EXHIBIT 10.68
EXECUTION COPY
================================================================================
$250,000,000
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of December 3, 2003
among
DOMINION HOMES, INC.
as the Company and borrower hereunder
THE LENDERS PARTY HERETO
THE HUNTINGTON NATIONAL BANK
as Issuing Bank
U.S. BANK NATIONAL ASSOCIATION
as Documentation Agent
KEYBANK NATIONAL ASSOCIATION
as Syndication Agent
and
THE HUNTINGTON NATIONAL BANK
as Administrative Agent and Lead Arranger
================================================================================
Porter, Wright, Xxxxxx & Xxxxxx LLP
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
TABLE OF CONTENTS
-----------------
Page No.
--------
1. AMOUNT AND TERMS OF EXTENSIONS OF CREDIT..................................1
1.1. Amendment and Restatement.........................................1
1.2. The Revolving Credit Facility.....................................1
1.3. Letters of Credit.................................................3
1.4. Swing Line Loans..................................................7
1.5. Potential Defaults................................................8
2. BORROWING BASE DEFINITIONS................................................9
2.1. Borrowing Base....................................................9
2.2. Available Cash....................................................9
2.3. Developed Lots....................................................9
2.4. Eligible Lumber Inventory........................................10
2.5. Eligible Real Estate.............................................10
2.6. Fall Foundation Lots.............................................10
2.7. Investments in Joint Ventures....................................10
2.8. Lots Under Development...........................................10
2.9. Model Homes......................................................11
2.10. Real Estate Held for Development.................................11
2.11. Home Work-in-Process.............................................11
2.12. Speculative Homes................................................11
2.13. Mutual Exclusivity...............................................11
3. INTEREST RATES, FEES, ADDITIONAL COSTS AND PAYMENTS......................11
3.1. Interest Rates...................................................11
3.2. Prepayment.......................................................12
3.3. Eurodollar Rate..................................................12
3.4. Calculation of Interest..........................................12
3.5. Conversions of Advances..........................................13
3.6. Additional Costs.................................................13
3.7. Limitation on Requests and Elections.............................13
3.8. Illegality and Impossibility.....................................14
3.9. Compensation.....................................................14
3.10. Survival of Obligations..........................................15
3.11. Interest Rate Protection.........................................15
3.12. Default Interest Rate............................................15
3.13. Fees.............................................................15
3.14. Capital Adequacy and Removal of Affected Lender..................16
3.15. Mandatory Reduction..............................................17
4. EVIDENCE OF INDEBTEDNESS.................................................17
5. COSTS AND EXPENSES.......................................................18
6. CONDITIONS PRECEDENT.....................................................19
6.1. Effectiveness and Initial Advance................................19
6.2. Conditions Precedent to Subsequent Advances......................19
7. WARRANTIES AND REPRESENTATIONS...........................................20
7.1. Organization and Authority.......................................20
7.2. Borrowing is Legal and Authorized................................20
7.3. Taxes............................................................20
7.4. Corporate Information............................................21
7.5. Compliance with Law..............................................21
7.6. Financial Statements; Full Disclosure............................21
7.7. Litigation: Adverse Effects......................................22
7.8. No Insolvency....................................................22
7.9. Government Consent...............................................22
7.10. Title to Properties..............................................22
7.11. No Defaults......................................................23
7.12. Environmental Protection.........................................23
7.13. Margin Loans.....................................................23
7.14. Real Estate Ownership............................................23
7.15. Existing Investments in Joint Venture............................25
8. COMPANY BUSINESS COVENANTS...............................................25
8.1. Payment of Taxes and Claims......................................25
8.2. Maintenance of Properties and Corporate Existence................25
8.3. Sale of Assets...................................................26
8.4. Liens and Encumbrances (Negative Pledge).........................26
8.5. Indebtedness.....................................................27
8.6. Contingent Liabilities...........................................28
8.7. Operating Lease Rentals..........................................28
8.8. Acquisition of Capital Stock.....................................28
8.9. Restrictions on Dividends........................................29
8.10. Management.......................................................29
8.11. Investments, Loans and Advances..................................29
8.12. ERISA............................................................30
8.13. Tangible Net Worth...............................................30
8.14. Leverage Ratio...................................................31
8.15. No Losses........................................................31
8.16. Ratio of Uncommitted Land Holdings to Consolidated Tangible
Net Worth................................................................31
8.17. Interest Coverage Ratio..........................................31
8.18. Land Not Zoned for Residential Development.......................31
8.19. Maintenance of Deposits..........................................31
8.20. Model Homes Inventory............................................31
8.21. Speculative Homes................................................31
8.22. Further Real Estate Acquisition Limitations, Maximum
New Market Investment Amount.............................................32
8.23. Conduct of Business, Subsidiaries................................32
8.24. Permitted Acquisitions...........................................32
8.25. Restriction on Fundamental Changes...............................33
8.26. Fall Foundation Lots.............................................33
9. INFORMATION AS TO COMPANY AND SUBSIDIARIES...............................33
10. EVENTS OF DEFAULT........................................................35
10.1. Nature of Events.................................................35
-ii-
10.2. Default Remedies.................................................36
11. THE AGENTS...............................................................37
11.1. Appointment......................................................37
11.2. Powers...........................................................38
11.3. General Immunity.................................................38
11.4. No Responsibility for Loans, Recitals............................39
11.5. Action on Instructions of Lenders................................39
11.6. Employment of Administrative Agents and Counsel..................39
11.7. Reliance on Documents, Counsel...................................39
11.8. Reimbursement and Indemnification................................40
11.9. Rights as a Lender...............................................40
11.10. Lender Credit Decision...........................................40
11.11. Successor Administrative Agent...................................41
11.12. Ratable Payments.................................................41
11.13. Application of Payments..........................................42
12. BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS........................43
12.1. Successors and Assigns...........................................43
12.2. Participations...................................................43
12.3. Assignments......................................................44
12.4. Dissemination of Information.....................................45
12.5. Tax Treatment....................................................45
13. NOTICES AND GENERAL PROVISIONS...........................................46
13.1. Notices..........................................................46
13.2. Reproduction of Documents........................................46
13.3. Survival.........................................................46
13.4. Amendments.......................................................47
13.5. Duplicate Originals and Revival and Reinstatement of
Obligations..............................................................47
13.6. Enforceability and Governing Law.................................48
13.7. Fiscal Year......................................................48
13.8. Consent to Jurisdiction and Waiver of Objection to Venue.........48
13.9. Waiver of Jury Trial.............................................49
13.10. Confidentiality..................................................49
13.11. Indemnification of Agents........................................49
14. DEFINITIONS..............................................................50
14.1. Accounting Terms.................................................50
14.2. Other Definitional Provisions....................................50
14.3. Defined Terms....................................................52
-iii-
EXHIBITS
--------
A-1 - Form of Revolving Credit Note
A-2 - Form of Swing Line Note
B - Form of Standby Letter of Credit Reimbursement Agreement
C - Form of Notice of Borrowing or Continuation/Conversion
D - Form of Officer's Certificate to Accompany Reports
E - Form of Assignment and Acceptance
F - Form of Subsidiary Guaranty
SCHEDULES
---------
Schedule I - Commitments, Addresses of Lenders
Schedule 1.3 - Existing Letters of Credit
Schedule 6.1(a) - Conditions Precedent to Initial Disbursement
Schedule 7.4 - Corporate Information
Schedule 7.10 - Schedule of Permitted Liens
Schedule 7.15 - Existing Investments in Joint Venture
Schedule 9 - Form of Borrowing Base and Compliance
-iv-
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
--------------------------------------------
This Second Amended and Restated Credit Agreement (this "Agreement") dated
as of December 3, 2003, is entered into among Dominion Homes, Inc., an Ohio
corporation (the "Company"), the institutions from time to time party hereto as
lenders, whether by execution of this Agreement or an Assignment and Acceptance
(individually, a "Lender" and collectively, the "Lenders"), KeyBank National
Association as syndication agent (in such capacity, together with its successors
in such capacity, the "Syndication Agent") for the Lenders and the issuing bank,
U. S. Bank National Association as documentation agent (in such capacity,
together with its successors in such capacity, the "Documentation Agent") for
the Lenders and the issuing bank, and The Huntington National Bank
("Huntington") as issuing bank for any Letters of Credit issued hereunder and as
a Lender, and Huntington, in its separate capacity as administrative agent for
the Lenders and such issuing bank (with its successors in such capacity,
"Administrative Agent") and amends and restates in its entirety a certain
Amended and Restated Credit Agreement dated as of December 31, 2001 (as amended,
modified, or supplemented prior to the effective date of this Agreement, the
"Prior Credit Agreement"), by and among the Company, the lenders and issuing
bank party thereto and Huntington, as administrative agent for such lenders and
issuing bank thereunder.
1. AMOUNT AND TERMS OF EXTENSIONS OF CREDIT
1.1 Amendment and Restatement.
--------------------------
The Indebtedness and obligations evidenced by this Agreement and all
instruments, agreements, and documents executed in connection herewith
constitute an amendment, renewal, and restatement of all Indebtedness and
obligations of the Company evidenced by the Prior Credit Agreement. All
promissory notes, instruments, applications for letters of credit, letter of
credit reimbursement agreements, and any other document, agreement, waiver or
other instrument executed in connection therewith (collectively the "Existing
Credit Documents") shall remain in full force and effect except to extent
modified by this Agreement or modified or replaced by the Loan Documents. It is
expressly understood and agreed by the parties hereto that this Agreement is in
no way intended to constitute a novation of the obligations and liabilities
existing under the Prior Credit Agreement or evidence payment in full of all or
any of such obligations and liabilities. All references to the Prior Credit
Agreement in the Existing Credit Documents shall be deemed to refer to this
Agreement. If any inconsistency exists between this Agreement and the Prior
Credit Agreement, the terms of this Agreement shall prevail. Nothing contained
in this Agreement or any other document or instrument executed contemporaneously
herewith shall be deemed to satisfy or discharge the Indebtedness evidenced by
the Prior Credit Agreement or the Existing Credit Documents (this being an
amendment and restatement only).
1.2 The Revolving Credit Facility.
------------------------------
(a) Revolving Loans. Subject to the terms and conditions hereof, each
Lender hereby severally (and not jointly) agrees to make revolving loans in U.S.
dollars (each individually a "Revolving Loan" and collectively the "Revolving
Loans") to the Company from time to time during the period from the initial
advance hereunder to the Business Day prior to the Revolving Credit Termination
Date, in an amount not to exceed at any time outstanding such Lender's
-1-
Revolving Credit Commitment at such time; provided, that the aggregate amount of
the Revolving Loans made to the Company by each Lender at any time shall not
exceed such Lender's Pro Rata Share of the Revolving Credit Availability on such
date. All Revolving Loans hereunder shall be made by such Lenders simultaneously
and proportionately to their then respective Revolving Credit Commitments.
(b) Revolving Credit Maximum Amount. In addition to the foregoing
limitation, the Revolving Credit Obligations shall at no time exceed the
Revolving Credit Maximum Amount.
(c) Frequency and Amount of Advances. Subject to the provisions hereof,
the Company may borrow and repay any outstanding advance under the Revolving
Loans on any Business Day, and any amounts so repaid may be reborrowed.
(d) Notices of Borrowing. When the Company desires to borrow or convert
an advance hereunder, it shall deliver to the Administrative Agent Notice of
Borrowing no later than 12:00 noon (Columbus, Ohio time) (i) at least one
Business Day in advance of the proposed funding or conversion date in the case
of a Base Rate Advance, and (ii) at least three (3) Business Days in advance of
the proposed funding or conversion date in the case of a Eurodollar Advance. The
Notice of Borrowing shall specify (i) the proposed funding or conversion date,
(ii) the amount of the proposed advance, (iii) whether the proposed advance will
be a Eurodollar Advance or a Base Rate Advance, and, if a Eurodollar Advance,
the Interest Period therefor, and (iv) instructions for the disbursement of the
proceeds of the advance.
(e) Making of Revolving Loans.
(i) Promptly after receipt of a Notice of Borrowing, the
Administrative Agent shall notify each Lender by telecopy or other similar form
of notice of the proposed borrowing. Each Lender shall deposit with the
Administrative Agent an amount equal to its Pro Rata Share of the amount
requested by the Company to be made as Revolving Loans in immediately available
funds on the funding date specified in the applicable Notice of Borrowing,
subject to the fulfillment of the conditions precedent set forth below. The
Administrative Agent shall make the proceeds of such amounts it receives
available to the Company at the office of the Administrative Agent on such
funding date and shall disburse such proceeds in accordance with the Company's
disbursement instructions set forth in the applicable Notice of Borrowing. The
failure of any Lender to deposit the amount described with the Administrative
Agent on the applicable funding date shall not relieve any other Lender of its
obligations hereunder to make its Revolving Loan on such funding date. No Lender
shall be responsible for any failure by any other Lender to perform its
obligation to make a Revolving Loan hereunder, nor shall the Revolving Credit
Commitment of any Lender be increased or decreased as a result of such failure.
(ii) Unless the Administrative Agent shall have been notified by any
Lender on the Business Day immediately preceding the applicable funding date in
respect of any borrowing of Revolving Loans that such Lender does not intend to
fund its Revolving Loan requested to be made on such funding date, the
Administrative Agent may assume that such Lender has funded its Revolving Loan
and is depositing the proceeds thereof with the Administrative Agent, on such
funding date, and the Administrative Agent, in its sole discretion, may, but
shall not be obligated to, disburse a corresponding amount to the Company on
such
-2-
funding date. If the Revolving Loan proceeds corresponding to that amount are
advanced to the Company by the Administrative Agent, but are not in fact
deposited with the Administrative Agent by such Lender on or prior to the
applicable funding date, such Lender agrees to pay, and in addition the Company
agrees to repay, to the Administrative Agent forthwith on demand such
corresponding amount, together with interest thereon, for each day from the date
such amount is disbursed to or for the benefit of the Company until the date
such amount is paid or repaid to the Administrative Agent, (A) in the case of
the Company, at the interest rate applicable to such borrowing and (B) in the
case of such Lender, at the Federal Funds Rate for the first Business Day, and
thereafter at the interest rate applicable to such borrowing. If such Lender
shall pay to the Administrative Agent the corresponding amount, the amount so
paid shall constitute such Lender's Revolving Loan, and if both such Lender and
the Company shall pay and repay such corresponding amount, the Administrative
Agent shall promptly pay to the Company such corresponding amount. This Section
1.2(e) does not relieve any Lender of its obligation to make its Revolving Loan
on any funding date.
(f) Use of Proceeds of Revolving Loans. The proceeds of the Revolving
Loans may be used (i) to pay the purchase price of any Permitted Acquisition and
other related transaction costs and expenses and to fund any refinancing of
Indebtedness in connection with a Permitted Acquisition as set forth and
certified in the Notice of Borrowing pertaining thereto, (ii) to fund working
capital in the ordinary course of the business of the Company and its
Subsidiaries, (iii) to amend and restate existing Indebtedness under the Prior
Credit Agreement, (iv) to make Investments permitted by Section 8.11 of this
Agreement, and (v) for other lawful general corporate purposes not prohibited
hereunder. Notwithstanding anything herein to the contrary, no proceeds of
Revolving Loans may be used to fund payments not permitted by this Agreement.
(g) Revolving Credit Termination Date. The Revolving Credit Commitments
shall terminate, and all outstanding Revolving Credit Obligations shall be paid
in full (or, in the case of unmatured Letter of Credit Obligations, provision
for payment of cash collateral shall be made to the satisfaction of Huntington
and the Administrative Agent), on the Revolving Credit Termination Date. Each
Lender's obligation to make Revolving Loans shall terminate at the close of
business of the Administrative Agent on the Business Day next preceding the
Revolving Credit Termination Date.
(h) Interest. Accrued interest under the Revolving Loans shall be due and
payable on each Interest Payment Date.
1.3 Letters of Credit.
------------------
(a) Issuance. Subject to the terms and conditions set forth herein,
Huntington hereby agrees to issue for the account of the Company, a Restricted
Subsidiary or an Approved Joint Venture, one or more letters of credit in U.S.
dollars (each individually a "Letter of Credit" and collectively the "Letters of
Credit") from time to time during the period from the date hereof to the
Revolving Credit Termination Date; provided that (i) the Letter of Credit
Obligations shall at no time exceed the aggregate sum of $20,000,000, and (ii)
the Revolving Credit Obligations shall at no time exceed the Revolving Credit
Maximum Amount.
(b) Expiry Dates. The Company, a Restricted Subsidiary or an Approved
Joint Venture, as applicable, shall have no right to obtain issuance of Letters
of Credit which have an
-3-
expiration date later than the earlier of (i) the Revolving Credit Termination
Date or (ii) 24 months from issuance of such Letter of Credit.
(c) Participations.
(i) Immediately upon issuance by Huntington of any Letter of Credit
in accordance with the procedures set forth in this Section 1.3, each Lender
shall be deemed to have irrevocably and unconditionally purchased and received
from Huntington, without recourse or warranty, an undivided interest and
participation in such Letter of Credit to the extent of such Lender's Pro Rata
Share.
(ii) If Huntington makes any payment under any Letter of Credit, and
such amount is not repaid to Huntington within two (2) Business Days, Huntington
shall promptly notify the Administrative Agent, which shall promptly notify each
Lender, and each such Lender shall promptly and unconditionally pay to the
Administrative Agent for the account of Huntington, in immediately available
funds, the amount of such Lender's Pro Rata Share of such payment, and the
Administrative Agent shall promptly pay to Huntington such amounts received by
it, and any other amounts received by the Administrative Agent for Huntington's
account, pursuant to this Section 1.3. All such payments shall constitute
Revolving Loans made to the Company (irrespective of the satisfaction of the
conditions in Section 6 or the requirement to deliver a Notice of Borrowing,
which conditions and requirement, for the purpose of refunding any Reimbursement
Obligation owing to Huntington, the Lenders irrevocably waive) and shall
thereupon cease to be unpaid Reimbursement Obligations. Such Revolving Loans
shall be Base Rate Advances. If a Lender does not make its Pro Rata Share of the
amount of such payment available to the Administrative Agent, such Lender agrees
to pay to the Administrative Agent for the account of Huntington, forthwith on
demand, such amount together with interest thereon, for the first Business Day
after the date such payment was first due at the Federal Funds Rate, and
thereafter at the interest rate then applicable to Base Rate Advances. The
failure of any such Lender to make available to the Administrative Agent for the
account of Huntington its Pro Rata Share of any such payment shall neither
relieve any other Lender of its obligation hereunder to make available to the
Administrative Agent for the account of Huntington such other Lender's Pro Rata
Share of any payment on the date such payment is to be made nor increase the
obligation of any other Lender to make such payment to the Administrative Agent.
This Section does not relieve any Lender of its obligation to purchase Pro Rata
Share participations in Letters of Credit; nor does this Section relieve the
Company of its obligation to pay or repay Huntington's funding of such payment
pursuant to this Section or interest on the amount of such payment from such
date such payment is to be made until the date on which payment is repaid in
full.
(iii) In the event that any draw occurs under any of the Letters of
Credit, and such draw is not reimbursed within two (2) Business Days after
demand to the Company, the Company shall be deemed to have made a Notice of
Borrowing of a Base Rate Advance under the Revolving Loans to repay such amount,
and if the Company has insufficient ability to obtain Revolving Loans to pay
such draw, the Administrative Agent is hereby authorized to repay such draw by
charging any or all of the Company's accounts or checking accounts in such order
as the Administrative Agent deems appropriate, in its sole discretion.
-4-
(iv) Whenever Huntington receives a payment on account of a
Reimbursement Obligation, including any interest thereon, as to which any Lender
has made a Revolving Loan pursuant to clause (ii) of this Section, Huntington
shall promptly pay to the Administrative Agent such payment. Each such payment
shall be made by Huntington or the Administrative Agent, as the case may be, on
the Business Day on which such Person receives the funds paid to such Person, if
received prior to 11:00 a.m. (Columbus, Ohio time) on such Business Day, and
otherwise on the next succeeding Business Day.
(v) Upon the request of any Lender to the Administrative Agent,
Huntington shall furnish such Lender copies of any Letter of Credit or Letter of
Credit Application to which Huntington is party and such other documentation as
reasonably may be requested by such Lender.
(vi) The obligations of a Lender to make payments to the
Administrative Agent for the account of Huntington with respect to a Letter of
Credit shall be irrevocable, shall not be subject to any qualification or
exception whatsoever, except willful misconduct or gross negligence of
Huntington as such issuing bank as determined in a final, non-appealable
judgment by a court of competent jurisdiction, and shall be honored in
accordance with this Section (irrespective of the satisfaction of the conditions
described in Section 6, as applicable, which conditions, for the purposes of the
repayment of Letters of Credit to Huntington, such Lenders irrevocably waive)
under all circumstances, including, without limitation, any of the following
circumstances: (A) any lack of validity or enforceability hereof or of any of
the other Loan Documents; (B) the existence of any claim, setoff, defense or
other right which any Person may have at any time against a beneficiary named in
a Letter of Credit or any transferee of a beneficiary named in a Letter of
Credit (or any Person for whom any such transferee may be acting), the
Administrative Agent, any issuing bank, any Lender, or any other Person, whether
in connection herewith, with any Letter of Credit, the transactions contemplated
herein or any unrelated transactions (including any underlying transactions
between the account party and beneficiary named in any Letter of Credit); (C)
any draft, certificate or any other document presented under the Letter of
Credit having been determined to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect; (D) the surrender or impairment of any security for the performance or
observance of any of the terms of any of the Loan Documents; (E) any failure by
Huntington to make any reports required pursuant to this Section 1.3 or the
inaccuracy of any such report; or (F) the occurrence of any Event of Default or
Potential Default.
(d) Requirements for Issuance of Letters of Credit.
(i) The Company may request Huntington to issue or cause the
issuance of a Letter of Credit by delivering to the Administrative Agent
Huntington's standard form of Letter of Credit Application and Agreement for
Standby Letter of Credit and/or Reimbursement Agreement (collectively the
"Letter of Credit Application") completed to the satisfaction of Huntington, and
such other certificates, documents and other papers and information as the
Administrative Agent or Huntington may request.
