight (8)
IBOR Borrowings in the aggregate shall be outstanding at any one time;
provided, however, up to twelve (12) IBOR Borrowings in the aggregate may
-------- -------
be outstanding if the Company pays to the Agent an additional fee of $250
per IBOR Borrowing with each Request for Borrowing after the eighth (8th)
such request.
(f) The Agent will notify each Bank of its receipt of a Request
for Borrowing and of the amount of such Bank's Pro Rata Share of that
Borrowing by 11:00 a.m. (California time) on the date of timely receipt of
a Request for Borrowing by the Company.
(g) Each Bank will make the amount of its Pro Rata Share of each
Borrowing available to the Agent for the account of the Company at the
Agent's Payment Office by 11:00 a.m. (California time) on the date of
Borrowing requested by the Company in funds immediately available to the
Agent. The proceeds of all such Loans will then be made available to the
Company by the Agent by wire transfer in accordance with written
instructions provided to the Agent by the Company of like funds as received
by the Agent.
(h) The following procedures shall apply to Swing Line Advances:
(i) Not later than 2:00 p.m., California time, on the
Banking Day on which a proposed Swing Line Advance is to be made, the
Agent must have received in writing a request that a Swing Line
Advance be made on that Banking Day, stating that such Advance shall
be a Swing Line Advance, and stating the amount of the requested Swing
Line Advance.
(ii) Upon fulfillment of each of the applicable conditions
in Article 6 and the condition that the aggregate amount of
outstanding Swing Line Advances at no time exceeds $20,000,000, BofA
shall credit to the Company's Account, from BofA's funds, the amount
of the requested Swing Line Advance.
(iii) Prior to 10:00 a.m., California time, on the Banking
Day following the Banking Day on which a Swing Line Advance is
-22-
made, the Agent shall inform each Bank by telephone, telecopier or
telex stating (x) the date of the Swing Line Advance, (y) the amount
of the Swing Line Advance, and (z) that the Agent assumes that no
Event of Default has occurred. The Agent may assume that no Event of
Default has occurred unless it has actual notice of the Event of
Default, has received notice from the Company stating the nature of
the Event of Default, or has received notice from a Bank stating the
nature of the Event of Default and that such Bank considers the Event
of Default to have occurred.
(iv) Each Bank shall deliver to the Agent, before 12:00
noon, California time, on or before the first Banking Day after the
date on which any Swing Line Advance is to be made, immediately
available funds in an amount equal to such Bank's Pro Rata Share of
such Swing Line Advance. The obligation of each Bank to make any
disbursement to the Agent shall be subject to the condition that such
Bank shall have been informed by the Agent as described in Section
-------
3.1(h)(iii) above, and the Agent has not elected to make a Swing Line
-----------
Advance with actual knowledge of an Event of Default. Except to the
extent expressly set forth herein, the obligation of each Bank to make
disbursements to the Agent pursuant to this Section 3.1(h)(iv) shall
------------------
be absolute and unconditional.
(v) Upon the occurrence of any Event of Default, BofA shall
have the option, which shall be exercisable by BofA in its sole
discretion, to sell and transfer to each Bank, pursuant to the terms
and conditions set forth herein, an undivided interest and
participation, to the extent of such Bank's Pro Rata Share, in all
outstanding Swing Line Advances. Forthwith upon notice from the Agent
to the Banks that BofA has elected to exercise the option set forth in
the immediately preceding sentence, BofA shall be deemed irrevocably
and unconditionally to have sold and transferred to each Bank without
recourse and, each Bank shall have deemed to have irrevocably and
unconditionally purchased and received, an undivided interest and
participation, to the extent of such Bank's Pro Rata Share, in all
outstanding Swing Line Advances. Each Bank shall promptly (and in any
event within two Banking Days) pay to the Agent (for the benefit of
BofA) in immediately available funds an amount equal to such Bank's
Pro Rata Share of the outstanding principal amount of such Swing Line
Advances. Any amount payable to the
-23-
Agent (for the benefit of BofA) pursuant to this Section 3.1(h)(v) and
-----------------
not paid within two Banking Days of the day on which notice of such
payment received from the Agent shall bear interest until paid at the
Reference Rate. If the Banks make any payment in respect of Swing Line
Advances as contemplated by this Section 3.1(h)(v) and thereafter the
-----------------
Agent or BofA receives a payment on account of any such Advance, the
Agent or BofA, as appropriate, shall promptly pay to each Bank which
funded its participation therein an amount equal to such Bank's Pro
Rata Share thereof. The obligation of each Bank to make payments under
this Section 3.1(h)(v) shall be unconditional and irrevocable and
-----------------
shall be made under all circumstances. If any payment received on
account of any Swing Line Advance and distributed to a Bank as a
participant under this Section 3.1(h)(v) is thereafter recovered from
-----------------
the Agent or BofA in connection with any bankruptcy or insolvency pro
ceeding relating to the Company or otherwise, each Bank which received
such distribution shall, upon demand by the Agent, repay to the Agent
or BofA, as applicable, such Bank's Pro Rata Share of the amount so
recovered together with an amount equal to such Bank's Pro Rata Share
(according to the proportion of (A) the total of such Bank's required
repayment to (B) the total amount so recovered) of any interest or
other amount paid or payable by the Agent or BofA in respect of the
total amount so recovered.
(vi) BofA shall not be obligated to make any Swing Line
Advance pursuant to this Section 3.1(h) if (i) the making of such
--------------
Swing Line Advance would result in an aggregate amount of Swing Line
Advances which are outstanding and not reimbursed by the Banks to the
Agent pursuant to Section 3.1(h)(iv) in excess of $20,000,000 or (ii)
------------------
if the result of funding such Swing Line Advance would be that the
total of funding such Swing Line Advance would be that the total
amount of Borrowings (including Swing Line Advances) funded by BofA
would be in excess of BofA's Commitment. Swing Line Advances shall be
considered Borrowings for all purposes hereunder, subject only to the
special reimbursement obligations of the Banks pursuant to this
Section 3.1(h). If BofA is excused from its obligation to make a
--------------
requested Swing Line Advance by this Section 3.1(h)(vi), the Company
------------------
shall still be entitled to obtain the requested Borrowing pursuant to
the other provisions of Article 3, subject to the conditions
applicable to such Borrowings.
-24-
3.2 Reference Rate Borrowings. All Loans shall at all times
-------------------------
constitute Reference Rate Borrowings unless properly designated or redesignated
as IBOR Borrowings pursuant to Sections 3.3. or 3.4.
--------------------
3.3 IBOR Borrowing.
--------------
(a) Each request by the Company for an IBOR Borrowing shall be
made pursuant to a Request for Borrowing received by the Agent, at the
Agent's office, not later than 9:00 a.m., California time, at least two (2)
IBOR Banking Days before the first day of the applicable IBOR Period. The
Agent will notify each Bank of its receipt of a Request for Borrowing in
accordance with Section 3.1(f).
--------------
(b) At or about 9:00 a.m., California time, one (1) IBOR Banking
Day before the first day of the applicable IBOR Period, the Agent shall
determine the applicable IBOR Rate (which determination shall be conclusive
in the absence of manifest error) and shall promptly give notice of the
same to the Company and the Banks by telephone, telecopier or telex.
(c) Upon fulfillment of the applicable conditions set forth in
Article 6, an IBOR Borrowing shall become effective on the first day of the
applicable IBOR Period.
3.4 Redesignation of Borrowings.
---------------------------
(a) Subject to Section 6.3, if any IBOR Borrowing is not repaid
-----------
on the last day of the applicable IBOR Period, such Borrowing auto
matically shall be redesignated as a Reference Rate Borrowing on such date.
(b) Subject to the terms and conditions set forth in this
Agreement, at any time and from time to time from the Closing Date until
the fourteenth (14th) day preceding the Applicable Maturity Date, the
Company may request that all or a portion of outstanding Reference Rate
Borrowings be redesignated as an IBOR Borrowing; provided that IBOR Period
for such IBOR Borrowing shall end on or before the Applicable Maturity
Date.
(c) Each redesignation of all or a portion of outstanding
Reference Rate Borrowings as an IBOR Borrowing shall be made pursuant to a
-25-
written Request for Redesignation of Borrowing. Not later than 9:00 a.m.,
California time, at least two (2) IBOR Banking Days prior to the first day
of the applicable IBOR Period, the Agent shall have received, at the
Agent's office, a properly completed Request for Redesignation of Borrowing
specifying (1) the requested date of redesignation, (2) the requested
amount of Reference Rate Borrowings to be redesignated as an IBOR
Borrowing, and (3) the requested IBOR Period. The Agent may, in its sole
and absolute discretion, permit a Request for Redesignation of Borrowing to
be made by telecopier or by telephone (with confirmation sent promptly by
telecopier) by the Company, in which case the Company shall confirm same by
mailing a written Request for Redesignation of Borrowing to the Agent
within 24 hours following the date of redesignation.
(d) The Agent will notify each Bank of its receipt of a Request
for Redesignation by 11:00 a.m. (California time) on the date of timely
receipt of a Request for Redesignation from the Company. All
redesignations shall be made ratably according to the respective
outstanding principal amount of the Loans with respect to which the Request
for Redesignation was given is then held by each Bank.
(e) Unless all of the Banks otherwise agree, during the existence
of an Event of Default, the Company may not elect to have a Loan converted
into an IBOR Borrowing.
(f) Unless the Banks otherwise consent, the amount of Reference
Rate Borrowings to be redesignated as an IBOR Borrowing shall be an
integral multiple of $100,000, but not less than $1,000,000.
(g) With respect to any redesignation of Reference Rate Borrowing
as an IBOR Borrowing, at or about 9:00 a.m., California time, one (1) IBOR
Banking Day before the first day of the applicable IBOR Period, the Agent
shall determine the applicable IBOR Rate (which determination shall be
conclusive in the absence of manifest error) and shall promptly give notice
of the same to the Company and the Banks by telephone, telecopier or telex.
(h) Upon fulfillment of the applicable conditions set forth in
this Agreement, the redesignation of all or a portion of outstanding
Reference Rate Borrowings as an IBOR Borrowing shall become effective on
the first day of the applicable IBOR Period.
-26-
(i) A Request for Redesignation of Borrowing shall be irrevocable
upon receipt by the Agent.
(j) Nothing contained herein shall require the Banks to fund any
IBOR Borrowing resulting from redesignation of all or a portion of any of
the Reference Rate Borrowings, in the Designated IBOR Market.
3.5 Calculation of Borrowing Base.
-----------------------------
(a) The Borrowing Base shall be calculated at the times and in
the manner set forth in this Section 3.5(a):
--------------
(i) Within forty-five (45) days after the end of each
calendar quarter, and at such other times as the Majority Banks may
reasonably require, the Company shall provide the Agent with a
Borrowing Base Certificate showing the Company's calculations of the
components of the Borrowing Base and such data supporting such
calculations as the Majority Banks may require. The Majority Banks
shall have a period of thirty (30) days following receipt of a
Borrowing Base Certificate to notify the Company of the Majority
Banks' approval or disapproval thereof. Failure of the Majority Banks
to so notify the Company within such thirty (30) day period shall be
deemed approval and such Borrowing Base as set forth in such Borrowing
Base Certificate shall be effective as of the date approved (or deemed
approved) by the Majority Banks.
(ii) In the event that the Agent (as requested by the
Majority Banks) timely notifies the Company of disapproval of a
Borrowing Base Certificate, then the Agent shall, at the same time,
notify the Company in writing of the amount of the Borrowing Base as
reasonably determined by the Majority Banks and the basis of such
determination, and the effective date thereof (which shall be the date
of the giving of such notice by the Agent), and such amount shall
thereupon and thereafter constitute the Borrowing Base which shall
remain in effect until such time as the Borrowing Base is redetermined
in accordance with this Section 3.5(a). The Majority Banks and the
--------------
Company shall each cooperate in good faith with the other in the
calculation of the Borrowing Base in circumstances where the Majority
Banks disapproves a Borrowing Base Certificate prepared by the
Company.
-27-
(iii) Each determination of the Borrowing Base in
accordance with this Section 3.5(a) shall be binding and conclusive
--------------
upon the parties hereto, and provided that the Majority Banks are not
bound to rely on information and figures provided by the Company if
the Majority Banks determine in good faith that it would be
inappropriate to do so. Nothing contained herein shall be deemed to
restrict the Company from submitting additional Borrowing Base
Certificates to the Agent for the Majority Banks' approval at times
other than those required hereunder.
(b) Amount of Borrowing Base. As used herein in the Agreement,
------------------------
the term "Borrowing Base" shall have the meaning set forth in this Section
-------
3.5(b):
------
(i) Except as set forth in Sections 3.5(b)(ii), (iii), (iv)
--------------------------------
and (v) below, the Borrowing Base shall consist of the dollar amount
-------
equal to the sum of the following Unencumbered Real Estate Inventory
owned by the Company:
(A) Entitled Land. 50% of the GAAP Value of the
-------------
Entitled Land (subject to the 20% limitation specified in Section
-------
3.5(b)(iii) below); plus
----------- ----
(B) Lots Under Development. 65% of the GAAP Value of
----------------------
the Lots Under Development; plus
----
(C) Units Under Construction. 90% of the GAAP Value of
------------------------
the Units Under Construction (including Completed Units, subject
to adjustment for Completed Units as set forth in Section
-------
3.5(b)(ii) below); plus
---------- ----
(D) Escrow Proceeds Receivable. 100% of the amount of
--------------------------
Escrow Proceeds Receivable.
(ii) Advance rates for Units Under Construction shall
decrease as follows with the passage of time following the dates such
Units become Completed Units: (A) 180 days following the date such
Units become Completed Units (other than with respect to Model Units,
as to which clause (C) below shall apply) the applicable advance rate
-28-
shall decrease from 90% (as specified in Section 3.5(b)(i) (C) above)
---------------------
to 50%; (B) 360 days following the date that such Units become
Completed Units (other than with respect to Model Units, as to which
clause (C) below shall apply) the applicable advance rate shall
decrease from 50% to 0% (i.e., no value shall be attributed to the
Borrowing Base); and (C) with respect to Model Xxxxx, 000 days
following the sale of the last production Unit in the applicable
project relating to such Model Unit, the applicable advance rate for
such Model Units shall decrease from 90% (as specified in Section
-------
3.5(b)(i)(C) above) to 0% (i.e., no value shall be attributed to the
------------
Borrowing Base).
(iii) Anything in this Agreement to the contrary
notwithstanding, in no event may more than 20% of the GAAP Value of
Real Estate Inventory constituting part of the Borrowing Base be
attributable to Entitled Land; and any Entitled Land in excess of such
20% shall have a 0% advance rate (i.e., shall add no value to the
Borrowing Base).
(iv) Only Real Estate Inventory which is Unencumbered Real
Estate Inventory may be added to the Borrowing Base. Any Real Estate
Inventory that is not Unencumbered Real Estate Inventory shall have no
value for purposes of the Borrowing Base (i.e., a 0% advance rate).
Furthermore, land in the Company's Real Estate Inventory which is not
Entitled Land shall have no value for purposes of the Borrowing Base
(i.e., a 0% advance rate). Once Units or any other Real Estate
Inventory are sold and conveyed to a buyer, or otherwise cease to be
owned by the Company, the applicable advance rate shall decrease to
0%, and the Company shall not be entitled to have any value for such
assets attributed to the Borrowing Base.
3.6 Borrowing Base. The sum of the aggregate principal
--------------
amount at any time outstanding under the Loans plus the L/C
----
Obligations shall not at any time exceed the lesser of (i) the Total
Aggregate Commitment (plus the outstanding principal amount of the
Term Loan, if any) or (ii) the Borrowing Base less Total Borrowing
----
Base Home Building Indebtedness (exclusive of the outstanding amount
of the Loans and L/C Obligations).
3.7 Payments by the Banks to the Agent.
----------------------------------
-29-
(a) Unless the Agent receives notice from a Bank on or
prior to the Closing Date or, with respect to any Borrowing after
the Closing Date, at least one Banking Day prior to the date of
such Borrowing, that such Bank will not make available as and
when required hereunder to the Agent for the account of the
Company the amount of that Bank's Pro Rata Share of the
Borrowing, the Agent may assume that each Bank has made such
amount available to the Agent in immediately available funds on
the date of Borrowing and the Agent may (but shall not be so
required), in reliance upon such assumption, make available to
the Company on such date a corresponding amount. If and to the
extent any Bank shall not have made its full amount available to
the Agent in immediately available funds and the Agent in such
circumstances has made available to the Company such amount, that
Bank shall on the Banking Day following such date of Borrowing
make such amount available to the Agent, together with interest
at the Reference Rate for each day during such period. A notice
of the Agent submitted to any Bank with respect to amounts owing
under this subsection (a) shall be conclusive, absent manifest
error. If such amount is so made available, such payment to the
Agent shall constitute such Bank's Loan on the date of Borrowing
for all purposes of this Agreement. If such amount is not made
available to the Agent on the Banking Day following the date of
Borrowing, the Agent will notify the Company of such failure to
fund and, upon demand by the Agent, the Company shall pay such
amount to the Agent for the Agent's account, together with
interest thereon for each day elapsed since the date of such
Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Loans comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any date
of Borrowing shall not relieve any other Bank of any obligation
hereunder to make a Loan on such date of Borrowing, but no Bank
shall be responsible for the failure of any other Bank to make
the Loan to be made by such other Bank on any date of Borrowing.
