Document/Exhibit Description Pages Size
1: 10-K Lennar Corporation 10K 19 117K
3: EX-10.(P) Revolving Credit Agreement 87 298K
4: EX-13 Annual Report to Stockholders Pages 12 Through 34 23 157K
5: EX-21 Lennar Corporation and Subsidiaries 3 13K
6: EX-23 Consents 3 10K
7: EX-27 Financial Data Schedule 1 6K
2: EX-99 Index to Exhibits 3 13K
EXHIBIT 10(p)
REVOLVING CREDIT AGREEMENT
among
LENNAR CORPORATION
and
CERTAIN SUBSIDIARIES
and
THE FIRST NATIONAL BANK OF CHICAGO,
THE FIRST NATIONAL BANK OF BOSTON,
BANK ONE, TEXAS, N.A.,
CREDIT LYONNAIS ATLANTA AGENCY,
CREDIT LYONNAIS CAYMAN ISLAND BRANCH,
INTERCONTINENTAL BANK,
COMERICA BANK,
NATIONSBANK OF FLORIDA, N.A.
THE FUJI BANK, LIMITED, NEW YORK BRANCH,
BARNETT BANK OF SOUTH FLORIDA, N.A.,
NBD BANK, N.A.,
CONTINENTAL BANK
and
THE FIRST NATIONAL BANK OF CHICAGO,
As Agent
Closing Date: July 29, 1994
TABLE OF CONTENTS
[Download Table]
ARTICLE I Certain Defined Terms 1
SECTION 1.01. Certain Defined Terms 1
SECTION 1.02. Computation of Time Periods 17
SECTION 1.03. Accounting Terms 18
ARTICLE II Amounts and Terms of the Advances 18
SECTION 2.01. Existing Loans; Loans Prior to the Termination Date;
Maximum Credit Facilities 18
SECTION 2.02. Ratable Loans 18
SECTION 2.03. Types of Advances; Final Maturity 19
SECTION 2.04. Mandatory Principal Payments 19
SECTION 2.05. Optional Principal Payments 19
SECTION 2.06. Commitment Fee and Reduction of Commitments 19
SECTION 2.07. Extension of Termination Date; Extension Fee 20
SECTION 2.08. Method of Borrowing 21
SECTION 2.09. Method of Selecting Types and Interest Periods for
Advances 21
SECTION 2.10. Method of Selecting Types and Interest Periods for
Conversion and Continuation of Advances 22
SECTION 2.11. Minimum Amount of Each Advance 23
SECTION 2.12. Rate after Maturity 23
SECTION 2.13. Method of Payment 23
SECTION 2.14. Notes; Telephonic Notices 24
SECTION 2.15. Interest Payment Dates; Interest and Fee Basis 24
SECTION 2.16. Notification of Advances, Interest Rates, Prepayments
and Commitment Reductions 25
SECTION 2.17. Lending Installations 25
SECTION 2.18. Non-Receipt of Funds by the Agent 25
SECTION 2.19. Withholding Tax Exemption 26
SECTION 2.20. Unconditional Obligation to Make Payments 26
SECTION 2.22. Compensating Balances 27
ARTICLE III Change In Circumstances 28
SECTION 3.01. Yield-Protection 28
SECTION 3.02. Changes in Capital Adequacy Regulations 28
SECTION 3.03. Availability of Types of Advances 29
SECTION 3.04. Funding Indemnification 29
SECTION 3.05. Lender Statements: Survival of Indemnity 29
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ARTICLE IV Representations and Warranties 30
SECTION 4.01. Organization, Powers, etc. 30
SECTION 4.02. Authorization and Validity of this Agreement, etc. 30
SECTION 4.03. Financial Statements 31
SECTION 4.04. No Material Adverse Effect 31
SECTION 4.05. Title to Properties 31
SECTION 4.06. Litigation 32
SECTION 4.07. Payment of Taxes 32
SECTION 4.08. Agreements 33
SECTION 4.09. Foreign Direct Investment Regulations 33
SECTION 4.10. Federal Reserve Regulations 33
SECTION 4.11. Consents, etc. 34
SECTION 4.12. Compliance with Applicable Laws 34
SECTION 4.13. Relationship of the Borrower 34
SECTION 4.14. Subsidiaries; Joint Ventures 35
SECTION 4.15. ERISA 35
SECTION 4.16. Investment Company Act 35
SECTION 4.17. Public Utility Holding Company Act 36
SECTION 4.18. Subordinated Debt 36
SECTION 4.19. Post-Retirement Benefits 36
SECTION 4.20. Insurance 36
SECTION 4.21. Environmental Representations 36
ARTICLE V Conditions Precedent 37
SECTION 5.01. Conditions of Effectiveness 37
SECTION 5.02. Conditions Precedent to All Borrowings 40
ARTICLE VI Affirmative Covenants 41
SECTION 6.01. Existence, Properties, etc. 41
SECTION 6.02. Notice 41
SECTION 6.03. Payments of Debts, Taxes, etc. 41
SECTION 6.04. Accounts and Reports 42
SECTION 6.05. Access to Premises and Records 46
SECTION 6.06. Maintenance of Properties and Insurance 46
SECTION 6.07. Financing; New Investments 47
SECTION 6.08. Compliance with Applicable Laws 47
SECTION 6.09. Change in Collateral 47
SECTION 6.10. Advances to the Mortgage Banking Subsidiaries 47
SECTION 6.11. Use of Proceeds 48
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[Download Table]
ARTICLE VII Negative Covenants 48
SECTION 7.01. Tangible Net Worth 48
SECTION 7.02. Ratio of Liabilities to Tangible Net Worth 48
SECTION 7.03. Guaranties 49
SECTION 7.04. Sale of Assets; Acquisitions; Merger 49
SECTION 7.05. Investments 50
SECTION 7.06. Disposition, Encumbrance or Issuance of Certain
Stock 51
SECTION 7.07. Subordinated Debt 51
SECTION 7.08. Housing Unit 51
SECTION 7.09. Construction in Progress 51
SECTION 7.10. Borrowing Base 52
SECTION 7.11. No Margin Stock 52
SECTION 7.12. Mortgage Banking Subsidiaries' Capital Ratio 52
SECTION 7.13. Transactions with Affiliates 52
SECTION 7.14. Restrictions on Advances to Mortgage Banking
Subsidiaries 52
SECTION 7.15. Adjusted Net Worth of Mortgage Banking Subsidiaries 53
ARTICLE VIII Collateral 54
SECTION 8.01. Security for Obligations 54
SECTION 8.02. Collateral Value 54
SECTION 8.03. Releases 55
SECTION 8.04. Substitute or Additional Collateral 56
SECTION 8.05. Collateral Documentation 56
SECTION 8.06. Powers and Duties of the Borrower with Respect to
the Collateral 58
SECTION 8.07. Power of Attorney 59
ARTICLE IX Events of Default 59
SECTION 9.01. Events of Default 59
SECTION 9.02. Right to Rescind Acceleration 61
SECTION 9.03. Rights as to Collateral 62
SECTION 9.04. Application of Funds 64
ARTICLE X The Agent 65
SECTION 10.01. Appointment 65
SECTION 10.02. Powers 65
SECTION 10.03. General Immunity 65
SECTION 10.04. No Responsibility for Loans, Recitals, etc. 65
SECTION 10.05. Employment of Agents and Counsel 66
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SECTION 10.06. Reliance on Documents; Counsel 66
SECTION 10.07. No Waiver of Rights 66
SECTION 10.08. Knowledge of Event of Default 67
SECTION 10.09. Agent's Reimbursement and Indemnification 67
SECTION 10.10. Notices to the Borrower 67
SECTION 10.11. Action on Instructions of Lenders 67
SECTION 10.12. Lender Credit Decision 68
SECTION 10.13. Resignation or Removal of the Agent 68
SECTION 10.14. Benefits of Article X 68
ARTICLE XI Setoff; Ratable Payments 69
SECTION 11.01. Setoff 69
SECTION 11.02. Ratable Payments 69
ARTICLE XII Benefit of Agreement; Assignments; Participations 69
SECTION 12.01. Successors and Permitted Assigns 69
SECTION 12.02. Participations 70
SECTION 12.03. Assignments 71
ARTICLE XIII Miscellaneous 72
SECTION 13.01. Notice 72
SECTION 13.02. Survival of Representations 72
SECTION 13.03. Expenses 72
SECTION 13.04. Indemnification of the Lenders and the Agent 73
SECTION 13.05. Maximum Interest Rate 74
SECTION 13.06. Modification of Agreement 74
SECTION 13.07. Preservation of Rights 75
SECTION 13.08. Joint and Several Obligations of Borrower; Several
Obligations of Lenders 75
SECTION 13.09. Severability 75
SECTION 13.10. Counterparts 75
SECTION 13.11. Representation and Warranty by the Lenders 75
SECTION 13.12. The Company as Agent for Each Other Borrower 76
SECTION 13.13. Loss, etc., Notes 76
SECTION 13.14. Governmental Regulation 76
SECTION 13.15. Taxes 76
SECTION 13.16. Headings 76
SECTION 13.17. Entire Agreement 76
SECTION 13.18. CHOICE OF LAW 77
SECTION 13.19. CONSENT TO JURISDICTION 77
SECTION 13.20. WAIVER OF JURY TRIAL 77
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REVOLVING CREDIT AGREEMENT, dated as of July 29, 1994, among LENNAR
CORPORATION, a corporation organized and existing under the laws of the
State of Delaware (the "Company"), the Subsidiaries of the Company listed
in Schedule I hereto (said Subsidiaries, together with the Company,
hereinafter individually and collectively referred to as the "Borrower"),
the lenders listed in Schedule II hereto (hereinafter such lenders,
together with any additional lenders as provided in Section 2.21 below, are
collectively referred to as the "Lenders"), and THE FIRST NATIONAL BANK OF
CHICAGO, as Agent (the "Agent").
RECITALS
The Borrower desires to obtain from the Lenders and the Lenders are
willing to provide to the Borrower revolving credit loans in an aggregate
principal amount outstanding from time to time not exceeding $250,000,000,
upon the terms and subject to the conditions hereinafter set forth;
PROVIDED, HOWEVER, that the aggregate principal amount of the Aggregate
Commitments of the Lenders may be increased as provided in Section 2.21
below.
AGREEMENT
In consideration of the foregoing and of the mutual covenants and
agreements hereinafter set forth, the parties hereto hereby agree as
follows:
ARTICLE I
CERTAIN DEFINED TERMS
SECTION 1.01. CERTAIN DEFINED TERMS. As used herein, each of the
following terms shall have the meaning ascribed to it below, which meaning
shall be applicable to both the singular and plural forms of the terms
defined:
"ADVANCE" means a borrowing hereunder consisting of the aggregate
amount of the several Loans made by the Lenders to the Borrower of the same
Type and, in the case of Fixed Rate Advances, for the same Interest Period.
"AFFILIATE" of any Person means any other Person directly or
indirectly controlling, controlled by or under common control with such
Person. A Person shall be deemed to control another Person if the
controlling Person owns 10% or more of any class of voting securities (or
other ownership interests) of the controlled Person or possesses, directly
or indirectly, the power to direct or cause the direction of the management
or policies of the controlled Person, whether through ownership of stock,
by contract or otherwise.
"AGENT" means The First National Bank of Chicago in its capacity as
agent for the Lenders pursuant to Article X, and not in its individual
capacity as a Lender, and any successor Agent appointed pursuant to Article
X.
"AGGREGATE COMMITMENT" means the aggregate of the Commitments of
all the Lenders, as increased or reduced from time to time pursuant to the
terms hereof.
"AGREEMENT" means this Revolving Credit Agreement, as it may be
amended or modified and in effect from time to time.
"AGREEMENT ACCOUNTING PRINCIPLES" means generally accepted
accounting principles as in effect from time to time in the United States,
applied in a manner consistent with those used in preparing the financial
statements referred to in Section 4.03.
"AFSI" means Ameristar Financial Services, Inc.
"APPLICABLE MARGIN" means, with respect to an outstanding Fixed CD
Rate Loan or a Eurodollar Loan during any Interest Period, a rate per annum
equal to 1.15% if Borrower's senior unsecured long-term debt is not rated
by Standard & Poor's or Moody's. In the event that Borrower's senior
unsecured long-term debt is rated without regard to credit enhancement by
either Standard & Poor's or Moody's, the Applicable Margin shall be
determined in accordance with the following table, such Applicable Margin
to remain in effect for each Interest Period during all of which the
applicable rating shall remain in effect:
APPLICABLE
RATING RATE
------ ----------
Equal to or better than
BBB- from Standard & Poor's
or Baa3 from Moody's 1.05%
Lower than BBB- from Standard
& Poor's or Baa3 from Moody's 1.25%
"APPRAISED VALUE" means, with respect to an interest in Real Estate
as of a given date, the then current fair market value of that interest as
determined in accordance with generally accepted methods of appraising by a
qualified appraiser, selected by the Agent (after application by the Agent
of the standards and procedures set forth in Section 8.01), who is a member
of the American Institute of Real Estate Appraisers or of another
nationally recognized group of professional appraisers.
2
"ARTICLE" means an article of this Agreement unless another
document is specifically referenced.
"ASSESSMENT RATE" means, for any CD Interest Period, the assessment
rate per annum (rounded upwards to the next higher multiple of 1/100 of 1%
if the rate is not such a multiple) payable to the Federal Deposit
Insurance Corporation (or any successor) for the insurance of domestic
deposits of First Chicago, as estimated by First Chicago on the first day
of such CD Interest Period.
"AUDITED FINANCIAL STATEMENTS" is defined in Section 4.03.
"AUTHORIZED OFFICER" means any of Leonard Miller, Allan J. Pekor, M.E.
Saleda, Mary Raurell, or any other Person designated by the Borrower in
writing to act as an Authorized Officer hereunder, acting singly.
"BORROWER" has the meaning assigned to that term in the
introductory paragraph of this Agreement. Whenever used in this Agreement,
the term "Borrower" refers to and means each of the entities comprising the
Borrower, individually, and all of such entities, collectively. All of the
entities comprising the Borrower shall be jointly and severally liable as
Borrower under this Agreement, the Notes, and all other Loan Documents.
"BORROWING BASE" means, from time to time, the sum of the following
amounts, all as reflected from time to time in accordance with United
States generally accepted accounting principles consistently applied in the
consolidated balance sheet of the Borrower: (i) 100% of Borrower's
unrestricted cash up to a maximum of $10,000,000 (with any excess cash
being excluded from the Borrowing Base); (ii) 100% of the Net Proceeds due
to Borrower at closing as a result of the consummation of the sale of any
Housing Unit, which Net Proceeds have been paid to the closing agent
handling such sale but which have not yet been received by Borrower;
PROVIDED, HOWEVER, that if, and to the extent that, such Net Proceeds which
are reported as outstanding on the last day of any fiscal quarter of
Borrower are not received by Borrower on or before the tenth (10th) day
following the end of any such fiscal quarter, such Net Proceeds shall not
be included in the Borrowing Base; (iii) 75% of the Net Book Value of all
Housing Units under Contract; (iv) 65% of the Net Book Value of all Housing
Units owned by Borrower (including, without limitation, model Housing
Units) that are not subject to a contract for sale, PROVIDED that the
amount determined pursuant to this clause (iv) shall not exceed 30% of the
aggregate Commitments of the Lenders (with any excess being excluded from
the Borrowing Base); (v) the lower of (A) 100% of the Net Book Value of all
Income Producing Properties (on an asset-by-asset basis), or (B) six and
one-half (6 1/2) times the Net Operating Income for the four fiscal
quarters immediately preced-
3
ing the date as of which Net Operating Income is to be determined, PROVIDED
that the amount determined pursuant to this clause (v) shall not exceed
40% of the aggregate Commitments of the Lenders (with any excess being
excluded from the Borrowing Base); and (vi) 50% of the Net Book Value of
all substantially improved land owned by the Borrower, PROVIDED that the
amount determined pursuant to this clause (vi) shall not exceed 25% of
the aggregate Commitments of the Lenders (with any excess being excluded
from the Borrowing Base); PROVIDED, HOWEVER, that notwithstanding anything
to the contrary provided herein, any asset which is encumbered by a Lien
shall not be included in the calculation of the Borrowing Base pursuant
to clauses (i) - (vi) above and the Discontinued Assets shall also be
disregarded in computation of the Borrowing Base. For purposes of clause
(vi) above, "substantially improved land" shall mean land with respect to
which at least 80% of the standard improvements (including zoning and
platting, engineering design and permits, filling to grade, main water
distribution and sewage collection systems and drainage system installation,
but excluding sidewalks, landscaping and sodding, decor and privacy walls,
recreation facilities, guardhouse and street lights) have been completed.
"BORROWING DATE" means a date on which an Advance is made hereunder.
"BORROWING NOTICE" is defined in Section 2.09.
"BUSINESS DAY" means (i) with respect to any borrowing, payment or
rate selection of Eurodollar Advances, a day (other than a Saturday or
Sunday) on which banks are open for business in Chicago and New York and on
which dealings in United States dollars are carried on in the London
interbank market and (ii) for all other purposes, a day (other than a
Saturday or Sunday) on which banks are open for business in Chicago.
"CAPITALIZED LEASE" of a Person means any lease of property by such
Person as lessee which would be capitalized on a balance sheet of such
Person prepared in accordance with Agreement Accounting Principles.
"CAPITALIZED LEASE OBLIGATIONS" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as
a liability on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.
"CD INTEREST PERIOD" means, with respect to a Fixed CD Rate
Advance, a period of 30, 60, 90 or 180 days, as available, commencing on a
Business Day selected by the Borrower pursuant to this Agreement. If such
CD Interest Period would end on a day
4
which is not a Business Day, such CD Interest Period shall end on the next
succeeding Business Day.
"CODE" means the Internal Revenue Code of 1986, as amended,
reformed or otherwise modified from time to time.
"COLLATERAL" means, at any time, any assets owned by the Borrower
that then are subject to a Mortgage or security interest in favor of the
Agent as security for the Obligations.
"COLLATERAL VALUE" means (i) with respect to Real Estate that is
(or is to be) part of the Collateral, the Appraised Value thereof, less the
aggregate outstanding amount of all prior Mortgages and other prior liens
or encumbrances upon such Real Estate, and (ii) with respect to a Mortgage
Receivable that is (or is to be) part of the Collateral, (x) if it is not
then in "default", the outstanding principal balance thereof, and (y) if it
is then in "default", zero. For the purposes of this definition, a Mortgage
Receivable shall be deemed to be in "default" if the relevant mortgagor is
in default beyond any applicable grace period in any of its obligations
under the provisions of the Mortgage Receivable, as in effect on the date
the same is pledged to the Agent hereunder, subject only to subsequent
modifications or waivers consented to by the Required Lenders. The value,
if any, of the Mortgage Banking Subsidiaries Note shall not be included in
the calculation of the Collateral Value.
"COMMITMENT" means, for each of the Lenders, the obligation of such
Lender to make Loans not exceeding the amount set forth opposite its
signature below, as such amount may be modified from time to time pursuant
to the terms hereof.
"COMPLETED HOUSING UNIT" means, at any time, a Housing Unit the
construction of which was commenced more than 10 months, in the case of a
single family home, more than 12 months, in the case of a townhouse, or
more than 18 months, in the case of a condominium, before that time.
"CONTINGENT OBLIGATION" of a Person means any agreement,
undertaking or arrangement by which such Person assumes, guarantees,
endorses, contingently agrees to purchase or provide funds for the payment
of, or otherwise becomes or is contingently liable upon, the obligation or
liability of any other Person, or agrees to maintain the net worth or
working capital or other financial condition of any other Person, or
otherwise assures any creditor of such other Person against loss,
including, without limitation, any comfort letter, operating agreement or
take-or-pay contract. With respect to the Borrower, Contingent Obligation
includes, without limitation of the foregoing, obligations under
reimbursement agreements with financial institutions
5
(including Lenders) relating to letters of credit issued by such financial
institutions for the account of Borrower.
"CONVERSION/CONTINUATION NOTICE" is defined in Section 2.10(d).
"CONTROLLED GROUP" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated)
under common control which, together with the Borrower or any of its
Subsidiaries, are treated as a single employer under Section 414 of the
Code.
"CORPORATE BASE RATE" means a rate per annum equal to the corporate
base rate of interest announced by First Chicago from time to time,
changing when and as said corporate base rate changes.
"DCA" means Development Corporation of America.
"DOLLARS" and the sign "$" each means lawful money of the United
States of America.
"DISCONTINUED ASSETS" means all assets owned by DCA or any
subsidiary of DCA for use in any of its textile and mining operations.
"EFFECTIVE DATE" means July 29, 1994.
"ENVIRONMENTAL LAWS" means all federal, state and local
environmental, health or safety laws, regulations and rules of common law.
