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EXHIBIT 10.1
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TERM LOAN AGREEMENT
Dated as of January 7, 1999
among
XXXXXXX AND BROAD HOME CORPORATION
THE BANKS PARTY HERETO
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent and Lead Arranger
CREDIT LYONNAIS LOS ANGELES BRANCH
as Syndication Agent
THE FIRST NATIONAL BANK OF CHICAGO
as Documentation Agent
and
UNION BANK OF CALIFORNIA
as Co-Agent
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TABLE OF CONTENTS
Page
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Article 1 DEFINITIONS AND ACCOUNTING TERMS........................................ 1
1.1 Defined Terms................................................... 1
1.2 Use of Defined Terms............................................ 25
1.3 Accounting Terms................................................ 25
1.4 Rounding........................................................ 26
1.5 Miscellaneous Terms............................................. 26
1.6 Exhibits and Schedules.......................................... 26
1.7 References to "Borrower and its Subsidiaries"................... 26
Article 2 LOANS................................................................... 26
2.1 Loans-General................................................... 26
2.2 Alternate Base Rate Loans....................................... 27
2.3 LIBOR Loans..................................................... 28
2.4 Automatic Reduction of Commitment............................... 28
2.5 Administrative Agent's Right to Assume Funds Available.......... 28
Article 3 PAYMENTS; FEES.......................................................... 29
3.1 Principal and Interest.......................................... 29
3.2 Upfront Fee..................................................... 33
3.3 Agency Fees..................................................... 33
3.4 Capital Adequacy................................................ 33
3.5 LIBOR Fees and Costs............................................ 34
3.6 Late Payments/Default Interest.................................. 37
3.7 Computation of Interest and Fees................................ 37
3.8 Holidays........................................................ 38
3.9 Payment Free of Taxes........................................... 38
3.10 Funding Sources................................................. 39
3.11 Failure to Charge or Making of Payment Not Subsequent Waiver.... 39
3.12 Time and Place of Payments; Evidence of Payments; Application
of Payments..................................................... 39
3.13 Administrative Agent's Right to Assume Payments Will be Made.... 39
3.14 Survivability................................................... 40
3.15 Bank Calculation Certificate.................................... 40
Article 4 REPRESENTATIONS AND WARRANTIES.......................................... 40
4.1 Existence and Qualification; Power; Compliance with Law ........ 40
4.2 Authority; Compliance with Other Instruments and Government
Regulations..................................................... 41
4.3 No Governmental Approvals Required.............................. 41
4.4 Subsidiaries.................................................... 42
4.5 Financial Statements............................................ 42
4.6 No Other Liabilities; No Material Adverse Effect................ 43
4.7 Title to Assets................................................. 43
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4.8 Intangible Assets............................................... 43
4.9 Existing Indebtedness and Contingent Guaranty Obligations ...... 43
4.10 Governmental Regulation......................................... 44
4.11 Litigation...................................................... 44
4.12 Binding Obligations............................................. 44
4.13 No Default...................................................... 44
4.14 Pension Plans................................................... 44
4.15 Tax Liability................................................... 44
4.16 Regulation U.................................................... 44
4.17 Environmental Matters........................................... 45
4.18 Disclosure...................................................... 45
4.19 Projections..................................................... 45
4.20 Year 2000 Issues................................................ 45
Article 5 AFFIRMATIVE COVENANTS (OTHER THAN INFORMATION AND
REPORTING REQUIREMENTS).................................................. 46
5.1 Payment of Taxes and Other Potential Liens...................... 46
5.2 Preservation of Existence....................................... 46
5.3 Maintenance of Properties....................................... 46
5.4 Maintenance of Insurance........................................ 46
5.5 Compliance with Laws............................................ 47
5.6 Inspection Rights............................................... 47
5.7 Keeping of Records and Books of Account......................... 47
5.8 Use of Proceeds................................................. 47
5.9 Subsidiary Guaranty............................................. 47
Article 6 NEGATIVE COVENANTS...................................................... 48
6.1 Payment or Prepayment of Subordinated Obligations............... 48
6.2 Dispositions.................................................... 48
6.3 Mergers and Sale of Assets...................................... 48
6.4 Investments and Acquisitions.................................... 48
6.5 ERISA Compliance................................................ 49
6.6 Change in Business.............................................. 49
6.7 Liens and Negative Pledges...................................... 49
6.8 Transactions with Affiliates.................................... 51
6.9 Consolidated Tangible Net Worth................................. 51
6.10 Consolidated Leverage Ratio..................................... 52
6.11 Consolidated Interest Coverage Ratio............................ 53
6.12 Distributions................................................... 53
6.13 Amendments...................................................... 53
6.14 Hostile Tender Offers........................................... 53
6.15 Inventory....................................................... 53
6.16 Certain Investments............................................. 53
6.17 Money Market Indebtedness....................................... 54
6.18 Domestic Standing Inventory..................................... 54
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6.19 Future Subsidiaries............................................ 54
Article 7 INFORMATION AND REPORTING REQUIREMENTS................................. 54
7.1 Financial and Business Information of Borrower and Its
Subsidiaries................................................... 54
7.2 Compliance Certificate......................................... 57
Article 8 CONDITIONS............................................................. 57
8.1 Advances....................................................... 57
Article 9 EVENTS OF DEFAULT AND REMEDIES UPON EVENTS OF DEFAULT.................. 59
9.1 Events of Default.............................................. 59
9.2 Remedies Upon Event of Default................................. 61
Article 10 THE ADMINISTRATIVE AGENT.............................................. 63
10.1 Appointment and Authorization.................................. 63
10.2 Administrative Agent and Affiliates............................ 63
10.3 Banks' Credit Decisions........................................ 63
10.4 Action by Administrative Agent................................. 63
10.5 Liability of Administrative Agent.............................. 64
10.6 Indemnification................................................ 65
10.7 Successor Administrative Agent................................. 66
10.8 No Obligations of Borrower..................................... 66
Article 11 MISCELLANEOUS......................................................... 67
11.1 Cumulative Remedies; No Waiver................................. 67
11.2 Amendments; Consents........................................... 67
11.3 Costs, Expenses and Taxes...................................... 67
11.4 Nature of Banks' Obligations................................... 68
11.5 Representations and Warranties................................. 69
11.6 Notices........................................................ 69
11.7 Execution in Counterparts...................................... 69
11.8 Binding Effect; Assignment..................................... 70
11.9 Sharing of Setoffs............................................. 72
11.10 Indemnity by Borrower.......................................... 72
11.11 Nonliability of Banks.......................................... 73
11.12 Confidentiality................................................ 74
11.13 No Third Parties Benefited..................................... 74
11.14 Other Dealings................................................. 74
11.15 Right of Setoff - Deposit Accounts............................. 74
11.16 Further Assurances............................................. 75
11.17 Integration.................................................... 75
11.18 Governing Law.................................................. 75
11.19 Severability of Provisions..................................... 75
11.20 Headings....................................................... 75
11.21 Conflict in Loan Documents..................................... 75
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11.22 Waiver Of Jury Trial........................................... 75
11.23 Purported Oral Amendments...................................... 76
11.24 Hazardous Materials Indemnity.................................. 76
Exhibits
A - Commitment Assignment and Acceptance
B - Compliance Certificate
C - Note
D-1 - Opinion of Counsel
D-2 - Opinion of Counsel
E - Subsidiary Guaranty
F - Quarterly Report - Sales
G - Quarterly Report - Inventory
Schedules
1.1 Pro Rata Shares
4.4 Subsidiaries
4.7 Existing Liens and Rights of Others
4.9 Existing Indebtedness and Contingent Obligations
6.4 Investments
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TERM LOAN AGREEMENT
Dated as of January 7, 1999
This Term Loan Agreement ("Agreement") is entered into by and
among Xxxxxxx and Broad Home Corporation, a Delaware corporation ("Borrower"),
each bank set forth on the signature pages of this Agreement or which from time
to time becomes party hereto (collectively, the "Banks" and individually, a
"Bank") and Bank of America National Trust and Savings Association, as
Administrative Agent and Lead Arranger, Credit Lyonnais Los Angeles Branch, as
Syndication Agent, The First National Bank of Chicago, as Documentation Agent,
and Union Bank of California, as Co-Agent.
WHEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto covenant and agree as follows:
Article 1
DEFINITIONS AND ACCOUNTING TERMS
1.1 Defined Terms. As used in this Agreement, the following
terms shall have the meanings set forth below:
"Acquisition" means any transaction, or any series of related
transactions, consummated after the Closing Date, by which Borrower
and/or any of its Subsidiaries directly or indirectly (a) acquires any
ongoing business or all or substantially all of the assets of any firm,
corporation or division thereof, whether through purchase of assets,
merger or otherwise, (b) acquires control of securities of a
corporation representing 50% or more of the ordinary voting power for
the election of directors or (c) acquires control of a 50% or more
ownership interest in any partnership, joint venture or other business
entity.
"Administrative Agent" means Bank of America or any successor
administrative agent.
"Administrative Agent's Office" means Bank of America National
Trust and Savings Association, CRESG-LA National #1357, 000 Xxxxx
Xxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, or such other
office as the Administrative Agent may designate in writing to Borrower
and the Banks.
"Advance" means an advance made or to be made to Borrower by a
Bank pursuant to Article 2.
"Affiliate" means, with respect to any Person, any other
Person which directly or indirectly controls, or is under common
control with, or is controlled by, such
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Person. As used in this definition, "control" (including its
correlative meanings, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of power to direct or
cause the direction of management or policies (whether through
ownership of securities or partnership or other ownership interests, by
contract or otherwise); provided that, in any event, any Person which
owns directly or indirectly 10% or more of the securities having
ordinary voting power for the election of directors or other governing
body of a corporation that has more than 100 record holders of such
securities or 10% or more of the partnership or other ownership
interests of any other Person that has more than 100 record holders of
such interests will be deemed to control such corporation or other
Person.
"Agreement" means this Term Loan Agreement, either as
originally executed or as it may from time to time be supplemented,
modified, amended, renewed, extended or supplanted.
"Alternate Base Rate" means, as of any date of determination,
the rate per annum which is the greater of (a) the Reference Rate or
(b) the Federal Funds Rate plus one half percent (1/2%).
"Alternate Base Rate Advance" means an Advance made by a Bank
to fund its Pro Rata Share of an Alternate Base Rate Loan.
"Alternate Base Rate Loan" means a Loan made hereunder and
designated or redesignated as an Alternate Base Rate Loan in accordance
with Article 2, or converted to an Alternate Base Rate Loan in
accordance with Article 3.
"Amortization Amount" means $25,000,000.
"Amortization Date" means each of (a) January 31, 2000, (b)
April 30, 2000 and (c) July 31, 2000.
"Applicable Alternate Base Rate Spread" means, as of any date
of determination, the interest rate spread set forth below opposite the
Applicable Pricing Level as of such date:
Applicable Alternate Base Rate
Pricing Level Spread
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I 0.00%
II 0.00%
III 0.00%
IV 0.00%
V 0.25%
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"Applicable LIBOR Spread" means, as of any date of
determination, the interest rate spread set forth below opposite the
Applicable Pricing Level as of such date:
Applicable
Pricing Level LIBOR Spread
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I 0.95%
II 1.25%
III 1.45%
IV 1.65%
V 1.90%
"Applicable Minimum Hold Requirement" means, in the case of
any Bank, the amount of the Pro Rata Share of the Commitment held by
that Bank as reduced by (a) the amount of any assignment of a portion
thereof made by that Bank to an Eligible Assignee that is not an
Affiliate of that Bank and (b) the amount of any participation therein
granted by that Bank to a participant that is not an Affiliate of that
Bank, which net amount, after giving effect to clauses (a) and (b),
shall not be less than, in the case of a Club Bank, $25,000,000 or, in
the case of any other Bank, $10,000,000.
"Applicable Pricing Level" means, Pricing Level "I" for any
day on which Borrower holds an Investment Grade Credit Rating and, for
any day during a Pricing Period on which Borrower does not hold an
Investment Grade Credit Rating, means the following:
Consolidated Leverage Ratio
Applicable Pricing Level Applicable to Pricing Period
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II Consolidated Leverage Ratio of less
than or equal to 1.25 to 1.00
III Consolidated Leverage Ratio of
higher than 1.25 to 1.00, but less
than or equal to 1.80 to 1.00
IV Consolidated Leverage Ratio of
higher than 1.80 to 1.00, but less
than or equal to 2.25 to 1.00
V Consolidated Leverage Ratio of
higher than 2.25 to 1.00.
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Borrower is responsible pursuant to Section 7.1(k) to provide the
Administrative Agent with notice of each change in the Applicable
Pricing Level that is due to the inception or cessation of an
Investment Grade Credit Rating.
"Authorizations" has the meaning set forth for that term in
Section 4.1.
"Bank" means any of the banks party to this Agreement and
"Banks" means all of such banks.
"Bank of America" means Bank of America National Trust and
Savings Association, a national banking association.
"Banking Day" means any Monday, Tuesday, Wednesday, Thursday
or Friday other than a day on which banks are authorized or required to
be closed in California or New York.
"Bond Facility" means any bond facility pursuant to which a
municipality, or a community facilities district formed by a
municipality, at the request of Borrower or one of its Subsidiaries,
will issue bonds to finance a portion of the costs of acquisition of
and improvements to real property located in such municipality (or
district) by Borrower or one of its Subsidiaries (or to pay development
or "impact" fees in lieu thereof), and with respect to which Borrower
or one of its Subsidiaries will provide a letter of credit or other
reimbursement support. The real property that is the subject of any
such bond facility will be subject to a Lien for special taxes to repay
the Indebtedness evidenced by such bonds.
"Borrower" means Xxxxxxx and Broad Home Corporation, a
Delaware corporation, and its successors and permitted assigns.
"Capital Lease" means, with respect to any Person, a lease of
any Property by that Person as lessee that is, or should be in
accordance with Financial Accounting Standards Board Statement No. 13,
recorded as a "capital lease" on a balance sheet of that Person
prepared in accordance with Generally Accepted Accounting Principles.
"Cash" means all monetary items (including currency, coin and
bank demand deposits) that are treated as cash under Generally Accepted
Accounting Principles.
"Cash Equivalents" means, with respect to any Person, that
Person's Investments in:
(a) Government Securities due within one year of the
making of the Investment;
(b) certificates of deposit issued by, deposits in,
bankers' acceptances of, and repurchase agreements covering
Government Securities
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executed by, (i) any Bank or (ii) any bank and/or savings and
loan association doing business in and incorporated under the
Laws of the United States of America or any state thereof and
having on the date of such Investment combined capital,
surplus and undivided profits of at least $500,000,000 and
which carries on the date of such Investment a credit rating
of P-1 or higher by Xxxxx'x Investors Service, Inc. (or a
successor rating agency) or A-1 or higher by Standard & Poor's
Rating Group (a division of XxXxxx-Xxxx, Inc.) (or a successor
rating agency), in each case due within one year after the
date of the making of the Investment; and
(c) readily marketable commercial paper of (i) any
Bank that is a Bank as of the Closing Date or (ii)
corporations doing business in and incorp orated under the
Laws of the United States of America or any state thereof
given on the date of such Investment a credit rating of P-1 or
higher by Xxxxx'x Investors Service, Inc. (or a successor
rating agency), of A-1 or higher by Standard & Poor's Rating
Group (a division of XxXxxx-Xxxx, Inc.) (or a successor rating
agency), or F-1 or higher by Fitch Investor Services, Inc. (or
a successor rating agency), in each case due within one year
of the making of the Investment.
"Change in Control" has the meaning set forth for such term in
Section 3.1(f).
"Closing Date" means the time and Banking Day on which the
conditions set forth in Section 8.1 are satisfied or waived pursuant to
Section 11.2.
"Club Bank" means, collectively, (a) Bank of America National
Trust and Savings Association, (b) Credit Lyonnais Los Angeles Branch,
(c) The First National Bank of Chicago and (d) Union Bank of
California.
"Co-Agent" means Union Bank of California, so long as such
Bank is a Bank hereunder. The Co-Agent, in such capacity, shall have no
duties under the Loan Documents beyond those of a Bank.
"Code" means the Internal Revenue Code of 1986, as amended or
replaced and as in effect from time to time.
"Commission" means the Securities and Exchange Commission and
any successor commission.
"Commitment Assignment and Acceptance" means a commitment
assignment and acceptance substantially in the form of Exhibit A.
"Commitment" means, subject to Section 2.4, $200,000,000. The
Pro Rata Shares of the Banks with respect to the Commitment are set
forth in Schedule 1.1.
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"Common Stock" means the $1.00 par value common stock and
special common stock of Borrower.
"Compliance Certificate" means a compliance certificate in the
form of Exhibit B signed, on behalf of Borrower, by a Senior Officer of
Borrower.
"Consolidated Adjusted EBITDA" means, for any fiscal period,
Consolidated EBITDA for that fiscal period plus (a) the amount of
capitalized interest that was included in cost of sales in determining
Consolidated Net Income for that fiscal period plus (b) all non-Cash
Net Realizable Value Adjustments made during that fiscal period.
"Consolidated EBITDA" means, for any fiscal period, the sum of
(a) Consolidated Net Income for that period, plus (b) any extraordinary
loss reflected in such Consolidated Net Income, minus (c) any
extraordinary gain reflected in such Consolidated Net Income, plus (d)
Consolidated Interest Expense for that period plus (e) the aggregate
amount of federal and state taxes on or measured by income for that
period (whether or not payable during that period), plus (f)
depreciation, amortization and all other non-cash expenses for that
period, in each case as determined in accordance with Generally
Accepted Accounting Principles, in the case of items (d), (e) and (f),
only to the extent deducted in the determination of Consolidated Net
Income for that period.
"Consolidated Interest Coverage Ratio" means, with respect to
any Fiscal Quarter of Borrower and its Consolidated Subsidiaries, the
ratio of (a) Consolidated Adjusted EBITDA for the twelve month period
ending on the last day of such Fiscal Quarter to (b) the sum of (i)
Consolidated Interest Expense (excluding any non-cash items included in
Consolidated Interest Expense) plus (ii) to the extent not included in
Consolidated Interest Expense, any charge to Consolidated Net Income
which reflects the distribution paid or accrued to or for the holders
of the Trust Preferred Capital Securities (including any such charge
denominated "minority interest in net income of consolidated
subsidiaries") plus (iii) all dividends (other than dividends paid in
the same class of stock) paid on any preferred stock of Borrower, in
each case for the twelve month period ending on the last day of such
Fiscal Quarter.
"Consolidated Interest Expense" means, with respect to any
fiscal period of Borrower and its Consolidated Subsidiaries, the
aggregate amount of interest, fees, charges and related expenses paid
or payable to a lender in connection with borrowed money that is
treated as interest (including accretion of original issue discount on
long-term debt existing during such fiscal period) and the interest
portion of any capitalized lease payment of Borrower and its
Consolidated Subsidiaries (other than any such items properly
attributable to Financial Subsidiaries).
"Consolidated Leverage Ratio" means, as of any date of
determination, the ratio of (a) Consolidated Total Indebtedness on that
date to (b) [Consolidated Tangible
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Net Worth on that date minus the amount, if any, by which the portion
of Shareholder's Equity of Borrower and its Consolidated Subsidiaries
attributable to Borrower's equity interest in the Shareholder's Equity
of all Joint Ventures (other than KBMHG and any Subsidiary of KBMHG
engaged solely in development of multi-family housing and related
businesses) exceeds $30,000,000].
"Consolidated Net Income" means, with respect to any fiscal
period, the consolidated net income of Borrower and its Consolidated
Subsidiaries for that period, determined in accordance with Generally
Accepted Accounting Principles, consistently applied.
"Consolidated Subsidiary" means, with respect to Borrower, all
of the Subsidiaries of Borrower.
"Consolidated Tangible Net Worth" means, as of any date of
determination, the Shareholder's Equity of Borrower and its
Consolidated Subsidiaries on a consolidated basis on that date plus if
that date is on or prior to the Settlement Date with respect to the
Trust Preferred Capital Securities, an amount equal to 100% of the
aggregate book value of the Trust Preferred Capital Securities
outstanding on that date minus the aggregate book value on that date of
any Intangible Assets consisting of goodwill arising from Acquisitions
completed after November 30, 1996, provided that any cumulative
positive or negative adjustment to Consolidated Tangible Net Worth
attributable to foreign currency translations shall be ignored.
"Consolidated Total Indebtedness" means, as of any date of
determination, all Indebtedness and Contingent Guaranty Obligations of
Borrower and its Subsidiaries on that date (without duplication for any
guaranty by Borrower of a Subsidiary's Indebtedness or any guaranty by
a Subsidiary of either Borrower's or another Subsidiary's Indebtedness)
plus (a) if that date is after the Settlement Date with respect to the
Trust Preferred Capital Securities, an amount equal to 100% of the
aggregate book value of the Trust Preferred Capital Securities
outstanding on that date, minus (b) all Indebtedness and Contingent
Guaranty Obligations of the Financial Subsidiaries on that date and
minus (c) the amount, if any, by which the aggregate Cash and Cash
Equivalents of Borrower and its Subsidiaries (other than the Financial
Subsidiaries) on that date are greater than $15,000,000.
"Contingent Guaranty Obligation" means, as to any Person, any
(a) direct or indirect guarantee of Indebtedness of, or other
obligation performable by, any other Person (other than a performance
obligation undertaken in the ordinary and usual course of business),
including any endorsement (other than for collection or deposit in the
ordinary course of business), co-making or sale with recourse of the
obligations of any other Person or (b) assurance given to an obligee
with respect to the performance of an obligation (other than a
performance obligation undertaken in the ordinary and usual course of
business) by, or the financial condition of, any other Person, whether
direct, indirect or contingent, including any purchase or repurchase
agreement
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covering such obligation or any collateral security therefor, any
agreement to provide funds (by means of loans, capital contributions or
otherwise) to such other Person, any agreement to support the solvency
or level of any balance sheet item of such other Person, or any
"keep-well", "take-or-pay", "through put" or other arrangement of
whatever nature having the effect of assuring or holding harmless any
obligee against loss with respect to any obligation of such other
Person. The amount of any Contingent Guaranty Obligation shall be
deemed to be an amount equal to the stated or determinable amount of
the related primary obligation (unless the Contingent Guaranty
Obligation is limited by its terms to a lesser amount, in which case to
the extent of such amount) or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof as
determined by the Person in good faith.
"Contractual Obligation" means, as to any Person, any
provision of any outstanding Securities issued by that Person or of any
material agreement, instrument or undertaking to which that Person is a
party or by which it or any of its Property is bound, other than, in
the case of Borrower and its Subsidiaries, any of the Loan Documents.
"Debtor Relief Laws" means the Bankruptcy Code of the United
States of America, as amended from time to time, and all other
applicable liquidation, conservatorship, insolvency, reorganization, or
similar debtor relief Laws from time to time in effect affecting the
rights of creditors generally.
"Default" means any event that, with the giving of notice or
passage of time or both, would be an Event of Default.
"Default Rate" means the interest rate described in Section
3.6.
"Designated Deposit Account" means a demand deposit account to
be maintained by Borrower with Bank of America, as from time to time
designated by Borrower by written notification to the Administrative
Agent.
"Disposition" means the sale, transfer or other disposition of
any of the capital stock of any Significant Subsidiary or of all or
substantially all of the assets of any Significant Subsidiary. A
Disposition may or may not constitute a Significant Asset Sale.
"Distribution" means, with respect to any shares of capital
stock or any warrant or right to acquire shares of capital stock or any
other equity security issued by a Person, (a) the retirement,
redemption, purchase, or other acquisition for value (other than for
capital stock of the same type of such Person) by such Person of any
such security, (b) the declaration or payment by such Person of any
dividend in Cash or in Property (other than in capital stock of the
same type of such Person) on or with respect to any such security, and
(c) any Investment by such Person in any holder of 5% or more of the
capital stock (or other equity securities) of such Person, if a purpose
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of such Investment is to avoid the characterization of the transaction
between such Person and such holder as a Distribution under clause (a)
or (b) above. In addition, to the extent any loan or advance by
Borrower to one of its Subsidiaries is deemed to be an "Investment" for
purposes of this Agreement, then any principal payment made by such
Subsidiary in respect of such loan or advance shall be considered a
Distribution for purposes of Section 6.16.
"Documentation Agent" means The First National Bank of
Chicago, so long as such bank is a Bank hereunder. The Documentation
Agent shall have no duties under the Loan Documents beyond those of a
Bank.
"Dollars" means the national currency of the United States of
America.
"Domestic Lending Office" means, with respect to each Bank,
its office, branch or affiliate identified on the signature pages
hereof as its Domestic Lending Office or such other office, branch or
affiliate as such Bank may hereafter designate as its Domestic Lending
Office by notice to the Borrower and the Administrative Agent.
"Domestic Standing Inventory" means, as of any date of
determination, all items of unsold housing inventory (other than Model
Homes) of Borrower and its Domestic Subsidiaries with respect to which
either (a) 90% of the direct construction costs have been incurred on
such date or (b) at least ten months have elapsed from the date its
construction was commenced through and including such date.
Construction for purposes of this definition shall be deemed to have
commenced upon the pouring of foundation concrete.
"Domestic Subsidiary" means, with respect to any Person and as
of any date of determination, a Subsidiary of such Person (a) that is
organized under the Laws of the United States of America or any state
thereof and (b) the majority of the assets of which (as reflected on a
balance sheet of such Subsidiary prepared in accordance with Generally
Accepted Accounting Principles) is located in the United States of
America; provided that KBMHG (and each Subsidiary thereof) shall in all
events be considered a Domestic Subsidiary of Borrower and Xxxxxxx and
Broad International, a California corporation, shall in no event be
considered a Domestic Subsidiary of Borrower.
"Domestic Unimproved Land" means, as of any date of
determination, real Property located in the United States of America
(a) owned by Borrower or any of its Subsidiaries if on that date there
has been expended by Borrower and its Subsidiaries less than 50% of the
physical construction costs reasonably estimated by Borrower (in
accordance with its past practices as of the Closing Date) to bring
such real Property to "finished lot" status and (b) owned by other
Persons but which, if owned by Borrower or any of its Subsidiaries on
that date, would have satisfied the requirement set forth in clause
(a), if on that date Borrower or any of its Domestic Subsidiaries holds
an option to purchase such real Property for which it has paid an
amount equal
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to 20% or more of the purchase price provided for in such option to
purchase. The "book value" with respect to Domestic Unimproved Land
referred to in Section 6.15 shall be calculated as if the option to
purchase had been exercised as of the date of determination, and
otherwise in accordance with Generally Accepted Accounting Principles,
consistently applied.
"Eligible Assignee" means (a) another Bank, (b) any commercial
bank, savings bank, savings and loan association or similar financial
institution which, (i) has total assets of $5,000,000,000 or more, (ii)
is "well capitalized" within the meaning of such term under the Federal
Depository Institutions Control Act, (iii) is engaged in the business
of lending money and extending credit under credit facilities
substantially similar to those extended under this Agreement and (iv)
is operationally and procedurally able to meet the obligations of a
Bank hereunder to the same degree as a commercial bank, (c) any
insurance company engaged in the business of writing insurance which
(i) has total assets of $5,000,000,000 or more, (ii) is "best
capitalized" under applicable regulations of the National Association
of Insurance Commissioners, and (iii) meets the requirements set forth
in subclauses (iii) and (iv) of clause (b) above and (d) any other
financial institution having total assets of $5,000,000,000 or more
(including a mutual fund or other fund under management of an
investment manager having under its management total assets of
$5,000,000,000 or more) which meets the requirements set forth in
subclauses (iii) and (iv) of clause (b) above; provided that each
Eligible Assignee must (A) be organized under the Laws of the United
States of America, any State thereof or the District of Columbia or (B)
if a commercial bank, be organized under the Laws set forth in clause
(A) or under the Laws of the Cayman Islands or any country which is a
member of the Organization for Economic Cooperation and Development, or
a political subdivision of such a country, and (C) act under the Loan
Documents through a branch, agency or funding office located in the
United States of America and (D) be exempt from withholding of tax on
interest and deliver the documents related thereto pursuant to the
Code.
"ERISA" means, at any date, the Employee Retirement Income
Security Act of 1974 and the regulations thereunder, all as the same
shall be in effect at such date.
"ERISA Affiliate" means, with respect to any Person, any other
Person (or any trade or business, whether or not incorporated) that is
under common control with that Person within the meaning of Section 414
of the Code.
"Event of Default" has the meaning set forth for that term in
Section 9.1.
"Federal Funds Rate" means the rate per annum equal to the
weighted average (rounded upwards, if necessary, to the nearest 1/100th
of one percent) of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers as published for such day (or, if such day is not a Banking
Day, for the next preceding Banking Day) by the Federal Reserve Bank of
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16
New York, or, if such rate is not so published for any day which is a
Banking Day, the average, the average (rounded upwards, if necessary,
to the nearest 1/100th of one percent) of the quotations for such day
on transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected
by the Administrative Agent.
"Financial Subsidiary" means (a) the Mortgage Company, so long
as it continues to engage in the mortgage banking business, and its
Subsidiaries, (b) a Trust Issuer, so long as it engages in no
activities other than those incident to the Trust Preferred Capital
Securities, (c) any Subsidiary of Borrower that is organized and
operates solely to issue collateralized mortgage obligations, and (d)
any other Subsidiary of Borrower that (i) is engaged primarily in the
business of origination, marketing, and servicing of residential
mortgage loans, the sale of servicing rights, or the financing of long
term residential mortgage loans, (ii) holds not less than 95% of its
total assets in the form of Cash, Cash Equivalents, notes and mortgages
receivable, Cash held by a trustee for the benefit of such Subsidiary
or other financial instruments and (iii) is the subject of an Officer's
Certificate of Borrower delivered to the Administrative Agent stating
that such Subsidiary is a Financial Subsidiary within the meaning
hereof.
"Fiscal Quarter" means each of the fiscal quarters of Borrower
ending on each February 28 (or 29, if a leap year), May 31, August 31
and November 30.
"Fiscal Year" means each of the fiscal years of Borrower
ending on each November 30 or as otherwise changed by the Borrower upon
advance written notice to the Administrative Agent, but subject to the
requirements of Section 1.3.
"Foreign Subsidiary" means, with respect to any Person, a
Subsidiary of that Person which is not a Domestic Subsidiary and with
respect to Borrower, includes Xxxxxxx and Broad International, Inc., a
California corporation, but excludes KBMHG (and each Subsidiary
thereof).
"Generally Accepted Accounting Principles" means, as of any
date of determination, accounting principles set forth as "generally
accepted" in then currently effective Statements of the Auditing
Standards Board of the American Institute of Certified Public
Accountants, or, if such Statements are not then in effect, accounting
principles that are then approved by a significant segment of the
accounting profession in the United States of America. The term
"consistently applied," as used in connection therewith, means that the
accounting principles applied to financial statements of a Person as of
any date or for any period are consistent in all material respects
(subject to Section 1.3) to those applied to financial statements of
that Person as of prior dates and for prior periods.
"Government Securities" means (a) readily marketable direct
full faith and credit obligations of the United States of America or
obligations unconditionally
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17
guaranteed by the full faith and credit of the United States of America
and (b) obligations of an agency or instrumentality of, or corporation
owned, controlled or sponsored by, the United States of America that
are generally considered in the securities industry to be implicit
obligations of the United States of America.
"Governmental Agency" means (a) any federal, state, county or
municipal government, or political subdivision thereof, (b) any
governmental or quasi-governmental agency, authority, board, bureau,
commission, department, instrumentality, or public body, (c) any court
or administrative tribunal, or (d) any arbitration tribunal or other
non-governmental authority to whose jurisdiction a Person has
consented, in each case whether of the United States of America or any
other nation.
"Guarantor Subsidiary" means (a) as of the Closing Date, any
Domestic Subsidiary which is a Significant Subsidiary, other than any
Financial Subsidiary and the Suspended Significant Subsidiaries, (b) as
of the date that is forty-five (45) days after the Closing Date, any
Suspended Significant Subsidiary that has not then merged into or
conveyed all of its assets to Borrower or a Guarantor Subsidiary and
(c) any other Domestic Subsidiary, other than any Financial Subsidiary,
that is designated in writing by Borrower to become a Guarantor
Subsidiary.
"Hazardous Materials" means substances defined as "hazardous
substances" pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 et seq.,
or as "hazardous", "toxic" or "pollutant" substances or as "solid
waste" pursuant to the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801, et seq., the Resource Conservation and Recovery
Act, 42 U.S.C. Section 6901, et seq., or as "friable asbestos" pursuant
to the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq. or
any other applicable Hazardous Materials Law, in each case as such Laws
are amended from time to time.