-30-
3.8 Sharing of Payments, Etc. If, other than as expressly
-------------------------
provided elsewhere herein, any Bank shall obtain on account of the
Loans made by it any payment (whether voluntary, involuntary, through
the exercise of any right of set-off, or otherwise) in excess of its
Pro Rata Share, such Bank shall immediately (a) notify the Agent of
such fact, and (b) purchase from the other Banks such participations
in the Loans made by them as shall be necessary to cause such
purchasing Bank to share the excess payment pro rata with each of
them; provided, however, that if all or any portion of such excess
-------- -------
payment is thereafter recovered from the purchasing Bank, such
purchase shall to that extent be rescinded and each other Bank shall
repay to the purchasing Bank the purchase price paid therefor,
together with an amount equal to such paying Bank's ratable share
(according to the proportion of (i) the amount of such paying Bank's
required repayment to (ii) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by
the purchasing Bank in respect of the total amount so recovered. The
Company agrees that any Bank so purchasing a participation from
another Bank may, to the fullest extent permitted by law, exercise all
its rights of payment (including the right of set-off, but subject to
Section 11.7) with respect to such participation as fully as if such
------------
Bank were the direct creditor of the Company in the amount of such
participation. The Agent will keep records (which shall be conclusive
and binding in the absence of manifest error) of participations
purchased under this Section and will in each case notify the Banks
following any such purchases or repayments.
3.9 Letter of Credit Sublimit.
-------------------------
3.9.1 Amount and Terms of the Credit. Subject to the
------------------------------
terms and upon the conditions of this Agreement, the Issuing Bank
shall issue letters of credit for the account of the Company from
time to time up to but not including July 30, 1999 (as extended
by the Banks in writing from time to time in their sole
discretion, the "L/C Commitment Termination Date"). The maximum
aggregate principal amount which remains undrawn under all
outstanding Letters of Credit (the "L/C Obligations") under this
Agreement shall not exceed at any one time outstanding the
aggregate principal sum of TEN MILLION AND NO/100 DOLLARS
($10,000,000.00) (the "L/C Commitment").
-31-
3.9.2 Standby Letters of Credit.
-------------------------
(a) Amounts and Terms of Standby Letters of
---------------------------------------
Credit. During the period from the date of this Agreement
to but excluding the L/C Commitment Termination Date, and
subject to the terms and conditions of this Agreement, upon
Company's request pursuant to Section 3.9.3, the Issuing
-------------
Bank shall issue one or more standby letter(s) of credit or
commercial letters of credit (subject to subparagraph (b)
below) (each, a "Letter of Credit," and collectively, the
"Letters of Credit") for the account of Company (subject to
Section 3.9.5) or the account of the Letter of Credit
-------------
Subsidiaries (subject to Section 3.9.6); provided that the
------------- --------
Issuing Bank shall not be obligated to issue any Letter of
Credit if, after giving effect thereto, (i) the L/C
Obligations would exceed the L/C Commitment, or (ii) the
total aggregate outstanding Revolving Loans plus the L/C
----
Obligations would exceed the Total Aggregate Commitment, or
(iii) the Total Borrowing Base Home Building Indebtedness
would exceed the Borrowing Base. All Letters of Credit
shall be on Issuing Bank's standard forms of letters of
credit at the time of issuance. No Letter of Credit shall
have an expiration date (unless the Banks otherwise consent
in writing) later than the Revolving Loans Maturity Date.
Except as specified in subparagraph (b) below, the Issuing
Bank shall not be required to issue any Letter of Credit
hereunder unless such Letter of Credit is for the benefit of
a party to which the Company or the Letter of Credit
Subsidiaries owe certain performance obligations in
connection with their ordinary course of business real
estate development activity (for example, for the benefit of
a municipality to support Company's obligation to widen
public streets in connection with a residential development
project). Issuing Bank shall not be required to issue any
Letter of Credit for the benefit of creditors to which the
Company or the Letter of Credit Subsidiaries are obligated
in respect of obligations for borrowed money.
-32-
(b) Panel Concepts Sublimit. Subject to the
-----------------------
satisfaction of the conditions set forth in this Agreement
to the issuance of Letters of Credit, the Issuing Bank shall
issue commercial Letters of Credit for the account of the
Company or Panel Concepts (subject to Section 3.9.6) for the
-------------
benefit of trade creditors to which Panel Concepts owes
payment for supplies in connection with its furniture
manufacturing activity, so long as the L/C Obligations with
respect to such commercial Letters of Credit do not, and
with the issuance of the requested commercial Letter of
Credit would not, exceed $150,000 in the aggregate as to all
such commercial Letters of Credit. The Company shall be the
account party under, and shall be liable for the repayment
of any drawing under, all such commercial Letters of Credit.
(c) Letter of Credit Draws are Loans under this
-------------------------------------------
Agreement. Company and each Bank agree that any draws under
---------
any Letters of Credit shall constitute Revolving Loans under
this Agreement for all purposes. Without limiting the
foregoing, (i) all draws under any Letter of Credit shall
bear interest and be repaid as Revolving Loans outstanding
under this Agreement, and (ii) if, at the time any draw is
made under any Letter of Credit, an Event of Default has
occurred or the Revolving Loans Maturity Date has passed or
the Revolving Loans have been accelerated or are otherwise
due and payable, such draw under such Letter of Credit shall
be immediately due and payable in full. Promptly upon being
notified by the Agent (after Agent has received notice from
the Issuing Bank) that a draw has occurred under any Letter
of Credit, each Bank shall reimburse the Agent, for the
benefit of the Issuing Bank, for that Bank's Pro Rata Share
of such draw.
3.9.3 Request for Credit. The Company, on or after
------------------
the date of this Agreement, shall give the Issuing Bank notice of
its request for the issuance of a Letter of Credit by delivering
to the Issuing Bank (with a copy to the Agent) a duly
-33-
executed and completed L/C Application on Issuing Bank's then
current form (herein, an "L/C Application"). Such request shall
specify: (i) the date on which the issuance of the Letter of
Credit is requested to be made (which day shall be a Banking
Day), and (ii) the amount of the Letter of Credit. Subject to the
conditions herein, the Issuing Bank will issue the Letter of
Credit as soon as reasonably practicable after receiving the
above described notice.
3.9.4 Issuance Fees. For each Letter of Credit
-------------
issued by the Issuing Bank (and upon any renewal thereof), the
Company shall pay to the Agent, for the account of each Bank in
accordance with its Pro Rata Share, from the Company's own funds
(and not from proceeds of Loans) a fee equal to 1.00% per annum
times the length of the term of the Letter of Credit (or renewal
-----
thereof) expressed in years times the dollar amount of the Letter
-----
of Credit and to the Agent, for the account of the Issuing Bank,
from the Company's own funds (and not from proceeds of Loans) a
fee equal to .25% per annum times the length of the term of the
-----
Letter of Credit (or renewal thereof) expressed in years times
-----
the dollar amount of the Letter of Credit (collectively, the
"Issuance Fee").
3.9.5 Conditions Precedent to Issuance of Letters of
----------------------------------------------
Credit. The obligation of the Issuing Bank to issue any Letter
------
of Credit requested by the Company is subject to satisfaction of
the following conditions precedent:
(a) Conditions to Loans shall be Satisfied. Each
--------------------------------------
of the conditions specified in Sections 6.2 and 6.3 to
--------------------
Borrowings shall also be applicable as conditions precedent
to the issuance of any Letter of Credit.
(b) L/C Application. The Issuing Bank shall have
---------------
received from the Company, in form and substance
satisfactory to the Issuing Bank, (i) a duly executed and
completed L/C Application which L/C Application shall set
forth, among other things, the beneficiary, the amount, and
the term of the proposed Letter of Credit, and (ii) a duly
executed and completed
-34-
Request for Letter of Credit (in the form attached hereto as
Exhibit "C-2").
(c) Issuing Bank Approval. The Issuing Bank shall
---------------------
have determined that the amount of any requested Letter of
Credit, the beneficiary thereof and the other terms
contained in the documents pertaining to such Letter of
Credit are satisfactory to the Issuing Bank in the exercise
of its sole discretion.
(d) Payment of Fees. The Company shall pay the
---------------
applicable Issuance Fee. The applicable Issuance Fee shall
be payable prior to the issuance (or renewal) of any Letter
of Credit and shall be paid by the Company to the Agent. In
addition, the Company shall pay all reasonable and customary
fees and costs described in the documents pertaining to such
Letter of Credit.
(e) Telephone Confirmation. Prior to the issuance
----------------------
of any Letter of Credit, the Issuing Bank shall confirm by
telephone with the Agent that, following the issuance of
such Letter of Credit, none of the limitations set forth in
Section 3.9 would be violated.
-----------
3.9.6 Subsidiary Letters of Credit. The Company has requested
----------------------------
that Letters of Credit from time to time upon its request be issued by the
Issuing Bank (the "Subsidiary Letters of Credit") with Standard Pacific of
Texas, Inc. or Panel Concepts (the "Letter of Credit Subsidiaries") as the
"account party" (which would be liable under the reimbursement agreements
pertaining to such Subsidiary Letters of Credit) thereunder. Subsidiary
Letters of Credit shall constitute "Letters of Credit" hereunder, and all
terms and conditions specified above in this Section 3.9 with respect to
-----------
Letters of Credit shall be applicable to such Subsidiary Letters of Credit.
Without limiting the foregoing, any draws under such Subsidiary Letters of
Credit shall constitute Loans hereunder which the Company is obligated to
repay (as more fully set forth in Section 3.9.2(c) above), all amounts
----------------
remaining undrawn on under all such Subsidiary Letters of Credit shall
constitute part of the "L/C Obligations", the $150,000 sublimit for Panel
Concepts (specified in Section 3.9.2(b) above) shall include all Subsidiary
----------------
Letters of Credit in which Panel Concepts is the account party, and the
fees and
-35-
issuance procedures shall be as specified above. In addition to all terms
and conditions specified in Section 3.9.5 above to the issuance of Letters
----------------
of Credit, it shall be a condition to the issuance of any Subsidiary Letter
of Credit that the Company shall have executed the Guaranty of the
Subsidiary Letters of Credit as well as such other documents as the Issuing
Bank may reasonably request (and shall have reaffirmed such guaranty from
time to time upon Issuing Bank's request). All waivers and releases made by
the Company which are set forth in the Guaranty of the Subsidiary Letters
of Credit are incorporated herein by this reference and shall also be
applicable to any Loans (and the Company's obligation to repay such Loans)
made or to be made under Section 3.9.2(c) hereof with respect to draws
----------------
under the Subsidiary Letters of Credit.
3.10 Term Loan Conversion Option.
---------------------------
3.10.1 Amount and Effect of Term Loan. Upon written notice to
------------------------------
each Bank not less than thirty (30) days prior to the end of a calendar
quarter up to and including the calendar quarter ending on the Term Loan
Election Date, the Company may elect to convert not less than $25,000,000
and not more than $75,000,000 of the Total Aggregate Commitment to a term
loan (the "Term Loan") effective at the beginning of the next calendar
quarter (the "Term Loan Conversion Date") under the terms and conditions
set forth herein. On the Term Loan Conversion Date, the Total Aggregate
Commitment shall be reduced by the amount of the Term Loan, the Commitment
of each Bank that makes a portion of the Term Loan shall also be ratably
reduced in accordance with such Bank's share of the Term Loan, and the
Commitment of each Bank that does not make a portion of the Term Loan shall
not be reduced; and the proceeds of the Term Loan shall first be applied to
-----
reduce the aggregate outstanding principal amount of the Revolving Loans to
the extent that the aggregate principal amount of the then outstanding
Revolving Loans exceeds the Total Aggregate Commitment as reduced by the
-- -------
amount of the Term Loan, before the Company may use the proceeds of the
Term Loan for any other purpose. This Term Loan conversion option may be
exercised only once.
3.10.2 Repayment of Term Loan. Principal and interest with
----------------------
respect to the Term Loan shall be paid in accordance with Article 4 hereof.
---------
3.10.3 Conditions Precedent to Term Loan Conversion. The Term
--------------------------------------------
Loan conversion is subject to the following conditions precedent:
(a) Conditions to Loans Shall be Satisfied. Each of the
--------------------------------------
conditions specified in Sections 6.2 and 6.3 to Borrowings shall also
------------ ---
be
-36-
applicable to as conditions precedent to the Term Loan conversion.
(b) Payment of Fee. The Company shall have paid to the
--------------
Agent, for the account of each Bank in accordance with its Pro Rata
Share, from the Company's own funds (and not from proceeds of Loans) a
fee equal to .50% times the dollar amount of the Term Loan.
-----
(c) Term Notes. The Company shall have executed and
----------
delivered to each Bank a Term Note, substantially in the form of
Exhibit "A-2" attached hereto and made a part hereof, in the amount of
------------
its Pro Rata Share of the Term Loan.
3.10.4 All Banks Participate. All Banks shall be required to
---------------------
participate in accordance with their Pro Rata Share in the Term Loan,
including those Banks which refuse to extend the Revolving Loans Maturity
---------
Date pursuant to Section 4.18 hereof and the Term Loan Election Date
pursuant to Section 3.10.5 hereof; provided that:
--------
(a) Any non-renewing Bank need not participate in any Term
Loan as to which the Term Loan Conversion Date is to occur following
the Non-Renewing Bank Term Loan Election Date applicable to such non-
renewing Bank; and
(b) If less than all of the Banks are obligated to
participate in the Term Loan pursuant to the foregoing provisions of
this Agreement, the remaining renewing Banks may reduce the amount of
the Term Loan they are obligated to fund and participate in pursuant
to Section 3.10.1 ratably in accordance with the Commitments of the
non-renewing Banks that are no longer obligated to participate in the
Term Loan.
3.10.5 Extension of Term Loan Election Date. Term Loan Election
------------------------------------
Date may be extended to the first anniversary of the then applicable Term
Loan Election Date, at the sole discretion of each of the Banks, upon
receipt from the Company of an Extension Request delivered to the Agent not
earlier than 60 days and not later than 30 days prior to the then existing
Term Loan Election Date. No such extension shall be effective as to a
particular Bank without the approval of such extension by such Bank.
Approval or disapproval of each such extension shall be in the sole and
absolute discretion of each Bank. Each Bank shall notify the Agent and the
Company, in writing and within 20 days of receipt of an Extension Request,
whether it will extend
-37-
the Term Loan Election Date. The Term Loan Election Date shall be extended
to the first anniversary of the then effective Term Loan Election Date as
to all Banks that approve such extension. If any Bank elects not to extend
the Term Loan Election Date, or does not give notice of its election to
extend the Term Loan Election Date on or before the date which is 10 days
before the then applicable Term Loan Election Date, the Term Loan Election
Date shall not be extended as to such non-renewing Bank. Furthermore, the
Term Loan Election Date shall not be extended as to any Bank unless such
Bank concurrently agrees to extend the Revolving Loans Maturity Date as to
such Bank pursuant to section 4.18 hereof (so that in no event shall the
Term Loan Election Date be extended if that would allow for the possibility
that the Term Loan Maturity Date could extend by more than one year past
the applicable Revolving Loans Maturity Date if the Term Loan conversion
option were exercised by the Company as provided for in Section 4.18).
ARTICLE 4: PAYMENTS AND FEES.
-----------------
4.1 Principal and Interest.
----------------------
(a) Interest shall be payable on the outstanding daily unpaid
principal amount of each Borrowing from the date thereof until payment in
full is made and shall accrue and be payable at the rates set forth herein
both before and after default and before and after maturity and judgment,
with interest on overdue interest to bear interest at the rate specified in
Section 4.4. Upon any partial prepayment or redesignation of outstanding
-----------
Reference Rate Borrowings, interest accrued through the date of such
prepayment or redesignation shall be payable on the next following Interest
Payment Date and shall be deducted from the Account on such date.
Insufficient funds in the Account shall not excuse the Company's obligation
to pay accrued interest on the Interest Payment Date. Upon any partial
prepayment or payment in full or redesignation or conversion of any IBOR
Borrowing, or upon any payment or redesignation in full of all outstanding
Reference Rate Borrowings, interest accrued through the date of such
prepayment, payment, redesignation or conversion shall be payable on the
next following Interest Payment Date.
(b) Interest on each Reference Rate Borrowing shall be computed
on the basis of a year of 360 days and the actual number of days elapsed,
at the Reference Rate times the total principal balance outstanding
-----
-38-
under each Note. Interest accrued on each Reference Rate Borrowing shall be
payable on each Interest Payment Date, commencing with the first such date
to occur after the Closing Date, and shall be deducted from the Account on
each such Interest Payment Date. Insufficient funds in the Account shall
not excuse the Company's obligation to pay accrued interest on the Interest
Payment Date. The Agent shall use its best efforts to notify the Company of
the amount of interest so payable prior to each Interest Payment Date, but
failure of the Agent to do so shall not excuse payment of such interest
when payable. Except as otherwise provided in Section 4.4, the unpaid
------ -----------
principal amount of any Reference Rate Borrowing shall bear interest at a
fluctuating rate per annum equal to the Reference Rate. Each change in the
interest rate shall take effect simultaneously with the corresponding
change in the Reference Rate. Each change in the Reference Rate shall be
effective as of 12:01 a.m. on the Banking Day on which the change in the
Reference Rate is announced, unless otherwise specified in such
announcement, in which case the change shall be effective as so specified.