(ii) Each Letter of Credit shall, among other things, provide for
the payment of sight drafts when presented for honor thereunder in accordance
with the terms thereof and
-5-
when accompanied by the documents described therein. Each Letter of Credit
Application and each Letter of Credit shall be subject to the Uniform Customs
and Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500, and any amendments or revision thereof and, to the
extent not inconsistent therewith, the laws of the State of Ohio.
(iii) Huntington shall give the Administrative Agent written notice,
or telephonic notice confirmed promptly thereafter in writing, of the issuance
of a Letter of Credit, which notice to the Administrative Agent shall promptly
transmit by telecopy, telephone or similar transmission to each Lender.
(iv) In connection with the issuance of any Letter of Credit, the
Company shall indemnify, save and hold Huntington, the Administrative Agent, and
each Lender harmless from any loss, cost, expense or liability, including,
without limitation, payments made by Huntington, the Administrative Agent or any
Lender, and expenses and reasonable attorneys' fees incurred by any of the same
arising out of, or in connection with, any Letter of Credit issued on behalf of
the Company, a Restricted Subsidiary or any Approved Joint Venture. The Company
and each Restricted Subsidiary or Approved Joint Venture shall be bound by
Huntington's or any issuing or accepting bank's regulations and good faith
interpretations of any Letter of Credit, regardless of whether any such
interpretation may be different from that of the account party of such Letter of
Credit. Neither Huntington, the Administrative Agent nor any Lender, nor any of
its correspondents shall be liable for any error, negligence, or mistakes,
whether of omission or commission, in following the instructions of the Company,
any Restricted Subsidiary or Approved Joint Venture, those contained in any
Letter of Credit or in any modifications, amendments or supplements thereto or
in issuing or paying any Letter of Credit, except in the case of the
Administrative Agent's, any Lender's, the issuing bank's or such correspondent's
gross negligence or willful misconduct.
(v) The Company shall authorize and direct Huntington with respect
to each Letter of Credit to name the Company, a Restricted Subsidiary or an
Approved Joint Venture as the "Account Party" therein, shall deliver to
Huntington, upon request of Huntington, all instruments, documents, and other
writings and property pursuant to the Letter of Credit and shall accept and rely
upon Huntington's instructions and agreements with respect to all matters
arising in connection with the Letter of Credit or the application therefor.
(e) Use of Proceeds for Letters of Credit. The Letters of Credit shall be
used by the Company, a Restricted Subsidiary or any Approved Joint Venture (i)
to support bonding requirements for real estate site improvements or maintenance
in favor of various municipal entities, (ii) to secure the Company's, a
Restricted Subsidiary's or any Approved Joint Venture's contractual performance
with respect to the land and lot development activities, (iii) to secure the
Company's, a Restricted Subsidiary's or any Approved Joint Venture's contractual
performance in connection with land acquisition activities, and (iv) to provide
admitted capital in connection with any Insurance Sub that is a Restricted
Subsidiary, subject to the limitations set forth in this Agreement.
(f) Existing Letters of Credit. Schedule 1.3 contains a schedule of
certain letters of credit issued prior to the effective date hereof by
Huntington for the account of the Company.
-6-
On such effective date, (i) such letters of credit, to the extent outstanding,
shall be automatically and without further action by the parties thereto
converted to Letters of Credit issued pursuant to this Section 1.3 for the
account of the Company, a Restricted Subsidiary or an Approved Joint Venture and
subject to the provisions hereof, and for this purpose the fees specified in
Section 3.13(b) shall be payable (in substitution for any fees set forth in the
Prior Credit Agreement or the applicable letter of credit reimbursement
agreements or applications relating to such letters of credit) as if such
Letters of Credit had been issued on such effective date, (ii) the face amount
of such Letters of Credit shall be included in the calculation of Letter of
Credit Obligations, and (iii) all liabilities of the Company with respect to
such Letters of Credit shall constitute Obligations. No Letter of Credit
converted in accordance with this Section 1.3 shall be amended, extended or
renewed without the prior written consent of the Administrative Agent.
1.4 Swing Line Loans.
-----------------
(a) Amount of Swing Line Loans. Upon the satisfaction of the conditions
precedent set forth in Section 6 hereof, from and including the date hereof and
prior to the Revolving Credit Termination Date, the Swing Line Bank agrees, on
the terms and conditions set forth in this Agreement, to make swing line loans
to the Company from time to time in an amount not to exceed the Swing Line
Commitment (each, individually, a "Swing Line Loan" and collectively, the "Swing
Line Loans"); provided, however, at no time shall (i) the Revolving Credit
Obligations exceed the Revolving Credit Maximum Amount, and (ii) the sum of (A)
the outstanding amount of the Swing Line Loans, plus (B) the outstanding amount
of Revolving Loans made by the Swing Line Bank, plus (C) the Swing Line Bank's
Pro Rata Share of Letter of Credit Obligations, exceed the Swing Line Bank's
Revolving Credit Commitment at such time. Subject to the terms of this
Agreement, the Company may borrow, repay and reborrow Swing Line Loans at any
time prior to the Revolving Credit Termination Date.
(b) Borrowing/Conversion/Continuation Notice. The Company shall deliver
to the Administrative Agent and the Swing Line Bank an executed Notice of
Borrowing, not later than 2:00 p.m. (Columbus, Ohio time) on the proposed
borrowing date of each Swing Line Loan, specifying (i) the applicable borrowing
date (which date shall be a Business Day), and (ii) the aggregate amount of the
requested Swing Line Loan.
(c) Making of Swing Line Loans. Promptly after receipt of the Notice of
Borrowing in respect of Swing Line Loans, the Administrative Agent shall notify
the Swing Line Bank by telex or telecopy, or other similar form of transmission,
of the requested Swing Line Loan. Not later than 3:00 p.m. (Columbus, Ohio time)
on the applicable borrowing date, the Swing Line Bank shall make available its
Swing Line Loan, in funds immediately available in Columbus, Ohio to the
Administrative Agent at its address specified pursuant to Section 13.1. The
Administrative Agent will promptly make the funds so received from the Swing
Line Bank available to the Company on the borrowing date at the Administrative
Agent's address.
(d) Repayment of Swing Line Loans. Each Swing Line Loan shall be paid in
full by the Company on or before the fifth (5th) Business Day after the
borrowing date for such Swing Line Loan. The Company may at any time pay,
without penalty or premium, all outstanding Swing Line Loans or any portion of
the outstanding Swing Line Loans, upon notice to the Administrative Agent and
the Swing Line Bank. In addition, the Administrative Agent, with respect to any
Swing Line Loan which shall have been advanced by the Swing Line Bank prior
-7-
to the Swing Line Bank's actual knowledge of the occurrence of an Event of
Default (i) may at any time in its sole discretion with respect to any such
outstanding Swing Line Loan, or (ii) shall on the earlier of (A) the fifth (5th)
Business Day after the borrowing date of any such Swing Line Loan, or (B) such
date that repayment of any Swing Line Loan is necessary to provide the Company,
subject to the terms of this Agreement, advances pursuant to Revolving Credit
Availability, require each Lender to make a Revolving Loan in the amount of such
Lender's Revolving Loan Pro Rata Share of such Swing Line Loan, for the purpose
of repaying such Swing Line Loan. Not later than 2:00 p.m. (Columbus, Ohio time)
on the date of any notice received pursuant to this Section 1.4(d), each Lender
shall make available its required Revolving Loan, in funds immediately available
in Columbus, Ohio to the Administrative Agent at its address specified pursuant
to Section 13.1. Each Lender's obligation to make Revolving Loans pursuant to
this Section 1.4(d) to repay Swing Line Loans shall be unconditional,
continuing, irrevocable and absolute and shall not be affected by any
circumstances, including, without limitation, (i) any set-off, counterclaim,
recoupment, defense or other right which such Lender may have against the
Administrative Agent, the Swing Line Bank or any other Person, (ii) the
occurrence or continuance of an Event of Default or Potential Default, (iii) any
adverse change in the condition (financial or otherwise) of the Company or any
Subsidiary thereof, or (iv) any other circumstances, happening or event
whatsoever. In the event that any Lender fails to make payment to the
Administrative Agent of any amount due under this Section 1.4(d), the
Administrative Agent shall be entitled to receive, retain and apply against such
obligation the principal and interest otherwise payable to such Lender hereunder
until the Administrative Agent receives such payment from such Lender or such
obligation is otherwise fully satisfied. In addition to the foregoing, if for
any reason any Lender fails to make payment to the Administrative Agent of any
amount due under this Section 1.4(d), such Lender shall be deemed, at the option
of the Administrative Agent, to have unconditionally and irrevocably purchased
from the Swing Line Bank, without recourse or warranty, an undivided interest
and participation in the applicable Swing Line Loan in the amount of such
Revolving Loan, and such interest and participation may be recovered from such
Lender together with interest thereon at the Federal Funds Rate for each day
during the period commencing on the date of demand and ending on the date such
amount is received. On the Revolving Credit Termination Date, the Company shall
repay in full the outstanding principal balance of the Swing Line Loans.
(e) Interest Rate. Interest shall accrue on the unpaid balance of the
Swing Line Loans at the Base Rate plus the Applicable Base Rate Margin.
(f) Use of Proceeds for Swing Line. The proceeds of the Swing Line Loans
may be used (i) to fund working capital in the ordinary course of the business
of the Company and its Subsidiaries, and (ii) for other lawful general corporate
purposes not prohibited hereunder.
1.5 Potential Defaults.
-------------------
Subject to the obligation, if any, of the Lenders pursuant to Section
1.4(d) hereof, none of the Lenders shall have any obligation to advance or
re-advance any sums pursuant to the Revolving Loans, the Swing Line Bank shall
have no obligation to advance any Swing Line Loan, and Huntington shall have no
obligation to issue or extend any Letters of Credit at any time when an Event of
Default or a Potential Default has occurred and is continuing.
-8-
2. BORROWING BASE DEFINITIONS
2.1 Borrowing Base.
---------------
"Borrowing Base" means (without duplication) the aggregate sum of the
following:
(a) 100% of Available Cash, plus
(b) 75% of Eligible Lumber Inventory, plus
(c) 90% of Eligible Home Work-in-Process, plus
(d) 50% of Eligible Real Estate Held for Development, plus
(e) the lesser of $15,000,000 or 50% of Eligible Investments in Joint
Ventures, plus
(f) the lesser of $7,650,000 or 90% of the aggregate sum of Eligible
Model Homes, plus
(g) the lesser of $20,000,000 or 90% of Eligible Speculative Homes, plus
(h) 70% of Eligible Developed Lots, plus
(i) 60% of Eligible Lots Under Development, plus
(j) the lesser of $6,000,000 or 50% of Eligible Fall Foundation Lots,
(k) provided, however, to the extent that the aggregate sum of (i)
Eligible Real Estate Held for Development under clause (d) above, (ii) Eligible
Developed Lots under clause (h) above, and (iii) Eligible Lots Under Development
under clause (i) above exceeds fifty-five percent (55%) of the total Borrowing
Base calculation as of any period of determination, the amount in excess of such
percentage shall not be eligible under the Borrowing Base.
2.2 Available Cash.
---------------
"Available Cash" means all of the cash or cash equivalents of the Company
or any Restricted Subsidiary held (a) for its own account at Huntington, or (b)
by title companies or other escrow agents, consisting solely of the net closing
proceeds from residential real estate closings, which cash or cash equivalents
are not subject to a lien or offset in favor of such entity.
2.3 Developed Lots.
---------------
"Developed Lots" means all residential lots of the Company and its
Restricted Subsidiaries located in the State of Ohio or any contiguous state on
which all development activity has been completed, including without limitation,
all site development for streets and sewers, and for which application has been
made for final acceptance by the applicable controlling municipality, but
excluding any Fall Foundation Lots, valued at the lesser of cost or market.
-9-
2.4 Eligible Lumber Inventory.
--------------------------
The term "Eligible Lumber Inventory" means that portion of the Company's
or any Restricted Subsidiary's inventory consisting of finished lumber or other
building materials, raw materials and finished goods, which shall be free and
clear of all liens and encumbrances, valued at the lesser of cost or market
(calculated on a FIFO basis and in accordance with GAAP).
2.5 Eligible Real Estate.
---------------------
With respect to Developed Lots, Fall Foundation Lots, Lots Under
Development, Model Homes, Real Estate Held for Development, Home
Work-In-Process, Speculative Homes, or any other form or type of real estate of
the Company or any Restricted Subsidiary which may be considered for the
purposes of the Borrowing Base, the term "Eligible" used in connection with any
such type of real estate means that portion of real property (a) owned in fee
simple title by the Company or a Restricted Subsidiary, (b) which is not subject
to any mortgage, lien, or encumbrance, except for reservations, exceptions,
encroachments, easements, rights-of-way, restrictions, leases or other similar
title exceptions which do not materially detract from the value of such real
estate or interfere with its use or resale and (c) which has a zoning
classification appropriate for a subdivision development of the type developed
by the Company or a Restricted Subsidiary.
2.6 Fall Foundation Lots.
---------------------
"Fall Foundation Lots" means, during the time period from October 1/st/ of
each calendar year continuing through and including March 31/st/ of the
immediately succeeding calendar year, those residential developed lots
previously in the category of Developed Lots on which the Company or any
Restricted Subsidiary has commenced the excavation of a foundation for a single
family residential dwelling through the time foundation has been completed,
valued at the lesser of cost or market.
2.7 Investments in Joint Ventures.
------------------------------
"Investments in Joint Ventures" means the net equity investment of the
Company or any Restricted Subsidiary in all real estate limited liability
companies, partnerships or joint ventures (including, without limitation,
Approved Joint Ventures) entered into solely for the purpose of acquiring real
property, developing residential lots or other residential developments and
distributing the same to the owners of such entities, valued at the equity
method. The term "Eligible" used in connection with Investments in Joint
Ventures means any of the foregoing joint ventures or other entities between the
Company or a Restricted Subsidiary on one hand, and M/I Schottenstein Homes,
Inc., Homewood Corporation, Rockford Homes, Inc., Xxxxxx Investment Company or
other joint venture partner or member whose profitability and balance sheet
demonstrate creditworthiness, as determined by the Administrative Agent.
2.8 Lots Under Development.
-----------------------
"Lots Under Development" means all lots of the Company or any Restricted
Subsidiary that such Person intends to use for construction of single-family
dwellings during the time period between the commencement of development of such
lots (by the issuance of a Letter of Credit to
-10-
support development activities) and the completion of such lot as a Developed
Lot, valued at the lesser of cost or market.
2.9 Model Homes.
------------
"Model Homes" means single-family residential dwellings of the Company or
its Restricted Subsidiaries that have been or are being constructed for the
purpose of marketing similar dwellings and for which there is no present
intention to sell, valued at the lesser of cost or market.
2.10 Real Estate Held for Development.
---------------------------------
"Real Estate Held for Development" means that portion of the real estate
of the Company or its Restricted Subsidiaries consisting of all raw acreage and
undeveloped real estate that has a zoning classification appropriate for a
subdivision development of the type developed by the Company or a Restricted
Subsidiary, prior to the commencement of construction to develop such real
estate into residential lots, valued at the lesser of cost or market.
2.11 Home Work-in-Process.
---------------------
"Home Work-in-Process" means that portion of the real estate of the
Company or any Restricted Subsidiary consisting of (a) work-in-process prior to
completion and (b) any completed unit subject to, in the case of both, of the
foregoing an Arm's Length Contract to sell the same, valued at the lesser of
cost or market.
2.12 Speculative Homes.
------------------
"Speculative Homes" means residential dwellings or lots other than Fall
Foundation Lots on which the Company or a Restricted Subsidiary has commenced
construction for such dwellings, which such entity presently intends to sell,
but for which such entity does not have an Arm's Length Contract, valued at the
lesser of cost or market.
2.13 Mutual Exclusivity.
-------------------
Each of the terms defined in Sections 2.1 through 2.12 (excluding Section
2.5) shall be mutually exclusive, and none of the real or personal property of
the Company or any Restricted Subsidiary shall be considered to be in more than
one of the foregoing categories at the same time.
3. INTEREST RATES, FEES, ADDITIONAL COSTS AND PAYMENTS
3.1 Interest Rates.
---------------
(a) All advances under the Revolving Loans shall bear interest upon the
unpaid principal amount thereof from the date such advances are made until paid
in full as follows: at the election of the Company (i) the Applicable Base Rate
Margin, plus the Base Rate from time to time in effect, with each change in the
Base Rate automatically and immediately changing the
-11-
interest rate on such Revolving Loans without notice to the Company; or (ii) the
Applicable Eurodollar Margin plus the Eurodollar Rate from time to time in
effect.
(b) All advances under the Swing Line Loans shall bear interest upon the
unpaid principal amount thereof from the date such advances are made until paid
in full at the Applicable Base Rate Margin plus the Base Rate from time to time
in effect, with each change in the Base Rate automatically and immediately
changing the interest rate on such Swing Line Loans without notice to the
Company. The Swing Line Loans shall be Base Rate Advances at all times.
3.2 Prepayment.
-----------
The Company shall have the right to prepay without penalty at any time and
from time to time before the Revolving Credit Termination Date any and all Base
Rate Advances and may repay any Eurodollar Advance, subject to the payment of
breakage costs and expenses. All prepayments will be first applied to accrued
and unpaid interest, then to any fees, and then to principal.
3.3 Eurodollar Rate.
----------------
(a) Eurodollar Rate. Each Eurodollar Advance shall be in a minimum amount
of $5,000,000 and integral multiples of $1,000,000 in excess thereof, and no
more than ten (10) Eurodollar Advances shall be outstanding at any time under
the Revolving Loans.
The Eurodollar Rate shall be adjusted automatically on and as of the
effective date of any change in the Eurodollar Reserve Percentage. Each
Eurodollar Advance shall be reserve adjusted, including all types of reserve
insurance and brokerage costs.
(b) Change in Margin. The Interest Coverage Ratio used to compute the
Applicable Eurodollar Margin initially shall be the Interest Coverage Ratio set
forth in the compliance certificate most recently delivered by the Company to
the Administrative Agent prior to the date hereof, and changes in the Applicable
Eurodollar Margin resulting from a change in the Interest Coverage Ratio shall
become effective as to all Eurodollar Advances upon the first day of the
calendar quarter following delivery by the Company to the Administrative Agent
of a new quarterly compliance certificate pursuant to Section 9(c) and notice by
the Company to the Administrative Agent that a rate change is required. If the
Company shall fail to deliver a certificate in respect of the Interest Coverage
Ratio within forty-five (45) days after the end of any fiscal quarter, the
Applicable Eurodollar Margin from and including the first day of the following
quarter to the date the Company delivers to the Administrative Agent such
certificate shall conclusively equal the highest Applicable Eurodollar Margin
set forth herein.
3.4 Calculation of Interest.
------------------------
Interest with respect to all advances under the Revolving Loans and all
fees owing to the Lenders under any Loan Document shall be calculated on a 360
day year basis and shall be based on the actual number of days which elapse
during the interest calculation period.
-12-
3.5 Conversions of Advances.
------------------------
An outstanding advance may only be converted on the last day of the then
current Interest Period (if applicable) with respect to such advance, and
provided, further, that upon the continuation or conversion of an advance such
notice shall also specify the Interest Period (if applicable) to be applicable
thereto upon such continuation or conversion. If the Company shall fail to
timely deliver such a notice with respect to any outstanding advance, the
Company shall be deemed to have elected to convert such advance to a Base Rate
Advance on the last day of the then current Interest Period with respect to such
advance.
3.6 Additional Costs.
-----------------
In the event that any applicable law, treaty, rule or regulation (whether
domestic or foreign) now or hereafter in effect, or any interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by the Administrative
Agent or any of the Lenders with any request or directive of any such authority
(whether or not having the force of law), shall (a) affect the basis of taxation
of payments to the Administrative Agent or any of the Lenders of any amounts
payable by the Company for Revolving Credit Obligations or any advance under
this Agreement (other than taxes imposed on the overall net income of the
Administrative Agent or any of the Lenders by the jurisdiction, or by any
political subdivision or taxing authority of any such jurisdiction, in which the
Administrative Agent or any of the Lenders has its principal office), or (b)
shall impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by the Administrative Agent or any of the Lenders, and the result of
any of the foregoing is to increase the cost to the Administrative Agent or any
of the Lenders of making or maintaining the Revolving Credit Obligations or any
advance hereunder, to reduce the amount of any sum receivable by the
Administrative Agent or any of the Lenders thereon, or to reduce the rate of
return on the Administrative Agent's or any Lender's capital, then the Company
shall pay to the Administrative Agent or such Lender, as the case may be, from
time to time, upon request of the Administrative Agent, additional amounts
sufficient to compensate the Administrative Agent or such Lender, as the case
may be, for such increased cost, reduced sum receivable or reduced rate of
return to the extent the Administrative Agent or any Lender, as the case may be,
is not compensated therefor in the computation of the interest rates applicable
to the Revolving Loans. A detailed statement as to the amount of such increased
cost, reduced sum receivable or reduced rate of return, prepared in good faith
and submitted by the Administrative Agent or any Lender, as the case may be, to
the Company, shall be conclusive and binding for all purposes relative hereto,
absent manifest error in computation.