"Hazardous Materials Laws" means all Laws governing the
treatment, transportation or disposal of Hazardous Materials applicable
to any real Property of Borrower or its Subsidiaries.
"Indebtedness" means, with respect to any Person, (a) all
indebtedness of such Person for borrowed money, (b) that portion of the
obligations of such Person under Capital Leases which should properly
be recorded as a liability on a balance sheet of that Person prepared
in accordance with Generally Accepted Accounting Principles, (c) any
obligation of such Person that is evidenced by a promissory note or
other instrument representing an extension of credit to such Person,
whether or not for borrowed money, (d) any obligation of such Person
for the deferred purchase price of Property or services (other than
trade or other accounts payable in the ordinary course of business in
accordance with customary industry terms), (e) any obligation of the
types referred to in clauses (a) through (d) above that is secured by a
Lien (other than a Permitted Encumbrance) on assets of such Person,
whether or not that Person has
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18
assumed such obligation or whether or not such obligation is
non-recourse to the credit of such Person, but only to the extent of
the fair market value of the assets so subject to the Lien, (f)
obligations of such Person arising under acceptance facilities or under
facilities for the discount of accounts receivable of such Person and
(g) any obligation of such Person under letters of credit issued for
the account of such Person and that is not otherwise a Contingent
Guaranty Obligation.
"Intangible Assets" means assets that are considered
intangible assets under Generally Accepted Accounting Principles,
including (a) customer lists, goodwill, computer software, unamortized
deferred charges, unamortized debt discount, capitalized research and
development costs and other intangible assets and (b) any write-up in
book value of any asset subsequent to its acquisition, but excluding
any existing write-up in book value of any asset acquired by Borrower
or any of its Subsidiaries prior to the Closing Date, as such write-up
may decrease (but not increase) from time to time.
"Interest Period" means, as to each LIBOR Loan, a period of
one, two, three or six months, as designated by Borrower; provided that
(a) the first day of each Interest Period must be a LIBOR Market Day,
(b) any Interest Period that would otherwise end on a day that is not a
LIBOR Market Day shall be extended to the next succeeding LIBOR Market
Day, unless such LIBOR Market Day falls in the next calendar month, in
which case the LIBOR Period shall end on the next preceding LIBOR
Market Day, and (c) no Interest Period may extend beyond the Maturity
Date.
"Investment" means, with respect to any Person, any investment
by that Person, whether by means of purchase or other acquisition of
capital stock or other Securities of any other Person or by means of
loan, advance, capital contribution, or other debt or equity
participation or interest in any other Person, including any
partnership or joint venture interest in any other Person; provided
that an Investment of a Person shall not include any trade or account
receivable arising in the ordinary course of the business of such
Person. The amount of any Investment shall be the amount actually
invested, without adjustment for subsequent increases or decreases in
the market value of such Investment.
"Investment Grade Credit Rating" means, as of any date of
determination, that at least two (2) Rating Agencies have as of that
date issued credit ratings for Borrower's long-term senior unsecured
debt of (a) at least BBB- in the case of S&P, (b) at least Baa3 in the
case of Moody's and (c) at least BBB- in the case of Duff. For purposes
of the foregoing, "S&P" means Standard & Poor's Rating Group (a
division of XxXxxx-Xxxx, Inc.) and its successors, "Moody's" means
Moody's Investor's Service, Inc. and its successors, "Duff" means Duff
& Xxxxxx, Inc. and its successors and "Rating Agencies" means S&P,
Moody's and Duff.
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19
"Joint Venture" means any Person (a) in which Borrower or any
Subsidiary of Borrower holds an equity Investment and (b) which has at
least one holder of its equity interests that is not an Affiliate of
Borrower or any Subsidiary of Borrower.
"KBMHG" means Xxxxxxx and Broad Multi-Housing Group, Inc., a
Subsidiary of Borrower.
"Laws" means, collectively, all foreign, federal, state and
local statutes, treaties, codes, ordinances, rules, regulations and
controlling precedents of any Governmental Agency.
"Lead Arranger" means Bank of America, in its capacity as lead
arranger of the credit facility under this Agreement.
"Xxxxx Homes Business" means the "Homebuilding Business" as
such term is defined in the Xxxxx Homes Acquisition Agreement.
"Xxxxx Homes Acquisition" means the acquisition by Borrower of
the Xxxxx Homes Business pursuant to the Xxxxx Homes Acquisition
Agreement.
"Xxxxx Homes Acquisition Agreement" means that certain
Purchase Agreement among Borrower and the sellers of the Xxxxx Homes
Business executed by the parties thereto as of January 7, 1999.
"Xxxxx Homes Entities" means the corporations, partnerships,
limited liability companies and other business entities that conducted
the Xxxxx Homes Business prior to the Closing Date.
"LIBOR" means, for each LIBOR Loan, that rate per annum,
determined solely by the Administrative Agent, pursuant to the
following formula (with each component expressed as a decimal and
rounded upward to the nearest 1/100 of 1%):
London Interbank Offered Rate for that LIBOR Loan
-------------------------------------------------
1.00 - Reserve Percentage
"LIBOR Advance" means an Advance made by a Bank to fund its
Pro Rata Share of a LIBOR Loan.
"LIBOR Lending Office" means, with respect to each Bank, its
office, branch or affiliate identified on the signature page hereof as
its LIBOR Lending Office or such other office, branch or affiliate as
such Bank may hereafter designate as its LIBOR Lending Office by notice
to Borrower and the Administrative Agent.
"LIBOR Loan" means a Loan made hereunder and designated or
redesignated as a LIBOR Loan in accordance with Article 2.
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00
"XXXXX Xxxxxx" xxxxx xxx Xxxxxx, Xxxxxxx market established by
and among banks for the solicitation, offer and acceptance of Dollar
deposits in such banks.
"LIBOR Market Day" means any Banking Day on which commercial
banks are open for international business (including dealing in Dollar
deposits) in London, England.
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment for security, security interest, encumbrance,
lien or charge of any kind, whether volun tarily incurred or arising by
operation of Law or otherwise, affecting any Property, including any
agreement to grant any of the foregoing (other than an agreement which
gives to a Person the right to become equally and ratably secured with
any other Person to whom a Lien is granted on any item of Property) any
conditional sale or other title retention agreement, any lease in the
nature of a security interest, and/or the filing of or agreement to
give any financing statement (other than a precautionary financing
statement with respect to a lease that is not in the nature of a
security interest) under the Uniform Commercial Code or comparable Law
of any jurisdiction with respect to any Property.
"Loan" means any of the groups of Advances made at any one
time by the Banks.
"Loan Documents" means, collectively, this Agreement, the
Notes, the Subsidiary Guaranty and any other agreement or instrument
that may hereafter be executed and delivered by Borrower or a
Subsidiary of Borrower in favor of the Banks relating to or in
furtherance of this Agreement.
"London Interbank Offered Rate" means, for each LIBOR Loan,
the per annum rate (rounded upward to the nearest 1/100 of 1%),
determined solely by the Administrative Agent, at which Bank of
America's branch in London, England would offer deposits of Dollars in
the LIBOR Market at or about 11:00 a.m., London time, on the day two
LIBOR Market Days preceding the first day of the applicable Interest
Period for approximately the same time period as the applicable
Interest Period and in an amount approximately equal to Bank of
America's Pro Rata Share of that LIBOR Loan.
"Majority Banks" means, as of any date of determination, Banks
holding in the aggregate in excess of 50% of the aggregate Indebtedness
then evidenced by the Notes.
"Material Adverse Effect" means any circumstance or event, or
any set of circumstances or events which, individually or when
aggregated with any other circum stances or events, (a) has or is
reasonably likely to have any material adverse effect upon the validity
or enforceability of any Loan Document, (b) is or is reasonably
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21
likely to be material and adverse to the condition (financial or
otherwise) or operations of Borrower and its Subsidiaries, taken as a
whole, (c) materially impairs or is reasonably likely to materially
impair the ability of Borrower and its Subsidiaries, taken as a whole,
to perform the Obligations or (d) were initiated or approved by
Borrower or any of its Subsidiaries and which materially impair or are
reasonably likely to materially impair the ability of the Banks to
enforce any material legal remedy pursuant to the Loan Documents.
"Maturity Date" means April 30, 2001.
"Model Homes" means housing units which have been completed,
furnished and landscaped and are used in the marketing efforts with
respect to a residential home project, provided that the total number
of units considered as Model Homes at any time shall not exceed an
amount equal to (a) the number of domestic residential home projects
open for sale at such time, times (b) four (4).
"Money Market Facility" means any unsecured credit facility
the advances under which have a maturity of not in excess of 180 days
and which have been extended to Borrower from time to time other than
under the Revolving Loan Agreement, either by a Bank or by any other
financial institution.
"Money Market Facility Lender" means, with respect to a Money
Market Facility, the financial institution that extended such Money
Market Facility to Borrower.
"Money Market Outstandings" means, as of any date of
determination, the aggregate principal amount outstanding under all
Money Market Facilities.
"Mortgage Company" means Xxxxxxx and Broad Mortgage Company,
an Illinois corporation and a wholly owned Financial Subsidiary of
Borrower.
"Mortgage Warehousing Agreement" means that certain Mortgage
Loan Warehousing Agreement dated as of February 24, 1997 among Mortgage
Company, the banks party thereto and NationsBank of Texas, N.A., as
agent for the banks, and as the same may from time to time be amended,
modified, refinanced or replaced.
"Multiemployer Plan" means any employee benefit plan of a type
described in Section 4001(a)(3) of ERISA.
"Net Cash Issuance Proceeds" means, with respect to the
issuance of any debt security by Borrower or any of its Subsidiaries,
the Cash proceeds received by or for the account of Borrower or such
Subsidiary in consideration of such issuance net of (a) underwriting
discounts and commissions actually paid to any Person not an Affiliate
of Borrower and (b) professional fees and disbursements actually paid
in connection therewith.
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22
"Net Cash Sales Proceeds" means, with respect to any
Significant Asset Sale, the sum of (a) the Cash proceeds received by or
for the account of Borrower and its Subsidiaries from such Significant
Asset Sale plus (b) the amount of Cash received by or for the account
of Borrower and its Subsidiaries upon the sale, collection or other
liquidation in one transaction or a series of related transactions of
any proceeds that are not Cash from such Significant Asset Sale, in
each case net of (i) any amount required to be paid to any Person
owning an interest in the assets disposed of, (ii) any amount applied
to the repayment of Indebtedness secured by a Lien permitted under
Section 6.7 on the asset disposed of as part of the Significant Asset
Sale, (iii) any transfer, income or other taxes payable as a result of
such Significant Asset Sale, (iv) professional fees and expenses, fees
due to any Governmental Agency, broker's commissions and other
out-of-pocket costs of sale actually paid to any Person that is not an
Affiliate of Borrower attributable to such Significant Asset Sale and
(v) any reserves established in accordance with Generally Accepted
Accounting Principles in connection with such Significant Asset Sale;
provided, however, that the first $5,000,000 of Net Cash Sales Proceeds
(as defined above) received by Borrower and its Subsidiaries with
respect to a Significant Asset Sale shall not constitute Net Cash Sales
Proceeds for purposes of Section 3.1(e).
"Net Orders" means, as of any date of determination, the
number of items of housing inventory that are in the process of being
sold and with respect to which a purchase contract has been signed, as
reported in Borrower's filings with the Securities Exchange Commission.
"Net Realizable Value Adjustment" means the adjustment
required pursuant to Generally Accepted Accounting Principles
(including FAS 121 issued by the Financial Accounting Standards Board)
to reflect a decrease in the book value of assets below their
historical costs.
"Non-Recourse Indebtedness" means Indebtedness incurred in
connection with the purchase or improvement of Property (a) that is
secured solely by the Property purchased or improved, (b) with respect
to which the holder of such Indebtedness has recourse only to such
Property, and (c) that is otherwise non-recourse (whether by contract
or under applicable Law) to any Person.
"Note" means each promissory note made by Borrower to a Bank
evidencing the Advances under that Bank's Pro Rata Share of the
Commitment, substantially in the form of Exhibit C, either as
originally executed or as the same may from time to time be
supplemented, modified, amended, renewed, extended or supplanted.
"Obligations" means all present and future obligations of
every kind or nature of Borrower or any Party at any time and from time
to time owed to the Administrative Agent or the Banks or any one or
more of them under any one or more of the Loan Documents, whether due
or to become due, matured or unmatured, liquidated or unliquidated, or
contingent or noncontingent, including obligations of
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23
performance as well as obligations of payment, and including interest
that accrues to the extent permitted by applicable Law after the
commencement of any proceeding under any Debtor Relief Law by or
against Borrower.
"Officer's Certificate" means, when used with reference to any
Person, a certificate signed by a Senior Officer of such Person.
"Operating Loss" means, for any Fiscal Quarter, that the sum
of (a) Consolidated Net Income for that Fiscal Quarter plus (b) all
taxes on or measured by income payable by Borrower with respect to such
Consolidated Net Income plus (c) all non-Cash Net Realizable Value
Adjustments made during that Fiscal Quarter is less than zero; provided
that each amount described in clauses (a), (b) and (c) shall be
adjusted to eliminate any portion thereof, or effect thereon,
attributable to a Financial Subsidiary.
"Opinions of Counsel" means the favorable written legal
opinions of (a) Xxxxxx, Xxxxxx & Xxxxx, LLP, special counsel to
Borrower, and (b) Xxxxxx X. Xxxxxxx, General Counsel of Borrower
substantially in the form of Exhibits D-1 and D-2, respectively,
together with copies of all factual certificates and legal opinions
upon which such counsel has relied.
"Party" means any Person other than the Banks, the Managing
Agents or the Co-Agent which now or hereafter is a party to any of the
Loan Documents.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto established under ERISA.
"Pension Plan" means any "employee pension benefit plan" (as
such term is defined in ERISA) which is subject to Title IV of ERISA
and which is maintained for employees of Borrower or any of its ERISA
Affiliates.
"Permitted Encumbrances" means:
(a) inchoate Liens incident to construction or maintenance of
real property; or Liens incident to construction or maintenance of real
property now or hereafter filed of record for which adequate reserves
have been set aside and which are being contested in good faith by
appropriate proceedings and have not proceeded to judgment, provided
that, by reason of nonpayment of the obligations secured by such Liens,
no material property is subject to a material risk of loss or
forfeiture;
(b) Liens for taxes and assessments on real property which are
not yet past due; or Liens for taxes and assessments on real property
for which adequate reserves have been set aside and are being contested
in good faith by appropriate proceedings and have not proceeded to
judgment, provided that, by reason of nonpayment of the
- 18 -
24
obligations secured by such Liens, no material property is subject to a
material risk of loss or forfeiture;
(c) minor defects and irregularities in title to any real
property which in the aggregate do not materially impair the fair
market value or use of the real property for the purposes for which it
is or may reasonably be expected to be held;
(d) easements, exceptions, reservations, or other agreements
for the purpose of pipelines, conduits, cables, wire communication
lines, power lines and substations, streets, trails, walkways,
drainage, irrigation, water, utilities, and sewerage purposes, dikes,
canals, ditches, the removal of oil, gas, coal, or other minerals, and
other like purposes affecting real property, facilities, or equipment
which in the aggregate do not materially burden or impair the fair
market value or use of such property for the purposes for which it is
or may reasonably be expected to be held;
(e) easements, exceptions, reservations, or other agreements
for the purpose of facilitating the joint or common use of property in
a shopping center or similar real property project affecting real
property which in the aggregate do not materially burden or impair the
fair market value or use of such property for the purposes for which it
is or may reasonably be expected to be held;
(f) rights reserved to or vested in any Governmental Agency to
control or regulate the use of any real property;
(g) any obligations or duties affecting any real property to
any Governmental Agency with respect to any right, power, franchise,
grant, license, or permit;
(h) present or future zoning laws and ordinances or other laws
and ordinances restricting the occupancy, use, or enjoyment of real
property;
(i) statutory Liens, including warehouseman's liens, other
than those described in clauses (a) or (b) above, arising in the
ordinary course of business with respect to obligations which are not
delinquent or are being contested in good faith, provided that, if
delinquent, adequate reserves have been set aside with respect thereto
and, by reason of nonpayment, no material property is subject to a
material risk of loss or forfeiture;
(j) covenants, conditions, and restrictions affecting the use
of real property which in the aggregate do not materially impair the
fair market value or use of the real property for the purposes for
which it is or may reasonably be expected to be held;
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25
(k) rights of tenants under leases and rental agreements
covering real property entered into in the ordinary course of business
of the Person owning such real property;
(l) Liens consisting of pledges or deposits to secure
obligations under workers' compensation laws or similar legislation,
including Liens of judgments thereunder which are not currently
dischargeable;
(m) Liens consisting of pledges or deposits of property to
secure performance in connection with operating leases made in the
ordinary course of business to which the Borrower or a Subsidiary is a
party as lessee, provided the aggregate value of all such pledges and
deposits in connection with any such lease does not at any time exceed
25% of the annual fixed rentals payable under such lease;
(n) Liens consisting of deposits of property to secure
statutory obligations of the Borrower or a Subsidiary of Borrower in
the ordinary course of its business; and
(o) Liens consisting of deposits of property to secure (or in
lieu of) surety, appeal or customs bonds in proceedings to which
Borrower or a Subsidiary of Borrower is a party in the ordinary course
of its business.
"Permitted Right of Others" means a Right of Others consisting
of (a) an interest (other than a legal or equitable co-ownership
interest, an option or right to acquire a legal or equitable
co-ownership interest and any interest of a ground lessor under a
ground lease), that does not materially impair the value or use of
property for the purposes for which it is or may reasonably be expected
to be held, (b) an option or right to acquire a Lien that would be a
Permitted Encumbrance or (c) the reversionary interest of a landlord
under a lease of Property.
"Person" means an individual, trustee, corporation, general
partnership, limited partnership, joint stock company, trust, estate,
unincorporated organization, union, tribe, business association or
firm, joint venture, Governmental Agency, or other entity.
"Pricing Period" means (a) the period commencing on the
Closing Date and ending on April 30, 1999 and (b) the three calendar
month periods of (i) May 1 through July 31, (ii) August 1 through
October 31, (iii) November 1 through January 31 and (iv) February 1
through April 30. The Consolidated Leverage Ratio applicable to the
initial Pricing Period shall be the Consolidated Leverage Ratio as of
the Closing Date set forth in the Officer's Certificate delivered
pursuant to Section 8.1(a)(vii) and the Consolidated Leverage Ratio
applicable to any subsequent Pricing Period shall be the one that is
calculated as of the Fiscal Quarter end that falls approximately 60
days prior to the beginning of such Pricing Period.
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26
"Projections" means the financial projections of Borrower
delivered to the Banks and dated as of December 3, 1998.
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Pro Rata Share" of a Bank, as pertains to the Commitment,
means the applicable percentage set forth opposite the name of that
Bank on Schedule 1.1 to this Agreement.
"Reference Rate" means the per annum rate of interest publicly
announced from time to time by Bank of America at San Francisco,
California, as its Reference Rate. The Reference Rate is set by Bank of
America based on various factors, including Bank of America's costs and
desired return, general economic conditions and other factors, and is
used as a reference point for pricing loans. Bank of America may price
loans at, above or below the Reference Rate. Any change in the
Reference Rate shall take effect on the day specified in the public
announcement of such change.
"Regulation D" means Regulation D, as at any time amended, of
the Board of Governors of the Federal Reserve System or any other
regulation in substance substituted therefor.
"Regulatory Development" means (a) any change in the Laws, (b)
change in the application of any existing Laws or the interpretation
thereof by any Governmental Agency or central bank or comparable
authority (whether or not having the force of Law), or (c) compliance
by any Bank with any request or directive (whether or not having the
force of Law) of any Governmental Agency or central bank or comparable
authority.
"Request for Loan" means a request for Loan signed by a
Responsible Official of Borrower, in a form reasonably designated from
time to time by the Administrative Agent.
"Request for Redesignation of Loans" means a written request
for redesignation of Loans signed by a Responsible Official of
Borrower, in a form reasonably designated from time to time by the
Administrative Agent.
"Requirement of Law" means, as to any Person, the articles or
certificate of incorporation and by-laws or other organizational or
governing documents of such Person, any Law or any judgment, award,
decree, writ or determination of, or any consent or similar agreement
with, a Governmental Agency, in each case applicable to or binding upon
such Person or any of its Property or to which such Person or any of
its Property is subject.
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"Reserve Percentage" means, for each LIBOR Loan, the total of
the maximum reserve percentages for determining the reserves to be
maintained by member banks of the Federal Reserve System for
Eurocurrency Liabilities, as defined in Regulation D. The Reserve
Percentage shall be expressed in decimal form and rounded upward, if
necessary, to the nearest 1/100th of one percent, and shall include
marginal, emergency, supplemental, special and other reserve
percentages. The Reserve Percentage shall be determined solely by the
Administrative Agent, which determination shall be conclusive absent
manifest error.
"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 a Person shall be
conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of that Person.
"Revolving Loan Agreement" means the 1997 Revolving Loan
Agreement dated as of April 21, 1997 among Borrower, Bank of America,
as administrative agent, and the banks party thereto, and as the same
may from time to time be amended, modified, refinanced or replaced.
"Right of Others" means, with respect to any Property in which
a Person has an interest, (a) any legal or equitable claim or other
interest (other than a Lien) in or with respect to that Property held
by any other Person, and (b) any option or right held by any other
Person to acquire any such claim or other interest (including a Lien).
"Securities" means any capital stock, share, voting trust
certificate, bonds, debentures, notes or other evidences of
indebtedness, limited partnership interests, or any warrant, option or
other right to purchase or acquire any of the foregoing.
"Senior Officer" means the (a) chief executive officer, (b)
chief operating officer, (c) chief financial officer, (d) vice
president and controller, or (e) treasurer, in each case whatever the
title nomenclature may be, of the Person designated.
"Settlement Date" means the settlement date specified in the
forward contract for the sale and purchase of Common Stock which is a
component of the Trust Preferred Capital Security.
"Shareholders' Equity" means, as of any date of determination,
shareholders' equity as of that date determined in accordance with
Generally Accepted Accounting Principles; provided that there shall be
excluded from Shareholders' Equity any amount attributable to capital
stock that is, directly or indirectly, required to be
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redeemed or repurchased by the issuer thereof prior to the date which
is one year after the Maturity Date or upon the occurrence of specified
events or at the election of the holder thereof.
"Significant Asset Sale" means the sale or other disposition
of any asset or group of assets to a Person not an Affiliate of
Borrower, in one transaction or a series of related transactions, with
a book value or fair market value (whichever is greater) of
more than $25,000,000 other than sales or other dispositions of
mortgages, collateralized mortgage obligations or other interests in
mortgages, or pools thereof, by Mortgage Company or any of its
Subsidiaries that is a Financial Subsidiary. A Significant Asset Sale
may or may not constitute a Disposition.
"Significant Subsidiary" means, as of the Closing Date, those
Subsidiaries of Borrower identified as such in Schedule 4.4 and, as of
any other date of determination, any Subsidiary of Borrower (other than
a Joint Venture) with respect to which any of the following conditions
is met:
(a) the aggregate book value of all Investments of Borrower
and its Subsidiaries in such Subsidiary exceeds 5% of the consolidated
total assets (other than assets of Financial Subsidiaries) of Borrower
and its Subsidiaries as of such date; or
(b) the proportionate share of Borrower and its Subsidiaries
in the total assets of such Subsidiary (after intercompany
eliminations) exceeds 5% of the consolidated total assets (other than
assets of Financial Subsidiaries) of Borrower and its Subsidiaries as
of such date; or
(c) the equity of Borrower and its Subsidiaries in the net
income of such Subsidiary (before income taxes, extraordinary items and
cumulative effect of a change in accounting principles) as of the end
of the most recently ended fiscal year or years of such Subsidiary
exceeds the greater of (i) an amount equal to 5% of the consolidated
net income of Borrower and its Subsidiaries (computed as aforesaid) as
of the end of the most recent Fiscal Year ended prior to such date or
(ii) $3,000,000.
"Subordinated Obligations" means, collectively, all
obligations of Borrower or any of its Subsidiaries that (a) do not
provide for any payment of principal, any sinking fund payment or any
scheduled redemption prior to the Maturity Date, (b) are expressly
subordinated to the Obligations by a written instrument containing
subordination and related provisions (including interest payment
blockage, standstill and related provisions) not materially less
favorable to the Banks in any respect whatsoever from those applicable
to Borrower's 9-5/8% Senior Subordinated Notes due 2006 (the
"Subordinated Notes") (or such other subordination and related
provisions as may be approved in writing by the Majority Banks), (c)
are subject to financial covenants not materially more burdensome to
Borrower in any respect than those applicable to the Subordinated
Notes, except such covenants as may be approved in writing by the
Majority Banks and (d) are subject to other covenants
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(other than the covenant to pay interest) and events of default which
in the aggregate are not materially more burdensome to Borrower than
those applicable to the Subordinated Notes, except such covenants or
events of default as may be approved in writing by the Majority Banks.
"Subsidiary" means, with respect to any Person, any
corporation, limited liability company, partnership or joint venture
whether now existing or hereafter organized or acquired: (a) in the
case of a corporation or limited liability company, of which securities
having a majority of the ordinary voting power for the election of the
board of directors (other than securities having such power only by
reason of the happening of a contingency) are at the time owned by such
Person and/or one or more Subsidiaries of such Person or (b) in the
case of a partnership, joint venture or other business entity, in which
such Person or a Subsidiary of such Person is a general partner.
"Subsidiary Guaranty" means the guaranty of the Indebtedness
of Borrower under this Agreement executed by each Guarantor Subsidiary
of Borrower substantially in the form of Exhibit E, either as
originally executed or as the same may from time to time be
supplemented, modified, amended, renewed, extended or supplanted.
"Suspended Significant Subsidiaries" means all Significant
Subsidiaries of Borrower acquired by Borrower pursuant to the Xxxxx
Homes Acquisition except KB Holdings One, Inc.
"Syndication Agent" means Credit Lyonnais Los Angeles Branch,
so long as such bank is a Bank hereunder. The Syndication Agent shall
have no duties under the Loan Documents beyond those of a Bank.
"Termination Event" means (a) a "reportable event" as defined
in Section 4043 of ERISA (other than a "reportable event" that is not
subject to the provision for 30 day notice to the PBGC), (b) the
withdrawal of Borrower or any of its ERISA Affiliates from a Pension
Plan during any plan year in which it was a "substantial employer" as
defined in Section 4001(a)(2) of ERISA, (c) the filing of a notice of
intent to terminate a Pension Plan or the treatment of an amendment to
a Pension Plan as a termination thereof pursuant to Section 4041 of
ERISA, other than pursuant to Section 4041(b) of ERISA, (d) the
institution of proceedings to terminate a Pension Plan by the PBGC or
(e) any other event or condition which might reasonably be expected to
constitute grounds under ERISA for the termination of, or the
apportionment of a trustee to administer, any Pension Plan.
"to the best knowledge of" means, when modifying a
representation, warranty or other statement of any Person, that such
representation, warranty or statement is a representation, warranty or
statement that (a) the Person making it has no actual knowledge of the
inaccuracy of the matters therein stated and (b) assuming the
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exercise by the Person making it of reasonable due diligence under the
circumstances (in accordance with the standard of what a reasonable
Person would have done under similar circumstances), the Person making
it would have no actual knowledge of the inaccuracy of the matters
therein stated. Where the Person making the representation, warranty or
statement is not a natural Person, the aforesaid actual or constructive
knowledge shall be that of any Senior Officer of that Person.
"Trust Issuer" means a business trust formed by Borrower as a
special purpose grantor trust for the purpose of facilitating the
issuance of Trust Preferred Capital Securities, and which engages in no
activities other than those incident to the Trust Preferred Capital
Securities.
"Trust Preferred Capital Security" means the securities issued
by Borrower and the Trust Issuer covered by Borrower's Prospectus dated
June 30, 1998 filed with the Securities and Exchange Commission.
1.2 Use of Defined Terms. Any defined term used in the plural
preceded by the definite article shall be taken to encompass all members of the
relevant class. Any defined term used in the singular preceded by "any" shall be
taken to indicate any number 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 sub mitted by this Agreement shall be prepared in
conformity with, Generally Accepted Accounting Principles, consistently applied,
except as otherwise specifically prescribed herein. In the event that Generally
Accepted Accounting Principles change during the term of this Agreement such
that the financial covenants contained in Sections 6.9, 6.10 or 6.11 would then
be calculated in a different manner or with different components or would render
the same not meaningful criteria for evaluating Borrower's financial condition,
(a) Borrower and the Banks agree to amend this Agreement in such respects as are
necessary to conform those covenants as criteria for evaluating Borrower's
financial condition to substantially the same criteria as were effective prior
to such change in Generally Accepted Accounting Principles and (b) Borrower
shall be deemed to be in compliance with the financial covenants contained in
such Sections during the 90 day period following such change in Generally
Accepted Accounting Principles if and to the extent that Borrower would have
been in compliance therewith under Generally Accepted Accounting Principles as
in effect immediately prior to such change. In the event that the Borrower
changes its Fiscal Year during the term of this Agreement, Borrower and the
Banks agree to amend this Agreement and the other Loan Documents in such
respects as are necessary to conform the definitions, the financial covenants,
the reporting requirements and the other provisions thereof to fairly reflect
such change in the Borrower's Fiscal Year.
1.4 Rounding. Any financial ratios required to be maintained
by Borrower pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which
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such ratio is expressed in this Agreement and rounding the result up or down to
the nearest number (with a round-up if there is no nearest number) to the number
of places by which such ratio is expressed in this Agreement.
1.5 Miscellaneous Terms. The term "or" is disjunctive; the
term "and" is conjunctive. The term "shall" is mandatory; the term "may" is
permissive. Masculine terms also apply to females; feminine terms also apply to
males. The term "including" is by way of example and not limitation.
1.6 Exhibits and Schedules. All Exhibits and Schedules to this
Agreement, either as originally existing or as the same may from time to time be
supplemented, modified, or amended, are incorporated herein by reference. A
matter disclosed on any Schedule shall be deemed disclosed on all Schedules.
1.7 References to "Borrower and its Subsidiaries". Any
reference herein to "Borrower and its Subsidiaries" or the like shall refer
solely to Borrower during such times, if any, as Borrower shall have no
Subsidiaries.
Article 2
LOANS
2.1 Loans-General.
(a) Subject to the terms and conditions set forth in this
Agreement, on the Closing Date, each Bank shall, pro rata according to
that Bank's Pro Rata Share of the Commitment, make an Advance to
Borrower under the Commitment in such amount as Borrower may request;
provided that after giving effect to such Advance, the aggregate
outstanding principal evidenced by the Notes shall not exceed the
Commitment. Borrower may not borrow under this Section 2.1(a)
subsequent to the Closing Date, or repay and reborrow under this
Section 2.1(a).
(b) Subject to the next sentence, the Loan shall be made
pursuant to a Request for Loan which shall be in a form and shall
contain information specified from time to time by the Administrative
Agent and which shall specify the requested (i) date of such Loan, (ii)
type of Loan, (iii) amount of such Loan and (iv) in the case of a LIBOR
Loan, Interest Period for such Loan. Unless the Administrative Agent,
in its sole and absolute discretion, has notified Borrower to the
contrary, the Loan may be requested by telephone (promptly confirmed in
writing) or telecopier by a Responsible Official of Borrower, and
Borrower shall confirm such request by promptly mailing a Request for
Loan conforming to the preceding sentence to the Administrative Agent.
(c) Promptly following receipt of a Request for Loan, the
Administrative Agent shall notify each Bank by telephone, telecopier or
telex of the date and type of the Loan, the applicable Interest Period
in the case of an LIBOR Loan and that Bank's
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Pro Rata Share of the Loan. Not later than 11:00 a.m., California time,
on the date specified for any Loan, each Bank shall make its Pro Rata
Share of the Loan in immediately available funds available to the
Administrative Agent at the Administrative Agent's Office. Upon
fulfillment of the applicable conditions set forth in Article 8, all
Advances shall be credited in immediately available funds to the
Designated Deposit Account.
(d) The principal amount of each Loan shall be an integral
multiple of $1,000,000 and shall be in an amount not less than (i)
$1,000,000 if such Loan is an Alternate Base Rate Loan and (ii)
$5,000,000 if such Loan is a LIBOR Loan.
(e) A Request for Loan shall be irrevocable upon the
Administrative Agent's first notification thereof. The obligation of
each Bank to make any Advance is several, and not joint or joint and
several, and is not conditioned upon the performance by any other Bank
of its obligation to make Advances. The failure by any Bank to perform
its obligation to make any Advance will not increase the obligation of
any other Bank to make Advances.