"EQUITY INVESTMENT" means the ownership of, or participation in the
ownership of, an equity interest in Real Estate or an equity interest in a
Person in the business of owning, developing, improving, operating or
managing Real Estate.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"EURODOLLAR ADVANCE" means an Advance which bears interest at a
Eurodollar Rate.
"EURODOLLAR BASE RATE" means, with respect to a Eurodollar Advance
for the relevant Eurodollar Interest Period, the rate determined by the
Agent to be the rate at which deposits in U.S. dollars are offered by First
Chicago to first-class banks in the London interbank market at
approximately 11 a.m. (London time) two Business Days
6
prior to the first day of such Eurodollar Interest Period, in the
approximate amount of First Chicago's relevant Eurodollar Loan and
having a maturity approximately equal to such Eurodollar Interest Period.
"EURODOLLAR INTEREST PERIOD" means, with respect to a Eurodollar
Advance, a period of one, two, three or six months, as available,
commencing on a Business Day selected by the Borrower pursuant to this
Agreement. Such Eurodollar Interest Period shall end on (but exclude) the
day which corresponds numerically to such date one, two, three or six
months thereafter, PROVIDED, HOWEVER, that if there is no such numerically
corresponding day in such next, second, third or sixth succeeding month,
such Eurodollar Interest Period shall end on the last Business Day of such
next, second, third or sixth succeeding month. If a Eurodollar Interest
Period would otherwise end on a day which is not a Business Day, such
Eurodollar Interest Period shall end on the next succeeding Business Day,
PROVIDED, HOWEVER, that if said next succeeding Business Day falls in a new
calendar month, such Eurodollar Interest Period shall end on the
immediately preceding Business Day.
"EURODOLLAR LOAN" means a Loan which bears interest at a Eurodollar
Rate.
"EURODOLLAR RATE" means, with respect to a Eurodollar Advance for
the relevant Eurodollar Interest Period, the sum of (i) the quotient of (a)
the Eurodollar Base Rate applicable to such Eurodollar Interest Period,
divided by (b) one minus the Reserve Requirement (expressed as a decimal)
applicable to such Eurodollar Interest Period, plus (ii) the Applicable
Margin. The Eurodollar Rate shall be rounded to the next higher multiple of
1/16 of 1% if the rate is not such a multiple.
"EVENT" means an event, circumstance, condition or state of facts.
"EVENT OF DEFAULT" is defined in Section 9.01 hereof.
"EXISTING LOANS" means advances under the Prior Credit Agreement
from the Prior Lenders to the Borrower outstanding immediately prior to the
Effective Date.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, an interest rate
per annum equal to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published for such day (or, if such
day is not a Business Day, for the immediately preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations at
approximately 10 a.m. (Chicago time) on such day on such transactions
re-
7
ceived by the Agent from three Federal funds brokers of recognized
standing selected by the Agent in its sole discretion.
"FIRST CHICAGO" means The First National Bank of Chicago in its
individual capacity, and its successors.
"FIRST MORTGAGE" means a Mortgage that (i) creates a lien that
covers any Real Estate and all developments thereto and/or improvements
thereon, whether existing at the time the lien is created or thereafter
made, (ii) takes priority or precedence over all other liens and
encumbrances to which the Real Estate is subject, and (iii) must be
satisfied before all other liens and encumbrances to which the Real Estate
is subject are entitled to participate in the proceeds of any sale or other
disposition of such Real Estate.
"FIXED CD BASE RATE" means, with respect to a Fixed CD Rate Advance
for the relevant CD Interest Period, the rate determined by the Agent to be
the arithmetic average of the prevailing bid rates quoted to the Agent at
or before 10 a.m. (Chicago time) on the first day of such CD Interest
Period by three New York or Chicago certificate of deposit dealers of
recognized standing selected by the Agent in its sole discretion for the
purchase at face value of certificates of deposit of First Chicago in the
approximate amount of First Chicago's relevant Fixed CD Rate Loan and
having a maturity approximately equal to such CD Interest Period.
"FIXED CD RATE" means, with respect to a Fixed CD Rate Advance for
the relevant CD Interest Period, a rate per annum equal to the sum of (i)
the quotient of (a) the Fixed CD Base Rate applicable to such CD Interest
Period, divided by (b) one minus the Reserve Requirement (expressed as a
decimal) applicable to such CD Interest Period, plus (ii) the Assessment
Rate applicable to such CD Interest Period, plus (iii) the Applicable
Margin. The Fixed CD Rate shall be rounded to the next higher multiple of
1/100 of 1% if the rate is not such a multiple.
"FIXED CD RATE ADVANCE" means an Advance which bears interest at a
Fixed CD Rate.
"FIXED CD RATE LOAN" means a Loan which bears interest at a Fixed
CD Rate.
"FIXED RATE" means the Fixed CD Rate or the Eurodollar Rate.
"FIXED RATE ADVANCE" means an Advance which bears interest at a
Fixed Rate.
"FIXED RATE LOAN" means a Loan which bears interest at a Fixed
Rate.
8
"FLOATING RATE" means, for any day, a rate per annum equal to the
higher of (i) the Corporate Base Rate for such day or (ii) the sum of (X)
the Federal Funds Effective Rate plus 0.5%, in each case changing when and
as the Corporate Base Rate and the Federal Funds Effective Rate change.
"FLOATING RATE ADVANCE" means an Advance which bears interest at
the Floating Rate.
"FLOATING RATE LOAN" means a Loan which bears interest at the
Floating Rate.
"HAZARDOUS SUBSTANCES" means any toxic or hazardous wastes,
pollutants or substances, including, without limitation, asbestos, PCBs,
petroleum products and by-products, substances defined or listed as
"hazardous substances" or "toxic substances" or similarly identified in or
pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. [Section] 9061 ET SEQ.,
hazardous materials identified in or pursuant to the Hazardous Materials
Transportation Act 49 U.S.C. [Section] 1802 ET SEQ., hazardous wastes
identified in or pursuant to The Resource Conservation and Recovery Act, 42
U.S.C. [Section] 6901 ET SEQ., any chemical substance or mixture regulated
under the Toxic Substance Control Act of 1976, as amended, 15 U.S.C.
[Section] 2601 ET SEQ., any "toxic pollutant" under the Clean Water Act, 33
U.S.C. [Section] 466 ET SEQ., as amended, any hazardous air pollutant under
the Clean Air Act, 42 U.S.C. [Section] 7401 et seq., and any hazardous or
toxic substance or pollutant regulated under any other applicable federal,
state or local Environmental Laws.
"HOUSING UNIT" means a residential housing unit that is (or, upon
completion of construction thereof, will be) available for sale.
"HOUSING UNIT CLOSING" means a closing of the sale of a Housing
Unit by the Borrower to a bona fide purchaser for value that is not an
Affiliate of the Borrower.
"HOUSING UNIT UNDER CONTRACT" means a Housing Unit owned by the
Borrower as to which the Borrower has a bona fide contract of sale, in a
form customarily employed by the Borrower and reasonably satisfactory to
the Agent, entered into not more than 15 months prior to the date of
determination with a Person who is not an Affiliate of the Borrower, under
which contract no defaults then exist and not less than 10% of the purchase
price has been paid; PROVIDED, HOWEVER, that in the case of any Housing
Unit the purchase of which is to be financed in whole or in part by a loan
insured by the Federal Housing Administration or guaranteed by the Veterans
Administration, the required minimum downpayment shall be the amount (if
any) required under the rules of the relevant agency.
9
"INCOME PRODUCING PROPERTIES" means all industrial Real Estate,
commercial Real Estate or multiple family dwellings owned and developed by
the Borrower, except for Real Estate developed for sale as condominium
units directly to individual purchasers for their residential use.
"INDEBTEDNESS" of a Person means such Person's (i) obligations for
borrowed money, (ii) obligations representing the deferred purchase price
of property or services (other than accounts payable arising in the
ordinary course of such Person's business payable on terms customary in the
trade), (iii) obligations, whether or not assumed, secured by Liens or
payable out of the proceeds or production from property now or hereafter
owned or acquired by such Person, (iv) obligations which are evidenced by
notes, acceptances, or other instruments, (v) Capitalized Lease
Obligations, and (vi) liabilities and obligations under any sales/leaseback
and receivable sales transactions. With respect to the Borrower,
Indebtedness includes, without limitation of the foregoing, all
Obligations.
"INTEREST PERIOD" means a CD Interest Period or a Eurodollar Interest
Period.
"INVESTMENT" of a Person means any loan, advance (other than
commission, travel and similar advances to officers and employees made in
the ordinary course of business), extension of credit (other than accounts
receivable arising in the ordinary course of business on terms customary in
the trade), deposit account or contribution of capital by such Person to
any other Person or any investment in, or purchase or other acquisition of,
the stock, partnership interests, notes, debentures or other securities of
any other Person made by such Person.
"JUNIOR MORTGAGE" means a Mortgage which is a valid lien and
encumbrance on Real Estate that is subject to the priority of one or more
other Mortgages.
"LENDERS" means the lending institutions listed on the signature
pages of this Agreement, any additional financial institutions which become
Lenders pursuant to Section 2.21 and the respective successors and
permitted assigns of the foregoing.
"LENDING INSTALLATION" means, with respect to a Lender or the
Agent, any office, branch, subsidiary or affiliate of such Lender or the
Agent.
"LFC" means Lennar Funding Corp.
"LFSI" means Lennar Financial Services, Inc.
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"LIABILITIES" of a Person means all items included in the liability
section of a balance sheet of that Person prepared in accordance with
United States generally accepted accounting principles consistently applied
as of the date of calculation. Without limiting the generality of the
foregoing, the term "Liabilities" shall include, without limitation: (i)
all Indebtedness secured by any Mortgage, lien, pledge, security interest,
charge or encumbrance upon or in property owned by that Person, to the
extent attributable to that Person's interest in the property, even though
that Person has not assumed or become liable for the payment of the
Indebtedness; and (ii) the aggregate amount of the reserves established on
the books of that Person in respect of contingent liabilities and other
contingencies (except reserves which are properly treated as deductions
from assets) and in any event shall include with respect to the Borrower
the amount of all outstanding Loans.
"LIEN" means any lien (statutory or other), mortgage (including,
without limitation, purchase money mortgages), pledge, hypothecation,
assignment, deposit arrangement, encumbrance or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title
retention agreement).
"LIMITED PURPOSE FINANCE SUBSIDIARIES" means the limited purpose
finance subsidiaries as identified on the financial statements referred to
in Section 4.03.
"LOAN" means, with respect to a Lender, such Lender's portion of any
Advance.
"LOAN DOCUMENTS" means this Agreement, the Notes, any Mortgages and
assignments of Mortgage Receivables delivered to the Agent pursuant to
Article VIII hereof and any and all other instruments or documents
delivered or to be delivered by the Borrower pursuant hereto and thereto,
as such documents may be amended or modified and in effect from time to
time.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i)
the business, properties, assets, condition (financial or otherwise),
results of operations, or prospects of (a) the Company and the other
entities comprising the Borrower, taken as a whole, or (b) if so specified,
any entity comprising the Borrower, (ii) the ability of the Borrower to
perform its obligations under the Loan Documents, or (iii) the validity or
enforceability of any of the Loan Documents or the rights or remedies of
the Agent or the Lenders thereunder.
"MATURITY DATE" means the date upon which the outstanding principal
amount of the Notes, all accrued but unpaid interest thereof, and all other
Obligations become due
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and payable, whether as a result of the occurrence of the stated maturity
date or the acceleration of maturity pursuant to the terms of any of the
Loan Documents.
"MOODY'S" means Moody's Investors Services, Inc. or any Person
succeeding to the securities rating business of such company.
"MONTHLY PAYMENT DATE" means the first day of each calendar month.
"MORTGAGE" means any mortgage, deed of trust or other security deed
in Real Estate, or in rights or interests, including leasehold interests,
in Real Estate.
"MORTGAGE BANKING SUBSIDIARY" means a Subsidiary of LFSI which is
engaged or hereafter engages in the mortgage banking business, including
the origination, servicing, packaging and/or selling of mortgages on
residential single- and multi-family dwellings and/or commercial property,
and in any event shall include AFSI, LFC and UAMC.
"MORTGAGE BANKING SUBSIDIARIES NOTE" means the promissory note
dated the Effective Date in the principal amount of $150,000,000 executed
by the Mortgage Banking Subsidiaries as joint makers to the order of the
Company which is to be held by the Agent pursuant to Section 6.10. The
Mortgage Banking Subsidiaries Note shall be in form and substance as
provided in Exhibit D attached hereto.
"MORTGAGE RECEIVABLE" means a note or other similar instrument
evidencing Indebtedness that is secured by a Mortgage in favor of the
Borrower on Real Estate sold by the Borrower to a bona fide purchaser for
value that is not an Affiliate of the Borrower, provided that (i) the sale
is made pursuant to a contract under which the purchaser has made a
nonrefundable cash payment to the Borrower in any amount not less than 20%
of the total purchase price of the Real Estate so sold, (ii) the note or
other instrument and Mortgage are genuine, constitute legal, valid, binding
and enforceable obligations of the purchaser, are not subject to any
dispute, setoff, counterclaim or defense and are freely negotiable and
assignable to the Agent, and (iii) the maturity of the note or other
instrument is on or before the fifth anniversary of the date of execution
and delivery thereof. For the purposes of this definition, a note or other
instrument and Mortgage shall be deemed legal, valid, binding and
enforceable obligations of the maker thereof notwithstanding that the
Borrower does not have the right to enforce payment of the Indebtedness
evidenced and secured thereby against the maker thereof other than through
foreclosure of the Mortgage or other recourse to the Real Estate encumbered
thereby.
"MULTIEMPLOYER PLAN" means a Plan maintained pursuant to a
collective bargaining agreement or any other arrangement to which the
Borrower or any member of the
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Controlled Group is a party to which more than one employer is obligated
to make contributions.
"NET BOOK VALUE" means, with respect to an asset owned by a
Borrower, the gross investment of that Borrower in the asset, less all
reserves (including loss reserves and reserves for depreciation)
attributable to that asset, all determined in accordance with United States
generally accepted accounting principles consistently applied.
"NET OPERATING INCOME" means, for any period, the total rental and
other income of the Income Producing Properties for such period, less all
related operating expenses of those Properties for such period, and less
all related extraordinary reserves (including without limitation reserves
for replacement escrows, major repairs and capital expenditures)
established for such Properties for such period, all as reflected in the
statement of operations for such Properties provided to the Lenders
pursuant to Section 6.04(o).
"NET PROCEEDS" means, in connection with the sale of any asset by
the Borrower, the gross sales price less (A) all bona fide prorations and
adjustments to the sales price required to be made pursuant to the terms of
the sales contract and (B) the aggregate amount of bona fide closing costs
due to any Person that is not an Affiliate of the Borrower.
"NONRECOURSE DEBT" means Indebtedness of the Borrower secured by a
Mortgage on Real Estate of the Borrower, as to which Indebtedness the sole
recourse of the holders thereof is to the Real Estate encumbered by that
Mortgage and none of such holders has the right (as a matter of law, by
contract or otherwise) to enforce payment thereof against the Borrower or
any of the Borrower's properties and assets other than the Real Estate
encumbered by that Mortgage.
"NOTE" means a promissory note in substantially the form of Exhibit
A hereto, completed, executed and delivered by the Borrower and payable to
the order of a Lender in the amount of its Commitment, including any
amendment, modification, renewal or replacement of such promissory note.
"NOTICE OF ASSIGNMENT" is defined in Section 12.03(b).
"OBLIGATIONS" means all unpaid principal of and accrued and unpaid
interest on the Notes, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of the Borrower to the
Lenders or to any Lender, the Agent or any indemnified party arising under
the Loan Documents.
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"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"PARTICIPANTS" is defined in Section 12.02.
"PERSON" means any natural person, corporation, firm, enterprise,
trust, association, company, partnership, joint venture or other entity or
organization, or any government or political subdivision or any agency,
department, or instrumentality thereof.
"PLAN" means an employee pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under Section
412 of the Code as to which the Borrower or any member of the Controlled
Group may have any liability.
"PRIOR LENDERS" are those Lenders listed on Schedule III.
"PRIOR CREDIT AGREEMENT" means the Revolving Credit Agreement dated
as of July 29, 1993, as heretofore modified and amended.
"PROJECT" means a group of Housing Units of substantially the same
type, design and price range that have been constructed, are under
construction or are to be constructed in a specific geographical area,
except that each building in a multi-family condominium development having
24 or more housing units shall be considered a "Project".
"PRO RATA SHARE" means, for each Lender, the ratio that such
Lender's Commitment bears to the Aggregate Commitment.
"PURCHASERS" is defined in Section 12.03(a).
"QUARTERLY PAYMENT DATE" means the first day of each April, July,
October and January.
"REAL ESTATE" means land, rights in land and interests therein
(including, without limitation, leasehold interests), and equipment,
structures, improvements, furnishings, fixtures and buildings (including a
mobile home of the type usually installed on a developed site) located on
or used in connection with land, rights in land or interests therein
(including leasehold interests), but shall not include Mortgages or
interests therein.
"RECENT BALANCE SHEET" is defined in Section 4.05.
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"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor
thereto or other regulation or official interpretation of said Board of
Governors relating to reserve requirements applicable to member banks of
the Federal Reserve System.
"REGULATION U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors
relating to the extension of credit by banks for the purpose of purchasing
or carrying margin stocks applicable to member banks of the Federal Reserve
System.
"REPORTABLE EVENT" means a reportable event as defined in Section
4043 of ERISA and the regulations issued under such section, with respect
to a Plan, excluding, however, such events as to which the PBGC by
regulation waived the requirement of Section 4043(a) of ERISA that it be
notified within 30 days of the occurrence of such event, PROVIDED, HOWEVER,
that a failure to meet the minimum funding standard of Section 412 of the
Code and of Section 302 of ERISA shall be a Reportable Event regardless of
the issuance of any such waiver of the notice requirement in accordance
with either Section 4043(a) of ERISA or Section 412(d) of the Code.
"REQUIRED LENDERS" means, at any time, Lenders then holding Notes
having outstanding principal balances aggregating not less than 66-2/3% of
the outstanding principal amount of the Notes, or if no such principal
amount is then outstanding, Lenders having at least 66-2/3% of the
Aggregate Commitment.
"RESERVE REQUIREMENT" means, with respect to a CD Interest Period
or a Eurodollar Interest Period, the maximum aggregate reserve requirement
(including all basic, supplemental, marginal and other reserves) which is
imposed under Regulation D on new non-personal time deposits of $100,000 or
more with a maturity equal to that of such CD Interest Period (in the case
of Fixed CD Rate Advances) or on Eurocurrency liabilities (in the case of
Eurodollar Advances).
"REVOLVING COLLATERAL VALUE" means, on any date, 125% of the sum of
the then aggregate outstanding principal balance of the Notes and the
aggregate amount of all accrued and unpaid interest on the Notes.
"SECTION" means a numbered section of this Agreement, unless
another document is specifically referenced.
"SECURITIES" of any Person means equity securities and debt
securities and any other instrument commonly understood to be a security
issued by that Person.
15
"SINGLE EMPLOYER PLAN" means a Plan maintained by the Borrower or
any member of the Controlled Group for employees of the Borrower or any
member of the Controlled Group.
"STANDARD & POOR'S" means Standard & Poor's Corporation and any
Person succeeding to the securities rating business of such company.
"STI" means Strategic Technologies, Inc., a Florida corporation.
"SUBORDINATED DEBT" of a Person means any Indebtedness of that
Person which by its terms is subordinated, in form and substance and in a
manner satisfactory to the Agent, in lien and right of payment to the prior
payment in full of the Obligations.
"SUBSIDIARY" of a Person means (i) any corporation more than 50% of
the outstanding securities having ordinary voting power of which shall at
the time be owned or controlled, directly or indirectly, by such Person or
by one or more of its Subsidiaries or by such Person and one or more of its
Subsidiaries, or (ii) any partnership, association, joint venture or
similar business organization more than 50% of the ownership interests
having ordinary voting power of which shall at the time be so owned or
controlled.
"TANGIBLE NET WORTH" means the amount of consolidated stockholders'
equity of the Company as shown on its balance sheet less the aggregate
amount of all of the following: (i) goodwill and other assets that are
properly classified as "intangible assets", exclusive of the Mortgage
Banking Subsidiaries, (ii) the assets of the Limited Purpose Finance
Subsidiaries, STI and TIC, less the liabilities of the Limited Purpose
Finance Subsidiaries, STI and TIC, as shown on the Company's consolidated
financial statements, and (iii) to the extent not deducted pursuant to the
immediately preceding clause (ii), the amount of stockholders' equity of
the Mortgage Banking Subsidiaries, STI and TIC as shown on the separate
consolidating financial statements for LFSI.
"TERMINATION DATE" means the later of (i) July 29, 1997 or (ii) the
date to which this Agreement is extended pursuant to Section 2.07, subject,
however, to earlier termination in whole of the Aggregate Commitment
pursuant to the terms of this Agreement.