3.7 Limitation on Requests and Elections.
-------------------------------------
Notwithstanding any other provision of this Agreement to the contrary, if,
upon receiving a request for an advance or a request for a continuation of an
advance as an advance of the then existing type or conversion of an advance to
an advance of another type, the Required Lenders advise the Administrative Agent
(a) that, in the case of any Eurodollar Advance, deposits in dollars for periods
comparable to the Interest Period elected are not generally available in the
London interbank or secondary market, or (b) that the Eurodollar Rate, as
determined by the Administrative Agent, will not accurately cover the cost to
such Lenders of making or
-13-
maintaining the related Eurodollar Advance or (c) that by reason of national or
international financial, political or economic conditions or by reason of any
applicable law, treaty, rule or regulation (whether domestic or foreign) now or
hereafter in effect, or the interpretation or administration thereof by any
Governmental Authority charged with the interpretation or administration
thereof, or compliance by such Lenders with any request or directive of such
authority (whether or not having the force of law), including, without
limitation, exchange controls, it is impracticable, unlawful or impossible for
such Lenders (i) to make the relevant Eurodollar Advance or (ii) to continue
such advance as a Eurodollar Advance or (iii) to convert an advance to a
Eurodollar Advance, then the Company shall not be entitled, so long as such
circumstances continue, to request a Eurodollar Advance or a conversion to such
advance from the Lenders. In the event that such circumstances no longer exist,
the Lenders shall again consider requests for Eurodollar Advances of the
affected type and requests for continuations of and conversions to such advances
of the affected type.
3.8 Illegality and Impossibility.
-----------------------------
In the event that any applicable law, treaty, rule or regulation (whether
domestic or foreign) now or hereafter in effect, or any interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by the Administrative
Agent or any Lender with any request or directive of such authority (whether or
not having the force of law), including, without limitation, exchange controls,
shall make it unlawful or impossible for the Administrative Agent or any Lender
to maintain any advance under this Agreement, the Company shall upon receipt of
notice thereof from the Administrative Agent, repay in full the then outstanding
principal amount of all such advances together with all accrued interest thereon
to the date of payment and all amounts due to the Administrative Agent under
Sections 1.2(h) and 3.2 on the last day of the then current Interest Period, if
any, applicable to such advance, if the Administrative Agent or any Lender may
lawfully continue to maintain such advance to such day, or immediately if the
Administrative Agent or any Lender may not continue to maintain such advance to
such day, in which case, the Administrative Agent will permit such prepayment
without payment of any additional compensation or breakage costs. This Section
3.8 shall apply only as long as such illegality exists. As an alternative to the
repayment obligation provided in this Section 3.8, the Company may, at its
option, and at the time provided in this Section 3.8, convert any affected
advance to a Base Rate Advance.
3.9 Compensation.
-------------
Subject to Section 3.8 above, in addition to all amounts required to be
paid by the Company pursuant to this Section 3, the Company shall compensate the
Administrative Agent and the Lenders, and each of them, upon demand, for all
losses, expenses and liabilities (including, without limitation, any loss or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by the Administrative Agent or any Lender to fund or
maintain the Eurodollar Advances) which the Administrative Agent or any Lender
may sustain (a) if for any reason an advance, conversion into or continuation of
such an advance does not occur on the date specified therefor in the Notice of
Borrowing or in a telephonic request by the Company for borrowing or conversion
or continuation or a successive Interest Period does not commence after notice
therefor is given to the Administrative Agent, (b) if for any reason any
Eurodollar Advance is prepaid on a date which is not the last day of the
applicable Interest
-14-
Period, (c) as a consequence of a required conversion of a Eurodollar Advance to
a Base Rate Advance as a result of any of the events indicated in Section 3.6 or
3.8, or (d) as a consequence of any failure by the Company to repay a Eurodollar
Advance when required by the terms hereof. The Company shall reimburse the
Administrative Agent and each Lender, or any of them, as the case may be, on
demand for any resulting loss or expense incurred by such entity, determined in
such entity's reasonable opinion, including without limitation any loss incurred
in obtaining, liquidating or employing deposits or other sources of funding from
third parties or funding sources. A detailed statement as to the amount of such
loss or expense, prepared in good faith and submitted by such entity to the
Company shall be conclusive and binding for all purposes absent manifest error
in computation.
3.10 Survival of Obligations.
------------------------
The provisions of Sections 3.6 and 3.9 shall survive the termination of
this Agreement and the payment in full of all Notes outstanding pursuant hereto.
3.11 Interest Rate Protection.
-------------------------
In the event that on any Business Day any Eurodollar Rate with respect to
any Interest Period available to the Company under this Agreement equals or
exceeds 8.50% per annum, the Company, within fifteen (15) Business Days of such
event, shall enter into or have entered into interest rate contracts with any
financial institution with an aggregate notional amount of not less than 50% of
the Revolving Credit Obligations outstanding on such Business Day for a term
extending to the Revolving Credit Termination Date on terms reasonably
satisfactory to the Administrative Agent.
3.12 Default Interest Rate.
----------------------
Upon the occurrence of any Event of Default, at the option of the
Administrative Agent or upon the direction of the Required Lenders, interest
shall thereafter accrue on the principal amount of the Revolving Loans, Swing
Line Loans and upon any unpaid Reimbursement Obligations at a rate equal to the
then effective interest rate(s), plus two (2) percentage points per annum.
3.13 Fees.
-----
Until and unless the Company pays the Revolving Credit Obligations in
full, and has no right to seek further extensions of credit pursuant thereto,
the Company agrees to pay to the Administrative Agent the fees set forth in this
Section 3.13.
(a) On or prior to the effective date of this Agreement, the Company
agrees to pay to the administrative agent for the benefit of each of the lenders
and Huntington as issuing bank under the Prior Credit Agreement, all fees which
have accrued under the Prior Credit Agreement but which are not yet due and
payable under the terms thereof, which fees shall be shared by each of the
lenders and/or Huntington pursuant to the Prior Credit Agreement.
(b) The Company agrees to pay to the Administrative Agent for the account
of the Lenders fees in respect of the Letters of Credit equal to the Applicable
Eurodollar Margin per
-15-
annum of the stated amount of each Letter of Credit. Huntington, as issuing
bank, shall retain a fee equal to one-eighth of one percent (1/8%) per annum,
and the remainder of such fee shall be shared by the Lenders pursuant to each
Lender's Pro Rata Share. Each such fee shall be payable quarterly in arrears,
beginning on the first day of the calendar quarter after issuance of each Letter
of Credit. In addition, the Company agrees to pay to Huntington, as issuing
bank, its normal and customary issuing, servicing and amendment fees for each
Letter of Credit.
(c) The Company agrees to pay the Administrative Agent for the account of
the Lenders in accordance with their respective Pro Rata Shares, an unused fee
accruing from the initial disbursement of Revolving Loans hereunder through and
including the Revolving Credit Termination Date at the Applicable Unused
Commitment Fee Rate in effect from time to time on the daily amount by which the
Revolving Credit Commitments exceed the Revolving Credit Obligations for such
period. Such fees shall be payable quarterly in arrears, beginning on the last
day of December 2003, and continuing on the last day of each March, June,
September, and December thereafter.
(d) Change in Unused Commitment Fee Rate. The Interest Coverage Ratio
used to compute the Applicable Unused Commitment Fee Rate initially shall be the
Interest Coverage Ratio set forth in the compliance certificate most recently
delivered by the Company to the Administrative Agent prior to the date hereof,
and changes in the Applicable Unused Commitment Fee Rate resulting from a change
in the Interest Coverage Ratio shall become effective upon the first day of the
calendar quarter following delivery by the Company to the Administrative Agent
of a new compliance certificate pursuant to Section 9(c) and notice by the
Company to the Administrative Agent that a rate change is required. If the
Company shall fail to deliver a certificate in respect of the Interest Coverage
Ratio within forty-five (45) days after the end of any fiscal quarter, the
Applicable Unused Commitment Fee Rate from and including the first day of the
following fiscal quarter to the date the Company delivers to the Administrative
Agent such certificate shall conclusively equal the highest Applicable Unused
Commitment Fee Rate set forth herein.
(e) The Company shall pay to the Administrative Agent such other fees as
the Company is obligated to pay pursuant to the Letter Agreement.
3.14 Capital Adequacy and Removal of Affected Lender.
------------------------------------------------
In the event that any Lender shall have determined that the adoption of
any articles of incorporation, bylaws, code of regulations or any other
organizational or governing document, or any law, treaty, rule or regulation, or
determination of any Governmental Authority, regarding capital adequacy, or any
change therein or in the interpretation or application thereof or compliance by
any Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) from any central bank or Governmental Authority,
does or shall have the effect of reducing the rate of return on such Lender's
capital as a consequence of its obligations hereunder to a level below that
which such Lender could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's policies with respect to
such capital adequacy) by an amount deemed by such Lender to be material, then
from time to time, upon submission by such Lender to the Company (with a copy to
the Administrative Agent), of a written request therefore setting forth in
reasonable detail the assumptions used by such Lender in determining such amount
and the manner in which such amount was calculated,
-16-
the Company shall pay to such Lender such additional amount or amounts that will
compensate such Lender for such reduction in rate of return; provided, however,
that if such event or condition with respect to capital adequacy applies only to
one Lender and/or the Company receives notice only from one Lender, then the
Company shall not be required to pay any such additional amount that accrues
during the initial 120 day period after notice to the Company of the occurrence
of such event or condition with respect to capital adequacy. If any Lender
becomes entitled to claim any additional amounts pursuant to this subsection, it
shall promptly notify the Company, through the Administrative Agent, of the
entitling event. A certificate as to any additional amounts payable pursuant to
this subsection submitted by any Lender to the Company, through the
Administrative Agent, shall be presumed correct with respect to the Company,
absent manifest error.
In the event that (a) the Company receives certification of the type
described in the immediately preceding paragraph from any Lender and (b) such
increase in capital requirements is not generally applicable to the Lenders, the
Company, at its option and in its discretion, shall have the right to designate
an assignee which is not affiliated with the Company and which is acceptable to
the Administrative Agent and the Required Lenders, to purchase for cash,
pursuant to an Assignment and Acceptance in form satisfactory to the
Administrative Agent and the Company, the outstanding Revolving Credit
Obligations of such Lender and to assume all of such Lender's other rights and
obligations (including, without limitation, such Lender's obligation to
participate in all outstanding Letters of Credit) hereunder without recourse to
or warranty by, or expense to, such Lender, for a purchase price equal to the
principal amount of all of such Lender's outstanding Revolving Loans plus any
accrued but unpaid interest thereon and the accrued but unpaid fees in respect
of such Lender's Revolving Credit Commitment hereunder and any other amounts
that may be owing to such Lender hereunder.
3.15 Mandatory Reduction.
--------------------
The Company shall make a mandatory reduction or repayment of the Revolving
Credit Obligations immediately if at any time the sum of the Revolving Credit
Obligations exceeds the Revolving Credit Maximum Amount, in an amount equal to
such difference.
4. EVIDENCE OF INDEBTEDNESS
(a) Evidence of the Revolving Loans. The Company hereby agrees to pay
when due the principal amount of each Revolving Loan and further agrees to pay
when due all unpaid interest accrued thereon, in accordance with the terms
hereof and with the Notes evidencing the Revolving Loans. The Company shall
execute and deliver to each Lender, as applicable, revolving credit promissory
notes substantially in the form of Exhibit A-1 and thereafter shall execute and
deliver such other promissory notes as are necessary to evidence the Revolving
Loans owing to the Lenders after giving any effect to any assignment or
substitution thereof pursuant to this Agreement, all in form and substance
acceptable to the Administrative Agent and the parties to such assignment (all
such promissory notes and all amendments thereto, replacements thereof, and
substitutions therefor being collectively referred to as the "Notes" and
separately as a "Note").
-17-
(b) Evidence of the Letters of Credit. Subject to the terms hereof, the
Company unconditionally agrees to pay Huntington the amount of all Reimbursement
Obligations, interest and other amounts payable to Huntington under and in
connection with any Letter of Credit when such amounts are due and payable,
irrespective of any claim, setoff, defense, or other right which the Company may
have at any time against Huntington or any other Person. The Company shall
execute and deliver to Huntington as issuing bank a Standby Letter of Credit
Reimbursement Agreement substantially in the form of Exhibit B. In the event any
payment by the Company received by Huntington with respect to a Letter of Credit
and distributed by the Administrative Agent to the Lenders on account of their
participation is thereafter set aside, voided or recovered from Huntington in
connection with any receivership, liquidation or bankruptcy proceeding, each
such Lender which received such distribution shall, upon demand by Huntington,
contribute such Lender's Pro Rata Share of the amount set aside, voided or
recovered, together with interest at the rate required to be paid by Huntington
upon the amount required to be repaid or returned by it.
(c) Evidence of Swing Line Loans. The Company hereby agrees to pay when
due the principal amount of each Swing Line Loan and further agrees to pay when
due all unpaid interest accrued thereon, in accordance with the terms hereof and
with the Notes evidencing the Swing Line Loans. The Company shall execute and
deliver to each Lender, as applicable, swing line promissory notes substantially
in the form of Exhibit A-2.
5. COSTS AND EXPENSES
(a) The Company shall pay all reasonable costs and expenses of the
Administrative Agent and Huntington in connection with the preparation,
negotiation and execution of the Loan Documents and any proposal or commitment
letters or otherwise incidental to the Revolving Credit Commitments, any
amendment or modification of this Agreement or any Loan Documents, any
litigation, contest, dispute, proceeding or action in any way relating to this
Agreement or to any instrument, promissory note, agreement, or other document
executed in connection with this Agreement, whether any of the foregoing be
incurred prior to or after maturity, the occurrence of an Event of Default, or
the rendering of a judgment. Such costs shall include, but not be limited to,
reasonable fees and out-of-pocket expenses of counsel for the Administrative
Agent and Huntington, recording fees, revenue stamps and note and mortgage
taxes.
(b) The Company further agrees to pay or reimburse the Administrative
Agent, Huntington and the Lenders upon demand for all out-of-pocket costs and
expenses, including, without limitation, reasonable attorneys' fees and
out-of-pocket expenses, incurred by any of the foregoing after the occurrence of
an Event of Default (i) in enforcing any Loan Document or exercising or
enforcing any other right or remedy available by reason of any Event of Default;
(ii) in connection with any refinancing or restructuring of the credit
arrangements provided hereunder in the nature of a "work-out" or any insolvency
or bankruptcy proceeding; and (iii) in commencing, defending or intervening in
any litigation or legal proceeding relating to the Revolving Credit Obligations,
the Company or any Subsidiary related to or arising out of the transactions
contemplated hereby except to the extent that such proceeding (A) involves the
gross negligence or willful conduct of a party hereto other than the Company or
a Restricted
-18-
Subsidiary or (B) is between or among parties hereto and does not include the
Company or a Restricted Subsidiary.
6. CONDITIONS PRECEDENT
6.1 Effectiveness and Initial Advance.
----------------------------------
This Agreement shall become effective, each Lender shall be obligated to
make the initial advance hereunder, and Huntington shall be required to issue
Letters of Credit only after the Administrative Agent shall have received from
the Company each of the following items in form and substance satisfactory to
the Administrative Agent:
(a) The Administrative Agent shall have received this Agreement, the
Notes and the Letter of Credit reimbursement agreement referenced above and all
other agreements, documents and instruments described in Schedule 6.1(a)
attached hereto and made a part hereof, each duly executed where appropriate in
form and substance satisfactory to the Administrative Agent, and without
limiting the foregoing, the Company hereby directs its counsel Vorys, Xxxxx,
Xxxxxxx and Xxxxx, LLP and Xxxxxxxxxx Xxxx & XxXxxxxx PLLC to prepare and
deliver to the Administrative Agent and the Lenders the opinions referred to in
such Schedule.
(b) The Administrative Agent shall have received a certificate signed by
the chief operating officer and/or the chief financial officer of the Company,
stating to the best of his knowledge after due inquiry, on such effective date
no Event of Default has occurred and is continuing.
6.2 Conditions Precedent to Subsequent Advances.
--------------------------------------------
The obligation of each Lender to make any disbursement or advance
subsequent to the initial disbursement or initial advance under the Revolving
Loans, or of Huntington as issuing bank to issue any Letters of Credit is
subject to all the conditions and requirements of this Agreement and delivery of
the following required documents, or other action, all of which are conditions
precedent:
(a) Warranties and Representations. On the date of each advance pursuant
to the Revolving Loans, the warranties and representations set forth in Section
7 hereof and each of the representations and warranties contained in any
certificate, document or financial or other statement furnished at any time
pursuant to this Agreement or any related document shall be true and correct on
and as of such date with the same effect as though such warranties and
representations had been made on and as of such date, except to the extent that
such warranties and representations expressly relate to an earlier date.
(b) Compliance. The Company and each Subsidiary shall have complied and
shall then be in compliance with all the terms, covenants and conditions of this
Agreement and any Loan Document which is binding upon it, and no Event of
Default or Potential Default shall have occurred and be continuing on such date
or after giving effect to the advances requested to be made.
-19-
(c) Confirmation of Conditions Precedent. The Company and any Subsidiary
shall then be in compliance with and able to confirm all the foregoing
conditions precedent with the same effect as though such conditions precedent
were requirements to the making of any advance contemplated herein.
7. WARRANTIES AND REPRESENTATIONS
In order to induce the Administrative Agent and each of the Lenders to
enter into this Agreement and to make the Revolving Loans, the Letters of Credit
and the other financial accommodations to the Company, the Company represents
and warrants to the Administrative Agent and each of the Lenders that each of
the following statements is true and correct:
7.1 Organization and Authority.
---------------------------
The Company and each of the Subsidiaries (a) is a corporation, limited
liability company, partnership or joint venture duly organized, validly existing
and in good standing under the laws of the state of its formation; (b) has all
requisite power and authority and all necessary licenses and permits to own and
operate its properties and to carry on its business as now conducted and as
presently proposed to be conducted; and (c) is not doing business or conducting
any activity in any jurisdiction in which it has not duly qualified and become
authorized to do business, where the failure to do so has or is reasonably
likely to have a Material Adverse Effect.
7.2 Borrowing is Legal and Authorized.
----------------------------------
(a) The execution and delivery of each of the Loan Documents which have
been executed and to which the Company or any Subsidiary is a party has been
authorized by the Board of Directors or other manager of such entity and will
constitute valid and binding obligations enforceable in accordance with their
respective terms; (b) the execution of this Agreement and related Notes and Loan
Documents and the compliance with all the provisions of this Agreement (i) are
within the corporate or constituent powers of such entity; and (ii) are legal
and will not conflict with, result in any breach in any of the provisions of,
constitute a default under, or result in the creation of any lien or encumbrance
upon any property of the Company or any Subsidiary under the provisions of, any
agreement, charter instrument, bylaw, or other instrument to which the Company
or any Subsidiary is a party or by which it may be bound; and (c) there are no
limitations in any indenture, material contract or agreement, mortgage, deed of
trust or other agreement or instrument to which the Company or any Subsidiary is
now a party or by which the Company or any Subsidiary may be bound with respect
to the payment of principal or interest on any Indebtedness, or the ability of
Company or any Subsidiary to incur Indebtedness, including the Notes to be
executed in connection with this Agreement.
7.3 Taxes.
------
All tax returns required to be filed by the Company and each Subsidiary in
any jurisdiction have in fact been filed, and all taxes, assessments, fees and
other governmental charges which are required to be paid pursuant to Section 8.1
or other provisions of this Agreement in respect of the Company and each
Subsidiary, or upon any of properties of any of such Persons which are due and
payable have been paid. The Company does not know of any
-20-
proposed additional tax assessment against it or any Subsidiary. The accruals
for taxes on the books of the Company and each Subsidiary for its current fiscal
period are adequate.
7.4 Corporate Information.
----------------------
Schedule 7.4 attached hereto and made a part hereof accurately represents
as of the initial funding under this Agreement, the following: (a) the classes
of capital stock or equity interests, as applicable, of the Company and each
Subsidiary and par value of each such class, as applicable, all as authorized by
the applicable Constituent Document of the Company or such Subsidiary, (b) the
number of shares of each such class of stock or equity interests, as applicable,
issued or outstanding, and (c) the employer tax identification number of the
Company and each Subsidiary. All shares of all classes of capital stock or other
equity interests issued and outstanding are fully paid and nonassessable. Except
for options granted pursuant to the Incentive Stock Plan of the Company, neither
the Company nor any Subsidiary has outstanding any securities, or any other
instrument convertible to a security of the Company or such Subsidiary, or any
commitment, understanding, agreement or arrangement to issue, sell or have
outstanding any of the foregoing.
7.5 Compliance with Law.
--------------------
Neither the Company nor any Subsidiary (a) is in violation of any laws,
ordinances, governmental rules or regulations to which it is subject, including,
without limitation, any laws, rulings or regulations relating to ERISA or
Section 4975 of the Internal Revenue Code or (b) has failed to obtain any
licenses, permits, franchises or other governmental or environmental
authorizations necessary to the ownership of its properties or to the conduct of
its business, which violation or failure under clause (a) or clause (b) above
has or is reasonably likely to have a Material Adverse Effect.
7.6 Financial Statements; Full Disclosure.
--------------------------------------
The financial statements for the fiscal year ending December 31, 2002,
which have been supplied to the Administrative Agent and the Lenders on or prior
to the date hereof, have been prepared in accordance with GAAP and fairly
represent the consolidated financial condition of the Company and its
consolidated Subsidiaries as of such date, and the financial statements for the
interim period ending September 30, 2003, which have been supplied to the
Administrative Agent and the Lenders prior to the date hereof, fairly represent
the consolidated financial condition of the Company and its consolidated
Subsidiaries as of such date. No material adverse change in the consolidated
financial condition of the Company and its consolidated Subsidiaries has
occurred since such dates. The financial statements referred to in this
paragraph do not, nor does this Agreement or any written statement furnished by
the Company or any Subsidiary to the Administrative Agent and the Lenders in
connection with obtaining the Revolving Loans, the Letters of Credit and the
Swing Line Loan, contain any untrue statement of a material fact or omit a
material fact necessary to make the statements contained therein or herein not
misleading. The Company has disclosed to the Administrative Agent and the
Lenders in writing all facts, including, without limitation, all pending
litigation, administrative proceedings, and arbitration proceedings, which may
or is likely to have a Material Adverse Effect.
-21-
7.7 Litigation: Adverse Effects.
----------------------------
There is no action, suit, audit, proceeding, investigation or arbitration
(or series of related actions, suits, proceedings, investigations or
arbitrations) before or by any Governmental Authority or private arbitrator
pending or, to the knowledge of the Company, threatened against the Company or
any Subsidiary or any property of the Company or any Subsidiary (a) challenging
the validity or the enforceability of any of this Agreement, or any Loan
Document, agreement, or instrument executed in connection herewith, or (b) which
has had, shall have or is reasonably likely to have a Material Adverse Effect.