(f) Borrower may redesignate an Alternate Base Rate Loan as a
LIBOR Loan, or a LIBOR Loan as an Alternate Base Rate Loan or a LIBOR
Loan with a new Interest Period, by delivering a Request for
Redesignation to the Administrative Agent, within the time periods and
pursuant to the conditions set forth in Section 2.1(c), 2.2 or 2.3, as
applicable, and elsewhere in this Agreement. If no Request for
Redesignation (or telephonic or other request referred to in the second
sentence of Section 2.1(c), if applicable) has been made prior to the
last day of the Interest Period for an outstanding LIBOR Loan within
the requisite notice periods set forth in Section 2.3, then Borrower
shall be deemed to have requested that such LIBOR Loan be redesignated
as an Alternate Base Rate Loan.
(g) The Advance made by each Bank on the Closing Date under
this Section 2.1 shall be evidenced by that Bank's Note.
2.2 Alternate Base Rate Loans. Each request by Borrower for an
Alternate Base Rate Loan shall be made pursuant to a Request for Loan (or
telephonic or other request for loan referred to in the second sentence of
Section 2.1(b), if applicable) received by the Administrative Agent, at the
Administrative Agent's Office, not later than 9:00 a.m., California time, on the
Banking Day on which the requested Alternate Base Rate Loan is to be made. The
Administrative Agent shall notify each Bank of a request for an Alternate Base
Rate Loan as soon as practicable after receipt of the same. All Loans shall
constitute Alternate Base Rate Loans unless properly designated as LIBOR Loans
pursuant to Section 2.3.
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2.3 LIBOR Loans.
(a) Each request by Borrower for a LIBOR Loan shall be made
pursuant to a Request for Loan (or telephonic or other request for loan
referred to in the second sentence of Section 2.1(b), if applicable)
received by the Administrative Agent, at the Administrative Agent's
Office, not later than 9:00 a.m., California time, at least three (3)
LIBOR Market Days before the first day of the applicable Interest
Period. The Administrative Agent shall notify each Bank of a request
for a LIBOR Loan as soon as practicable after receipt of the same.
(b) At or about 10:00 a.m., California time, two (2) LIBOR
Market Days before the first day of the applicable Interest Period, the
Administrative Agent shall determine the applicable LIBOR (which
determination shall be conclusive in the absence of manifest error) and
promptly shall give notice of the same to Borrower and the Banks by
telephone, telecopier or telex.
(c) No more than ten (10) LIBOR Loans may be outstanding at
any particular time.
(d) Unless the Majority Banks otherwise consent, no LIBOR Loan
may be requested during the continuance of an Event of Default.
2.4 Automatic Reduction of Commitment. In the event that
Borrower does not submit a Request for Loan on the Closing Date for the full
amount of the Commitment, the Commitment shall automatically reduce on the
Closing Date to an amount equal to the amount so set forth in such Request for
Loan.
2.5 Administrative Agent's Right to Assume Funds Available.
Unless the Administrative Agent shall have been notified by any Bank at least
two hours prior to the funding by the Administrative Agent of the Loan that such
Bank does not intend to make available to the Administrative Agent such Bank's
Pro Rata Share of such Loan, the Administrative Agent may, in its discretion
(but shall not be so obligated), assume that such Bank has made such amount
available to the Administrative Agent on the date of the Loan and the
Administrative Agent may, in reliance upon such assumption, make available to
Borrower a corresponding amount. If such corresponding amount is not in fact
made available to the Administrative Agent by such Bank, the Administrative
Agent shall be entitled to recover such corresponding amount on demand from such
Bank, which demand shall be made in a reasonably prompt manner. If such Bank
does not pay such corresponding amount forthwith upon the Administrative Agent's
demand therefor, the Administrative Agent promptly shall notify Borrower and
Borrower shall pay such corresponding amount to the Administrative Agent. The
Administrative Agent shall also be entitled to recover from such Bank interest
on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Administrative Agent to Borrower
to the date such corresponding amount is recovered by the Administrative Agent,
at a rate per annum equal to the Federal Funds Rate as notified by the
Administrative Agent to such Bank
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or the Borrower, as the case may be. Nothing herein shall be deemed to relieve
any Bank from its obligation to fulfill its Pro Rata Share of the Commitment
hereunder or to prejudice any rights which the Administrative Agent or Borrower
may have against any Bank as a result of any default by such Bank hereunder.
Article 3
PAYMENTS; FEES
3.1 Principal and Interest
(a) Interest shall be payable on the outstanding daily unpaid
principal amount of each Loan from the date thereof until payment in
full and shall accrue and be payable at the rates set forth herein, to
the extent permitted by applicable Laws, before and after default,
before and after maturity, before and after any judgment, and before
and after the commencement of any proceeding under any Debtor Relief
Law, with interest on overdue interest to bear interest at the Default
Rate.
(b) Interest accrued on each Alternate Base Rate Loan shall be
due and payable on the last day of each calendar month. Except as
otherwise provided in Section 3.6, the unpaid principal amount of any
Alternate Base Rate Loan shall bear interest at a fluctuating rate per
annum equal to the sum of the Alternate Base Rate plus the Applicable
Alternate Base Rate Spread. Each change in the interest rate hereunder
shall take effect simultaneously with the corresponding change in the
Alternate Base Rate. Each change in the Alternate Base Rate shall be
effective as of the Banking Day on which the change in the Alternate
Base Rate is announced, unless otherwise specified in such
announcement, in which case the change shall be effective as so
specified.
(c) Interest accrued on each LIBOR Loan which has an Interest
Period of one month shall be due and payable on the last day of the
related Interest Period. Interest accrued on each other LIBOR Loan
shall be due and payable on the date which is one calendar month after
the date such LIBOR Loan was made, every month thereafter and on last
day of the related Interest Period. Except as otherwise provided in
Section 3.6, the unpaid principal amount of any LIBOR Loan shall bear
interest at a rate per annum equal to the sum of LIBOR for that LIBOR
Loan plus the Applicable LIBOR Spread.
(d) If not sooner paid, the principal Indebtedness evidenced
by the Notes shall be payable as follows:
(i) each Amortization Amount shall be payable in Cash
on the related Amortization Date; and
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35
(ii) the principal Indebtedness evidenced by the
Notes shall in any event be immediately payable in Cash on the
Maturity Date.
(e) The principal Indebtedness evidenced by the Notes shall be
prepaid (i) within five (5) Banking Days following the receipt by
Borrower or any of its Subsidiaries of Net Cash Sales Proceeds from any
Significant Asset Sale by an amount equal to the amount of such Net
Cash Sales Proceeds and (ii) within five (5) Banking Days following the
receipt by Borrower or any of its Subsidiaries of Net Cash Issuance
Proceeds from the issuance of debt securities of Borrower or any of its
Subsidiaries (except an issuance of debt securities to Borrower or to
any of its Subsidiaries), by an amount equal to such Net Cash Issuance
Proceeds. Any prepayment under this Section 3.1(e) shall be applied to
the next installment or installments of principal then due under the
Notes.
(f) The Notes may, at any time and from time to time,
voluntarily be prepaid at the election of Borrower in whole or in part
without premium or penalty; provided that: (i) any partial prepayment
shall be in integral multiples of $1,000,000, (ii) any partial
prepayment shall be in an amount not less than $1,000,000 on an
Alternate Base Rate Loan, and not less than $5,000,000 on a LIBOR Loan,
(iii) the Administrative Agent must have received written notice (or
telecopied notice confirmed promptly in writing) of any prepayment at
least three Banking Days before the date of prepayment in the case of a
LIBOR Loan and by 10:00 a.m., California time, on the date of
prepayment in the case of an Alternate Base Rate Loan, (iv) each
prepayment of principal, except for partial prepayments on Alternate
Base Rate Loans, shall be accompanied by prepayment of interest accrued
to the date of payment on the amount of principal paid, (v) in the case
of any prepayment of any LIBOR Loan, Borrower shall promptly upon
demand reimburse each Bank for any loss or cost directly or indirectly
resulting from the prepayment, determined as set forth in Section 3.5,
and (vi) in the case of a prepayment prior to January 31, 2000, the
prepayment shall be accomplished by a certificate of a Senior Officer
stating that such prepayment has not been funded, in whole or in part,
directly or indirectly, by a borrowing under the Revolving Loan
Agreement. Any prepayment under this Section 3.1(f) shall be applied to
the next installment or installments of principal then due under the
Notes.
(g) Change in Control.
(i) If a Change in Control (as defined below) shall
have occurred, at the option of the Majority Banks, Borrower
shall repay in Cash the entire principal Indebtedness
evidenced by the Notes, together with interest thereon and all
other amounts due in connection with the Notes and this
Agreement (the "Change in Control Repayment"), on the date
that is 27 Banking Days after the occurrence of the Change of
Control (the "Change of Control Payment Date"), subject to
receipt by Borrower of a Change in Control Payment Notice as
set forth in Section 3.1(g)(iii).
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A "Change in Control" shall be deemed to have
occurred at such time as any of the following events shall
occur:
(A) There shall be consummated any consolidation
or merger of Borrower in which Borrower is
not the continuing or surviving corporation
or pursuant to which the Voting Stock (as
defined below) would be converted into Cash,
securities or other property, other than a
merger of Borrower in which the holders of
Voting Stock immediately prior to the merger
have the same or greater proportionate
ownership, directly or indirectly, of the
Voting Stock of the surviving corporation
immediately after such merger as they had of
the Voting Stock immediately prior to such
merger; or
(B) There is a report filed by any person,
including its Affiliates and Associates, on
Schedule 13D or 14D-1 (or any successor
schedule, form or report) pursuant to the
Securities Exchange Act of 1934 (the
"Exchange Act"), disclosing that such person
(for the purposes of this Section 3.1(g)
only, the term "person" is used as defined
in Section 13(d)(3) or Section 14(d)(2) of
the Exchange Act or any successor provision
to either of the foregoing) has become the
beneficial owner (as the term "beneficial
owner" is defined under Rule 13d-3 or any
successor rule or regulation promulgated
under the Exchange Act) of 50% or more of
the voting power of Borrower's Voting Stock
then outstanding; provided, however, that a
person shall not be deemed beneficial owner
of, or to own beneficially (1) any
Securities tendered pursuant to a tender or
exchange offer made by or on behalf of such
person or any of such person's Affiliates or
Associates (as defined below) until such
tendered Securities are accepted for
purchase or exchange thereunder, or (2) any
Securities if such beneficial ownership (a)
arises solely as a result of a revocable
proxy delivered in response to a proxy or
consent solicitation made pursuant to, and
in accordance with, the applicable rules and
regulations under the Exchange Act, and (b)
is not also then reportable on Schedule 13D
(or any successor schedule) under the
Exchange Act; or
(C) A "Change in Control" (or analogous term) as
defined in an indenture or agreement
governing any Subordinated Obligation
occurs.
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Notwithstanding the foregoing provisions of this
Section 3.1(g), a Change in Control shall not be deemed to
have occurred if at any time Borrower, any Subsidiary of
Borrower, any employee stock ownership plan or any other
employee benefit plan, including any Pension Plan of Borrower
or any Subsidiary of Borrower, or any person holding Voting
Stock for or pursuant to the terms of such employee benefit
plan, files or becomes obligated to file a report under or in
response to Schedule 13D or Schedule 14D-1 (or any successor
schedule, form or report) under the Exchange Act disclosing
beneficial ownership by it of shares of Voting Stock, whether
in excess of 50% or otherwise.
"Voting Stock" means, with respect to any Person, the
capital stock of such Person having general voting power under
ordinary circumstances to elect at least a majority of the
board of directors, managers or trustees of such Person
(irrespective of whether or not at the time capital stock of
any other class or classes shall have or might have voting
power by reason of the happening of any contingency).
"Associate" shall have the meaning ascribed to such
term in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act, as in effect on the date hereof.
(ii) Within 15 Banking Days after the occurrence of a
Change in Control, Borrower shall provide written notice of
the Change in Control to the Administrative Agent and each
Bank. The notice shall state:
(A) the events causing a Change in Control and
the date of such Change in Control;
(B) the date by which the Change in Control
Payment Notice (as defined in Section
3.1(g)(iii)) must be given; and
(C) the Change in Control Payment Date.
(iii) At the direction of the Majority Banks, the
Administrative Agent shall, on behalf of the Banks, exercise
the rights specified in Section 3.1(g)(i) by delivery of a
written notice (a "Change in Control Payment Notice") to
Borrower at any time prior to or on the Change in Control
Payment Date, stating that the Notes shall be prepaid on the
Change in Control Payment Date. On the Change in Control
Payment Date, Borrower shall make the Change in Control
Repayment to the Administrative Agent for the benefit of the
Banks.
3.2 Upfront Fee. In addition to fees specified in the agency
letter referred in Section 3.3, on the Closing Date, Borrower shall pay to the
Administrative Agent, for the
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38
account of each Bank, the upfront fee payable to that Bank pursuant to a fee
letter agreement dated as of December 7, 1998 between Borrower and that Bank.
3.3 Agency Fees. Borrower shall pay to the Administrative
Agent, for the account solely of the Administrative Agent, such agency fees as
are set forth in a fee letter agreement dated as of December 7, 1998 between
Borrower and the Administrative Agent.
3.4 Capital Adequacy.
(a) If any Bank (an "Affected Bank") determines that
compliance with any Law or regulation or with any guideline or request
from any central bank or other Governmental Agency (whether or not
having the force of Law) enacted or issued after the Closing Date
relating to the capital adequacy of banks or corporations in control of
banks has or would have the effect of reducing the rate of return on
the capital of such Affected Bank or any corporation controlling such
Affected Bank as a consequence of, or with reference to, such Affected
Bank's Pro Rata Share of the Commitment below the rate which the Bank
or such other corporation could have achieved but for such compliance
(taking into account the policies of such Bank or corporation with
regard to capital adequacy), then Borrower shall from time to time,
upon demand by such Affected Bank in accordance with this Section 3.4
(with a copy of such demand to the Administrative Agent), within 15
days after demand pay to such Affected Bank additional amounts
sufficient to compensate such Affected Bank or other corporation for
such reduction.
(b) An Affected Bank may not seek compensation under Section
3.4(a) unless the demand for such compensation is delivered to Borrower
within six months following the date of enactment or issuance of the
Law, regulation, guideline or request giving rise to such demand for
compensation.
(c) A certificate as to any amounts for which an Affected Bank
is seeking compensation under Section 3.4(a), submitted to Borrower and
the Administrative Agent by such Affected Bank, shall be conclusive and
binding for all purposes, absent manifest error. Each Affected Bank
shall calculate such amounts in a manner which is consistent with the
manner in which it makes calculations for comparable claims with
respect to similarly situated borrowers from such Affected Bank, will
not allocate to Borrower a proportionately greater amount of such
compensation than it allocates to each of its other Commitment to lend
or other loans with respect to which it is entitled to demand
comparable compensation, and will not include amounts already factored
into the rates of interest or fees already provided for herein. Each
Bank agrees promptly to notify Borrower and the Administrative Agent of
any circumstances that would cause Borrower to pay additional amounts
pursuant to this Section, provided that the failure to give such notice
shall not affect Borrower's obligation to pay such additional amounts
hereunder.
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(d) Without limiting its obligation to reimburse an Affected
Bank for compensation theretofore claimed by an Affected Bank pursuant
to Section 3.4(a), Borrower may, within 60 days following any demand by
an Affected Bank, request that one or more Persons that are Eligible
Assignees and that are acceptable to Borrower and approved by the
Administrative Agent (which approval shall not be unreasonably
withheld) purchase all (but not part) of the Affected Bank's then
outstanding Advances, its Notes, and assume its Pro Rata Share of its
obligations hereunder. If one or more such Banks or banks so agree in
writing (each, an "Assuming Bank" and collectively, the "Assuming
Banks"), the Affected Bank shall assign its Pro Rata Share of the
Commitment, together with the Indebtedness then evidenced by its Note,
to the Assuming Bank or Assuming Banks in accordance with Section 11.8.
On the date of any such assignment, the Affected Bank which is being so
replaced shall cease to be a "Bank" for all purposes of this Agreement
and shall receive (x) from the Assuming Bank or Assuming Banks the
principal amount of its Advances then outstanding and (y) from Borrower
all interest and fees accrued and then unpaid with respect to such
Advances, together with any other amounts then payable to such Bank by
Borrower.
3.5 LIBOR Fees and Costs.
(a) If the occurrence of any Regulatory Development after the
Closing Date:
(i) shall subject any Bank or its LIBOR Lending
Office to any tax, duty or other charge or cost with respect
to any LIBOR Advance or its obligation to make LIBOR Advances,
or shall change the basis of taxation of payments to any Bank
of the principal of or interest on any LIBOR Advance or any
other amounts due under this Agreement in respect of any LIBOR
Advance or its obligation to make LIBOR Advances (except for
changes in any tax on the overall net income, gross income or
gross receipts of such Bank or its LIBOR Lending Office);
(ii) shall impose, modify or deem applicable any
reserve (including, without limitation, any reserve imposed by
the Board of Governors of the Federal Reserve System), special
deposit or similar requirements (excluding any such
requirement included in any applicable Reserve Percentage)
against assets of, deposits with or for the account of, or
credit extended by, any Bank or its LIBOR Lending Office; or
(iii) shall impose on any Bank or its LIBOR Lending
Office or the LIBOR Market any other condition affecting any
LIBOR Advance or its obligation to make LIBOR Advances, or
shall otherwise affect any of the same;
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40
and the result of any of the foregoing, as determined by such Bank,
increases the cost to such Bank or its LIBOR Lending Office of making
or maintaining any LIBOR Advance or in respect of any LIBOR Advance or
its obligation to make LIBOR Advances or reduces the amount of any sum
received or receivable by such Bank or its LIBOR Lending Office with
respect to any LIBOR Advance or its obligation to make LIBOR Advances
(assuming such Bank's LIBOR Lending Office had funded 100% of its LIBOR
Advance in the LIBOR Market), then, within 15 days after demand by such
Bank (with a copy to the Administrative Agent), Borrower shall pay to
such Bank such additional amount or amounts as will compensate such
Bank for such increased cost or reduction (determined as though such
Bank's LIBOR Lending Office had funded 100% of its LIBOR Advance in the
LIBOR Market); provided that Borrower shall not be liable to any Bank
for any such increased cost or reduction pursuant to this Section in
respect of any period which is more than six months prior to such
Bank's demand for such compensation. A statement of any Bank claiming
compensation under this sub section and setting forth the additional
amount or amounts to be paid to it hereunder shall be conclusive in the
absence of manifest error. Each Bank agrees to endeavor promptly to
notify Borrower of any event of which it has actual knowledge which
will entitle such Bank to compensation pursuant to this Section, and
agrees to designate a different LIBOR Lending Office if such
designation will avoid the need for or reduce the amount of such
compensation and will not, in the judgment of such Bank, otherwise be
disadvantageous to such Bank. If any Bank claims compensation under
this Section, Borrower may at any time, upon at least four (4) LIBOR
Market Days' prior notice to the Administrative Agent and such Bank and
upon payment in full of the amounts provided for in this Section
through the date of such payment plus any prepay ment fee required by
Section 3.5(d), pay in full the affected LIBOR Advances of such Bank or
request that such LIBOR Advances be converted to Alternate Base Rate
Advances.
(b) If after the Closing Date the occurrence of any Regulatory
Development shall, in the opinion of any Bank, make it unlawful or
impossible for such Bank or its LIBOR Lending Office to make, maintain
or fund its portion of any LIBOR Loan, or to take deposits of, dollars
in the LIBOR Market, or to determine or charge interest rates based
upon the LIBOR, and such Bank shall so notify the Administrative Agent,
then such Bank's obligation to make LIBOR Advances shall be suspended
for the duration of such illegality or impossibility and the
Administrative Agent forthwith shall give notice thereof to the other
Banks and Borrower. Before giving any notice to the Administrative
Agent pursuant to this Section, such Bank shall designate a different
Lending Office if such designation will avoid the need for giving such
notice and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. Upon receipt of such notice, the
outstanding principal amount of such Bank's LIBOR Advances, together
with accrued interest thereon, automatically shall be converted to
Alternate Base Rate Advances with Interest Periods corresponding to the
LIBOR Loans of which such LIBOR Advances were a part on either (1) the
last day of the Interest Period(s) applicable to such LIBOR Advances if
such Bank may lawfully continue to maintain and fund such LIBOR
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Advances to such day(s) or (2) immediately if such Bank may not
lawfully continue to fund and maintain such LIBOR Advances to such
day(s), provided that in such event the conversion shall not be subject
to payment of a prepayment fee under Section 3.5(d). In the event that
any Bank is unable, for the reasons set forth above, to make, maintain
or fund its portion of any LIBOR Loan, such Bank shall fund such amount
as an Alternate Base Rate Advance for the same period of time, and such
amount shall be treated in all respects as an Alternate Base Rate
Advance.
(c) If, with respect to any proposed LIBOR Loan:
(i) the Administrative Agent reasonably determines
that, by reason of circumstances affecting the LIBOR Market
generally that are beyond the reasonable control of the Banks,
deposits in dollars (in the applicable amounts) are not being
offered to each of the Banks in the LIBOR Market for the
applicable Interest Period; or
(ii) the Majority Banks advise the Administrative
Agent that the LIBOR as determined by the Administrative Agent
will not adequately and fairly reflect the cost to such Banks
of making the applicable LIBOR Advances;
then the Administrative Agent forthwith shall give notice thereof to
Borrower and the Banks, whereupon until the Administrative Agent
notifies Borrower that the circumstances giving rise to such
suspension no longer exist, the obligation of the Banks to make any
future LIBOR Advances shall be suspended. If at the time of such notice
there is then pending a Request for Loan that specifies a LIBOR Loan,
such Request for Loan shall be deemed to specify an Alternate Base Rate
Loan.
(d) Upon payment or prepayment of any LIBOR Advance (other
than as the result of a conversion required under Section 3.5(b)) on a
day other than the last day in the applicable Interest Period (whether
voluntarily, involuntarily, by reason of acceler ation, or otherwise),
or upon the failure of Borrower to borrow on the date or in the amount
specified for a LIBOR Loan in any Request for Loan, Borrower shall pay
to each Bank an amount equal to the sum of
(i) $250; plus
(ii) the amount, if any, by which (x) the additional
interest that would have accrued (without any Applicable LIBOR
Spread) on the principal amount prepaid on account of the
LIBOR Advance had it remained outstanding until the last day
of the applicable Interest Period, exceeds (y) the interest
that Bank could recover by placing funds in the amount of the
prepayment on deposit in the LIBOR Market selected by that
Bank for a period beginning on the date of the prepayment and
ending on the last day of the
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42
applicable Interest Period, or for a comparable period for
which an appropriate rate quote may be obtained; plus
(iii) an amount equal to all costs and expenses which
that Bank incurred or reasonably expects to incur in
liquidating and reinvesting the prepayment.
Each Bank's determination of the amount of any prepayment fee or
failure to borrow fee payable under this Section 3.5(d) shall be
conclusive in the absence of manifest error.
(e) Any statement or certificate given by a Bank under this
Section 3.5 shall satisfy the requirements set forth in Section 3.5(c)
with respect to requests for reimbursement under Section 3.5(a)
(f) Should any Bank demand payment under the provisions of
Section 3.5(a) or should any Bank's LIBOR Advances be suspended under
the provisions of Section 3.5(b), then without limiting its obligation
to reimburse any Bank for compensation claimed by such Bank pursuant to
this Section 3.5, Borrower may, within 60 days following such
occurrence, treat that Bank as an "Affected Bank" under Section 3.4(d),
and exercise the remedies set forth in such Section 3.4(d).
3.6 Late Payments/Default Interest. If any installment of
principal or interest under the Notes or any other amount payable to the Banks
under any Loan Document is not paid when due, it shall thereafter bear interest
at a fluctuating interest rate per annum at all times equal to the sum of the
Alternate Base Rate plus the Applicable Alternate Base Rate Spread plus 2%, to
the extent permitted by applicable Law, until paid in full (whether before or
after judgment). Upon and during the continuance of any Event of Default, the
Indebtedness evidenced by the Notes shall, at the election of the Majority Banks
and upon notice to Borrower (and in lieu of interest provided for in the
preceding sentence), bear interest at a fluctuating interest rate per annum at
all times equal to the sum of the Alternate Base Rate plus the Applicable
Alternate Base Rate Spread plus 2%, to the extent permitted by applicable Law,
until no Event of Default exists (whether before or after judgment).
Notwithstanding the preceding sentence, after the occurrence of any Event of
Default under Sections 6.7, 6.10 or 6.16, the Indebtedness evidenced by the
Notes may not bear interest at the increased rate provided for in the preceding
sentence until such Event of Default has continued for at least 15 days, in the
case of Section 6.7, or 30 days, in the case of Sections 6.10 or 6.16.
3.7 Computation of Interest and Fees. All computations of
interest and fees hereunder shall be calculated on the basis of a year of 360
days and paid for the actual number of days elapsed (including the first day and
excluding the last day), which results in greater interest than if a year of 365
days were used. Any Loan that is repaid on the same day on which it is made
shall bear interest for one day.
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43
3.8 Holidays. If any principal payment to be made by Borrower
on an Alternate Base Rate Loan shall come due on a day other than a Banking Day,
payment shall be made on the next succeeding Banking Day and the extension of
time shall be reflected in computing interest. If any principal payment to be
made by Borrower on a LIBOR Loan shall come due on a day other than a LIBOR
Market Day, payment shall be made on the next preceding or succeeding LIBOR
Market Day as determined by the Administrative Agent in accordance with the then
current banking practice in the LIBOR Market and the adjustment shall be
reflected in computing interest.
3.9 Payment Free of Taxes.
(a) Any payments made by any Party under the Loan Documents
shall be made free and clear of, and without reduction by reason of,
any tax, assessment or other charge imposed by any Governmental Agency,
central bank or comparable authority (other than taxes on income or
gross receipts generally applicable to banks). To the extent that
Borrower is obligated by applicable Laws to make any deduction or
withholding on account of taxes, assessments or other charges imposed
by any Governmental Agency from any amount payable to any Bank under
this Agreement, Borrower shall (a) make such deduction or withholding
and pay the same to the relevant Governmental Agency and (b) pay such
additional amount to that Bank as is necessary to result in that Bank's
receiving a net after-tax (or after-assessment or after-charge) amount
equal to the amount to which that Bank would have been entitled under
this Agreement absent such deduction or withholding. If and when
receipt of such payment results in an excess payment or credit to that
Bank on account of such taxes, assessments or other charges, that Bank
shall refund such excess to Borrower. Each Bank that is incorporated
under the Laws of a jurisdiction other than the United States of
America or any state thereof shall deliver to Borrower, with a copy to
the Administrative Agent, within twenty days after the Closing Date (or
such later date on which such Bank becomes a "Bank" hereunder), a
certificate signed by a Responsible Official of that Bank to the effect
that such Bank is entitled to receive payments of interest and other
amounts payable under this Agreement without deduction or withholding
on account of United States of America federal income taxes, which
certificate shall be accompanied by two copies of Internal Revenue
Service Form 1001 or Form 4224, as applicable, also executed by a
Responsible Official of that Bank. Each such Bank agrees (i) promptly
to notify the Administrative Agent and Borrower if any fact set forth
in such certificate ceases to be true and correct and (ii) to take such
steps as may be reasonably necessary to avoid any requirement of
applicable Laws that Borrower make any deduction or withholding for
taxes from amounts payable to that Bank under this Agreement.
(b) Without limiting its obligation to pay any additional
amount to a Bank pursuant to Section 3.9(a), Borrower may, within 60
days following any such payment by that Bank, treat that Bank as an
"Affected Bank" under Section 3.4(d), and exercise the remedies set
forth in such Section 3.4(d).
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44
3.10 Funding Sources. Nothing in this Agreement shall be
deemed to obligate any Bank to obtain the funds for its share of any Loan in any
particular place or manner or to constitute a representation by any Bank that it
has obtained or will obtain the funds for its share of any Loan in any
particular place or manner.
3.11 Failure to Charge or Making of Payment Not Subsequent
Waiver. Any decision by any Bank not to require payment of any fee or costs, or
to reduce the amount of the payment required for any fee or costs, or to
calculate any fee or any cost in any particular manner, shall not limit or be
deemed a waiver of any Bank's right to require full payment of any fee or costs,
or to calculate any fee or any costs in any other manner. Any decision by
Borrower to pay any fee or costs shall not limit or be deemed a waiver of any
right of Borrower to protest or dispute the payment amount of such fee or costs.
3.12 Time and Place of Payments; Evidence of Payments;
Application of Payments. The amount of each payment hereunder, under the Notes
or under any Loan Document shall be made to the Administrative Agent at the
Administrative Agent's Office, for the account of each of the Banks or the
Administrative Agent, as the case may be, in lawful money of the United States
of America, without deduction, offset or counterclaim and in immediately
available funds on the day of payment (which must be a Banking Day). All
payments of principal received after 10:00 a.m., California time, on any Banking
Day, shall be deemed received on the next succeeding Banking Day for purposes of
calculating interest thereon. The amount of all payments received by the
Administrative Agent for the account of a Bank shall be promptly paid by the
Administrative Agent to that Bank in immediately available funds. Each Bank
shall keep a record of Advances made by it and payments of principal with
respect to each Note, and such record shall be presumptive evidence of the
principal amount owing under such Note; provided that failure to keep such
record shall in no way affect the Obligations of Borrower hereunder. Prior to
the Maturity Date or an acceleration of the maturity of the Loans, payments
under the Loan Documents shall be applied first to amounts owing thereunder
other than the outstanding principal balance under the Notes and second to the
outstanding principal balance under the Notes in a manner designated by Borrower
or, if no such designation is made prior to payment or, if a Default or Event of
Default shall have occurred and be continuing, as may be designated by the
Majority Banks. Following the Maturity Date or an acceleration of the maturity
of the Loans, payments and recoveries under the Loan Documents shall be applied
in a manner designated in Section 9.2(e).
3.13 Administrative Agent's Right to Assume Payments Will be
Made. Unless the Administrative Agent shall have been notified by Borrower prior
to the date on which any payment to be made by Borrower hereunder is due that
Borrower does not intend to remit such payment, the Administrative Agent may, in
its discretion (but shall not be so obligated), assume that Borrower has
remitted such payment when so due and the Administrative Agent may, in its
discretion and in reliance upon such assumption, make available to each Bank on
such payment date an amount equal to such Bank's Pro Rata Share of such assumed
payment. If Borrower has not in fact remitted such payment to the Administrative
Agent, each Bank shall forthwith on demand repay to the Administrative
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45
Agent the amount of such assumed payment made available to such Bank, together
with interest thereon in respect of each day from and including the date such
amount was made available by the Administrative Agent to such Bank to but
excluding the date such amount is repaid to the Administrative Agent at a rate
per annum equal to the actual cost to the Administrative Agent of funding such
amount as notified by the Administrative Agent to such Bank. In furtherance of
the foregoing, Borrower hereby authorizes the Administrative Agent, through Bank
of America, to automatically debit the Designated Deposit Account (or, upon
notice to Borrower, any other deposit account maintained by Borrower with Bank
of America) for payments as and when due hereunder.
3.14 Survivability. All of Borrower's obligations under this
Article 3 shall survive for six months following the date on which all Loans
hereunder were fully paid.
3.15 Bank Calculation Certificate. Any request for
compensation pursuant to Section 3.4 or 3.5 shall be accompanied by a statement
of an officer of the Bank requesting such compensation and describing the
methodology used by such Bank in calculating the amount of such compensation,
which methodology (i) may consist of any reasonable averaging and attribution
methods and (ii) in the case of Section 3.5 hereof shall be consistent with the
methodology used by such Bank in making similar calculations in respect of loans
or commitments to other borrowers.
Article 4
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to the Banks that:
4.1 Existence and Qualification; Power; Compliance with Law.
Borrower is a corporation duly organized, validly existing and in good standing
under the Laws of Delaware, and its certificate of incorporation does not
provide for the termination of its existence. Borrower is duly qualified or
registered to transact business as a foreign corporation in the State of
California, and in each other jurisdiction in which the conduct of its business
or the ownership of its properties makes such qualification or registration
necessary, except where the failure so to qualify or register would not
constitute a Material Adverse Effect. Borrower has all requisite corporate power
and authority to conduct its business, to own and lease its Properties and to
execute, deliver and perform all of its obligations under the Loan Documents.
All outstanding shares of capital stock of Borrower are duly authorized, validly
issued, fully paid, non-assessable, and were issued in compliance with all
applicable state and federal securities Laws, except where the failure to so
comply would not constitute a Material Adverse Effect. Borrower is in
substantial compliance with all Laws and other legal requirements applicable to
its business, has obtained all authorizations, consents, approvals, orders,
licenses and permits (collectively, "Authorizations") from, and has accomplished
all filings, registrations and qualifications with, or obtained exemptions from
any of the foregoing from, any Governmental Agency that are necessary for the
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46
transaction of its business, except where the failure so to obtain
Authorizations, comply, file, register, qualify or obtain exemptions does not
constitute a Material Adverse Effect.