"TIC" means TitleAmerica Insurance Corporation, a Florida corporation.
"TRANSFEREE" is defined in Section 12.03(c).
16
"TYPE" means, with respect to any Advance, its nature as a Floating
Rate Advance, Eurodollar Advance or Fixed CD Rate Advance.
"UAMC" means Universal American Mortgage Company.
"UNAUDITED FINANCIAL STATEMENTS" is defined in Section 4.03.
"UNCONSOLIDATED JOINT VENTURE" shall mean a joint venture (whether
in the form of a corporation, a partnership or otherwise) (i) to which the
Borrower is or becomes a party (other than the tenancies in common listed
in Schedule VII annexed hereto), (ii) which Borrower is not required to
consolidate in its financial statements in accordance with United States
generally accepted accounting principles, and (iii) in which the Borrower
has or will have a total investment exceeding $25,000 or which has total
assets plus contingent liabilities exceeding $100,000. For the purposes of
this definition, the Borrower's investment in a joint venture shall be
deemed to include any Securities of the joint venture owned by the
Borrower, any loans, advances or accounts receivable by the Borrower from
the joint venture, any commitments, arrangement or other agreement by the
Borrower to provide funds or credit to the joint venture and the Borrower's
share of the undistributed profits of the joint venture.
"UNFUNDED LIABILITIES" means the amount (if any) by which the
present value of all vested nonforfeitable benefits under all Single
Employer Plans exceeds the fair market value of all such Plan assets
allocable to such benefits, all determined as of the then most recent
valuation date for such Plans.
"UNMATURED DEFAULT" means an event which but for the lapse of time
or the giving of notice, or both, would constitute an Event of Default.
"WHOLLY-OWNED SUBSIDIARY" of a Person means (i) any Subsidiary all
of the outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, by such Person or one or more
Wholly-Owned Subsidiaries of such Person, or by such Person and one or more
Wholly-Owned Subsidiaries of such Person, or (ii) any partnership,
association, joint venture or similar business organization 100% of the
ownership interests having ordinary voting power of which shall at the time
be so owned or controlled.
SECTION 1.02. COMPUTATION OF TIME PERIODS. For the purposes of this
Agreement, in the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including", the words
"to" and "until" each means "to but excluding" and the word "through" means
"to and including".
17
SECTION 1.03. ACCOUNTING TERMS. All accounting terms used and not
specifically defined herein shall be construed in accordance with Agreement
Accounting Principles. All references herein to Agreement Accounting
Principles shall be deemed to refer to those principles; PROVIDED, HOWEVER,
that notwithstanding the requirements imposed by United States generally
accepted accounting principles which require the consolidation of the
operations of LFSI with the operations of the Borrower, for the purposes of
the calculations set forth in Article VII hereof, the operations of such
Subsidiary shall be so included only as specifically provided for herein.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. EXISTING LOANS; LOANS PRIOR TO THE TERMINATION
DATE; MAXIMUM CREDIT FACILITIES.
(a) The Borrower acknowledges that the Prior Lenders have made the
Existing Loans pursuant to the Prior Credit Agreement. The aggregate
principal amount outstanding under the Existing Loans as of the date hereof
is $_____________. The Existing Loans are payable in accordance with the
terms of the Prior Credit Agreement, subject to no offsets, defenses,
counterclaims or other claims. On the Effective Date, the Lenders shall
make an Advance to the Borrower in the aggregate amount of the then
outstanding principal amount of the Existing Loans, the proceeds of which
shall be applied by the Borrower to repay those loans in full.
(b) From and including the date of this Agreement and prior to the
Termination Date, each Lender severally agrees, on the terms and conditions
set forth in this Agreement and in reliance upon the representations and
warranties of Borrower herein set forth, to make Loans to the Borrower from
time to time in amounts not to exceed in the aggregate at any one time
outstanding the amount of its Commitment. Subject to the terms of this
Agreement, the Borrower may borrow, repay and reborrow at any time prior to
the Termination Date.
(c) Notwithstanding anything to the contrary contained in this
Agreement, the maximum principal amount of outstanding Advances shall not
at any time exceed $250,000,000.
SECTION 2.02. RATABLE LOANS. Each Advance hereunder shall consist
of Loans made from the several Lenders ratably in their respective Pro Rata
Shares.
18
SECTION 2.03. TYPES OF ADVANCES; FINAL MATURITY.
(i) The Advances may be Floating Rate Advances, Fixed
CD Rate Advances or Eurodollar Advances, or a combination thereof,
selected by the Borrower in accordance with Section 2.09.
(ii) All Obligations shall be fully repaid and satisfied
by the Borrower on the Termination Date or shall become due and
payable pursuant to Section 9.01 below.
SECTION 2.04. MANDATORY PRINCIPAL PAYMENTS. The Borrower
shall prepay the principal of the Notes in the amount, and promptly upon
its receipt, of (i) the Net Proceeds of (or, in the case of a
partially-financed sale, the net cash down payment received in connection
with) any sale of Real Estate constituting part of the Collateral owned by
the Borrower that is subject to a Mortgage in favor of the Agent securing
the Notes, (ii) any principal payment made with respect to a Mortgage
Receivable constituting part of the Collateral, and (iii) any principal
payment made with respect to the Mortgage Banking Subsidiaries Note from
and after the date the Agent is granted a security interest therein
pursuant to Section 8.01; PROVIDED, HOWEVER, that anything in the foregoing
clauses (i) and (ii) to the contrary notwithstanding, the Borrower shall
not be required to prepay the Notes with the proceeds of the sale of Real
Estate constituting part of the Collateral once it has applied to the
prepayment of the Notes proceeds of that sale (including, in the case of a
partially financed sale, the proceeds of any principal payments with
respect to Mortgage Receivables received in connection therewith) in an
aggregate amount equal to the Appraised Value of the Real Estate sold.
SECTION 2.05. OPTIONAL PRINCIPAL PAYMENTS. The Borrower may from
time to time pay, without penalty or premium, all outstanding Floating Rate
Advances, or, in a minimum aggregate amount of $100,000 or any integral
multiple of $100,000 in excess thereof, any portion of the outstanding
Floating Rate Advances upon one Business Day's prior notice to the Agent. A
Fixed Rate Advance may not be paid prior to the last day of the applicable
Interest Period.
SECTION 2.06. COMMITMENT FEE AND REDUCTION OF COMMITMENTS. The
Borrower agrees to pay to the Agent for the account of each Lender a
commitment fee of 0.375% per annum on the daily unborrowed and unused
portion of such Lender's Commitment (i.e., after deducting from the
Commitment of such Lender the outstanding amount of all Loans made by such
Lender) from the date hereof to and including the Termination Date, payable
in arrears on each Quarterly Payment Date hereafter and on the Termination
Date. The Borrower may permanently reduce the Aggregate Commitment in
whole, or in part ratably among the Lenders in integral multiples of $100,000,
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upon at least three Business Days' written notice to the Agent,
which notice shall specify the amount of any such reduction, PROVIDED,
HOWEVER, that the amount of the Aggregate Commitment may not be reduced
below the aggregate principal amount of the outstanding Advances. All
accrued commitment fees under this Section 2.06 shall be payable on the
effective date of any termination of the obligations of the Lenders to make
Loans hereunder. The fees payable under this Section 2.06, once paid, shall
not be refundable for any reason.
SECTION 2.07. EXTENSION OF TERMINATION DATE; EXTENSION FEE.
(a) During the 15-day period which is not more than 105 days and not
less than 90 days prior to each anniversary of the Effective Date (the
"Request Period"), the Borrower may request a one-year extension of the
Termination Date by submitting a request for an extension to the Agent (an
"Extension Request"). If no Extension Request is made in a Request Period
in any year or, if made, the same is denied hereunder, no further Extension
Request may be made thereafter. Promptly upon receipt of an Extension
Request, the Agent shall notify each Lender thereof and shall request each
Lender to approve the Extension Request on or prior to the sixtieth (60th)
day after the Agent notifies such Lender of the Extension Request (the
"Review Period"). Any Lender which does not notify the Agent prior to the
expiration of the Review Period shall be deemed to have denied the
Extension Request and be subject to replacement as a Lender hereunder and,
if not so replaced, will withdraw its Commitment as of the then applicable
Termination Date. Each Lender approving the Extension Request (an
"Extending Lender") shall deliver its written consent to the Agent and the
Borrower prior to the expiration of the Review Period. Any such consent
delivered by a Lender may be revoked up to and including the fourth (4th)
day prior to the expiration of the Review Period, but shall be irrevocable
thereafter. Provided that the consents of the Required Lenders are received
by the Agent and remain in effect on the last day of the Review Period, the
Termination Date shall be deemed extended until the first anniversary of
the then applicable Termination Date, all references in this Agreement to
the Termination Date shall mean the Termination Date as so extended, and
the Agent shall promptly notify the Borrower and each Lender of the new
Termination Date. Each Lender shall have the sole discretion as to whether
to consent or withhold its consent to an Extension Request.
(b) Upon being notified by the Agent that the Required Lenders have
consented to an Extension Request, Borrower will pay to each Extending
Lender an extension fee equal to a percentage of the Extending Lender's
Commitment in accordance with the following table:
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[Download Table]
COMMITMENT
AMOUNT FEE
---------- ---
$25,000,000 or more 0.12%
More than or equal to
$15,000,000 but less
than $25,000,000 0.08%
Less than $15,000,000 0.05%
SECTION 2.08. METHOD OF BORROWING. Not later than noon (Chicago
time) on each Borrowing Date, each Lender shall make available its Loan or
Loans, in funds immediately available in Chicago to the Agent at its
address specified pursuant to Article XI. The Agent will make the funds so
received from the Lenders available to the Borrower by deposit into Account
No. 5801117 maintained by the Borrower at First Chicago.
SECTION 2.09. METHOD OF SELECTING TYPES AND INTEREST PERIODS
FOR ADVANCES.
(a) The Borrower shall select the Type of Advance and, in the case
of each Fixed Rate Advance, the Interest Period applicable to each Advance
from time to time. The Borrower shall give the Agent irrevocable notice (a
"Borrowing Notice") not later than 10:00 a.m. (Chicago time) on the
Borrowing Date for each Floating Rate Advance or Fixed CD Rate Advance and
at least two Business Days before the Borrowing Date for each Eurodollar
Advance, specifying:
(i) the Borrowing Date, which shall be a Business Day, of such
Advance,
(ii) the aggregate amount of such Advance,
(iii) the Type of Advance selected, and
(iv) in the case of each Fixed Rate Advance, the Interest Period
applicable thereto.
The Borrower shall be entitled to obtain only one Advance in any single
Business Day, which may be comprised in whole or in part of any Fixed Rate
Advance. Changes in the rate of interest on that portion of any Advance
maintained as a Floating Rate
21
Advance will take effect simultaneously with each change in the Floating Rate.
Each Fixed Rate Advance shall bear interest from and including the first day
of the Interest Period applicable thereto to (but not including) the last
day of such Interest Period at the interest rate determined as applicable
to such Fixed Rate Advance. The Borrower shall select Interest Periods with
respect to Fixed Rate Advances so that it is not necessary to pay a Fixed
Rate Advance prior to the last day of the applicable Interest Period in
order to make any mandatory payment required be made pursuant to Section
2.04 above or to repay the Obligations in full on the Maturity Date.
(b) Each Borrowing Notice shall be irrevocable and binding on the
Borrower and, in respect of the borrowing specified in the Borrowing
Notice, the Borrower shall indemnify each Lender against any loss or
expense incurred by that Lender as a result of any failure to fulfill the
applicable conditions set forth in Section 5.02 on or before the proposed
Borrowing Date specified in the Borrowing Notice, including, without
limitation, any loss (including loss of profit) or expense incurred by
reason of the liquidation or reemployment of deposits or other funds
acquired by any Lender to fund the Loan to be made by that Lender as part
of that borrowing when that Loan, as a result of that failure, is not made
on that date.
SECTION 2.10. METHOD OF SELECTING TYPES AND INTEREST PERIODS
FOR CONVERSION AND CONTINUATION OF ADVANCES.
(a) RIGHT TO CONVERT. The Borrower may elect from time to time,
subject to the provisions of Section 2.10(c), to convert all or any part of
an Advance of any Type into any other Type or Types of Advances; PROVIDED
that any conversion of any Fixed Rate Advance shall be made on, and only
on, the last day of the Interest Period applicable thereto.
(b) AUTOMATIC CONVERSION AND CONTINUATION. Floating Rate Advances
shall continue as Floating Rate Advances unless and until such Floating
Rate Advances are converted into Fixed Rate Advances. Fixed Rate Advances
of any Type shall continue as Fixed Rate Advances of such Type until the
end of the then applicable Interest Period therefor, at which time such
Fixed Rate Advance shall be automatically converted into a Floating Rate
Advance unless the Borrower shall have given the Agent notice in accordance
with Section 2.10(d) requesting that, at the end of such Interest Period,
such Fixed Rate Advance either continue as a Fixed Rate Advance of such
Type for the same or another Interest Period or be converted into an
Advance of another Type.
(c) NO CONVERSION IN CASE OF AN EVENT OF DEFAULT OR UNMATURED
DEFAULT. Notwithstanding anything to the contrary contained in Section
2.10(a) or 2.10(b), no Advance may be converted into or continued as a
Fixed Rate Advance (except with the
22
consent of the Required Lenders) when any Event of Default or Unmatured
Default has occurred and is continuing.
(d) CONVERSION/CONTINUATION NOTICE. The Borrower shall give the
Agent irrevocable notice (a "Conversion/Continuation Notice") of each
conversion of an Advance or continuation of a Fixed Rate Advance not later
than 10:00 a.m. (Chicago time) on the day of any conversion into a Floating
Rate Advance or Fixed CD Rate Advance or at least two Business Days prior
to the date of the requested conversion into or continuation of a
Eurodollar Advance, specifying:
(i) the requested date (which shall be a Business Day) of such
conversion or continuation;
(ii) the amount and Type of the Advance to be converted or
continued; and
(iii) the amount and Type(s) of Advance(s) into which
such Advance is to be converted or continued and, in the case
of a conversion into or continuation of a Fixed Rate
Advance, the duration of the Interest Period applicable
thereto.
SECTION 2.11. MINIMUM AMOUNT OF EACH ADVANCE. Each Fixed Rate
Advance shall be in the minimum amount of $5,000,000 (and in multiples of
$100,000 if in excess thereof), and each Floating Rate Advance shall be in
the minimum amount of $500,000 and in multiples of $100,000 if in excess
thereof), PROVIDED, HOWEVER, that any Floating Rate Advance may be in the
amount of the unused Aggregate Commitment.
SECTION 2.12. RATE AFTER MATURITY. Except as provided in the next
sentence, any Advance not paid at maturity, whether by acceleration or
otherwise, shall bear interest until paid in full at a rate per annum equal
to the Floating Rate plus 5% per annum. In the case of a Fixed Rate Advance
the maturity of which is accelerated, such Fixed Rate Advance shall bear
interest at the rate otherwise applicable to such Interest Period plus 5%
per annum for the remainder of the applicable Interest Period, and
thereafter at the Floating Rate plus 5% per annum.
SECTION 2.13. METHOD OF PAYMENT. All payments of principal,
interest, and fees hereunder shall be made, without setoff, deduction, or
counterclaim, in immediately available funds to the Agent at the Agent's
address specified pursuant to Article XIII, or at any other Lending
Installation of the Agent specified in writing by the Agent to the
Borrower, by 11:00 a.m. (local time) on the date when due and shall be made
ratably among the Lenders. Each payment delivered to the Agent for the
account of
23
any Lender shall be delivered promptly by the Agent to such
Lender in the same type of funds which the Agent received at its address
specified pursuant to Article XIII or at any Lending Installation specified
in a notice received by the Agent from such Lender. The Agent is hereby
authorized to charge any account of the Borrower maintained with First
Chicago for each payment of principal, interest and fees as it becomes due
hereunder. The Agent shall endeavor in good faith to provide telephonic
notice to Borrower prior to any such charge, but the Agent shall not be
liable to Borrower or any other Person if Agent fails to provide any such
notice. If and to the extent payment owed to any Lender is not made by the
Borrower to the Agent or that Lender, as the case may be, when due
hereunder or under the Note held by that Lender, the Borrower further
authorizes such Lender to charge from time to time against any or all of
the accounts maintained by the Borrower with the Lender, its subsidiaries,
affiliates or branches any amount so due, subject to the provisions of
Article XI.
SECTION 2.14. NOTES; TELEPHONIC NOTICES. Each Lender is hereby
authorized to record the principal amount of each of its Loans and each
repayment on the schedule attached to its Note; PROVIDED, HOWEVER, that the
failure to so record shall not affect the Borrower's obligations under such
Note. The Borrower hereby authorizes the Lenders and the Agent to extend,
convert or continue Advances, effect selections of Types of Advances and to
transfer funds based on telephonic notices made by any person or persons
the Agent or any Lender in good faith believes to be acting on behalf of
the Borrower. All actions taken by the Lenders and the Agent upon such
telephonic notices are hereby approved by the Borrower, and the Lenders and
the Agent shall incur no liability as a result of any such actions. The
Borrower agrees to deliver promptly to the Agent a written confirmation, if
such confirmation is requested by the Agent or any Lender, of each
telephonic notice signed by an Authorized Officer. If the written
confirmation differs in any material respect from the action taken by the
Agent and the Lenders, the records of the Agent and the Lenders shall
govern absent manifest error.
SECTION 2.15. INTEREST PAYMENT DATES; INTEREST AND FEE BASIS.
Interest accrued on each Floating Rate Advance shall be payable on each
Monthly Payment Date, commencing with the first such date to occur after
the date hereof, and on the Maturity Date. Interest accrued on that portion
of the outstanding principal amount of any Floating Rate Advance converted
into a Fixed Rate Advance on a day other than a Monthly Payment Date shall
be payable on the date of conversion. Interest accrued on each Fixed Rate
Advance shall be payable on the last day of its applicable Interest Period,
on any date on which the Fixed Rate Advance is prepaid, whether by
acceleration or otherwise, and at maturity. Interest accrued on each Fixed
Rate Advance having an Interest Period longer than three months shall also
be payable on the last day of each three-month interval during such
Interest Period. Interest on Floating Rate Loans and commitment fees shall
be calculated for actual days elapsed on the basis of a 365-day
24
year; interest on Eurodollar Loans and Fixed Rate Loans shall be calculated
for actual days elapsed on the basis of a 360-day year. Interest shall be
payable for the day an Advance is made but not for the day of any payment
on the amount paid if payment is received prior to noon (local time) at the
place of payment. If any payment of principal of or interest on an Advance
shall become due on a day which is not a Business Day, such payment shall
be made on the next succeeding Business Day and, in the case of a principal
payment, such extension of time shall be included in computing interest in
connection with such payment.
SECTION 2.16. NOTIFICATION OF ADVANCES, INTEREST RATES,
PREPAYMENTS AND COMMITMENT REDUCTIONS.
Promptly after receipt thereof, the Agent will notify each Lender of the
contents of each Aggregate Commitment reduction notice, Borrowing Notice,
Conversion/Continuation Notice, and repayment notice received by it
hereunder. The Agent will notify each Lender of the interest rate
applicable to each Fixed Rate Advance promptly upon determination of such
interest rate.
SECTION 2.17. LENDING INSTALLATIONS. Each Lender may book its Loans
at any Lending Installation selected by such Lender and may change its
Lending Installation from time to time. All terms of this Agreement shall
apply to any such Lending Installation and the Notes shall be deemed held
by each Lender for the benefit of such Lending Installation. Each Lender
may, by written or telex notice to the Agent and the Borrower, designate a
Lending Installation through which Loans will be made by it and for whose
account Loan payments are to be made.
SECTION 2.18. NON-RECEIPT OF FUNDS BY THE AGENT. Unless the Borrower
or a Lender, as the case may be, notifies the Agent prior to the date on
which it is scheduled to make payment to the Agent of (i) in the case of a
Lender, the proceeds of a Loan or (ii) in the case of the Borrower, a
payment of principal, interest or fees to the Agent for the account of the
Lenders, that it does not intend to make such payment, the Agent may assume
that such payment has been made. The Agent may, but shall not be obligated
to, make the amount of such payment available to the intended recipient in
reliance upon such assumption. If such Lender or the Borrower, as the case
may be, has not in fact made such payment to the Agent, the recipient of
such payment shall, on demand by the Agent, repay to the Agent the amount
so made available together with interest thereon in respect of each day
during the period commencing on the date such amount was so made available
by the Agent until the date the Agent recovers such amount at a rate per
annum equal to (i) in the case of payment by a Lender, the Federal Funds
Effective Rate for such day or (ii) in the case of payment by the Borrower,
the interest rate applicable to the relevant Loan.