Neither the Company nor any Subsidiary is (i) in violation of any applicable
requirements of law which violation shall have or is likely to result in a
Material Adverse Effect, or (ii) subject to or in default with respect to any
final judgment, writ, injunction, restraining order or order of any nature,
decree, rule or regulation of any court or Governmental Authority, in each case
which shall have or is likely to have a Material Adverse Effect.
7.8 No Insolvency.
--------------
On the date of this Agreement and after giving effect to all Indebtedness
of the Company and its Subsidiaries (including, without limitation, the
Revolving Credit Obligations and all Contingent Obligations) and on the date of
each advance under the Revolving Loans or the issuance of any Letter of Credit
hereunder, each of the Company and its Subsidiaries (a) will be able to pay its
respective obligations as they become due and payable; (b) has assets, the
present fair saleable value of which exceeds the amount that will be required to
pay probable liability on its obligations as the same become absolute and
matured; (c) has sufficient property, the sum of which at a fair valuation
exceeds all of its Indebtedness; and (d) will have sufficient capital to engage
in its business.
7.9 Government Consent.
-------------------
Neither the nature of the Company or any Subsidiary or of any of their
businesses or properties, nor any relationship between the Company or any
Subsidiary and any other entity or person, nor any circumstance in connection
with the execution of this Agreement, is such as to require a consent, approval
or authorization of, or filing, registration or qualification with, any
Governmental Authority on the part of the Company or any Subsidiary as a
condition to the execution and delivery of this Agreement or the Loan Documents.
7.10 Title to Properties.
--------------------
The Company and each of its Subsidiaries (a) has good title to all the
property in which it has a property interest, free from any liens and
encumbrances, except as set forth on Schedule 7.10 attached hereto or as
permitted by Section 8.4 of this Agreement, and (b) has not agreed or consented
to cause or permit in the future (upon the happening of a contingency or
otherwise) any of its property whether now owned or hereafter acquired to be
subject to a lien or encumbrance except as provided in this Section 7.10.
-22-
7.11 No Defaults.
------------
No event has occurred and no condition exists which would constitute a
Potential Default or an Event of Default pursuant to this Agreement. Neither the
Company nor any Subsidiary is in violation of any term of any agreement, charter
instrument, bylaw or other instrument to which it is a party or by which it may
be bound, which violation has or is reasonably likely to have a Material Adverse
Effect.
7.12 Environmental Protection.
-------------------------
Except for matters, conditions, operations and noncompliance which would
not have or be reasonably likely to have a Material Adverse Effect, neither the
Company nor any Subsidiary has actual knowledge of (a) the permanent placement,
burial or disposal of any Hazardous Substances (as hereinafter defined) on any
real property owned, leased, or used by the Company or any Subsidiary (the
"Premises"), of any spills, releases, discharges, leaks, or disposal of
Hazardous Substances that have occurred or are presently occurring on, under, or
onto the Premises, or of any spills, releases, discharges, leaks or disposal of
Hazardous Substances that have occurred or are occurring off the Premises as a
result of the improvement, operation, or use of the Premises which would result
in non-compliance with any of the Environmental Laws (as hereinafter defined);
(b) a violation of any applicable Environmental Laws; (c) any pending or
threatened environmental civil, criminal or administrative proceedings against
the Company or any Subsidiary relating to Hazardous Substances; (d) any facts or
circumstances that would give rise to any future civil, criminal or
administrative proceeding against the Company or any Subsidiary relating to
Hazardous Substances; or (e) any of its employees, agents, contractors,
subcontractors, or any other person occupying or present on the Premises
generating, manufacturing, storing, disposing or releasing on, about or under
the Premises any Hazardous Substances which would result in the Premises not
complying with the Environmental Laws.
7.13 Margin Loans.
-------------
None of the transactions contemplated in the Agreement will violate or
result in a violation of Section 7 of the Securities Exchange Act of 1934, as
amended, or any regulation issued pursuant thereto, including, without
limitation, Regulation U of the Board of Governors of the Federal Reserve
System, 12 C.F.R., Chapter II. Neither the Company nor any Subsidiary owns or
intends to carry or purchase any "margin security" within the meaning of said
Regulation U. None of the proceeds of the Revolving Loans or the Letters of
Credit have been or will be used to purchase or refinance any borrowing, the
proceeds of which were used to purchase any "security" within the meaning of the
Securities Exchange Act of 1934, as amended.
7.14 Real Estate Ownership.
----------------------
With respect to each tract of unimproved or improved real property which
the Company or any Subsidiary now leases, owns or acquires rights therein after
the date hereof (hereinafter a "Real Property Parcel"), except where a failure,
violation, condition, requirement or noncompliance with any of the items
specified below does not or is not reasonably likely to have a Material Adverse
Effect:
-23-
(a) Neither the Company nor any Subsidiary has received notice of any
pending or threatened condemnation proceeding or notice of any special
assessment for improvements to and/or for the benefit of any Real Property
Parcel;
(b) Neither the Company nor any Subsidiary has knowledge of any boundary
line dispute, encroachment, access limitation or other survey defect affecting
any Real Property Parcel. Each Real Property Parcel has legal access to a public
street by unrestricted frontage or over a title-insured easement and complies
with applicable subdivision regulations, except for minor survey defects which
do not materially interfere with the Company's or any Subsidiary's intended use
and except for subdivision of acreage into residential lots after acquisition in
the ordinary course of the Company's or any Subsidiary's business. The Company
or its Subsidiary has a survey of each Real Property Parcel obtained prior to
the acquisition thereof;
(c) The surveys obtained for each Real Property Parcel certify those
portions, if any, of the Real Property Parcel which are located within a flood
hazard area;
(d) The Company or its Subsidiary has a "Phase One" environmental study
prepared by an environmental engineering company obtained prior to acquisition
of each Real Property Parcel;
(e) Neither the Company nor any Subsidiary has filled any Real Property
Parcel which contains "wetlands," or did contain "wetlands," unless such fill
was approved by state and federal authorities having jurisdiction, as "wetlands"
are defined or described in applicable state and federal laws and regulations.
Neither the Company nor any Subsidiary has acquired any Real Property Parcel
without obtaining a wetlands determination study by a qualified expert;
(f) Except to the extent permitted by Section 8.18 below, each Real
Property Parcel is finally and unappealably zoned for the Company's or such
Subsidiary's intended use prior to purchase, except for Real Property Parcels
which will be rezoned by the Company or such Subsidiary for development as
residential lots in the ordinary course of its business in which case the
Company or such Subsidiary will use its best efforts to obtain the appropriate
rezoning as soon as practicable after acquisition;
(g) The Company and each of the Subsidiaries has obtained appropriate
assurances of availability in adequate capacities of all necessary utilities, at
a property line or by extension through publicly dedicated rights-of-way or
recorded easements, prior to acquisition of such Real Property Parcel;
(h) The Company or a Subsidiary has good and marketable fee simple title
to each Real Property Parcel, free and clear of all liens and encumbrances
except: (i) the lien of real estate taxes and assessments not yet due; (ii)
easements, covenants, conditions and restrictions of record which do not
materially interfere with present lawful use or the Company's or a Subsidiary's
intended use; (iii) the effect of zoning and building laws; (iv) the effect of
legal highways; and (v) liens or encumbrances disclosed as set forth on Schedule
7.10 to this Agreement or permitted in connection with borrowings or lease
obligations permitted pursuant to Sections 8.4, 8.5 or 8.7 hereof. Neither the
Company nor any Subsidiary has knowledge of any off-record or undisclosed legal
or equitable interest claimed by any person in any Real Property Parcel or any
pending or threatened litigation or administrative proceeding against or
affecting any Real Property Parcel or any claim of right to file a mechanic's or
materialman's lien against
-24-
any Real Property Parcel. The Company or a Subsidiary has obtained owner's title
insurance in the amount of the purchase price showing good and marketable fee
simple title to each Real Property Parcel, free and clear of all liens and
encumbrances except as permitted by this Section 7.14; and
(i) Upon receipt of written request by the Administrative Agent, the
Company will promptly furnish to the Administrative Agent copies of existing
documentation or certificates in the Company's or a Subsidiary's possession
affecting any Real Property Parcel, as the Administrative Agent may reasonably
request.
7.15 Existing Investments in Joint Venture.
--------------------------------------
As of the date hereof, Schedule 7.15 attached hereto, sets forth all of
the Investments in Joint Venture of the Company and its Subsidiaries and the
nature and amount of such Investments.
8. COMPANY BUSINESS COVENANTS
Effective on and after the date of this Agreement, so long as any of the
indebtedness or credit provided for herein remains unpaid or outstanding, the
Company covenants and agrees in favor of the Administrative Agent and each
Lender as follows:
8.1 Payment of Taxes and Claims.
----------------------------
The Company will, and will cause each of its Subsidiaries to, pay before
they become delinquent (a) all taxes, assessments and governmental charges or
levies imposed upon it or its property; and (b) all claims or demands of
materialmen and mechanics in excess of $100,000 in the aggregate, carriers,
warehousemen, landlords, bailees and other like persons which, if unpaid, might
result in the creation of a lien or encumbrance upon its property, provided,
however, that items of the foregoing description need not be paid (i) while
being contested in good faith and by appropriate proceedings or (ii) if
uncontested, such entity is able to obtain title insurance insuring against such
items, and provided further that adequate book reserves have been established
with respect thereto and provided further that such entity's title to, and its
right to use, its property are not materially adversely affected thereby. In the
case of any item of the foregoing description involving in excess of the amount
which the Company's independent public accountants shall fix as the threshold of
materiality for purposes of their audit of the then current year, the
appropriateness of the proceedings shall be supported by an opinion of the
independent counsel responsible for such proceedings and the adequacy of such
reserves shall be supported by the opinion of the independent accountants.
8.2 Maintenance of Properties and Corporate Existence.
--------------------------------------------------
The Company will and will cause each of its Subsidiaries to:
(a) Property - maintain its property in good condition, ordinary wear and
tear excepted, and make all renewals, replacements, additions, betterments and
improvements thereto which are deemed necessary by the Company or such
Subsidiary;
-25-
(b) Insurance - maintain, with financially sound and reputable insurers,
insurance with respect to its properties and business against such casualties
and contingencies, of such types (including but not limited to fire and
casualty, public liability, products liability, larceny, embezzlement or other
criminal misappropriation insurance) and in such amounts as is customary in the
case of corporations of established reputations engaged in the same or a similar
business and similarly situated;
(c) Financial Records - keep true books of records and accounts in which
full and correct entries will be made of all its business transactions, and
reflect in its financial statements adequate accruals and appropriations to
reserves, all in accordance with GAAP;
(d) Existence and Rights - except as otherwise permitted by this
Agreement, do or cause to be done all things necessary (i) to preserve and keep
in full force and effect its existence, rights and franchises, and (ii) to
maintain its status as a corporation, limited liability company, partnership or
other entity duly organized and existing and in good standing under the laws of
the state of its formation; and
(e) Compliance with Law - not be in violation of any laws, ordinances, or
governmental rules and regulations to which it is subject and will not fail to
obtain any licenses, permits, franchises or other governmental authorizations
necessary to the ownership of its properties or to the conduct of its business,
which violation or failure to obtain has or is reasonably likely to have a
Material Adverse Effect.
8.3 Sale of Assets.
---------------
The Company will not, and will not permit any Subsidiary to, sell, lease,
transfer, assign or otherwise dispose of, any of its assets or property, whether
now owned or hereafter acquired, or any income or profits therefrom, or enter
into any agreement to do so, except (a) sales, transfers or other distributions
of personal or real property in the ordinary course of business, including,
without limitation, the sale of Model Homes, Real Estate Held for Development,
Developed Lots, and Lots Under Development for consideration not less than fair
market value (but in no event less than the amount advanced under the Borrowing
Base); (b) the disposition of obsolete equipment in the ordinary course of
business; (c) sales in the ordinary course of business of residential first
mortgage loans made in the ordinary course of business by the Company or a
Subsidiary thereof to buyers of residences from the Company or a Subsidiary
thereof; and (d) dispositions by the Company or any Restricted Subsidiary which
constitute Investments in Restricted Subsidiaries permitted by Section 8.11
hereof; provided however that any such disposition or Investment does not cause
the Company and its Subsidiaries to exceed the Maximum New Market Investment
Amount.
8.4 Liens and Encumbrances (Negative Pledge).
-----------------------------------------
The Company will not, and will not permit any of the Subsidiaries to,
cause or permit or agree or consent to cause or permit in the future (upon the
happening of a contingency or otherwise), any of its property, whether now owned
or hereafter acquired, to be subject to a lien or encumbrance except for:
-26-
(a) liens securing taxes, assessments or governmental charges or levies
or the claims or demands of materialmen, mechanics, carriers, warehouses,
landlords and other like persons in connection with such items permitted by
Section 8.1 above;
(b) liens incurred or deposits made in the ordinary course of business in
connection with worker's compensation, unemployment insurance, social security
and other like laws;
(c) attachment, judgment and other similar liens arising in connection
with court proceedings in an aggregate amount less than $1,000,000;
(d) attachment, judgment or other similar liens arising in connection
with court proceedings for the payment of money aggregating in excess of
$1,000,000, but less than $10,000,000, provided that (i) fewer than 21 days have
elapsed from the date of the filing of such lien or liens, or (ii) such lien or
liens have been discharged in the full amount or the execution or other
enforcement of such lien or liens are effectively stayed or bonded in full, and
the claims secured thereby are being actively contested in good faith and by
appropriate proceedings;
(e) reservations, exceptions, encroachments, easements, rights of way,
covenants, conditions, restrictions, leases and other similar title exceptions
or encumbrances affecting real property, provided they do not materially
interfere with its use in the ordinary conduct of the Company's or its
Subsidiary's business;
(f) inchoate liens arising under ERISA to secure the contingent liability
of the Company or any of the Subsidiaries;
(g) liens or encumbrances on first priority residential mortgage loans
originated by the Company or any Subsidiary in connection with Mortgage
Warehouse Financing permitted hereunder.
(h) the liens and encumbrances disclosed on Schedule 7.10 to this
Agreement or in connection with any secured Indebtedness permitted by Section
8.5(b) below and operating lease rentals permitted by Section 8.7 below.
In addition, the Company will not, and will not permit any of the
Subsidiaries to, contractually agree with any other creditor to provide such
creditor a negative pledge, or other covenant similar to this Section 8.4.
8.5 Indebtedness.
-------------
The Company will not, and will not permit any of the Subsidiaries to,
directly or indirectly create, incur, assume or otherwise become or remain
directly or indirectly liable with respect to any Indebtedness (other than
Contingent Obligations permitted by Section 8.6 below), except for (a) the
Revolving Credit Obligations; (b) up to the aggregate sum of $25,000,000
outstanding at any time in (i) secured nonrecourse Indebtedness, (ii) secured or
unsecured capital lease or purchase money Indebtedness incurred to finance the
acquisition of capital assets or real estate in connection with the business of
the Company or any Restricted Subsidiary, provided that such Indebtedness (A)
has a scheduled maturity and is not due on demand and (B) is secured only by the
property being purchased and does not exceed the purchase price thereof, (c)
unsecured indebtedness subordinated to the Revolving Credit Commitments, which
shall be
-27-
subordinated in a manner satisfactory to the Administrative Agent; (d) Hedging
Obligations or other Indebtedness evidenced by interest rate agreements in
respect of interest rate, swap, collar, cap or similar agreements pursuant to
which the Company xxxxxx its actual interest rate exposure under the Revolving
Loans; (e) intercompany Indebtedness incurred by any Restricted Subsidiary to
(i) the Company or to (ii) any Restricted Subsidiary wholly owning such
Restricted Subsidiary; provided, however, that such Indebtedness constitutes an
Investment permitted by Section 8.11 of this Agreement and does not cause the
Company and its Subsidiaries to exceed the Maximum New Market Investment Amount;
and (f) Mortgage Warehouse Financing not to exceed $25,000,000 outstanding at
any time.
8.6 Contingent Liabilities.
-----------------------
The Company will not, and will not permit any of the Subsidiaries to,
directly or indirectly create or become liable with respect to any Contingent
Obligations, except (a) by indorsement of negotiable instruments for deposit or
collection in the ordinary course of business; (b) the guaranty of Letters of
Credit issued in connection with Approved Joint Ventures, (c) up to the maximum
aggregate stated amount of $15,000,000 in guaranteed obligations outstanding at
any time in connection with (i) Non-Facility Contingent Obligations, (ii)
Indebtedness incurred by Approved Joint Ventures to sellers of real property and
(iii) Indebtedness incurred by a Qualified Joint Venture to the extent of the
greater of the Company's or its Subsidiary's percentage of ownership (A) in such
joint venture or (B) that would be applicable under the applicable Constituent
Document for such joint venture upon the breach of the other joint venture
partner or partners; (d) the guaranty of any Indebtedness of the Company or any
Subsidiary that is permitted to be incurred under Section 8.5 above; (e)
contingent liability of the Company or any Subsidiary as a partner or joint
venture partner in connection with joint ventures or partnerships; (f) the
guaranty of any other Indebtedness not to exceed the sum of $100,000 in the
aggregate outstanding at any time; (g) obligations, warranties and indemnities
not relating to Indebtedness, which have been or are undertaken or made in the
ordinary course of business or in connection with the issuance of Indebtedness
or securities; and (h) Contingent Obligations with respect to surety, appeal and
performance bonds obtained by the Company or any Restricted Subsidiary.
8.7 Operating Lease Rentals.
------------------------
The Company will not, nor will it permit any Subsidiary to, enter into any
operating leases (including without limitation leases of Model Homes), except to
the extent that the aggregate consolidated annual rentals for all operating
leases of the Company and its Subsidiaries do not exceed the sum of $10,000,000.
8.8 Acquisition of Capital Stock.
-----------------------------
The Company will not, and will not permit any of its Subsidiaries to,
redeem or acquire any of the Company's capital stock or any options or other
interests in respect thereof having an aggregate value in excess of $10,000,000
from the date hereof through the term of this Agreement; provided, however no
such redemption or acquisition shall occur during the existence of an Event of
Default; except (a) the purchase or redemption of capital stock in connection
with a simultaneous sale of an equivalent or greater amount of capital stock for
not less than the same aggregate purchase or redemption price, or (b) up to the
aggregate amount of
-28-
$1,000,000 in any fiscal year for the purchase of capital stock, options or
other interests in respect thereto (i) using funds escrowed pursuant to the
Company's Amended and Restated Executive Deferred Compensation Plan, as amended
from time to time, or any replacement plan therefor in effect from time to time
or (ii) pursuant to the Company's or any Restricted Subsidiary's management
incentive plans, as amended from time to time, or any replacement plan therefor
in effect from time to time. Except for stock owned by the Company, the Company
will not permit any of the Subsidiaries to redeem or acquire any of its own
capital stock.
8.9 Restrictions on Dividends.
--------------------------
The Company shall not declare or pay any cash dividends or distributions,
for any fiscal year, which total in excess of 50% of the Company's Consolidated
Net Income after taxes for such fiscal year; provided, however, that any such
payment does not cause an Event of Default or Potential Default. None of the
Subsidiaries shall declare or pay any cash dividends or distributions for any
fiscal year, except to or for the benefit of the Company.
8.10 Management.
-----------
The Company shall not replace or change the position of its chief
executive officer or the chief operating officer unless such replacement or
change will not or is not reasonably likely to have or cause a Material Adverse
Effect.
8.11 Investments, Loans and Advances.
--------------------------------
The Company will not and will not permit any of its Subsidiaries to,
directly or indirectly make or own any Investment except: (a) cash or cash
equivalents (marketable direct obligations issued or unconditionally guaranteed
and backed by the full faith and credit of the United States government), bonds
or other obligations of the United States of America, certificates of deposit
issued by commercial banks with a minimum capital of $500,000,000, and
commercial paper rated at least A-1 or P-1 and having a maturity of not more
than one year; (b) Investments in Joint Ventures, provided that all such
Investments described in this subsection (b), together with the Investments
described in subsections (c) and (d) of this Section 8.11 do not cause the
Company and its Subsidiaries to exceed the Maximum New Market Investment Amount;
(c) the Investments in connection with the Kentucky Acquisition and other
Investments in Permitted Acquisitions not to exceed the aggregate Purchase Price
of $25,000,000 from the date hereof through the term of this Agreement
(excluding the Kentucky Acquisition), provided, however, that all such
Investments described in this subsection (c), together with the Investments
described in subsections (b) and (d) of this Section 8.11 do not cause the
Company and its Subsidiaries to exceed the Maximum New Market Investment Amount;
(d) Investments in Restricted Subsidiaries, including without limitation, the
Kentucky Acquisition, if applicable, provided, however, that all such
Investments described in this subsection (d), together with the Investments
described in subsections (b) and (c) of this Section 8.11 do not cause the
Company and its Subsidiaries to exceed the Maximum New Market Investment Amount;
(e) investments consisting of deposit accounts maintained or managed by the
Company or its Subsidiaries; (f) loans or advances to employees of the Company
or any Subsidiary, which loans and advances shall not in the aggregate exceed
$200,000 outstanding at any time; (g) Investments up to the sum of $2,000,000 on
or after the date hereof in one or more mortgage companies which (i) conduct
business in areas in which the Company or its Subsidiaries also conduct business
and (ii)
-29-
are principally in the residential mortgage lending business; (h) loans and
advances evidenced by promissory notes from the purchasers of any of real
property of the Company or any Subsidiary (individually which shall not exceed
the purchase price paid for such property) in an amount not to exceed the
aggregate sum of $2,000,000 outstanding at any time; (i) Investments in one or
more Insurance Subs not to exceed the aggregate sum of $2,000,000 outstanding at
any time; (j) Investments consisting of residential first mortgage loans made in
the ordinary course of business by the Company or a Subsidiary thereof to buyers
of residences from the Company or a Subsidiary thereof, and (k) any other
Investment (including Alliance Title Agency, Ltd.) not to exceed the aggregate
amount of $100,000 outstanding at any time.