(c) Interest on each IBOR Borrowing shall be computed on the
basis of a year of 360 days and the actual number of days elapsed.
Interest accrued on each IBOR Borrowing which is for a term of 30 days or
less shall be payable on the next Interest Payment Date following the
maturity date of that IBOR Borrowing. Interest accrued on each other IBOR
Borrowing outstanding as of each Interest Payment Date, commencing with the
first such date to occur after the Closing Date: (i) shall be payable on
each such Interest Payment Date and shall be deducted from the Account on
such date, and (ii) shall be payable on the next Interest Payment Date
following the maturity date of that IBOR Borrowing. Insufficient funds in
the Account shall not excuse the Company's obligation to pay accrued
interest on the Interest Payment Date. The Agent shall use its best
efforts to notify the Company of the amount of interest so payable prior to
each such date, but failure of the Agent to do so shall not excuse payment
of such interest when payable. The unpaid principal amount of any IBOR
Borrowing shall bear interest at a rate per annum equal to the IBOR Rate
for that IBOR Borrowing plus the applicable IBOR Rate Spread.
----
(d) If not sooner paid, the principal indebtedness evidenced by
each Note shall be payable as follows:
(i) subject to the applicable provisions of this Agreement
providing for automatic redesignation of Borrowings upon compliance
-39-
with Section 3.4, the principal amount of each Borrowing shall be
-----------
payable on the last day of the IBOR Period for such Borrowing;
(ii) the amount, if any, by which the principal indebtedness
evidenced by each Revolving Note at any time exceeds the applicable
Bank's Commitment shall be payable immediately;
(iii) the amount of each payment required pursuant to
Section 4.16 shall be payable immediately;
------------
(iv) all outstanding Revolving Loans (other than as
specified in subparagraph (v) below) shall be payable on the Revolving
Loans Maturity Date;
(v) the principal of any Revolving Note held by a Bank which
refuses to extend the Maturity Date pursuant to Section 4.18, if not
------------
sooner paid, shall be payable on such Bank's Non-Renewing Bank
Revolving Loan Maturity Date; and
(vi) The principal amount of the Term Loan shall be due and
payable in twelve (12) equal quarterly payments, due and payable
commencing on the last day of the calendar quarter in which the Term
Loan Conversion Date occurs, and continuing on the last day of each
calendar quarter thereafter until the Term Loan Maturity Date, at
which time any and all remaining outstanding principal under the Term
Loan (and any other amounts owing in connection with the Term Loan not
otherwise paid when due) shall be due and payable in full.
(e) Each Note may, at any time and from time to time, be paid or
prepaid in whole or in part, provided that (i) any partial prepayment shall
--------
be an integral multiple of $10,000, (ii) any partial prepayment shall be in
an amount not less than $100,000, (iii) except as required by subsection
------
(d) above, no IBOR Borrowing may be paid or prepaid in whole or in part
prior to the last day of the applicable IBOR Period without the prior
consent of each Bank, and, notwithstanding such required prepayment or such
consent, any payment or prepayment of all or any part of any IBOR Borrowing
on a day other than the last day of the applicable IBOR Period shall be
made on an IBOR Banking Day, as applicable, and shall be preceded by at
least five (5) IBOR Banking Days, as applicable, written notice to the
Agent of the date and amount of such payment
-40-
or payments, and (iv) any prepayment of an IBOR Borrowing shall be
accompanied by a prepayment fee calculated in accordance with subsection
(f) below.
(f) Prepayment fees shall be calculated as follows (and
determined as though 100% of the IBOR Borrowing had been funded in the IBOR
Market):
(i) principal amount of the IBOR Borrowing, times [the
-----
number of days between the date of prepayment and the last day in the
applicable IBOR Period] divided by 360, times the applicable Interest
---------- -----
Differential; plus
----
(ii) all reasonable out-of-pocket expenses (including
Attorney Costs) incurred by the Banks and reasonably attributable to
such prepayment; provided that no prepayment fee shall be payable (and
--------
no credit or rebate shall be required) if the product of the foregoing
formula is not positive.
The Agent's determination of the amount of any prepayment fee shall be
conclusive in the absence of manifest error.
Nothing contained in this Section 4.1 shall relieve the Company from
-----------
its obligation to make interest payments to the Banks on each Interest Payment
Date (in accordance with the terms and conditions contained herein) in the event
the funds held in the Account are insufficient to make such interest payments on
any such Interest Payment Date.
4.2 Unused Fee. For the period commencing on the date of this
----------
Agreement and ending on the Revolving Loans Maturity Date, the Company shall pay
to the Agent for the account of each Bank in accordance with its Pro Rata Share
an unused fee, computed on the basis of a year of 360 days and the actual number
of days elapsed, at the rate of .250% per annum times the average daily
-----
difference between (a) the Total Aggregate Commitment, and (b) the total
principal balance outstanding under the Revolving Notes plus the L/C Obligations
(the "Unused Amounts"), for all Unused Amounts up to $100,000,000; and .375% per
annum times the average daily difference between (i) the Total Aggregate
-----
Commitment and (ii) the total principal balance outstanding under the Revolving
Notes plus the L/C Obligations, for all Unused Amounts over $100,000,000. The
unused fee accrued as of the last day of
-41-
September, December, March and June of each year shall be payable in arrears on
the day on which the Agent notifies the Company of the amount due, except that
------
upon payment of each Revolving Note in full, the unused fee accrued to the date
of payment shall be payable on the date of payment.
4.3 Commitment Fee. For the period commencing on the date of this
--------------
Agreement and ending on the Revolving Loans Maturity Date, the Company shall pay
to the Agent for the account of each Bank in accordance with its Pro Rata Share
a commitment fee, computed on the basis of a year of 360 days and the actual
number of days, at the rate of .125% per annum times the amount of the Total
-----
Aggregate Commitment. The Commitment Fee shall be payable quarterly in advance
on the first day of each January, April, July, and October of each year.
4.4 Late Payments. Should any installment of principal or interest
-------------
or any fee or cost or other amount payable under any Loan Document to the Banks
not be paid within 15 days of when due, it shall thereafter bear interest at a
fluctuating interest rate per annum at all times equal to the sum of the
Reference Rate plus 2.00% per annum, to the fullest extent permitted by
----
applicable Law. Accrued and unpaid interest on past due amounts (including,
---------
without limitation, interest on past due interest) shall be compounded monthly,
on the last day of each calendar month, to the fullest extent permitted by
applicable Law.
4.5 Taxes. All payments payable to the Banks hereunder or with
-----
respect to the Loan Documents shall be made to the Banks without deductions for
any Taxes or Other Taxes except to the extent the Company is required by any Law
or Governmental Authority to withhold and except in accordance with Section
-------
10.10 to the extent, if any, that such amounts are required to be withheld by
-----
the Agent under the laws of the United States of America or any other applicable
taxing authority.
4.6 Illegality.
----------
(a) If any Bank determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has
asserted that it is unlawful, for any Bank or its applicable Lending Office
to make IBOR Rate Loans, then, on notice thereof by the Bank to the Company
through the Agent, any obligation of that Bank to make IBOR Rate Loans
shall be suspended until the Bank notifies the Agent and the Company that
the
-42-
circumstances giving rise to such determination no longer exist.
(b) If a Bank determines that it is unlawful to maintain any IBOR
Rate Loan, the Company shall, upon its receipt of notice of such fact and
demand from such Bank (with a copy to the Agent), prepay in full such IBOR
Borrowings of that Bank then outstanding, together with interest accrued
thereon and amounts required under Section 4.8, either on the last day of
-----------
the IBOR Period thereof, if the Bank may lawfully continue to maintain such
IBOR Rate Loans to such day, or immediately, if the Bank may not lawfully
continue to maintain such IBOR Rate Loan. If the Company is required to so
prepay any IBOR Rate Loan, then concurrently with such prepayment, the
Company shall borrow from the affected Bank, in the amount of such
repayment, a Reference Rate Loan.
(c) If the obligation of any Bank to make or maintain IBOR Rate
Loans has been so terminated or suspended, the Company may elect, by giving
notice to the Bank through the Agent that all Loans which would otherwise
be made by the Bank as IBOR Rate Loans shall be instead Reference Rate
Loans.
(d) Before giving any notice to the Agent under this Section, the
affected Bank shall designate a different Lending Office with respect to
its Reference Rate Loans if such designation will avoid the need for giving
such notice or making such demand and will not, in the judgment of the
Bank, be illegal or otherwise disadvantageous to the Bank.
4.7 Increased Costs and Reduction of Return.
----------------------------------------
(a) If any Bank determines that, due to either (i) the
introduction of or any change (other than any change by way of imposition
of or increase in reserve requirements included in the calculation of the
IBOR Rate or in respect of the assessment rate payable by any Bank to the
FDIC for insuring U.S. deposits) in or in the interpretation of any law or
regulation or (ii) the compliance by that Bank with any guideline or
request from any central bank or other Governmental Authority (whether or
not having the force of law), there shall be any increase in the cost to
such Bank of agreeing to make or making, funding or maintaining any IBOR
Rate Loans, then the Company shall be liable for, and shall from time to
time, upon demand (with a copy of such demand to be sent to the Agent), pay
to the Agent for the account of such Bank, additional
-43-
amounts as are sufficient to compensate such Bank for such increased costs.
(b) If any Bank shall have determined that (i) the introduction
of any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental
Authority charged with the interpretation or administration thereof, or
(iv) compliance by the Bank (or its Lending Office) or any corporation
controlling the Bank with any Capital Adequacy Regulation, affects or would
affect the amount of capital required or expected to be maintained by the
Bank or any corporation controlling the Bank and (taking into consideration
such Bank's or such corporation's policies with respect to capital adequacy
and such Bank's desired return on capital) determines that the amount of
such capital is increased as a consequence of its Commitment, loans,
credits or obligations under this Agreement, then, upon demand of such Bank
to the Company through the Agent, the Company shall pay to the Bank, from
time to time as specified by the Bank, additional amounts sufficient to
compensate the Bank for such increase.
4.8 Funding Losses. The Company shall reimburse each Bank and hold
--------------
each Bank harmless from any loss or expense which the Bank may sustain or incur
as a consequence of:
(a) the failure of the Company to borrow, continue or convert a
Loan after the Company has given (or is deemed to have given) a Request for
Borrowing or a Request for Redesignation of Borrowing; or
(b) the prepayment (including pursuant to Section 4.16) or other
------------
payment (including after acceleration thereof) of an IBOR Rate Loan on a
day that is not the last day of the relevant IBOR Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its IBOR Rate Loans or from fees payable to
terminate the deposits from which such funds were obtained. Such loss or
expense shall be calculated as follows (and determined as though 100% of the
IBOR Borrowing had been funded in the IBOR Market):
(i) principal amount of the IBOR Borrowing, times [the
-----
number of days between the date of the event and the last day in the
-44-
applicable IBOR Period] divided by 360, times the applicable Interest
---------- -----
Differential; plus
----
(ii) all out-of-pocket expenses (including Attorney Costs)
incurred by the Banks and reasonably attributable to such event;
provided that no prepayment fee shall be payable (and no credit or
--------
rebate shall be required) if the product of the foregoing formula is
not positive.
4.9 Inability to Determine Rates. If any Bank determines that for
----------------------------
any reason adequate and reasonable means do not exist for determining the IBOR
Rate for any requested IBOR Period with respect to a proposed IBOR Rate Loan, or
that the IBOR Rate applicable pursuant to subsection 4.1(c) for any requested
IBOR Period with respect to a proposed IBOR Rate Loan does not adequately and
fairly reflect the cost to such Banks of funding such Loan, the Agent will
promptly so notify the Company and each Bank. Thereafter, the obligation of the
Banks to make or maintain IBOR Rate Loans, as the case may be, hereunder shall
be suspended until the Agent upon the instruction of such Bank revokes such
notice in writing. Upon receipt of such notice, the Company may revoke any
Request for Borrowing or Request for Redesignation of Borrowing then submitted
by it. If the Company does not revoke such Request, the Banks shall make,
convert or continue the Loans, as proposed by the Company, in the amount
specified in the applicable notice submitted by the Company, but such Loans
shall be made, converted or continued as Reference Rate Loans instead of IBOR
Rate Loans, as the case may be.
4.10 Reserves on IBOR Rate Loans. The Company shall pay to each Bank,
---------------------------
as long as such Bank shall be required under regulations of the FRB to maintain
reserves with respect to liabilities or assets consisting of or including
Eurocurrency funds or deposits (currently known as "Eurocurrency liabilities"),
additional costs on the unpaid principal amount of each IBOR Rate Loan equal to
the actual costs of such reserves allocated to such Loan by the Bank (as
determined by the Bank in good faith, which determination shall be conclusive),
payable on each date on which interest is payable on such Loan, provided the
Company shall have received at least 15 days' prior written notice (with a copy
to the Agent) of such additional interest from the Bank. If a Bank fails to
give notice 15 days prior to the relevant Interest Payment Date, such additional
interest shall be payable 15 days from receipt of such notice.
4.11 Certificates of Banks. Any Bank claiming reimbursement or
---------------------
compensation under this Article 4 shall deliver to the Company (with a copy to
the Agent) a certificate setting forth in reasonable detail the amount payable
to the Bank
-45-
hereunder and such certificate shall be conclusive and binding on the Company in
the absence of manifest error.
4.12 Substitution of Banks. Upon the receipt by the Company from any
---------------------
Bank (an "Affected Bank") of a claim for compensation under Section 4.7 or
------------- -----------
Section 4.15, the Company may: (i) request the Affected Bank to use its best
------------
efforts to obtain a replacement bank or financial institution satisfactory to
the Company to acquire and assume all or a ratable part of all of such Affected
Bank's Loans and Commitment (a "Replacement Bank"); or (ii) request one or more
----------------
of the other Banks to acquire and assume all or part of such Affected Bank's
Loans and Commitment; or (iii) designate a Replacement Bank. Any such
designation of a Replacement Bank under clause (i) or (iii) shall be subject to
the prior written consent of the Agent (which consent shall not be unreasonably
withheld).
4.13 Survival. The agreements and obligations of the Company in this
--------
Article 4 shall survive for one year following the payment in full of all
Obligations.
4.14 Manner and Treatment of Payments. The amount of each payment
--------------------------------
hereunder or on each Note shall be made to each applicable Bank in immediately
available funds on the day of payment (which must be a Banking Day). Any
payment received after 11:00 a.m., California time, on any Banking Day, shall be
deemed received on the next succeeding Banking Day. Whenever any payment to be
made hereunder or on each Note is due on a day that is not a Banking Day,
payment shall be made on the next succeeding Banking Day; provided that the
extension shall be included in the computation of interest owing on the next
following Interest Payment Date. Any payment of the principal of any IBOR
Borrowing shall be made on an IBOR Banking Day as applicable.
4.15 Change in Capital Requirements; Additional Costs. If a Bank at
------------------------------------------------
any time subsequent to the date of this Agreement determines that the amount of
capital required or expected to be maintained by the Bank or any corporation
controlling the Bank under any Law or any guideline, request or directive of any
Governmental Authority is based on or increased by advances and/or commitments
of the type contemplated by this Agreement, then Company shall pay to the Bank
on demand such additional amounts as the Bank may reasonably determine to be
sufficient to compensate the Bank or such other corporation in light of such
circumstances to the extent that the Bank reasonably determines that the
maintenance of such capital is allocable to advances and/or commitments under
this Agreement. If the occurrence of any Special Circumstance or other
regulatory development, or the
-46-
imposition of any Tax or Other Tax, or change in applicable Law, shall result in
an increase in the cost to the Bank of making, funding, maintaining or
continuing the funding of any Borrowing, then Company shall pay to the Bank on
demand such additional amounts as the Bank determines to be necessary to
compensate the Bank for such increased cost.
4.16 Mandatory Prepayment. In the event that the aggregate principal
--------------------
amount of the outstanding Loans plus the L/C Obligations at any time exceeds the
----
limitations specified in Section 3.6 (whether because of the outstanding amount
-----------
of the Loans or L/C Obligations, or because of the other outstanding Total
Borrowing Base Home Building Indebtedness), the Company shall immediately make a
prepayment of the Loans in such amount as is necessary to cause the amount of
outstanding Loans plus L/C Obligations to comply with the limitations of Section
---- -------
3.6. In the event that the L/C Obligations at any time exceed the Borrowing
---
Base, the Company shall immediately upon demand by the Agent deposit with the
Agent, for the benefit of the Banks, an amount in cash equal to the amount by
which the outstanding L/C Obligations exceed the Borrowing Base. Such cash
shall be deposited in an interest bearing account with the Agent as to which the
Company shall have no right of withdrawal except as provided below. At such
time as the Borrowing Base once again equals or exceeds the outstanding L/C
Obligations, and provided no other Event of Default is outstanding and the
Company is otherwise in compliance with this Agreement, the amount so deposited
by the Company in such restricted account with the Agent, together with any
interest accrued thereon, shall be remitted to the Company.