4.2 Authority; Compliance with Other Instruments and
Government Regulations. The execution, delivery, and performance by Borrower,
and by each Guarantor Subsidiary of Borrower, of the Loan Documents to which it
is a Party, have been duly authorized by all necessary corporate action, and do
not:
(a) require any consent or approval not heretofore obtained of
any stockholder, partner, security holder, or creditor of such Party;
(b) violate or conflict with any provision of such Party's
charter, certificate or articles of incorporation or bylaws;
(c) result in or require the creation or imposition of any
Lien or Right of Others upon or with respect to any Property now owned
or leased or hereafter acquired by such Party;
(d) constitute a "transfer of an interest" or an "obligation
incurred" that is avoidable by a trustee under Section 548 of the
Bankruptcy Code of 1978, as amended, or constitute a "fraudulent
transfer" or "fraudulent obligation" within the meaning of the Uniform
Fraudulent Transfer Act as enacted in any jurisdiction or any analogous
Law;
(e) violate any Requirement of Law applicable to such Party;
or
(f) 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 Contractual
Obligation to which such Party or any of its Property is bound or
affected;
and neither Borrower nor any Subsidiary of Borrower is in violation of, or
default under, any Requirement of Law or Contractual Obligation, or any
indenture, loan or credit agreement described in Section 4.2(f) in any respect
that would constitute a Material Adverse Effect.
4.3 No Governmental Approvals Required. Except such as have
heretofore been obtained, no authorization, consent, approval, order, license or
permit from, or filing, registration, or qualification with, or exemption from
any of the foregoing from, any Governmental Agency is or will be required to
authorize or permit the execution, delivery and performance by Borrower or any
Significant Subsidiary of Borrower of the Loan Documents to which it is a Party.
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47
4.4 Subsidiaries.
(a) Schedule 4.4 correctly sets forth the names, the form of
legal entity and jurisdictions of organization of all Subsidiaries of
Borrower as of the Closing Date (giving effect to the Xxxxx Homes
Acquisition) and identifies each such Subsidiary that is a Consolidated
Subsidiary, a Significant Subsidiary, a Suspended Significant
Subsidiary, a Guarantor Subsidiary, a Foreign Subsidiary and a
Financial Subsidiary. As of the Closing Date, unless otherwise
indicated in Schedule 4.4, all of the outstanding shares of capital
stock, or all of the units of equity interest, as the case may be, of
each Subsidiary indicated thereon are owned of record and beneficially
by Borrower or one of such Subsidiaries, and all such shares or equity
interests so owned were issued in compliance with all state and federal
securities Laws and are duly authorized, validly issued, fully paid and
non-assessable (other than with respect to required capital
contributions to any joint venture in accordance with customary terms
and provisions of the related joint venture agreement), except where
the failure to so comply would not constitute a Material Adverse
Effect, and are free and clear of all Liens and Rights of Others,
except for Permitted Encumbrances and Permitted Rights of Others.
(b) Each Significant Subsidiary is as of the date of this
Agreement, and will be as of the Closing Date, a legal entity of the
form described for that Subsidiary in Schedule 4.4, and is duly
organized, validly existing and in good standing under the Laws of its
jurisdiction of organization, is duly qualified to do business as a
foreign organization and is in good standing as such in each
jurisdiction in which the conduct of its business or the ownership or
leasing of its Properties makes such qualification necessary (except
where the failure to be so duly qualified and in good standing does not
constitute a Material Adverse Effect) and has all requisite power and
authority to conduct its business, to own and lease its Properties and
to execute, deliver and perform the Loan Documents to which it is a
Party.
(c) Each Significant Subsidiary is in substantial compliance
with all Laws and other requirements applicable to its business and has
obtained all Authorizations from, and each such Significant Subsidiary
has accomplished all filings, registrations, and qualifications with,
or obtained exemptions from any of the foregoing from, any Governmental
Agency that are necessary for the transaction of its business, except
where the failure so to obtain Authorizations, comply, file, register,
qualify or obtain exemptions does not constitute a Material Adverse
Effect.
4.5 Financial Statements. Borrower has furnished to each Bank
the following financial statements:
(a) the audited consolidated financial statements of Borrower
and its Consolidated Subsidiaries as at November 30, 1997 and for the
Fiscal Year then ended;
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48
(b) the unaudited consolidated and consolidating (in
accordance with past practices of Borrower) financial statements of
Borrower and its Consolidated Subsidiaries as at August 31, 1998 for
the Fiscal Quarter then ended and for the portion of the Fiscal Year
ended with such Fiscal Quarter.
The audited financial statements described in clause (a) are in accordance with
the books and records of Borrower and its Consolidated Subsidiaries, were
prepared in accordance with Generally Accepted Accounting Principles and fairly
present in accordance with Generally Accepted Accounting Principles consistently
applied the consolidated financial condition and results of operations of
Borrower and its Consolidated Subsidiaries as at the date and for the period
covered thereby. The unaudited financial statements described in clause (b) are
in accordance with the books and records of Borrower and its Consolidated
Subsidiaries, were prepared in accordance with Generally Accepted Accounting
Principles and fairly present in accordance with Generally Accepted Accounting
Principles consistently applied the consolidated and consolidating financial
condition and results of operation of Borrower and its Consolidated Subsidiaries
as at the date and for the period covered thereby.
4.6 No Other Liabilities; No Material Adverse Effect. Borrower
and its Consolidated Subsidiaries do not have any material liability or material
contingent liability not reflected or disclosed in the financial statements or
in the notes to the financial statements described in Section 4.5, other than
liabilities and contingent liabilities arising pursuant to the Xxxxx Homes
Acquisition or in the ordinary course of business subsequent to August 31, 1998.
Since August 31, 1998, no event or circumstance has occurred that constitutes a
Material Adverse Effect with respect to Borrower and its Subsidiaries.
4.7 Title to Assets. As of the Closing Date, Borrower and its
Consolidated Subsidiaries have good and valid title to all of the assets
reflected in the financial statements described in Section 4.5 owned by them or
any of them (other than assets disposed of in the ordinary course of business)
and all other assets owned on the date of this Agreement, free and clear of all
Liens and Rights of Others other than (a) those reflected or disclosed in the
notes to the financial statements described in Section 4.5, (b) immaterial Liens
or Rights of Others not required under Generally Accepted Accounting Principles
to be so reflected or disclosed, (c) Liens permitted pursuant to Section 6.7,
(d) Permitted Rights of Others, and (e) such existing Liens or Rights of Others
as are described on Schedule 4.7 hereto.
4.8 Intangible Assets. Borrower and its Subsidiaries own, or
possess the unrestricted right to use, all trademarks, trade names, copyrights,
patents, patent rights, licenses and other intangible assets that are necessary
in the conduct of their businesses as now operated, and no such intangible
asset, to the best knowledge of Borrower, conflicts with the valid trademark,
trade name, copyright, patent, patent right or intangible asset of any other
Person to the extent that such conflict would constitute a Material Adverse
Effect.
4.9 Existing Indebtedness and Contingent Guaranty Obligations.
As of the Closing Date, except as set forth in Schedule 4.9, neither Borrower
nor any of its Subsidiaries
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49
has (a) any Indebtedness owed to any Person or (b) outstanding any Contingent
Guaranty Obligation with respect to obligations of another Person that is not a
Subsidiary of Borrower.
4.10 Governmental Regulation. Neither Borrower nor any of its
Subsidiaries is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Interstate Commerce Act or the
Investment Company Act of 1940.
4.11 Litigation. There are no actions, suits, or proceedings
pending or, to the best knowledge of Borrower, threatened against or affecting
Borrower or any of its Subsidiaries or any Property of any of them before any
Governmental Agency which would constitute a Material Adverse Effect.
4.12 Binding Obligations. Each of the Loan Documents to which
Borrower or any Guarantor Subsidiary of Borrower is a Party will, when executed
and delivered by Borrower or the Guarantor Subsidiary, as the case may be,
constitute the legal, valid and binding obligation of Borrower or the Guarantor
Subsidiary, as the case may be, enforceable against Borrower or the Guarantor
Subsidiary, as the case may be, in accordance with its terms, except as
enforcement may be limited by Debtor Relief Laws or by equitable principles
relating to the granting of specific performance and other equitable remedies as
a matter of judicial discretion.
4.13 No Default. No event has occurred and is continuing that
is a Default or an Event of Default.
4.14 Pension Plans. As of the Closing Date, all contributions
required to be made under any Pension Plan maintained by Borrower or any of its
ERISA Affiliates (or to which Borrower or any ERISA Affiliate contributes or is
required to contribute) have been made or accrued in the balance sheet of
Borrower and its Consolidated Subsidiaries as at November 30, 1995. There is no
"accumulated funding deficiency" within the meaning of Section 302 of ERISA or
any liability to the PBGC (other than for premiums) with respect to any such
Pension Plan other than a Multiemployer Plan.
4.15 Tax Liability. Borrower and its Subsidiaries have filed
all tax returns which are required to be filed, and have paid, or made provision
for the payment of, all taxes which have become due pursuant to said returns or
pursuant to any assessment received by Borrower or any Subsidiary, except (a)
such taxes, if any, as are being contested in good faith by appropriate
proceedings (and with respect to which Borrower or its Subsidiary has
established adequate reserves for the payment of the same), and (b) such taxes
the failure of which to pay will not constitute a Material Adverse Effect.
4.16 Regulation U. Neither Borrower nor any of its
Subsidiaries 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 Board of Governors
of the Federal Reserve System, and no Loan
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hereunder will be used to purchase or carry any such margin stock in violation
of Regulation U.
4.17 Environmental Matters. To the best knowledge of Borrower,
Borrower and its Subsidiaries are in substantial compliance with all applicable
Laws relating to environmental protection where the failure to comply would
constitute a Material Adverse Effect. To Borrower's best knowledge, neither
Borrower nor any of its Subsidiaries has received any notice from any
Governmental Agency respecting the alleged violation by Borrower or any
Subsidiary of such Laws which would constitute a Material Adverse Effect and
which has not been or is not being corrected.
4.18 Disclosure. The information provided by Borrower to the
Banks in connection with this Agreement or any Loan, taken as a whole, has not
contained any untrue statement of a material fact and has not omitted a material
fact necessary to make the statements contained therein not misleading under the
totality of the circumstances existing at the date such information was provided
and in the context in which it was provided.
4.19 Projections. As of the Closing Date, the assumptions upon
which the Projections are based are reasonable and consistent with each other
assumption and with all facts known to Borrower and the Projections are
reasonably based on those assumptions. Nothing in this Section 4.19 shall be
construed as a representation or warranty as of any date other than the Closing
Date or that the Projections will in fact be achieved by Borrower.
4.20 Year 2000 Issues. Borrower has adopted a plan (the "Year
2000 Plan") which, in the judgment of senior management of Borrower, adequately
addresses the operational and financial issues (the "Year 2000 Issues") arising
from data in Borrower's computer-based data processing and information systems
respecting dates subsequent to December 31, 1999 (and, to the extent relevant,
arising from such data in the data processing systems of its material customers
and vendors). The Year 2000 Plan is in the process of implementation, Borrower
believes that it will be implemented in all material respects by December 31,
1999 and, as a result thereof, Year 2000 Issues do not present a reasonable
likelihood of resulting in a Material Adverse Effect.
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Article 5
AFFIRMATIVE COVENANTS
(OTHER THAN INFORMATION AND
REPORTING REQUIREMENTS)
As long as any Loan remains unpaid, or any other Obligation remains
unpaid, or any portion of the Commitment remains outstanding, Borrower shall,
and shall cause each of its Subsidiaries to, unless the Administrative Agent
(with the approval of the Majority Banks) otherwise consents in writing:
5.1 Payment of Taxes and Other Potential Liens. Pay and
discharge promptly, all taxes, assessments, and governmental charges or levies
imposed upon Borrower or any of its Subsidiaries, upon their respective Property
or any part thereof, upon their respective income or profits or any part
thereof, except any tax, assessment, charge, or levy that is not yet past due,
or is being contested in good faith by appropriate proceedings, as long as
Borrower or its Subsidiary has established and maintains adequate reserves for
the payment of the same and by reason of such nonpayment no material Property of
Borrower or its Subsidiaries is subject to a risk of loss or forfeiture.
5.2 Preservation of Existence. Preserve and maintain their
respective existence, licenses, rights, franchises, and privileges in the
jurisdiction of their formation and all authorizations, consents, approvals,
orders, licenses, permits, or exemptions from, or registrations with, any
Governmental Agency that are necessary for the transaction of their respective
business, and qualify and remain qualified to transact business in each
jurisdiction in which such qualification is necessary in view of their
respective business or the ownership or leasing of their respective Properties;
provided that (a) the failure to preserve and maintain any particular right,
franchise, privilege, authorization, consent, approval, order, license, permit,
exemption, or registration, or to qualify or remain qualified in any
jurisdiction, that does not constitute a Material Adverse Effect will not
constitute a violation of this covenant, and (b) nothing in this Section 5.2
shall prevent any consolidation or merger or disposition of assets permitted by
Sections 6.2 or 6.3 or shall prevent the termination of the business or
existence (corporate or otherwise) of any Subsidiary of Borrower which in the
reasonable judgment of the management of Borrower is no longer necessary or
desirable.
5.3 Maintenance of Properties. Maintain, preserve and protect
all of their respective real Properties in good order and condition, subject to
wear and tear in the ordinary course of business and damage caused by the
natural elements, and not permit any waste of their respective real Properties,
except that the failure to so maintain, preserve or protect any particular real
Property, or the permitting of waste on any particular real Property, where such
failure or waste with respect to all real Properties of Borrower and its
Subsidiaries, in the aggregate, would not constitute a Material Adverse Effect
will not constitute a violation of this covenant.
5.4 Maintenance of Insurance. Maintain insurance with
responsible insurance companies in such amounts (subject to deductibles and
retentions that are
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52
reasonable and, if reasonably available, at least as protective as recent
historical practices of Borrower) and against such risks as is usually carried
by responsible companies of similar size engaged in similar businesses and
owning similar assets in the general areas in which Borrower and its
Subsidiaries operate.
5.5 Compliance with Laws. Comply with all Requirements of Laws
noncompliance with which would constitute a Material Adverse Effect, except that
Borrower and its Subsidiaries need not comply with a Requirement of Law then
being contested by any of them in good faith by appropriate procedures, so long
as such contest (or a bond or surety posted in connection therewith) operates as
a stay of enforcement of any penalty that would otherwise apply as a result of
such failure to comply.
5.6 Inspection Rights. At any time during regular business
hours and as often as reasonably requested (and, in any event, upon 24 hours'
prior notice), permit any Bank or any appropriately designated employee, agent
or representative thereof at the expense of such Bank to examine, audit and make
copies and abstracts from the records and books of account of, and to visit and
inspect the Properties of Borrower and its Subsidiaries, and to discuss the
affairs, finances and accounts of Borrower and its Subsidiaries with any of
their officers or employees; provided that none of the foregoing unreasonably
interferes with the normal business operations of Borrower or any of its
Subsidiaries and that the Banks shall engage in any such inspections on a
cooperative basis, if reasonably possible.
5.7 Keeping of Records and Books of Account. Keep adequate
records and books of account fairly reflecting all financial transactions in
conformity with Generally Accepted Accounting Principles applied on a consistent
basis (except for changes concurred with by Borrower's independent certified
public accountants) and all applicable requirements of any Governmental Agency
having jurisdiction over Borrower or any of its Subsidiaries.
5.8 Use of Proceeds. Use the proceeds of the Loan solely to
(a) provide a portion of the Cash deliveries by Borrower with respect to the
Xxxxx Homes Acquisition pursuant to the Xxxxx Homes Acquisition Agreement, (b)
pay or prepay Indebtedness secured by Liens on assets acquired by Borrower or
any of its Subsidiaries pursuant to the Xxxxx Homes Acquisition and/or (c) repay
Indebtedness incurred by Borrower under the Revolving Loan Agreement or one or
more Money Market Facilities the proceeds of which were used for either or both
of the foregoing purposes.
5.9 Subsidiary Guaranty. Cause each of its Guarantor
Subsidiaries hereafter formed, acquired or qualifying as a Guarantor Subsidiary,
to execute and deliver a joinder of the Subsidiary Guaranty promptly following
such formation, acquisition or qualification.
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Article 6
NEGATIVE COVENANTS
As long as any Loan remains unpaid, or any other Obligation remains
unpaid, or any portion of the Commitment remains outstanding, Borrower shall
not, and shall not permit any of its Subsidiaries to, unless the Administrative
Agent (with the approval of the Majority Banks) otherwise consents in writing:
6.1 Payment or Prepayment of Subordinated Obligations. Make an
optional or unscheduled payment or prepayment of any principal (including an
optional or unscheduled sinking fund payment), interest or any other amount with
respect to any Subordinated Obligation, or make a purchase or redemption of any
Subordinated Obligation, or make any payment with respect to any Subordinated
Obligation in violation of the subordination provisions in the instruments
governing such Subordinated Obligation if a Default or Event of Default then
exists or would result therefrom.
6.2 Dispositions. Make any Disposition, except (a) a
Disposition to Borrower or to a wholly-owned Subsidiary of Borrower and (b) a
Disposition of a Foreign Subsidiary that does not hold a majority of its assets
in the Republic of France.
6.3 Mergers and Sale of Assets. Merge or consolidate with or
into any Person, or sell all or substantially all of its assets to any Person,
except, subject to Section 6.6:
(a) a merger of Borrower into a wholly-owned Subsidiary of
Borrower that has nominal assets and liabilities, the primary purpose
of which is to effect the reincorporation of Borrower in another state;
(b) mergers or consolidations of a Subsidiary of Borrower into
Borrower (with Borrower as the surviving corporation) or into any other
wholly-owned Subsidiary of Borrower;
(c) liquidations of any Subsidiary of Borrower into Borrower
or into a wholly-owned Subsidiary of Borrower;
(d) a merger of Borrower or one of its Subsidiaries with
another Person if (i) Borrower or such Subsidiary is the corporation
surviving such merger and (ii) immediately after giving effect to such
merger, no Default or Event of Default shall have occurred and be
continuing; or
(e) Dispositions permitted under Section 6.2.
6.4 Investments and Acquisitions. Make any Acquisition, or
enter into an agreement to make any Acquisition, or make or suffer to exist any
Investment, other than:
(a) Investments consisting of Cash or Cash Equivalents;
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54
(b) advances to employees of Borrower or its Subsidiaries for
travel, housing expenses, stock option plans, or otherwise in
connection with their employment or the business of Borrower or any of
its Subsidiaries;
(c) Investments of Borrower in any of its wholly-owned
Subsidiaries and Investments of any Subsidiary of Borrower in Borrower
or any of Borrower's wholly-owned Subsidiaries;
(d) Acquisitions of or Investments in Persons engaged in the
same businesses as Borrower and its Subsidiaries, or in a business
reasonably related to such businesses;
(e) Acquisitions and Investments by the Mortgage Company
permitted under the Mortgage Warehousing Agreement;
(f) Acquisitions of or Investments in Persons engaged
primarily in businesses in addition to those permitted by Sections
6.4(d), provided that the aggregate cost of all such Acquisitions and
Investments made after November 30, 1996 does not exceed $5,000,000 in
the aggregate;
(g) Investments in a Trust Issuer and Investments by a Trust
Issuer in Borrower; and
(h) Investments in existence on the Closing Date disclosed on
Schedule 6.4;
but in all events, subject to the restrictions of Section 6.16.
6.5 ERISA Compliance. Permit any Pension Plan maintained by
Borrower or any of its ERISA Affiliates (or to which Borrower or any ERISA
Affiliate contributes or is required to contribute), other than a Multiemployer
Plan, to incur any material "accumulated funding deficiency," as such term is
defined in Section 302 of ERISA, unless waived, or permit any Pension Plan
maintained by any of them to suffer a Termination Event or incur withdrawal
liability under any Multiemployer Plan if any of such events would result in a
liability of Borrower or any ERISA affiliate exceeding in the aggregate
$5,000,000.
6.6 Change in Business. Engage in any business other than the
businesses as now conducted by Borrower or its Subsidiaries, and any business
reasonably related to such businesses.
6.7 Liens and Negative Pledges. Create, incur, assume, or
suffer to exist, any Lien of any nature upon or with respect to any of their
respective Properties, whether now owned or hereafter acquired, or enter or
suffer to exist any Contractual Obligation wherein
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55
Borrower or any of its Subsidiaries agrees not to grant any Lien on any of their
Properties, except:
(a) Liens and Contractual Obligations existing on the date
hereof and described in Schedule 4.7, provided that the obligations
secured by such Liens are not increased and that no such Lien extends
to any Property of Borrower or any Subsidiary other than the Property
subject to such Lien on the Closing Date;
(b) Liens on Property of any Financial Subsidiary or Foreign
Subsidiary securing Indebtedness of that Financial Subsidiary or
Foreign Subsidiary;
(c) Liens on Property securing Indebtedness of Borrower or any
of its Subsidiaries provided that (i) aggregate Indebtedness secured by
all such Liens shall at no time exceed $100,000,000 and (ii) the
aggregate book value of the Property so encumbered shall at no time
exceed 300% of the aggregate Indebtedness so secured.
(d) Liens consisting of a Capital Lease covering personal
Property;
(e) Permitted Encumbrances;
(f) attachment, judgment and other similar Liens arising in
connection with court proceedings; provided that the execution or
enforcement of such Lien is effectively stayed and the claims secured
thereby do not in the aggregate exceed $10,000,000 and are being
contested in good faith by appropriate proceedings timely commenced and
diligently prosecuted;
(g) Liens existing on any asset of any Person at the time such
Person becomes a Subsidiary and not created in contemplation of such
event;
(h) Liens on any asset of any Person existing at the time such
Person is merged or consolidated with or into Borrower or any of its
Subsidiaries and not created in contemplation of such event;
(i) Liens existing on any asset prior to the acquisition
thereof by Borrower or any of its Subsidiaries and not created in
contemplation of such acquisition;
(j) Liens arising out of the refinancing, extension, renewal
or refunding of any Indebtedness secured by any Lien permitted by any
of the foregoing clauses of this Section, provided that such
Indebtedness is not increased and is not secured by additional assets;
(k) Liens arising in the ordinary course of business which (i)
do not secure Indebtedness, (ii) do not secure any obligation in an
amount exceeding $200,000 individually, or $500,000 in the aggregate,
and (iii) do not in the aggregate materially
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56
detract from the value of the assets covered by such Liens or
materially impair the use thereof in the operation of Borrower's
business;
(l) Liens not otherwise permitted by the foregoing clauses of
this Section which secure Indebtedness not exceeding $500,000 in the
aggregate;
(m) Liens referred to in the last sentence of the definition
of "Bond Facility" encumbering (i) real property owned by Borrower or
one of its Subsidiaries on November 30, 1996 or (ii) other real
property of Borrower or one of its Subsidiaries provided that the
aggregate obligations secured by such Liens does not at any time exceed
$10,000,000 plus the amount by which aggregate Indebtedness then
secured by Liens described in Section 6.7(c) is less than $100,000,000;
(n) a Contractual Obligation wherein Borrower or any of its
Subsidiaries agrees not to a grant any Lien on any of their Properties,
if such Contractual Obligation does not, by its terms, prohibit the
grant of a Lien in favor of the Administrative Agent and the Banks with
respect to the Obligations (and Borrower shall, as soon as reasonably
possible, provide to the Banks a copy of such Contractual Obligation);
and
(o) Liens on Property of a Joint Venture.
6.8 Transactions with Affiliates. Enter into any transaction
of any kind with any Affiliate of Borrower other than (a) a transaction that
results in Subordinated Obligations, or (b) a transaction between or among
Borrower and its wholly-owned Subsidiaries, or (c) a transaction that has been
approved by a resolution adopted by the board of directors of Borrower with the
favorable vote of a majority of the directors who have no financial or other
interest in the transaction or by the vote of a majority of the outstanding
shares of capital stock of Borrower, or (d) an arm's length transaction entered
into on terms and under conditions not less favorable to Borrower or any of its
Subsidiaries than could be obtained from a Person that is not an Affiliate of
Borrower.
6.9 Consolidated Tangible Net Worth. Permit Consolidated
Tangible Net Worth to be, at the end of any Fiscal Quarter, less than an amount
equal to (a) $300,000,000, plus (b) an amount equal to 50% of aggregate of
Consolidated Net Income for each Fiscal Quarter contained in the fiscal period
commencing on December 1, 1996 and ending as of the last day of such Fiscal
Quarter (provided that there shall be no reduction hereunder in the event of a
consolidated net loss in any such Fiscal Quarter), plus (c) an amount equal to
50% of the cumulative net proceeds received by Borrower from the issuance of its
capital stock subsequent to November 30, 1996, plus (d) an amount equal to 50%
of the cumulative net proceeds received by Borrower from the issuance of the
Trust Preferred Capital Securities subsequent to November 30, 1996 and minus (e)
the cumulative cost to Borrower for the repurchase, if any, of its capital stock
subsequent to November 30, 1996 (provided that such deduction shall have an
aggregate cap of $40,000,000 for the measurement at the end of any Fiscal
Quarter in the Fiscal Year ending November 30, 1997, $30,000,000 for the
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57
measurement at the end of any Fiscal Quarter in the Fiscal Year ending November
30, 1998 and $20,000,000 for the measurement at the end of any Fiscal Quarter in
any Fiscal Year thereafter).
6.10 Consolidated Leverage Ratio. Permit the Consolidated
Leverage Ratio to be, at the end of any Fiscal Quarter, greater than 2.25 to
1.00; provided that:
(a) in the event that a portion of the Commitments (as such
term is defined in the Revolving Loan Agreement) of $30,000,000 or more
is used to finance Acquisitions during any three consecutive Fiscal
Quarters by Borrower or its Subsidiaries, the foregoing maximum
permitted ratio may, upon the request of Borrower to the Administrative
Agent, be increased to 2.65 to 1.00 for the three (3) consecutive
Fiscal Quarters next ending after such Acquisition, provided that (i)
an increase under this clause (a) has not been in effect with respect
to any of the four (4) Fiscal Quarters prior to the first Fiscal
Quarter for which an adjustment is to be made, (ii) Borrower's request
is accompanied by 12-month cash flow, balance sheet and income
statement projections, reasonably acceptable to the Administrative
Agent and for delivery to the Banks, demonstrating that, giving effect
to the Acquisition and to Borrower's election under this Section,
Borrower will be in compliance with Sections 6.9, 6.10 and 6.11 for at
least the next ending four (4) Fiscal Quarters and (iii) Borrower must
remain in compliance with Section 6.11 (without giving effect to any
adjustment permitted thereunder) during each Fiscal Quarter for which
an adjustment is applicable under this Section 6.10(a);
(b) if an election under Section 6.10(a) is not then in
effect, the foregoing ratio shall, if needed, be increased to 2.50 to
1.00 for a period of up to two (2) consecutive Fiscal Quarters,
provided that (i) this clause (b) has not been in effect with respect
to any of the four (4) Fiscal Quarters prior to the first Fiscal
Quarter for which an adjustment is needed, (ii) no other Default or
Event of Default then exists, (iii) Borrower furnishes to the
Administrative Agent no later than 60 days after the end of the first
Fiscal Quarter for which such adjustment is needed, 12-month cash flow,
balance sheet and income statement projections, reasonably acceptable
to the Administrative Agent and for delivery to the Banks,
demonstrating that Borrower will be in compliance with Sections 6.9,
6.10 and 6.11 for at least the next ending two (2) Fiscal Quarters,
(iv) as of the end of each Fiscal Quarter for which such adjustment is
applicable, the Consolidated Interest Coverage Ratio is not less than
2.50 to 1.00 and (v) Borrower has not incurred Operating Losses for the
first Fiscal Quarter for which such adjustment is needed and the
immediately preceding Fiscal Quarter; and
(c) notwithstanding Section 6.10(a) or 6.10(b), the foregoing
ratio shall automatically be reduced to 1.75 to 1.00 as of the end of
any Fiscal Quarter if Borrower has incurred an Operating Loss for that
Fiscal Quarter and the immediately preceding Fiscal Quarter and shall
remain at 1.75 to 1.00 until the first Fiscal Quarter thereafter for
which there is no Operating Loss.
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6.11 Consolidated Interest Coverage Ratio. Permit the
Consolidated Interest Coverage Ratio to be, at the end of any Fiscal Quarter,
less than 2.25 to 1.00; provided that the foregoing ratio shall, upon the
request of Borrower to the Administrative Agent, be decreased for a period of
two (2) Fiscal Quarters provided that (a) an adjustment under this Section 6.11
has not been in effect with respect to any of the four (4) Fiscal Quarters prior
to the first Fiscal Quarter for which an adjustment is to be made, (b) no
Default or Event of Default then exists and (c) Borrower furnishes to the
Administrative Agent 12-month cash flow, balance sheet and income statement
projections, reasonably acceptable to the Administrative Agent, demonstrating
that Borrower will be in compliance with Sections 6.9, 6.10 and 6.11 for at
least the next ending four (4) Fiscal Quarters. Subject to satisfaction of the
foregoing conditions, the decrease in the ratio for the first Fiscal Quarter
shall be to 1.75 to 1.00 and the decrease for the second Fiscal Quarter shall be
to a level (in no event higher than 2.25:1.00) that is 0.25 higher than the
actual Consolidated Interest Coverage Ratio for such first Fiscal Quarter (e.g.,
from 1.80 to 1.00 improving to at least 2.05 to 1.00).
6.12 Distributions. Make any Distribution (other than a
Distribution made to Borrower or to a Guarantor Subsidiary) if an Event of
Default then exists or if an Event of Default or Default would result therefrom.
6.13 Amendments. Amend, waive or terminate any provision in
any instrument or agreement governing Subordinated Obligations unless such
amendment, waiver or termination would not be materially adverse to the
interests of the Banks under this Agreement.
6.14 Hostile Tender Offers. Make any offer to the shareholders
of a publicly held corporation or business entity to purchase or acquire, or
consummate such a purchase or acquisition of, more than 5% of the shares of
capital stock or analogous ownership interests in such a corporation or business
entity if the board of directors or analogous body of such corporation or
business entity has notified Borrower that it opposes such offer or purchase,
except for consideration which consists solely of shares of capital stock or
other equity securities of Borrower or any of its Subsidiaries.
6.15 Inventory. Permit, as of the end of any Fiscal Quarter,
the book value of Domestic Unimproved Land to exceed an amount equal to 100% of
Consolidated Tangible Net Worth.
6.16 Certain Investments. Make any Investment (a) in any
Foreign Subsidiary, (b) in any Financial Subsidiary other than a Trust Issuer,
or (c) in any Person that is not a wholly owned Subsidiary of Borrower
(collectively, "Specified Entities") if, giving effect thereto, the aggregate
amount of all such Investments made after November 30, 1996 exceeds the sum of
(i) $30,000,000 plus (ii) the aggregate amount of Cash Distributions declared
and paid by all Specified Entities to Borrower after November 30, 1996, plus
(iii) the aggregate amount of capital of Specified Entities returned to Borrower
after November 30, 1996.
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6.17 Money Market Indebtedness. Permit, for any consecutive
period of more than one (1) Banking Day, at any time the sum of the aggregate
outstanding principal amount of the Loans (as such term is defined in the
Revolving Loan Agreement) plus the Letter of Credit Usage (as such term is
defined in the Revolving Loan Agreement) plus the Money Market Outstandings (as
such term is defined in the Revolving Loan Agreement) plus the Swing Line
Outstandings (as such term is defined in the Revolving Loan Agreement) to exceed
the Commitments (as such term is defined in the Revolving Loan Agreement).
6.18 Domestic Standing Inventory. Permit, as of the last day
of any Fiscal Quarter that immediately follows a Fiscal Quarter on the last day
of which the Consolidated Leverage Ratio was in excess of 2.25:1.00, Domestic
Standing Inventory to exceed an amount equal to 15% of Net Orders received
during the four most recently ended Fiscal Quarters.
6.19 Future Subsidiaries. Permit, as of the last day of any
Fiscal Quarter, the total assets of all Subsidiaries of Borrower (other than
Guarantor Subsidiaries, Financial Subsidiaries, Foreign Subsidiaries and any
Trust Issuer) that are formed after the Closing Date to exceed 10% of the
consolidated total assets (other than assets of Financial Subsidiaries or
Foreign Subsidiaries) of Borrower and its Subsidiaries as of such date.