8.12 ERISA.
------
The Company will, and will cause each of its Subsidiaries to, with respect
to any pension plan or profit-sharing plan in effect now or in the future:
(a) at all times make prompt payment of contributions required to meet
the minimum funding standards set forth in Section 302 through 305 of ERISA with
respect to its plan,
(b) promptly, after the filing thereof, upon the request of the
Administrative Agent, furnish to the Administrative Agent copies of each annual
report required to be filed pursuant to Section 103 of ERISA in connection with
its plan for the plan year, including any certified financial statements or
actuarial statements required pursuant to said Section 103,
(c) notify the Administrative Agent immediately of any fact, including,
but not limited to, any "Reportable Event," as that term is defined in Section
4043 of ERISA, arising in connection with the plan which might constitute
grounds for termination thereof by the Pension Benefit Guaranty Corporation or
for the appointment by the appropriate United States District Court of a Trustee
to administer the plan, and
(d) notify the Administrative Agent of any "Prohibited Transaction" as
that term is defined in Section 406 of ERISA.
The Company will not, and will not permit any of the Subsidiaries to:
(e) engage in any "Prohibited Transaction," or
(f) terminate any such plan in a manner which could result in the
imposition of a lien on the property of the Company or any Subsidiary pursuant
to Section 4068 of ERISA.
8.13 Tangible Net Worth.
-------------------
At all times, the Company and its consolidated Subsidiaries shall maintain
a Consolidated Tangible Net Worth of not less than the sum of (i) $110,000,000,
plus (ii) beginning December 31, 2003, calculated separately for each fiscal
year ending on and after such date, 50% of the Consolidated Net Income after
taxes of the Company and its consolidated Subsidiaries in each fiscal year which
the such Consolidated Net Income after taxes is positive.
-30-
8.14 Leverage Ratio.
---------------
The Company and its consolidated Subsidiaries at all times shall maintain
a Leverage Ratio of not greater than 2.25 to 1.00.
8.15 No Losses.
----------
The Company and its consolidated Subsidiaries shall not incur an Adjusted
Loss in any five (5) consecutive fiscal quarters ending on the date of
determination.
8.16 Ratio of Uncommitted Land Holdings to Consolidated Tangible Net Worth.
----------------------------------------------------------------------
The Company and its consolidated Subsidiaries shall maintain at all times
a ratio of Uncommitted Land Holdings to Consolidated Tangible Net Worth of not
greater than 1.75 to 1.00.
8.17 Interest Coverage Ratio.
------------------------
The Interest Coverage Ratio of the Company and its Subsidiaries on a
consolidated basis, as determined as of the last day of each fiscal quarter for
the twelve month period ending on such date, shall not be less than 2.25 to
1.00.
8.18 Land Not Zoned for Residential Development.
-------------------------------------------
Without the consent of the Administrative Agent and the Required Lenders,
the Company will not, and will not permit any Subsidiaries to, purchase or hold
any raw acreage or undeveloped land or other land not having a zoning
classification appropriate for a subdivision development of the type developed
by the Company or a Restricted Subsidiary, whether now owned or acquired
hereafter, in excess of the aggregate sum of $15,000,000 outstanding at any
time, valued at the lesser of cost or market.
8.19 Maintenance of Deposits.
------------------------
The Company will, and will cause each of its Subsidiaries to, maintain its
primary operating and deposit accounts at Huntington, except for those deposits
managed by the Company or any Subsidiary which are not owned by such Person.
8.20 Model Homes Inventory.
----------------------
The Company and its Subsidiaries will not have Model Homes, whether now
owned or hereafter acquired, that exceed the aggregate sum of $8,500,000,
outstanding at any time, valued at the lesser of cost or market.
8.21 Speculative Homes.
------------------
The Company and its Subsidiaries will not have an inventory of Speculative
Homes and other dwellings built for speculation, whether now owned or hereafter
acquired, that exceeds $30,000,000 in the aggregate outstanding at any time,
valued the at the lesser of cost or market.
-31-
8.22 Further Real Estate Acquisition Limitations, Maximum New Market
---------------------------------------------------------------
Investment Amount.
------------------
The Company and its Subsidiaries will not permit (i) the Maximum New
Market Investment Amount to exceed the aggregate sum of $25,000,000 outstanding
at any time, valued at the lesser of cost or market, and (ii) their consolidated
total Investments in or purchases of any Uncommitted Land Holdings, Speculative
Homes, Model Homes and all other real or personal property constituting any one
or more "start up operations" or other de novo entries in any market other than
a Dominion Market to exceed the aggregate sum of $15,000,000 outstanding at any
time, valued at the lesser of cost or market. In addition, the Company will not,
and will not permit any Subsidiary to, build homes or develop real estate in any
locations or markets other than the State of Ohio or any contiguous state.
8.23 Conduct of Business, Subsidiaries.
----------------------------------
(a) The Company will not, and will not permit any of its Subsidiaries to,
engage in any business other than the businesses engaged in by such Person on
the date hereof and any business or activities which are substantially similar,
related or incidental thereto including, without limitation, a mortgage company
pursuant to Section 8.11 above. The Company will not, and will not permit any of
its Subsidiaries to, create, capitalize or acquire any Subsidiary after the date
hereof except in connection with a Permitted Acquisition or an Investment
permitted pursuant to Section 8.11 above.
8.24 Permitted Acquisitions.
-----------------------
(a) The Administrative Agent and each Lender hereby consents to the
Kentucky Acquisition. From the date hereof through the term of this Agreement,
the Company will not, and will not permit any Subsidiary to, make any
Acquisition without the prior written consent of the Administrative Agent and
the Required Lenders, except for the Kentucky Acquisition and any Permitted
Acquisition, the Purchase Price of which, together with the aggregate Purchase
Prices of all other Acquisitions made after the date hereof (excluding the
Kentucky Acquisition) does not exceed the sum of $25,000,000, provided that such
Acquisition, together with all Investments described in subsections (b), (c) and
(d) of Section 8.11 do not cause the Company and its Subsidiaries to exceed the
Maximum New Market Investment Amount or cause an Event of Default. In addition,
the Company and its Subsidiaries shall make no more than four (4) Acquisitions
after the date hereof without the prior written consent of the Administrative
Agent and the Required Lenders.
(b) On the funding date for any borrowing of Revolving Loans for the
purpose of consummating a Permitted Acquisition, the Administrative Agent shall
have received an officer's certificate from a Financial Officer certifying that
(i) the Acquisition meets the requirements of the definition of Permitted
Acquisition and sets forth detailed calculations of all financial covenants,
(ii) the liabilities assumed with respect to such Permitted Acquisition do not
or are not reasonably likely to have a Material Adverse Effect, (iii) the
Company shall deliver to the Administrative Agent copies of all material
documentation evidencing the Permitted Acquisition, and (iv) the Company shall
have delivered to the Administrative Agent copies of all material, business and
financial information (with appropriate supporting detail) relating to the
business purchased in the Permitted Acquisition as the Administrative Agent may
reasonably request.
-32-
8.25 Restriction on Fundamental Changes.
-----------------------------------
The Company will not, and will not permit any Subsidiary to (a) enter into
any merger or consolidation, or (b) liquidate, wind up or dissolve (or suffer
any liquidation or dissolution), or convey, lease, sell, transfer or otherwise
dispose of, in one transaction or a series of transactions, all or substantially
all of the Company's or any such Subsidiary's business or property, whether now
or hereafter acquired, except for (i) a Permitted Acquisition involving (A) the
Company in which the Company is the surviving constituent or (B) a Subsidiary in
which the Company owns directly or indirectly the Person acquired, and (ii) for
the merger or liquidation of assets of a Subsidiary into the Company or into a
Restricted Subsidiary. The Company shall cause each Subsidiary to be a direct or
indirect wholly-owned Subsidiary of the Company.
8.26 Fall Foundation Lots.
---------------------
The Company shall not, and shall not permit its Subsidiaries, at any time
to have their consolidated inventories of Fall Foundation Lots exceed 275 lots
or exceed $12,000,000 in the aggregate outstanding, valued at the lower of cost
or market.
9. INFORMATION AS TO COMPANY AND SUBSIDIARIES
The Company shall deliver the following to the Administrative Agent and
each Lender:
(a) within 45 days after the end of each month, consolidated financial
statements, including a balance sheet, statements of operations of the Company
and the Subsidiaries, and statements of income and surplus, certified in the
form of Exhibit D attached hereto by the president, chief operating officer,
chief financial officer, or treasurer (a "Financial Officer") of the Company as
fairly representing the financial condition of the Company and the Subsidiaries
as of the end of such period;
(b) within 45 days after the end of each month, a statement signed by a
Financial Officer of the Company setting forth and certifying the calculation of
the Borrowing Base as of the end of that period;
(c) within 45 days after the end of each month, a statement signed by a
Financial Officer of the Company certifying that the Company is in compliance
with terms of this Agreement and calculating the financial covenants and ratios
of the Company and its Subsidiaries set forth in Sections 8.13, 8.14, 8.16 and
8.17 above;
(d) within 45 days after the end of each month, and at such other times
as the Administrative Agent may request, a report for the Company and its
Subsidiaries, signed by a Financial Officer of the Company setting forth the
number and dollar total of accounts receivable of the Company and its
Subsidiaries in format satisfactory to the Administrative Agent and consistent
with past practices;
(e) within 45 days after the end of each month, a report signed by a
Financial Officer of the Company in form substantially similar to that being
currently provided to the
-33-
Administrative Agent as of the date hereof setting forth, inter alia, the
following consolidated information with respect to the Company and its
Subsidiaries:
(i) work-in-process for each subdivision then under development
specifying the number of units and related costs;
(ii) backlog report, including beginning backlog, sales, closings,
and ending backlog;
(iii) the number of Model Homes for each subdivision then under
development specifying the number of units and related costs;
(iv) sales of units and closings of units for each subdivision then
under development by the Company and its Subsidiaries; and
(v) Speculative Homes for each subdivision then under development
by the Company and its Subsidiaries specifying the number of units and related
costs;
(f) within 45 days after the end of each month, a Land Development Lot
Availability Report certified by a Financial Officer of the Company, specifying
the completed lots and lots under development for each subdivision then under
development by the Company or any of the Subsidiaries;
(g) within 45 days after the end of each quarter, (i) consolidated and
consolidating financial statements, including a balance sheet, statements of the
operations of the Company and each of the Subsidiaries, and statement of income
and surplus certified by a Financial Officer of the Company as fairly
representing the financial condition of the Company and each of the Subsidiaries
as of the end of such period, and (ii) a report substantially similar to the
report required by Section 9(d) above for the Company and for each Subsidiary;
(h) immediately upon the filing, release or disclosure, as the case may
be, copies of all filings, documents, disclosures or other information filed
with the Securities and Exchange Commission or state or local securities
commissions or other regulatory agency and all press releases;
(i) within 90 days of the end of each fiscal year, audited consolidated
financial statements prepared in accordance with GAAP and certified by
independent public accountants satisfactory to the Administrative Agent,
containing a balance sheet and statement of income and surplus, statement of
cash flows and a reconciliation of capital accounts, along with any management
letters written by such accountants, together with consolidating schedules of
each Subsidiary;
(j) immediately upon becoming aware of the existence of any condition or
event which constitutes an Event of Default, a written notice specifying the
nature and period of existence thereof and what action the Company is taking or
proposes to take with respect thereto;
-34-
(k) within 45 days after the end of each quarter, a real estate
acquisition report for the Company and its Subsidiaries detailing all real
estate acquired or obtained for such quarter and the total of such acquisitions
on a year to date basis through the end of such quarter, which includes (i) the
total amount of acreage or developed lots, both for such quarter and on a year
to date basis through the end of such quarter; (ii) the total dollar amount of
such acquisitions, both for such quarter and on a year to date basis through the
end of such quarter; (iii) the title and common name or subdivision name of such
real property, both for such quarter and on a year to date basis through the end
of such quarter; and (iv) a detailed listing of all Investments in Joint
Ventures; and
(l) at the request of the Administrative Agent, such other information
the Administrative Agent may from time to time reasonably require.
10. EVENTS OF DEFAULT
10.1. Nature of Events.
-----------------
An "Event of Default" shall exist if any of the following occurs:
(a) the Company fails to make any payment of principal (including,
without limitation, any payment or reduction required under Section 3.15 above)
or fails to reimburse a Lender pursuant to this Agreement or a holder of any
Note, reimbursement agreement, or guaranty agreement executed in connection with
this Agreement on or before five (5) days after the date such payment is due;
(b) the Company fails to make any payment of interest on any Note
executed in connection with this Agreement on or before five days after the date
such payment is due;
(c) the Company fails to perform or observe any covenant contained in
Sections 8.2(d), 8.3, or 8.12 of this Agreement;
(d) the Company fails to perform or observe any covenant contained in
Sections 8.4, 8.5, or 8.6 of this Agreement and such failure involves an amount
in excess of the aggregate sum of $1,000,000;
(e) the Company fails to comply (i) with any covenant contained in
Sections 8.4, 8.5 or 8.6 and such failure involves an amount of $1,000,000 or
less or (ii) with any other provision of this Agreement, and such failure
continues for more than 30 days after such failure shall first become known to
any Financial Officer of the Company;
(f) any warranty, representation or other statement by or on behalf of
the Company contained in this Agreement or by a Subsidiary in any Loan Document
or in any instrument furnished by an officer thereof in compliance with or in
reference to this Agreement is false or misleading in any material respect on
the date made (or deemed made);
(g) the Company or any Material Subsidiary makes an assignment for the
benefit of creditors, or consents to the appointment of a trustee, receiver or
liquidator;
-35-
(h) bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings are instituted by the Company or any Material Subsidiary;
(i) bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings are instituted against the Company or any of the Subsidiaries, and
remain undismissed for a period of 90 days;
(j) a final judgment or judgments for the payment of money aggregating in
excess of $1,000,000 in excess of applicable insurance coverage (as verified by
the Administrative Agent) is or are outstanding against the Company or any of
the Subsidiaries, and such judgment or judgments have been outstanding for more
than 21 days from the date of entry and have not been discharged, stayed or
bonded in the full amount of such judgment or judgments;
(k) the Company's audited financial statements referred to in Section
9(i) above, or any discussion draft thereof, reflects that the Company's
financial statement is a "qualified" statement and such circumstance has existed
for more than 48 hours;
(l) the Company or any Subsidiary fails to perform or observe any
covenant not specified in Section 10.1 (a) through (k) above in favor of the
Administrative Agent or any of the Lenders pursuant to any Loan Document or any
agreement, instrument, or document executed in connection with this Agreement,
including, without limitation, guaranty agreements, any interest rate contracts
or agreements relating to interest rate limitations or interest rate "swaps,"
and such failure continues for more than 30 days after such failure shall become
first known to any Financial Officer of the Company;
(m) any Change of Control shall occur; or
(n) the Administrative Agent and the Required Lenders shall determine
that a Material Adverse Effect has occurred.
10.2 Default Remedies.
-----------------
(a) Acceleration and Termination. Upon the occurrence of any Event of
Default described in Sections 10.1(g), (h), or (i), the Revolving Credit
Commitments shall automatically and immediately terminate and the unpaid
principal amount of, and any and all accrued interest on, the Revolving Credit
Obligations and all accrued fees shall automatically become immediately due and
payable, without presentment, demand, or protest or other requirements of any
kind, all of which are hereby expressly waived by the Company; and upon the
occurrence of any other Event of Default, the Administrative Agent shall at the
request, or may with the consent, of the Required Lenders, by written notice to
the Company (i) declare that all or any portion of the Revolving Credit
Commitments are terminated, in which case the Revolving Credit Commitments and
the obligations of each Lender to make any Revolving Loan hereunder and of each
Lender or Huntington to issue or participate in any Letter of Credit not then
issued shall immediately terminate, (ii) declare the unpaid principal amount of
and any and all accrued and unpaid interest on the Revolving Credit Obligations
to be immediately due and payable, without presentment, demand or protest or any
requirements of any kind, all of which are hereby expressly waived by the
Company.
-36-
(b) Deposit for Letters of Credit. In addition, within five days after
the occurrence of an Event of Default, the Company shall, promptly upon demand
by the Administrative Agent, in its sole discretion, deliver to the
Administrative Agent cash collateral in such form as requested by the
Administrative Agent, together with such endorsements, and execution and
delivery of such documents and instruments as the Administrative Agent may
request in an aggregate stated amount equal to the then outstanding Letter of
Credit Obligations. Any such cash collateral shall be promptly returned to the
Company upon the satisfaction or expiration of the Letter of Credit Obligations.
(c) Nonwaiver; Remedies Cumulative. No course of dealing on the part of
the Administrative Agent or any Lender, nor any delay or failure on the part of
the Administrative Agent or any Lender in exercising any rights, powers or
privileges hereunder, shall operate as a waiver of such rights, powers or
privileges or otherwise prejudice any of the Administrative Agent's or Lenders'
rights and remedies hereunder; nor shall any single or partial exercise thereof
preclude any further exercise thereof or the exercise of any other right, power
or privilege by the Administrative Agent or each Lender. No right or remedy
conferred upon or reserved to the Administrative Agent or any Lender under this
Agreement is intended to be exclusive of any other right or remedy, and every
right and remedy shall be cumulative and in addition to every other right or
remedy given hereunder or now or hereafter existing under any applicable law.
Every right and remedy given by this Agreement or by applicable law to the
Administrative Agent or any Lender may be exercised from time to time and as
often as may be deemed expedient by the Administrative Agent or any Lender.
(d) Right of Set-Off. Upon the occurrence and during the continuance of
any Event of Default hereunder, the Administrative Agent, each Lender, and any
of them, subject to the terms of this Agreement, are hereby authorized at any
time and from time to time, without notice to the Company (any such notice being
expressly waived by the Company) and to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by the Administrative Agent or each Lender, or any of them to or for the credit
or the account of the Company against any and all of the obligations of the
Company now or hereafter existing under this Agreement, irrespective of whether
or not the Administrative Agent or any Lender shall have made any demand
hereunder and although such obligations may be unmatured. Notwithstanding the
foregoing, none of the Lenders shall be permitted to exercise any right of
offset or set-off referred to in this Section 10.2 without the prior written
consent of the Administrative Agent.
11. THE AGENTS
11.1. Appointment.
------------
Each of the Lenders hereby designates and appoints Huntington as
Administrative Agent hereunder and under each of the Loan Documents, and each of
the Lenders irrevocably authorizes the Administrative Agent to act as the
contractual representative of such Lender. The Administrative Agent agrees to
act as such contractual representative upon the express conditions contained in
this Section 11. Notwithstanding the use of the defined term "Administrative
Agent," it is expressly understood and agreed that the Administrative Agent
-37-
shall not have any fiduciary responsibilities to any Lender or to the Company or
any Subsidiary of the Company by reason of this Agreement and that the
Administrative Agent is merely acting as the representative of the Lenders with
only those duties as are expressly set forth in this Agreement and the other
Loan Documents. In its capacity as the Lenders' contractual representative, (i)
the Administrative Agent shall not assume any fiduciary duties to any of the
Lenders, (ii) the Administrative Agent is a "representative" of the Lenders
within the meaning of Section 9-105 of the Uniform Commercial Code, and (iii)
the Administrative Agent is acting as an independent contractor, the rights and
duties of which are limited to those expressly set forth in this Agreement and
the other Loan Documents. Each of the Lenders hereby agrees to assert no claim
against the Administrative Agent on any agency theory or any other theory of
liability for breach of fiduciary duty, all of which claims each Lender hereby
waives.
Each Lender and the issuing bank hereby appoint KeyBank National
Association as Syndication Agent hereunder and hereby authorizes the Syndication
Agent to act as Syndication Agent on its behalf in accordance with the terms of
this Agreement and the other Loan Documents. Notwithstanding anything to the
contrary contained in this Agreement, the Syndication Agent is a Lender
designated as "Syndication Agent" for title purposes only and in such capacity
shall have no obligations or duties whatsoever under this Agreement or any other
Loan Document to any Loan Party, any Lender or any Issuer and shall have no
rights separate from its rights as a Lender except as expressly provided in this
Agreement.
Each Lender and the issuing bank hereby appoint U.S. Bank National
Association as Documentation Agent hereunder and hereby authorizes the
Documentation Agent to act as Documentation Agent on its behalf in accordance
with the terms of this Agreement and the other Loan Documents. Notwithstanding
anything to the contrary contained in this Agreement, the Documentation Agent is
a Lender designated as "Documentation Agent" for title purposes only and in such
capacity shall have no obligations or duties whatsoever under this Agreement or
any other Loan Document to any Loan Party, any Lender or any Issuer and shall
have no rights separate from its rights as a Lender except as expressly provided
in this Agreement.
11.2 Powers.
-------
The Administrative Agent shall have and may exercise such powers under the
Loan Documents as are specifically delegated to the Administrative Agent by the
terms of each thereof, together with such powers as are reasonably incidental
thereto. The Administrative Agent shall have no implied duties to the Lenders,
or any obligation to the Lenders to take any action thereunder except any action
specifically provided by the Loan Documents to be taken by the Administrative
Agent.
11.3 General Immunity.
-----------------
None of the Administrative Agent or any of its directors, officers, agents
or employees shall be liable to any or all of the Company, any Subsidiary of the
Company or the Lenders for any action taken or omitted to be taken by it or them
hereunder or under any other Loan Documents or in connection herewith or
therewith, except to the extent that such action or inaction is found in a final
judgment by a court of competent jurisdiction to have arisen solely from the
gross negligence or willful misconduct of such Persons.