4.17 Agency Fee And Other Consideration Payable To Agent. The Banks
---------------------------------------------------
acknowledge that pursuant to a fee letter agreement of even date herewith
between the Agent, BofA and the Company (the "Fee Letter Agreement"), the
Company has agreed to pay the Agent an agency fee and other fees and
compensation as consideration for the Agent's performance of its duties as Agent
under this Agreement, as more fully set forth in the Fee Letter Agreement. The
Borrower covenants and agrees to pay such agency fee and other fees and
compensation to the Agent at the times and in the manner set forth in the Fee
Letter Agreement. The agency fee and other fees and compensation payable to the
Agent under the Fee Letter Agreement shall belong solely to the Agent, and Agent
shall not be required to share any such agency fee or other fees or compensation
specified in the Fee Letter Agreement with any of the other Banks.
4.18 Maturity Date Extension Option.
------------------------------
-47-
(a) The Revolving Loans Maturity Date may be extended to the
first anniversary of the then applicable Revolving Loans Maturity Date, at
the sole discretion of each of the Banks, upon receipt from the Company of
an Extension Request delivered to the Agent not earlier than ninety (90)
days and not later than sixty (60) days prior to the date which is two (2)
years prior to the then existing Revolving Loans Maturity Date. No such
extension shall be effective as to a particular Bank without the approval
of such extension by such Bank, and no Bank may agree to an extension of
the applicable Revolving Loan's Maturity Date without concurrently agreeing
to an extension of the applicable Term Loan Conversion Date (and any Bank
that agrees to an extension of the application Revolving Loan's Maturity
Date shall automatically be deemed to have agreed to an extension of the
applicable Term Loan Conversion Date pursuant to Section 3.10.5 hereof).
Approval or disapproval of each such extension shall be in the sole and
absolute discretion of each Bank. Each Bank shall notify the Agent and the
Company, in writing and within 30 days of receipt of an Extension Request,
whether it will extend the Revolving Loans Maturity Date. If all Banks
approve such extension on or before the date for which the request is made,
the Revolving Loans Maturity Date shall be extended to the first
anniversary of the then effective Revolving Loans Maturity Date.
(b) If any Bank elects not to extend the Revolving Loans Maturity
Date, or does not give notice of its election to extend the Revolving Loans
Maturity Date on or before the date which is thirty (30) days before the
date which is two (2) years prior to the previously applicable Revolving
Loans Maturity Date, the Company may, at its option to be exercised in its
sole discretion, by delivery of written notice to all of the Banks at any
time prior to the previously applicable Revolving Loans Maturity Date,
either:
(i) Repay all Revolving Loans from the non-renewing Bank(s),
reduce the Total Aggregate Commitment by an amount equal to the Pro
Rata Share of the Revolving Loans of the non-renewing Bank(s)
effective on the date of repayment of the non-renewing Bank(s) (which
date must be on or before the Non-Renewing Bank Revolving Loans
Maturity Date), amend the Commitments of the renewing Banks to reflect
a ratable allocation of the Total Aggregate Commitment as thus
reduced, effective as of the date of repayment of the non-renewing
Bank(s), and extend the Revolving Loans Maturity Date by one year as
-48-
to the renewing Banks; or
(ii) Reduce the Total Aggregate Commitment by an amount
equal to the Pro Rata Share of the Revolving Loans of the non-renewing
Bank(s) effective on a date specified by the Company (which date must
be on or before the Non-Renewing Bank Revolving Loans Maturity Date),
amend the Commitments of the renewing Banks to reflect a ratable
allocation of the Total Aggregate Commitment as thus reduced,
effective as of the date specified by the Company as provided above,
extend the Revolving Loans Maturity Date by one year as to the
renewing Banks and retain the Non-Renewing Bank Revolving Loans
Maturity Date as the date of maturity of principal of the Pro Rata
Share of Revolving Loan proceeds disbursed by the non-renewing Banks;
or
(iii) Identify an Eligible Assignee to purchase, without
recourse, at par, all or the remaining portion of the non-renewing
Bank's Commitment on or before the Non-Renewing Bank Revolving Loans
Maturity Date for such Bank. Such Eligible Assignee must agree to a
Revolving Loans Maturity Date and a Term Loan Election Date which is
coterminous with the Revolving Loans Maturity Date and the Term Loan
Election Date for all of the renewing Banks and must be approved by
the Agent, which approval shall not be unreasonably withheld or
delayed.
ARTICLE 5: SECURITY.
--------
5.1 Unsecured Credit. The Obligations shall be unsecured.
----------------
ARTICLE 6: CONDITIONS.
----------
6.1 Conditions to Disbursement of First Borrowings. The obligation
----------------------------------------------
of the Banks to make the first new disbursement of the Loan Proceeds (other than
those Proceeds already outstanding under the Fourth Amended Credit Agreement) is
subject to the conditions precedent specified in Section 11.21.
-------------
6.2 Conditions for Subsequent Borrowings or for a Redesignation of
--------------------------------------------------------------
Borrowings. The obligation of the Banks to make any subsequent Borrowing or
----------
redesignation of Borrowing is subject to the following conditions precedent:
-49-
(a) the representations and warranties contained in Sections 7.1
------------
through 7.12, inclusive, and Sections 7.13 and 7.14, inclusive, as of the
------------ ----------------------
latest reporting required under this Agreement, shall be correct in all
Material respects on and as of the date of the Borrowing, or redesignation
thereof, as though made on and as of that date, and no Event of Default or
event that could become an Event of Default upon the giving of notice
and/or the passage of time shall have occurred and be continuing; and
(b) the Company shall, at its sole expense, deliver or cause to
be delivered to the Agent, in form and substance satisfactory to the Agent,
a Request for Borrowing or a Request for Redesignation of Borrowing, as
applicable.
6.3 Any Borrowing. In addition to any applicable conditions
-------------
precedent set forth elsewhere in this Article 6, the obligation of the Banks to
make any Loan is subject to the conditions precedent that the representations
and warranties con tained in Section 7.2 shall be true and correct in all
-----------
Material respects on and as of the date of such Loan as though made on and as of
that date, and that there shall not have occurred any default which would
constitute an Event of Default or which would upon notice or the passage of time
constitute an Event of Default.
ARTICLE 7: REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
---------------------------------------------
The Company represents and warrants to each Bank that:
7.1 Incorporation, Qualification, Powers and Capital Stock. The
------------------------------------------------------
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the state of Delaware, is duly qualified to do
business as, and is in good standing as, a foreign corporation in each
jurisdiction in which the conduct of its business or the ownership or leasing of
its properties makes such qualification necessary, and has all requisite power
and authority to conduct its business and to own and lease its properties. All
outstanding shares of capital stock of the Company are duly authorized, validly
issued, fully paid, nonassessable, and issued in compliance with all applicable
state and federal securities and other Laws.
7.2 Execution, Delivery and Performance of Loan Documents.
-----------------------------------------------------
-50-
(a) The Company has all requisite power and authority to execute
and deliver, and to perform all of its obligations under, the Loan
Documents.
(b) Guarantor has all requisite power and authority to execute
and deliver, and to perform all of its obligations under the Guaranty.
(c) The execution and delivery by the Company of, and the
performance by the Company of each of its obligations under, each Loan
Document, and the execution and delivery by each Guarantor of, and the
performance by each Guarantor of each of its obligations under the
Guaranty, have been duly authorized by all necessary action and do not and
will not:
(i) require any consent or approval not heretofore obtained
of any stockholder, security holder or creditor of the Company, any
Subsidiary or any Guarantor;
(ii) violate any provision of the certificate of incor
poration or bylaws of the Company or any Guarantor or any provision of
the articles or certificate of incorporation, bylaws or partnership
agreement of any Subsidiary;
(iii) result in or require the creation or imposition of
any lien, claim or encumbrance (except to the extent that any lien is
created under this Agreement) upon or with respect to any property now
owned or leased or hereafter acquired by the Company, any Subsidiary
or any Guarantor;
(iv) violate any provision of any Law, order, writ,
judgment, injunction, decree, determination or award presently in
effect having applicability to the Company, any Subsidiary or any
Guarantor; or
(v) result in a breach of or constitute a default under, or
cause or permit the acceleration of any obligation owed under, any
indenture or loan or credit agreement or any other Material agreement,
lease or instrument to which the Company, any Subsidiary or any
Guarantor is a party or by which the Company, any Subsidiary or any
Guarantor or any property of the Company, any Subsidiary or any
-51-
Guarantor is bound or affected.
(d) The Company, each Subsidiary and each Guarantor is
not in default under any Law, order, writ, judgment, injunction,
decree, determination, award, indenture, agreement, lease or
instrument described in Sections 7.2(c)(iv) or 7.2(c)(v) above,
--------------------------------
in any respect that is Materially adverse to the interests of any
Bank, or that could Materially impair the ability of the Company,
its Subsidiaries and each Guarantor taken as a whole to perform
its obligations, under the Loan Documents, as applicable or that
has a Material adverse effect on the business or financial
condition of the Company, any Subsidiary or any Guarantor.
(e) No authorization, consent, approval, order,
license, permit or exemption from, or filing, registration or
qualification with, any Governmental Authority not heretofore
obtained is or will be required under applicable Law to authorize
or permit the execution, delivery and performance by the Company
or any Guarantor of, all of its obligations under, the Loan
Documents.
(f) Each of the Loan Documents, when executed and
delivered, will constitute the legal, valid and binding
obligations of the Company and each Guarantor enforceable against
it in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, arrangement,
moratorium or other similar laws relating to or affecting
creditors' rights generally or equitable principles relating to
the granting of specific performance or other equitable remedies
as a matter of judicial discretion.
7.3 Compliance with Laws and Other Requirements. The
-------------------------------------------
Company is in compliance in all Material respects with all Laws and
other requirements applicable to its business and has obtained all
Material authorizations, consents, approvals, orders, licenses,
permits and exemptions from, and has accomplished all Material
filings, registrations or qualifications with, any Governmental
Authority that is necessary for the transaction of its business.
-52-
7.4 Subsidiaries.
------------
(a) Exhibit "F" hereto correctly sets forth the names
and jurisdictions of incorporation or formation of all present
Subsidiaries. Except as described in Exhibit "F", the Company
does not own any capital stock or equity interest or partnership
interest in any Person other than the Subsidiaries with the
exception of certain real estate development joint ventures in
which the Company is a joint venturer which have previously been
disclosed to the Banks in writing (and in which the Company's net
investment does not exceed the $15,000,000 limitation of Section
-------
8.13). All outstanding shares of capital stock or partnership
----
interests, as the case may be, of each Subsidiary that are owned
by the Company or any Subsidiary are (i) owned of record and
beneficially by the Company and/or by one or more Subsidiaries,
free and clear of all liens, claims, encumbrances and rights of
others, and are (ii) duly authorized, validly issued, fully paid,
nonassessable, and issued in compliance with all applicable state
and federal securities and other Laws. The Company may update
Exhibit "F" from time to time by sending written notice to the
Agent.
(b) Each Subsidiary is a corporation, partnership or
limited liability company duly incorporated or formed, validly
existing and in good standing under the laws of its respective
jurisdiction of incorporation or formation, is duly qualified to
do business as, and is in good standing as, a foreign
corporation, partnership or limited liability company in each
jurisdiction in which the conduct of its business or the
ownership or leasing of its properties makes such qualification
necessary, and has all requisite power and authority to conduct
its business and to own and lease its properties.
(c) Each Subsidiary is in compliance in all Material
respects with all Laws and other requirements applicable to its
business and has obtained all Material authorizations, consents,
approvals, orders, licenses, permits and exemptions from, and has
accomplished all Material filings, registrations or
qualifications with, any Governmental Authority that is necessary
-53-
for the transaction of its business.
7.5 Affiliated Partnerships. There are no Affiliated
-----------------------
Partnerships presently in existence which are not Subsidiaries listed
on Exhibit "F" hereto, with the exception of certain real estate
development joint ventures in which the Company is a joint venturer
which have previously been disclosed to the Banks in writing (and in
which the Company's net investment does not exceed the $15,000,000
limitation of Section 8.13).
------------
7.6 Financial Statements of the Company and the
-------------------------------------------
Subsidiaries. The Company has furnished to the Banks a copy of the
------------
Form 10-K of the Company and the Subsidiaries as of December 31, 1995,
a copy of the Form 1O-Q of the Company and the Subsidiaries dated as
of September 30, 1996, and the related unaudited financial statements
(and for the September 30, 1996 1O-Q the other information required by
Section 8.10(b) was also furnished to the Banks). Such financial
---------------
statements and the notes thereto fairly present in all Material
respects the consolidated financial position of the Company and the
Subsidiaries as at the dates specified therein and the consolidated
results of operations and cash flows for the period then ended, all in
conformity with generally accepted accounting principles applied on a
consistent basis.
7.7 No Material Adverse Change. There has been no Material
--------------------------
adverse change in the condition, financial or otherwise, of the
Company and the Subsidiaries, taken as a whole, from the financial
condition of the Company and the Subsidiaries, taken as a whole, since
December 31, 1995, and the Company and the Subsidiaries, taken as a
whole, do not have any Material liability or, to the best knowledge of
the Company, Material contingent liability, not reflected or disclosed
in the financial statements or notes thereto described in Section 7.6.
-----------
7.8 Tax Liability. The Company and each Subsidiary have
-------------
filed all tax returns (federal, state and local) required to be filed
by them and have paid all taxes shown thereon to be due and all
property taxes due, including interest and penalties, if any. To the
best knowledge of the Company, there does not exist any substantial
likelihood that any Governmental Authority will successfully assert a
tax deficiency against
-54-
the Company or any Subsidiary that is Material to the Company and the
Subsidiaries, taken as a whole, that has not been adequately reserved
against in the financial statements described in Section 7.6. The
-----------
Company and each Subsidiary has established and is maintaining
adequate reserves for tax liabilities, if any, sufficient to comply
with generally accepted accounting principles.
7.9 Litigation. There are no actions, suits or proceedings
----------
pending or, to the best knowledge of the Company, threatened against
or affecting the Company or any Subsidiary or any Affiliated
Partnership, or any property of the Company or any Subsidiary or any
Affiliated Partnership, before any Governmental Authority which, if
determined adversely to the Company or the Subsidiary or any
Affiliated Partnership, could have a Material adverse effect on the
interests of any Bank, or could Materially impair the ability of the
Company to perform its obligations under the Loan Documents, or could
have a Material adverse effect on the business or financial condition
of the Company and the Subsidiaries, taken as a whole.
7.10 Pension Plan. Neither the Company nor any Subsidiary
------------
maintains or contributes to any employee Plan (other than the 401K
plans presently established by the Company and Panel Concepts, Inc.,
as to which both corporations have Materially complied with all
applicable Laws).
7.11 Regulations U and X; Investment Company Act. Neither
-------------------------------------------
the Company nor any Subsidiary is engaged principally, or as one of
its important activities, in the business of extending credit for the
purpose of "purchasing" or "carrying" any "margin stock" within the
meanings of Regulation U of the FRB. No part of the Loan Proceeds
will be used to purchase or carry any margin stock, or to extend
credit to others for that purpose, or for any purpose that violates
the provisions of Regulations U or X of the Board of Governors.
Neither the Company nor any Subsidiary is or is required to be
registered under the Investment Company Act of 1940.
7.12 No Default. No event has occurred and is continuing
----------
that is an Event of Default or that could become an Event of Default
upon the giving of notice and/or the passage of time.
-55-
7.13 Borrowing Base. The Total Borrowing Base Home
--------------
Building Indebtedness does not exceed the Borrowing Base.
7.14 Borrowing Base Components. At any time of deter
-------------------------
mination thereof, the value of any component of Real Estate Inventory
used to calculate the Borrowing Base does not exceed the GAAP Value of
such component of Real Estate Inventory.
ARTICLE 8: COVENANTS OF THE COMPANY.
------------------------
As long as any Note remains unpaid or any other Obligation
remains outstanding or any Commitment remains in effect, unless each
Bank otherwise consents in writing:
8.1 Consolidated Tangible Net Worth.
-------------------------------
(a) The Company shall not permit Consolidated Tangible
Net Worth at any time to be less than the sum of (a) $230,000,000
(the "Base Amount") plus (b) the greater of (i) 50% of the
----
cumulative consolidated net income (without deduction for losses
sustained during any fiscal year) of the Company and its
consolidated Subsidiaries for each fiscal quarter subsequent to
the fiscal quarter ended December 31, 1995 or (ii) $2,500,000 per
year for each year subsequent to the year ended December 31,
1995; provided, however, that in the event that (i) the Company
-------- -------
divests itself of all its equity interest in Standard Pacific
Savings in a stock spin-off to shareholders of the Company, or in
the case of changes in the applicable regulations affecting the
holding company, through sale, (ii) as a result of such stock
spin-off or sale, the Company has no further Material liability
or obligation with respect to Standard Pacific Savings, and (iii)
such stock spin-off or sale reduces Consolidated Tangible Net
Worth by no more than the sum of the Tangible Net Worth of
Standard Pacific Savings determined at the time of such stock
spin-off or sale plus all reasonable transaction expenses
----
relating to such stock spin-off or sale, then the Base Amount
shall be reduced to $207,000,000.