25
SECTION 2.19. WITHHOLDING TAX EXEMPTION. At least five Business Days
prior to the first date on which interest or fees are payable hereunder for
the account of any Lender, each Lender that is not incorporated under the
laws of the United States of America, or a state thereof, agrees that it
will deliver to each of the Borrower and the 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 federal income taxes. Each Lender which so delivers a Form
1001 or 4224 further undertakes to deliver to each of the Borrower and the
Agent two additional copies of such form (or a successor form) on or before
the date that such form expires (currently, three successive calendar years
for Form 1001 and one calendar year for Form 4224) or becomes obsolete or
after the occurrence of any event requiring a change in the most recent
forms so delivered by it, and such amendments thereto or extensions or
renewals thereof as may be reasonably requested by the Borrower or the
Agent, in each case certifying that such Lender is entitled to receive
payments under this Agreement and the Notes without deduction or
withholding of any United States federal income taxes, unless an event
(including without limitation any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent
such Lender from duly completing and delivering any such form with respect
to it and such Lender advises the Borrower and the Agent that it is not
capable of receiving payments without any deduction or withholding of
United States federal income tax.
SECTION 2.20. UNCONDITIONAL OBLIGATION TO MAKE PAYMENTS. To the
fullest extent permitted by law, the Borrower shall make all payments
hereunder, under the Notes and under all of the other Loan Documents
regardless of any defense or counterclaim, including any defense or
counterclaim based on any law, rule or policy which is now or hereafter
promulgated by any governmental authority or regulatory body and which may
adversely affect the Borrower's obligations to make, or the right of the
holder of any Note to receive, those payments.
SECTION 2.21. ADMISSION OF ADDITIONAL LENDERS; INCREASE OF
AGGREGATE AVAILABILITY.
(a) Upon the approval of the Agent, additional financial
institutions may become Lenders hereunder provided that (i) each such
additional Lender and the amount of the Commitment of such Lender have been
approved in writing by Borrower, (ii) Borrower shall have agreed in writing
that all of the terms, covenants and provisions of this Agreement and all
of the other Loan Documents shall, from and after the admission of each
additional Lender, inure to the benefit of such Lender, (iii) each
additional
26
Lender shall agree in writing to the amount of its Commitment
and to be bound, from and after the date of its admission as an additional
Lender, by all of the terms, conditions and provisions of this Agreement
and the Loan Documents, to the same extent and with the same effect as if
such additional Lender were an original signatory to this Agreement, (iv)
Borrower shall have executed and delivered a Note which is payable to the
order of the additional Lender in the amount of its Commitment, and (v) in
no event shall the Aggregate Commitment at any time exceed $250,000,000.
The form and substance of the documents required under clause (ii), (iii)
and (iv) above must be fully acceptable to the Agent. The Agent shall
provide written notice to all of the other Lenders hereunder of the
admission of any additional Lender pursuant to this Section 2.21 and shall
furnish to each of the other Lenders a copy of the agreements required
under clauses (ii) and (iii) above.
(b) Upon the admission of any additional Lender pursuant to this
Section 2.21, such Lender shall make a Loan to Borrower in an amount
sufficient, upon application of the proceeds thereof to the reduction of
the outstanding Floating Rate Advances held by the other Lenders, to cause
the principal amount outstanding under the Loans made by each Lender
(including, without limitation, the Loan made by the additional Lender) to
be in proportion to the ratio that the respective Commitments of the
Lenders (including, without limitation, the additional Lender) bear to the
Aggregate Commitment. The Borrower hereby irrevocably authorizes each
additional Lender to fund to the Agent the Loan required to be made
pursuant to the immediately preceding sentence for application to the
reduction of the outstanding Floating Rate Advances. To the extent that the
amount of outstanding Floating Rate Advances is less than the amount of the
Loan required to be made by the additional Lender, the additional Lender
shall not be admitted until sufficient Floating Rate Advances exist as a
result of the conversion of Fixed Rate Advances in accordance with the
terms of this Agreement. After the additional Lender makes the Loan
required to be made under this Section 2.21(b), each Advance under this
Agreement shall consist of Loans made ratably by the several Lenders in
accordance with this Article II.
SECTION 2.22. COMPENSATING BALANCES. First Chicago shall have the
right (but no obligation) to enter into a separate agreement with the
Borrower which provides for the reduction of the interest rate payable to
First Chicago hereunder in the event that the Borrower maintains collected
balances in non-interest bearing accounts at First Chicago, but in no event
shall such agreement affect the amounts payable under this Agreement to any
other Lender. Similarly, each other Lender shall have the right (but no
obligation) to enter into a separate agreement with the Borrower which
provides for the rebate to Borrower of a portion of the interest paid to
such Lender under this Agreement in the event that the Borrower maintains
collected balances in non-interest
27
bearing accounts at such Lender, but in no event shall any such
agreement affect the amounts payable under this Agreement to such Lender.
ARTICLE III
CHANGE IN CIRCUMSTANCES
SECTION 3.01. YIELD-PROTECTION. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive
(whether or not having the force of law), or any interpretation thereof,
or the compliance of any Lender therewith,
(i) subjects any Lender or any applicable Lending
Installation to any tax, duty, charge or withholding on or from
payments due from the Borrower (excluding federal taxation of the
overall net income of any Lender or applicable Lending
Installation), or changes the basis of taxation of payments to any
Lender in respect of its Loans or other amounts due it hereunder,
or
(ii) imposes or increases or deems applicable any
reserve, assessment, insurance charge, special deposit or similar
requirement against assets of, deposits with or for the account of,
or credit extended by, any Lender or any applicable Lending
Installation (other than reserves and assessments taken into
account in determining the interest rate applicable to Fixed Rate
Advances), or
(iii) imposes any other condition the result of which is
to increase the cost to any Lender or any applicable Lending
Installation of making, funding or maintaining loans or reduces any
amount receivable by any Lender or any applicable Lending
Installation in connection with loans, or requires any Lender or
any applicable Lending Installation to make any payment calculated
by reference to the amount of loans held or interest received by
it, by an amount deemed material by such Lender,
then, within 15 days of demand by such Lender, the Borrower shall pay such
Lender that portion of such increased expense incurred or reduction in an
amount received which such Lender determines is attributable to making,
funding and maintaining its Loans and its Commitment.
SECTION 3.02. CHANGES IN CAPITAL ADEQUACY REGULATIONS. If a Lender
determines the amount of capital required or expected to be maintained by
such Lender, any Lending Installation of such Lender or any corporation
controlling such Lender is increased as a result of a Change, then, within
15 days of demand by such Lender, the
28
Borrower shall pay such Lender the amount necessary to compensate for any
shortfall in the rate of return on the portion of such increased capital
which such Lender determines is attributable to this Agreement, its Loans
or its obligation to make Loans hereunder (after taking into account such
Lender's policies as to capital adequacy). "Change" means (i) any change
after the date of this Agreement in the Risk-Based Capital Guidelines or
(ii) any adoption of or change in any other law, governmental or quasi-
governmental rule, regulation, policy, guideline, interpretation, or
directive (whether or not having the force of law) after the date of this
Agreement which affects the amount of capital required or expected to be
maintained by any Lender or any Lending Installation or any corporation
controlling any Lender. "Risk-Based Capital Guidelines" means (i) the
risk-based capital guidelines in effect in the United States on the date
of this Agreement, including transition rules, and (ii) the corresponding
capital regulations promulgated by regulatory authorities outside the
United States implementing the July 1988 report of the Basle Committee
on Banking Regulation and Supervisory Practices entitled "International
Convergence of Capital Measurements and Capital Standards," including
transition rules, and any amendments to such regulations adopted prior
to the date of this Agreement.
SECTION 3.03. AVAILABILITY OF TYPES OF ADVANCES. If any Lender
determines that maintenance of its Eurodollar Loans at a suitable Lending
Installation would violate any applicable law, rule, regulation, or
directive, whether or not having the force of law, or if the Agent
determines that (i) deposits of a type and maturity appropriate to match
fund Fixed Rate Advances are not available or (ii) the interest rate
applicable to a Type of Advance does not accurately reflect the cost of
making or maintaining such Advance, then the Agent shall suspend the
availability of the affected Type of Advance and require any Fixed Rate
Advances of the affected Type to be repaid or to be converted (in
accordance with the terms of this Agreement) to any Type of Advance which
is not affected and is then available under this Agreement.
SECTION 3.04. FUNDING INDEMNIFICATION. If any payment of a Fixed
Rate Advance occurs on a date which is not the last day of the applicable
Interest Period, whether because of acceleration, prepayment or otherwise,
or a Fixed Rate Advance is not made on the date specified by the Borrower
for any reason other than default by the Lenders, the Borrower will
indemnify each Lender for any loss or cost incurred by it resulting
therefrom, including, without limitation, any loss or cost in liquidating
or employing deposits acquired to fund or maintain the Fixed Rate Advance.
SECTION 3.05. LENDER STATEMENTS: SURVIVAL OF INDEMNITY. To the
extent reasonably possible, each Lender shall designate an alternate
Lending Installation with respect to its Fixed Rate Loans to reduce any
liability of the Borrower to such Lender under Sections 3.01 and 3.02 or to
avoid the unavailability of a Type of Advance under
29
Section 3.03, so long as such designation is not disadvantageous to such
Lender. Each Lender shall deliver a written statement of such Lender as
to the amount due, if any, under Sections 3.01, 3.02 or 3.04. Such written
statement shall set forth in reasonable detail the calculations upon which
such Lender determined such amount and shall be final, conclusive and
binding on the Borrower in the absence of manifest error. Determination of
amounts payable under such Sections in connection with a Fixed Rate Loan
shall be calculated as though each Lender funded its Fixed Rate Loan through
the purchase of a deposit of the type and maturity corresponding to the
deposit used as a reference in determining the Fixed Rate applicable to such
Loan, whether in fact that is the case or not. Unless otherwise provided
herein, the amount specified in the written statement shall be payable on
demand after receipt by the Borrower of the written statement. The
obligations of the Borrower under Sections 3.01, 3.02 and 3.04 shall survive
payment of the Obligations and termination of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The entities comprising the Borrower jointly and severally
represent and warrant to each of the Lenders that:
SECTION 4.01. ORGANIZATION, POWERS, ETC. Each Borrower (i) is a
corporation duly organized, validly existing and in good standing under
laws of its state of incorporation, (ii) has the power and authority to own
or hold under lease the properties it purports to own or hold under lease
and to carry on its business as now conducted, (iii) is duly qualified or
licensed to transact business in every jurisdiction in which such
qualification or licensing is necessary to enable it to enforce all of its
material contracts and other material rights and to avoid any material
penalty or forfeiture.
SECTION 4.02. AUTHORIZATION AND VALIDITY OF THIS AGREEMENT, ETC.
The Borrower has the power and authority to execute and deliver this
Agreement, the Notes and the other Loan Documents and to perform all its
obligations thereunder. The execution and delivery by each of the entities
comprising the Borrower of this Agreement, the Notes and the other Loan
Documents and the performance by the Borrower of all its obligations
thereunder and any and all actions taken by the Borrower (i) have been duly
authorized by all requisite corporate action, (ii) will not violate or be
in conflict with (a) any provisions of law (including, without limitation,
any applicable usury or similar law), (b) any order, rule, regulation,
writ, judgment, injunction, decree or award of any court or other agency of
government, or (c) any provision of its certificate of incorporation or
by-laws, (iii) will not violate, be in conflict with, result in
30
a breach of or constitute (with or without the giving of notice or the passage
of time or both) a default under any material indenture, agreement or other
instrument to which it is a party or by which it or any of its properties
or assets is or may be bound, and (iv) except as otherwise contemplated by
this Agreement, will not result in the creation or imposition of any lien,
charge or encumbrance upon, or any security interest in, any of its
properties or assets. The Loan Documents constitute legal, valid and
binding obligations of the Borrower enforceable against the Borrower in
accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally.
SECTION 4.03. FINANCIAL STATEMENTS. The Borrower heretofore has
provided to the Lenders (i) the consolidated balance sheet of the Company
and its Subsidiaries as of November 30, 1993, and the related consolidated
statements of earnings, stockholders' equity and cash flows for the
12-month period ended on that date, audited and reported upon by KPMG Peat
Marwick, independent certified public accountants (the "Audited Financial
Statements"), and (ii) a consolidated balance sheet of the Borrower as of
May 31, 1994 and a consolidated statement of earnings of the Borrower for
the six-month period ended on that date, both unaudited, but certified to
be true and accurate (subject to normal year-end audit adjustments) by the
President and the chief financial officer of the Company (the "Unaudited
Financial Statements"). Those financial statements and reports (subject, in
the case of the Unaudited Financial Statements, to normal year-end audit
adjustments), and the related notes and schedules (if any), (a) were
prepared in accordance with United States generally accepted accounting
principles consistently applied throughout the respective periods covered
thereby, (b) present fairly the consolidated financial condition of the
Company and its Subsidiaries as of the respective dates thereof, (c) show
all material liabilities, direct or contingent, of the Company and its
Subsidiaries as of those dates (including, without limitation, liabilities
for taxes and material commitments), and (d) present fairly the
consolidated results of operations of the Company and its Subsidiaries for
the respective periods covered thereby.
SECTION 4.04. NO MATERIAL ADVERSE EFFECT. Since the date of the
Audited Financial Statements, no Event has occurred which has had or could
reasonably be expected to have a Material Adverse Effect. There are no
material unrealized or expected losses in connection with loans, advances
and other commitments of the Borrower.
SECTION 4.05. TITLE TO PROPERTIES. Schedule IV hereto contains a
complete and accurate list of all Real Estate owned by the Borrower, except
those properties (i) acquired or disposed of by the Borrower after the date
of the Audited Financial Statement in the ordinary course of business or
(ii) the loss or forfeiture of which individu-
31
ally or in the aggregate would not have a Material Adverse Effect. The
Borrower and its Subsidiaries have good and marketable fee title, or title
insurable by a reputable and nationally recognized title insurance company,
to the Real Estate owned by it listed in Schedule IV hereto, and to all the
other assets owned by it and either reflected on the balance sheet and
related notes and schedules most recently delivered by the Borrower to the
Lenders (the "Recent Balance Sheet") or acquired by it after the date of
that balance sheet and prior to the date hereof, except (x) for those
properties and assets which have been disposed of since the date of
that balance sheet or which no longer are used or useful in the conduct
of its business and (y) that good and marketable fee title, or title
insurable by a reputable and nationally recognized title insurance
company, to the properties designated as "Arbor Lake," "Park View
Apartments," "Oak Tree Apartments," and "Tree House Apartments" in
Schedule IV and to certain of the properties located in Arizona listed
in Schedule IV is held by the Persons and in the manner described in
Schedule IV hereto. All such Real Estate and other assets
owned by the Borrower (including the properties referred to in clause (y)
above) are free and clear of all Mortgages, pledges, liens, charges and
other encumbrances, except (i) in the case of Real Estate, as reflected on
title insurance policies insuring the interest of the Borrower in the Real
Estate or in title insurance binders issued with respect to the Real Estate
(some of which title insurance binders have expired but were valid at the
time of acquisition of the relevant Real Estate), (ii) as reflected in the
Recent Balance Sheet, and none of those Mortgages, pledges, liens, charges
or other encumbrances, individually or in the aggregate, prevents or has a
Material Adverse Effect upon the use by the Borrower of any of their
respective properties or assets as currently conducted or as planned for
the future.
SECTION 4.06. LITIGATION. There is no action, suit, proceeding,
arbitration, inquiry or investigation (whether or not purportedly on behalf
of the Borrower) pending or, to the best knowledge of the Borrower,
threatened against or affecting the Borrower or any of the Subsidiaries
which could reasonably be expected to have a Material Adverse Effect. The
Borrower is not in default with respect to any final judgment, writ,
injunction, decree, rule or regulation of any court or federal, state,
municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, which default would or
could have a Material Adverse Effect on the Borrower. The Borrower has no
material contingent obligations not provided for or disclosed in the
Unaudited Financial Statements.
SECTION 4.07. PAYMENT OF TAXES. There have been filed all federal,
state and local tax returns with respect to the operations of the Borrower
which are required to be filed, including federal tax returns for the
fiscal year ended November 30, 1993 and all prior fiscal years of the
Borrower, except where extensions of time to make those filings have been
granted by the appropriate taxing authorities and the extensions
32
have not expired. The Borrower has paid or caused to be paid to the
appropriate taxing authorities all taxes as shown on those returns and on
any assessment received by any of them, to the extent that those taxes have
become due, except for taxes the failure to pay which do not violate the
provisions of Section 6.03 hereof. The Internal Revenue Service has
completed an examination of the Company's federal income tax returns for
the years ended 1980 through 1988, and Borrower has paid all additional
taxes, assessments, interest and penalties with respect to such years.
SECTION 4.08. AGREEMENTS. Neither the Borrower nor any Subsidiary
is a party to any agreement or instrument or is subject to any charter or
other restriction that could reasonably be expected to have a Material
Adverse Effect on it. Neither the Borrower nor any Subsidiary is in
material default in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in any material
agreement or instrument to which it is a party and consummation of the
transactions will not cause any Borrower to be in material default thereof.
SECTION 4.09. FOREIGN DIRECT INVESTMENT REGULATIONS. Neither the
making of the Advances nor the repayment thereof nor any other transaction
contemplated hereby will involve or constitute a violation by the Borrower
of any provision of the Foreign Direct Investment Regulations of the United
States Department of Commerce or of any license, ruling, order, or
direction of the Secretary of Commerce thereunder.
SECTION 4.10. FEDERAL RESERVE REGULATIONS.
(a) The Borrower is not engaged principally, or as one of its
important activities, in the business of extending credit for the purpose
of purchasing or carrying any margin stock (within the meaning of
Regulation U or Regulation X of the Board of Governors of the Federal
Reserve System of the United States). Margin stock (as defined in
Regulation U) constitutes less than 25% of those assets of the Borrower and
its Subsidiaries which are subject to any limitation on sale, pledge, or
other restriction hereunder.
(b) No part of the proceeds of any of the Advances will be used to
purchase or carry any such margin stock or to extend credit to others for
the purpose of purchasing or carrying any such margin stock. If requested
by the Lenders, the Borrower shall furnish to the Lenders a statement in
conformity with the requirements of Federal Reserve Form U-l referred to in
Regulation U of said Board of Governors. No part of the proceeds of the
Advances will be used for any purpose that violates, or which is
inconsistent with, the provisions of Regulation X of said Board of
Governors.
33
SECTION 4.11. CONSENTS, ETC. Except as set forth on Schedule V, no
order, license, consent, approval, authorization of, or registration,
declaration, recording or filing (except for the filing of a Current Report
on Form 8-K, and a Quarterly Report on Form 10-Q, in each case with the
Securities and Exchange Commission) with, or validation of, or exemption
by, any governmental or public authority (whether federal, state or local,
domestic or foreign) or any subdivision thereof is required in connection
with, or as a condition precedent to, the due and valid execution, delivery
and performance by Borrower of this Agreement, the Notes or the other Loan
Documents, or the legality, validity, binding effect or enforceability of
any of the respective terms, provisions or conditions thereof. To the
extent that any franchises, licenses, certificates, authorizations,
approvals or consents from any federal, state or local (domestic or
foreign) government, commission, bureau or agency are required for the
acquisition, ownership, operation or maintenance by the Borrower of
properties now owned, operated or maintained by it, those franchises,
licenses, certificates, authorizations, approvals and consents have been
validly granted, are in full force and effect and constitute valid and
sufficient authorization therefor.
SECTION 4.12. COMPLIANCE WITH APPLICABLE LAWS. The Borrower and its
Subsidiaries are in compliance with and conform to all statutes, laws,
ordinances, rules, regulations, orders, restrictions and all other legal
requirements of all domestic or foreign government or any instrumentality
thereof having jurisdiction over the conduct of their respective businesses
or the ownership of their respective properties, the violation of which
would have a Material Adverse Effect on it, including, without limitation,
regulations of the Board of Governors of the Federal Reserve System, the
Federal Interstate Land Sales Full Disclosure Act and the Florida Land
Sales Act. Neither the Borrower nor any Subsidiary has received any notice
to the effect that its operations are not in material compliance with any
of the requirements of applicable federal, state and local environmental,
health and safety statutes and regulations or the subject of any federal or
state investigation evaluating whether any remedial action is needed to
respond to a release of any toxic or hazardous waste or substance into the
environment, which non-compliance or remedial action could reasonably be
expected to have a Material Adverse Effect.
SECTION 4.13. RELATIONSHIP OF THE BORROWER. The entities comprising
the Borrower are engaged as an integrated group in the business of owning,
developing and selling Real Estate and of providing the required services,
credit and other facilities for those integrated operations. The Borrower
requires financing on such a basis that funds can be made available from
time to time to such entities, to the extent required for the continued
successful operation of their integrated operations. The Advances to be
made to the Borrower under this Agreement are for the purpose of financing
the integrated operations of the Borrower, and each of the entities
comprising the Borrower expects to
34
derive benefit, directly or indirectly, from the Advances, both individually
and as a member of the integrated group, since the financial success of the
operations of each Borrower is dependent upon the continued successful
performance of the integrated group as a whole.