-38-
11.14 No Responsibility for Loans, Recitals.
--------------------------------------
None of the Administrative Agent or any of their respective directors,
officers, or employees shall be responsible for or have any duty to ascertain,
inquire into, or verify (a) any statement, warranty or representation made in
connection with any Loan Documents or any borrowing hereunder; (b) the
performance or observance of any of the covenants or agreements of any obligor
under any Loan Documents, including, without limitation, any agreement by an
obligor to furnish information directly to each Lender; (c) the satisfaction of
any condition specified in Section 6, except receipt of items required to be
delivered to the Administrative Agent; or (d) the validity, effectiveness or
genuineness of any Loan Documents or any other instrument or writing furnished
in connection therewith. The Administrative Agent shall have no duty to disclose
to the Lenders information that is not required to be furnished by the Company
to the Administrative Agent at such time, but is voluntarily furnished by the
Company to the Administrative Agent (either in its capacity as Administrative
Agent or in its individual capacity).
11.5 Action on Instructions of Lenders.
----------------------------------
The Administrative Agent shall in all cases be fully protected in acting,
or in refraining from acting, hereunder and under any other Loan Document in
accordance with written instructions signed by the Required Lenders or, in the
case of any act or failure to act calculated to give rise to any of the events
or circumstances described in clauses (a) through (e) of Section 13.4, each
affected Lender, and such instructions and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders and on all holders of
Notes. The Administrative Agent shall be fully justified in failing or refusing
to take any action hereunder and under any other Loan Documents unless it shall
first be indemnified to its satisfaction by the Lenders pro rata against any and
all liability, costs and expense that it may incur by reason of taking or
continuing to take any such action.
11.6 Employment of Administrative Agents and Counsel.
------------------------------------------------
The Administrative Agent may execute any of its duties as Administrative
Agent hereunder and under any other Loan Documents by or through employees,
agents, and attorneys-in-fact and shall not be answerable to the Lenders, except
as to money or securities received by it or its authorized agents, for the
default or misconduct of any such agents or attorneys-in-fact selected by it
with reasonable care. The Administrative Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby created and its
duties hereunder and under any other Loan Documents.
11.7 Reliance on Documents, Counsel.
-------------------------------
The Administrative Agent shall be entitled to rely upon any note, notice,
consent, certificate, affidavit, letter, telegram, statement, paper or document
believed to be genuine and correct and to have been signed or sent by the proper
person or persons, and, in respect of legal matters, upon the opinion of counsel
selected by the Administrative Agent, which counsel may be employees of the
Administrative Agent.
-39-
11.8 Reimbursement and Indemnification.
----------------------------------
The Lenders agree to reimburse and indemnify the Administrative Agent
ratably in proportion to their respective Revolving Credit Commitments (a) for
any amounts not reimbursed by the Company for which the Administrative Agent is
entitled to reimbursement by the Company under the Loan Documents, (b) for any
amounts not reimbursed by the Company for any other expenses incurred by the
Administrative Agent on behalf of the Lenders, in connection with the
preparation, execution, delivery, administration and enforcement of the Loan
Documents, and (c) for any amounts not reimbursed by the Company for any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Administrative Agent in any way
relating to or arising out of the Loan Documents or any other document delivered
in connection therewith or the transactions contemplated thereby, or the
enforcement of any of the terms thereof or of any such other documents, provided
that no Lender shall be liable for any of the foregoing to the extent they are
determined in a final judgment of a court of competent jurisdiction to have
arisen solely from the gross negligence or willful misconduct of the
Administrative Agent. The obligations of the Lenders under this Section 11.8
shall survive payment of the Revolving Credit Obligations and termination of
this Agreement.
11.9 Rights as a Lender.
-------------------
In the event the Administrative Agent is a Lender, the Administrative
Agent shall have the same rights and powers hereunder and under any other Loan
Documents as any Lender and may exercise the same as though it were not the
Administrative Agent, and the term "Lender" or "Lenders" shall at any time when
the Administrative Agent is a Lender, unless the context otherwise indicates,
include the Administrative Agent in its individual capacity. The Administrative
Agent may accept deposits from, lend money to, and generally engage in any kind
of trust, debt, equity or other transaction, in addition to those contemplated
by this Agreement or any other Loan Documents, with the Company or any of its
Subsidiaries in which the Company or any of its Subsidiaries is not restricted
hereby from engaging with any other Person. The Administrative Agent, in its
individual capacity, is not obligated to remain a Lender, provided, however,
that in the event that the Administrative Agent ceases to be a Lender hereunder,
the Required Lenders may remove the Administrative Agent and appoint a successor
Administrative Agent, if no Event of Default has occurred and is continuing,
with the consent of the Company.
11.10 Lender Credit Decision.
-----------------------
Each Lender acknowledges that it has, independently and without reliance
upon the Administrative Agent or any other Lender and based on the financial
statements prepared by the Company or any Subsidiary and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and the other Loan Documents. Each Lender
also acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement and the
other Loan Documents.
-40-
11.11 Successor Administrative Agent.
-------------------------------
The Administrative Agent may resign at any time by giving written notice
thereof to the Lenders and the Company, such resignation to be effective upon
the appointment of a successor Administrative Agent or, if no successor
Administrative Agent has been appointed, 45 days after the resigning
Administrative Agent gives notice of its intention to resign. Upon any such
resignation, the Required Lenders shall have the right to appoint, on behalf of
the Lenders, a successor Administrative Agent. If no successor Administrative
Agent shall have been so appointed by the Required Lenders within 30 days after
the resigning Administrative Agent's giving notice of its intention to resign,
then the resigning Administrative Agent may appoint, on behalf of the Lenders, a
successor Administrative Agent. If the Administrative Agent has resigned and no
successor Administrative Agent has been appointed, the Lenders may perform all
the duties of the Administrative Agent hereunder, and the Company shall make all
payments in respect of the Revolving Credit Obligations to the applicable Lender
and for all other purposes shall deal directly with the Lenders. No successor
Administrative Agent shall be deemed to be appointed hereunder until such
successor Administrative Agent has accepted the appointment and, if no Event of
Default or Potential Default has occurred and is continuing, the Company has
consented to such appointment. Any such successor Administrative Agent shall be
a commercial bank having capital and retained earnings of at least $500,000,000.
Upon the acceptance of any appointment as Administrative Agent hereunder by a
successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the resigning Administrative Agent, and, in the event that
Huntington is both the resigning Administrative Agent and has issued Letters of
Credit hereunder, such successor shall be obligated upon the request of
Huntington to issue substitute Letters of Credit for the outstanding Letters of
Credit issued by Huntington its capacity as issuing bank hereunder, or otherwise
to provide credit assurance satisfactory to Huntington in its capacity as
issuing bank with respect to such outstanding Letters of Credit. Upon the
effectiveness of the resignation of the Administrative Agent, the resigning
Administrative Agent shall be discharged from its duties and obligations
hereunder and under the Loan Documents. After the effectiveness of the
resignation of an Administrative Agent, the provisions of this Section 11 shall
continue in effect for the benefit of such Administrative Agent in respect of
any actions taken or omitted to be taken by it while it was acting as the
Administrative Agent hereunder and under the other Loan Documents.
11.12 Ratable Payments.
-----------------
Subject to the provisions of Section 11.13 below, and except as otherwise
provided herein, all payments and any other amounts received by the
Administrative Agent from or for the benefit of the Company shall be applied
first, to pay principal of and interest on any portion of the Loans which the
Administrative Agent may have advanced pursuant to the express provisions of
this Agreement on behalf of any Lender, for which the Administrative Agent has
not then been reimbursed by such Lender or the Company, and second, to pay all
other Obligations then due and payable. Payments in respect of Swing Loans
received by the Administrative Agent shall be distributed to the Swing Line
Bank, payments in respect of Revolving Loans received by the Administrative
Agent shall be distributed to Lender in accordance with such Lender's Pro Rata
Share; and all payments of fees and all other payments in respect of any other
Obligation shall be allocated among such of the Lenders and Huntington as issuer
as are entitled thereto, and, if to the Lenders, in proportion to their
respective Pro Rata
-41-
Shares. If any Lender, whether by setoff or otherwise has payment made to it
upon its Revolving Loans (other than payments received pursuant to Sections 3.6,
3.9 or 3.14) in a greater proportion than that received by any other Lender,
such Lender agrees, promptly upon demand, to purchase a portion of the Revolving
Loans held by the other Lenders so that after such purchase each Lender will
hold its Pro Rata Share of Revolving Loans. If any Lender, whether in connection
with setoff or amounts which might be subject to setoff or otherwise, receives
collateral or other protection for its Revolving Credit Obligations or such
amounts which may be subject to setoff, such Lender agrees, promptly upon
demand, to take such action necessary such that all Lenders share in the
benefits of such collateral in respect of their Pro Rata Shares. In case any
such payment is disturbed by legal process, or otherwise, appropriate further
adjustments shall be made.
11.13 Application of Payments.
------------------------
After the occurrence and during the continuance of an Event of Default,
the Administrative Agent may, and upon the acceleration of the Revolving Credit
Obligations or at the written direction of the Required Lenders, which direction
shall be consistent with the last sentence of this Section 11.13, shall apply
all payments and prepayments in respect of any obligations and all funds on
deposit in the following order:
(a) first, to pay interest on and then principal of any portion of the
Loans which the Administrative Agent may have advanced on behalf of any Lender
for which the Administrative Agent has not then been reimbursed by such Lender
or the Company;
(b) second, to pay obligations in respect of any fees, expenses,
reimbursements or indemnities then due to the Administrative Agent;
(c) third, to pay obligations in respect of any fees, expenses,
reimbursements or indemnities then due to the Lenders and any issuing bank;
(d) fourth, to pay interest due in respect of Swing Line Loans and
Reimbursement Obligations;
(e) fifth, to pay interest due in respect of Loans (other than Swing Line
Loans and Reimbursement Obligations);
(f) sixth, to the ratable payment or prepayment of principal outstanding
on Swing Line Loans and Reimbursement Obligations;
(g) seventh, to the ratable payment or prepayment of principal
outstanding on Loans (other than Swing Line Loans and Reimbursement Obligations)
and to provide cash collateral for undrawn Letters of Credit;
(h) eighth, to the ratable payment of Hedging Obligations of the Lenders
in respect of the Loans; and
(i) ninth, to the ratable payment of all other obligations owing to the
Lenders from the Company or any Subsidiary.
-42-
Unless otherwise designated (which designation shall only be applicable prior to
the occurrence of an Event of Default) by the Company, all principal payments in
respect of Loans (other than Swing Line Loans) shall be applied first to repay
outstanding Base Rate Advances. The order of priority set forth in this Section
11.13 and the related provisions of this Agreement are set forth solely to
determine the rights and priorities of the Administrative Agent, the Lenders and
the Swing Line Bank as among themselves. The order of priority set forth in
clauses (c) through (h) of this Section 11.13 may at any time and from time to
time be changed by the Required Lenders without necessity of notice to or
consent of or approval by the Company, or any other Person; provided that the
order of priority of payments in respect of Swing Line Loans may be changed only
with the prior written consent of the Swing Line Bank. The order of priority set
forth in clauses (a) through (c) of this Section 11.13 may be changed only with
the prior written consent of the Administrative Agent.
12. BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1 Successors and Assigns.
-----------------------
The terms and provisions of the Loan Documents shall be binding upon and
inure to the benefit of the Company, the Administrative Agent and the Lenders
and their respective successors and assigns, except that (a) the Company shall
not have the right to assign its rights or obligations under the Loan Documents
without the consent of all of the Lenders and (b) any assignment by any Lender
must be made in compliance with Section 12.3. Notwithstanding clause (b) of the
preceding sentence, any Lender may at any time, without the consent of the
Company or the Administrative Agent, assign all or any portion of its rights
under this Agreement and its Notes to a Federal Reserve Bank for the purpose of
securing loans from such Federal Reserve Bank to any such Lender; provided,
however, that no such assignment shall release the transferor Lender from its
obligations hereunder. The Administrative Agent may treat the payee of any Note
as the owner thereof for all purposes hereof unless and until such payee
complies with Section 12.3 in the case of an assignment thereof or, in the case
of any other transfer, a written notice of the transfer is filed with the
Administrative Agent. Any assignee or transferee of a Note agrees by acceptance
thereof to be bound by all the terms and provisions of the Loan Documents. Any
request, authority or consent of any Person, who at the time of making such
request or giving such authority or consent is the holder of any Note, shall be
conclusive and binding on any subsequent holder, transferee or assignee of such
Note or of any Note or Notes issued in exchange therefor.
12.2 Participations.
---------------
(a) Permitted Participants; Effect. Any Lender, in the ordinary course of
its business and in accordance with the applicable law, at any time may sell to
one or more entities (each such entity being referred to herein as a
"Participant") participating interests in any Revolving Loan owing to such
Lender, any Note held by such Lender, any interest in Letters of Credit held by
such Lender, the Revolving Credit Commitment of such Lender or any other
interest of such Lender under the Loan Documents. In the event of any such sale
by a Lender of participating interests to a Participant, such Lender's
obligations under the Loan Documents shall remain unchanged, such Lender shall
remain solely responsible to the other parties hereto for the
-43-
performance of such obligations, such Lender shall remain the holder of any such
Note for all purposes under the Loan Documents, all amounts payable by the
Company under this Agreement shall be determined as if such Lender had not sold
such participating interests, and the Company and the Administrative Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under the Loan Documents. The participation
agreement effecting the sale of any participating interest shall contain a
representation by the Participant to the effect that none of the consideration
used to make the purchase of the participating interest in the Revolving Credit
Commitment, Revolving Loans and interests in Letters of Credit under such
participation agreement are "plan assets" as defined under ERISA and that the
rights and interests of the Participant in and under the Loan Documents will not
be "plan assets" under ERISA.
(b) Voting Rights. Each Lender shall retain the sole right to approve,
without the consent of any Participant, any amendment, modification or waiver of
any provision of the Loan Documents.
(c) Benefit of Setoff. The Company agrees that to the extent permitted by
applicable law each Participant shall be deemed to have the right of setoff
provided in Section 10.2(d) in respect of its participating interest in amounts
owing under the Loan Documents to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under the Loan
Documents, provided that each Lender shall retain the right of setoff provided
in Section 10.2(d) with respect to the amount of participating interests sold to
each Participant. The Lenders agree to share with each Participant, and each
Participant shall be deemed to agree, by exercising the right of setoff provided
in Section 10.2(d) to share with each Lender, any amount received pursuant to
the exercise of its right of setoff, such amounts to be shared in accordance
with Section 10.2(d) as if each Participant were a Lender.
12.3 Assignments.
------------
(a) Permitted Assignments. Any Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time assign to one or
more banks or other entities ("Purchasers") all or any part of its Revolving
Credit Commitment and outstanding Revolving Loans and interests in the Letters
of Credit, together with its rights and obligations under the Loan Documents
with respect thereof; provided, however, that (i) each such assignment shall be
of a constant, and not a varying percentage of all of the assigning Lender's
rights and obligations so assigned; (ii) the amount of the Revolving Credit
Commitment of the assigning Lender being assigned pursuant to each such
assignment (determined as of the date of such assignment) may be in the amount
of such Lender's entire Revolving Credit Commitment but otherwise shall not be
less than $5,000,000 or an integral multiple of $1,000,000 in excess of that
amount; and (iii) notwithstanding the foregoing clause (ii), (A) if the
assignment is made to a Lender, the amount of the Revolving Credit Commitment
assigned shall not be less than $5,000,000 or an integral multiple thereof and
(B) if the assignment is made pursuant to Section 3.14, the Revolving Credit
Commitment assigned may be in the amount of the relevant Lender's entire
remaining Revolving Credit Commitment. Such assignment shall be substantially in
the form of Exhibit E hereto or in such other form as may be agreed to by the
parties thereto. The consent of the Company and the Administrative Agent shall
be required prior to an assignment becoming effective with respect to a
Purchaser which is not a Lender; provided, however, that if an Event of Default
has occurred
-44-
and is continuing, or if the assignment is made to an affiliate of the assigning
Lender, the consent of the Company shall not be required. Such consents shall
not be unreasonably withheld.
(b) Effect; Effective Date. Following delivery to the Administrative
Agent of a notice of assignment, substantially in the form attached to Exhibit E
hereof (a "Notice of Assignment"), together with any consents required by
Section 12.3(a), and payment by the Purchaser of a $5,000 fee (which the Company
shall not be obligated to pay or reimburse) to the Administrative Agent for
processing such assignment, upon the date certain specified in such Notice of
Assignment, such assignment shall become effective (the "Effective Assignment
Date"). The Notice of Assignment shall contain a representation by the Purchaser
to the effect that none of the consideration used to make the purchase of the
Revolving Credit Commitment, Revolving Loans and interests in the Letters of
Credit under the applicable assignment agreement are "loan assets" as defined
under ERISA and that the rights and interests of the Purchaser in and under the
Loan Documents will not be "plan assets" under ERISA. On and after the Effective
Assignment Date of such assignment, such Purchaser shall for all purposes be a
Lender party to this Agreement and any other Loan Documents executed by the
Lenders and shall have all the rights and obligations of a Lender under the Loan
Documents, to the same extent as if it were an original party hereto and
thereto, and no further consent or action by the Company, the Lenders or the
Administrative Agent shall be required to release the transferor Lender with
respect to the percentage of the aggregate Revolving Credit Commitments assigned
to such Purchaser. Upon the consummation of any assignment to a Purchaser
pursuant to this Section 12.3(b) the transferor Lender, the Administrative
Agent, and the Company shall make appropriate arrangements so that replacement
Notes are issued to such transferor Lender and new Notes or, as appropriate,
replacement Notes, are issued to such Purchaser, in each case in principal
amounts reflecting its Revolving Credit Commitment, as adjusted pursuant to such
assignment.
12.4 Dissemination of Information.
-----------------------------
The Company authorizes each Lender to disclose to any Participant or
Purchaser or any other person acquiring an interest in the Loan Documents by
operation of law (each a "Transferee") and any prospective Transferee any and
all information in such Lender's possession concerning the creditworthiness of
the Company and its Subsidiaries; provided that each Transferee and prospective
Transferee agrees to be bound by Section 13.10 hereof.
12.5 Tax Treatment.
--------------
If any interest in any Loan Documents is transferred to any Transferee
which is organized under the laws of any jurisdiction other than the United
States of America or any State thereof, the transferor Lender shall cause such
Transferee, concurrently with the effectiveness of such transfer, to comply with
the following provisions: with respect to any Lender that is not incorporated
under the laws of the United States of America, or a state thereof, such Lender
agrees that it will deliver to each of the Company and the Administrative Agent
two duly completed copies of United States Internal Revenue Service Form 1001 or
4224, certifying in either case that such Lender is entitled to receive payments
under this Agreement and the Notes without deduction or withholding of any
United States or federal income taxes. Each Lender which so delivers such form
further agrees and undertakes to deliver to each of the Company and
-45-
the Administrative Agent two additional copies of such form (or successor or
related form) on or before the date such form expires.
13. NOTICES AND GENERAL PROVISIONS
13.1 Notices.
--------
(a) Giving Notice. Except as otherwise permitted by Section 1.2(d) with
respect to borrowing notices, all notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by telex or by facsimile and addressed or delivered to such party at
its address set forth on Schedule I attached hereto and made a part hereof, or
at such other address as may be designated by such party in a notice to the
other parties. Any notice, if mailed and properly addressed with postage
prepaid, shall be deemed given when received; any notice, if transmitted by
telex or facsimile, shall be deemed given when transmitted.
(b) Change of Address. The Company, the Administrative Agent and any
Lender may each change the address for service of notice upon it by a notice in
writing to the other parties hereto.
13.2 Reproduction of Documents.
--------------------------
This Agreement and all documents relating hereto, including, without
limitation, (a) consents, waivers and modifications which may hereafter be
executed, (b) documents received by the Administrative Agent or any Lender at
the closing or otherwise, and (c) financial statements, certificates and other
information previously or hereafter furnished to the Administrative Agent or any
Lender, may be reproduced by the Administrative Agent or any Lender by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process and the Administrative Agent or any Lender may destroy any
original document so reproduced. The Company agrees and stipulates that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by the Administrative
Agent or any Lender in the regular course of business) and that any enlargement,
facsimile or further reproduction of such reproduction shall likewise be
admissible in evidence.
13.3 Survival.
---------
All warranties, representations, and covenants made by the Company herein
or on any certificate or other instrument delivered by it or on its behalf under
this Agreement shall be considered to have been relied upon by the
Administrative Agent and each Lender and shall survive the closing of the
Revolving Credit Commitments regardless of any investigation made by the
Administrative Agent or any Lender on their behalf. All statements in any such
certificate or other instrument shall constitute warranties and representations
by the Company. This Agreement shall inure to the benefit of and be binding upon
the heirs, successors and assigns of each of the parties.
-46-
13.4 Amendments.
-----------
Subject to the provisions of this Section 13.4, the Required Lenders (or
the Administrative Agent with the consent in writing of the Required Lenders)
and the Company may enter into written agreements supplemental hereto for the
purpose of adding to or modifying any provisions of the Loan Documents or
changing in any manner the rights of the Lenders and the Company hereunder or
waiving any Event of Default hereunder; provided, however, that no such
supplemental agreement, waiver or amendment or modification shall, without the
consent of each Lender affected thereby,
(a) extend the Revolving Credit Termination Date, any Note, or
Reimbursement Obligation or forgive all or any portion of the principal amount
thereof, any interest thereon, or any fees or other amounts payable hereunder
(except that the Administrative Agent may waive payment of the fee required
under Section 12.3(b) without obtaining the consent of any other party to this
Agreement) or reduce the rate or rates of interest or extend the time of payment
of interest, fees or other amounts payable hereunder;
(b) reduce the percentage specified in the definition of Required Lenders
or change the aggregate Pro Rata Share required for the Lenders or any of them
to take action hereunder;
(c) reduce the amount or extend the payment date for any payments
required under Section 3.15 or increase the amount of the Revolving Credit
Commitment of any Lender hereunder or permit the Company to assign its rights or
obligations under this Agreement;
(d) change or amend the percentages applicable to any component of the
Borrowing Base; or
(e) amend this Section 13.4.