-56-
(b) In addition to complying with the requirements of
subparagraph (a) above, the Company shall not permit the
Consolidated Tangible Net Worth of the Company, less the Tangible
----
Net Worth of Standard Pacific Savings, at any time to be less
than $207,000,000 plus (b) the greater of (i) 50% of the
----
cumulative consolidated net income (without deduction for losses
sustained during any fiscal year) of the Company and its
consolidated Subsidiaries for each fiscal quarter subsequent to
the fiscal quarter ended December 31, 1995, or (ii) $2,500,000
per year for each year subsequent to the year ended December 31,
1995.
8.2 Leverage Covenants.
------------------
(a) The Company shall not permit, at any time, the
ratio of Home Building Debt to Home Building Net Worth to exceed
1.6 to 1.0.
(b) The Company shall not permit, at any time, the
ratio of Consolidated Debt to Consolidated Tangible Net Worth to
exceed 2.5 to 1.0.
8.3 Payment of Taxes and Other Potential Liens. The
------------------------------------------
Company shall pay and discharge promptly, and cause each Subsidiary to
pay and discharge promptly, all taxes, assessments and governmental
charges or levies imposed upon it, upon its property or any part
thereof, upon its income or profits or any part thereof, or upon any
right or interest of any Bank under or in respect of any Loan
Document, except that neither the Company nor any Subsidiary shall be
------
required to pay or cause to be paid (a) any income or gross receipts
tax generally applicable to banks and imposed on any Bank, or (b) any
tax, assessment, charge or levy that is not yet past due, or being
actively contested in good faith by appropriate proceedings, as long
as the Company or Subsidiary, as the case may be, has established and
maintains adequate reserves for the payment of the same and, by reason
of nonpayment, no property of the Company or any Subsidiary is in
danger of being lost or forfeited. If Standard Pacific Savings elects
not to pay property taxes on its undivided interest in the parcel of
land in its real estate owned portfolio described
-57-
as Rose Canyon Ranch located in the County of Orange, California, and
also known as Xxxxxx Ranch, the Company will not be in violation of
this Section 8.3.
-----------
8.4 Preservation of Existence. The Company shall preserve
-------------------------
and maintain, and cause each Subsidiary to preserve and maintain, its
corporate or partnership existence, as the case may be, and all
licenses, rights, franchises and privileges in the jurisdiction of its
incorporation or formation and all authorizations, consents,
approvals, orders, licenses, permits or exemptions from, or
registrations or qualifications with, any Governmental Authority that
are necessary for the transaction of its business, and qualify and
remain qualified, and cause each Subsidiary to qualify and remain
qualified, to do business as a foreign corporation or partnership in
each jurisdiction in which such qualification is necessary in view of
its business or the ownership or leasing of its properties, except
-------
that neither the complete liquidation or dissolution of any
Subsidiary, nor the failure to preserve and maintain any particular
license, right, franchise, privilege, authorization, consent,
approval, order, permit, exemption, registration or qualification, or
to qualify or remain qualified in any jurisdiction, that is not
Material to the business or financial condition of the Company and its
Subsidiaries taken as a whole will constitute a violation of this
covenant, and except that neither the sale of Standard Pacific Savings
------
nor the sale of Panel Concepts, Inc. will constitute a violation of
this covenant.
8.5 Maintenance of Properties. The Company shall maintain,
-------------------------
preserve and protect, and cause each Subsidiary to maintain, preserve
and protect, all of its properties in good order and condition,
subject to wear and tear in the ordinary course of business and, in
the case of unimproved properties, damage caused by the natural
elements, and not permit any Subsidiary to permit, any waste of its
properties, except that neither (i) the failure to maintain, preserve
------
and protect a par ticular item of property that is not of Material
value, either intrinsically or to the operations of the Company or any
Subsidiary, nor (ii) the failure to maintain, preserve and protect a
particular item of property due to full compliance with a final
written order from a Governmental Agency, will constitute a violation
of this covenant.
8.6 Maintenance of Insurance. Except as permitted by
------------------------
-58-
Section 8.21 below, the Company shall maintain, and cause each
------------
Subsidiary to maintain: (a) insurance with responsible companies in
such amounts and against such risks as is usually carried by companies
engaged in similar businesses and owning similar properties in the
same general area in which the Company or any Subsidiary operates, and
(b) insurance required by any Governmental Authority having
jurisdiction over the Company or any Subsidiary.
8.7 Mergers. The Company shall not merge or consolidate,
-------
or permit any Subsidiary to merge or consolidate, with or into any
Person, except that any Subsidiary existing on the date hereof may
merge into the Company (provided that the surviving entity is the
Company) or into any other Subsidiary; provided that no Subsidiary who
is a Guarantor shall merge with or into a non-guarantying Subsidiary.
8.8 Books and Records. The Company shall maintain, and
-----------------
cause each Subsidiary to maintain, full and complete books of account
and other records reflecting the results of its operations in
conformity with generally accepted accounting principles applied on a
consistent basis and all applicable requirements of any Governmental
Authority having jurisdiction over the Company or any Subsidiary or
any business or properties of the Company or any Subsidiary.
8.9 Inspection Rights. At any time during regular business
-----------------
hours and at any other reasonable time, and as often as requested, the
Company shall permit, and cause each Subsidiary to permit, each Bank
or any employee, agent or representative thereof to inspect and make
copies and abstracts from the records and books of account of, and to
visit and inspect the properties of, the Company and any Subsidiary,
and to discuss any affairs, finances and accounts of the Company and
any Subsidiary with any of their respective officers or directors.
8.10 Reporting Requirements. The Company shall cause to be
----------------------
delivered to each Bank, in form and detail satisfactory to such Bank:
(a) as soon as practicable and in any event within 15
days after the occurrence of an Event of Default becomes
-59-
known to the Company, a written statement setting forth the
nature of the Event of Default and the action that the Company
proposes to take with respect thereto;
(b) as soon as available and in any event within 45
days after the end of each of the first three quarters of each
calendar year, a Form 10-Q of the Company and the Subsidiaries as
of the end of the quarter most recently ended, and unaudited
consolidated balance sheets, statements of income, retained
earnings and cash flows of the Company and unaudited
consolidating balance sheets and statements of income of the
Subsidiaries in the form attached as Schedule 8.10(b) hereto, for
such period, all in reasonable detail and duly certified (subject
to year-end audit adjustments) by the chief financial officer or
the treasurer of the Company; (additionally, a schedule shall
accompany the unaudited consolidating and consolidated balance
sheets which shall reconcile the amounts used to calculate the
covenants pursuant to Sections 8.1 and 8.2 above to such
------------ ---
unaudited consolidated and consolidating balance sheets);
(c) as soon as available and in any event within 90
days after the end of each calendar year, a Form 10-K and a
consolidating and consolidated balance sheet of the Company and
the Subsidiaries as of the end of the year most recently ended
and consolidated statements of income, retained earnings and cash
flows of the Company and the Subsidiaries for such year, setting
forth in each case in comparative form the corresponding figures
for the preceding fiscal year, audited by and with the opinion of
Xxxxxx Xxxxxxxx LLP or some other independent certified public
accountants of recognized standing selected by the Company and
acceptable to the Majority Banks, which opinion shall be
unqualified except as to such matters as are acceptable to the
Majority Banks ("Acceptable Audit Opinion");
(d) as soon as available and in any event within 90
days after the end of the fiscal year of Standard Pacific Savings
most recently ended, (i) an audited balance sheet, statements of
income, retained earnings and cash flows of Standard Pacific
Savings for such fiscal year, together with an Acceptable Audit
-60-
Opinion; and (ii) unaudited balance sheets and statements of
income of the Subsidiaries described in Schedule 8.10(d); all in
reasonable detail and duly certified by the chief financial
officer or the treasurer of the Company;
(e) at the time of the delivery of the financial
statements described in (b), (c) and (d) above, a certificate of
the chief financial officer or the treasurer of the Company
stating that no event exists that is, or with the giving of
notice and/or the passage of time would be, an Event of Default,
or if such an event exists, stating the nature thereof and the
action that the Company proposes to take with respect thereto;
(f) as soon as available and in any event within 45
days after the end of each calendar year, a projected operating
budget of the Company for the succeeding twelve months (which for
1997 will be in the form previously delivered to Agent); and
including for each of the Company's real estate development
projects for each quarter (a) the number of projected closings of
Units, and (b) projected revenue (including the aggregate of all
amounts projected to be generated from any source in connection
with the sale of Units to the public);
(g) [Intentionally Left Blank.]
(h) [Intentionally Left Blank.]
(i) promptly upon the Company learning thereof, notice
in writing of any action, suit or proceeding before any
Governmental Authority which, if determined adversely to the
Company or any Subsidiary, might reasonably be expected to have a
Material adverse effect on the business, assets, operation or
condition, financial or otherwise, of the Company or Subsidiary
or could impair the ability of the Company to perform its
obligations under the Loan Documents;
(j) such other information about the business, assets,
operation or condition, financial or otherwise, of the
-61-
Company or any Subsidiary, as each Bank may reasonably request
from time to time;
(k) as soon as available and in any event within 45
days after the end of each calendar quarter, a residential
development summary substantially in the form previously
submitted to each Bank;
(l) as soon as practicable, and in any event within
forty-five (45) days after the end of each calendar quarter,
monthly projections for the next succeeding twelve (12) month
period of cash flow for the Company (except for the March 31
reporting which may be for the next succeeding 9 months), in the
form previously delivered to each Bank;
(m) as soon as practicable, and in any event within
forty-five (45) days after the end of each calendar quarter,
reports showing the actual operating results for the calendar
quarter most recently ended, in the form of the projected
operating budget required under Section 8.10(f) above; and
---------------
(n) within forty-five (45) days after the end of each
calendar quarter, a certificate of the Company's chief financial
officer or treasurer, together with such backup infor mation as
each Bank may reasonably require, demonstrating in reasonable
detail that the Company was in compliance during the applicable
period with the covenants set forth in Sections 8.1, 8.2, 8.13,
------------ --- ----
8.17, 8.19, 8.23, 8.24, and 8.25.
---- ---- ---- ---- ----
8.11 Liens. The Company shall not create, incur, assume or
-----
allow to exist, or permit any Subsidiary to create, incur, assume or
allow to exist, any lien of any nature upon or with respect to any
property of the Company or any Subsidiary, whether now owned or
hereafter acquired, except the following permissible liens:
(a) liens securing indebtedness existing on the date
hereof and disclosed in the notes to the financial statements
incorporated in the Form 10-K described in Section 7.6, but only
-----------
to the extent of the indebtedness secured thereby and the
property
-62-
subject thereto on the date hereof and renewals, extensions or
refundings thereof that do not increase the principal amount of
in debtedness secured thereby or the property subject thereto;
(b) liens for taxes, assessments or governmental
charges or levies to the extent that neither the Company nor any
Subsidiary is required to pay the amount secured thereby under
Section 8.3;
-----------
(c) liens imposed by law, such as carrier's,
warehouseman's, mechanic's, materialman's and other similar
liens, arising in the ordinary course of business in respect of
obligations that are not overdue or are being actively contested
in good faith by appropriate proceedings, as long as the Company
or Subsidiary, as the case may be, has established and maintains
adequate reserves for the payment of the same and, by reason of
nonpayment, no property of the Company or any Subsidiary is in
danger of being lost or forfeited;
(d) liens on property located in the State of Texas
which do not in the aggregate secure indebtedness exceeding
$10,000,000 (provided that liens held by the Company or any
Subsidiary, as lender, on properties in the State of Texas which
are owned by the Company or any Subsidiary shall not be included
in the $10,000,000 limitation specified above, and shall be
permitted);
(e) purchase money liens upon or in any property
acquired or held by the Company or any Subsidiary in the ordinary
course of business, including, without limitation real property,
to secure the purchase price of such property, or liens upon or
in such property to secure indebtedness incurred solely for the
purpose of financing the acquisition of such property;
(f) liens existing on purchase money property at the
time of its acquisition;
(g) leases of model units;
-63-
(h) liens on property owned by joint ventures with
respect to which the Company or any Subsidiary is a partner;
(i) liens or assignments by the Company, Standard
Pacific Financing, L.P. or Standard Pacific Financing, Inc. (or
an operating limited partnership formed to perform the same
functions as Standard Pacific Financing, Inc. in which the
Company will have a 99% interest in allocations of profits,
losses, distributions and credits) of mortgages made in
connection with financing transactions entered into in the
ordinary course of business;
(j) liens on property owned by Panel Concepts, Inc. to
finance its operations in the ordinary course of business; and
(k) liens incurred in the ordinary course of business
on property or assets owned by Standard Pacific Savings.
8.12 Prepayment of Indebtedness. If an Event of Default
--------------------------
has occurred and is continuing or an acceleration of the indebtedness
evidenced by each Note has occurred, the Company shall not prepay the
principal amount, in whole or in part, of any indebtedness other than
(a) indebtedness owed to each Bank hereunder or under some other
agreement between the Company and such Bank and (b) indebtedness which
ranks pari passu with indebtedness evidenced by each Note which is or
becomes due and owing whether by reason of acceleration or otherwise.
8.13 Bank Approval of Joint Ventures. Neither the Company
-------------------------------
nor any Subsidiary shall become a partner in a joint venture or any
other partnership, other than the existing Subsidiaries, without the
prior written approval of the Majority Banks, provided that the
---------
foregoing shall not apply to joint ventures and partnerships with
respect to which the total amount of the net investment of the Company
and all Subsidiaries does not exceed $15,000,000 in the aggregate.
8.14 Compliance with Laws and Other Requirements.
-------------------------------------------
-64-
(a) The Company shall comply, and cause each Subsidiary
to comply, with the requirements of all applicable Laws and
orders of any Governmental Authority, noncompliance with which
might Materially adversely affect the business or financial
condition of the Company or any Subsidiary.
(b) The Company shall comply, and cause each Subsidiary
(to the extent they are so engaged) to comply, with all Material
applicable Laws and other requirements relating to the
development of each of its projects and the sale of units
therein, and shall obtain, and cause each Subsidiary (to the
extent they are so engaged) to obtain, all necessary Material
authorizations, consents, approvals, licenses and permits of any
Governmental Authority with respect thereto.
8.15 Change in Nature of Business. The Company shall not
----------------------------
make, or permit any Subsidiary to make, any change in the nature of
its or their respective businesses as carried on at the date hereof
that is Material to the Company and Subsidiaries, taken as a whole,
which has not been consented to by each Bank in writing. Neither the
sale of Standard Pacific Savings nor the sale of Panel Concepts, Inc.
will constitute a violation of this covenant.
8.16 Pension Plan. The Company shall not enter into,
------------
maintain or make contributions to, or permit any Subsidiary to enter
into, maintain or make contributions to, directly or indirectly, any
Plan that is subject to Title IV of ERISA.
8.17 Dividends and Subordinated Debt. The Company shall
-------------------------------
not declare or pay any dividend on, or purchase, redeem, retire or
otherwise acquire for value any of its capital stock now or hereafter
outstanding, return any capital to its stockholders or make any
distribution of assets to its stockholders, whether in cash, property
or obligations, or pay all or any part of any Subordinated Debt,
transfer any property in payment of or as security for the payment of
all or any part of any Subordinated Debt, or establish any sinking
fund, reserve or like set aside of funds or other property for the
redemption, retirement or repayment of all or any part of any
Subordinated Debt, except (so long as no Event of Default has occurred
------
and is continuing):
-65-
(a) the Company may make payments in respect of any
Subordinated Debt as and when required by the terms thereof, but
in any event not more than 90 days in advance of the due date
thereof; provided, however, that the Company may prepay
-------- -------
Subordinated Debt at any time from the proceeds of indebtedness
issued by the Company following the Closing Date so long as the
maturity date of all such indebtedness is at least one year
beyond the Maturity Date;
(b) the Company may declare and pay dividends in any
calendar quarter so long as (i) at the time each such dividend is
declared the Consolidated Tangible Net Worth requirement of
Section 8.1 remains satisfied and any such dividend would not
-----------
cause Section 8.1 to be violated and (ii) all such dividends paid
-----------
in such calendar quarter do not in the aggregate exceed the sum
of (A) $1,000,000, plus (B) 50% of the amount by which the
----
cumulative net income (without deduction for net losses) of the
Company for the preceding calendar quarter exceeds $1,000,000;
and
(c) the Company may from time to time repurchase shares
of its capital stock for an amount not to exceed $25,000,000 in
the aggregate.
8.18 Disposition of Properties. The Company shall not, and
-------------------------
shall not permit the Subsidiaries to, sell, assign, exchange,
transfer, lease or otherwise dispose of any of their respective
properties (whether real or personal), other than properties sold,
assigned, exchanged, transferred, leased or otherwise disposed of for
fair value and in the ordinary course of business or properties
transferred to the Company or a Subsidiary pursuant to the dissolution
of a Subsidiary permitted under Section 8.4, or properties with an
-----------
aggregate value which does not exceed $2,500,000 in any one year;
provided, however, any transfer of the respective properties of
-------- -------
Standard Pacific Savings and Panel Concepts, Inc. shall be permitted
and shall not be counted toward the limitation in this covenant.
8.19 Limitation on New Operating Subsidiaries or
-------------------------------------------
-66-
Affiliated Partnerships. Without the prior written consent of each
-----------------------
Bank, the Company shall not form, acquire, or permit to exist, or
transfer any of the business of the Company or any Subsidiary or
Affiliated Partnership to, any new Subsidiaries or Affiliated
Partnerships not in existence as of the date hereof, except as
contemplated by Sections 8.11(i), 8.13, 8.20 and 8.21; provided,
---------------- ---- ---- ---- --------
however, the Company may form or acquire new Subsidiaries or
-------
Affiliated Partnerships without such consent if the aggregate capital
contributions to such Subsidiaries or Affiliated Partnerships in any
single year shall not at any time exceed $2,500,000 in the aggregate.