SECTION 4.14. SUBSIDIARIES; JOINT VENTURES. Schedule VI hereto
contains a complete and accurate list of (i) all Subsidiaries, including,
with respect of each Subsidiary, (a) its state of incorporation, (b) all
jurisdictions (if any) in which it is qualified as a foreign corporation,
(c) the number of shares of its capital stock outstanding, and (d) the
number and percentage of those shares owned by the Company and/or by any
other Subsidiary, and (ii) each Unconsolidated Joint Venture, including,
with respect to each such Unconsolidated Joint Venture, (a) its
jurisdiction of organization, (b) all other jurisdictions in which it is
qualified as a foreign entity and (c) all Persons other than the Borrower
that are parties thereto. All the outstanding shares of capital stock of
each Subsidiary are validly issued, fully paid and nonassessable, except as
otherwise provided by state wage claim laws of general applicability. All
of the outstanding shares of capital stock of each Subsidiary owned by the
Borrower as specified in Schedule VI are owned free and clear of all liens,
pledges, security interests, equity or other beneficial interests, charges
and encumbrances of any kind whatsoever. None of the entities comprising
the Borrower owns of record or beneficially any shares of the capital stock
of any corporation (other than UAMC, LFC, AFSI, STI, TIC and the Limited
Purpose Finance Subsidiaries) that is not a Borrower.
SECTION 4.15. ERISA. The Borrower is not executing or delivering any
of the Loan Documents or entering into any of the transactions contemplated
hereby, directly or indirectly, in connection with any arrangement or
understanding in any respect involving any "employee benefit plan" with
respect to which the Borrower is a "party in interest" within the meaning
of the Employee Retirement Income Security Act of 1974, or a "disqualified
person", within the meaning of the Internal Revenue Code 1986, as amended.
No Unfunded Liabilities exist with respect to any Single Employer Plans.
Each Plan complies in all material respects with all applicable
requirements of law and regulations, no Reportable Event has occurred with
respect to any Plan, neither the Borrower nor any other members of the
Controlled Group has withdrawn from any Plan or initiated steps to do so,
and no steps have been taken to reorganize or terminate any Plan.
SECTION 4.16. INVESTMENT COMPANY ACT. Neither the Borrower nor any
Subsidiary thereof is an "investment company" or a company "controlled" by
an "investment company", within the meaning of the Investment Company Act
of 1940, as amended.
35
SECTION 4.17. PUBLIC UTILITY HOLDING COMPANY ACT. Neither the
Borrower nor any Subsidiary is a "holding company" or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company"
or of a "subsidiary company" of a "holding company", within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
SECTION 4.18. SUBORDINATED DEBT. The Obligations constitute
senior indebtedness which is entitled to the benefits of the subordination
provisions of all outstanding Subordinated Debt.
SECTION 4.19. POST-RETIREMENT BENEFITS. The present value of the
expected cost of post-retirement medical and insurance benefits payable by
the Borrower and its Subsidiaries to its employees and former employees, as
estimated by the Borrower in accordance with procedures and assumptions
deemed reasonable by the Required Lenders, does not exceed $ -0- .
SECTION 4.20. INSURANCE. The certificate signed by the President or
Chief Financial Officer of the Company, that attests to the existence and
adequacy of, and summarizes, the property, casualty, and liability
insurance programs carried by the Borrower and that has been furnished by
the Borrower to the Agent and the Lenders, is complete and accurate. This
summary includes the insurer's or insurers' name(s), policy number(s),
expiration date(s), amount(s) of coverage, type(s) of coverage,
exclusion(s), and deductibles. This summary also includes similar
information, and describes any reserves, relating to any self-insurance
program that is in effect.
SECTION 4.21. ENVIRONMENTAL REPRESENTATIONS. To the best of the
Borrower's knowledge and belief, no Hazardous Substances in violation of
any Environmental Laws are present upon any of the Real Estate owned by
Borrower or any Real Estate which is encumbered by any Mortgage held by
Borrower, and the Borrower has not received any notice to the effect that
any of the Real Estate owned by Borrower or any its operations are not in
compliance with any of the requirements of applicable Environmental Laws or
are the subject of any federal or state investigation evaluating whether
any remedial organization is needed to respond to a release of any
Hazardous Substance into the environment which, in either case, could be
reasonably expected to have a Material Adverse Effect.
SECTION 4.22. NO MISREPRESENTATION. No representation or warranty
contained herein or made hereunder and no certificate, schedule, exhibit,
report or other document provided or to be provided in connection with the
transactions contemplated hereby (including, without limitation, the
negotiation of and compliance with the Loan Documents) contains or will
contain a misstatement of a material fact or omit to state a
36
material fact required to be stated therein in order to make the statements
contained therein, in the light of the circumstances under which made, not
misleading.
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.01. CONDITIONS OF EFFECTIVENESS. This Agreement shall
become effective when the Agent shall have received counterparts of this
Agreement executed by the Borrower and each of the Lenders; PROVIDED, HOWEVER,
that the Lenders shall not be required to make the initial Advance hereunder,
unless and until the Agent shall have received each of the documents specified
in subsections (a) - (j) below (with all documents required below, except as
otherwise specified, to be dated the date of receipt thereof by the Agent, which
date shall be the same for all such documents, and each of such documents to be
in form and substance satisfactory to the Agent, and (except for the Notes)
to be in sufficient copies for each Lender), and the conditions specified
in subsections (k) and (l) below shall have been satisfied:
(a) Estoppel letters from the Prior Lenders which set forth all
amounts owed by the Borrower under the Existing Loans.
(b) The Notes evidencing the Loans to be made hereunder.
(c) The favorable written opinion by Mershon, Sawyer, Johnston,
Dunwody & Cole, counsel for the Borrower, dated the Effective Date,
addressed to the Lenders and in form and substance satisfactory to the
Agent, (i) confirming the accuracy of the representations and warranties
set forth in Sections 4.01 (excluding clause (ii) thereof, and limited, in
the case of clause (iii) thereof, to the jurisdictions listed under the
heading "Where Qualified" in Schedule VI hereto), 4.02, 4.06, 4.11, 4.12
and the second sentence of Section 4.08 hereof, (which opinion, as to the
representations set forth in clauses (ii)(b), (iii) and (iv) of Section
4.02, Sections 4.06, 4.11, 4.12 and the second sentence of Section 4.08
hereof, may be to the best knowledge of such counsel, and may in its
entirety be limited to Florida, Arizona, Delaware, Texas and United States
federal law); and (ii) to the effect that this Agreement and the Notes have
been duly authorized, executed and delivered by the Borrower. Such counsel
may rely, in its opinion, on the opinions of special counsel to the
Borrower referred to in Section 5.01(d) below, as to matters of law of the
State of Illinois, and on the opinion of Fennemore, Craig of Phoenix,
Arizona as to matters of law of the State of Arizona, and the opinion of
Arter & Hadden as to matters of law of the State of Texas. The Borrow-
37
er hereby instructs its counsel to prepare its opinion and deliver it to
Lenders for their benefit, and such opinion shall contain a statement to
such effect.
(d) The favorable written opinion of Rudnick & Wolfe, special
counsel to the Borrower, that (i) no authorization, consent, approval,
license or exemption of, or filing or registration with or other action by
any Illinois, United States federal or Delaware governmental department,
commission, board, bureau, regulatory body, agency or instrumentality or to
the best knowledge of such counsel, any court is or will be necessary for
the execution, delivery and performance by the Borrower of this Agreement
and the Notes and (ii) this Agreement and the Notes constitute the legal,
valid and binding obligations of the Borrower, enforceable in accordance
with their respective terms, except as the rights and remedies of the
Lenders thereunder may be limited by (A) applicable bankruptcy,
reorganization, insolvency and other laws effecting creditors' rights
generally from time to time in effect, (B) the exercise of the
discretionary powers of the court before which any proceeding seeking
equitable remedies (including, without limitation, specific performance and
injunctive relief) may be brought, and (C) such other qualifications
expressed in the opinion provided that such qualifications are acceptable
to Agent. Such counsel may rely on the opinion of counsel to the Borrower
delivered pursuant to subsection (c) above relating to the representations
set forth in Sections 4.01 and 4.02 hereof. The Borrower hereby instructs
its special counsel to prepare its opinion and deliver it to Lenders for
their benefit, and such opinion shall contain a statement to such effect.
(e) The favorable written opinion of Stearns Weaver Miller Weissler
Alhadeff & Sitterson, P.A., special counsel to the Agent and the Lenders,
dated the Effective Date, addressed to the Lenders to the effect that:
while it has not independently considered the matters covered by the
opinions provided pursuant to Sections 5.01(c) and (d) to the extent
necessary to enable it to express the conclusions stated therein, those
opinions of counsel and the other documents provided pursuant to this
Section 5.01 are substantially responsive to the requirements of this
Agreement.
(f) The following supporting documents with respect to each
Borrower: (i) a copy of its certificate of incorporation, certified as of a
date reasonably close to the Effective Date to be a true and accurate copy
by the Secretary of State of its state of incorporation, or a certificate
of its Secretary or Assistant Secretary to the effect that there have been
no amendments to its certificate of incorporation since December 29, 1986;
(ii) a certificate of that Secretary of State, dated as of a date
reasonably close to the effective Date, as to its existence and (if
available) good standing; (iii) a certificate of the Secretary of State of
each jurisdiction, other than its state of incorporation, in which it does
business, as to its qualification as a foreign corporation; (iv) a copy of
its by-laws, certified by its Secretary or Assistant Secretary to be a true
and accurate copy
38
of its by-laws in effect on the Effective Date; (v) a certificate of its
Secretary or Assistant Secretary, dated the Effective Date, as to the
incumbency and signatures of its officers who have executed
any documents in connection with the transactions contemplated by this
Agreement; (vi) a copy of resolutions of the Executive Committee of its
Board of Directors, certified by its Secretary or Assistant Secretary to be
a true and accurate copy of resolutions duly adopted by such Executive
Committee that are in full force and effect on the Effective Date,
authorizing the execution and delivery by it of this Agreement, the Notes
and the other Loan Documents and the performance by it of all its
obligations thereunder; and (vii) such additional supporting documents and
other information with respect to its operations and affairs as the Agent
may reasonably request.
(g) A certificate signed by a duly authorized officer of each
Borrower stating that: (i) the representations and warranties of the
Borrower contained in Article IV hereof are correct and accurate on and as
of the date of that certificate as though made on and as of that date and
(ii) no event has occurred and is continuing which constitutes an Event of
Default or Unmatured Default hereunder.
(h) A report from the Borrower with respect to all Income Producing
Properties included in the calculation of the Borrowing Base that provides
all such information as the Agent may require with respect to each such
property, including, without limitation, the name, type and size (square
feet, number of units or number of rooms, as applicable), the current
leasing or occupancy status, the year-to-date average daily rate and
year-to-date occupancy for each hotel property, and the operating cash flow
(operating revenues less appropriate market rate management fees and all
other operating expenses except depreciation and capital expenditures) for
the most recently completed four fiscal quarters.
(i) Written money transfer instructions, in substantially the form
of Exhibit B hereto, signed by an Authorized Officer, together with such
other related money transfer authorizations as the Agent may reasonably
request.
(j) Such other documents as any Lender or its counsel may reasonably
request.
(k) There shall not have occurred any changes in the consolidated
financial condition or results of operations of the Borrower from that
reflected in the financial statements dated May 31, 1994 which has or
reasonably could be expected to have, in the judgment of the Required
Lenders, a Material Adverse Effect on the Borrower's operations, taken as a
whole.
39
(l) The Existing Loans shall have been simultaneously repaid in
full from the proceeds of the initial Advance hereunder and the Prior
Credit Agreement terminated in accordance with the terms thereof.
SECTION 5.02. CONDITIONS PRECEDENT TO ALL BORROWINGS.
(a) The Lenders shall not be required to make any Loan, unless on the
applicable Borrowing Date:
(i) the Agent shall have received notice of Borrower's request
for the Advance with respect thereto as provided in Section 2.09(a)
and such other approvals, opinions or documents as the Agent may
reasonably request; and
(ii) the representations and warranties of the Borrower contained
in Article IV hereof are true and correct as of such Borrowing
Date; PROVIDED, HOWEVER, that for the purposes hereof, (A) from and
after the date of delivery by the Borrower pursuant to Section
6.04(a) of their consolidated financial statements for the year
ended November 30, 1993, the references in Section 4.03 to "Audited
Financial Statements" shall be deemed to be references to the
annual audited financial statements most recently delivered by the
Borrower pursuant to Section 6.04(a) as of the date of the request
for an Advance and (B) from and after that date of delivery by the
Borrower pursuant to Section 6.04(b) of its consolidated financial
statements for the quarter ended May 31, 1994, the references in
Section 4.03 to "Unaudited Financial Statements" shall be deemed to
be references to the quarterly unaudited financial statements most
recently delivered by the Borrower pursuant to Section 6.04(b) as
of the date of that request for an Advance; and
(iii) All legal matters incident to the making of such Advance shall
be satisfactory to the Lenders and their counsel; and
(iv) There exists no Event of Default or Unmatured Default; and
(v) The making of the Advance will not cause the outstanding
principal amount of the Notes to exceed the Borrowing Base, nor
will the making of the Advance result in any Event of Default or
Unmatured Default.
(b) Each Borrowing Notice with respect to each such Advance shall
constitute a representation and warranty by the Borrower that all of the
conditions contained in Section 5.02 have been satisfied.
40
ARTICLE VI
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that from the date hereof until
payment in full of all the Obligations, unless the Required Lenders
otherwise shall consent in writing as provided in Section 13.06 hereof, the
Borrower will, and will cause each of its Subsidiaries to:
SECTION 6.01. EXISTENCE, PROPERTIES, ETC. Do or cause to be done
all things or proceed with due diligence with any actions or courses of
action which may be necessary to preserve and keep in full force and effect
its existence under the laws of their respective states of incorporation
and all qualifications or licenses in jurisdictions in which such
qualification or licensing is required for the conduct of its business or
in which the Lenders shall request such qualification; PROVIDED, HOWEVER,
that nothing herein shall be deemed to prohibit any Borrower other than the
Company from (i) merging into or consolidating with any other Borrower
(including the Company, if the Company is the surviving entity) or (ii)
declaring and paying dividends in complete liquidation. The Borrower will,
and will cause each Subsidiary to, carry on and conduct its business in
substantially the same manner and in substantially the same fields of
enterprise as it is presently conducted and maintain all requisite
authority to conduct its business in each jurisdiction in which its
business is conducted. The primary business of the Borrower and the
Subsidiaries shall at all times be the acquisition, development,
management, rental and/or sale of real estate assets and/or the provision
of financial services.
SECTION 6.02. NOTICE. Give prompt written notice to the Agent of
(i) any proceeding instituted by or against the Borrower or any of the
Subsidiaries in any federal or state court or before any commission or
other regulatory body, federal, state or local, or any such proceedings
threatened against the Borrower in writing by any federal, state or other
governmental agency, which, if adversely determined, could reasonably be
expected to have a Material Adverse Effect on the Borrower, and (ii) any
other Event which may lead to or result in a Material Adverse Effect on the
Borrower, or which, with or without the giving of notice or the passage of
time or both, would constitute an Event of Default or a default under any
material agreement other than this Agreement to which the Borrower is a
party or by which any of its properties or assets is or may be bound.
SECTION 6.03. PAYMENTS OF DEBTS, TAXES, ETC. Pay all its debts and
perform all its obligations promptly and in accordance with the respective
terms thereof, and pay and discharge or cause to be paid and discharged
promptly all taxes, assessments and
41
governmental charges or levies imposed upon the Borrower or upon its
incomes or receipts or upon any of its properties before the same shall
become in default or past due, as well as all lawful claims for labor,
materials and supplies or otherwise which, if unpaid, might result in the
imposition of a lien or charge upon such properties or any part thereof;
PROVIDED, HOWEVER, that it shall not constitute a violation of the
provisions of this Section 6.03 if the Borrower shall fail to perform any
such obligation or to pay any such debt (except for obligations for money
borrowed), tax, assessment, governmental charge or levy or claim for labor,
materials or supplies which is being contested in good faith, by proper
proceedings diligently pursued, and as to which adequate reserves have
been provided.