Article 7
INFORMATION AND REPORTING REQUIREMENTS
7.1 Financial and Business Information of Borrower and Its
Subsidiaries. As long as any Loan remains unpaid or any other Obligation remains
unpaid, or any portion of the Commitment remains outstanding, Borrower shall,
unless the Administrative Agent (with the approval of the Majority Banks)
otherwise consents in writing, deliver to the Administrative Agent and each of
the Banks (except as otherwise provided below) at its own expense:
(a) As soon as reasonably possible, and in any event within 60
days after the close of each Fiscal Quarter of Borrower (other than the
fourth Fiscal Quarter), (i) the consolidated and consolidating balance
sheet of Borrower and its Consolidated Subsidiaries as of the end of
such Fiscal Quarter, setting forth in comparative form the
corresponding figures for the corresponding Fiscal Quarter of the
preceding Fiscal Year, if available, and (ii) the consolidated and
consolidating statements of profit and loss and the consolidated
statements of cash flows of Borrower and its Consolidated Subsidiaries
for such Fiscal Quarter and for the portion of the Fiscal Year ended
with such Fiscal Quarter, setting forth in comparative form the
corresponding periods of the preceding Fiscal Year. Such consolidated
and consolidating balance sheets and statements shall be prepared in
reasonable detail in accordance with Generally Accepted Accounting
Principles (other than those which require footnote disclosure of
certain matters) consistently applied, and shall be certified by the
principal financial officer of Borrower, subject to normal year-end
accruals and audit adjustments;
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(b) As soon as reasonably possible, and in any event within 90
days after the close of each Fiscal Year of Borrower, (i) the
consolidated and consolidating (in accordance with past practices of
Borrower) balance sheets of Borrower and its Consolidated Subsidiaries
as at the end of such Fiscal Year, setting forth in comparative form
the corresponding figures at the end of the preceding Fiscal Year and
(ii) the consolidated and consolidating (in accordance with past
practices of Borrower) statements of profit and loss and the
consolidated statements of cash flows of Borrower and its Consolidated
Subsidiaries for such Fiscal Year, setting forth in comparative form
the corresponding figures for the previous Fiscal Year. Such
consolidated and consolidating balance sheet and statements shall be
prepared in reasonable detail in accordance with Generally Accepted
Accounting Principles consistently applied. Such consolidated balance
sheet and statements shall be accompanied by a report and opinion of
Ernst & Young or other independent certified public accountants of
recognized standing selected by Borrower (to which the Majority Banks
have not reasonably objected), which report and opinion shall state
that the examination of such consolidated financial statements by such
accountants was made in accordance with generally accepted auditing
standards and that such consolidated financial statements fairly
present the financial condition, results of operations and of cash
flows of Borrower and its Subsidiaries subject to no exceptions as to
scope of audit and subject to no other exceptions or qualifications
(other than changes in accounting principles in which the auditors
concur) not approved by the Majority Banks in their reasonable
discretion. Such accountants' report and opinion shall be accompanied
by a certificate stating that, in conducting the audit examination of
books and records necessary for the certification of such financial
statements, such accountants have obtained no knowledge of any Default
or Event of Default hereunder or, if in the opinion of such
accountants, any such Default or Event of Default shall exist, stating
the nature and status of such event, and setting forth the applicable
calculations under Sections 6.9, 6.10, 6.11, 6.15 (without requiring
any physical count of inventory) and 6.16, as of the date of the
balance sheet. Such consolidating balance sheet and statements shall be
certified by the principal financial officer of Borrower;
(c) Promptly after the receipt thereof by Borrower, copies of
any audit or management reports submitted to it by independent
accountants in connection with any audit or interim audit submitted to
the board of directors of Borrower or any of its Subsidiaries;
(d) Promptly after the same are available, copies of each
annual report, proxy or financial statement or other report or
communication sent to its stockholders, and copies of all annual,
regular, periodic and special reports and registration statements which
Borrower may file or be required to file with the Commission or any
similar or corresponding Governmental Agency or with any securities
exchange;
(e) Promptly upon a Senior Officer of Borrower becoming aware,
and in any event within ten Banking Days after becoming aware, of the
occurrence of any (i) "reportable event" (as such term is defined in
Section 4043 of ERISA) other than
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any such event as to which the PBGC has by regulation waived the
requirement of 30 days' notice or (ii) "prohibited transaction" (as
such term is defined in Section 406 of ERISA or Section 4975 of the
Code) in connection with any Pension Plan, other than a Multiemployer
Plan, or any trust created thereunder, a written notice specifying the
nature thereof, what action Borrower and any of its Subsidiaries is
taking or proposes to take with respect thereto, and, when known, any
action taken by the Internal Revenue Service with respect thereto;
(f) Promptly upon a Senior Officer of Borrower becoming aware,
and in any event within five Banking Days after becoming aware, of the
existence of a Default or an Event of Default, a written notice
specifying the nature and period of existence thereof and what action
Borrower is taking or proposes to take with respect thereto;
(g) Promptly upon a Senior Officer of Borrower becoming aware,
and in any event within five Banking Days after becoming aware, that
the holder of any evidence of Indebtedness (in a principal amount in
excess of $5,000,000) of Borrower or any of its Subsidiaries has given
notice or taken any other action with respect to a default or event of
default, a written notice specifying the notice given or action taken
by such holder and the nature of such default or event of default and
what action Borrower or its Subsidiary is taking or proposes to take
with respect thereto;
(h) Promptly upon a Senior Officer of Borrower becoming aware,
and in any event within five Banking Days after becoming aware, of the
existence of any pending or threatened litigation or any investigation
by any Governmental Agency that would constitute a Material Adverse
Effect (provided, that no failure of a Senior Officer to provide notice
of any such event shall be the sole basis for any Default or Event of
Default hereunder);
(i) As soon as possible, and in any event within 60 days after
the close of each Fiscal Quarter of Borrower (except 90 days after the
close of the Fiscal Year of Borrower), (i) a sales report by
geographical region, in the form of Exhibit F hereto, certified by a
Senior Officer of Borrower, setting forth the number of homes or other
units sold and delivered during such period and in backlog at the end
of such period, (ii) an inventory report for such Fiscal Quarter
summarizing such inventory by type and geographical region, in the form
of Exhibit G hereto and (iii) a report of any change, as of the last
day of such Fiscal Quarter, in the listing of Subsidiaries set forth in
Schedule 4.4 (as the same may have been revised by previous reports
under this clause (i)(iii));
(j) As soon as reasonably possible, and in any event prior to
the date that is sixty (60) days after the commencement of each Fiscal
Year, deliver to the Administrative Agent the business plan of
Borrower and its Subsidiaries for that Fiscal Year, together with
projections (in substantially the same format as the Projections)
covering the next two (2) Fiscal Years;
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(k) Promptly following obtaining knowledge thereof by a Senior
Officer of Borrower, written notice of the inception or cessation of
the Investment Grade Credit Rating; and
(l) Such other data and information as from time to time may
be reasonably requested by any of the Banks.
7.2 Compliance Certificate. Not later than 60 days after the
close of each Fiscal Quarter and 90 days after the close of each Fiscal Year, a
Compliance Certificate dated as of the last day of the Fiscal Quarter or Fiscal
Year, as the case may be, (a) setting forth computations showing, in detail
reasonably satisfactory to the Administrative Agent, whether Borrower and its
Subsidiaries were in compliance with their obligations to the Banks pursuant to
Sections 6.9, 6.10, 6.11, 6.15, 6.16, and 6.18 (b) either (i) stating that to
the best knowledge of the certifying officer as of the date of such certificate
there is no Default or Event of Default, or (ii) if there is a Default or Event
of Default as of the date of such certifi cate, specifying all such Defaults or
Events of Default and their nature and status and (c) stating, to the best
knowledge of the certifying officer, whether any event or circumstance
constituting a Material Adverse Effect (other than a Material Adverse Effect
which is not particular to the Borrower and which is generally known) has
occurred since the date of the most recent Compliance Certificate delivered
under this Section and, if so, describing such Material Adverse Effect in
reasonable detail. No failure of the certifying officer to describe the
existence of an event or circumstance constituting a Material Adverse Effect
shall be the sole basis for any Default or Event of Default hereunder.
Article 8
CONDITIONS
8.1 Advances. The effectiveness of this Agreement, and
obligations of the Banks to make the Advances are subject to the following
conditions, each of which shall be satisfied prior to or concurrently with the
making of the initial Advances:
(a) The Administrative Agent shall have received all of the
following, each dated as of the Closing Date (unless otherwise
specified or unless the Administrative Agent otherwise agrees) and all
in form and substance satisfactory to the Administrative Agent and
legal counsel for the Administrative Agent:
(i) executed counterparts of this Agreement,
sufficient in number for distribution to the Banks and
Borrower;
(ii) a Note executed by Borrower in favor of each
Bank, each in a principal amount equal to that Bank's Pro Rata
Share of the Commitment;
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(iii) the Subsidiary Guaranty executed by each
Subsidiary which is a Guarantor Subsidiary as of the Closing
Date;
(iv) with respect to Borrower and each Subsidiary
which is a Guarantor Subsidiary as of the Closing Date, such
documentation as the Administrative Agent may reasonably
require to establish the due organization, valid existence and
good standing of Borrower and each such Subsidiary, its
qualification to engage in business in each jurisdiction in
which it is required to be so qualified, its authority to
execute, deliver and perform any Loan Documents to which it is
a Party, and the identity, authority and capacity of each
Responsible Official thereof authorized to act on its behalf,
including, without limitation, certified copies of articles of
incorporation and amendments thereto, bylaws and amendments
thereto, certificates of good standing and/or qualification to
engage in business, tax clearance certificates, certificates
of corporate resolutions, incumbency certificates, and the
like;
(v) the Opinions of Counsel;
(vi) a copy of the Xxxxx Homes Acquisition Agreement
certified to be a true copy by a Senior Officer of Borrower;
(vii) an Officer's Certificate of Borrower setting
forth the Consolidated Leverage Ratio on a pro forma basis as
of the Closing Date, giving effect to the Xxxxx Homes
Acquisition, this Agreement and all other transactions related
thereto;
(viii) an Officer's Certificate of Borrower
affirming, to the best knowledge of the certifying Senior
Officer, that (i) no Default or Event of Default then exists
under the Revolving Loan Agreement and (ii) no event or
circumstance then exists that would constitute a Material
Adverse Effect on the financial or business condition of
Borrower or the Xxxxx Homes Entities, in either case from that
previously described to the Banks;
(ix) an Officer's Certificate of Borrower affirming,
to the best knowledge of the certifying Senior Officer, that
the conditions set forth in Sections 8.1(c) and 8.1(d) have
been satisfied;
(x) a Request for Loan; and
(xi) such other assurances, certificates, documents,
consents or opinions relevant hereto as the Administrative
Agent may reasonably require.
(b) The upfront fee payable pursuant to Section 3.2 shall have
been paid and any agency fees then payable under the letter agreement
referred to in Section 3.3 shall have been paid.
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(c) The Xxxxx Homes Acquisition shall have previously or shall
concurrently be consummated pursuant to the Xxxxx Homes Acquisition
Agreement, with any waiver or departure from any provision thereof
approved by the Banks.
(d) The representations and warranties of Borrower contained
in Article 4 shall be true and correct in all material respects on and
as of the Closing Date.
(e) Borrower and its Subsidiaries and any other Parties shall
be in compliance with all the terms and provisions of the Loan
Documents.
(f) The Banks shall have received the written legal opinion of
Sheppard, Mullin, Xxxxxxx & Hampton LLP, legal counsel to the
Administrative Agent, to the effect that the Opinions of Counsel are
acceptable and such other matters relating to the Loan Documents as the
Administrative Agent may request.
Article 9
EVENTS OF DEFAULT AND REMEDIES UPON EVENTS OF DEFAULT
9.1 Events of Default. There will be a default hereunder if
any one or more of the following events ("Events of Default") occurs and is
continuing, whatever the reason therefor:
(a) failure to pay any installment of principal on any of the
Notes when due; or
(b) failure to pay any installment of interest on any of the
Notes, or to pay any fee or other amounts due the Administrative Agent
or any Bank hereunder, within five Banking Days after the date when
due; or
(c) any failure to comply with Sections 5.8, 5.9, 6.1, 6.2,
6.3, 6.4, 6.7, 6.9, 6.10, 6.11, 6.15, 6.16, 6.17, 6.18 or 7.1(f); or
(d) any failure to comply with Section 6.8 which shall remain
unremedied for a period of three Banking Days after notice by the
Administrative Agent of such Default; or
(e) Borrower or any other Party fails to perform or observe
any other term, covenant, or agreement contained in any Loan Document
on its part to be performed or observed within thirty (30) calendar
days after notice by the Administrative Agent of such Default; or
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(f) any representation or warranty in any Loan Document or in
any certificate, agreement, instrument, or other document made or
delivered, on or after the Closing Date, pursuant to or in connection
with any Loan Document proves to have been incorrect when made in any
respect material to the ability of Borrower to duly and punctually
perform all of the Obligations; or
(g) Any failure to pay any interest or principal when due
(following any applicable cure period) under the Mortgage Warehousing
Agreement or under any Money Market Facility; or
(h) Borrower or any of its Significant Subsidiaries (i) fails
to pay the principal, or any principal installment, of any present or
future Indebtedness (other than Non-Recourse Indebtedness, and in the
case of the Mortgage Company, arising under the Mortgage Warehousing
Agreement), or any guaranty of present or future Indebtedness (other
than Non-Recourse Indebtedness) on its part to be paid, when due (or
within any stated grace period), whether at the stated maturity, upon
acceleration, by reason of required prepayment or otherwise in excess
of $10,000,000 individually or $25,000,000 in the aggregate or (ii)
fails to perform or observe any other material term, covenant, or
agreement on its part to be performed or observed, or suffers to exist
any condition, in connection with any present or future Indebtedness
(other than Non-Recourse Indebtedness, and in the case of the Mortgage
Company, arising under the Mortgage Warehousing Agreement) or any
guaranty of present or future Indebtedness (other than Non-Recourse
Indebtedness), in excess of $10,000,000 individually or $25,000,000 in
the aggregate, if as a result of such failure or such condition any
holder or holders thereof (or an agent or trustee on its or their
behalf) has the right to declare it due before the date on which it
otherwise would become due; or
(i) any Loan Document, at any time after its execution and
delivery and for any reason other than the agreement of all the Banks
or satisfaction in full of all the Obligations, ceases to be in full
force and effect or is declared by a court of competent jurisdiction to
be null and void, invalid, or unenforceable in any respect which is, in
the reasonable opinion of the Majority Banks, materially adverse to the
interest of the Banks;
(j) a final judgment (or judgments) against Borrower or any of
its Significant Subsidiaries is entered for the payment of money in
excess of $10,000,000 individually or $25,000,000 in the aggregate, and
remains unsatisfied without procurement of a stay of execution within
thirty (30) calendar days after the issuance of any writ of execution
or similar legal process or the date of entry of judgment, whichever is
earlier, or in any event at least five (5) calendar days prior to the
sale of any assets pursuant to such legal process; or
(k) Borrower or any Significant Subsidiary of Borrower
institutes or consents to any proceeding under a Debtor Relief Law
relating to it or to all or any
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part of its Property, or fails generally to pay its debts as they
mature, or makes a general 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, xxxxxx vator, liquidator, rehabilitator, or similar
officer is appointed without the application or consent of that Person
and the appointment continues undischarged or unstayed for sixty (60)
calendar days; or any proceeding under any Debtor Relief Law relating
to any such Person or to all or any part of its Property is instituted
without the consent of that Person, and continues undismissed or
unstayed for sixty (60) calendar days; or
(l) the occurrence of a Termination Event with respect to any
Pension Plan if the aggregate liability of Borrower and its ERISA
Affiliates under ERISA as a result thereof exceeds $10,000,000; or the
complete or partial withdrawal by Borrower or any of its ERISA
Affiliates from any Multiemployer Plan if the aggregate liability of
Borrower and its ERISA Affiliates as a result thereof exceeds
$10,000,000; or
(m) any determination is made by a court of competent
jurisdiction that payment of principal or interest or both is due to
the holder of any Subordinated Obligations which would not be permitted
by Section 6.1 or that any Subordinated Obligation is not subordinated
in accordance with its terms to the Obligations; or
(n) the occurrence of an Event of Default (as such term is
defined in the Revolving Loan Agreement) under the Revolving Loan
Agreement.
9.2 Remedies Upon Event of Default. Without limiting any other
rights or remedies of the Administrative Agent or the Banks provided for
elsewhere in this Agreement or the Loan Documents, or by applicable Law or in
equity, or otherwise:
(a) Upon the occurrence of any Event of Default, and so long
as any such Event of Default shall be continuing (other than an Event
of Default described in Section 9.1(k) with respect to Borrower or a
Guarantor Subsidiary): the Majority Banks may request the
Administrative Agent to, and the Administrative Agent thereupon shall,
declare the unpaid principal of all Obligations due to the Banks
hereunder and under the Notes, all interest accrued and unpaid thereon,
and all other amounts payable to the Banks under the Loan Documents to
be forthwith due and payable, whereupon the same shall become and be
forthwith due and payable, without protest, presentment, notice of
dishonor, demand, or further notice of any kind, all of which are
expressly waived by Borrower; provided that the Administrative Agent
shall notify Borrower (by telecopy and, if practicable, by telephone)
substantially concurrently with any such acceleration (but the failure
of Borrower to receive such notice shall not affect such acceleration).
(b) Upon the occurrence of any Event of Default described in
Section 9.1(k) with respect to Borrower or a Guarantor Subsidiary: the
unpaid
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principal of all Obligations due to the Banks hereunder and under the
Notes, and all interest accrued and unpaid on such Obligations, and all
other amounts payable under the Loan Documents shall be forthwith due
and payable, without protest, presentment, notice of dishonor, demand,
or further notice of any kind, all of which are expressly waived by
Borrower.
(c) Upon the occurrence of an Event of Default, the Banks and
the Administrative Agent, or any of them, may proceed to protect,
exercise, and enforce their rights and remedies under the Loan
Documents against Borrower or any other Party and such other rights and
remedies as are provided by Law or equity, without notice to or demand
upon Borrower (which are expressly waived by Borrower) except to the
extent required by applicable Laws. The order and manner in which the
rights and remedies of the Banks under the Loan Documents and otherwise
are exercised shall be determined by the Majority Banks.
(d) All payments received by the Administrative Agent and the
Banks, or any of them, after the acceleration of the maturity of the
Loans shall be applied first to the costs and expenses (including
attorneys' fees and disbursements) of the Administrative Agent, acting
as Administrative Agent, and of the Banks and thereafter paid pro rata
to the Banks in the same proportion that the aggregate of the unpaid
principal amount owing on the Obligations of Borrower to each Bank,
plus accrued and unpaid interest thereon, bears to the aggregate of the
unpaid principal amount owing on all the Obligations, plus accrued and
unpaid interest thereon. Regardless of how each Bank may treat the
payments for the purpose of its own accounting, for the purpose of
computing Borrower's Obligations, the payments shall be applied first,
to the costs and expenses of the Administrative Agent, acting as
Administrative Agent, and the Banks as set forth above, second, to the
payment of accrued and unpaid fees hereunder and interest on all
Obligations to the Banks, to and including the date of such application
(ratably according to the accrued and unpaid interest on the Loans),
third, to the ratable payment of the unpaid principal of all
Obligations to the Banks, and fourth, to the payment of all other
amounts then owing to the Administrative Agent or the Banks under the
Loan Documents. Subject to Section 9.2(a), 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 rights or remedies of
the Banks hereunder or under applicable Law unless all amounts then due
(whether by acceleration or otherwise) have been paid in full.
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Article 10
THE ADMINISTRATIVE AGENT
10.1 Appointment and Authorization. Subject to Section 10.7,
each Bank hereby irrevocably appoints and authorizes the Administrative Agent to
take such action as agent on its behalf and to exercise such powers under the
Loan Documents as are delegated to the Administrative Agent by the terms thereof
or are reasonably incidental, as determined by the Administrative Agent,
thereto. This appointment and authorization does not constitute appointment of
the Administrative Agent as trustee for any Bank and, except as specifically set
forth herein to the contrary, the Administrative Agent shall take such action
and exercise such powers only in an administrative and ministerial capacity.
10.2 Administrative Agent and Affiliates. Bank of America (and
each successor Administrative Agent) has the same rights and powers under the
Loan Documents as any other Bank and may exercise the same as though it were not
the Administrative Agent; and the term "Bank" or "Banks" includes Bank of
America in its individual capacity. Bank of America (and each successor
Administrative Agent) and its respective Affiliates may accept deposits from,
lend money to, and generally engage in any kind of banking, trust or other
business with Borrower and any Affiliate of Borrower, as if it were not the
Administrative Agent and without any duty to account therefor to the Banks. Bank
of America (and each successor Administrative Agent) need not account to any
other Bank for any monies received by it for reimbursement of its costs and
expenses as Administrative Agent hereunder, or for any monies received by it in
its capacity as a Bank hereunder, except as otherwise provided herein.
10.3 Banks' Credit Decisions. Each Bank agrees that it has,
independently and without reliance upon the Administrative Agent, any other
Bank, or the directors, officers, agents, or employees of the Administrative
Agent or of any other Bank, and instead in reliance upon information supplied to
it by or on behalf of Borrower and its Subsidiaries and upon such other
information as it has deemed appropriate, made its own independent credit
analysis and decision to enter into this Agreement. Each Bank also agrees that
it shall, independently and without reliance upon the Administrative Agent, any
other Bank, or the directors, officers, agents, or employees of the
Administrative Agent or of any other Bank, continue to make its own independent
credit analyses and decisions in acting or not acting under the Loan Documents.
10.4 Action by Administrative Agent.
(a) The Administrative Agent may assume that no Default or
Event of Default has occurred and is continuing, unless the
Administrative Agent has actual knowledge of the Default or Event of
Default, has received notice from Borrower stating the nature of the
Default or Event of Default, or has received notice from a Bank stating
the nature of the Default or Event of Default and that Bank considers
the Default or Event of Default to have occurred and to be continuing.
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(b) The Administrative Agent has only those obligations under
the Loan Documents that are expressly set forth therein. Without
limitation on the foregoing, the Administrative Agent shall have no
duty to inspect any property of Borrower or any of its Subsidiaries,
although the Administrative Agent may in its discretion periodically
inspect any property from time to time.
(c) Except for any obligation expressly set forth in the Loan
Documents and as long as the Administrative Agent may assume that no
Event of Default has occurred and is continuing, the Administrative
Agent may, but shall not be required to, exercise its discretion to act
or not act, except that the Administrative Agent shall be required to
act or not act upon the instructions of the Majority Banks (or of all
the Banks, to the extent required by Section 11.2) and those
instructions shall be binding upon the Administrative Agent and all the
Banks, provided that the Administrative Agent shall not be required to
act or not act if to do so would, in the reasonable judgment of the
Administrative Agent, expose the Administrative Agent to significant
liability or would be contrary to any Loan Document or to applicable
law.
(d) If the Administrative Agent has received a notice
specified in clause (a), the Administrative Agent shall give notice
thereof to the Banks and shall act or not act upon the instructions of
the Majority Banks (or of all the Banks, to the extent required by
Section 11.2). If the Majority Banks fail for three (3) Banking Days
after the receipt of notice from the Administrative Agent, to instruct
the Administrative Agent, then the Administrative Agent, in its sole
discretion, may act or not act as it deems advisable for the protection
of the interests of the Banks.
(e) The Administrative Agent shall have no liability to any
Bank for acting, or not acting, as instructed by the Majority Banks (or
all the Banks, if required under Section 11.2), notwithstanding any
other provision hereof.
10.5 Liability of Administrative Agent. Neither the
Administrative Agent nor any of its respective directors, officers, agents, or
employees shall be liable for any action taken or not taken by them under or in
connection with the Loan Documents, except for their own gross negligence or
willful misconduct. Without limitation on the foregoing, the Administrative
Agent and its respective directors, officers, agents, and employees:
(a) may treat the payee of any Note as the holder thereof
until the Administrative Agent receives notice of the assignment or
transfer thereof in form satisfactory to the Administrative Agent,
signed by the payee and may treat each Bank as the owner of that Bank's
interest in the obligations due to Banks for all purposes of this
Agreement until the Administrative Agent receives notice of the
assignment or transfer thereof, in form satisfactory to the
Administrative Agent, signed by that Bank;
(b) may consult with legal counsel, in-house legal counsel,
independent public accountants, in-house accountants and other
professionals, or other experts selected by it, or with legal counsel,
independent public accountants, or other experts
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for Borrower, and shall not be liable for any action taken or not taken
by it or them in good faith in accordance with the advice of such legal
counsel, independent public accountants, or experts;
(c) will not be responsible to any Bank for any statement,
warranty, or representation made in any of the Loan Documents or in any
notice, certificate, report, request, or other statement (written or
oral) in connection with any of the Loan Documents;
(d) except to the extent expressly set forth in the Loan
Documents, will have no duty to ascertain or inquire as to the
performance or observance by Borrower or any other Person of any of the
terms, conditions, or covenants of any of the Loan Documents or to
inspect the property, books, or records of Borrower or any of its
Subsidiaries or other Person;
(e) will not be responsible to any Bank for the due execution,
legality, validity, enforceability, genuineness, effectiveness,
sufficiency, or value of any Loan Document, any other instrument or
writing furnished pursuant thereto or in connection therewith;
(f) will not incur any liability by acting or not acting in
reliance upon any Loan Document, notice, consent, certificate,
statement, or other instrument or writing believed by it or them to be
genuine and signed or sent by the proper party or parties; and
(g) will not incur any liability for any arithmetical error in
computing any amount payable to or receivable from any Bank hereunder,
including without limitation payment of principal and interest on the
Notes, payment of commitment fees, Loans, and other amounts; provided
that promptly upon discovery of such an error in computation, the
Administrative Agent, the Banks, and (to the extent applicable)
Borrower shall make such adjustments as are necessary to correct such
error and to restore the parties to the position that they would have
occupied had the error not occurred.
10.6 Indemnification. Each Bank shall, ratably in accordance
with its respective Pro Rata Share of the Commitment, indemnify and hold the
Administrative Agent and its directors, officers, agents, and employees harmless
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, or disbursements of any kind or
nature whatsoever (including, without limitation, attorney's fees and
disbursements) that may be imposed on, incurred by, or asserted against it or
them in any way relating to or arising out of this Agreement (other than losses
incurred by reason of the failure by Borrower to pay the obligations due to the
Administrative Agent under a Note) or any action taken or not taken by it as
Administrative Agent thereunder, except for the Administrative Agent's gross
negligence or willful misconduct. Without limitation on the foregoing, each Bank
shall reimburse the Administrative Agent upon demand for that Bank's
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ratable share of any cost or expense incurred by the Administrative Agent in
connection with the negotiation, preparation, execution, delivery,
administration, amendment, waiver, refinancing, restructuring, reorganization
(including a bankruptcy reorganization), or enforcement of the Loan Documents,
to the extent that Borrower is required by Section 11.3 to pay that cost or
expense but fails to do so upon demand. Any such reimbursement shall not relieve
Borrower of its obligations under Section 11.3.
10.7 Successor Administrative Agent. The Administrative Agent
may resign as such at any time by written notice to Borrower and the Banks, to
be effective upon a successor's acceptance of appointment as Administrative
Agent. The Majority Banks may at any time remove the Administrative Agent by
written notice to that effect to be effective on such date as the Majority Banks
designate. In either event, the Majority Banks shall appoint a successor
Administrative Agent or Agents, who must be from among the Banks and who shall
be subject to the prior approval of Borrower, which approval shall not be
unreasonably withheld or delayed, provided, that the Administrative Agent shall
be entitled to appoint a successor Administrative Agent from among the Banks,
subject to acceptance of appointment by that successor Administrative Agent, if
the Majority Banks have not appointed a successor Administrative Agent within
thirty (30) days after the date the Administrative Agent gave notice of
resignation or was removed. Upon a successor's acceptance of appointment as
Administrative Agent, the successor will thereupon succeed to and become vested
with all the rights, powers, privileges, and duties of the Administrative Agent
under the Loan Documents, and the resigning or removed Administrative Agent will
thereupon be discharged from its duties and obligations thereafter arising under
the Loan Documents. After any retiring Administrative Agent's resignation or
removal hereunder as Administrative Agent, the provisions of this Article 10 and
Sections 11.3 and 11.10 shall inure to its benefit as to any action taken or
omitted to be taken by it while it was Administrative Agent under this
Agreement.
10.8 No Obligations of Borrower. Nothing contained in this
Article 10 shall be deemed to impose upon Borrower any obligation in respect of
the due and punctual performance by the Administrative Agent of its obligations
to the Banks under any provision of this Agreement, and Borrower shall have no
liability to the Administrative Agent or any of the Banks in respect of any
failure by the Administrative Agent or any Bank to perform any of its
obligations to the Administrative Agent or the Banks under this Agreement.
Without limiting the generality of the foregoing, where any provision of this
Agreement relating to the payment of any amounts due and owing under the Loan
Documents provides that such payments shall be made by Borrower to the
Administrative Agent for the account of the Banks, Borrower's obligations to the
Banks in respect of such payments shall be deemed to be satisfied upon the
making of such payments to the Administrative Agent in the manner provided by
this Agreement.
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Article 11
MISCELLANEOUS
11.1 Cumulative Remedies; No Waiver. The rights, powers, and
remedies of the Administrative Agent or any Bank provided herein or in any Note
or other Loan Document are cumulative and not exclusive of any right, power, or
remedy provided by law or equity. No failure or delay on the part of the
Administrative Agent or any Bank in exercising any right, power, or remedy may
be, or may be deemed to be, a waiver thereof; nor may any single or partial
exercise of any right, power, or remedy preclude any other or further exercise
of any other right, power, or remedy. The terms and conditions of Section 8.1
hereof are inserted for the sole benefit of the Banks and the Administrative
Agent may (with the approval of the Majority Banks) waive them in whole or in
part with or without terms or conditions in respect of any Loan, without
prejudicing the Banks' rights to assert them in whole or in part in respect of
any other Loans.
11.2 Amendments; Consents. No amendment, modification,
supplement, termination, or waiver of any provision of this Agreement or any
other Loan Document, and no consent to any departure by Borrower or any other
Party therefrom, may in any event be effective unless in writing signed by the
Administrative Agent with the approval of the Majority Banks and Borrower, and
then only in the specific instance and for the specific purpose given; and
without the approval in writing of all the Banks, no amendment, modification,
supplement, termination, waiver, or consent may be effective:
(a) to amend or modify the principal of, or the amount of
principal or principal prepayments payable on, any Obligation or the
amount of the Commitment or to decrease the rate of any interest or fee
payable to any Bank;
(b) to postpone any date fixed for any payment of principal
of, prepayment of principal of, or any installment of interest on, any
Obligation or any installment of any fee or to extend the term of the
Commitment;
(c) to amend or modify the provisions of the definitions in
Section 1.1 of "Majority Banks" or of Sections 11.2, 11.9, 11.10, or
11.11;
(d) release any Guarantor Subsidiary from liability under the
Subsidiary Guaranty; or
(e) to amend or modify any provision of this Agreement or the
Loan Documents that expressly requires the consent or approval of all
the Banks.
Any amendment, modification, supplement, termination, waiver, or consent
pursuant to this Section 11.2 shall apply equally to, and shall be binding upon,
all the Banks and the Agents.
11.3 Costs, Expenses and Taxes. Borrower shall pay within 30
days after demand (which demand shall be accompanied by an invoice in reasonable
detail) the
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reasonable actual out-of-pocket costs and expenses of the Administrative Agent
in connection with (a) the negotiation, preparation, execution, delivery,
arrangement, syndication and closing of the Loan Documents, provided that such
costs and expenses do not exceed the amounts referred to in a letter agreement
between Borrower and the Administrative Agent, (b) administration of the Loan
Documents, provided that such costs and expenses do not exceed the amounts set
forth in a letter agreement between Borrower and the Administrative Agent and
(c) any amendment, waiver or modification of the Loan Documents. Borrower shall
pay within 30 days after demand the reasonable actual out-of-pocket costs and
expenses of the Administrative Agent and each of the Banks in connection with
the enforcement of any Loan Documents following the occurrence of a Default or
an Event of Default, including in connection with any refinancing,
restructuring, reorganization (including a bankruptcy reorganization, if such
payment is approved by the bankruptcy court or any similar proceeding). The
costs and expenses referred to in the first sentence above (for which Borrower
shall be liable solely with respect to costs and expenses of the Administrative
Agent) and the second sentence above (which shall apply to costs and expenses of
the Administrative Agent and the Banks) shall include filing fees, recording
fees, title insurance fees, appraisal fees, search fees, and other out-of-pocket
expenses and the reasonable actual fees and out-of-pocket expenses of any legal
counsel retained by the Administrative Agent or any of the Banks (including the
allocated costs of in-house counsel), as the case may be, or independent public
accountants and other outside experts retained by the Administrative Agent
(provided that (i) Borrower shall not be liable under this Section 11.3 for fees
and expenses of more than one firm of independent public accountants, or more
than one expert with respect to a specific subject matter, at any one time and
(ii) with respect to the costs and expenses referred to in the second sentence
above (pertaining to enforcement matters), Borrower shall not be liable for the
fees and expenses of more than one firm of outside legal counsel retained to
represent the Administrative Agent nor for more than one additional firm of
outside legal counsel retained to otherwise represent one or more of the Banks).