No amendment of any provision of this Agreement relating in any way to (i)
the Administrative Agent or any of the Letters of Credit shall be effective
without the written consent of the Administrative Agent or Huntington, as the
case may be, and (ii) Swing Line Loans shall be effective without the written
consent of the Swing Line Bank. The Administrative Agent may waive payment of
the fee required under Section 12.3(b) without obtaining the consent of the any
of the Lenders. No delay or failure or other course of conduct by the
Administrative Agent or any Lender in the exercise of any power or right shall
operate as a waiver thereof; nor shall any single or partial exercise of the
same preclude any other or further exercise thereof, or the exercise of any
other power or right.
13.5 Duplicate Originals and Revival and Reinstatement of Obligations.
-----------------------------------------------------------------
(a) Multiple duplicate originals of this Agreement may be signed by the
parties, each of which shall be an original but all of which together shall
constitute one and the same instrument.
(b) If the incurrence or payment of any Revolving Credit Obligations by
the Company or any Subsidiary or the transfer to any Lender and/or the
Administrative Agent of any property should for any reason subsequently be
declared to be void or voidable under any state or federal law relating to
creditors' rights, including provisions of the Bankruptcy Code relating to
-47-
fraudulent conveyances, preferences, or other voidable or recoverable payments
of money or transfers of property (collectively a "Voidable Transfer"), and if
any Lender and/or the Administrative Agreement is required to repay or restore,
in whole or in part, any such Voidable Transfer, or elects to do so upon the
reasonable advice of counsel, then, as to any such Voidable Transfer, or the
amount thereof that such Lender(s) and/or the Administrative Agent is required
or elects to repay or restore, and as to all reasonable costs, expenses, and
attorneys' fees of such Lender(s) and/or the Administrative Agent related
thereto, the liability of the Company and its Subsidiaries automatically shall
be revived, reinstated, and restored and shall exist as though such Voidable
Transfer had never been made.
13.6 Enforceability and Governing Law.
---------------------------------
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction, as to such jurisdiction, shall be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. No delay or omission on the part of the Administrative Agent
or any of the Lenders in exercising any right shall operate as a waiver of such
right or any other right. All of the Administrative Agent's or any Lender's
rights and remedies, whether evidenced hereby or by any other agreement or
instrument, shall be cumulative and may be exercised singularly or concurrently.
This Agreement shall be governed by and construed in accordance with the laws of
the State of Ohio.
13.7 Fiscal Year.
------------
The fiscal year of the Company and its Subsidiaries begins January 1 and
ends December 31 of each calendar year, and the Company will not change such
fiscal year without the prior written consent of the Administrative Agent and
the Required Lenders.
13.8 Consent to Jurisdiction and Waiver of Objection to Venue.
---------------------------------------------------------
The Company, the Administrative Agent, each Lender and Huntington agree
that any legal action or proceeding with respect to this Agreement, the Notes or
the other Loan Documents or the transactions contemplated hereby may be brought
in the Court of Common Pleas of Franklin County, Ohio, or in the United States
District Court for the Southern District of Ohio, Eastern Division, and the
Company, the Administrative Agent, each Lender and Huntington hereby irrevocably
submit to and accept generally and unconditionally the jurisdiction of those
courts with respect to its person, property and revenues and irrevocably consent
to service of process in any such action or proceeding by the mailing thereof by
U.S. mail to the designated party at the address referenced in Section 13.1
hereof.
The Company, the Administrative Agent, each Lender and Huntington hereby
irrevocably waive any objection to the laying of venue of any such suit or
proceeding in the above described courts, and unconditionally waive and agree
not to plead or claim that any such suit or proceeding brought in any such court
has been brought in an inconvenient forum, provided, that this provision shall
not preclude any party from seeking to consolidate actions brought against it.
-48-
Nothing in this paragraph shall affect the right of the Administrative
Agent, any Lender or Huntington to serve process in any other manner permitted
by law or limit the right of the Administrative Agent, any Lender or Huntington
to bring any such action or proceeding against the Company or to obtain
execution on any judgment in any other jurisdiction or in any other manner
permitted by law.
13.9 Waiver of Jury Trial.
---------------------
THE PARTIES ACKNOWLEDGE THAT, AS TO ANY AND ALL DISPUTES THAT MAY ARISE
BETWEEN THE PARTIES, THE COMMERCIAL NATURE OF THE TRANSACTION OUT OF WHICH THIS
AGREEMENT ARISES WOULD MAKE ANY SUCH DISPUTE UNSUITABLE FOR TRIAL BY JURY.
ACCORDINGLY, EACH OF THE PARTIES TO THIS AGREEMENT HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY AS TO ANY AND ALL DISPUTES THAT MAY ARISE RELATING TO THIS
AGREEMENT OR TO ANY OF THE OTHER INSTRUMENTS OR DOCUMENTS EXECUTED IN CONNECTION
HEREWITH.
13.10 Confidentiality.
----------------
The Administrative Agent and each Lender shall hold all non-public
information obtained pursuant to the requirements hereof and identified as such
by the Company in accordance with the customary procedures of the Administrative
Agent and each of the Lenders respectively for handling confidential information
of this nature and in accordance with safe and sound banking practices, and in
any event may make disclosures reasonably required by a bona fide Participant or
co-lender in connection with the contemplated participation or assignment, or as
required or requested by any Governmental Authority or any representative
thereof, or pursuant to any legal process, or to its accountants, lawyers and
other advisors.
13.11 Indemnification of Agents.
--------------------------
The Company shall indemnify each of the Agents (in each such Agent's
capacity as an Agent) from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses and
disbursements of any kind or nature whatsoever (including without limitation
fees and disbursements of counsel) which may be imposed on, incurred by, or
asserted against such Agent in any litigation, proceeding or investigation
instituted or conducted by any Governmental Authority or any other Person with
respect to any aspect of any transaction contemplated by or referred to in, or
any matter related to, this Agreement, whether or not such Agent is a party
thereto, except to the extent that any of the foregoing arises out of the gross
negligence or willful misconduct of any Agent, as determined in a final,
non-appealable judgment by a court of competent jurisdiction. The indemnities
provided for in this Section 13.11 shall survive the termination of this
Agreement and the indefeasible payment of the Loans in full.
-49-
14. DEFINITIONS
14.1 Accounting Terms.
-----------------
As used in this Agreement, and any promissory notes, certificates, reports
or other documents made or delivered pursuant hereto, accounting terms not
defined in this Agreement shall have the respective meanings given to such terms
under GAAP. "GAAP" means generally accepted accounting principles consistently
applied set forth in the opinions and pronouncements of the Accounting
Principles Board, the American Institute of Certified Public Accountants and the
Financial Accounting Standards Board as in effect on the date hereof.
14.2 Other Definitional Provisions.
------------------------------
(a) The words "hereof," "herein," and "hereunder," and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement.
(b) Whenever required by the context of this Agreement, the Notes or
other Loan Documents executed in connection herewith, the singular shall include
the plural, and vice versa and the masculine and feminine genders shall include
the neuter gender and vice versa.
14.3 Defined Terms.
--------------
"Acquisition" means any transaction, or any series of related
transactions, by which the Company or any of its Subsidiaries (a) acquires any
going business or all or substantially all of the assets of any other Person or
division thereof whether through purchase of assets, merger or otherwise, or (b)
acquires directly or indirectly (in one transaction or in a series of
transactions) at least a majority of ownership or voting power of the
securities, partnership interests, membership interests or other interests of a
Person which have ordinary voting power for the election of directors, partners,
managers or other equivalent controlling Persons.
"Adjusted EBITDA" means for any period the sum of such Person's (a)
EBITDA, plus (b) the compensation of any shareholders and affiliates of such
Person and other expenses outside of the ordinary course of business for such
shareholders or affiliates (if such shareholders and affiliates will not remain
with the business or if such related expenses will not be continued in the
operation of the acquired entity), plus (c) any extraordinary losses, as
determined by GAAP, minus (d) any extraordinary gains, as determined by GAAP.
"Adjusted Loss" means with respect to any fiscal quarter, if the Company
and its consolidated Subsidiaries' (a) Consolidated Net Income before taxes as
determined in accordance with GAAP, minus (b) the sum of all extraordinary gains
(and any unusual gains arising outside the ordinary course of business not
included in extraordinary gains determined in accordance with GAAP), is less
than $1.00.
"Administrative Agent" is defined in the Preamble.
"Agents" means the Administrative Agent, the Syndication Agent and the
Documentation Agent.
-50-
"Agreement" is defined in the Preamble.
"Applicable Base Rate Margin" means zero percent (0%).
"Applicable Eurodollar Margin" means the applicable rate per annum set
forth below based on the Interest Coverage Ratio of the Company and its
consolidated Subsidiaries as of the end of any applicable period of
determination:
-----------------------------------------------------------------------
Interest Coverage Ratio Applicable Eurodollar Margin
-----------------------------------------------------------------------
greater than 3.75 to 1.00 1.75%
-----------------------------------------------------------------------
greater than or equal to 3.25 to 1.00,
but less than or equal to 3.75 to 1.00 2.00%
-----------------------------------------------------------------------
greater than 2.75 to 1.00,
but less than 3.25 to 1.00 2.25%
-----------------------------------------------------------------------
less than or equal to 2.75 to 1.00 2.50%
-----------------------------------------------------------------------
"Applicable Unused Commitment Fee Rate" means the applicable rate per
annum set forth below based on the Interest Coverage Ratio of the Company and
its consolidated Subsidiaries as of the end of the most recently ended quarter:
-----------------------------------------------------------------------
Applicable Unused Commitment
Interest Coverage Ratio Fee Rate
-----------------------------------------------------------------------
greater than 2.75 to 1.00 0.25%
-----------------------------------------------------------------------
less than or equal to 2.75 to 1.00 0.375%
-----------------------------------------------------------------------
"Approved Joint Venture" means (a) any Person (i) in which (A) the Company
or any Restricted Subsidiary and (B) M/I Schottenstein Homes, Inc., Homewood
Corporation, Rockford Homes, Inc. or Xxxxxx Investment Company (or any
combination thereof) are the sole owners or partners, (ii) for which the Company
or any Restricted Subsidiary has guaranteed in full or is otherwise liable for
the entire amount of all Letters of Credit issued on behalf of such Person, and
(iii) for which the Company or a Restricted Subsidiary acts as managing partner
or similar manager, as applicable, or (b) any other Person in which the Company
or any Restricted Subsidiary has an Investment in Joint Venture for which (i)
the Company or any Restricted Subsidiary acts as managing partner, manager or
similar controlling Person, as applicable, (ii) the Administrative Agent for the
benefit of the Lenders has received guaranty agreements or other undertakings
satisfactory to the Administrative Agent in an aggregate amount not less than
the full amount of any Letter of Credit issued on account of such entity, and
(iii) such entity satisfies the following conditions to the satisfaction of the
Administrative Agent and the Required Lenders: (A) the Administrative Agent
shall have reviewed and approved the financial statements and financial
condition of the other partners, investors, shareholders or members as the case
may be, in such joint venture, including confirmation of the absence of any
borrowings by such Person (other than purchase money seller financing in an
amount not to exceed the purchase price of any undeveloped real property), (B)
the Administrative Agent shall have reviewed and approved the Constituent
Documents or other evidence of the Company's or its Restricted Subsidiary's
ownership interest in such Person, (C) such joint venture shall have executed
and delivered to the Administrative Agent an application and agreement for
standby
-51-
letter of credit for such entity in form satisfactory to the Administrative
Agent, (D) the Administrative Agent shall have reviewed and approved resolutions
or other indicia of authority for those persons signing on behalf of such
Person, (E) execution and delivery of a guaranty agreement in form acceptable to
the Administrative Agent by each of the partners or owners in such entity, (F)
the Administrative Agent shall have reviewed and approved resolutions or other
indicia of authority of those persons executing such guaranty agreements, (G)
the Administrative Agent shall have reviewed and approved any other documents,
instruments or agreements deemed necessary by the Administrative Agent with
respect to the issuance of such Letters of Credit in respect of such Person or
the other partner or owner therein, and (H) the Administrative Agent shall have
received evidence that all of the real property owned by such entity is located
in the State of Ohio or any state contiguous thereto.
"Arm's Length Contract" means any effective and existing, executed
arm's-length, bona fide purchase contract for the sale of residential real
estate of the Company or a Restricted Subsidiary or the purchase of real estate
by the Company or a Restricted Subsidiary, as the case may be.
"Assignment and Acceptance" means an assignment and acceptance in
substantially the form of Exhibit E attached hereto and made a part hereof (with
blanks appropriately completed) delivered to the Administrative Agent in
connection with an assignment of a Lender's interest hereunder in accordance
with the provisions of this Agreement.
"Available Cash" is defined in Section 2.2.
"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C.,
Section 101 et seq.), as amended from time to time, and any successor statute
thereto, including (unless the context requires otherwise) any rules or
regulations promulgated thereunder.
"Base Rate" means, for any period, a fluctuating interest rate per annum
as shall be in effect from time to time, which rate per annum shall at all times
be equal to the highest of:
(a) the Prime Commercial Rate; and
(b) the sum of (i) one half of one percent (0.50%) per annum plus (ii)
the Federal Funds Rate in effect from time to time during such period.
"Base Rate Advance" means any Loan denominated in U.S. dollars which bears
interest at a rate determined by reference to the Base Rate.
"Xxxxxx Group" means (a) any corporation, partnership, entity or trust in
respect of which Xxxxxx X. Xxxxxx and/or his lineal descendants directly or
indirectly (i) exercise voting control and (ii) have a majority of the
beneficial interests thereof, (b) any individual shareholder of BRC as of the
date of this Agreement, (c) any lineal descendant of Xxxxxx X. Xxxxxx or (d) any
combination thereof.
"Borrowing Base" is defined in Section 2.1.
"BRC" means BRC Properties Inc., an Ohio corporation.
-52-
"Business Day" means a day, in the applicable local time, which is not a
Saturday or Sunday or a legal holiday and on which banks are not required or
permitted by law or other governmental action to close (a) in Columbus, Ohio,
and (b) in the case of a Eurodollar Advance, in London, England.
"Central Ohio" means any area within a 60 mile radius from the Company's
corporate headquarters in Franklin County, Ohio.
"Change in Control" means (a) the replacement of a majority of the Board
of Directors of the Company or BRC from the directors who constituted the Board
of Directors on the date of this Agreement for any reason other than death or
disability, and such replacement shall not have been approved by the Board of
Directors of the Company or of BRC, as the case may be, as constituted on the
date of this Agreement (or as changed over time with the approval of the Board
of Directors of such entity); or (b) a Person or Persons (other than any of the
Xxxxxx Group) acting in concert, shall, as a result of a tender or exchange
offer, open market purchases, privately negotiated purchases, exercise of the
stock pledge or otherwise, have become the beneficial owner (within the meaning
of Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of equity
securities of the Company or BRC representing more than 29% of the combined
voting power of the outstanding securities of the Company or BRC, as applicable,
ordinarily having the right to vote in the election of directors from the
beneficial owners as of the date hereof; or (c) the failure of the Xxxxxx Group
at any time to (i) have (on a fully diluted basis) beneficial ownership and
voting control of (A) 30% of the outstanding equity securities of the Company or
(B) the majority of the outstanding equity securities of BRC, as the case may
be, or (ii) Control the Company.
"Company" is defined in the Preamble.
"Consolidated Net Income" means, for any period on a consolidated basis
for the Company and its Subsidiaries, the net income (or loss) after taxes for
such period taken as a single accounting period, determined in conformity with
GAAP.
"Consolidated Tangible Net Worth" means the consolidated stockholders'
equity of the Company and its consolidated Subsidiaries, minus the sum of all
the following: (a) the excess of cost over the value of net assets of purchased
businesses, rights, and other similar intangibles, (b) organization expenses,
(c) intangible assets (to the extent not reflected in the foregoing), (d)
goodwill, (e) deferred charges or deferred financing costs, (f) loans or
advances to and/or accounts receivable or notes receivable from affiliates
(other than funds in escrow due from affiliates in connection with holdbacks or
other amounts to ensure the completion of performance for the sale of
residential dwellings), (g) non-compete agreements, and (h) to the extent
included in stockholders' equity, minority interests in any Subsidiaries held by
other persons or entities.
"Consolidated Total Liabilities" means with respect to the Company and its
consolidated Subsidiaries (a) all indebtedness and obligations which, in
accordance with GAAP, would be classified upon a balance sheet as liabilities
(except capital stock and surplus earned), and further, including, without
limitation, the amount of Noncancellable Land Commitments, and (b) to the
extent, if any, not included within a GAAP classification of liabilities, all
liabilities
-53-
secured by any lien or encumbrance on any property owned by the Company or any
Restricted Subsidiary even though such Person has not assumed or otherwise
become liable for the payment thereof.
"Constituent Documents" means with respect to any entity, (i) the articles
or certificate of incorporation or organization or partnership agreement (or
equivalent organizational documents) of such entity, (ii) the by-laws or
operating agreement (or equivalent governing documents) of such entity and (iii)
any document setting forth the designation, amount or relative rights,
limitations and preferences of any class or series of capital stock, warrants,
options or other equity interests.
"Contingent Obligations" means any agreement, undertaking or arrangement
by which the Company or any Subsidiary assumes, guaranties, endorses, agrees to
provide funding, or otherwise becomes or is contingently liable upon the
obligation or liability of any other Person.
"Control" means the possession, direct or indirect, of the power to cause
the direction of the management and policies of a Person whether through the
ownership of voting securities, by contract or otherwise. A Person shall be
deemed to have "control" of another Person if it is a "beneficial owner" (as
such term is defined in Rule 13d-3 and Rule 13d-5 of the Securities Exchange Act
of 1934, as amended) or a member of a "group" that is the beneficial owner,
directly or indirectly, of 30% or more of the voting equity securities in such
Person.
"Developed Lots" is defined in Section 2.3.
"Documentation Agent" is defined in the Preamble.
"Dominion Markets" means Central Ohio, the metropolitan Louisville,
Kentucky area and the metropolitan Lexington, Kentucky area.
"EBITDA" means for any period, the sum of the amounts for such period of
(a) Consolidated Net Income, (b) Interest Expense, (c) charges for federal,
state, local and foreign income taxes, and (d) depreciation, amortization
expense and non-cash charges which were deducted in determining Consolidated Net
Income.
"Effective Assignment Date" is defined in Section 12.3(b).
"Eligible" with respect to real estate is defined in Section 2.5, and
"Eligible" with respect to Investments in Joint Ventures is defined in Section
2.7.
"Eligible Investments in Joint Ventures" is defined in Section 2.7.
"Eligible Lumber Inventory" is defined in Section 2.4.
"Environmental Laws" means the Comprehensive Environmental Response,
Compensation and Liability Act, as amended (42 U.S.C. Section 9601, et seq.),
the Hazardous Materials Transportation Act, as amended (49 U.S.C. Section 1801,
et seq.), the Toxic Substances Control Act, as amended (15 U.S.C. Section 2601,
et seq.), the Resource Conservation and Recovery Act, as amended (42 U.S.C.
Section 6901, et seq.), the Water Quality Act of 1987, as amended (33 U.S.C.
Section 1251, et
-54-
seq.), the Clean Water Act, as amended (33 U.S.C. Section 1321 et seq.), the
Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C. Sec.
136, et seq.), the National Environmental Policy Act of 1969, as amended (42
U.S.C. Sec. 4321, et seq.), and the Clean Air Act, as amended (42 U.S.C. Section
7401, et seq.), and any other federal, state or local statute, ordinance, law,
code, rule, regulation or order regulating or imposing liability (including
strict liability) or standards of conduct regarding Hazardous Substances.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"Eurodollar Advance" means any amount borrowed as part of the Revolving
Loans that bears interest at a rate calculated with a reference to the
Eurodollar Rate.
"Eurodollar Rate" means, with respect to any Eurodollar Advance and the
related Interest Period, the per annum rate that is obtained by dividing: (a)
the actual or estimated arithmetic mean of the per annum rates of interest at
which deposits in U.S. dollars for the related Interest Period and in an
aggregate amount comparable to the amount of such Eurodollar Advance are being
offered to U.S. banks by one or more prime banks in the London interbank market,
as determined by the Administrative Agent in its sole discretion based upon
reference to information appearing in Telerate, a service of Telerate Systems
Incorporated, or any successor thereto, in the section captioned "British
Bankers Assoc. Interest Settlement Rates," or any comparable index selected by
the Administrative Agent for the obtaining of rate quotations, or any other
reasonable procedure, at approximately 11:00 a.m. London, England time, on the
second Business Day prior to the first day of the related Interest Period, all
as determined by the Administrative Agent, such interest rate to be rounded up
to the nearest whole multiple of 1/16 of 1% per annum, by (b) a percentage equal
to 100%, minus the Eurodollar Reserve Percentage.
"Eurodollar Reserve Percentage" means, for any day, that percentage which
is in effect on such day, as prescribed by the Federal Reserve Board for
determining the maximum reserve requirement (including, without limitation, any
emergency, supplemental, or other marginal reserve requirement) for a member
bank of the Federal Reserve System in respect of "Certificate of Deposit
Liabilities" or in respect of any other category of liabilities which includes
deposits by reference to which the interest rate on Eurodollar Advances is
determined or any category of extensions of credit or other assets which
includes loans by a non-United States office of any bank to United States
residents, or with respect to any "Eurocurrency Liabilities" under Regulation D
of the Board of Governors of the Federal Reserve System, or any other
regulations of any Governmental Authority having jurisdiction with respect
thereto.
"Event of Default" is defined in Section 10.1.
"Existing Credit Documents" is defined in Section 1.1.
"Fall Foundation Lots" is defined in Section 2.6.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business
-55-
Day) by the Federal Reserve Bank of New York, or if such rate is not so
published for any day which is a Business Day, the average of the quotations for
such day on such transactions received by Huntington from three federal funds
brokers of recognized standing selected by the Administrative Agent.
"Financial Officer" is defined in Section 9(a).
"GAAP" is defined in Section 14.1.