Upon the formation of any new Subsidiary or Affiliated Partnership,
the Company shall provide the Banks with a revised Exhibit "F" to this
Agreement, which revised exhibit shall be effective for all purposes
under this Agreement upon such formation.
8.20 Operating Subsidiaries of Panel Concepts, Inc. Panel
----------------------------------------------
Concepts, Inc. may form one or more new operating Subsidiaries (owned
by Panel Concepts, Inc.) following the date hereof, provided that (i)
the aggregate capital contributions to any Subsidiary of Panel
Concepts, Inc. shall not at any time exceed $100,000.00, and (ii) the
aggregate capital contributions to all Subsidiaries of Panel Concepts,
Inc. shall not at any time exceed $500,000.00 in the aggregate.
8.21 Maintenance of General Liability, Workers Compensation
------------------------------------------------------
and Subsidence Insurance. The Company has previously formed The
------------------------
Boston Casualty Co. Ltd. in order to provide the Company with general
liability, workers compensation and subsidence insurance policies.
The parties hereto agree that the following terms, covenants and
conditions shall apply to The Boston Casualty Co. Ltd. and all
policies issued by The Boston Casualty Co. Ltd.:
(a) Other than its initial capital contribution of
$1,000,000 and to comply with future minimum capital requirements
for The Boston Casualty Co. Ltd., the Company shall not, without
the prior written consent of the Majority Banks (which consent
shall not to be unreasonably and arbitrarily withheld), make any
additional capital contributions, payments or other transfers of
funds to The Boston Casualty Co. Ltd. or any entity under its
control or under the joint control of the Company and The Boston
Casualty Co. Ltd., other than payments of
-67-
insurance premiums which are reasonable and standard for the
industry in light of the claims experience or reasonably expected
claims experience of the Company and The Boston Casualty Co.
Ltd., so long as such contributions, payments or other transfers
of funds would not otherwise cause an Event of Default. Insurance
premiums may be paid only for the permitted types of insurance
coverage and reinsurance policies described in Sections 8.21(c)
----------------
and 8.21(d) below.
-------
(b) The Boston Casualty Co. Ltd. shall insure only the
Company, Subsidiaries and, directly or indirectly, non-commercial
consumers of Units and no other Person; provided, however, that
-------- -------
"additional insureds" may appear in policies under which the
Company or any Subsidiary is the primary insured.
(c) The policies of insurance to be provided by The
Boston Casualty Co. Ltd. to the Company and/or Subsidiaries shall
be limited to general liability, workers compensation, product
warranty and subsidence insurance only, unless the Majority Banks
otherwise consent in writing (which consent shall not be
unreasonably and arbitrarily withheld).
(d) The Company and/or any Subsidiary may obtain, prior
to the expiration of its current insurance policies, and
thereafter may maintain, insurance coverage and reinsurance
policies through The Boston Casualty Co. Ltd. with respect to the
types of insurance specified in subparagraph (c) above, and the
Company and Subsidiaries shall promptly notify each Bank of any
Material increases to their exposure retained by The Boston
Casualty Co. Ltd. as a result of this new insurance structure and
any renewals of these policies; provided, however, that such
-------- -------
notification shall not be required with respect to any increase
in exposure that is within the level of self-insurance that is
reasonable and standard for the homebuilding industry.
(e) Any Material failure by the Company (which failure
is not cured within 30 days after written notice from the Banks
to the Company) to observe or perform, or any Material failure
(which failure is not cured within 30 days after written
-68-
notice from the Banks to the Company) to cause The Boston
Casualty Co. Ltd. to observe or perform, any of the terms,
agreements, or conditions contained in this Section 8.21, shall
------------
constitute an Event of Default, and allow the Banks to exercise
all rights and remedies specified in Section 9.2 of this
-----------
Agreement, or otherwise available under applicable Law.
8.22 Transfers to Saddleback Inns of the Americas. The
--------------------------------------------
Company acknowledges that the Banks shall not at this time require
Saddleback Inns of the Americas to execute and deliver to the Banks a
Guaranty of the Obligations. Notwithstanding the immediately
preceding sentence, in the event that the Company or any Subsidiary
transfers assets to Saddleback Inns of the Americas which in the
aggregate exceed $50,000.00, the Company hereby agrees to cause
Saddleback Inns of the Americas to execute and deliver to the Banks a
Guaranty in the form (other than as to the identity of the Guarantor)
of Exhibit "D" hereto. For the purposes of this Section 8.22, a
------------
transfer of assets by the Company or any Subsidiary to Saddleback Inns
of the Americas shall be deemed to be a transfer in excess of
$50,000.00 if the amount of such transfer, when combined with all
previous transfers of assets by the Company or any Subsidiary to
Saddleback Inns of the Americas on or after the date hereof, exceeds
$50,000.00 in the aggregate.
8.23 Management. The Company shall at all times, unless
----------
each Bank otherwise agrees, maintain in senior management positions at
the Company at least three (3) of the following individuals: Xxxxxx
Xxxxxxxx, Xxxxxxx Xxxxxxxxxxx, Xxxxx Xxxxxxx and Xxxxxx Xxxxxx.
8.24 Investments in Standard Pacific Savings. The Company
---------------------------------------
shall not, and shall not permit any Subsidiary to, at any time,
without the prior written consent of the Majority Banks, which consent
will not be unreasonably withheld, make any Investment in Standard
Pacific Savings, if at the time of such Investment or as a result of
such Investment, the aggregate of all Investments by the Company and
its Subsidiaries in Standard Pacific Savings exceed or would exceed
the sum of:
(i) the amount of the Company's and its Subsidiaries'
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Investment in Standard Pacific Savings, as of June 30, 1993, plus
----
(ii) 5% of the Company's Consolidated Tangible Net Worth at
the time of the proposed Investment, plus
----
(iii) the amount of all dividends and distributions paid by
Standard Pacific Savings to the Company as a shareholder after June
30, 1993;
provided, however, that in the event of the creation of, or change in, any
-------- -------
applicable law, rule, regulation, official interpretation thereof or
official directive after the date hereof which has the effect of increasing
the capital maintenance, net worth or similar regulatory requirements
applicable to Standard Pacific Savings to maintain its Well Capitalized
rating from the Office of Thrift Supervision, the Company and its
subsidiaries may, without the prior written consent of the Majority Banks,
make an Investment or Investments in Standard Pacific Savings for the
purpose of causing Standard Pacific Savings to meet such regulatory
requirements. All calculations required to be made pursuant to this
Section 8.24 shall be based upon information derived from quarterly
------------
financial statements for the quarter immediately preceding the date of any
such calculations; provided, however, that by doing so the Company confirms
-------- -------
that no event has occurred following the date of such quarterly financial
statements which would require a Material downward adjustment of such
calculations, and if such an event has occurred, such calculations shall be
adjusted to reflect the same.
8.25 Total Borrowing Base Home Building Indebtedness Not to Exceed
-------------------------------------------------------------
Borrowing Base. The Company shall not permit the Total Borrowing Base Home
--------------
Building Indebtedness to at any time exceed the Borrowing Base.
ARTICLE 9: EVENTS OF DEFAULT AND REMEDIES UPON DEFAULT.
-------------------------------------------
9.1 Events of Default. The occurrence of any one or more of the
-----------------
following events shall constitute an Event of Default hereunder:
(a) failure to pay within 15 days after the date when due the
principal of each Note or any portion thereof or any interest thereon; or
(b) failure to pay any fee or any other amount payable by the
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Company or any Subsidiary under the Loan Documents within 15 days after the
date when due; or
(c) failure to perform or observe any other Material term,
covenant or agreement contained in any Loan Document on the Company's or
any Subsidiary's part to be performed or observed (except that with respect
to a failure of the Company or The Boston Casualty Co. Ltd. to observe or
perform any term, agreement or condition contained in Section 8.21, the
------------
cure period shall be as specified in Section 8.21(e)); or
---------------
(d) any representation or warranty in any Loan Document or in any
certificate, agreement, instrument or other document made or delivered
pursuant to or in connection with any Loan Document proves to have been
incorrect when made in any respect that is Materially adverse to the
interests of any Bank under the Loan Documents; or
(e) the occurrence of any default under any other agreement
between the Company and any Bank, including without limitation, the failure
to pay when due (or within any stated grace period) the principal or any
principal installment of, or any interest, on any present or future
indebtedness for borrowed money owed by the Company to any Bank; or
(f) the Company, any Subsidiary or any Guarantor (except as
provided in Section 8.4 with respect to Subsidiaries) is dissolved or
-----------
liquidated or all or substantially all of the assets of the Company are
sold or otherwise transferred or encumbered without the prior written
consent of each Bank; or
(g) the Company, any Subsidiary or any Guarantor is the subject
of an order for relief by any bankruptcy court, or is unable or admits in
writing its inability to pay its debts as they mature or makes an
assignment for the benefit of creditors; or applies for or consents to the
appointment of any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer for it or for all or any part of its
property; or any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer is appointed without the application or
consent of the Company, Subsidiary or Guarantor and the appointment
continues undischarged or unstayed for 60 days; or institutes or consents
to any bankruptcy, insolvency, reorganization, arrangement, readjustment of
debt, dissolution, custodianship, conservatorship, liquidation,
rehabilitation or similar proceeding relating to it or to all or any part
of its
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property under the laws of any jurisdiction; or any similar proceeding is
instituted without the consent of the Company, Subsidiary or Guarantor and
continues undismissed or unstayed for 45 days; or any judgment, writ,
warrant of attachment or execution or similar process is issued or levied
against all or any part of the property of the Company, any Subsidiary or
any Guarantor and is not released, vacated or fully bonded within 45 days
after its issue or levy; or
(h) the Majority Banks have reasonably determined that a Material
adverse change has occurred since the date hereof in the operations,
business or financial condition of the Company and the Subsidiaries taken
as a whole, and 15 calendar days have elapsed since the date that notice of
such determination is given to the Company; or
(i) the Company, any Subsidiary or any Guarantor shall (i) fail
to pay any indebtedness to any other Person or any interest or premium
thereon, when due (whether by Scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such failure shall continue after
the applicable grace period, if any, specified in the agreement or
instrument relating to such indebtedness, or (ii) fail to perform any term,
covenant or condition on its part to be performed under any agreement or
instrument relating to any such indebtedness, when required to be
performed, and such failure shall continue after the applicable grace
period, if any, specified in such agreement or instrument, if the effect of
such failure to perform is to accelerate, or to permit the acceleration of,
the maturity of such indebtedness; or any such indebtedness shall be
declared to be due and payable, or required to be prepaid (other than by a
regularly scheduled required prepayment), prior to the stated maturity
thereof; or
(j) without the prior written consent of each Bank, any
Subsidiary that is a partner or venturer in a partnership or joint venture
shall withdraw as a partner or venturer in any partnership or joint
venture, unless (i) none of the Banks has made any loans or extended any
credit accommodations to any such partnership or joint venture, and (ii)
the aggregate net investment of the Company and any Subsidiary in such
partnership or joint venture does not exceed $15,000,000; or
(k) any Guarantor shall reject or disaffirm its Guaranty, or
otherwise notify the Agent that it does not intend the Guaranty or its
liability thereunder to apply to any one or more future Borrowings or other
Obligations;
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or
(l) any Borrowing Base Certificate proves to have been incorrect
in any Material respect when delivered to the Agent.
9.2 Remedies Upon Event of Default.
------------------------------
(a) Upon the occurrence of any Event of Default: (i) all
obligations of the Banks and all rights of the Company under the Loan
Documents will terminate without notice to or demand upon the Company,
which are expressly waived by the Company; (ii) each Bank may declare the
unpaid principal of its own Note (or Notes), all interest accrued and
unpaid thereon and its Pro Rata Share of all other amounts payable under
the Loan Documents to be due and payable 10 days after demand, whereupon
the same shall be due and payable 10 days after demand without protest,
presentment, notice of dishonor or further notice or demand of any kind,
all of which are expressly waived by the Company; (iii) the Company shall
immediately pay to Agent an amount (the "L/C Obligations Amount") equal to
the aggregate outstanding L/C Obligations; and (iv) all consent and
approval rights will be based solely upon the aggregate unpaid principal
amount of the Loans by each Bank then outstanding.
(b) Upon acceleration, each Bank may, without notice to or demand
upon the Company, which are expressly waived by the Company, proceed to
protect, exercise and enforce its rights and remedies under the Loan
Documents and such other rights and remedies as are provided by law or
equity in such order and manner as such Bank may determine in its sole
discretion, and all payments received by each Bank shall be applied by such
Bank in such order and manner as such Bank may determine in its sole
discretion. No application of the payments will cure any Event of Default
or prevent acceleration, or continued acceleration, of amounts payable
under the Loan Documents or prevent the exercise, or continued exercise, of
any rights or remedies of any Bank hereunder or under law. The rights,
powers and remedies of each Bank provided herein and in each Note are
cumulative and not exclusive of any right, power or remedy provided by law
or equity.
(c) Upon receipt of the payment of the L/C Obligations Amount,
the Agent shall deposit such funds in an interest-bearing cash account (the
"Cash Account") in the name of the Company maintained with the Agent as
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to which the Company shall have no right of withdrawal except as provided
below. The Agent shall apply amounts on deposit in the Cash Account against
draws on the outstanding Letters of Credit as such draws are made. Upon
expir ation of all Letters of Credit and payment in full of all draws
thereunder and all outstanding Loans, the amounts then on deposit in the
Cash Account and any interest accrued thereon shall then be returned to the
Company.
9.3 Notice of Default. The Banks will refrain from exercising their
-----------------
default rights and remedies (whether hereunder or under any Loan Document)
arising as a result of the occurrence of an Event of Default under Sections 7.3,
-------------
8.5, 8.6 and 8.14 of this Agreement for a period of 15 days after notice of such
-------- ----
Event of Default has been given by the Agent to the Company during which the
Company may cure such default. Provided, however, any Bank may, during such
period, immediately ter minate further Loans and all rights of the Company and
obligations of such Bank under the Loan Documents. Provided further, that such
rights and obligations, including, without limitation, obligations to make
Loans, shall be reinstated upon timely cure by the Company. Provided further,
that no Bank will be required to give such notice or delay in exercising its
default rights and remedies for any period of time if the Company knowingly
failed to immediately give the Agent the statement provided in Section 8.10(a).
---------------
ARTICLE 10: THE AGENT.
---------
10.1 Appointment and Authorization. Each Bank hereby irrevocably
-----------------------------
appoints, designates and authorizes the Agent to take such action in its behalf
under the provisions of this Agreement and each other Loan Document and to
exercise such powers and perform such duties as are expressly delegated to it by
the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary contained elsewhere in this Agreement or in any other Loan
Document, the Agent shall not have any duties or responsibilities, except those
expressly set forth herein, nor shall the Agent have or be deemed to have any
fiduciary relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
10.2 Delegation of Duties. The Agent may execute any of its duties
--------------------
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters
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pertaining to such duties. The Agent shall not be responsible for the negligence
or misconduct of any agent or attorney-in-fact that it selects with reasonable
care.
10.3 Liability of Agent. None of the Agent-Related Persons shall:
------------------
(a) be liable for any action taken or omitted to be taken by any
of them under or in connection with this Agreement or any other Loan
Document or the transactions contemplated hereby (except for its own gross
negligence or willful misconduct), or
(b) be responsible in any manner to any of the Banks for any
recital, statement, representation or warranty made by the Company or any
Subsidiary or Affiliate of the Company, or any officer thereof, contained
in this Agreement or in any other Loan Document, or in any certificate,
report, statement or other document referred to or provided for in, or
received by the Agent under or in connection with, this Agreement or any
other Loan Document, or for the value of or title to any collateral, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of the Company or
any other party to any Loan Document to perform its obligations hereunder
or thereunder.
No Agent-Related Person shall be under any obligation to any Bank to ascertain
or to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books or records of the Company or any of the Company's
Subsidiaries or Affiliates.
10.4 Reliance by Agent.
-----------------
(a) The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper
Person or Persons, and upon advice and statements of legal counsel
(including counsel to the Company), independent accountants and other
experts selected by the Agent. The Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other
Loan Document unless it shall first receive such advice or concurrence of
each Bank as it deems appropriate and, if it so requests, it
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shall first be indemnified to its satisfaction by the Banks against any and
all liability and expense which may be incurred by it by reason of taking
or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or
consent of each Bank and such request and any action taken or failure to
act pursuant thereto shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Article 6, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with,
each document or other matter either sent by the Agent to such Bank for
consent, approval, acceptance or satisfaction, or required thereunder to be
consented to or approved by or acceptable or satisfactory to the Bank.
10.5 Notice of Default. The Agent shall not be deemed to have
-----------------
knowledge or notice of the occurrence of any Default or Event of Default, except
with respect to defaults in the payment of principal, interest and fees required
to be paid to the Agent for the account of the Banks, unless the Agent shall
have received written notice from a Bank or the Company referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default". The Agent will notify the Banks of its receipt
of any such notice. The Agent shall take such action with respect to such
Default or Event of Default as may be requested by each Bank in accordance with
Article 9; provided, however, that unless and until the Agent has received any
-------- -------
such request, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable or in the best interest of the Banks.