Nothing herein shall obligate Borrower to pay any costs and expenses in
connection with an assignment of or participation in a Bank's Pro-Rata Share of
the Commitment. Borrower shall pay any and all documentary and transfer taxes,
assessments or charges made by any Governmental Agency and all reasonable actual
costs, expenses, fees, and charges of Persons (other than the Administrative
Agent or the Banks) payable or determined to be payable in connection with the
execution, delivery, filing or recording of this Agreement, any other Loan
Document, or any other instrument or writing to be delivered hereunder or
thereunder, and shall reimburse, hold harmless, and indemnify the Administrative
Agent and each Bank from and against any and all loss, liability, or legal or
other expense with respect to or resulting from any delay in paying or failure
to pay any such tax, cost, expense, fee, or charge or that any of them may
suffer or incur by reason of the failure of Borrower to perform any of its
Obligations. Any amount payable to the Administrative Agent or any Bank under
this Section shall bear interest from the date which is 30 days after Borrower's
receipt of demand (together with reasonable supporting documentation) for
payment at the rate then in effect for Alternate Base Rate Loans.
11.4 Nature of Banks' Obligations. Nothing contained in this
Agreement or any other Loan Document and no action taken by the Administrative
Agent or the Banks or
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74
any of them pursuant hereto or thereto may, or may be deemed to, make the Banks
a partnership, an association, a joint venture, or other entity, either among
themselves or with Borrower. Each Bank's obligation to make any Advance pursuant
hereto is several and not joint or joint and several, and is not conditioned
upon the performance by any other Bank of its obligation to make Advances. A
default by any Bank will not increase the Commitment of any other Bank. Any Bank
not in default may, if it desires, assume in such proportion as the
nondefaulting Banks agree the obligations of any Bank in default, but is not
obligated to do so.
11.5 Representations and Warranties. All representations and
warranties of Borrower and any other Party contained herein or in any other Loan
Document (including, for this purpose, all representations and warranties
contained in any certificate or other writing required to be delivered by or on
behalf of Borrower or such Party pursuant to any Loan Document) will survive the
making of the loans hereunder and the execution and delivery of the Notes, and,
in the absence of actual knowledge by the Administrative Agent or a Bank of the
untruth of any representation or warranty, have been or will be relied upon by
the Administrative Agent and that Bank, notwithstanding any investigation made
by the Administrative Agent or that Bank or on their behalf.
11.6 Notices. Except as otherwise provided in any Loan
Document, all notices, requests, demands, directions, and other communications
provided for hereunder and under any other Loan Document must be in writing and
must be mailed (provided that communications related to any Default or Event of
Default or proposed action under Section 11.2 shall not be sent solely by mail),
telegraphed, delivered, or sent by telex, telecopier 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 the applicable
Loan Document or in a written notice sent to the Administrative Agent and
Borrower in accordance with this Section. Except as otherwise provided in any
Loan Document if any notice, request, demand, direction, or other communication
is given by mail it will be effective on the earlier of actual receipt or the
third Banking Day after deposited in the United States mails with first class or
airmail postage prepaid; if given by telegraph or cable, when delivered to the
telegraph company with charges prepaid; if given by telecopier, when sent; if
given by telex, when confirmed by answerback; or if given by personal delivery,
when delivered.
11.7 Execution in Counterparts. This Agreement and any other
Loan Document to which Borrower is a Party may be executed in any number of
counterparts and any party hereto or thereto may execute any counterpart, each
of which when executed and delivered will be deemed to be an original and all of
which counterparts of this Agreement or any other Loan Document, as the case may
be, taken together will be deemed to be but one and the same instrument. Such
counterparts may be sent by telecopy, with the original counterparts to follow
by mail or courier. The execution of this Agreement or any other Loan Document
by any party hereto or thereto will not become effective until executed
counterparts hereof or thereof (or other evidence of execution satisfactory to
the
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75
Administrative Agent and Borrower) have been delivered to the Administrative
Agent and Borrower.
11.8 Binding Effect; Assignment.
(a) This Agreement and the other Loan Documents to which
Borrower is a Party will be binding upon and inure to the benefit of
Borrower, the Agents, each of the Banks, and their respective
successors and assigns, except that except as permitted in Section 6.3,
Borrower may not assign its rights hereunder or thereunder or any
interest herein or therein without the prior written consent of all the
Banks. Any Bank may at any time pledge its Notes or any other
instrument evidencing its rights as a Bank hereunder to a Federal
Reserve Bank, but no such pledge shall release that Bank from its
obligations hereunder or grant to such Federal Reserve Bank the rights
of a Bank hereunder absent foreclosure of such pledge.
(b) From time to time following the Effective Date, each Bank
may assign to one or more Eligible Assignees all or any portion of its
Pro Rata Share of the Commitment; provided that (i) such Eligible
Assignee, if not then a Bank, shall be approved by each of the
Administrative Agent (which approval shall not be unreasonably
withheld) and by Borrower (which approval shall not be unreasonably
withheld), (ii) such assignment shall be evidenced by a Commitment
Assignment and Acceptance, a copy of which shall be furnished to the
Administrative Agent as hereinbelow provided; (iii) except in the case
of an assignment to an Affiliate of the assigning Bank, to another Bank
or of the entire remaining Commitment of the assigning Bank, the
assignment shall not assign a Pro Rata Share of the Commitment
equivalent to less than $10,000,000 and that is not an integral
multiple of $1,000,000, (iv) except in the case of an assignment of the
entire remaining Commitment of the assigning Bank, giving effect to the
assignment, the assigning Bank will not be in violation of its
Applicable Minimum Hold Requirement and (v) the effective date of any
such assignment shall be as specified in the Commitment Assignment and
Acceptance, but not earlier than the date which is five (5) Banking
Days after the date the Administrative Agent has received the
Commitment Assignment and Acceptance. Upon the effective date of such
Commitment Assignment and Acceptance, the Eligible Assignee named
therein shall be a Bank for all purposes of this Agreement with the Pro
Rata Shares of the Commitment therein set forth and, to the extent of
such Pro Rata Shares, the assigning Bank shall be released from its
further obligations under this Agreement. Borrower agrees that it shall
execute and deliver (against delivery by the assigning Bank to Borrower
of its Notes under this Agreement) to such assignee Bank, Notes
evidencing that assignee Bank's Pro Rata Share, and to the assigning
Bank, Notes evidencing the remaining balance Pro Rata Share retained by
the assigning Bank.
(c) By executing and delivering a Commitment Assignment and
Acceptance, the Eligible Assignee thereunder acknowledges and agrees
that: (i) other than the representation and warranty that it is the
legal and beneficial owner of the Pro
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76
Rata Shares of the Commitment being assigned thereby free and clear of
any adverse claim, the assigning Bank has made no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability,
genuineness or sufficiency of this Agreement or any other Loan
Document; (ii) the assigning Bank has made no representation or
warranty and assumes no responsibility with respect to the financial
condition of Borrower or the performance by Borrower of its obligations
under this Agreement; (iii) it has received a copy of this Agreement,
together with copies of the most recent financial statements delivered
pursuant to this Agreement and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision
to enter into such Commitment Assignment and Acceptance; (iv) it will,
independently and without reliance upon the Administrative Agent, or
any Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (v) it appoints and
authorizes the Administrative Agent to take such action and to exercise
such powers as are delegated to the Administrative Agent by this
Agreement; and (vi) it will perform in accordance with their terms all
of the obligations which by the terms of this Agreement are required to
be performed by it as a Bank.
(d) After receipt of a completed Commitment Assignment and
Acceptance executed by any Bank and an Eligible Assignee, and receipt
of an assignment fee of $4,000 from such Eligible Assignee, the
Administrative Agent shall, at least one Banking Day prior to the
effective date thereof, provide to Borrower and the Banks a revised
Schedule 1.1 giving effect thereto.
(e) Each Bank may from time to time grant participations to
one or more banks or other financial institutions (including another
Bank) in its Pro Rata Share of the Commitment; provided, however, that
(i) such participant, if not an Affiliate of the granting Bank, shall
be approved by Borrower (which approval shall not be unreasonably
withheld), (ii) such Bank's obligations under this Agreement shall
remain unchanged, (iii) such Bank shall remain solely responsible to
the other parties hereto and thereto for the performance of such
obligations, (iv) the participating bank or other financial institution
shall not be a Bank hereunder for any purpose except, if the
participation agreement so provides, for the purposes of recovery of
eurodollar costs or capital adequacy expenses or indemnifications
provided to the Banks under this Agreement but only to the extent that
the cost of such benefits to Borrower does not exceed the cost which
Borrower would have incurred in respect of such Bank absent the
participation, (v) the participating bank or other financial
institution shall be prohibited from transferring, encumbering or
granting any sub-participation interest in the participation interest,
(vi) Borrower, the Administrative Agent, and the other Banks shall
continue to deal solely and directly with such Bank in connection with
such Bank's rights and obligations under this Agreement, (vii) the
participation interest granted shall not be with respect to a Pro Rata
Share of the Commitment equivalent to less than $10,000,000, (viii)
giving effect to the participation, the
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granting Bank will not be in violation of its Applicable Minimum Hold
Requirement, (ix) the consent of the holder of such participation
interest shall not be required for amendments or waivers of provisions
of the Loan Documents other than those which (A) extend the maturity
dates or any other date upon which any payment of money is due to the
Banks, (B) reduce the rate of interest, any fee or any other monetary
amount payable to the Banks, (C) reduce the amount of any installment
of principal due to the Banks thereunder, (D) release any Guarantor
Subsidiary from its obligations under the Subsidiary Guaranty, or (E)
release any material portion of any collateral securing any of the
obligations of Borrower to the Banks and (x) to the extent that the
holder of the participation interest is granted consent rights with
respect to the matters described in clause (ix), such rights must be
subject to a voting procedure whereby the holders of the entire Pro
Rata Share of the Commitment held by the participating Bank shall act
in such matters in accordance with the vote of a majority-in-interest
of such Pro Rata Share of the Commitment.
11.9 Sharing of Setoffs. Each Bank severally agrees that if
it, through the exercise of the right of setoff, banker's lien, or counterclaim
against Borrower or otherwise, receives payment of the Obligations due it
hereunder and under the Notes that is ratably more than that to which it is
entitled hereunder pursuant to Section 3.12 or 9.2(e), then: (a) the Bank
exercising the right of setoff, banker's lien, or counterclaim or otherwise
receiving such payment shall purchase, and shall be deemed to have
simultaneously purchased, from the other Bank a participation in the Obligations
held by the other Bank and shall pay to the other Bank a purchase price in an
amount so that the share of the Obligations held by each Bank after the exercise
of the right of setoff, banker's lien, or counterclaim or receipt of payment
shall be in the same proportion that existed prior to the exercise of the right
of setoff, banker's lien, or counterclaim or receipt of payment, and (b) such
other adjustments and purchases of participations shall be made from time to
time as shall be equitable to ensure that all of the Banks share any payment
obtained in respect of the Obligations ratably in accordance with the provisions
of Section 3.12 and 9.2(e), provided that, if all or any portion of a
disproportionate payment obtained as a result of the exercise of the right of
setoff, banker's lien, counterclaim or otherwise is thereafter recovered from
the purchasing Bank by Borrower or any Person claiming through or succeeding to
the rights of Borrower, the purchase of a participation shall be rescinded and
the purchase price thereof shall be restored to the extent of the recovery, but
without interest. Each Bank that purchases a participation in the Obligations
pursuant to this Section shall from and after the purchase have the right to
give all notices, requests, demands, directions and other communications under
this Agreement with respect to the portion of the Obligations purchased to the
same extent as though the purchasing Bank were the original owner of the
Obligations purchased. Borrower expressly consents to the foregoing arrange
ments and agrees that, to the extent permitted by Law, any Bank holding a
participation in an Obligation so purchased may exercise any and all rights of
setoff, banker's lien or counterclaim with respect to the participation as fully
as if the Bank were the original owner of the Obligation purchased.
11.10 Indemnity by Borrower. Borrower agrees to indemnify,
save, and hold harmless the Administrative Agent and each Bank and their
directors, officers, agents,
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78
attorneys, and employees (collectively, the "indemnitees") from and against: (i)
any and all claims, demands, actions or causes of action that are asserted
against any indemnitee (other than by Borrower or by any other indemnitee) if
the claim, demand, action or cause of action arises out of or relates to a
Commitment, the use of proceeds of any Loans, any transaction contemplated
pursuant to this Agreement, or any relationship or alleged relationship of any
indemnitee to Borrower related to this Agreement; (ii) any administrative or
investigative proceeding by any Governmental Agency arising out of or related
to a claim, demand, action or cause of action described in clause (i) above; and
(iii) any and all liabilities, losses, costs, or expenses (including reasonable
attorneys' fees and disbursements (including the allocated cost of in-house
counsel)) that any indemnitee suffers or incurs as a result of any of the
foregoing; provided, that Borrower shall have no obligation under this Section
to any indemnitee with respect to any of the foregoing arising out of the gross
negligence or willful misconduct of that indemnitee or the breach by the
indemnitee of this Agreement or from the transfer or disposition of any Note by
any Bank. If any claim, demand, action or cause of action is asserted against
any indemnitee, such indemnitee shall promptly notify Borrower, but the failure
to so promptly notify Borrower shall not affect Borrower's obligations under
this Section unless such failure materially prejudices Borrower's right to
participate in the contest of such claim, demand, action or cause of action, as
hereinafter provided. If requested by Borrower in writing and so long as no
Default or Event of Default shall have occurred and be continuing, such
indemnitee shall in good faith contest the validity, applicability and amount of
such claim, demand, action or cause of action, shall permit Borrower to
participate in such contest and shall cooperate with Borrower to the extent
their interests are aligned. Any indemnitee that proposes to settle or
compromise any claim or proceeding for which Borrower may be liable for payment
of indemnity hereunder shall give Borrower written notice of the terms of such
proposed settlement or compromise reasonably in advance of settling or
compromising such claim or proceeding and shall not so settle or compromise
without Borrower's written approval thereof, which approval may be withheld in
Borrower's sole discretion. Any voluntary settlement by an indemnitee of such a
claim or proceeding without Borrower's written approval shall relieve Borrower
of its obligation to indemnify that indemnitee with respect to such claim or
proceeding. In any legal action involving more than one indemnitee, all
indemnitees shall be represented by a single legal counsel unless such legal
counsel determines that a defense or counterclaim is available to an indemnitee
that is not available to all indemnitees and that to assert such a defense or
counterclaim would create a conflict of interest, or a potential conflict of
interest, in which case such indemnitee shall be entitled to separate legal
counsel. Any obligation or liability of Borrower to any indemnitee under this
Section shall survive the expiration or termination of this Agreement and the
repayment of all Loans and all other Obligations owed to the Banks.
11.11 Nonliability of Banks. The relationship between Borrower
and the Banks is, and shall at all times remain, solely that of borrower and
lenders, and the Banks and the Administrative Agent neither undertake nor assume
any responsibility or duty to Borrower to review, inspect, supervise, pass
judgment upon, or inform Borrower of any matter in connection with any phase of
Borrower's business, operations, or condition, financial or otherwise. Borrower
shall rely entirely upon its own judgment with respect to such matters, and any
review, inspection, supervision, exercise of judgment, or information
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79
supplied to Borrower by any Bank or the Agents in connection with any such
matter is for the protection of the Banks and the Agents, and neither Borrower
nor any third party is entitled to rely thereon.
11.12 Confidentiality. Each Bank agrees to use any
confidential information that it may receive, directly or indirectly, from
Borrower pursuant to this Agreement only for the purposes of this Agreement and
to hold such confidential information in confidence, except for disclosure: To
Affiliates of the Bank; To other Banks; To legal counsel, accountants and other
professional advisors to that Bank; To regulatory officials having jurisdiction
over that Bank; As required by Law or legal process (provided that the Bank
shall, to the extent possible give sufficient notice to Borrower of such legal
process to enable Borrower to oppose such legal process, and in any event, give
written notice to Borrower of such legal process as soon as practicable) or in
connection with any legal proceeding to which that Bank and Borrower are adverse
parties; and to another financial institution in connection with a disposition
or proposed disposition to that financial institution of all or part of that
Bank's interests hereunder or a participation interest in its Notes, provided
that such disclosure is made subject to an appropriate confidentiality agreement
by such institution on terms sub stantially similar to this Section. For
purposes of the foregoing, "confidential information" shall mean any information
respecting Borrower or its Subsidiaries reasonably considered by Borrower to be
confidential, other than (a) information previously filed with any Governmental
Agency and available to the public, (b) information previously published in any
public medium from a source other than, directly or indirectly, the Agents or
any Bank, and (c) information previously disclosed by Borrower to any Person not
associated with Borrower without any reasonable expectation of confidentiality.
Nothing in this Section shall be construed to create or give rise to any
fiduciary duty on the part of the Agents or the Banks to Borrower.
11.13 No Third Parties Benefited. This Agreement is made for
the purpose of defining and setting forth certain obligations, rights and duties
of Borrower, the Agents and the Banks in connection with the Commitment, and is
made for the sole benefit of Borrower, the Administrative Agent and the Banks,
and the Administrative Agent's and the Banks' successors and assigns. Except as
provided in Sections 11.8 and 11.10, no other Person shall have any rights of
any nature hereunder or by reason hereof.
11.14 Other Dealings. Any Bank may, without liability to
account to the other Banks, accept deposits from, lend money or provide credit
facilities to and generally engage in any kind of banking or other business with
Borrower and its Subsidiaries.
11.15 Right of Setoff - Deposit Accounts. Upon the occurrence
of an Event of Default and the acceleration of maturity of the principal
indebtedness under any of the Notes pursuant to Section 9.2, Borrower hereby
specifically authorizes each Bank in which Borrower maintains a deposit account
(whether a general or special deposit account, other than trust accounts) or a
certificate of deposit to setoff any Obligations owed to the Banks against such
deposit account or certificate of deposit without prior notice to Borrower
(which notice is hereby waived) whether or not such deposit account or
certificate of deposit has then
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80
matured. Nothing in this Section shall limit or restrict the exercise by a Bank
of any right to setoff or banker's lien under applicable Law, subject to the
approval of the Majority Banks.
11.16 Further Assurances. Borrower shall, at its expense and
without expense to the Banks or the Administrative Agent, do, execute, and
deliver such further acts and documents as any Bank or the Administrative Agent
from time to time reasonably requires for the assuring and confirming unto the
Banks or the Administrative Agent the rights hereby created or intended now or
hereafter so to be, or for carrying out the intention or facilitating the
performance of the terms of any Loan Document; provided that this Section 11.16
is not intended to create any affirmative obligation on the part of Borrower to
provide collateral security, additional guarantors or other credit enhancement
with respect to the Obligations.
11.17 Integration. This Agreement, together with the other
Loan Documents, comprises the complete and integrated agreement of the parties
on the subject matter hereof and supersedes all prior agreements, written or
oral, on the subject matter hereof except as expressly provided herein to the
contrary; provided that the foregoing is subject to Section 4.18 hereof. The
Loan Documents were drafted with the joint participation of Borrower and the
Banks and shall be construed neither against nor in favor of either, but rather
in accordance with the fair meaning thereof.
11.18 Governing Law. The Loan Documents shall be governed by,
and construed and enforced in accordance with, the Laws of California.
11.19 Severability of Provisions. Any provision in any Loan
Document that is held to be inoperative, unenforceable, or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or
invalid without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.
11.20 Headings. Article and section headings in this Agreement
and the other Loan Documents are included for convenience of reference only and
are not part of this Agreement or the other Loan Documents for any other
purpose.
11.21 Conflict in Loan Documents. To the extent there is any
actual irreconcilable conflict between the provisions of this Agreement and any
other Loan Document, the provisions of this Agreement shall prevail.
11.22 Waiver Of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, THE NOTES, ANY OTHER LOAN
DOCUMENT OR UNDER ANY AMENDMENT, INSTRUMENT OR DOCUMENT DELIVERED OR WHICH MAY
IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING OR
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81
OTHER RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY
OTHER LOAN DOCUMENT AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY. ANY PARTY TO THIS AGREEMENT MAY FILE AN
ORIGINAL COUNTERPART OR COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE
OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL
BY JURY.
11.23 Purported Oral Amendments. BORROWER EXPRESSLY
ACKNOWLEDGES THAT THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY ONLY BE
AMENDED OR MODIFIED, OR THE PROVISIONS HEREOF OR THEREOF WAIVED OR SUPPLEMENTED,
BY AN INSTRUMENT IN WRITING THAT COMPLIES WITH SECTION 11.2. BORROWER AGREES
THAT IT WILL NOT RELY ON ANY COURSE OF DEALING, COURSE OF PERFORMANCE, OR ORAL
OR WRITTEN STATEMENTS BY ANY REPRESENTATIVE OF ANY AGENT OR ANY BANK THAT DOES
NOT COMPLY WITH SECTION 11.2 TO EFFECT AN AMENDMENT, MODIFICATION, WAIVER OR
SUPPLEMENT TO THE AGREEMENT OR THE OTHER LOAN DOCUMENTS.
11.24 Hazardous Materials Indemnity. Without limiting any
other indemnity provided for in the Loan Documents, Borrower agrees to indemnify
the Administrative Agent, each other Managing Agent and each Bank and their
directors, officers, agents, attorneys, and employees (collectively, the
"indemnities") from any claim, liability, loss, cost or expense (including
reasonable attorneys' fees (including the allocated cost of in-house counsel))
directly or indirectly arising out of the use, generation, manufacture,
production, storage, release, threatened release, discharge, disposal or
presence of any Hazardous Materials if such Hazardous Materials are on, under,
about or relate to Borrower's Property or operations, so long as such claim,
liability, loss, cost or expense arises out of or relates to a Commitment, the
use of proceeds of any Loans, any transaction contemplated pursuant to this
Agreement,
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or any relationship or alleged relationship of any indemnitee to Borrower
related to this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
XXXXXXX AND BROAD HOME CORPORATION
By /s/ XXXXXXX X. XXXX
--------------------------------------
Xxxxxxx X. Xxxx
Senior Vice President
and Chief Financial Officer
By /s/ XXXXXXX X. XXXXXXXXX
--------------------------------------
Xxxxxxx X. Xxxxxxxxx
Vice President and Controller
00000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxx
Senior Vice President and
Chief Financial Officer
Phone: (000) 000-0000
Fax: (000) 000-0000
- 00 -
00
XXXX XX XXXXXXX NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Administrative
Agent, Lead Arranger and a Bank
By: /s/ XXXXX XXXXXX
-------------------------------------
Xxxxx Xxxxxx
Vice President
Domestic Lending Office
Bank of America NT&SA
CRESG - National Accounts #1357
000 Xxxxx Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Vice President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
LIBOR Lending Office
Bank of America NT&SA
CRESG National Accounts #1357
000 Xxxxx Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxx Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
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84
CREDIT LYONNAIS LOS ANGELES BRANCH,
as Syndication Agent and a Bank
By: /s/ XXXXXX X. XXXXX
------------------------------------
Xxxxxx X. Xxxxx,
First Vice President and Manager
Domestic and LIBOR Lending Office
Credit Lyonnais Los Angeles Branch
000 Xxxxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
Vice President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
THE FIRST NATIONAL BANK OF CHICAGO,
as Documentation Agent and a Bank
By: /s/ XXXX XXXXX
--------------------------------------
Xxxx Xxxxx
Corporate Banking Officer
Domestic and LIBOR Lending Office
The First National Bank of Chicago
Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxx
Corporate Banking Officer
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
- 78 -
00
XXXXX XXXX XX XXXXXXXXXX, N.A., as a
Co-Agent and a Bank
By: /s/ XXXX X. XXXXXXX
-------------------------------------
Xxxx X. Xxxxxxx
Vice President
Domestic and LIBOR Lending Office
Union Bank of California, N.A.
000 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
Vice President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
BANK UNITED, FSB, as a Bank
By /s/ XXXXXX X. XXXXXXX
--------------------------------------
Xxxxxx X. Xxxxxxx
Vice President/Manager
Domestic and LIBOR Lending Office
Bank United, FSB
0000 Xx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Vice President/Manager
Residential Construction
Lending - San Diego
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
- 79 -
86
COMERICA BANK, as a Bank
By /s/ XXX XXXXXX
-------------------------------------
Xxx Xxxxxx
Account Officer
Domestic and LIBOR Lending Office
Comerica Bank
000 Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxx Xxxxxx
Account Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
SUNTRUST BANK, ATLANTA, as a Bank
By /s/ XXXXX XXXX
--------------------------------------
Xxxxx Xxxx
Vice President
Domestic and LIBOR Lending Office
SunTrust Bank, Atlanta
00 Xxxx Xxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxx
Vice President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
By /s/ XXXXXXX X. MCMEELIN
--------------------------------------
Xxxxxxx McMeelin
Bank Officer
- 80 -
87
PARIBAS, as a Bank
By /s/ XXXX X. XXXXXXX
--------------------------------------
Xxxx X. Xxxxxxx
Assistant Vice President
By /s/ XXXX XXXXXX
--------------------------------------
Xxxx Xxxxxx
Vice President
Domestic and LIBOR Lending Offices
Paribas
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
Assistant Vice President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
- 81 -
88
EXHIBIT A
COMMITMENT ASSIGNMENT AND ACCEPTANCE AGREEMENT
THIS COMMITMENT ASSIGNMENT AND ACCEPTANCE AGREEMENT
("Agreement") dated as of ____________ is made with reference to that certain
Term Loan Agreement, dated as of January 7, 1999 (the "Loan Agreement") among
KBHC, the Banks party thereto, Credit Lyonnais Los Angeles Branch, as
Syndication Agent, The First National Bank of Chicago, as Documentation Agent,
Union Bank of California, as Co-Agent, and Bank of America National Trust and
Savings Association, as Administrative Agent and Lead Arranger, and is entered
into between the "Assignor" described below, in its capacity as a Bank under the
Loan Agreement, and the "Assignee" described below. Assignor and Assignee hereby
represent, warrant and agree as follows:
1. Definitions. Capitalized terms defined in the Loan Agreement are
used herein with the meanings set forth for such terms in the Loan Agreement. As
used in this Agreement, the following capitalized terms shall have the meanings
set forth below:
"Agents" means, collectively, the Syndication Agent, the
Documentation Agent, the Co-Agent and the Administrative Agent.
"Assignee" means __________________________________.
"Assigned Pro Rata Share" means _____% of the Commitment of
the Banks under the Loan Agreement, being equal to the following dollar amount:
$____________.
"Assignor" means __________________________________.
"Effective Date" means ______________, the effective date of
this Agreement determined in accordance with Section 11.8 of the Loan Agreement.
"KBHC" means Xxxxxxx and Broad Home Corporation, a Delaware
corporation, and its successors.
2. Representations and Warranties of the Assignor. The Assignor
represents and warrants, as of the date hereof, as follows:
(a) The Pro Rata Share of the Assignor is _____% of the
Commitment (without giving effect to assignments thereof which have not yet
become effective). The Assignor is the legal and beneficial owner of the
Assigned Pro Rata Share and the Assigned Pro Rata Share is free and clear of any
adverse claim.
-1-
89
(b) The outstanding principal balance of Advances made by
Assignor under the Commitment is $__________.
(c) The Assignor has full power and authority, and has taken
all action necessary to execute and deliver this Agreement and any and all other
documents required or permitted to be executed or delivered by it in connection
with this Agreement and to fulfill its obligations under, and to consummate the
transactions contemplated by, this Agreement, and no governmental authorizations
or other authorizations are required in connection therewith.
(d) This Agreement constitutes the legal, valid and binding
obligation of the Assignor.
Assignor makes no representation or warranty and assumes no responsibility with
respect to the financial condition of KBHC or the performance by KBHC of its
obligations under the Loan Agreement, and assumes no responsibility with respect
to any statements, warranties or representations made or in connection with the
Loan Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Agreement or any Loan Document
other than as expressly set forth above.
3. Representations and Warranties of the Assignee. The Assignee hereby
represents and warrants to the Assignor as follows:
(a) The Assignee is an Eligible Assignee;
(b) The Assignee has full power and authority, and has taken
all action necessary to execute and deliver this Agreement, and any and all
other documents required or permitted to be executed or delivered by it in
connection with this Agreement and to fulfill its obligations under, and to
consummate the transactions contemplated by, this Agreement, and no governmental
authorizations or other authorizations are required in connection therewith;
(c) This Agreement constitutes the legal, valid and binding
obligation of the Assignee;
(d) The Assignee has independently and without reliance upon
the Assignor and based on such information as the Assignee has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Assignee will, independently and without reliance upon the Agents,
Lead Arranger or any Bank, and based upon such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Loan Agreement;
(e) The Assignee has received copies of the Loan Agreement and
such of the Loan Documents as it has requested, together with copies of the most
recent financial statements delivered pursuant to the Loan Agreement; and
-2-
90
(f) If Assignee is organized under the Laws of a jurisdiction
outside the United States of America, attached hereto are the forms prescribed
by the Code and the Loan Agreement certifying Assignee's exemption from United
States withholding taxes with respect to all payments to be made to Assignee
under the Loan Agreement.
4. Assignment. On the terms set forth herein, Assignor, as of Effective
Date, hereby irrevocably sells, assigns and transfers to the Assignee all of the
rights and obligations of the Assignor under the Loan Agreement and the other
Loan Documents, in each case to the extent of the Assigned Pro Rata Share, and
the Assignee irrevocably accepts such assignment of rights and assumes such
obligations from the Assignor on such terms and as of the Effective Date. As of
the Effective Date, Assignee shall have the rights and obligations of a "Bank"
(as defined in the Loan Agreement) under the Loan Documents, except to the
extent of any arrangements with respect to payments referred to in Section 5
hereof. Assignee hereby appoints and authorizes the Administrative Agent to take
such action and to exercise such powers as are delegated to the Administrative
Agent by the Loan Agreement.
5. Payment. On the Effective Date, Assignee shall pay to the Assignor,
in immediately available funds, an amount equal to the purchase price, as agreed
between the Assignor and the Assignee, of the Assigned Pro Rata Share. The
Assignor and the Assignee have entered into a letter agreement, of even date
herewith, which sets forth their agreement with respect to the amount of
interest, fees, and other payments with respect to the Assigned Pro Rata Share
which are to be retained by the Assignor.
The Assignor and the Assignee hereby agree that if either
receives any payment of interest, principal, fees or any other amount under the
Loan Agreement, their respective Notes and other Loan Documents which is for the
account of the other, it shall hold the same in trust for such party to the
extent of such party's interest therein and shall promptly pay the same to such
party.
6. Principal, Interest, Fees, etc. Any principal that would be payable
and any interest, fees and other amounts that would accrue from and after the
Effective Date to or for the account of the Assignor pursuant to the Loan
Agreement and the Notes shall be payable to or for the account of the Assignor
and the Assignee, in accordance with their respective interests as adjusted
pursuant to this Agreement.
7. Notes. The Assignor and Assignee shall make appropriate arrangements
with KBHC concurrently with the execution and delivery hereof so that a
replacement Note is issued to the Assignor, if necessary, and a new Note is
issued to the Assignee in principal amounts reflecting their Pro Rata Shares of
the Commitment or their outstanding Advances (as adjusted pursuant to this
Agreement). As of the Effective Date, the Pro Rata Shares of Assignor and
Assignee to be reflected on Schedule 1.1 to the Loan Agreement shall be:
-3-
91
Pro Rata Share of
Commitment
Assignor __% ($_________)
Assignee __% ($_________)
8. Further Assurances. Concurrently with the execution of this
Agreement, Assignor shall execute four counterpart original Requests for
Registration, in the form of Exhibit A to this Agreement, to be forwarded to the
Administrative Agent. The Assignor and the Assignee further agree to execute and
deliver such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions con templated by this
Agreement, and Assignor specifically agrees to cause the delivery of (i) four
original counterparts of this Agreement and (ii) the Requests for Registration,
to the Administrative Agent for the purpose of registration of Assignee as a
"Bank" pursuant to the Loan Agreement.
9. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACTUAL
OBLIGATION UNDER, AND SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA.