SECTION 6.04. ACCOUNTS AND REPORTS. Maintain a standard system
of accounting established and administered in accordance with Agreement
Accounting Principles, and provide to the Lenders the following:
(a) as soon as available and in any event within 120 days after the
end of each fiscal year of the Borrower (commencing with the fiscal year
ending November 30, 1994), a consolidated balance sheet of the Company and
its Subsidiaries as of the end of that fiscal year and the related
consolidated statements of earnings, stockholders' equity and cash flows
for that fiscal year, all with accompanying notes and schedules, prepared
in accordance with United States generally accepted accounting principles
consistently applied and audited and reported upon by KPMG Peat Marwick or
another firm of independent certified public accountants of recognized
standing selected by the Borrower and acceptable to the Agent (such audit
report shall be unqualified except for qualifications relating to changes
in United States generally accepted principles of accounts and required or
approved by the Borrower's independent certified public accountants);
(b) as soon as available and in any event within 60 days after the
end of each of the first three quarters, and within 120 days after the end
of the fourth quarter, of each fiscal year of the Borrower (commencing with
the quarter ending August 31, 1994), a consolidated balance sheet of the
Company and its Subsidiaries as of the end of that quarter, and the related
consolidated statement of earnings of the Company and its Subsidiaries for
the period from the beginning of the fiscal year to the end of that
quarter, all prepared in accordance with United States generally accepted
accounting principles consistently applied, unaudited but certified to be
true and accurate, subject to normal year-end audit adjustments, by the
chief financial officer of the Company;
(c) within 60 days after the end of each of the first three
quarters, and within 120 days after the end of the fourth quarter, of each
fiscal year of the Borrower (commencing with the quarter ending August 31,
1994), (i) a consolidating balance sheet of the Borrower (in a form
acceptable to the Agent) as of the end of that quarter and the
42
related consolidating statement of earnings of the Borrower (in a form
acceptable to the Agent) for the period from the beginning of the fiscal
year to the end of that quarter, and (ii) a consolidating balance sheet
of LFSI (in a form acceptable to the Agent) as of the end of that quarter
and the related consolidating statement of earnings of LFSI (in a form
acceptable to the Agent) for the period from the beginning of the fiscal
year to the end of that quarter, all prepared in accordance with United
States generally accepted accounting principles consistently applied,
unaudited but certified to be true and accurate, subject to normal
year-end audit adjustments, by the chief financial officer of the Company;
(d) concurrently with the delivery of the financial statements
described in subsection (a) above, a letter signed by that firm of
independent certified public accountants to the effect that, during the
course of their examination, nothing came to their attention which caused
them to believe that any Event of Default or Unmatured Default has
occurred, or if such Event of Default or Unmatured Default has occurred,
specifying the facts with respect thereto; and concurrently with the
delivery of the financial statements described in subsections (b) and (c)
above, a certificate signed by the President or Executive Vice President
and the chief financial officer of the Company to the effect that, having
read this Agreement, and based upon an examination which they deemed
sufficient to enable them to make an informed statement, there does not
exist any Event of Default or Unmatured Default, or if such Event of
Default or Unmatured Default has occurred, specifying the facts with
respect thereto;
(e) within 30 days after the end of each calendar month (commencing
with the month ending July 31, 1994), a report, in reasonable detail and in
form and substance satisfactory to the Agent, setting forth, as of the end
of the month, with respect to each Project owned by the Company and its
Subsidiaries, (i) the number of Housing Unit Closings, (ii) the number of
Housing Units either completed or under construction, specifying the number
thereof that are Completed Housing Units, (iii) the number of Housing Units
Under Contract;
(f) within 120 days after the end of each fiscal year of the
Borrower (commencing with the fiscal year ending November 30, 1994), (i) a
schedule of all Real Estate owned by the Borrower in the form of Schedule
IV annexed hereto or as otherwise required by Agent, which schedule, in
addition to providing all the categories of information specified in
Schedule IV, shall specify those properties the interest and carrying
charges attributable to which are being deducted, for financial reporting
purposes, for the fiscal year in which they are paid and shall contain all
such other information as Agent shall require, (ii) a schedule listing each
Mortgage Receivable held by the Borrower having an outstanding principal
balance exceeding $100,000 as of the end of that fiscal year, setting
forth, in reasonable detail and in form and substance
43
satisfactory to the Agent, with respect to each such Mortgage Receivable,
(A) the name and address of the Debtor, (B) a description of the Real
Estate encumbered by the Mortgage granted as security therefor, (C) the
original sales price of the Real Estate, (D) the original principal amount
of the receivable, (E) the terms of payment of, and the interest payable
on, the receivable and (F) the outstanding principal balance thereof and
the accrued and unpaid interest thereon as of the end of that fiscal year;
and (iii) a report, in form and substance reasonably acceptable to Agent,
with respect to all Income Producing Properties included in the calculation
of the Borrowing Base that provides all such information as the Agent may
require with respect to each such property, including, without limitation,
the name, type and size (square feet, number of units or number of rooms,
as applicable) of the property, the year-to-date average daily rate and
year-to-date occupancy for each hotel property, leasing or occupancy
reports for such fiscal year, and operating reports for such fiscal year;
(g) within 90 days after the beginning of each fiscal year of the
Borrower (commencing with the fiscal year beginning December 1, 1994), a
projection, in reasonable detail and in form and substance satisfactory to
the Agent, on a quarterly basis of the cash flow and of the earnings of the
Company and its Subsidiaries for that fiscal year and for the immediately
succeeding fiscal year;
(h) promptly upon becoming available, copies of all financial
statements, reports, notices and proxy statements sent by the Borrower to
its stockholders, and of all regular and periodic reports and other
material (including copies of all registration statements and reports under
the Securities Act of 1933, as amended, and the Securities Exchange Act of
1934, as amended) filed by the Borrower with any securities exchange or any
governmental authority or commission, except material filed with
governmental authorities or commissions relating to the development of Real
Estate in the ordinary course of the business of the Borrower and which
does not relate to or disclose any Material Adverse Effect to the affairs
of the Borrower;
(i) as soon as available and in any event within 60 days after the
end of each of the first three quarters, and within 120 days after the end
of the fourth quarter, of each fiscal year of each Unconsolidated Joint
Venture, a balance sheet of that Unconsolidated Joint Venture as of the end
of that quarter and a statement of earnings of that Unconsolidated Joint
Venture for the period from the beginning of the fiscal year to the end of
that quarter, prepared in accordance with United States generally accepted
accounting principles consistently applied, unaudited but certified to be
true and accurate, subject (in the case of the financial statements
delivered for the first three quarter of each fiscal year) to normal
year-end adjustments, by the chief financial officer of the Company;
44
(j) within 60 days after the end of each of the first three
quarters, and within 90 days after the end of each fiscal year of the
Borrower (commencing with the quarter ending August 31, 1994), a report, in
reasonable detail and in form and substance satisfactory to the Agent, with
calculations indicating that the Borrower is in compliance with the
provisions of Article VII and, if the Borrower shall have been required to
provide Collateral, Article VIII of this Agreement. Without limiting the
generality of the foregoing, Borrower shall provide to the Lenders (i) a
report calculating the Borrowing Base in form and substance satisfactory to
Agent, in which report the Borrower shall include (a) a report of all
accounts receivable from the sales of Housing Units included in the
Borrowing Base, showing all such receivables which remain uncollected on
the tenth (10th) day after the end of the quarter or fiscal year, as the
case may be, and (b) a general description of all Income Producing
Properties included in the calculation of the Borrowing Base and with
respect to each of such properties the Net Book Value and the Net Operating
Income for the most recently completed four fiscal quarters, and (ii) a
report containing the calculations necessary to indicate that the Borrower
is in compliance with the provisions of Sections 6.10 and 7.14, including a
certification of the outstanding principal amount of all loans and advances
made by the Company to each of the Mortgage Banking Subsidiaries, as the
case may be, and that all such loans and advances are duly evidenced by the
Mortgage Banking Subsidiaries Note in the possession of Agent. The reports
furnished pursuant to this subsection (j) shall be certified to be true and
correct by the Chief Financial Officer of the Company and shall also
contain a representation and warranty by the Borrower that it is in full
compliance with the provisions of Article VII and, if applicable, Article
VIII of this Agreement;
(k) within 270 days after the close of each fiscal year, a statement
of the Unfunded Liabilities of each Single Employer Plan, certified as
correct by an actuary enrolled under ERISA, but the foregoing statement
shall be required only if any Single Employer Plan shall exist;
(l) as soon as possible and in any event within 10 days after the
Borrower knows that any Reportable Event has occurred with respect to any
Plan, a statement, signed by the chief financial officer of the Borrower,
describing said Reportable Event and the action which the Borrower proposes
to take with respect thereto;
(m) as soon as possible and in any event within 10 days after
receipt by the Borrower, a copy of (a) any notice or claim to the effect
that the Borrower or any of its Subsidiaries is or may be liable to any
Person as a result of the release by the Borrower, any of its Subsidiaries,
or any other Person of any toxic or hazardous waste or substance into the
environment, and (b) any notice alleging any violation of any federal,
state or local environmental, health or safety law or regulation by the
Company or any
45
of its Subsidiaries, which, in either case, could reasonably
be expected to have a Material Adverse Effect;
(n) promptly upon the request of the Agent or any Lender, an
accurate legal description with respect to any Real Estate (including,
without limitation, all Income Producing Property) included in the
calculation of the Borrowing Base;
(o) promptly upon the request of the Agent or any Lender, quarterly
operating statements for any Income Producing Property included in the
calculation of the Borrowing Base; and
(p) such supplements to the aforementioned documents and additional
information (including, but not limited to, leasing, occupancy and
non-financial information) and reports as the Agent or any Lender may from
time to time reasonably require.
SECTION 6.05. ACCESS TO PREMISES AND RECORDS. At all reasonable
times and as often as any Lender may reasonably request, permit authorized
representatives and agents designated by that Lender to (i) have access to
the premises of the Borrower and each Subsidiary and to their respective
corporate books and financial records, and all other records relating to
their respective operations and procedures, (ii) make copies of or excerpts
from those books and records and (iii) upon reasonable notice to the
Company, discuss the respective affairs, finances and operations of the
Borrower and its Subsidiaries with, and to be advised as to the same by,
their respective officers and directors.
SECTION 6.06. MAINTENANCE OF PROPERTIES AND INSURANCE. Maintain all
its properties and assets in good working order and condition and make all
necessary repairs, renewals and replacements thereof so that its business
carried on in connection therewith may be properly conducted at all times;
and maintain or require to be maintained (i) adequate insurance, by
financially sound and reputable insurers, on all properties of the Borrower
which are of character usually insured by Persons engaged in the same or a
similar business (including, without limitation, all Real Estate encumbered
by Mortgages securing mortgage loans made by the Borrower, to the extent
normally required by prudent mortgagees, and all Real Estate which is
subject of an Equity Investment by the Borrower, to the extent normally
carried by prudent builder-developers) against loss or damage resulting
from fire, defects in title or other risks insured against by extended
coverage and of the kind customarily insured against by those Persons, (ii)
adequate public liability insurance against tort claims which may be
incurred by the Borrower, and (iii) such other insurance as may be required
by law. Upon the request of the Agent, the Borrower will furnish to the
Lenders full information as to the insurance carried. Notwithstanding the
foregoing provisions of this Section 6.06,
46
Borrower shall be permitted to self-insure against all property and
casualty risks associated with its construction of single-family
dwelling units up to a maximum aggregate exposure not to exceed at
any time 25% of Tangible Net Worth.
SECTION 6.07. FINANCING; NEW INVESTMENTS. Give the Agent (i)
written notice of any serious negotiations for debt or equity financing or
for the placement of the Borrower's Securities in either a private or
public financing, if any of the foregoing transactions are to be in excess
of $1,000,000 in any one transaction or series of related transactions,
(ii) advance written notice of the formation of any new Significant
Subsidiary (as hereinafter defined), the establishment of any new joint
venture or the commencement of any new project or work-out involving Real
Estate not owned by the Borrower as of the Effective Date, which such new
Significant Subsidiary shall forthwith become a party to this Agreement as
a Borrower hereunder, and (iii) written notice of the formation of any new
Subsidiary which is not a Significant Subsidiary given not later than ten
(10) days after such formation; PROVIDED, HOWEVER, that nothing in this
Section 6.07 shall be deemed to authorize the Borrower to enter into any
such transaction if the same would violate any of the limitations set forth
in Article VII hereof. As used in this Section 6.07, the term "Significant
Subsidiary" means a Significant Subsidiary as such term is defined in
Section 1-02(v) of Regulation S-X promulgated by the Securities and
Exchange Commission.
SECTION 6.08. COMPLIANCE WITH APPLICABLE LAWS. Promptly and fully
comply with, conform to and obey all present and future laws, ordinances,
rules, regulations, orders, writs, judgments, injunctions, decrees, awards
and all other legal requirements applicable to the Borrower, its
Subsidiaries and their respective properties, including Regulation Z of the
Board of Governors of the Federal Reserve System, the Federal Interstate
Land Sales Full Disclosure Act and the Florida Land Sales Act, the
violation of which would have a Material Adverse Effect on the Borrower.
SECTION 6.09. CHANGE IN COLLATERAL. Give the Agent immediate notice
of any material change in the status of any of the Collateral which may be
required hereunder.
SECTION 6.10. ADVANCES TO THE MORTGAGE BANKING SUBSIDIARIES. Cause
the Mortgage Banking Subsidiaries to execute and deliver the Mortgage
Banking Subsidiaries Note in order to evidence all loans and advances that
now exist or are hereafter made by the Company to any of the Mortgage
Banking Subsidiaries, respectively; deposit the original Mortgage Banking
Subsidiaries Note with Agent; and obtain, prior to or contemporaneously
with the execution of this Agreement, written acknowledgments from each
Mortgage Banking Subsidiary that the aggregate of all loans and advances
hereafter made by the Company to such Mortgage Banking Subsidiary shall be
47
evidenced and governed by the Mortgage Banking Subsidiaries Note held by
Agent. At all times the principal amount of the Mortgage Banking
Subsidiaries Note held by Agent must equal or exceed the aggregate
principal amount of all loans and advances made by the Company to Mortgage
Banking Subsidiaries, and upon the request of Agent (but no more frequently
than monthly), the Company shall obtain and deliver to the Agent specific
written acknowledgments from each of the Mortgage Banking Subsidiaries to
the effect that loans and advances theretofore made by the Company to the
Mortgage Banking Subsidiaries are evidenced by the Mortgage Banking
Subsidiaries Note. In the event that after the Effective Date the Borrower
organizes or acquires any Mortgage Banking Subsidiary, such Mortgage
Banking Subsidiary shall, upon such organization or acquisition, join in
and become a maker of a replacement Mortgage Banking Subsidiaries Note,
such new Mortgage Banking Subsidiaries Note shall be deposited with the
Agent pursuant to this Section 6.10, and all references in this Agreement
to Mortgage Banking Subsidiaries shall thereafter be deemed references to
all such Mortgage Banking Subsidiaries.
SECTION 6.11. USE OF PROCEEDS. Use the proceeds of the Advances for
working capital and general corporate purposes and to finance acquisitions,
and use the initial Advance to repay the amounts outstanding under the
Existing Loans.
ARTICLE VII
NEGATIVE COVENANTS
The Borrower covenants and agrees that from the date hereof until
payment in full of all the Obligations, unless the Lenders otherwise shall
consent in writing as provided in Section 13.06 hereof, Borrower will not,
either directly or indirectly:
SECTION 7.01. TANGIBLE NET WORTH. Permit the consolidated Tangible
Net Worth of the Borrower at any time to be less than the sum of (a)
$370,000,000, and (b) an amount equal to 50% of the result obtained by
subtracting the after tax net income of the Mortgage Banking Subsidiaries,
the Limited Purpose Finance Subsidiaries, STI and TIC from the aggregate
net income of the Company and its Subsidiaries, for each fiscal quarter of
the Company ending after February 28, 1994 for which the Company and its
Subsidiaries, taken as a whole, had net income, and (c) the aggregate net
proceeds received by the Borrower after the Effective Date from the sale of
any of its equity Securities.
SECTION 7.02. RATIO OF LIABILITIES TO TANGIBLE NET WORTH. Permit
the consolidated Liabilities of the Borrower less the Liabilities of the
Mortgage Banking
48
Subsidiaries, the Limited Purpose Finance Subsidiaries, STI and TIC, as
shown on the Company's consolidated financial statements, at any time to
exceed 200% of the result obtained by subtracting all of the investments
and advances of the Borrower to unconsolidated joint ventures from the
consolidated Tangible Net Worth of the Borrower.
SECTION 7.03. GUARANTIES. Make or suffer to exist any Contingent
Obligation (including, without limitation, any Contingent Obligation with
respect to the obligations of a Subsidiary or joint venture) or otherwise
assume, guarantee or in any way become contingently liable or responsible
for obligations of any other Person, whether by agreement to purchase those
obligations of any other Person, or by agreement for the furnishing of
funds through the purchase of goods, supplies or services (whether by way
of stock purchase, capital contribution, advance or loan) for the purpose
of paying or discharging the obligations of any other Person, except for:
(a) guaranties of obligations of another Borrower issued in the ordinary
course of business; (b) the endorsement of negotiable instruments in the
ordinary course of business; (c) guaranties of performance and completion
and performance and completion bonds issued in connection with the
construction of Real Estate developments owned by the Borrower; (d)
guaranties of liabilities incurred by Unconsolidated Joint Ventures to
which the Borrower is a party, PROVIDED that all such guaranties
outstanding at any one time, when aggregated with all then outstanding
investments in and loans or advances to Unconsolidated Joint Ventures of
the type referred to in clause (i) of Section 7.05 hereof, do not exceed
$50,000,000 for any single Unconsolidated Joint Venture or $150,000,000 for
all Unconsolidated Joint Ventures. None of the foregoing clauses, however,
shall be deemed to permit the Borrower to guaranty any obligations of the
Mortgage Banking Subsidiaries, Limited Purpose Finance Subsidiaries, STI or
TIC.
SECTION 7.04. SALE OF ASSETS; ACQUISITIONS; MERGER.
(a) Do either of the following: (i) sell any single asset with a
book value of $5,000,000 or more for a sales price which is less than the
book value of that asset, or (ii) sell any single asset with a book value
of $10,000,000 or more; PROVIDED, HOWEVER, that in no event shall the
aggregate sales price of all assets sold or disposed of by the Borrower,
other than those sold in the ordinary course of business, exceed
$25,000,000 in any single calendar year.
(b) Do any of the following:
(i) sell, assign, lease or otherwise dispose of
(whether in one transaction or in a series of transactions) all or
substantially all of the assets (whether now owned or hereafter
acquired) of the Company and the Subsidiaries (on a
49
consolidated basis) except for the sale of inventory in the ordinary
course of business;
(ii) merge into or consolidate with any other Person or permit
any other Person to merge into or consolidate with it; or
(iii) dissolve, liquidate or wind up its business by operation
of law or otherwise;
PROVIDED, HOWEVER, that any Subsidiary or any other Person may merge into
or consolidate with or may dissolve and liquidate into any Borrower, if
(and only if), (1) in the case of a merger or consolidation, a Borrower is
the surviving Person, (2) in the case of a merger or consolidation
involving the Company, the Company is the surviving Person, (3) the
character of the business of the Company and the Subsidiaries on a
consolidated basis will not be materially changed by such occurrence, and
(4) such occurrence shall not constitute or give rise to an Event of
Default or Unmatured Default or a default in respect of any of the
covenants contained in any agreement to which the Company or such
Subsidiary is a party or by which its property may be bound.
(c) Acquire another company unless such company is involved in the
acquisition, development, management, rental and/or sale of real estate
assets and/or the provision of financial services as its primary business.
Nothing contained in this Section 7.04, however, shall restrict any
sale of assets between the entities comprising the Borrower which is in
compliance with all other provisions of this Agreement.
SECTION 7.05. INVESTMENTS. Purchase or otherwise acquire, hold or
invest in the Securities (whether capital stock or instruments evidencing
debt) of, make loans or advances to, enter into any arrangements for the
purpose of providing funds or credit to, or make any Equity Investment in,
any Person which is not either a Borrower on the Effective Date or a
Subsidiary which becomes a Borrower upon the making of the investment,
except for: (i) investments in or loans or advances to Unconsolidated Joint
Ventures to which the Borrower is a party, PROVIDED that all such
investments, loans and advances outstanding at any time, when aggregated
with all then outstanding guaranties of the obligations of Unconsolidated
Joint Ventures of the type referred to in clause (d) of Section 7.03 hereof
do not exceed $50,000,000 for any single Unconsolidated Joint Venture or
$150,000,000 in the aggregate for all Unconsolidated Joint Ventures; (ii)
advances to or investments in the Mortgage Banking Subsidiaries or the
Limited Purpose Finance Subsidiaries outstanding at any time not exceeding
$150,000,000 in the aggregate; (iii) advances to or investments in STI and
TIC outstanding at any time not
50
exceeding $10,000,000 in the aggregate; and (iv)(A) purchases of direct
obligations of the government of the United States of America, or any
agency thereof, or obligations unconditionally guaranteed by the United
States of America; (B) certificates of deposit of any bank organized
or licensed to conduct a banking business under the laws of the United
States or any state thereof having capital, surplus and undivided
profits of not less than $100,000,000; (C) investments in commercial
paper which, at the time of acquisition by the Borrower, is accorded
an "A" or equivalent rating by Standard & Poor's, Moody's or any
other nationally recognized credit rating agency of similar standing; and
(D) investments in publicly traded, readily marketable securities, traded
on a recognized national exchange or over-the-counter, PROVIDED, HOWEVER,
that no more than an aggregate of $15,000,000, (excluding investments in
Sunrise Lakes Phase I Bonds, Coupon at 7 1/2%, Aggregate face value
$4,215,000) may be invested in such securities.
SECTION 7.06. DISPOSITION, ENCUMBRANCE OR ISSUANCE OF CERTAIN
STOCK.
Sell, transfer or otherwise dispose of, or pledge, grant a security
interest, equity interest or other beneficial interest in or otherwise
encumber any of the outstanding shares of capital stock of any Mortgage
Banking Subsidiary, or permit any Mortgage Banking Subsidiary to sell,
issue or otherwise transfer any shares of its capital stock to any Person
other than the Borrower.
SECTION 7.07. SUBORDINATED DEBT. Directly or indirectly make any
payment of principal or interest with respect to any Subordinated Debt
prior to the date the same is due, or amend or modify the terms of any
Subordinated Debt except for extensions of the due date thereof, or
directly or indirectly redeem, retire, defease, purchase, retire or
otherwise acquire any Subordinated Debt.
SECTION 7.08. HOUSING UNIT. Permit the total number of Housing
Units owned by the Borrower, including Housing Units under construction but
excluding model housing units and Housing Units Under Contract, at any time
to exceed the greater of (i) 50% of the total number of Housing Unit
Closings during the immediately preceding 12-month period, or (ii) 110% of
the total number of Housing Unit Closings during the immediately preceding
six-month period.
SECTION 7.09. CONSTRUCTION IN PROGRESS. Cause, suffer or permit to
exist any Mortgage, security interest or other encumbrance to secure
Indebtedness on any Housing Unit or other building or structure (including,
without limitation, any asset reported as "Construction in Progress" in the
financial statements of the Borrower, but excluding any Income Producing
Property and any part thereof) that is under construction on any land owned
or leased by the Borrower; PROVIDED, HOWEVER, that the Borrower may cause,
suffer or permit to exist purchase money Mortgages having an
51
aggregate outstanding principal balance not exceeding $10,000,000 at any
time on assets so reported as "Construction in Progress".
SECTION 7.10. BORROWING BASE. Permit the aggregate outstanding
principal amount of all unsecured Indebtedness of the Borrower (including,
without limitation, the outstanding principal amount of the Notes,
regardless of whether the Notes are unsecured or have been collateralized
pursuant to Article VIII below) at any time to exceed the Borrowing Base.
SECTION 7.11. NO MARGIN STOCK. Use any of the proceeds of the
Advances to purchase or carry any "margin stock" (as defined in Regulation U).
SECTION 7.12. MORTGAGE BANKING SUBSIDIARIES' CAPITAL RATIO. Permit
the "Mortgage Banking Subsidiaries' Capital Ratio" to exceed, at any time,
eight (8) to one (1). As used in this Section 7.12, the term "Mortgage
Banking Subsidiaries' Capital Ratio" shall mean the ratio of the combined
total indebtedness of the Mortgage Banking Subsidiaries to Adjusted Net
Worth (as defined in Section 7.15 below).
SECTION 7.13. TRANSACTIONS WITH AFFILIATES. Will not enter into any
transaction (including, without limitation, the purchase or sale of any
property or service) with, or make any payment or transfer to, any
Affiliate except in the ordinary course of business and pursuant to the
reasonable requirements of the Borrower's or a Subsidiary's business and
upon fair and reasonable terms no less favorable to the Borrower or such
Subsidiary than the Borrower or such Subsidiary would obtain in a
comparable arms-length transaction.