10.6 Credit Decision. Each Bank acknowledges that none of the Agent-
---------------
Related Persons has made any representation or warranty to it, and that no act
by the Agent hereinafter taken, including any review of the affairs of the
Company and its Subsidiaries, shall be deemed to constitute any representation
or warranty by any Agent-Related Person to any Bank. Each Bank represents to
the Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of the
Company and its Subsidiaries, the value of and title to any collateral, and all
applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this
-76-
Agreement and to extend credit to the Company hereunder. Each Bank also
represents that it will, independently and without reliance upon any Agent-
Related Person and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement and the other
Loan Documents, and to make such investigations as it deems necessary to inform
itself as to the business, prospects, operations, property, financial and other
condition and creditworthiness of the Company. Except for notices, reports and
other documents expressly herein required to be furnished to the Banks by the
Agent, the Agent shall not have any duty or responsibility to provide any Bank
with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of the
Company which may come into the possession of any of the Agent-Related Persons.
10.7 Indemnification. Whether or not the transactions contemplated
---------------
hereby are consummated, the Banks shall indemnify upon demand the Agent-Related
Persons (to the extent not reimbursed by or on behalf of the Company and without
limiting the obligations of the Company to do so), pro rata, from and against
any and all liabilities covered by any indemnification hereunder; provided,
--------
however, that no Bank shall be liable for the payment to the Agent-Related
-------
Persons of any portion of such liabilities resulting solely from such Person's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Bank shall reimburse the Agent upon demand for its ratable share of any
costs or out-of-pocket expenses (including attorney costs) incurred by the Agent
in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Company. The undertaking in
this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of the Agent.
10.8 Agent in Individual Capacity. BofA and its Affiliates may make
----------------------------
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Company and its
Subsidiaries and Affiliates as though BofA were not the Agent hereunder and
without notice to or consent of the Banks. Each Bank acknowledges that,
pursuant to such activities, BofA or its Affiliates may receive information
regarding the Company or its Affiliates (including
-77-
information that may be subject to confidentiality obligations in favor of the
Company or such Subsidiary) and acknowledge that the Agent shall be under no
obligation to provide such information to it. With respect to its Loans, BofA
shall have the same rights and powers under this Agreement as any other bank and
may exercise the same as though it were not the Agent, and the terms "Bank" and
"Banks" include BofA in its individual capacity.
10.9 Successor Agent. The Agent may resign as Agent upon 30 days'
---------------
notice to the Banks. If the Agent resigns under this Agreement, the Majority
Banks shall appoint from among the Banks a successor agent for the Banks upon
the written consent of the Company and the Banks (which consents shall not be
unreasonably withheld). If no successor agent is appointed prior to the
effective date of the resignation of the Agent, the Agent may appoint a
successor agent from among the Banks upon the written consent of the Company and
the Banks (which consents shall not be unreasonably withheld). Upon the
acceptance of its appointment as successor agent hereunder, such successor agent
shall succeed to all the rights, powers and duties of the retiring Agent and the
term "Agent" shall mean such successor agent and the retiring Agent's
appointment, powers and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Article 10 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. If no successor agent has accepted
appointment as Agent by the date which is 30 days following a retiring Agent's
notice of resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and the Banks shall perform all of the duties of the
Agent hereunder until such time, if any, as the Majority Banks appoint a
successor agent as provided for above.
10.10 Withholding Tax.
---------------
(a) If any Bank is a "foreign corporation, partnership or trust"
within the meaning of the Code and such Bank claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code,
such Bank agrees with and in favor of the Agent, to deliver to the Agent:
(i) if such Bank claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, properly
completed IRS Forms 1001 and W-8 before the payment of any interest in
the first calendar year and before the payment of any interest in each
third succeeding calendar year during which interest may be paid under
this Agreement;
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(ii) if such Bank claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Bank, two properly completed and executed copies of IRS Form 4224
before the payment of any interest is due in the first taxable year of
such Bank and in each succeeding taxable year of such Bank during
which interest may be paid under this Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be required under the
Code or other laws of the United States as a condition to exemption
from, or reduction of, United States withholding tax.
Such Bank agrees to promptly notify the Agent of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Bank claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001
and such Bank sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of the Company to such Bank in
accordance with Section 11.6, such Bank agrees to notify the Agent of the
------------
percentage amount in which it is no longer the beneficial owner of
Obligations of the Company to such Bank. To the extent of such percentage
amount, the Agent will treat such Bank's IRS Form 1001 as no longer valid.
(c) If any Bank claiming exemption from United States withholding
tax by filing IRS Form 4224 with the Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of
the Company to such Bank in accordance with Section 11.6, such Bank agrees
------------
to undertake sole responsibility for complying with the withholding tax
requirements imposed by Sections 1441 and 1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such
Bank an amount equivalent to the applicable withholding tax after taking
into account such reduction. If the forms or other documentation required
by subsection (a) of this Section are not delivered to the Agent, then the
Agent may withhold from any interest payment to such Bank not providing
such forms or other documentation an amount equivalent to the applicable
withholding tax.
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(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Agent did not
properly withhold tax from amounts paid to or for the account of any Bank
(because the appropriate form was not delivered, was not properly executed,
or because such Bank failed to notify the Agent of a change in
circumstances which rendered the exemption from, or reduction of,
withholding tax ineffective, or for any other reason) such Bank shall
indemnify the Agent fully for all amounts paid, directly or indirectly, by
the Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to
the Agent under this Section, together with all costs and expenses
(including Attorney Costs). The obligation of the Banks under this
subsection shall survive the payment of all Obligations and the resignation
or replacement of the Agent.
10.11 Collateral Matters.
------------------
(a) The Agent is authorized on behalf of all the Banks, without
the necessity of any notice to or further consent from the Banks, from time
to time to take any action with respect to any collateral.
(b) The Banks irrevocably authorize the Agent, at its option and
in its discretion, to release any Lien granted to or held by the Agent upon
any collateral (i) upon termination of the Commitments and payment in full
of all Loans and all other Obligations known to the Agent and payable under
this Agreement or any other Loan Document; (ii) constituting property sold
or to be sold or disposed of as part of or in connection with any
disposition permitted hereunder; (iii) constituting property in which the
Company of any Subsidiary owned no interest at the time the Lien was
granted or at any time thereafter; (iv) constituting property leased to the
Company or any Subsidiary under a lease which has expired or been
terminated in a transaction permitted under this Agreement or is about to
expire and which has not been, and is not intended by the Company or such
Subsidiary to be, renewed or extended; (v) consisting of an instrument
evidencing Indebtedness or other debt instrument, if the indebtedness
evidenced thereby has been paid in full; or (vi) if approved, authorized or
ratified in writing by all the Banks. Upon request by the Agent at any
time, the Banks will confirm in writing the Agent's authority to release
particular types or items of collateral.
-80-
(c) Each Bank agrees with and in favor of each other (which
agreement shall not be for the benefit of the Company or any Subsidiary)
that the Company's obligation to such Bank under this Agreement and the
other Loan Documents is not and shall not be secured by any real property
collateral now or hereafter acquired by such Bank.
10.12 Performance by the Agent. In the event that the Company shall
------------------------
default in or fail to perform any of its obligations under the Loan Documents,
which default is not cured within any applicable cure period, the Agent shall
have the right, but not the duty, without limitation upon any of the Agent's or
the Banks' rights pur suant thereto, to perform the same, and the Company agrees
to pay to the Agent within five (5) Banking Days after demand, all reasonable
costs and expenses incurred by the Agent in connection therewith, including
without limitation reasonable Attorney Costs, together with interest thereon
from the date which is 5 Banking Days after demand until paid at a rate per
annum equal to the Reference Rate plus 3%.
----
10.13 Actions. The Agent shall have the right to commence, appear in,
-------
and defend any action or proceeding purporting to affect the rights or duties of
the Banks hereunder or the payment of any funds, and in connection therewith the
Agent may pay necessary expenses, employ counsel, and pay Attorney Costs. The
Company agrees to pay to the Agent, within 5 Banking Days after demand, all
reasonable costs and expenses incurred by the Agent in connection therewith,
including without limitation reasonable Attorney Costs, together with interest
thereon from the date which is 5 Banking Days after demand until paid at a rate
per annum equal to the Reference Rate plus 3%.
----
10.14 Co-Agent. Notwithstanding anything contained herein which may
--------
be construed to the contrary, the Co-Agent shall not exercise any of the rights
or have any of the responsibilities of the Agent hereunder, or any other rights
or responsibilities other than its rights and responsibilities as a Bank
hereunder.
ARTICLE 11: MISCELLANEOUS.
-------------
11.1 Amendments and Waivers. No amendment or waiver of any provision
----------------------
of this Agreement or any other Loan Document, and no consent with respect to any
departure by the Company therefrom, shall be effective unless the same shall be
in writing and signed by the Majority Banks (or by the Agent at the written
request of the Majority Banks) and the Company and acknowledged by the Agent,
and then any
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such waiver of consent shall be effective only in the specific instance and for
the specific purpose for which given; provided, however, that no such waiver,
-------- -------
amendment, or consent shall, unless in writing and signed by all the Banks and
the Company and acknowledged by the Agent, do any of the following:
(a) increase or extend the Commitment of any Bank, unless such
Bank has consented thereto in writing;
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees or other
amounts due to the Banks (or any of them) hereunder or under any other Loan
Document;
(c) reduce the principal of, or the rate of interest specified
herein on any Loan, or any fees or other amounts payable hereunder or under
any other Loan Document;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which is required for the Banks or any
of them to take any action hereunder;
(e) amend the definitions of Borrowing Base or Majority Banks or
Sections 3.5 or 3.6;
-------------------
(f) amend this Section or any provision herein providing for
consent or other action by all Banks;
(g) discharge any Guarantor, or release any Material portion of
any collateral except where the consent of the Majority Banks only is
specifically provided for; or
(h) amend, or perform any act pursuant to, any provision herein
expressly requiring the consent of each Bank;
and, provided further, that no amendment, waiver or consent shall, unless in
-------- -------
writing and signed by the Agent in addition to the Majority Banks or all the
Banks, as the case may be, affect the rights or duties of the Agent under this
Agreement or any other Loan Document. Each Bank shall bear its Pro Rata Share
of all costs and expenses incurred in any amendment, waiver or consent pursuant
to this Agreement. Notwithstanding the definition of "Majority Banks", or
anything else contained herein which may be
-82-
construed to the contrary, in determining whether all Banks shall have voted for
the matters specified in subparagraph (d) above, or any other matter which the
Agent reasonably determines affects only the Revolving Loans, only those Banks
which retain a Commitment to make Revolving Loans (and not simply have a portion
of the Term Loan owed to them) may vote or otherwise consent to any particular
action or inaction which affects only the Commitments or the Revolving Loans.
11.2 Costs, Expenses and Taxes. The Company shall pay on demand the
-------------------------
reasonable costs and expenses of the Agent and the Banks in connection with the
negotiation, preparation, execution, delivery, administration, amendment, waiver
and enforcement of the Loan Documents and any matter related thereto and any
litigation or dispute with respect thereto (including any bankruptcy or similar
proceedings), including without limitation attorney's fees and disbursements;
provided, however, the Company shall not be liable for any expenses of any Bank
-------- -------
other than BofA (for itself and as Agent) in connection with the negotiation and
preparation of the Loan Documents (provided further, that the immediately
----------------
preceding proviso shall not be deemed to limit the right of each Bank to payment
from the Company of all reasonable costs and expenses incurred by each Bank as
aforesaid in connection with any and all future administration, amendments,
waivers, enforcement actions, litigation, negotiations and other actions or
matters [other than assignments or participations with respect to which the only
amounts payable shall be the processing fee owing pursuant to Section 11.6(a)]
relating to the Loans and Loan Documents). Any amount payable to the Agent and
the Banks under this Section 11.2 shall, from the date of demand for payment,
------------
and any other amount payable to the Agent under the Loan Documents which is not
paid when due or within any applicable grace period shall, thereafter, bear
interest at the rate in effect under each Note with respect to Reference Rate
Borrowings.
11.3 No Waiver; Cumulative Remedies. No failure to exercise and no
------------------------------
delay in exercising, on the part of the Agent or any Bank, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege.
11.4 Payments Set Aside. To the extent that the Company makes a
------------------
payment to the Agent or the Banks, or the Agent or the Banks exercise their
right of set-off, and such payment or the proceeds of such set-off or any part
thereof are subse quently invalidated, declared to be fraudulent or
preferential, set aside or required (including pursuant to any settlement
entered into by the Agent or such Bank in its
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discretion) to be repaid to a trustee, receiver or any other party, in
connection with any bankruptcy, insolvency, reorganization, arrangement,
moratorium or other similar proceeding relating to or affecting creditors'
rights generally or otherwise, then (a) to the extent of such recovery the
obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or
such set-off had not occurred, and (b) each Bank severally agrees to pay to the
Agent upon demand its Pro Rata Share of any amount so recovered from or repaid
by the Agent.
11.5 Successors and Assigns. The provisions of this Agreement shall
----------------------
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Company may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of the Agent and each Bank, and no Bank may assign or transfer
any of its rights or obligations under this Agreement except in accordance with
Section 11.6.
------------
11.6 Assignments, Participations, etc.
---------------------------------
(a) Any Bank may, with the written consent of (i) the Company at
all times other than during the existence of an Event of Default (which
consent shall not be unreasonably withheld) and (ii) the Agent (which
consent shall not be unreasonably withheld), at any time assign and
delegate to one or more Eligible Assignees (provided that no written
consent of the Company or the Agent shall be required in connection with
any assignment and delegation by a Bank to an Eligible Assignee that is an
affiliate of such Bank) which have not been a party to any Material
litigation with the Agent or the Company (each an "Assignee") all, or any
--------
ratable part of all, of the Loans, the Commitments and the other rights and
obligations of such Bank hereunder, in an initial minimum amount of
$15,000,000 and in minimum amounts of $5,000,000 after the first
assignment; provided, however, that (A) each Bank (including each Eligible
-------- -------
Assignee) must retain a Commitment of not less than $15,000,000 after
giving effect to such assignment (except for the Banks which act as the
Agent and Co-Agent, respectively, which each must retain a Commitment of
not less than $25,000,000), and (B) the Company and the Agent may continue
to deal solely and directly with such Bank in connection with the interest
so assigned to an Assignee until (1) written notice of such assignment,
together with payment instructions, addresses and related information with
respect to the Assignee, shall have been given to the Company and the Agent
by such Bank and the Assignee; (2) such Bank and its Assignee shall have
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delivered to the Company and the Agent an Assignment and Acceptance in the
form of Exhibit "H" ("Assignment and Acceptance") together with any Note or
Notes subject to such assignment and (3) the assignor Bank or Assignee has
paid to the Agent a processing fee in the amount of $5,000. All costs and
expenses incurred by an assigning Bank in such assignment shall be borne by
such Bank.
(b) From and after the date that the Agent notifies the assignor
Bank that it has received (and provided its consent with respect to and
received the consent of the Company with respect to) an executed Assignment
and Acceptance and payment of the above-referenced processing fee, (i) the
Assignee thereunder shall be a party hereto and, to the extent that rights
and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Bank
under the Loan Documents, and (ii) the assignor Bank shall, to the extent
that rights and obligations hereunder and under the other Loan Documents
have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Loan
Documents.
(c) Within five Banking Days after its receipt of notice by the
Agent that it has received an executed Assignment and Acceptance and
payment of the processing fee (and provided that it consents to such
assignment in accordance with Section 11.6(a)), the Company shall execute
---------------
and deliver to the Agent, new Notes evidencing such Assignee's assigned
Loans and Commitment and, if the assignor Bank has retained a portion of
its Loans and its Commitment, replacement Notes in the principal amount of
the Loans retained by the assignor Bank (such Notes to be in exchange for,
but not in payment of, the Notes held by such Bank). Immediately upon each
Assignee's making its processing fee payment under the Assignment and
Acceptance, this Agreement shall be deemed to be amended to the extent, but
only to the extent, necessary to reflect the addition of the Assignee and
the resulting adjustment of the Commitments arising therefrom. The
Commitment allocated to each Assignee shall reduce such Commitments of the
assigning Bank pro tanto.
--- -----
(d) Any Bank may, with the written consent of (i) the Company at
all times other than during the existence of an Event of Default (which
consent shall be at the Company's sole and absolute discretion) and (ii)
the Agent (which consent shall not be unreasonably withheld), at any time
sell to one or more commercial banks or other Persons not Affiliates of the
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Company (a "Participant") participating interests in any Loans, the
Commitment of that Bank and the other interests of that Bank (the
"originating Bank") hereunder and under the other Loan Documents; provided,
--------
however, that (A) the originating Bank's obligations under this Agreement
-------
shall remain unchanged, (B) the originating Bank shall remain solely
responsible for the performance of such obligations, (C) the Company and
the Agent shall continue to deal solely and directly with the originating
Bank in connection with the originating Bank's rights and obligations under
this Agreement and the other Loan Documents, and (D) no Bank shall transfer
or grant any participating interest under which the Participant has rights
to approve any amendment to, or any consent or waiver with respect to, this
Agreement or any other Loan Document, except to the extent such amendment,
consent or waiver would require unanimous consent of the Banks as described
in the first proviso to Section 11.1. In the case of any such
----- ------- ------------
participation, the Participant shall be entitled to the benefit of Sections
--------
4.5, 4.7 and 11.12 as though it were also a Bank hereunder, and, if amounts
-------- -----
outstanding under this Agreement are due and unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an
Event of Default, each Participant shall be deemed to have the right of
set-off in respect of its participating interest in amounts owing under
this Agreement to the same extent as if the amount of its participating
interest were owing directly to it as a Bank under this Agreement. Each
Bank understands and acknowledges that the Company does not presently
intend to permit the sale of participations to Participants pursuant to
this subparagraph (d), and will not likely consent to any such request of
any Bank during the term of this Agreement.