10. Notices. All communications among the parties or notices in
connection herewith shall be in writing, hand delivered or sent by registered
airmail, postage prepaid, or by telex, telegram or cable, addressed to the
appropriate party at its address set forth on the signature pages hereof. All
such communications and notices shall be effective upon receipt.
11. Binding Effect. This Agreement shall become effective upon the
execution of the Request for Registration in the form of Exhibit A to this
Agreement by KBHC and the execution of the Consent in the form of Exhibit B to
this Agreement by the Administrative Agent, and shall be binding upon and inure
to the benefit of the parties and their respective successors and assigns;
provided, however, that Assignee shall not assign its rights or obligations
without the prior written consent of the Assignor and any purported assignment,
absent such consent, shall be void.
12. Interpretation. The headings of the various sections hereof are for
convenience of reference only and shall not affect the meaning or construction
of any provision hereof.
-4-
92
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their respective officials, officers or agents
thereunto duly authorized as of the date first above written.
"Assignor"
By:_____________________________________
_____________________________________
Printed Name and Title
Address: ________________________________
________________________________
________________________________
Attn: _________________________
"Assignee"
_________________________________________
By:______________________________________
______________________________________
Printed Name and Title
Address: ________________________________
________________________________
________________________________
Attn: _________________________
-5-
93
Exhibit A to Commitment Assignment and Acceptance Agreement
REQUEST FOR REGISTRATION
TO: BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Administrative Agent
THIS REQUEST FOR REGISTRATION OF ASSIGNEE is made as of the date
of the enclosed Commitment Assignment and Acceptance Agreement with reference to
that certain Term Loan Agreement dated as of January 7, 1999 among KBHC and the
Agents, Lead Arranger and the Banks who are parties thereto.
Assignor and Assignee hereby request that the Administrative
Agent approve of Assignee as a Bank, and that the Administrative Agent register
Assignee as a Bank pursuant to the Loan Agreement effective as of the Effective
Date described in the enclosed Commitment Assignment and Acceptance Agreement
and, in connection with this request certify to the Administrative Agent that
the enclosed Commitment Assignment and Acceptance Agreement sets forth the
correct Commitment and the Assigned Pro Rata Share of the Assignee.
Enclosed with this Request are four counterpart originals of the
Commitment Assignment and Acceptance Agreement as well as the original Note
issued to Assignor.
IN WITNESS WHEREOF, Assignor and Assignee have executed this
Request for Registration by their duly authorized officers as of ______________.
"Assignor"
_________________________________________
By:______________________________________
______________________________________
Printed Name and Title
Exhibit A
Page 1 of 2
94
"Assignee"
_________________________________________
By:______________________________________
______________________________________
Printed Name and Title
THE UNDERSIGNED HEREBY CONSENT
TO THE ABOVE ASSIGNMENT:
XXXXXXX AND BROAD HOME CORPORATION,
a Delaware corporation
By:__________________________________
_____________________________________
Printed Name and Title
Exhibit A
Page 2 of 2
95
Exhibit B to Commitment Assignment and Acceptance Agreement
CONSENT
TO: THE ASSIGNOR AND ASSIGNEE REFERRED TO IN THE ABOVE REQUEST
FOR REGISTRATION
When countersigned by the Administrative Agent below, this document shall
certify that:
1. The Administrative Agent has consented, pursuant to the terms of
the Loan Documents, to the assignment by Assignor to Assignee of the Assigned
Pro Rata Share.
2. The Administrative Agent has registered Assignee as a Bank under
the Loan Agreement, effective as of the Effective Date described above, with a
Pro Rata Share of the Commitment corresponding to the Assigned Pro Rata Share
and has adjusted the registered Pro Rata Share of the Commitment of Assignor to
reflect the assignment of the Assigned Pro Rata Share.
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Administrative
Agent
By:______________________________________
______________________________________
Printed Name and Title
Exhibit B
Page 1 of 1
96
EXHIBIT B
COMPLIANCE CERTIFICATE AS REQUIRED BY ARTICLE 7, SECTION 2
TERM LOAN AGREEMENT
PROJECTED AUGUST 31, 1998
ARTICLE 6.9 - CONSOLIDATED TANGIBLE NET WORTH
11/30/97A 2/28/98A 5/31/98A 8/31/98A 11/30/98 11/30/99
--------- -------- -------- -------- -------- --------
$000 $000 $000 $000 $000 $000
Measured from 12/1/96:
Consolidated Net Income 27,922 8,098 17,222 28,098
50% cumulative Consolidated Net Income 29,115 33,164 41,775 55,824
proceeds from issuance capital stock 860 1,857 7,345 798
50% cumulative proceeds issuance capital stock 1,227 2,156 5,828 6,227
6.9 MINIMUM CONSOLIDATED TANGIBLE NET WORTH
(a) Base Amount 300,000 300,000 300,000 300,000
(b) Plus - 50% of cumulative Consolidated
Net Income 29,115 33,164 41,775 55,824
(c) Plus - 50% cumulative proceeds from
issuance capital stock after 11/30/96 1,227 2,156 5,828 6,227
(d) Plus - 50% of proceeds Feline Prides 0 0 0 94,875
(e) (Less) Stock Repurchase Stepdown 0 0 0 0
-------- -------- -------- -------- -------- --------
MINIMUM CONSOLIDATED TANGIBLE NET WORTH 330,342 335,320 347,603 456,926 0 0
======== ======== ======== ======== ======== ========
1.1 "CONSOLIDATED TANGIBLE NET WORTH"
Consolidated Shareholder's Equity 383,056 388,341 410,237 427,425
Plus - Feline Prides 189,750
(Less) book value goodwill from
Acquisitions after 11/30/96 0 0 (23,058) (22,472)
(Less)/Plus any cumulative foreign
currency translation adjustment 1,987 3,716 3,441 3,892
-------- -------- -------- -------- -------- --------
CONSOLIDATED TANGIBLE NET WORTH 385,043 392,057 390,620 598,595 0 0
======== ======== ======== ======== ======== ========
CTNW (LESS) MIN CTNW 54,701 56,738 43,017 141,669 0 0
======== ======== ======== ======== ======== ========
97
EXHIBIT B
COMPLIANCE CERTIFICATE AS REQUIRED BY ARTICLE 7, SECTION 2
TERM LOAN AGREEMENT
PROJECTED 8/31/98
ARTICLE 6.10 - CONSOLIDATED LEVERAGE RATIO
11/30/97A 2/28/98A 5/31/98A 8/31/98A
--------- -------- -------- --------
$000 $000 $000 $000
1.1 "CONSOLIDATED TOTAL INDEBTEDNESS"
-------------------------------------------
revolving credit facility 0 0 181,000 15,000
secured debt 14,294 11,312 23,472 20,724
senior notes - 10-3/8% 0 0 0 0
senior sub notes - 9-3/8% 174,085 174,118 174,151 174,186
senior sub notes - 9-5/8% 124,445 124,455 124,465 124,475
senior notes - 7-3/4% 175,000 175,000 175,000 175,000
other unsecured 9,045 28,428 10,195 29,276
financial letters of credit 14,474 13,182 13,137 17,802
Contingent Guaranty Obligations 22,991 18,524 21,826 26,829
Cash & Cash Equivalents > $15m (51,343) (18,968) 0 0
--------- -------- -------- --------
TOTAL CONSOLIDATED INDEBTEDNESS 482,991 526,051 723,246 583,292
========= ======== ======== ========
total equity interest in unconsol JVs 6,338 5,629 5,706 5,974
KBMHG equity interest in unconsol JVs 0 0 0 0
--------- -------- -------- --------
net equity interest in unconsol JVs 6,338 5,629 5,706 5,974
CONSOLIDATED TANGIBLE NET WORTH 385,043 392,057 390,620 598,595
net equity interest in unconsol
JVs > $30m 0 0 0 0
--------- -------- -------- --------
CONSOLIDATED TANGIBLE NET WORTH FOR
CONSOLIDATED LEVERAGE RATIO 385,043 392,057 390,620 598,595
========= ======== ======== ========
DEBT TO CAPITAL RATIO 53.8% 56.0% 62.7% 46.6%
ACTUAL CONSOLIDATED LEVERAGE RATIO 1.25 1.34 1.85 0.97
========= ======== ======== ========
98
EXHIBIT B
COMPLIANCE CERTIFICATE AS REQUIRED BY ARTICLE 7, SECTION 2
TERM LOAN AGREEMENT
PROJECTED AUGUST 31, 1998
Article 6.11 - Consolidated Interest Coverage Ratio
1996 1997 1998
Actual Actual 2/28/98A 5/31/98A 8/31/98A 11/30/98 Actual 11/30/99
-------- -------- -------- -------- -------- -------- ------ --------
$000 $000 $000 $000 $000 $000 $000 $000
1.1 "Consolidated Interest Coverage Ratio"
-------------------------------------------
1.1 "CONSOLIDATED EBITDA"
(a) Consolidated Net Income (61,245) 58,230 8,098 17,222 28,098
(b) Plus - any extraordinary loss 0 0 0 0 0
(c) (Less) any extraordinary gain 0 0 0 0 0
(d) Plus - Consolidated Interest Expense 36,691 29,829 7,137 7,662 4,532
(e) Plus - federal and state taxes (34,500) 32,800 4,600 9,000 15,200
(f) Plus - depreciation and amortization 12,329 14,200 3,700 4,508 4,553
(f) Plus - all other non cash expenses 0 0 0 0
------- ------- ------- ------- -------
CONSOLIDATED EBITDA (46,725) 135,059 23,535 38,392 52,383
------- ------- ------- ------- -------
1.1 "CONSOLIDATED ADJUSTED EBITDA"
-------------------------------------------
Consolidated EBITDA (46,725) 135,059 23,535 38,392 52,383
(a) Plus - capitalized interest amortized
in COGS 24,893 21,972 6,812 4,860 8,448
(b) Plus - non-Cash NRV Adjustments 170,757 0 0 0 0
------- ------- ------- ------- -------
CONSOLIDATED ADJUSTED EBITDA 148,925 157,031 30,347 43,252 60,831
------- ------- ------- ------- -------
12 mo trailing Consolidated
Adjusted EBITDA 148,925 157,031 163,391 173,720 195,160
======= ======= ======= ======= =======
1.1 "CONSOLIDATED INTEREST EXPENSE"
-------------------------------------------
Consolidated Interest Expense 36,691 29,829 7,137 7,662 4,532
Plus - interested capitalized
to COGS 26,937 22,639 5,103 7,196 9,303
Plus - dividends paid on
preferred stock 0 0 0 0 0
------- ------- ------- ------- -------
CONSOLIDATED INTEREST EXPENSE 63,628 52,468 12,240 14,858 13,835
======= ======= ======= ======= =======
12 MO TRAILING CONSOLIDATED INTEREST
EXPENSE 63,628 52,468 51,535 53,043 53,638
======= ======= ======= ======= =======
CONSOLIDATED INTEREST COVERAGE RATIO 2.34 2.99 3.17 3.28 3.64
======= ======= ======= ======= =======
6.11 MIN CONSOLIDATED INTEREST
COVERAGE RATIO 2.00 2.00 2.25 2.25 2.25 2.25 2.25 2.25
======= ======= ======= ======= ======= ==== ==== ====
(a) MIN CURE PERIOD COVERAGE RATIO 1.50 1.50 1.75 1.75 1.75 1.75 1.75 1.75
99
EXHIBIT B
COMPLIANCE CERTIFICATE AS REQUIRED BY ARTICLE 7, SECTION 2
TERM LOAN AGREEMENT
PROJECTED AUGUST 31, 1998
ARTICLE 6.15 INVENTORY
11/30/96A 11/30/97A 2/28/98A 5/31/98A 8/31/98A 11/30/98 11/30/99
__________________________________________________________________________________
$000 $000 $000 $000 $000 $000 $000
DOMESTIC UNIMPROVED LAND __________________________________________________________________________________
BOOK VALUE 90,734 114,100 162,025 249,314 209,533
__________________________________________________________________________________
__________________________________________________________________________________
CONSOLIDATED TANGIBLE 336,025 385,043 392,057 390,620 598,595
NET WORTH __________________________________________________________________________________
DOMESTIC UNIMPROVED LAND BOOK
VALUE AS PERCENT OF
CONSOLIDATED TANGIBLE
NET WORTH 27.0% 29.6% 41.3% 63.8% 35.0%
===================================================================================
CUSHION (VIOLATION) 245,291 270,943 230,032 141,306 389,062
===================================================================================
100
EXHIBIT B
COMPLIANCE CERTIFICATE AS REQUIRED BY ARTICLE 7, SECTION 2
TERM LOAN AGREEMENT
PROJECTED AUGUST 31, 1998
Article 6.16 - Certain Investments
11/30/96A 11/30/97A 2/28/98A 5/31/98A 8/31/98A 11/30/98 11/30/99
__________________________________________________________________________________
$ 000 $ 000 $ 000 $ 000 $ 000 $000 $000
(a) equity in Foreign Subsidiaries 39,420 30,994 29,174 30,205 30,047
Plus any interco receivables - foreign subs 23,405 25,425 26,111 26,368 26,720
(Less) any interco payables - foreign subs (3,449) 0 0 0 0
__________________________________________________________________________________
INVESTMENT IN FOREIGN SUBSIDIARIES 59,376 56,419 55,285 56,573 56,767 0 0
__________________________________________________________________________________
AGGREGATE INVESTMENT IN FOREIGN
SUBSIDIARIES AFTER 11/30/96 n/a (2,957) (4,091) (2,803) (2,609)
==================================================================================
(b) equity in Financial Subsidiaries 35,208 17,559 17,611 17,811 16,764
Plus any interco receivables - financial subs 0 0 3,173 576 0
(Less) any interco payables - financial subs (2,690) (615) 0 0 (6,337)
__________________________________________________________________________________
INVESTMENT IN FINANCIAL SUBSIDIARIES 32,518 16,944 20,784 18,387 10,427
__________________________________________________________________________________
AGGREGATE INVESTMENT IN FINANCIAL
SUBSIDIARIES AFTER 11/30/96 n/a (15,574) (11,734) (14,131) (22,091)
========= ======================================================================
__________________________________________________________________________________
(c) INVESTMENT IN SPECIFIED ENTITIES 8,312 6,338 5,629 5,706 5,974
__________________________________________________________________________________
AGGREGATE INVESTMENT IN SPECIFIED
ENTITIES AFTER 11/30/96 n/a (1,974) (2,683) (2,606) (2,338)
==================================================================================
AGGREGATE INVESTMENTS IN FOREIGN AND
FINANCIAL SUBSIDIARIES AND SPECIFIED
ENTITIES AFTER 11/30/96 n/a (25,505) (18,508) (19,540) (27,038)
==================================================================================
MAX INVESTMENTS IN FOREIGN AND
FINANCIAL SUBSIDIARIES AND SPECIFIED
ENTITIES AFTER 11/30/96 30,000 30,000 30,000 30,000 30,000
__________________________________________________________________________________
CUSHION (VIOLATION) n/a 50,505 48,508 49,540 57,038
==================================================================================
101
EXHIBIT C
NOTE
$_______________ January 7, 1999
Los Angeles, California
FOR VALUE RECEIVED, the undersigned promises to pay to the
order of ______________________________ ("the Bank") the principal amount of
__________________________________ DOLLARS ($___________), or such lesser
aggregate amount of the Advance as may be made pursuant to the Bank's Pro Rata
Share of the Commitment under the Term Loan Agreement hereinafter described,
payable as hereinafter set forth. The undersigned promises to pay interest on
the principal amount of the Advance made hereunder and remaining unpaid from
time to time from the date of such Advance until the date of payment in full,
payable as hereinafter set forth.
Reference is made to the Term Loan Agreement dated as of
January 7, 1999, among the undersigned, as Borrower, the Banks that are parties
thereto, Bank of America National Trust and Savings Association, as
Administrative Agent and Lead Arranger, Credit Lyonnais Los Angeles Branch, as
Syndication Agent, The First National Bank of Chicago, as Documentation Agent,
and Union Bank of California, as Co-Agent (as amended from time to time, the
"Loan Agreement"). Terms defined in the Loan Agreement and not otherwise defined
herein are used herein with the meanings defined for those terms in the Loan
Agreement. This is one of the Notes referred to in the Loan Agreement, and any
holder hereof is entitled to all of the rights, remedies, benefits and
privileges provided for in the Loan Agreement as originally executed or as it
may from time to time be supplemented, modified, amended, renewed, extended or
supplanted. The Loan 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 Loan Agreement and in any event on the Maturity Date.
Interest shall be payable on the outstanding daily unpaid
principal amount of the Advance 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 Loan Agreement to the fullest extent permitted by applicable Law, 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
3.6 of the Loan Agreement.
-1-
102
The amount of each payment hereunder shall be made to the
Administrative Agent at the Administrative Agent's Office, for the account of
the Bank, in lawful money of the United States of America, without deduction,
offset or counterclaim and in immediately available funds on the day of payment
(which must be a Banking Day). All payments of principal received after 10:00
a.m., Los Angeles time, on any Banking Day, shall be deemed received on the next
succeeding Banking Day for purposes of calculating interest thereon. The Bank
shall use its best efforts to keep a record of the Advance 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.
The undersigned hereby promises to pay, within thirty (30)
days after demand, the reasonable 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
attorneys' fees and disbursements, whether or not an action is filed in
connection therewith, in accordance with Section 11.3 of the Loan Agreement.
The undersigned 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.
This Note shall be delivered to and accepted by the Bank in
the State of California, and shall be governed by, and construed and enforced in
accordance with, the local Laws thereof.
XXXXXXX AND BROAD HOME CORPORATION,
a Delaware corporation
By ___________________________________
Xxxxxxx X. Xxxx
Senior Vice President
and Chief Financial Officer
By ___________________________________
Xxxxxxx X. Xxxxxxxxx
Vice President and Controller
-2-
103
ADVANCES AND PAYMENTS OF PRINCIPAL
(Alternate Base Rate Loans)
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Amount of
Amount of Loan or Principal Paid or
of Redesignation Redesignated Into Unpaid
From Another Another Type Principal Notation
Date Type of Loan of Loan Balance Made By
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-3-
104
ADVANCES AND PAYMENTS OF PRINCIPAL
(LIBOR Loans)
--------------------------------------------------------------------------------
Amount of
Amount of Loan or Principal Paid or
of Redesignation Redesignated Into Unpaid
From Another Another Type Principal Notation
Date Type of Loan of Loan Balance Made By
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-4-
105
EXHIBIT D-1
(XXXXXX, XXXXXX & XXXXX LLP LETTERHEAD)
January 7, 1999
To: Bank of America National Trust and
Savings Association, as Administrative Agent
and Lead Arranger;
Credit Lyonnais Los Angeles Branch, as
Syndication Agent;
The First National Bank of Chicago, as
Documentation Agent; and
Union Bank of California, as Co-Agent
c/o Bank of America National Trust and
Savings Association
CRESG National Accounts, #1357
000 Xxxxx Xxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxxxxx, XX 00000
Re: Xxxxxxx and Broad Home Corporation
Ladies and Gentlemen:
We have acted as counsel to Xxxxxxx and Broad Home Corporation, a
Delaware corporation ("Borrower") in connection with the Term Loan Agreement
(the "Loan Agreement")
000
Xxxx xx Xxxxxxx National Trust and Savings Association et. al.
January 7, 1999
Page 2
dated as of January 7, 1999, by and among Borrower; the Banks which are parties
thereto; Bank of America National Trust and Savings Association, as
Administrative Agent and Lead Arranger; Credit Lyonnais Los Angeles Branch, as
Syndication Agent; The First National Bank of Chicago, as Documentation Agent;
and Union Bank of California, as Co-Agent (all such parties other than the
Borrower are collectively referred to herein as "Bank Parties").
This opinion is furnished to you pursuant to Section 8.1(a)(v) of the Loan
Agreement. Terms not otherwise defined herein shall have the meanings defined
for such terms in the Loan Agreement.
For the purposes of this opinion, we have examined originals, or copies
identified to our satisfaction as being true copies, of the following documents:
(a) The Loan Agreement;
(b) The Notes of even date herewith; and
(c) The Subsidiary Guaranty
The documents described in (a) through (c) above are sometimes referred to
herein as the "Loan Documents".
We have also examined such other corporate documents and records, and other
certificates, opinions and instruments and have conducted such investigations as
we have deemed necessary as a basis for the opinions expressed below. As to
factual matters relevant to our opinions expressed below, we have, without
independent investigation, relied upon certificates of public officials, upon
public records, and have further assumed and relied upon without independent
investigation the truth and accuracy of all factual representations and
warranties of all parties to the Loan Documents.
We have assumed (i) all natural persons have legal capacity, (ii) the
genuineness of all parties other than Borrower, (iii) the conformity to
authentic original documents of all documents submitted to us as copies and the
authenticity of all documents submitted to us as originals, (iv) that each of
the Guarantor Subsidiaries listed in Schedule 4.4 to the Loan Agreement (the
"Guarantor Subsidiaries") is duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization and
in each other jurisdiction where the conduct of its business or the ownership of
its Properties makes qualification or registration to transact business
necessary, (v) as to all parties other than the Borrower and the Guarantor
Subsidiaries, the due authorization, execution and delivery of the Loan
Documents, (vi) the validity and enforceability of the Loan Documents against
all parties
000
Xxxx xx Xxxxxxx National Trust and Savings Association et. al.
January 7, 1999
Page 3
thereto other than Borrower and the Guarantor Subsidiaries, (vii) that each of
the Bank Parties has the requisite power and authority, has obtained all
necessary consents, licenses and permits, has taken all necessary action and
has complied with any and all applicable laws with which such Bank Party is
required to comply, in each case relating to or affecting the matters and
actions contemplated by the Loan Documents, (viii) that each of the Bank
Parties is a national bank, state bank or similar financial institution and is
an exempt lender under Article XV of the California Constitution or statutes
enacted pursuant thereto and (ix) that the Loan Documents have not been
modified, amended, terminated or revoked in any respect, and remain in full
force and effect as of the date hereof.
On the basis of the foregoing, and relying thereon, and with the
qualifications herein set forth, we are of the opinion that:
1. Borrower is a corporation duly incorporated, validly existing and in
good standing under the General Corporation Law of the State of Delaware, and
its certificate of incorporation does not limit the term of its existence.
2. Borrower has all requisite corporate power and authority to conduct
its business, to own and lease its Properties and to execute, deliver and
perform all of its obligations under the Loan Documents to which it is a Party.
3. The execution, delivery, and performance by Borrower of the Loan
Documents to which it is a Party have been duly authorized by all necessary
corporate action.
4. The execution, delivery, and performance of the Loan Documents by
Borrower do not violate any provision of Borrower's certificate of incorporation
or bylaws, and the execution, delivery, and performance by Borrower and each
Guarantor Subsidiary of the Loan Documents to which it is a Party do not violate
any Requirement of Law applicable to Borrower or such Guarantor Subsidiary
imposed by the laws of the United States of America or the State of California
that, in our experience, is normally applicable to general business entities in
relation to transactions of the type contemplated by the Loan Documents.
5. Except as have heretofore been obtained, no authorization, consent,
approval, order, license or permit from, or filing, registration, or
qualification with, or exemption from any of the foregoing from, any
Governmental Agency under any Requirement of Law imposed on Borrower or any
Guarantor Subsidiary by the laws of the United States of America or the State of
California, in each case as such Requirements of Law exist on the date hereof,
is or will be required to authorize or permit the execution, delivery and
performance by Borrower or any Guarantor Subsidiary of the Loan Documents to
which it is a Party.
108
XXXXXX, XXXXXX & XXXXX LLP
Bank of America National Trust and Savings Association et. al.
January 7, 1999
Page 4
6. Each of the Loan Documents to which Borrower or any Guarantor
Subsidiary is a party will, when executed and delivered by Borrower or such
Guarantor Subsidiary, as the case may be, constitute the legal, valid and
binding obligation of Borrower or such Guarantor Subsidiary, as the case may be,
enforceable against Borrower or such Guarantor Subsidiary, as the case may be,
in accordance with its terms.
In addition to any assumptions, qualifications and other matters set
forth elsewhere herein, the opinions set forth above are subject to the
following:
(a) Our opinion with respect to the legality, validity, binding
effect and enforceability of any Loan Document, agreement or provision is
subject to the effect of any applicable bankruptcy, insolvency, fraudulent
conveyance, fraudulent transfer and equitable subordination, reorganization,
moratorium or similar law affecting creditors' rights generally and to the
effect of general principles of equity, including (without limitation) concepts
of materiality, reasonableness, estoppel, good faith and fair dealing
(regardless of whether considered in a proceeding in equity or at law). We
express no opinion as to the availability of equitable remedies. In applying
such equitable principles, a court, among other things, might not allow a
creditor to accelerate the maturity of a debt or enforce a guaranty thereof upon
the occurrence of a default deemed immaterial or for non-credit reasons or might
decline to order a debtor to perform covenants. Such principles applied by a
court might also include a requirement that a creditor act with reasonableness
and in good faith.
(b) Certain rights, remedies and waivers of the Loan Documents
may be unenforceable in whole or in part, but the inclusion of such provisions
does not affect the validity of the Loan Documents taken as a whole and, except
as set forth in subparagraph (a) above, the Loan Documents taken as a whole
contain adequate provisions for enforcing payment of the Obligations; however,
the unenforceability of such provisions may result in delays in or limitations
on the enforcement of the parties' rights and remedies under the Loan Documents
(and we express no opinion as to the economic consequences, if any, of such
delays or limitations).
(c) We call your attention to the following matters as to which
we express no opinion:
(i) the Borrower's agreements in the Loan Documents to
indemnify you against costs or expenses or liability notwithstanding your acts
of negligence or willful misconduct;
(ii) the Borrower's agreements in the Loan Documents for
payment or reimbursement of costs, fees and expenses or indemnification for
claims, losses or liabilities to
000
Xxxx xx Xxxxxxx National Trust and Savings Association et. al.
January 7, 1999
Page 5
the extent any such provision may be determined by a court or other tribunal to
be in an unreasonable amount, to constitute a penalty or to be contrary to
public policy;
(iii) the Borrower's agreements in the Loan Documents to the
jurisdiction or venue of a particular court, to the waiver of the right to jury
trial or to be served with process by service upon a designated third party;
(iv) any of the waivers or remedies contained in the Loan Documents,
whether or not any Loan Document deems any such waiver or remedy commercially
reasonable, if such waivers or remedies are determined (1) not to be
commercially reasonable under applicable law, (2) to conflict with mandatory
provisions of applicable law, (3) to be taken in a manner determined to be
unreasonable or not performed in good faith or with fair dealing or with
honesty in fact or (4) to be broadly or vaguely stated or not to describe the
right or duty purportedly waived with reasonable specificity;
(v) provisions in the Loan Documents which may be construed as
imposing penalties or forfeitures, late payment charges or an increase in
interest rate, upon delinquency in payment or the occurrence of a default;
(vi) any power of attorney granted under the Loan Documents;
(vii) provisions in the Loan Documents to the effect that rights or
remedies are not exclusive, that every right or remedy is cumulative and may be
exercised in addition to any other right or remedy, that the election of some
particular remedy does not preclude recourse to one or more others or that
failure to exercise or delay in exercising rights or remedies will not operate
as a waiver of any such right or remedy;
(viii) provisions in the Loan Documents which expressly or by
implication waive or limit the benefits of statutory, regulatory or
constitutional rights, unless and to the extent the statute, regulation or
constitution explicitly allow such waiver or other limitation; and
(ix) the effect of Section 1698 of the California Civil Code which,
among other matters, provides that written contract may be modified by an oral
agreement to the extent such agreement is performed by the parties.
Our opinions expressed herein are limited to the laws of the State of
California, the General Corporation Law of the State of Delaware and the
federal laws of the United States, and we do not express any opinion herein
concerning any other law, including, but not limited to, ordinances,
regulations or practices of any county, city or other government agency or body
within the State of California.
110
Bank of America National Trust and Savings Association et. al.
January 7, 1999
Page 6
This opinion is being provided for you benefit at the specific request
of our clients, is rendered to you in connection with the transaction referred
to above and may not be relied upon by any person (other than the Bank Parties,
an Eligible Assignee or any successor in interest of any Bank Party) or by you
or the other Bank Parties in any other context. Copies hereof may be furnished
(a) to your independent auditors and attorneys, (b) to any governmental agency
or authority having regulatory jurisdiction over you, (c) pursuant to an order
of legal process of any court or of any governmental agency or authority, or (d)
in connection with any legal action to which you are a party arising out of the
transaction referred to above. This opinion is rendered as of the date hereof
and we hereby disclaim any obligation to advise any person entitled to rely
hereon of any change in the matters stated herein.
Very truly yours,
/s/ XXXXXX XXXXXX & XXXXX LLP
111
EXHIBIT D-2
XXXXXXX [LOGO] BROAD
January 7, 1999
To: Bank of America National Trust and
Savings Association, as Administrative Agent
and Lead Arranger;
Credit Lyonnais Los Angeles Branch, as
Syndication Agent;
The First National Bank of Chicago, as
Documentation Agent; and
Union Bank of California, as Co-Agent
c/o Bank of America National Trust and
Savings Association
CRESG National Accounts, #1357
000 Xxxxx Xxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxxxxx, XX 00000
Ladies and Gentlemen:
I am the Senior Vice President and General Counsel of Xxxxxxx and
Broad Home Corporation, a Delaware corporation ("KBHC"). KBHC shall also be
referred to herein as the "Borrower". I have acted as such in connection with
the Term Loan Agreement dated as of January 7, 1999 (the "Agreement"), by and
among the Borrower and the Banks which are the parties hereto. The term "Banks"
shall, for the purposes of this letter, have the meaning ascribed to such term
in the Agreement.
This opinion is furnished to you pursuant to Section 8.1(a)(v) of the
Agreement. Terms not otherwise defined herein shall have the meanings defined
for such terms in the Agreement. The term "Loan Documents", as used herein,
means those Loan Documents (as defined in the Agreement) in existence as of the
Closing Date, including without limitation those referenced in paragraphs (a)
through (c) below.
000
Xxxx xx Xxxxxxx National Trust
and Savings Association xx.xx.
January 7, 1999
Page 2
This opinion is rendered to you as a supplement to the legal opinion of
Xxxxxx, Xxxxxx & Xxxxx LLP of even date herewith in connection with the
Agreement but expressly does not incorporate the terms of said Xxxxxx, Xxxxxx &
Xxxxx LLP opinion.
For purposes of this opinion, I have examined originals, or copies
identified to my satisfaction as being true copies, of the following documents:
a. The Agreement;
b. The Notes under the Agreement; and
c. The Subsidiary Guaranty.
I have also made such investigations of fact and law, obtained such
certificates of Responsible Officials of Borrower and certain of its
Subsidiaries and of public officials, reviewed incorporation documentation,
resolutions, secretary certificates, good standing certificates and other
documents as appropriate of and for the Borrower and the Guarantor
Subsidiaries, as applicable, and done such other things as I have deemed
necessary for the purpose of this opinion.
I have assumed (i) all natural persons have legal capacity, (ii) the
genuineness of all signatures of all parties other than Borrower and the
Guarantor Subsidiaries listed in Schedule 4.4 to the Agreement, (iii) the
conformity to authentic original documents of all documents submitted to me as
copies and the authenticity of all documents submitted to me as originals, (iv)
as to all parties other than Borrower and the Guarantor Subsidiaries, the due
authorization, execution and delivery of all documents and the validity and
enforceability thereof against all parties thereto other than Borrower and the
Guarantor Subsidiaries, (v) that each Person (other than Borrower and Guarantor
Subsidiaries) which is a party to the Loan Documents has full power, authority
and legal right, under its charter and other governing documents and laws
applicable to it to perform its respective obligations thereunder, (vi) all
parties to any Loan Documents have filed all required franchise tax returns, if
any, and paid all required taxes, if any, under the California Revenue &
Taxation Code and under the laws of the State of Delaware and the respective
states of incorporation of the Guarantor Subsidiaries, (vii) that each of the
Banks has the requisite power and authority, has obtained all necessary
consents, licenses and permits, has taken all necessary action and
000
Xxxx xx Xxxxxxx National Trust
and Savings Association xx.xx.
January 7, 1999
Page 3
has complied with any and all applicable laws with which such Bank is required
to comply, in each case relating to or affecting the matters and actions
contemplated by the Loan Documents, (viii) that each of the Banks is a national
bank, state bank or similar financial institution and is an exempt lender under
Article XV of the California Constitution or statutes enacted pursuant thereto
and (ix) that the Loan Documents have not been modified, amended, terminated or
revoked in any respect, and remain in full force and effect as of the date
hereof.