SECTION 7.14. RESTRICTIONS ON ADVANCES TO MORTGAGE BANKING
SUBSIDIARIES. Will not (i) permit any loan or advance to be made by the
Borrower to a Mortgage Banking Subsidiary except for loans and advances
from the Company to the Mortgage Banking Subsidiaries which are made under,
and evidenced by, the Mortgage Banking Subsidiaries Note that is in the
possession of Agent and for which the Company shall have obtained a written
acknowledgment from each Mortgage Banking Subsidiary that the same are
evidenced and governed by the Mortgage Banking Subsidiaries Note; (ii)
permit the aggregate amount of all loans and advances made by the Company
to any Mortgage Banking Subsidiary outstanding at any time to exceed the
sum of (a) the aggregate principal amount of all mortgage loans held for
sale by such Mortgage Banking Subsidiary, less the aggregate principal
amount of all promissory notes payable by such Mortgage Banking Subsidiary
to banks or other lenders, and less the aggregate principal amount of all
mortgage loans held for sale by such Mortgage Banking Subsidiaries which
are pledged, assigned or otherwise encumbered, to the extent that said
aggregate amount exceeds the aggregate principal amount of notes payable by
such
52
Mortgage Banking Subsidiary to banks or other lenders, and (b) 1.5% of
the principal amount of all mortgages serviced by such Mortgage Banking
Subsidiary, less any loans or other financing to such Mortgage Banking
Subsidiary associated with the servicing portfolio (exclusive of those
amounts deducted in the calculation required under clause (a) above) if,
and to the extent that, the servicing rights with respect to such mortgages
are not subject to any Lien; (iii) assign, transfer, pledge, hypothecate or
encumber in any way the Mortgage Banking Subsidiaries Note, any interest
therein or any sums due or to become due thereunder; (iv) modify, amend,
extend or in any way change the terms of the Mortgage Banking Subsidiaries
Note; (v) make any principal advances to any Mortgage Banking Subsidiary,
under the Mortgage Banking Subsidiaries Note or otherwise, at any time
after the Agent has been granted a security interest in the Mortgage
Banking Subsidiaries Note except to the extent of any principal prepayments
under the Mortgage Banking Subsidiaries Note in excess of the mandatory
principal payments required thereunder; or (vi) permit a Mortgage Banking
Subsidiary to enter into any agreement or agreements which (a) in any way
restrict the payment of dividends by such Mortgage Banking Subsidiary or
(b) individually or in the aggregate impose any restriction on the
repayment of any indebtedness of a Mortgage Banking Subsidiary to any
Person (including, without limitation, the indebtedness payable under the
Mortgage Banking Subsidiaries Note) other than a restriction on the payment
of the last $5,000,000 of principal indebtedness of UAMC (i.e., such
permitted restriction shall be applicable only after the aggregate
principal amount of indebtedness owed by UAMC to any Person shall be less
than or equal to $5,000,000).
SECTION 7.15. ADJUSTED NET WORTH OF MORTGAGE BANKING SUBSIDIARIES.
Permit the Adjusted Net Worth of the Mortgage Banking Subsidiaries at any
time to be less than $40,000,000. For purposes of this Section 7.15, the
term "Adjusted Net Worth" shall mean the combined net worth of the Mortgage
Banking Subsidiaries as computed in accordance with United States generally
accepted accounting principles reduced by the amount of intangibles of the
Mortgage Banking Subsidiaries (such as goodwill, purchased servicing,
excess servicing, trademarks), plus two and one-half (2-1/2) times the
combined Mortgage Banking Subsidiaries annualized gross servicing revenue
(including service fees, late fees and other ancillary servicing fees). If
and when the Mortgage Banking Subsidiaries cannot maintain Adjusted Net
Worth of $40,000,000 as a result of acquiring servicing, the above
computation of Adjusted Net Worth shall be modified to provide for a
multiple of three (3) times annualized gross servicing revenue (as defined
above).
53
ARTICLE VIII
COLLATERAL
SECTION 8.01. SECURITY FOR OBLIGATIONS. Upon the request of the
Agent (which may not be made without the prior written or telegraphic
consent from the Required Lenders and which shall be made upon the written
or telegraphic request of the Required Lenders), the Borrower shall grant
the Agent, on behalf of the Lenders, as security for the payment in full of
all the Obligations, (i) First Mortgages on Real Estate owned by the
Borrower and selected by the Agent having an aggregate Collateral Value not
less than the Revolving Collateral Value, and (ii) a first lien and
security interest in the Mortgage Banking Subsidiaries Note; PROVIDED,
HOWEVER, that in no event shall the Agent request a security interest in
the Mortgage Banking Subsidiaries Note under clause (ii) above prior to
requesting the First Mortgages under clause (i) above. Notwithstanding
anything to the contrary provided in this Agreement, the Borrower agrees
that the security agreement relating to the Mortgage Banking Subsidiaries
Note shall require all principal payments payable under the Mortgage
Banking Subsidiaries Note to be made directly to the Agent and applied to
the principal outstanding under the Notes as required under Section 2.04.
The Appraised Value of all Real Estate so selected by the Agent shall be
determined by an independent MAI appraiser selected by the Agent as of a
date reasonably close to the date the particular Collateral is required to
be delivered to Agent pursuant to an appraisal which has been reviewed and
approved by the Agent. In selecting any appraiser and reviewing any
appraisal, the Agent shall follow the same procedures as used in connection
with loans held by the Agent for its own account, and the Agent agrees to
communicate and, as appropriate, consult with the Lenders in connection
therewith. Notwithstanding such communication and consultation, the final
determination of the Agent shall govern and control. To the extent that, in
its review of any appraisal, the Agent determines that any clarifications
or corrections are necessary, the Agent shall communicate its comments to
the appraiser and require the appraiser to revise or supplement its
appraisal report, as appropriate. Currently, the selection of appraisers
and review of appraisals by the Agent is performed by the Real Estate
Valuation Services Unit of the Agent and appraisals are reviewed to
determine compliance with the appraisal requirements of the Financial
Institutions Reform, Recovery and Enforcement Act of 1989 and the
regulations promulgated thereunder. However, the department or unit of the
Agent selecting appraisers and reviewing appraisals and the nature of the
review of appraisals is subject to change.
SECTION 8.02. COLLATERAL VALUE.
(a) From the date that the Agent requests collateralization pursuant
to Section 8.01 hereof until payment in full of all the Obligations, the
Borrower at all times shall
54
cause the Obligations to be secured by Mortgages on or security interests
in Collateral that has an aggregate Collateral Value not less than the
Revolving Collateral Value.
(b) The Agent shall have the right (which it may exercise at any
time it deems appropriate, but which it in any event shall exercise at the
written request of the Required Lenders), not more than once during each
12-month period following the Effective Date, to retain one or more
independent MAI appraisers to determine the Appraised Value of all Real
Estate owned by the Borrower that is part of the Collateral.
(c) If, as a result of those appraisals or any principal payment
made with respect to one or more Mortgage Receivables that is part of the
Collateral, the Agent shall determine that the aggregate Collateral Value
of all the Collateral is less than the Revolving Collateral Value, the
Agent shall so advise the Borrower in writing and the Borrower shall,
promptly (and in any event within 30 days) after receipt of that notice,
grant the agent, as security for the payment in full of all the
Obligations, First Mortgages on Real Estate owned by the Borrower and
selected by the Agent having an aggregate Collateral Value sufficient to
remedy the deficiency. In the event that the Agent fails to take any of the
actions required in this subsection (c), the Required Lenders shall have
the right to take such actions.
SECTION 8.03. RELEASES.
(a) Each Mortgage executed and delivered by the Borrower to the
Agent hereunder shall provide that, so long as no Event of Default or any
Unmatured Default shall have occurred and be continuing, the Agent shall
execute and deliver to the Borrower a release of the lien of the Mortgage
from all or any part of the Real Estate subject thereto upon (i) the sale
of the Real Estate to be released either for (a) cash in an amount not less
than 100% of the Appraised Value of the Real Estate, PROVIDED that the cash
proceeds of the sale are applied to the prepayment of the Notes to the
extent (if any) required by Section 2.04 hereof, or (b) a cash downpayment
and a Mortgage Receivable in an aggregate amount equal to 100% of the
Appraised Value of the Real Estate, PROVIDED that the cash downpayment is
applied to the prepayment of the Notes to the extent (if any) required by
Section 2.04 hereof and the Mortgage Receivable is assigned to the Agent as
additional security for the payment in full of the Obligations, and (ii)
the Borrower's granting to the Agent, on or before the date of the release,
First Mortgages on Real Estate owned by the Borrower and selected by the
Agent having an aggregate Collateral Value not less than the Collateral
Value of the released Collateral.
(b) So long as no Event of Default or Unmatured Default shall have
occurred and be continuing, the Agent shall deliver to the appropriate
Borrower a duly executed assignment of each Mortgage Receivable assigned to
the Agent as security for the Obligations, together with the relevant
promissory note and Mortgage documents, at
55
such time as, pursuant to the proviso to Section 2.04, the Borrower no
longer is required to apply the proceeds of principal payments made under
the Mortgage Receivable to the payment of the principal of the Notes.
SECTION 8.04. SUBSTITUTE OR ADDITIONAL COLLATERAL. Anything in
Section 8.01, Section 8.02 or Section 8.03 hereof to the contrary
notwithstanding, in any instance that the Borrower is required, pursuant to
one of those Sections, to grant the Agent First Mortgages on Real Estate
owned by the Borrower and selected by the Agent, the Borrower may, subject
to the consent of the Required Lenders (which may be granted or denied in
their sole and absolute discretion), grant the Agent, in lieu of or in
addition to those First Mortgages, a security interest in Mortgage
Receivables owned by the Borrower and selected by the Agent, and/or Junior
Mortgages of highest available priority on Real Estate owned by the
Borrower and selected by the Agent (with the approval of the Required
Lenders), having an aggregate Collateral Value sufficient to satisfy the
requirements of the relevant Section.
SECTION 8.05. COLLATERAL DOCUMENTATION. In each instance that the
Borrower is required to grant the Agent a Mortgage on or security interest
in one of its assets pursuant to any of the foregoing provisions of this
Article VIII, the Borrower shall deliver to the Agent the following
documentation:
(a) If the asset is Real Estate:
(i) a duly executed and acknowledged instrument, in
form and substance satisfactory to the Agent, granting the Agent,
on behalf of the Lenders, a First Mortgage or Junior Mortgage, as
the case may be, on the Real Estate;
(ii) a mortgagee's title insurance policy, issued by a
substantial and reputable title insurance company satisfactory to
the Agent, insuring the lien of the Mortgage and listing the Agent
as the insured party and containing such endorsements as shall be
requested by the Agent;
(iii) a phase I environmental report issued in favor of
the Agent by an environmental engineering firm which is fully
satisfactory to the Agent indicating the that property is free from
all hazardous substances and environmental concerns; and
(iv) such other documentation as the Agent may
reasonably request (including, without limitation, an Assignment of
Leases, Rents and Profits, UCC-1 Financing Statements, collateral
assignments of agreements relating to the relevant property, a
survey of the property, and insurance certificates naming the Agent
under a mortgagee endorsement which is acceptable to Agent).
56
(b) If the asset is a Mortgage Receivable:
(i) a duly executed and acknowledged assignment, in form and
substance satisfactory to the Agent, of such Mortgage Receivable to
the Agent on behalf of the Lenders;
(ii) the original promissory note (duly endorsed to the Agent,
on behalf of the Lenders) and the original Mortgage documents;
(iii) either (x) an existing title insurance policy
insuring the lien of the Mortgage and listing the Borrower as the
insured party, together with an endorsement thereof to the Agent,
or (y) a mortgagee's title insurance policy, issued by a
substantial and reputable title insurance company satisfactory to
the Agent, insuring the lien of the Mortgage and listing the Agent
as insured party;
(iv) an opinion of counsel to the Borrower, dated the
date of execution and delivery of the assignment and addressed to
the Lenders, to the effect that, subject to due compliance with the
recording and/or filing requirements of applicable law, the Agent
has a valid and perfected security interest in the Mortgage
Receivable. The Borrower shall instruct its counsel to prepare its
opinion and deliver it to Lenders for their benefit, and such
opinion shall contain a statement to such effect;
(v) a phase I environmental report issued in favor of
the Agent by an environmental engineering firm which is fully
satisfactory to the Agent indicating that the property is free from
all hazardous substances and environmental concerns; and
(vi) such additional documentation as the Agent may reasonably
request.
(c) If the asset is the Mortgage Banking Subsidiaries Note:
(i) a duly executed pledge and security agreement, in
form and substance satisfactory to Agent, granting the Agent on
behalf of the Lenders, a first lien on, and security interest in,
the Mortgage Banking Subsidiaries Note;
(ii) an endorsement or allonge to the Mortgage Banking
Subsidiaries Note, in form and substance satisfactory to Agent,
transferring the Mortgage Banking Subsidiaries Note to Agent on
behalf of the Lenders; and
(iii) a written acknowledgment from the Company that the
Agent holds the Mortgage Banking Subsidiaries Note as Collateral
for the Obligations.
57
(d) If the asset is unrestricted cash and/or Net Proceeds referred
to in clauses (i) or (ii) of the definition of "Borrowing Base" in Section
2.01, the Borrower shall execute and deliver to the Agent such collateral
assignments, security agreements, cash collateral agreements and financing
statements in respect thereof as shall be requested by the Agent from time
to time.
All the foregoing documents shall be delivered to the Agent on or before
the date that the Borrower is required to grant the Agent the relevant
Mortgage or security interest, except that the items specified in clauses
(a)(ii) and (b)(iii) above shall be delivered to the Agent as soon as
available, but in no event more than 30 days after the date of recording of
the relevant Mortgage or assignment. All of the documentation and other
items required under this Section 8.05 must be fully satisfactory, both in
form and substance, to the Agent. In addition to the foregoing, the
Borrower shall, at the request of the Agent, execute and deliver to the
Agent such assignments, pledges, deeds, Mortgages, financing statements and
other documents, and cause to be done such further acts, all as the Agent
from time to time may deem necessary or appropriate to evidence, confirm,
perfect or protect any Mortgage or security interest required to be granted
to the Agent hereunder.
SECTION 8.06. POWERS AND DUTIES OF THE
BORROWER WITH RESPECT TO THE COLLATERAL.
(a) Subject to the provisions of this Agreement, so long as no Event
of Default shall have occurred and be continuing, the Borrower shall have
the right to deal with, manage and administer the Collateral and to collect
and use the proceeds thereof in such manner as it shall deem appropriate
(subject to the provisions of Section 2.04), including, without limitation,
the right to engage in development and/or construction activities with
respect to any Real Estate constituting part of the Collateral; PROVIDED,
HOWEVER, that the Borrower shall not be entitled to exercise that right in
any manner that would conflict with or prejudice the continued validity or
perfection of any Mortgage or security interest in any Collateral held by
the Agent pursuant to this Agreement. Subject to the foregoing provision,
the Agent shall, at the reasonable request of the Borrower, consent to and,
when necessary, join in such plats, zoning applications, utility easements
and similar instruments (all of which shall be in form and substance
satisfactory to the Agent) as may be required in connection with the
Borrower's management or administration of any item of Collateral.
(b) Unless the Borrower shall have been notified, pursuant to
Section 9.03 hereof, that it has been discharged from its right to deal
with, manage and administer all items of the Collateral, the Borrower
shall, subject to the provisions of this Agreement, manage and administer
all the Collateral in such manner as they shall deem appropriate, without
charge to the Lenders; PROVIDED, HOWEVER, that the Borrower shall remain
fully
58
responsible for all its obligations as owner, creditor or otherwise
with respect to the Collateral.
SECTION 8.07. POWER OF ATTORNEY. With respect to the Collateral
which the Agent may from time to time hold and/or be entitled to obtain
hereunder, the Agent hereby is irrevocably appointed by the Borrower as
Borrower's true and lawful attorney-in-fact with full power, from time to
time, to (i) take possession of and endorse in Borrower's name any
Mortgages, deeds, pledges, assignments and other documents and any notes,
checks, drafts, bills of exchange, money orders and any other documents
received in payment for or on account of those assets and properties, (ii)
to collect, sue for and give acquittance for moneys due on account of those
assets and properties, (ii) to withdraw any claims, suits or proceedings
pertaining to or arising out of those assets and properties. The foregoing
appointment is with full power of substitution and is coupled with an
interest. The Agent shall not be liable for any failure to collect or
enforce the payment of any of those assets and properties.
ARTICLE IX
EVENTS OF DEFAULT
SECTION 9.01. EVENTS OF DEFAULT. In case of the happening of any
of the following events (hereinafter called "Events of Default"):
(a) any representation or warranty made or deemed made by or on
behalf of the Borrower to the Lenders or the Agent under or in connection
with this Agreement shall be false or misleading in any material respect
when made;
(b) any report, certificate, financial statement or other document
or instrument furnished in connection with this Agreement or the
Loans hereunder shall be false or misleading in any material respect when
furnished;
(c) default shall be made in the payment of (i) the principal of any
of the Notes when and as due and payable, or (ii) the interest on any of the
Notes, any fees or any other sums due pursuant to Article II, within 5 days
after the same becomes due and payable;
(d) default shall be made with respect to any Indebtedness or
Contingent Obligations of the Borrower (other than the Indebtedness
evidenced by the Notes), or in any net liabilities under interest rate
swap, exchange or cap agreements, beyond any applicable period of grace, or
default shall be made with respect to the performance of any other
obligation incurred in connection with any such Indebtedness or liabilities
59
beyond any applicable period of grace, or default shall be made with
respect to any other liability of $10,000 or more, if the effect of any
such default is to accelerate the maturity of such Indebtedness or
liability or to cause any other liability to become due prior to its stated
maturity, or any such Indebtedness or liability shall not be paid when due
and such default shall not have been remedied or cured by the Borrower or
waived by the obligor;
(e) default shall be made in the due observance or performance
of any of the provisions of Article VII or Article VIII of this Agreement;
(f) default shall be made in the due observance or performance
of any other covenant, agreement or condition on the part of the Borrower
to be performed, and such default shall have continued for a period of
30 days after the occurrence thereof;
(g) the Borrower shall (i) petition or apply for, seek, consent to,
or acquiesce in, the appointment of a receiver, trustee, examiner,
custodian, liquidator or similar official of the Borrower or any of its
properties or assets, (ii) be unable, or admit in writing its inability, to
pay its debts as they mature, (iii) make a general assignment for the
benefit of or a composition with its creditors, (iv) have an order for
relief entered with respect to it under the Federal bankruptcy laws as now
or hereafter in effect, (v) institute any proceeding seeking an order for
relief under the Federal bankruptcy laws as now or hereafter in effect, or
file a petition or an answer seeking dissolution, winding up, liquidation
or reorganization or an arrangement with creditors or a composition of its
debts or to take advantage of any bankruptcy, reorganization, insolvency,
readjustment of debts, dissolution or liquidation law or statute or other
statute or law for the relief of debtors, or file any answer admitting the
material allegations of a petition filed against it in any proceeding under
such law, or fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, or if corporate or
other action shall be taken by the Borrower for the purpose of effecting
any of the foregoing, or (vi) fail to contest in good faith any appointment
or proceeding described in Section 9.01(h);
(h) an order, judgment, or decree shall be entered without the
application, approval, or consent of the Borrower by any court of competent
jurisdiction appointing a receiver, trustee or liquidator of the Borrower
or a proceeding described in Section 9.01(g) shall be instituted against
the Borrower, and such appointment shall continue undischarged or such
proceeding continues undismissed or unstayed for any period of 45 days;
(i) final judgment for the payment of money in excess of $25,000
shall be rendered against the Borrower and the same shall remain
undischarged for a period of
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30 days during which execution shall not be effectively stayed or
contested in good faith;
(j) final judgment(s) for the payment of money in excess of an
aggregate of $250,000 shall be rendered against the Borrower (or any of
them) after the Effective Date and shall remain undischarged for a period
of ten days;
(k) there shall occur any Event or Events which, individually or in the
aggregate, shall be deemed by the Required Lenders to have had a Material
Adverse Effect;
(l) The Borrower shall be the subject of any proceeding or
investigation pertaining to the release by the Borrower, any of its
Subsidiaries or any other Person of any toxic or hazardous waste or
substance into the environment, or any violation of any federal, state or
local environmental, health or safety law or regulation, which, in either
case, could reasonably be expected to have a Material Adverse Effect; or
(m) The occurrence of any "default", as defined in any Loan
Document (other than this Agreement or the Notes) or the breach of any of
the terms or provisions of any Loan Document (other than this Agreement or
the Notes), which default or breach continues beyond any period of grace
therein provided;
then, or at any time thereafter during the continuance of any such event,
the Required Lenders (or the Agent on their behalf) may, by written or
telegraphic notice to the Borrower, (i) terminate the Aggregate Commitment
and/or (ii) declare all the Obligations to be forthwith due and payable,
without presentment, demand, protest or other notice of any kind, all of
which the Borrower hereby expressly waives, anything contained herein or in
the Notes to the contrary notwithstanding; PROVIDED, HOWEVER, that upon the
happening of any of the events set forth in subsection (g) or subsection
(h) above the obligations of the Lenders to make Loans hereunder shall
automatically terminate and the Obligations shall immediately become due
and payable without any election or action on the part of the Agent or any
Lender and without presentment, demand, protest or other notice of any
kind, all of which the Borrower hereby expressly waives.