(e) Each Bank agrees to take normal and reasonable precautions
and exercise due care to maintain the confidentiality of all information
identified as "confidential" or "secret" by the Company and provided to it
by the Company or any Subsidiary, or by the Agent on such Company's or
Subsidiary's behalf, under this Agreement or any other Loan Document, and
neither it nor any of its Affiliates shall use any such information other
than in connection with or in enforcement of this Agreement and the other
Loan Documents; except to the extent such information (i) was or becomes
generally available to the public other than as a result of disclosure by
the Bank, or (ii) was or becomes available on a non-confidential basis
from a source other than the Company, provided that such source is not
bound by a confidentiality agreement with the Company known to the Bank;
provided, however, that any Bank may disclose such information (A) at the
-------- -------
request or pursuant to any
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requirement of any Governmental Authority to which the Bank is subject or
in connection with an examination of such Bank by any such authority; (B)
pursuant to subpoena or other court process; (C) when required to do so in
accordance with the provisions of any applicable Requirement of Law; (D) to
the extent reasonably required in connection with any litigation or
proceeding to which the Agent, any Bank or their respective Affiliates may
be party; (E) to the extent reasonably required in connection with the
exercise of any remedy hereunder or under any other Loan Document; (F) to
such Bank's independent auditors and other professional advisors; (G) to
any Participant or Assignee, actual or potential, provided that such Person
agrees in writing to keep such information confidential to the same extent
required of the Banks hereunder, and (H) as to any Bank, as expressly
permitted under the terms of any other document or agreement regarding
confidentiality to which the Company is party or is deemed party with such
Bank.
(f) Notwithstanding any other provision in this Agreement, any
Bank may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement and the Note
held by it in favor of any Federal Reserve Bank in accordance with
Regulation A of the FRB or U.S. Treasury Regulation 31 CFR (S)203.14, and
such Federal Reserve Bank may enforce such pledge or security interest in
any manner permitted under applicable Law.
11.7 Set-off. In addition to any rights and remedies of the Banks
-------
provided by Law, if an Event of Default exists or the Loans have been
accelerated, each Bank is authorized at any time and from time to time, without
prior notice to the Company, any such notice being waived by the Company to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final excluding the
Company's customer trust accounts) at any time held by, and other indebtedness
at any time owing by, such Bank to or for the credit or the account of the
Company against any and all Obligations owing to the Banks, now or hereafter
existing, irrespective of whether or not the Agent or such Bank shall have made
demand under this Agreement or any Loan Document and although such Obligations
may be contingent or unmatured. Each Bank agrees promptly to notify the Company
and the Agent after any such set-off and application made by such Bank;
provided, however, that the failure to give such notice shall not affect the
-------- -------
validity of such set-off and application.
11.8 Automatic Debits. With respect to any principal or interest
----------------
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payment, commitment fee or usage fee due and payable to the Agent or the Banks
under the Loan Documents, the Company hereby irrevocably authorizes the Agent to
debit any deposit account of the Company with BofA (excluding the Company's
customer trust accounts), and hereby agrees to irrevocably direct in writing the
holder of any deposit account to debit any deposit account of the Company
(excluding the Company's customer trust accounts), in amounts specified by the
Agent from time to time such that the aggregate amount debited from all such
deposit accounts does not exceed such payment, fee, other cost or expense. The
Agent shall use its best efforts to give the Company advance notice of each
debit, but failure of the Agent to give such notice shall not invalidate its
authorization hereunder. If there are insufficient funds in such deposit
accounts to cover the amount of the payment, fee, other cost or expense then
due, such debits will be reversed (in whole or in part, in the Agent's sole
discre tion) and such amount not debited shall be deemed to be unpaid. No such
debit under this Section shall be deemed a set-off.
11.9 Notification of Addresses, Lending Offices, Etc. Each Bank shall
------------------------------------------------
notify the Agent in writing of any changes in the address to which notices to
the Bank should be directed, of addresses of any Lending Office, of payment
instructions in respect of all payments to be made to it hereunder and of such
other administrative information as the Agent shall reasonably request.
11.10 Survival of Representations and Warranties. All representations
------------------------------------------
and warranties of the Company contained herein or in any certificate or other
writing delivered by or on behalf of the Company pursuant to any Loan Document
will survive the making and repayment of the Loan and the execution and delivery
of each Note, and have been or will be relied upon by each Bank, notwithstanding
any investigation made by such Bank or on its behalf.
11.11 Notices. Except as otherwise provided herein or in each Note:
-------
(a) all notices, requests, demands, directions and other
communications provided for hereunder and under each Note must be in
writing and must be mailed, telecopied, delivered or sent by telex or cable
to the appropriate party at the address set forth on the signature pages of
this Agreement or, as to any party, at any other address as may be
designated by it in a written notice sent to the other party in accordance
with this Section 11.11, and
-------------
(b) if any notice, request, demand, direction or other
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communication is given by mail it will be effective on the earlier of
receipt or the third calendar day after deposit in the United States mails
with first class or airmail postage prepaid; if given by telecopier, when
receipt is confirmed by the recipient; if given by cable, when delivered to
the telegraph company with charges prepaid; if given by telex, when sent;
or if given by personal delivery, when delivered.
11.12 Indemnity by the Company. The Company agrees to indemnify, save
------------------------
and hold harmless each Bank, the Agent and their directors, officers, agents,
attorneys and employees (collectively the "indemnitees") from and against (a)
any and all claims, demands, actions or causes of action that are asserted
against any indemnitee by any Person if the claim, demand, action or cause of
action directly or indirectly relates to a claim, demand, action or cause of
action that the Person has or asserts against the Company or any officer,
director or shareholder of the Company, and (b) any and all liabilities, losses,
costs or expenses (including Attorney Costs) that any indemnitee suffers or
incurs as a result of the assertion of any such claim, demand, action or cause
of action.
11.13 Integration and Severability. This Agreement and the other Loan
----------------------------
Documents comprise the complete and integrated agreement of the parties on the
subject matter hereof and supersede all prior agreements, written or oral, on
the subject matter hereof. Any provision in any Loan Document that is held to
be inoperative, unenforceable or invalid in any jurisdiction shall, as to that
jurisdiction, be inoperative, unenforceable or invalid without affecting the
remaining provisions or the operation, enforceability or validity of that
provision in any other jurisdiction, and to this end the provisions of the Loan
Documents are declared to be severable.
11.14 Counterparts. This Agreement may be executed in any number of
------------
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
11.15 No Third Parties Benefited. This Agreement is made and entered
--------------------------
into for the sole protection and legal benefit of the Company, the Banks, the
Agent and the Agent-Related Persons, and their permitted successors and assigns,
and no other Person shall be a direct or indirect legal beneficiary of, or have
any direct or indirect cause of action or claim in connection with, this
Agreement or any of the other Loan Documents.
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11.16 Section Headings. Section headings in this Agreement are
----------------
included for convenience of reference only and are not part of this Agreement
for any other purpose.
11.17 Further Acts by the Company. The Company agrees, at its own
---------------------------
expense, to do such acts and execute and deliver such documents as any Bank from
time to time reasonably requires for the purpose of carrying out the intention
or facilitating the performance of the terms hereof.
11.18 Time of the Essence. Time is of the essence of the Loan
-------------------
Documents.
11.19 Governing Law. The Loan Documents shall be governed by, and
-------------
construed and enforced in accordance with, the internal laws of the State of
California without regard to the conflict of law provisions thereof.
11.20 Reference and Arbitration.
-------------------------
(a) In any judicial action between or among the parties,
including any action or cause of action arising out of or relating to this
Agreement or the Loan Documents or based on or arising from an alleged
tort, all decisions of fact and law shall at the request of any party be
referred to a referee in accordance with California Code of Civil Procedure
Sections 638 et seq. The parties shall designate to the court a referee or
-- ---
referees selected under the auspices of the American Arbitration
Association ("AAA") in the same manner as arbitrators are selected in AAA-
sponsored proceedings. The presiding referee of the panel, or the referee
if there is a single referee, shall be an active attorney or retired judge.
Judgment upon the award rendered by such referee or referees shall be
entered in the court in which such proceeding was commenced in accordance
with California Code of Civil Procedure Sections 644 and 645.
(b) Any controversy or claim between or among the parties,
including those arising out of or relating to this Agreement or the Loan
Documents and any claim based on or arising from an alleged tort, shall at
the request of any party be determined by arbitration. The arbitration
shall be conducted in accordance with the United States Arbitration Act
(Title 9, U.S. Code), notwithstanding any choice of law provision in this
Agreement, and under the Commercial Rules of the AAA. The arbitrator(s)
shall give effect to
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statutes of limitation in determining any claim. Any controversy concerning
whether an issue is arbitrable shall be determined by the arbitrator(s).
Judgment upon the arbitration award may be entered in any court having
jurisdiction. The institution and maintenance of an action for judicial
relief or pursuit of a provisional or ancillary remedy shall not constitute
a waiver of the right of any party, including the plaintiff, to submit the
controversy or claim to arbitration if any other party contests such action
for judicial relief.
(c) No provision of this Section 11.20 shall limit the right of
-------------
any party to this Agreement to exercise self-help remedies such as setoff,
foreclosure against or sale of any real or personal property collateral or
security, or to obtain provisional or ancillary remedies from a court of
competent jurisdiction before, after, or during the pendency of any
arbitration or other proceeding. The exercise of a remedy does not waive
the right of either party to resort to arbitration or reference.
11.21 Effectiveness of this Agreement. Notwithstanding anything
-------------------------------
contained herein to the contrary, the effectiveness of this Agreement and the
Banks' and the Agent's obligations hereunder are expressly conditioned upon
satisfaction of all of the following conditions precedent (any one or more of
which the Banks may waive in their sole discretion):
(a) The Agent shall have received the following original executed
documents (in form and substance satisfactory to the Agent and legal
counsel for the Agent in sufficient number for the Agent and each Bank):
(i) this Agreement;
(ii) each Note;
(iii) the Guaranty and the Guaranty of the Subsidiary
Letters of Credit;
(iv) the Opinion of Counsel;
(v) a certified copy of resolutions of the board of
directors of the Company authorizing the execution of the Loan
Documents, together with an incumbency certificate executed by the
corporate secretary of the Company;
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(vi) a certified copy of resolutions of the board of
directors of Standard Pacific of Texas, Inc. authorizing the execution
of the Guaranty, together with an incumbency certificate executed by
the corporate secretary of Standard Pacific of Texas, Inc.;
(vii) a Borrowing Base Certificate calculated as of
September 30, 1996, showing the Company to be in compliance with
Sections 3.6 and 8.25 hereof; and
---------------------
(viii) such other agreements, instruments and documents as
any Bank shall reasonably request.
(b) The Agent shall have received evidence satisfactory to the
Agent and legal counsel to the Agent that the Company has been duly incor
porated, validly exists and is in good standing under the laws of the State
of Delaware, is duly qualified to do business as, and is in good standing
as, a foreign corporation in each jurisdiction in which the conduct of its
business or the ownership or leasing of its properties makes such
qualification necessary, and has all requisite power and authority to
conduct its business and to own and lease its properties.
Within two (2) Banking Days following the date that this Agreement
becomes effective, and subject to the satisfaction (or waiver by Agent in its
sole discretion) of all applicable conditions to advances hereunder, Borrower
authorizes and directs BofA to disburse sufficient funds under this Agreement to
pay to each of the financial institutions specified on Schedule 11.21 hereto the
amounts specified on Schedule 11.21 hereto (including any specified per diem)
which are owing to each such financial institution under the credit facilities
described in Schedule 11.21 hereto (herein, the "Terminated Credit Facilities").
Upon disbursement hereunder to repay the sums owing under the Terminated Credit
Facilities, each of the Terminated Credit Facilities shall be deemed terminated
and the Company shall have no further right to borrow any further sums
thereunder, and Borrower agrees that it shall not request or receive any further
advances or funds under any of such Terminated Credit Facilities. The financial
institutions described in Section 11.21 hereto shall be deemed third party
beneficiaries of the provisions of this paragraph regarding the termination of
the Terminated Credit Facilities and may enforce the Company's agreements herein
with respect thereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
The Company:
-----------
STANDARD PACIFIC CORP., a Delaware corporation
By:
------------------------------------
------------------------------------
[Printed Name and Title]
By:
------------------------------------
------------------------------------
[Printed Name and Title]
Address for notices:
Standard Pacific Corp.
0000 Xxxx XxxXxxxxx Xxxxxxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
The Banks:
---------
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, a national banking association
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By:
------------------------------------
Xxxxxxx X. Xxxxxxxx, Vice President
Address for notices:
Bank of America National
Trust and Savings Association
0 Xxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xx. Xxxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
IBOR Lending Office:
Bank of America National Trust and Savings Association
0 Xxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xx. Xxxx Xxxxxxxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
The Agent:
---------
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, a national banking association
By:
------------------------------------
Xxxxxxx X. Xxxxxxx III, Vice President
Address for notices:
(Agent's Payment Office)
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Bank of America National
Trust and Savings Association
0 Xxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xx. Xxxxxxx X. Xxxxxxx
Vice President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
-95-
EXHIBIT "A-1"
REVOLVING NOTE
--------------
$
----------------- ------------------
Irvine, California
FOR VALUE RECEIVED, Standard Pacific Corp., a Delaware corporation
(the "Company"), promises to pay to the order of __________________
______________________________ ("Bank") the principal amount of
_________________________________ AND NO/100 DOLLARS ($___________), or such
lesser aggregate amount of Revolving Loans as may be made pursuant to Bank's
Commitment under the Fifth Amended and Restated Revolving Credit Agreement
hereinafter described, payable as hereinafter set forth. Company promises to
pay interest on the principal amount hereof remaining unpaid from time to time
from the date hereof until the date of payment in full, payable as hereinafter
set forth.
Reference is made to the Fifth Amended and Restated Revolving Credit
Agreement of even date herewith among Company and the Banks (the "Agreement").
Terms defined in the Agreement and not otherwise defined herein are used herein
with the meanings defined for those terms in the Agreement. This is one of the
Revolving Notes referred to in the Agreement, and any holder hereof is entitled
to all of the rights, remedies, benefits and privileges provided for in the
Agreement as originally executed or as it may from time to time be supplemented,
modified or amended. The Agreement, among other things, contains provisions for
acceleration of the maturity hereof upon the happening of certain stated events
upon the terms and conditions therein specified.
The principal indebtedness evidenced by this Note shall be payable as
provided in the Agreement and in any event on the Applicable Maturity Date
(which shall be July 31, 1999, subject to possible extension as provided in
Section 4.18 of the Agreement).
Interest shall be payable on the outstanding daily unpaid principal
amount of each Revolving Loan hereunder from the date thereof until payment in
full and shall accrue and be payable at the rates and on the dates set forth in
the Agreement both before and after default and before and after maturity and
judgment, with interest on overdue interest to bear interest at the rate set
forth in Section 4.4 of the Agreement, to the fullest extent permitted by
applicable Law.
SCHEDULE 11.21
The amount of each payment hereunder shall be made to Bank at Agent's
office located in Irvine, California, for the account of Bank, in lawful money
of the United States of America and in immediately available funds not later
than 11:00 a.m., California time, on the day of payment (which must be a Banking
Day). All payments received after 11:00 a.m., California time, on any Banking
Day, shall be deemed received on the next succeeding Banking Day. Bank shall
use its best efforts to keep a record of Revolving Loans made by it and payments
of principal with respect to this Note, and such record shall be presumptive
evidence of the principal amount owing under this Note.
Company hereby promises to pay all costs and expenses of any holder
hereof incurred in collecting the undersigned's obligations hereunder or in
enforcing or attempting to enforce any of any holder's rights hereunder,
including Attorney Costs, whether or not an action is filed in connection
therewith.
Company hereby waives presentment, demand for payment, dishonor,
notice of dishonor, protest, notice of protest and any other notice or
formality, to the fullest extent permitted by applicable Laws.
Assignment of this Note is subject to the consent of certain parties
pursuant to Section 11.6 of the Agreement.
This Note shall be delivered to and accepted by Bank in the State of
California, and shall be governed by, and construed and enforced in accordance
with, the internal Laws thereof without regard to the choice of law provisions
thereof.
"Company"
STANDARD PACIFIC CORP., a Delaware corporation
By:
------------------------------------
------------------------------------
[Printed Name and Title]
By:
------------------------------------
SCHEDULE 11.21
------------------------------------
[Printed Name and Title]
SCHEDULE 11.21