With respect to those opinions expressed below to be to "knowledge" or
"to the knowledge of the undersigned," or similar such wording, I am referring
solely to my individual, actual knowledge. Except as expressly set forth herein,
I did not undertake a review or examination of the activities or business
records of Borrower or any Subsidiaries specifically for the purpose of
rendering this opinion or to determine the existence or absence of such facts.
As Senior Vice President and General Counsel of KBHC, however, material
information respecting the matters covered by such opinions is brought to my
attention on a regular basis as a matter of internal policy and I intend the
phrase "to the knowledge of the undersigned" to mean that, in reviewing such
information, nothing has come to my attention which caused or should have caused
me not to render such opinions.
Based upon the foregoing and in reliance thereon, I am of the opinion
that:
1. KBHC is a corporation duly organized, validly existing and in
good standing under the Laws of the State of Delaware, and its certificate
of incorporation does not provide for the termination of its existence.
KBHC is duly qualified or registered to transact business and is in good
standing as a foreign corporation in the State of California and each other
jurisdiction in which the conduct of its business or the ownership of its
Properties makes such qualifications or registration necessary, except
where the failure so to qualify or register and to be in good standing
would not constitute a Material Adverse Effect.
2. Borrower has all requisite corporate power and authority to
conduct its business, to own and lease its Properties and to execute,
deliver and perform all of its Obligations under the Loan Documents to
which it is a Party.
114
Bank of America National Trust
and Savings Association et. al.
January 7, 1999
Page 4
3. To the knowledge of the undersigned, Borrower is in substantial
compliance with all Laws and other legal requirements applicable to its
business, has obtained all authorizations, consents, approvals, orders,
licenses and permits from, and has accomplished all filings, registrations
and qualifications with, or obtained exemptions from any of the foregoing
from, any Government Agency that are necessary for the transaction of its
business, except where the failure so to comply, file, register, qualify
or obtain exemptions would not constitute a Material Adverse Effect.
4. The execution, delivery and performance by Borrower and by each
Guarantor Subsidiary of each of the Loan Documents to which it is a Party
have been duly authorized by all necessary corporate action, and do not:
a. require under the charter documents of Borrower or the
Guarantor Subsidiary any consent or approval not heretofore obtained
of any partner, director, stockholder, security holder or creditor of
such Party;
b. violate or conflict with the Party's charter, certificate
or articles of incorporation or bylaws;
c. to the knowledge of the undersigned, result in or require
the creation or imposition of any Lien or Right of Others (other than
as provided under the Loan Documents) upon or with respect to any
Property now owned or leased by such Party;
d. violate any Requirement of Law known to the undersigned to
be applicable to such Party; or
e. 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 known to the undersigned or any
other Contractual Obligation known to the undersigned to which such
Party is a party or by which such Party or any of its Property is
bound or affected;
and, to the knowledge of the undersigned, neither Borrower nor any Subsidiary
or Borrower is in violation of, or default under, any Requirement of Law, or
000
Xxxx xx Xxxxxxx National Trust
and Savings Association et. al.
January 7, 1999
Page 5
contractual obligation, or any indenture, loan or credit agreement described in
subparagraph (e) above in any respect that would constitute a Material Adverse
Effect.
5. Each of the Loan Documents to which either Borrower or any
Guarantor Subsidiary is a Party will, when executed and delivered by Borrower or
such Guarantor Subsidiary, as the case may be, constitute the legal, valid and
binding obligation of Borrower or such Guarantor Subsidiary, as the case may be,
enforceable against such Borrower or such Guarantor Subsidiary, as the case may
be, in accordance with its terms.
6. Except as have heretofore been obtained, no authorization,
consent, approval, order, license or permit from, or filing, registration or
qualification with, or exemption from any of the foregoing from, any
Governmental Agency under any Requirement of Law imposed on Borrower or any
Guarantor Subsidiary by the laws of the United States of America or the State of
California, in each case as the same exists on the date hereof, is or will be
required to authorize or permit the execution, delivery and performance by
Borrower or by any Significant Subsidiary of the Loan Documents to which it is a
Party.
7. Each Significant Subsidiary which is a Domestic Subsidiary is
a legal entity of the form described for that Subsidiary in Schedule 4.4 to the
Agreement, duly organized, validly existing and in good standing under the Laws
of its jurisdiction of formation, is duly qualified or registered to do business
as a foreign organization (if applicable) and is in good standing as such in
each jurisdiction in which the conduction of its business or the ownership or
leasing of its Properties makes such qualifications or registration necessary
(except where the failure to be so qualified or registered and in good standing
does not constitute a Material Adverse Effect) and has all requisite power and
authority to conduct its business and to own and lease its Properties and to
execute, deliver and perform the obligations under the Loan Documents to which
it is a Party.
8. To the knowledge of the undersigned, each Significant
Subsidiary is in substantial compliance with all Laws and other requirements
applicable to its business, has obtained all authorizations, consents,
approvals, orders, licenses and permits from, and has accomplished all filings,
registrations and qualifications with, or obtained exemptions from any of the
foregoing from, any Governmental Agency that are necessary for the transaction
of its business, except where the failure so to comply, file, register, qualify
or obtain exemptions
000
Xxxx xx Xxxxxxx National Trust
and Savings Association et. al.
January 7, 1999
Page 6
does not constitute a Material Adverse Effect.
9. Neither Borrower nor any of its Subsidiaries is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940.
10. To the knowledge of the undersigned, there are no actions, suits or
proceedings pending or threatened against or affecting Borrower or any of its
Subsidiaries or any Property of any of them in any court of Law or before any
Governmental Agency in which there is a reasonable probability of a decision
which would constitute a Material Adverse Effect.
11. Neither Borrower nor any of its Subsidiaries is engaged principally,
or as one of its important activities, in the business of extending credit for
the purpose of "purchasing" or "carrying" and "margin stock" or "margin
security" within the meanings of Regulation U of the Board of Governors of the
Federal Reserve System and no Loan under the Agreement will be used to purchase
or carry any such margin stock in violation of Regulation U.
12. To the knowledge of the undersigned, Borrower and its Subsidiaries are
in substantial compliance with all applicable Laws relating to environmental
protection where the failure to comply would constitute a Material Adverse
Effect, and have not received any notice from any Governmental Agency respecting
the alleged violation by Borrower or any Subsidiary of such Laws which would
constitute a Material Adverse Effect which has not been or is not being
corrected.
In addition to any assumptions, qualifications and other matters set forth
elsewhere herein, the opinions set forth above are subject to the following:
a. My opinion with respect to the legality, validity, binding effect
and enforceability of any Loan Document, agreement or provision is subject
to the effect of any applicable bankruptcy, insolvency, fraudulent
conveyance, fraudulent transfer and equitable subordination,
reorganization, moratorium or similar law affecting creditors' rights
generally and to the effect of general principles of equity, including
(without limitation) concepts of materiality, reasonableness, estoppel,
good faith and fair dealing (regardless of whether considered in a
proceeding in equity or at law). I express no opinion as to the
availability of equitable remedies. In
117
Bank of America National Trust
and Savings Association xx.xx.
January 7, 1999
Page 7
applying such equitable principles, a court, among other things, might not
allow a creditor to accelerate the maturity of a debt or enforce a
guaranty thereof upon the occurrence of a default deemed immaterial or for
non-credit reasons or might decline to order a debtor to perform
covenants. Such principles applied by a court might also include a
requirement that a creditor act with reasonableness and in good faith.
b. Certain rights, remedies and waivers of the Loan Documents may
be unenforceable in whole or in part, but the inclusion of such provisions
does not affect the validity of the Loan Documents taken as a whole and,
except as set forth in subparagraph (a) above, the Loan Documents taken as
a whole contain adequate provisions for enforcing payment of the
"Obligations" (as defined in the Agreement); however, the unenforceability
of such provisions may result in delays in or limitations on the
enforcement of the parties' rights and remedies under the Loan Documents
and I express no opinion as to the economic consequences, if any, of such
delays or limitations.
c. I call your attention to the following matters as to which I
express no opinion:
(i) the Borrower's agreements in the Loan Documents to
indemnify you against cost or expenses or liability notwithstanding your
acts of negligence or willful misconduct;
(ii) the Borrower's agreements in the Loan Documents for
payment or reimbursement of costs, fees and expenses or indemnification
for claims, losses or liabilities to the extent any such provision may be
determined by a court or other tribunal to be in an unreasonable amount,
to constitute a penalty or to be contrary to public policy;
(iii) the Borrower's agreements in the Loan Documents to the
jurisdiction or venue of a particular court, to the waiver of the right to
jury trial or to be served with process by service upon a designated third
party;
(iv) any of the waivers or remedies contained in the Loan
Documents, whether or not any Loan Document deems any such
000
Xxxx xx Xxxxxxx National Trust
and Savings Association xx.xx.
January 7, 1999
Page 8
waiver or remedy commercially reasonable, if such waivers or remedies are
determined (1) not to be commercially reasonable under applicable law, (2)
to conflict with mandatory provisions of applicable law, (3) to be taken
in a manner determined to be unreasonable or not performed in good faith
or with fair dealing or with honesty in fact or (4) to be broadly or
vaguely stated or not to describe the right or duty purportedly waived
with reasonable specificity;
(v) provisions in the Loan Documents which may be construed as
imposing penalties or forfeitures, late payment charges or an increase in
interest rate, upon delinquency in payment or the occurrence of a default;
(vi) any power of attorney granted under the Loan Documents;
(vii) provisions in the Loan Documents to the effect that rights or
remedies are not exclusive, that every right or remedy is cumulative and
may be exercised in addition to any other right or remedy, that the
election of some particular remedy does not preclude recourse to one or
more others or that failure to exercise or delay in exercising rights or
remedies will not operate as a waiver of any such right or remedy;
(viii) provisions in the Loan Documents which expressly or by
implication waive or limit the benefits of statutory, regulatory or
constitutional rights, unless and to the extent the statute, regulation or
constitution explicitly allow such waiver or other limitation; and
(ix) the effect of Section 1698 of the California Civil Code which,
among other matters, provides that a written contract may be modified by
an oral agreement to the extent such agreement is performed by the parties.
My opinion expressed herein is limited to the laws of the State of
California, the General Corporation Law of the State of Delaware and the
federal laws of the United States, and I do not express any opinion herein
concerning any other law, including, but not limited to, ordinances,
regulations, or practices of any county, city or other government agency or
body within the State of California.
119
Bank of America National Trust
and Savings Association xx.xx.
January 7, 1999
Page 9
This opinion is being rendered to you in connection with the transaction
referred to above and may not be relied upon by any person (other than the
Banks, an Eligible Assignee or any successor in interest of any Bank) or by you
or the other Banks in any other context. Copies hereof may be furnished (a) to
your independent auditors and attorneys, (b) to any governmental agency or
authority having regulatory jurisdiction over you, (c) pursuant to order of
legal process of any court or of any governmental agency or authority, or (d)
in connection with any legal action to which you are a party arising out of the
transaction referred to above. This opinion is rendered as of the date hereof
and I hereby disclaim any obligation to advise any person entitled to rely
hereon of any change in the matters stated herein.
Very truly yours,
/s/ XXXXXX X. XXXXXXX
---------------------------
Xxxxxx X. Xxxxxxx
Senior Vice President and
General Counsel
120
EXHIBIT E
BORROWER: XXXXXXX AND BROAD
HOME CORPORATION, a
Delaware corporation
GUARANTORS: See Schedule 1 hereto
TO: BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
for itself and as Administrative Agent
GUARANTY
THIS GUARANTY ("Guaranty") dated as of January 7, 1999, is
made by each of the parties listed on Schedule 1 hereto, together with each
other person who may become a party hereto pursuant to Section 10 of this
Guaranty (each, a "Guarantor" and collectively, "Guarantors"), jointly and
severally, in favor of Bank of America National Trust and Savings Association,
as Administrative Agent and Lead Arranger, the Syndication Agent, the
Documentation Agent, the Co-Agent and the Banks (as those terms are defined in
the below- referenced Loan Agreement), with reference to the following facts:
RECITALS
A. Pursuant to the Term Loan Agreement of even date herewith
entered into by and among Xxxxxxx and Broad Home Corporation, a Delaware
corporation ("Borrower"), the Banks signatory thereto, Bank of America National
Trust and Savings Association, as Administrative Agent and Lead Arranger, Credit
Lyonnais Los Angeles Branch, as Syndication Agent, The First National Bank of
Chicago, as Documentation Agent and Union Bank of California, as Co-Agent (as
the same may be amended from time to time, the "Loan Agreement"), the Banks are
making a credit facility available to Borrower.
B. As a condition of the availability of such credit facility,
Guarantors are required to enter into this Guaranty.
C. Guarantors expect to realize direct and indirect benefits
as the result of the availability of the aforementioned credit facility, and as
the result of the execution of this Guaranty.
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AGREEMENT
NOW, THEREFORE, in order to induce the Banks to extend the
aforementioned credit facility, and for other good and valuable consideration,
the receipt and adequacy of which is hereby acknowledged, each Guarantor hereby
represents, warrants, covenants, agrees and guaranties as follows:
(1) Terms used in this Guaranty but not defined herein shall
have the meanings defined for them in the Loan Agreement.
(2) Guarantors unconditionally guarantee and promise to pay to
Bank of America National Trust and Savings Association, as the Administrative
Agent for the Banks, on demand, in lawful money of the United States, any and
all Indebtedness of Borrower then due to the Banks. The word "Indebtedness"
means any and all advances, debts, obligations and liabilities of Borrower
heretofore, now, or hereafter made, incurred or created under the Loan Agreement
and under the Loan Documents, and whether Borrower may be liable individually or
jointly with others, or whether such Indebtedness may be or hereafter becomes
otherwise unenforceable.
(3) This Guaranty is irrevocable in nature, is a guaranty of
prompt and punctual payment and performance of all Indebtedness of Borrower, and
is not merely a guaranty of collection. The Indebtedness guaranteed hereunder
includes that arising under successive transactions which shall either continue
the Indebtedness from time to time or renew it after it has been satisfied.
Anything in this Guaranty to the contrary notwithstanding, the maximum liability
of any Guarantor hereunder shall be limited to the extent required for the
obligation of such Guarantor to be valid, binding and enforceable and not
otherwise voidable or avoidable.
(4) The obligations hereunder are joint and several, and
independent of the obligations of Borrower and any of its other Subsidiaries.
Separate action or actions may be brought and prosecuted against any Guarantor
whether action is brought against the Borrower or any of its other Subsidiaries,
including any other Guarantor, or whether Borrower or any of its other
Subsidiaries, including any other Guarantor, may be joined in any such action or
actions.
(5) Each Guarantor authorizes the Banks, without notice or
demand and without affecting its liability hereunder, from time to time to (a)
renew, compromise, extend, accelerate or otherwise change the time for payment
of, or otherwise change the terms of the Indebtedness or any part thereof,
including increase or decrease of the rate of interest thereon; (b) take and
hold security for the payment of this Guaranty or the Indebtedness guaranteed,
and exchange, enforce, waive and release any such security; (c) apply such
security and direct the order or manner of sale thereof as the Administrative
Agent or any Bank in its discretion may determine; and (d) release or substitute
any one or more of the endorsers or guarantors.
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(6) Each Guarantor waives, to the fullest extent permitted by
applicable law, any right to require any Bank to (a) proceed against Borrower or
any of its other Subsidiaries, including any other Guarantor; (b) proceed
against or exhaust any security held from Borrower or any of its Subsidiaries;
or (c) pursue any other remedy in the Banks' power whatsoever. Each Guarantor
waives any defense arising by reason of any disability or other defense of
Borrower or by reason of the cessation from any cause whatsoever of the
liability of Borrower, other than payment in full of the Indebtedness. Until all
Indebtedness of Borrower to the Banks shall have been paid in full, each
Guarantor waives any right to enforce any remedy which the Banks now have or may
hereafter have against Borrower or any of its other Subsidiaries, and waives any
benefit of, and any right to participate in, any security now or hereafter held
by the Banks. Guarantors waive all rights and defenses arising out of an
election of remedies by the creditor, even though that election of remedies,
such as a nonjudicial foreclosure with respect to security for a guaranteed
obligation, has destroyed the guarantor's rights of subrogation and
reimbursement against the principal by the operation of Section 580d of the Code
of Civil Procedure or otherwise. Guarantors expressly waive to the fullest
extent permitted by applicable Law all other suretyship defenses they otherwise
might or would have under any Law. Each Guarantor waives any right of
subrogation that it may have in respect to the obligations of Borrower to the
Banks. Each Guarantor waives all presentments, demands for performance, notices
of nonperformance, protests, notices of protest, notices of dishonor, and
notices of acceptance of this Guaranty and of the existence, creation, or
incurring of new or additional Indebtedness.
(7) After demand upon the Guarantors for payment under this
Guaranty, each Guarantor hereby specifically authorizes each Bank (subject to
the approval of the Majority Banks) in which such Guarantor maintains a deposit
account (whether a general or special deposit account, other than trust
accounts) or a certificate of deposit to setoff any Obligations owed to the
Banks against such deposit account or certificate of deposit without prior
notice to any Guarantor (which notice is hereby waived) whether or not such
deposit account or certificate of deposit has then matured. Nothing in this
paragraph shall limit or restrict the exercise by a Bank of any right to setoff
or banker's lien under applicable Law, subject to the approval of the Majority
Banks.
(8) Each Guarantor represents and warrants to the Banks that
it has established adequate means of obtaining from Borrower and its
Subsidiaries, on a continuing basis, financial and other information pertaining
to the businesses, operations and condition (financial and otherwise) of
Borrower and its Subsidiaries, and that Guarantor now is and hereafter will be
completely familiar with the businesses, operations and condition (financial and
otherwise) of Borrower and its Subsidiaries. Each Guarantor hereby expressly
waives and relinquishes any duty on the part of the Banks (should any such duty
exist) to disclose to any Guarantor any matter, fact or thing related to the
businesses, operations or condition (financial or otherwise) of Borrower or its
Subsidiaries, whether now known or hereafter known by the Banks during the life
of this Guaranty.
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123
(9) Guarantors agree to pay, within thirty (30) days after
demand, the reasonable out-of-pocket costs and expenses of the Administrative
Agent and each of the Banks in connection with the enforcement of this Guaranty,
including without limitation the reasonable fees and out-of-pocket expenses of
any legal counsel retained by the Administrative Agent or any of the Banks.
(10) Any other Person may become a Guarantor under, and become
bound by the terms and conditions of, this Guaranty by executing and delivering
to the Administrative Agent an Instrument of Joinder substantially in the form
attached hereto as Exhibit A.
(11) This Guaranty shall be governed by and construed
according to the laws of the State of California, to the jurisdiction of which
the parties hereto submit.
"GUARANTORS"
XXXXXXX AND BROAD OF NORTHERN
CALIFORNIA, INC., a California corporation
XXXXXXX AND BROAD OF SAN DIEGO,
INC., a California corporation
XXXXXXX AND BROAD - SOUTH BAY,
INC., a California corporation
XXXXXXX AND BROAD - CENTRAL
VALLEY, INC., a California corporation
XXXXXXX AND BROAD COASTAL, INC., a
California corporation
XXXXXXX AND BROAD OF NEVADA, INC., a
Nevada corporation
XXXXXXX AND BROAD OF ARIZONA, INC.,
an Arizona corporation
XXXXXXX AND BROAD OF COLORADO,
INC., a Colorado corporation
XXXXXXX AND BROAD MULTI-HOUSING
GROUP, INC., a California corporation
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124
XXXXXXX AND BROAD OF NEW MEXICO,
INC., a New Mexico corporation
XXXXXXX AND BROAD - MONTEREY BAY,
INC., a California corporation
XXXXXXX AND BROAD OF SACRAMENTO,
INC., a California corporation
XXXXXXX AND BROAD OF RENO, INC., a
Nevada corporation
GENERAL HOMES CORPORATION, a Delaware
corporation
By:_______________________________________
Xxxxxxx X. Xxxxxxxxx,
Assistant Secretary
KB HOLDINGS ONE, INC., a California
corporation
By:_______________________________________
Xxxxxxx X. Xxxxxxxxx,
Assistant Secretary and Vice President
XXXXXXX AND BROAD OF SOUTHERN
CALIFORNIA, INC., a California corporation
By:_______________________________________
Xxxxxxx X. Xxxxxxxxx,
Assistant Treasurer
XXXXXXX AND BROAD OF UTAH, INC., a
California corporation
By:_______________________________________
Xxxxxxx X. Xxxxxxxxx, Vice President
-5-
000
XXXXXXX XXX XXXXX XX XXXXX, LTD., a
Texas limited partnership
By: KBSA, Inc., a Texas corporation,
Its general partner
By:_________________________________
Xxxxxxx X. Xxxxxxxxx,
Assistant Secretary
XXXXXXX AND BROAD LONE STAR, L.P., a
Texas limited partnership
By: KBSA, Inc., a Texas corporation,
Its general partner
By:_________________________________
Xxxxxxx X. Xxxxxxxxx,
Assistant Secretary
XXXXXXX AND BROAD DEVELOPMENT OF
TEXAS, L.P., a Texas limited partnership
By: KBSA, Inc., a Texas corporation,
Its general partner
By:_________________________________
Xxxxxxx X. Xxxxxxxxx,
Assistant Secretary
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SCHEDULE 1
TO GUARANTY
List of Guarantors
Xxxxxxx and Broad of Northern California, Inc.
Xxxxxxx and Broad of San Diego, Inc.
Xxxxxxx and Broad - South Bay, Inc.
Xxxxxxx and Broad of Southern California, Inc.
Xxxxxxx and Broad - Central Valley, Inc.
Xxxxxxx and Broad Coastal, Inc.
Xxxxxxx and Broad of Nevada, Inc.
Xxxxxxx and Broad of Arizona, Inc.
Xxxxxxx and Broad of Colorado, Inc.
Xxxxxxx and Broad of Utah, Inc.
Xxxxxxx and Broad Multi-Housing Group, Inc.
Xxxxxxx and Broad of New Mexico, Inc.
Xxxxxxx and Broad of Texas, Ltd.
Xxxxxxx and Broad - Monterey Bay, Inc.
Xxxxxxx and Broad of Sacramento, Inc.
Xxxxxxx and Broad of Reno, Inc.
General Homes Corporation
Xxxxxxx and Broad Lone Star, X.X.
Xxxxxxx and Broad Development of Texas, L.P.
KB Holdings One, Inc.
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127
INSTRUMENT OF JOINDER
THIS INSTRUMENT OF JOINDER ("Joinder") is executed as of
________________, by ________________________________
_______________________________________, a ____________________ ("Joining
Party"), and delivered to the Administrative Agent pursuant to the Guaranty
dated as of January 7, 1999 (the "Guaranty"). Terms used but not defined in this
Joinder shall have the meanings defined for those terms in the Guaranty.
RECITALS
A. The Guaranty was made by the Guarantors in favor of the Banks that
are parties to that certain Term Loan Agreement, dated as of January 7, 1999
(the "Loan Agreement") among Xxxxxxx and Broad Home Corporation, as Borrower,
the Banks signatory thereto, Bank of America National Trust and Savings
Association, as Administrative Agent and Lead Arranger, Credit Lyonnais Los
Angeles Branch as Syndication Agent, The First National Bank of Chicago, as
Documentation Agent and Union Bank of California, as Co-Agent.
B. Joining Party is required pursuant to Section 5.9 of the Loan
Agreement to become a Guarantor.
C. Joining Party expects to realize direct and indirect benefits as a
result of the availability to Borrower of a credit facility pursuant to the Loan
Agreement, and as a result of becoming a party to the Guaranty.
NOW THEREFORE, Joining Party agrees as follows:
AGREEMENT
1. By this Joinder, Joining Party becomes a "Guarantor" under and
pursuant to Section 10 of the Guaranty. Joining Party agrees that, upon its
execution hereof, it will become a Guarantor under the Guaranty with respect to
all Indebtedness of Borrower heretofore or hereafter incurred under the Loan
Agreement, and will be bound by all terms, conditions, and duties applicable to
a Guarantor under the Guaranty.
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128
2. The effective date of this Joinder is _______________.
"Joining Party"
_____________________________________
a ___________________________________
By:___________________________________
___________________________________
Printed Name and Title
ACKNOWLEDGED:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Administrative Agent
By:___________________________________
___________________________________
Printed Name and Title
XXXXXXX AND BROAD HOME CORPORATION
By:___________________________________
___________________________________
Printed Name and Title
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EXHIBIT F
XXXXXXX AND BROAD HOME CORPORATION
SUMMARY SALES AND BACKLOG REPORT
QUARTER ENDING AUGUST 31, 1998
31-Aug-98 31-Aug-97
-------------------- ----------------------------------------------------- -----------------------------------------------------
Deliveries Sales Backlog Avg Price Backlog Deliveries Sales Backlog Avg Price Backlog
Division Quarter Quarter Units (000's) Value Quarter Quarter Units (000's) Value
-------------------- ----------------------------------------------------- -----------------------------------------------------
Greater LA 308 275 371 $172 $ 63,812 321 360 301 $157 $ 47,257
Coastal II 285 309 388 253 98,164 241 458 421 216 90,936
Northbay 270 248 424 208 88,192 272 265 385 229 88,165
Central Valley 154 131 199 154 30,646 191 188 177 130 23,010
Southbay 112 54 224 368 82,432 72 145 246 364 89,544
Monterey Bay 96 100 116 222 25,752 107 90 170 226 38,420
----------------------------------------------------- -----------------------------------------------------
Total California 1,225 1,117 1,722 226 388,998 1,204 1,506 1,700 222 377,332
----------------------------------------------------- -----------------------------------------------------
Nevada 278 404 486 129 62,694 161 166 206 121 24,926
Phoenix 340 308 558 122 68,076 171 262 350 127 44,450
Tucson 117 127 173 112 19,376 0 0 0 0 0
New Mexico 96 53 250 151 37,750 123 110 208 164 34,112
Dallas 185 178 421 119 50,099 42 137 152 137 20,824
Houston 190 196 309 101 31,209 0 0 0 0 0
General Homes 31 8 310 123 38,130 0 0 0 0 0
San Antonio 749 667 1,240 97 120,280 690 568 1,213 94 114,022
Austin 176 132 365 118 43,070 66 83 206 102 21,012
Colorado 324 268 741 143 105,963 209 207 302 151 45,602
Utah 81 46 108 166 17,928 51 66 101 159 16,059
----------------------------------------------------- -----------------------------------------------------
Total Other US 2,567 2,387 4,961 120 594,575 1,513 1,599 2,738 117 321,007
----------------------------------------------------- -----------------------------------------------------
Total United States 3,792 3,504 6,683 147 983,573 2,717 3,105 4,438 157 698,339
Maisons Individuelles 180 132 314 173 54,322 188 130 203 146 29,638
KBD 183 238 595 142 84,490 107 61 373 111 41,403
----------------------------------------------------- -----------------------------------------------------
Total France 363 370 909 153 138,812 295 191 576 123 71,041
----------------------------------------------------- -----------------------------------------------------
Mexico 12 9 38 254 9,652 4 14 26 320 8,320
----------------------------------------------------- -----------------------------------------------------
Total 4,167 3,883 7,630 $148 $1,132,037 3,016 3,310 5,040 $154 $777,700
===================================================== =====================================================
Difference
-------------------- -----------------------------------------------------
Deliveries Sales Backlog Avg Price Backlog
Division Quarter Quarter Units (000's) Value
-------------------- -----------------------------------------------------
Greater LA (13) (85) 70 $ 15 $ 16,555
Coastal II 44 (149) (33) 37 7,228
Northbay (2) (17) 39 (21) 27
Central Valley (37) (57) 22 24 7,636
Southbay 40 (91) (22) 4 (7,112)
Monterey Bay (11) 10 (54) (4) (12,668)
-----------------------------------------------------
Total California 21 (389) 22 4 11,666
-----------------------------------------------------
Nevada 117 238 280 8 37,768
Phoenix 169 46 208 (5) 23,626
Tucson 117 127 173 112 19,376
New Mexico (27) (57) 42 (13) 3,638
Dallas 143 41 269 (18) 29,275
Houston 190 196 309 101 31,209
General Homes 31 8 310 123 38,130
San Antonio 59 99 27 3 6,258
Austin 110 49 159 16 22,058
Colorado 115 61 439 (8) 60,361
Utah 30 (20) 7 7 1,869
-----------------------------------------------------
Total Other US 1,054 788 2,223 3 273,568
-----------------------------------------------------
Total United States 1,075 399 2,245 (10) 285,234
Maisons Individuelles (8) 2 111 27 24,684
KBD 76 177 222 31 43,087
-----------------------------------------------------
Total France 68 179 333 29 67,771
-----------------------------------------------------
Mexico 8 (5) 12 (66) 1,332
-----------------------------------------------------
Total 1,151 573 2,590 $ (6) $354,337
=====================================================
130
EXHIBIT G
XXXXXXX AND BROAD HOME CORPORATION
SUMMARY OF INVENTORY
AS OF AUGUST 31, 1998
Inventory Book Value (Thousands) Size of Project (Lots/Acres)
--------------------------------------------------- ----------------------------------------------------
Land in Productions Land Under Development
Home/Lots Land Under Secured Total Total ------------------- ----------------------
Total in Prod Development Debt Lots Acres W/Homes WO/Homes Lots Acres
---------- -------- ----------- ------- ------- ------- -------- -------- -------- -------
California
Greater LA $ 121,784 $ 53,000 $ 68,714 $ 842 $12,462 300 406 765 11,291 300
Coastal 151,534 128,181 23,353 -- 3,337 169 608 818 1,911 000
Xxxxxxxx 96,428 72,185 24,243 6,527 2,320 -- 380 501 1,439 --
Central Valley 28,502 16,967 11,535 858 2,015 -- 186 183 1,646 --
Southbay 85,565 79,388 6,177 -- 1,570 -- 292 328 950 --
Monterey Bay 55,426 33,249 22,177 2,986 2,016 1,416 157 280 1,579 1,416
---------- -------- --------- ------- ------- ----- ------ ------- ------- -------
Total California 539,169 382,970 156,199 11,213 23,720 1,855 2,029 2,875 18,816 1,885
---------- -------- --------- ------- ------- ----- ------ ------- ------- -------
Nevada 64,007 52,146 11,861 3,844 2,507 43 463 799 1,245 43
Phoenix 82,047 47,193 34,854 17 7,277 -- 406 874 5,997 --
Tucson 16,365 14,187 2,178 714 1,573 -- 183 365 1,025 --
New Mexico 34,056 32,856 1,200 -- 1,383 -- 204 873 306 --
Dallas 29,634 29,634 -- -- 2,061 -- 308 1,753 -- --
Houston 26,990 26,460 530 -- 3,895 -- 295 251 3,349 --
General Homes 27,705 17,784 9,921 2,295 1,031 -- 84 452 495 --
San Antonio 64,995 51,621 13,374 497 4,650 -- 789 2,443 1,418 --
Austin 44,740 36,449 8,291 -- 2,022 -- 1,290 335 397 --
Colorado 93,335 73,136 20,199 931 8,284 -- 497 4,728 3,059 --
Utah 15,437 14,330 1,107 818 1,006 -- 39 354 613
---------- -------- --------- ------- ------- ----- ------ ------- ------- -------
Total Other US 499,311 395,796 103,515 9,116 35,689 43 4,558 13,227 17,904 43
---------- -------- --------- ------- ------- ----- ------ ------- ------- -------
Total United States 1,038,480 778,766 259,714 20,329 59,409 1,928 6,587 16,102 36,720 1,928
France
Maisonia Individuelles 44,949 41,149 3,600 -- 995 -- 457 135 403 --
KBD 33,883 22,612 11,271 -- 1,594 -- 523 -- 1,071 --
---------- -------- --------- ------- ------- ----- ------ ------- ------- -------
Total France 78,832 63,961 14,871 -- 2,589 -- 980 135 1,474 --
---------- -------- --------- ------- ------- ----- ------ ------- ------- -------
Mexico 7,173 3,574 3,599 -- 92 -- 36 12 44 --
---------- -------- --------- ------- ------- ----- ------ ------- ------- -------
Other Properties
Pacific Island 929 929 -- -- 7 -- 7 -- -- --
General Homes 7,853 7,853 -- -- -- -- -- -- -- --
Illinois 588 -- 588 -- -- 96 -- -- -- 96
Canada 1,473 -- 1,473 -- -- 140 -- -- -- 140
---------- -------- --------- ------- ------- ----- ------ ------- ------- -------
Total Other Properties 10,843 8,782 2,061 -- 7 236 7 -- -- 236
---------- -------- --------- ------- ------- ----- ------ ------- ------- -------
Total Inventory $1,135,328 $855,083 $280,245 $20,329 62,097 2,164 7,610 16,249 38,238 2,164
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