"Governmental Authority" means any arbitrator or court, government, state,
or political subdivision thereof, or any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Hazardous Substances" means and includes all hazardous and toxic
substances, wastes, materials, compounds, pollutants and contaminants
(including, without limitation, asbestos, polychlorinated biphenyls, and
petroleum products) which are included under or regulated by any Environmental
Laws, but does not include such substances as are permanently incorporated into
a structure or any part thereof in such a way as to preclude their subsequent
release into the environment, or the permanent or temporary storage or disposal
of household hazardous substances by tenants, and which are thereby exempt from
or do not give rise to any violation of any Environmental Laws.
"Hedging Obligations" means any and all obligations of a Person, whether
absolute or contingent and howsoever and whenever created, arising, evidenced or
acquired (including all renewals, extensions and modifications thereof and
substitutions therefor), under (i) any and all agreements, devices or
arrangements designed to protect at least one of the parties thereto from the
fluctuations of interest rates, commodity prices, exchange rates or forward
rates applicable to such party's assets, liabilities or exchange transactions,
including, but not limited to, dollar-denominated or cross-currency interest
rate exchange agreements, forward currency exchange agreements, interest rate
cap or collar protection agreements, forward rate currency or interest rate
options, puts and warrants, and (ii) any and all cancellations, buy backs,
reversals, terminations or assignments of any of the foregoing.
"Hostile Acquisition" means to acquire, or obtain the right to acquire,
beneficial ownership of 5% or more of common stock or 5% or more of assets then
outstanding of any other business entity pursuant to a tender offer, exchange
offer, or other offer not expressly authorized in writing by the Board of
Directors of such business entity.
"Huntington" is defined in the Preamble.
"Indebtedness" means, with respect to any Person (a) all indebtedness,
obligations or other liabilities (other than accounts payable arising in the
ordinary course of business payable on terms customary in the trade) which in
accordance with GAAP should be classified upon such Person's balance sheet as
liabilities, including, without limitation (i) for borrowed money or evidenced
by debt securities, debentures, acceptances, notes or other similar instruments,
and any accrued interest, fees and charges relating thereto, (ii) payable out of
the proceeds or production of property owned by such Person, or in respect of
obligations to redeem, repurchase or exchange any securities or to pay dividends
in respect of any stock, (iii) with respect to letters of
-56-
credit issued, (iv) to pay the deferred purchase price of property or services,
except accounts payable and accrued expenses arising in the ordinary course of
business, or (v) in respect of capital leases; (b) all indebtedness, obligations
or other liabilities secured by a lien on any property, whether or not such
indebtedness, obligations or liabilities are assumed by the owner of the same;
and (c) all indebtedness, obligations or other liabilities in respect of Hedging
Obligations interest rate contracts and currency agreements, net of liabilities
owed by the counterparties thereon.
"Insurance Sub" means Dominion Structural Warranty Company, LLC and any
other domestic Subsidiary formed by the Company or a Restricted Subsidiary for
the purpose of insuring residential structural warranties of the Company and its
Subsidiaries.
"Interest Coverage Ratio" means, with respect to any period, the ratio of
(a) EBITDA of for such period to (b) Interest Expense for such period.
"Interest Expense" means, for any period, as determined in conformity with
GAAP, total interest expense, whether paid or accrued or due and payable
(without duplication), including, without limitation, the interest component of
capital lease obligations for such period, all bank fees, commissions, discounts
and other fees and charges owed with respect to the Letters of Credit and net
costs under interest rate contracts.
"Interest Payment Date" means in respect of the Revolving Loans, the last
day of each Interest Period, and for any Interest Period that exceeds three
months, on the 90th day after the commencement of such Interest Period.
"Interest Period" means:
(a) With respect to any Base Rate Advance, an initial period commencing,
as the case may be, on the day such an advance shall be made by the
Administrative Agent, or on the day of conversion of any then outstanding
advance to an advance of such type, and ending the last day of each month and on
the day of conversion to an advance of a different type.
(b) With respect to any Eurodollar Advance, an initial period commencing,
as the case may be, on the day such an advance shall be made by the
Administrative Agent, or on the day of conversion of any then outstanding
advance to an advance of such type, and ending on the date one (1), two (2),
three (3) or six (6) months thereafter, all as the Company may elect pursuant to
this Agreement; provided, that (i) any Interest Period with respect to a
Eurodollar Advance that shall commence on the last Business Day of the calendar
month (or any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business Day of the
respective subsequent calendar month; and (ii) each Interest Period with respect
to a Eurodollar Advance that would otherwise end on a day which is not a
Business Day or, if such next succeeding Business Day falls in the next
succeeding calendar month, shall end on the immediately preceding Business Day.
Notwithstanding the provisions of paragraphs (a) and (b) above, no Interest
Period shall be permitted which would end after the Revolving Credit Termination
Date.
"Investment" means any loan, advance, extensions of credit (other than
accounts receivable arising in the ordinary course of business on terms
customary in the trade), deposit
-57-
accounts or contribution of capital in or to any other entity or any investment
in, or purchase or other acquisition of, the stock, partnership interests,
ownership interests in any limited liability company, notes debentures, or other
securities of any other entity.
"Investments in Joint Ventures" is defined in Section 2.7.
"Kentucky Acquisition" means the Company's or a Restricted Subsidiary's
acquisition of the stock and/or assets of certain Kentucky-based limited
liability companies and other related entities identified in, and for an
aggregate purchase price not in excess of the sum the Company disclosed to the
Administrative Agent in, a certain writing dated September 18, 2003, pursuant to
the terms and conditions which have been approved in writing by the
Administrative Agent, including without limitation that the Administrative Agent
shall be satisfied with the structure and terms of such Acquisition.
"Land Deposits" means the sum of down payments, deposits, or other funds
paid pursuant to noncancellable, Arm's Length Contracts for the purchase of real
property by the Company or any Subsidiary.
"Lenders" is defined in the Preamble.
"Letter Agreement" means the fee letter agreement dated November 19, 2003,
from the Administrative Agent and accepted and agreed to by the Company.
"Letter of Credit" is defined in Section 1.3(a).
"Letter of Credit Application" is defined in Section 1.3(d).
"Letter of Credit Obligations" means, at any time, the sum of (a)
Reimbursement Obligations, plus (b) the aggregate undrawn stated amount of all
outstanding Letters of Credit, plus (c) the aggregate stated amount of all
Letters of Credit requested hereunder, but not yet issued or rejected.
"Leverage Ratio" means, for any period, the ratio of Consolidated Total
Liabilities to Consolidated Tangible Net Worth for such period.
"Loans" means, with respect to a Lender, such Lender's portion of any
advance made pursuant to Section 1.2, hereof and in the case of the Swing Line
Bank, any Swing Line Loan made pursuant to Section 1.4 hereof, and collectively,
all Revolving Loans and Swing Line Loans, whether made or continued as or
converted to Base Rate Advances or Eurodollar Advances.
"Loan Document" and "Loan Documents" means this Agreement, the Notes, any
Letter of Credit Application, the documents executed or delivered pursuant to
this Agreement, any interest rate contracts or other agreements evidencing
Hedging Obligations to which any Lender or affiliate of a Lender is a party, and
all other instruments, guaranties, agreements and contracts between (a) the
Company or any Subsidiary of the Company and (b) any of the Administrative
Agent, the Lenders or Huntington, in each case delivered to either the
Administrative Agent,
-58-
such Lender or Huntington pursuant to or in connection with this Agreement or
the Revolving Credit Commitments.
"Lots Under Development" is defined in Section 2.8.
"Material Adverse Effect" means a material adverse effect upon (a) the
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Company and its Subsidiaries taken as a whole,
(b) the ability of the Company or any Subsidiary to perform its obligations
under this Agreement, any Loan Document or any document, agreement, guaranty, or
instrument executed in connection herewith, or (c) the ability of the
Administrative Agent or the Lenders to enforce the terms of this Agreement, or
any document, agreement, guaranty, or instrument executed in connection
herewith.
"Material Subsidiary" means any Subsidiary in which the sum of the
Company's (a) Investment in such Subsidiary and (b) Contingent Obligations with
respect to such Subsidiary equals or exceeds $1,000,000.
"Maximum New Market Investment Amount" means, with respect to the Company
and its Subsidiaries, the aggregate amount of (a) each Purchase Price for an
Acquisition of a Person or the assets of a Person whose principal business or
the principal location of its assets is not in a Dominion Market, (b) the
aggregate amount of Investments in Restricted Subsidiaries and in Investments in
Joint Ventures, whose principal operations or the principal location of its
assets or property is not in a Dominion Market, and (c) the aggregate cost of
all Uncommitted Land Holdings, Speculative Homes, Model Homes and all other real
or personal property not located in a Dominion Market; which in the aggregate
for clauses (a), (b) and (c) above shall not exceed $25,000,000, whether such
investment or investments are made prior to, on or after the date of this
Agreement.
"Model Homes" is defined in Section 2.9.
"Mortgage Warehouse Financing" means Indebtedness incurred by the Company
or any Subsidiary to finance the origination and warehousing of residential
first mortgage loans made in the ordinary course of business by the Company or a
Subsidiary thereof to buyers of residences from the Company or a Subsidiary
thereof, each term and condition of such financing shall be in all respects
satisfactory to the Administrative Agent and the Required Lenders.
"Noncancellable Land Commitments" means the amount of the obligations of
the Company and its Subsidiaries with respect to the unpaid purchase price of
noncancellable contracts for the purchase of real property.
"Non-Facility Contingent Obligations" means the aggregate stated amount of
the Contingent Obligations of the Company and its Subsidiaries in connection
with letters of credit, bonds or other forms of surety issued by a lender or
other surety other than pursuant to a Revolving Credit Commitment.
"Note" and "Notes" are defined in Section 4(a).
"Notice of Assignment" is defined in Section 12.3(b).
-59-
"Notice of Borrowing" means the irrevocable notice of borrowing in the
form attached hereto and made a part hereof as Exhibit C or such other form
satisfactory to the Administrative Agent.
"Participant" is defined in Section 12.2(a).
"Permitted Acquisition" means an Acquisition by the Company or any
Restricted Subsidiary, for which the Company or a Restricted Subsidiary
satisfies each of the following conditions to the good faith satisfaction of the
Administrative Agent and the Required Lenders:
(a) such Acquisition is of or with a Person in the homebuilding or
related industry;
(b) such Acquisition is made at a time when, after giving effect thereto
and the related financing thereof, (i) no Event of Default exists or would occur
based upon (A) a pro forma prospective calculation for the next twelve (12)
month period and (B) a pro forma historical calculation (using Adjusted EBITDA
if applicable) for the most recent twelve (12) month period of the financial
covenants set forth in this Agreement performed in accordance with GAAP giving
effect to any higher levels of Indebtedness associated with the acquired
operations, together with interest thereon to be accrued for such twelve (12)
month period, and (ii) after giving effect to such Acquisition, the Company and
each Subsidiary would remain solvent pursuant to the warranties contained in
this Agreement;
(c) the acquired business entity shall have had positive Adjusted EBITDA
for the twelve (12) month period immediately prior to the effective date of the
Acquisition;
(d) on the date of the closing of the Permitted Acquisition and after
giving effect thereto and to any advances under the Revolving Loan made to
finance such Permitted Acquisition, (i) no Event of Default shall have occurred
and be continuing and (ii) all representations and warranties under this
Agreement shall be true and correct as though made on and as of such date,
except to the extent that any such representation or warranty expressly relates
to an earlier date;
(e) the acquired business entity, if the acquisition is of capital stock
and such entity constitutes a Subsidiary, obligates itself on the Revolving
Loans or this Agreement pursuant to a guaranty or supplement substantially in
the form of Exhibit F hereto or other loan documents satisfactory to the
Administrative Agent and otherwise complies with the requirements of this
Agreement and executes and delivers such documentation as the Administrative
Agent deems appropriate with respect to intercompany borrowings from the Company
or any Subsidiary;
(f) the acquired assets are free and clear of all liens or encumbrances
except as permitted under this Agreement;
(g) the Company delivers written notice to the Administrative Agent of
its or a Restricted Subsidiary's intention to make such Acquisition no less than
45 days prior to the proposed closing date for such Acquisition that sets forth,
among other things, information regarding liabilities and obligations with
respect to the environmental matters, labor matters, or ERISA matters to be
incurred by the such Person (including, without limitation, the acquired
-60-
business entity in the event of an acquisition of capital stock) as a result of
such Acquisition, any indemnities afforded under the terms of such acquisition
and the scope and results of any environmental review, labor review, or ERISA
review undertaken by such Person in connection therewith and the results of any
further due diligence required by the Administrative Agent;
(h) the Company shall provide the Administrative Agent with copies of
financial statements of the proposed acquired business entity;
(i) the Company or its Restricted Subsidiary shall not engage in a
Hostile Acquisition; and
(j) all assets and/or Subsidiaries acquired shall be subject to the
provisions of this Agreement.
"Person" means any natural person, corporation, limited partnership,
limited liability company, general partnership, joint stock company, joint
venture, association, company, trust, business trust, or other organization
whether the same constitutes a legal entity, and any Governmental Authority.
"Potential Default" means a set of facts or circumstances exists, which,
by themselves, upon the giving of notice, the lapse of time, or any one or more
of the foregoing, would constitute an Event of Default under Sections 10.1(g),
(h), (i) or (j) of this Agreement.
"Premises" is defined in Section 7.12.
"Prime Commercial Rate" means the rate established by Huntington from time
to time based on its consideration of economic, money market, business and
competitive factors, and it is not necessarily Huntington's most favored rate.
"Prior Credit Agreement" is defined in the preamble.
"Pro Rata Share" means, with respect to any Lender, the percentage
obtained by dividing (a) the sum of such Lender's Revolving Credit Commitment at
such time by (b) the sum of the aggregate amount of all Revolving Credit
Commitments at such time (as adjusted from time to time in accordance with the
provisions of this Agreement); provided, however, if all of the Revolving Credit
Commitments are terminated pursuant to the terms of this Agreement, then "Pro
Rata Share" means the percentage obtained by dividing (c) the sum of the
aggregate amount of such Lender's Revolving Credit Obligations, by (d) the sum
of the aggregate amount of all Revolving Credit Obligations.
"Purchase Price" shall mean the sum of cash and cash equivalents paid,
notes or other indebtedness given, liabilities assumed, or the fair market value
of property transferred in connection with any Acquisition.
"Purchasers" is defined in Section 12.3(a).
"Qualified Joint Venture" means any corporation, partnership, limited
liability company or joint venture which meets all of the following criteria (i)
the interest of the Company or such
-61-
Restricted Subsidiary in such entity is an Investment in Joint Venture, and (ii)
the Administrative Agent has approved the guaranty or limited guaranty of such
entity's Indebtedness.
"Real Estate Held for Development" is defined in Section 2.10.
"Real Property Parcel" is defined in Section 7.14.
"Reimbursement Obligations" means the aggregate non-contingent
reimbursement or repayment obligations of the Company, a Restricted Subsidiary
or any Approved Joint Venture with respect to amounts drawn under Letters of
Credit issued for the account of the Company, a Restricted Subsidiary or any
Approved Joint Venture.
"Required Lenders" means, at any time, Lenders holding in the aggregate at
least sixty-six and two-thirds percent (66 2/3%) of the sum of the then
aggregate amount of the Revolving Credit Commitments in effect at such time;
provided, however, that in the event any Lender shall have failed to fund its
Pro Rata Share of (i) any Revolving Loan requested by the Company or (ii) any
Swing Line Loan as requested by Administrative Agent, which such Lender is
obligated to fund under the terms hereof, and any such failure has not been
cured, then for so long as such failure continues, "Required Lenders" means
Lenders (excluding any Lender who has not cured its failure to fund its
respective Pro Rata Share of such Revolving Loans or Swing Line Loans) whose Pro
Rata Shares represent at least sixty-six and two-thirds percent (66 2/3%) of the
aggregate Pro Rata Shares of such Lenders. Provided, however, further that, in
the event that the Revolving Credit Commitments have been terminated pursuant to
the terms hereof, "Required Lenders" means Lenders (without regard to such
Lenders' performance of their respective obligations hereunder) whose aggregate
ratable shares (stated as a percentage) of the aggregate outstanding balance of
all Revolving Credit Obligations are at least sixty-six and two-thirds percent
(66 2/3%).
"Restricted Subsidiary" means a Subsidiary of the Company which (a) is
organized and existing under the laws of any state of the United States of
America, and (b) which has become obligated to the Administrative Agent, the
Lenders and the issuing bank under the terms of this Agreement pursuant to a
supplement or guaranty agreement satisfactory to the Administrative Agent, in
its sole and absolute discretion.
"Revolving Credit Availability" means, at any time, the amount by which
the Revolving Credit Maximum Amount exceeds the Revolving Credit Obligations
outstanding at such time.
"Revolving Credit Commitment" means, with respect to any Lender, the
obligation of such Lender to make Revolving Loans and to participate in Letters
of Credit and Swing Line Loans pursuant to the terms and conditions hereof,
which obligation shall not exceed the amount set forth opposite the heading
Revolving Credit Commitment under such Lender's name on the Schedule I attached
hereto, in any amendment or modification hereto or in Assignment and Acceptance
by which it became a Lender, as modified from time to time pursuant to the terms
hereof or to give effect to any applicable Assignment and Acceptance.
"Revolving Credit Commitments" means the aggregate amount of each
Revolving Credit Commitment of all the Lenders, provided that the maximum
aggregate principal amount of Revolving Loans and Swing Line Loans and the
stated amount of the Letter of Credit
-62-
Obligations shall not exceed $250,000,000, as reduced from time to time pursuant
to the terms hereof.
"Revolving Credit Maximum Amount" means, at any time, the lesser of the
amount of the Revolving Credit Commitments or the Borrowing Base.
"Revolving Credit Obligations" means, at any time, the sum of (a) the
outstanding principal amount of the Revolving Loans at such time, plus (b) the
amount of Letter of Credit Obligations outstanding at such time, plus (c) the
outstanding principal amount of the Swing Line Loans at such time.
"Revolving Credit Termination Date" means the earlier to occur of (a) the
date of termination of the Revolving Credit Commitments pursuant to the terms
hereof, and (b) May 31, 2007.
"Revolving Loan" is defined in Section 1.2(a).
"Speculative Homes" is defined in Section 2.12.
"Subsidiary" means any corporation or other entity more than 50% of the
outstanding securities or other ownership interest having ordinary voting power
or the equivalent thereof which shall at the time be owned or controlled,
directly or indirectly, by the Company or by one or more of its Subsidiaries,
and shall exclude Alliance Title Agency, Ltd. (other than in respect of
financial reporting under Section 9 hereof and the financial covenants set forth
in Sections 8.13 through and including 8.17 hereof.
"Swing Line Bank" means Huntington pursuant to the terms hereof.
"Swing Line Commitment" means the obligation of the Swing Line Bank to
make Swing Line Loans up to a maximum principal amount of $15,000,000 at any one
time outstanding.
"Swing Line Loan" and "Swing Line Loans" are defined in Section 1.4(a).
"Syndication Agent" is defined in the Preamble.
"Transferee" is defined in Section 12.4.
"Uncommitted Land Holdings" shall mean the sum of all of the following in
respect of the Company and its Subsidiaries, valued at the lesser of cost or
market: (a) Real Estate Held for Development, (b) Lots Under Development, (c)
Developed Lots, (d) Land Deposits, (e) Noncancellable Land Commitments, and (f)
the net equity investment in Investments in Joint Venture.
"Voidable Transfer" is defined in Section 13.5(b).
[The remainder of this page intentionally left blank.]
-63-
Each of the undersigned parties has signed this Agreement as of the date
set forth in the Preamble hereto.
THE COMPANY:
DOMINION HOMES, INC.
By: /s/ Xxxxx X. X'Xxxxxx
------------------------------------
Its: Senior Vice President and Chief
Financial Officer
------------------------------------
Dominion Homes, Inc.
0000 Xxxxxx Xxxxxxxx Xxxx.
Xxxxxx, Xxxx 00000-0000
Attention: Xxx X. Xxxxxxx
President and Chief Operating Officer
Fax: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxx, Xx., Esq.
Senior Vice President and
General Counsel
Dominion Homes, Inc.
0000 Xxxxxx Xxxxxxxx Xxxx.
Xxxxxx, Xxxx 00000-0000
Fax: (614) 761 - 6139
THE ADMINISTRATIVE AGENT:
THE HUNTINGTON NATIONAL BANK
By: /s/ Xxxx X. Xxxxxxx
------------------------------------
Its: Vice President
------------------------------------
The Huntington National Bank,
Administrative Agent
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attention: Xxxx X. Xxxxxxx,
Vice President
Fax: (000) 000-0000
-64-
With a copy to:
Xxxxxxx X. Xxxxx, Esq.
PORTER, WRIGHT, XXXXXX & XXXXXX LLP
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Fax: (000) 000-0000
THE LENDERS:
THE HUNTINGTON NATIONAL BANK,
as Lender and Issuing Bank
By: /s/ Xxxx X. Xxxxxxx
------------------------------------
Its: Vice President
------------------------------------
BANK ONE, NATIONAL ASSOCIATION
By: /s/ Xxxxx X. XxXxxxxx
------------------------------------
Its: Vice President
------------------------------------
KEYBANK NATIONAL ASSOCIATION,
as Lender and Syndication Agent
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Its: Senior Vice President
------------------------------------
NATIONAL CITY BANK
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Its: Senior Vice President
------------------------------------
COMERICA BANK
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Its: Vice President
------------------------------------
-65-
U.S. BANK NATIONAL ASSOCIATION,
As Lender and Documentation Agent
By: /s/ Xxxx X. XxxxxXxxxx
------------------------------------
Its: Assistant Vice President
------------------------------------
THE PROVIDENT BANK
By: /s/ Xxxxxxx XxXxxx
------------------------------------
Its: Vice President
------------------------------------
FIFTH THIRD BANK (CENTRAL OHIO)
By: /s/ Xxxxxxx Xxxxxxxx
------------------------------------
Its: Assistant Vice President
------------------------------------
FLEET NATIONAL BANK
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------
Its: Director
------------------------------------
WASHINGTON MUTUAL BANK, FA,
a federal association
By: /s/ Xxxxx X. Xxxxx
------------------------------------
Its: Vice President
------------------------------------
-66-