SECTION 9.02. RIGHT TO RESCIND ACCELERATION. If, within 30 days
after acceleration of the maturity of the Obligations or termination of the
obligations of the Lenders to make Loans hereunder as a result of any Event
of Default (other than any Event of Default as described in Section 9.01(g)
or (h) with respect to the Borrower) and before any judgment or decree for
the payment of the Obligations due shall have been obtained or entered, the
Required Lenders (in their sole discretion) shall so direct,
61
the Agent shall, by notice to the Borrower, rescind and annul such
acceleration and/or termination.
SECTION 9.03. RIGHTS AS TO COLLATERAL.
(a) If, on the Maturity Date, the Borrower shall not have paid in
full all the Obligations, the Agent, with the consent of the Required
Lenders, shall take (and/or shall cause one or more of its designees to
take) any or all of the following actions, after giving at least three
Business Days' (which notice period the Borrower acknowledges to be
adequate and reasonable) written notice to the Borrower (a single such
notice being sufficient to entitle the Agent to take one or more of the
actions described below):
(i) prohibit the Borrower from taking any action otherwise
permitted by Section 8.06(a) hereof, and/or discharge the Borrower
from their right to manage and administer the items of Collateral
as provided in Section 8.06(b) hereof;
(ii) notify the mortgagors, obligors, lessees or other
parties interested in any item of the Collateral of the interest of
the Lenders therein and of any action proposed to be taken with
respect thereto, and inform any of those parties that all payments
otherwise payable to the Borrower with respect thereto thereafter
shall be made to the Agent until all the Obligations have been paid
in full;
(iii) receive and retain all payments and all other distributions
of any kind with respect to any and all of the Collateral;
(iv) exercise any rights of voting or consent pertaining
to any item of Collateral to the same extent as if the Agent were
the outright owner thereof for the benefit of the Lenders, or cause
any item of the Collateral to be transferred to its own name and
have such transfer recorded in any place or places deemed
appropriate by the Agent;
(v) deal with the Collateral in all respects as if it were
the outright owner thereof for the benefit of the Lenders;
(vi) take such action as directed by the Required
Lenders with respect to the sale, assignment and delivery of the
whole of, or from time to time any one or more items of, the
Collateral, including, without limitation: to sell, assign and
deliver the whole of, or from time to time any part of, the
Collateral at any broker's board or at any private sale or at
public auction, with or without demand on the Borrower or
advertisement of the time or place of sale or adjourn-
62
ment thereof or otherwise, for cash, for credit or for other property,
for immediate or future delivery, and for such price or prices and on
such terms as the Required Lenders in their discretion may
determine, and the Agent or any of the other Lenders may bid for
and purchase the whole or any one or more items of the Collateral
so sold free from any right or equity of redemption; to adjourn any
such sale or cause the same to be adjourned from time to time to a
subsequent time and place announced at the time and place fixed for
the sale; and to carry out any agreement to sell any item or items
of Collateral in accordance with the terms of such agreement,
notwithstanding that after the Agent shall have entered into such
agreement, all the Obligations may have been paid in full; and
(vii) in addition to, and not by way of limitation of,
any of the rights specified above, exercise any and all rights and
remedies afforded to it, as a secured party in possession of
collateral or otherwise, under any and all applicable provisions of
laws.
(b) The Agent, any Person designated by the Agent to take any of the
action as enumerated in subsection (a) above, any of the Lenders, and their
respective officers, directors, employees, agents and counsel shall not
incur any liability (other than for acts or omissions amounting to gross
negligence or willful misconduct) as a result of the sale of the
Collateral, or any part thereof, in a commercially reasonable manner in
accordance with the provisions of subsection (a)(vi) above or of applicable
law, or for the failure to sell or offer for sale the Collateral, for any
reason whatsoever. The Borrower waives any claims (other than those
attributable to acts or omissions amounting to gross negligence or willful
misconduct) against the Agent, any Person designated by the Agent to take
any action, the Lenders, and their respective officers, directors,
employees, agents and counsel arising with respect to the price at which
the Collateral, or any part there of, may have been sold or by reason of
the fact that such price was less than the aggregate of all the
Obligations, PROVIDED that all such sales have been effected in a
commercially reasonable manner.
(c) The Agent shall collect the cash proceeds received from any sale
or other disposition or from any other source contemplated by subsection
(a) above and, after deducting all costs and expenses incurred by the
Agent, any person designated by the Agent to take any of the actions
enumerated in subsection (a) above, and the Lenders (other than in
connection with the purchase by any of the Lenders of any item of the
Collateral) in connection with such collection and sale (including, without
limitation, reasonable counsel fees and expenses), shall apply the same in
accordance with the provisions of Section 9.04 below. Noncash proceeds
received by the Agent shall be held by it, unless and until instructions
are received from the Required Lenders to distribute those proceeds. Upon
any such distribution in the order set forth in Section
63
9.04 below, the Obligations shall be reduced by the fair market value
of any such noncash proceeds.
(d) If the amount of all proceeds received in liquidation of the
Collateral which shall be applied to payment of the Obligations shall be
insufficient to pay all the Obligations in full, the Borrower acknowledges
that it shall continue to remain liable for any deficiency, together with
any interest thereon and costs of collection thereof (including reasonable
counsel fees and legal expenses), in accordance with the terms of this
Agreement and the other Loan Documents. The Agent shall account to the
Borrower as to all applications of the proceeds of the Collateral in
reduction of the Obligations.
(e) Notwithstanding the foregoing, none of the provisions of this
Section 9.03 shall confer on the Agent or any of the Lenders any rights or
privileges not permissible under applicable law; PROVIDED, HOWEVER, that to
the extent the Borrower may waive any provisions of applicable law which
would or could be in conflict with the terms of this Section 9.03, the
Borrower hereby expressly waives the application of any such laws and
provisions.
(f) In connection with the foregoing provisions of this Section
9.03, the Borrower from time to time promptly shall execute and deliver, or
cause to be executed and delivered, to the Agent such reasonable documents
and instruments, and take or cause to be taken other reasonable and lawful
action, as the Agent reasonably shall deem necessary or desirable to enable
it to exercise any of the rights with respect to the Collateral granted to
it pursuant to this Section 9.03.
SECTION 9.04. APPLICATION OF FUNDS. In the event that all the
Obligations shall have become or been declared due and payable pursuant to
the terms of Section 9.01 hereof, the Lenders agree, by and among
themselves (and, with respect to subsection (f) below, with the Borrower),
that any funds received from or on behalf of the Borrower (pursuant to the
provisions of Section 9.03 or otherwise) by the Agent or any of the Lenders
(except funds retained by any Lender pursuant to the terms of Section 11.01
hereof) shall be remitted to the Agent, if received by any Lender, and
applied by the Agent (in the case of subsections (c), (d) and (e) below),
on a pro rata basis among the Lenders in accordance with their respective
percentages of the Aggregate Commitment in the following manner and order:
(a) first, to pay to or reimburse the Agent for any out-of-pocket
expenses for which it is entitled to be paid or reimbursed pursuant to the
provisions of Section 13.03 hereof;
(b) second, to reimburse any of the Lenders pursuant to the provisions
of Section 13.03 hereof;
64
(c) third, to payment of accrued and unpaid interest due on the Notes;
(d) fourth, to payment of the outstanding principal of the Notes;
(e) fifth, to payment in full of all the remaining Obligations; and
(f) sixth, any remainder shall be returned to the Borrower or as
otherwise required by applicable law.
ARTICLE X
THE AGENT
SECTION 10.01. APPOINTMENT. The First National Bank of Chicago is
hereby appointed Agent hereunder and under each other Loan Document and,
subject to the provisions of Section 10.13 below, each of the Lenders
irrevocably authorizes the Agent to act as the agent of such Lender. The
Agent agrees to act as such upon the express conditions contained in this
Article X. The Agent shall not have a fiduciary relationship in respect of
any Lender by reason of this Agreement.
SECTION 10.02. POWERS. The Agent shall have and may exercise such
powers under the Loan Documents as are specifically delegated to the Agent
by the terms of each thereof, together with such powers as are reasonably
incidental thereto. The 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
Agent.
SECTION 10.03. GENERAL IMMUNITY. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable to the Borrower,
the Lenders or any Lender for any action taken or omitted to be taken by it
or them hereunder or under any other Loan Document or in connection
herewith or therewith except for its or their own gross negligence or
willful misconduct.
SECTION 10.04. NO RESPONSIBILITY FOR LOANS, RECITALS, ETC. Neither
the Agent nor any of its directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into, or verify (i)
any statement, warranty or representation made in connection with any Loan
Document or any borrowing hereunder; (ii) the performance or observance of
any of the covenants or agreements of any obligor under any Loan Document;
(iii) the satisfaction of any condition specified in Article IV, except
receipt of items required to be delivered to the Agent; or (iv) the
validity, effectiveness or genuineness (except its own due execution
thereof) of any
65
Loan Document or any other instrument or writing furnished
in connection therewith. Further, the Agent assumes no obligation to any
other Lender as to the collectibility of any Loans made by any Lender to
the Borrower. Each Lender expressly acknowledges that the Agent has not
made any representations or warranties to it on or prior to the date hereof
and that no act by the Agent hereafter taken shall be deemed to constitute
any representation or warranty by the Agent to any other Lender. Each
Lender acknowledges that it has taken and will take such action and make
such investigation as it deems necessary to inform itself as to the affairs
and creditworthiness of the Borrower.
SECTION 10.05. EMPLOYMENT OF AGENTS AND COUNSEL. The Agent may
execute any of its duties as Agent hereunder and under any other Loan
Document 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 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
Document.
SECTION 10.06. RELIANCE ON DOCUMENTS; COUNSEL. The Agent shall not
be under a duty to examine into or pass upon the validity, effectiveness,
genuineness or value of this Agreement, the Notes or any other document
furnished pursuant hereto or thereto or in connection herewith, and the
Agent shall be entitled to assume that the same are valid, effective and
genuine and what they purport to be. The Agent shall be entitled to rely
upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document reasonably believed by it to be genuine and
correct and to have been signed or sent by the proper person or persons,
and, in respect to legal matters, upon the opinion of counsel selected by
the Agent, which counsel may be employees of the Agent. The Agent shall not
be liable for any action taken or suffered in good faith by it based on or
in accordance with any of the foregoing.
SECTION 10.07. NO WAIVER OF RIGHTS. With respect to its Commitment,
Loans made by it and the Note issued to it, the Agent shall have the same
rights and powers hereunder and under any other Loan Document as any Lender
and may exercise the same as though it was not the Agent, and the term
"Lender" or "Lenders" shall, unless the context otherwise indicates,
include the Agent in its individual capacity. The Agent may accept deposits
from, lend money to and issue letters of credit for the account of, and
generally engage in any kind of business with the Borrower or its
Affiliates (including, without limitation, trust, debt, equity and other
transactions) in addition to the transaction contemplated by this Agreement
or any other Loan Document; it being expressly understood and agreed that
neither the Agent nor any other Lender shall be deemed by the execution
hereof to have waived any rights under any
66
term loan or other agreement with the Borrower relating to any other
business or loans to the Borrower not a part of the Aggregate Commitment
under this Agreement.
SECTION 10.08. KNOWLEDGE OF EVENT OF DEFAULT. It is expressly
understood and agreed that the Agent shall be entitled to assume that no
Event of Default or Unmatured Default has occurred and is continuing,
unless the officers of the Agent active on the Borrower's account have
actual knowledge of such occurrence or have been notified by a Lender that
such Lender considers that an Event of Default or Unmatured Default has
occurred and is continuing and specifying the nature thereof.
SECTION 10.09. AGENT'S REIMBURSEMENT AND INDEMNIFICATION. The
Lenders agree to reimburse and indemnify the Agent ratably in accordance
with their respective Pro Rata Shares (i) for any amounts not reimbursed by
the Borrower for which the Agent is entitled to reimbursement by the
Borrower under the Loan Documents, (ii) for any other expenses incurred by
the Agent on behalf of the Lenders, in connection with the preparation,
execution, delivery, administration and enforcement of the Loan Documents
and (iii) for any liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind and
nature whatsoever which may be imposed on, incurred by or asserted against
the 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 arise from the gross negligence or
willful misconduct of the Agent.
SECTION 10.10. NOTICES TO THE BORROWER. In each instance that a
notice is required, pursuant to the terms hereof, to be given by one or
more of the Lenders to the Borrower, the Lenders desiring that such notice
be given shall so advise the Agent (which advice, if given by telephone,
shall be promptly confirmed by telex or letter to the Agent at its address
listed in the signature pages hereto), which shall transmit such notice to
the Borrower promptly after its having been so advised by the appropriate
number of Lenders; PROVIDED, HOWEVER, that subject to the provisions of
Section 10.14 hereof, if the Agent shall fail to transmit such notice to
the Borrower within a reasonable period of time after its having been so
advised by the appropriate number of Lenders, the Lenders desiring that
such notice be given may transmit such notice directly to the Borrower.
SECTION 10.11. ACTION ON INSTRUCTIONS OF LENDERS. The 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, 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 Agent shall be
67
fully justified in failing or refusing to take any action hereunder and
under any other Loan Document unless it shall first be indemnified to its
satisfaction by the Lenders pro rata against any and all liability, cost
and expense that it may incur by reason of taking or continuing to take
any such action.
SECTION 10.12. LENDER CREDIT DECISION. Each Lender acknowledges that
it has, independently and without reliance upon the Agent or any other
Lender and based on the financial statements prepared by the Borrower and
such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement and the other
Loan Documents. Each Lender also acknowledges that it will, independently
and without reliance upon the 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.
SECTION 10.13. RESIGNATION OR REMOVAL OF THE AGENT. If, at any time,
Lenders holding Notes having aggregate outstanding principal balances equal
to at least 75% of the then outstanding amount of the Aggregate Commitment
(excluding from such computation the Agent and its Notes) shall deem it
advisable, those Lenders may submit to the Agent notification by certified
mail, return receipt requested of its removal as Agent under this
Agreement, which removal shall be effective as of the date of receipt of
such notice by the Agent. If, at any time, the Agent shall deem it
advisable, in its sole discretion, it may submit to each of the Lenders
written notification, by certified mail, return receipt requested, of its
resignation as Agent under this Agreement, which resignation shall be
effective as of thirty days after the date of such notice. In the event of
any such removal or resignation, the Required Lenders may appoint a
successor to the Agent. In the event the Agent shall have resigned and/or
have been removed and so long as no successor shall have been appointed,
the Borrower shall make all payments due each Lender hereunder directly to
that Lender and all powers specifically delegated to the Agent by the terms
hereof may be exercised by the Required Lenders. Upon the removal or
resignation of the Agent, the retiring Agent shall be discharged from its
duties and obligations hereunder and under the other Loan Documents. After
the removal or resignation of the Agent, the provisions of this Article X
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken while it was acting as the Agent hereunder and under
the other Loan Documents.
SECTION 10.14. BENEFITS OF ARTICLE X. None of the provisions of this
Article X shall inure to the benefit of the Borrower or of any Person other
than Agent and each of the Lenders and their respective successors and
permitted assigns. Accordingly, neither the Borrower nor any Person other
than Agent and the Lenders (and their respective successors and permitted
assigns) shall be entitled to rely upon, or to raise as
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a defense, the failure of the Agent or any Lenders to comply with the
provisions of this Article X.
ARTICLE XI
SETOFF; RATABLE PAYMENTS
SECTION 11.01. SETOFF. In addition to, and without limitation of,
any rights of the Lenders under applicable law, if the Borrower becomes
insolvent, however evidenced, or any Event of Default or Unmatured Default
occurs, any indebtedness from any Lender to the Borrower (including all
account balances, whether provisional or final and whether or not collected
or available) may be offset and applied toward the payment of the
Obligations owing to such Lender, whether or not the Obligations, or any
part hereof, shall then be due. Each Lender agrees promptly to notify the
Borrower after any such set-off and application made by such Lender;
PROVIDED, HOWEVER, that the failure to give such notice shall not affect
the validity of any such set-off and application. The rights of each Lender
under this Section 11.01 are in addition to any other rights and remedies
which that Lender may have under this Agreement or otherwise.
SECTION 11.02. RATABLE PAYMENTS. If any Lender, whether by setoff or
otherwise, has payment made to it upon its Loans (other than payments
received pursuant to Sections 3.01, 3.02 or 3.04) in a greater proportion
than that received by any other Lender, such Lender agrees, promptly upon
demand, to purchase a portion of the Loans held by the other Lenders so
that after such purchase each Lender will hold its Pro Rata Share of 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 Obligations or such amounts which may be subject to setoff, such Lender
agrees, promptly upon demand, to take such action necessary such that all
Lenders share in the benefits of such collateral ratably in accordance with
their respective Pro Rata Shares. In case any such payment is disturbed by
legal process, or otherwise, appropriate further adjustments shall be made.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
SECTION 12.01. SUCCESSORS AND PERMITTED ASSIGNS. The terms and
provisions of the Loan Documents shall be binding upon and inure to the
benefit of the Borrower and the Lenders and their respective successors and
permitted assigns, except that (i) the Borrower shall not have the right to
assign its rights or obligations under the Loan
69
Documents and (ii) any assignment by any Lender must be made in compliance
with Section 12.03. Notwithstanding clause (ii) of this Section, any Lender
may at any time, without the consent of the Borrower or the Agent, assign
all or any portion of its rights under this Agreement and its Notes to a
Federal Reserve Bank; PROVIDED, HOWEVER, that no such assignment shall
release the transferor Lender from its obligations hereunder. The Agent
may treat the payee of any Note as the owner thereof for all purposes
hereof unless and until such payee complies with Section 12.03 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 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.
SECTION 12.02. PARTICIPATIONS.
(a) PERMITTED PARTICIPANTS; EFFECT. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at any time
sell to one or more banks or other entities ("Participants") participating
interests in any Loan owing to such Lender, any Note held by such Lender,
any Commitment of such Lender or any other interest of such Lender under
the Loan Documents. In the event of any such sale by a Lender of
participating interests to a Participant, such Lender's obligations under
the Loan Documents shall remain unchanged, such Lender shall remain solely
responsible to the other parties hereto for the performance of such
obligations, such Lender shall remain the holder of any such Note for all
purposes under the Loan Documents, all amounts payable by the Borrower
under this Agreement shall be determined as if such Lender had not sold
such participating interests, and the Borrower and the Agent shall continue
to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under the Loan Documents.
(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 other than
any amendment, modification or waiver with respect to any Loan or
Commitment in which such Participant has an interest which forgives
principal, interest or fees or reduces the interest rate or fees payable
with respect to any such Loan or Commitment, postpones any date fixed for
any regularly-scheduled payment of principal of, or interest or fees on,
any such Loan or Commitment, releases any guarantor of any such Loan or
releases any substantial portion of collateral, if any, securing any such
Loan.
70
(c) BENEFIT OF SETOFF. The Borrower agrees that each Participant
shall be deemed to have the right of setoff provided in Section 11.01 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 11.01
with respect to the amount of participating interests sold to each
Participant. The Lenders agree to share with each Participant, and each
Participant, by exercising the right of setoff provided in Section 11.01,
agrees 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 11.02 as if each Participant were a Lender.
SECTION 12.03. 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
rights and obligations under the Loan Documents. Such assignment shall be
substantially in the form of Exhibit C hereto. Unless an Event of Default
has occurred and is continuing, the consent of the Borrower and the Agent
shall be required prior to an assignment becoming effective with respect to
a Purchaser which is not a Lender or an Affiliate thereof. Such consent
shall be substantially in the form attached as Exhibit C-2 hereto and shall
not be unreasonably withheld.
(b) EFFECT; EFFECTIVE DATE. Upon (i) delivery to the Agent of a
notice of assignment, substantially in the form attached as Exhibit C-1
hereto (a "Notice of Assignment"), together with any consents required by
Section 12.03(a), and (ii) payment of a $2,500 fee to the Agent for
processing such assignment, such assignment shall become effective on the
effective date specified in such Notice of Assignment. On and after the
effective date of such assignment, such Purchaser shall for all purposes be
a Lender party to this Agreement and any other Loan Document executed by
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 no further consent or action by the Borrower, the Lenders or
the Agent shall be required to release the transferor Lender with respect
to the percentage of the Aggregate Commitment and Loans assigned to such
Purchaser. Upon the consummation of any assignment to a Purchaser pursuant
to this Section 12.03(b), the transferor Lender, the Agent and the Borrower
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
their Commitment, as adjusted pursuant to such assignment.
71
(c) DISSEMINATION OF INFORMATION. The Borrower authorizes each
Lender to disclose to any Participant or Purchaser or any other Person
acquiring an interest in the Loan Documents by operation of law (each a
"Transferee") and any prospective Transferee any and all information in
such Lender's possession concerning the creditworthiness of the Borrower
and its Subsidiaries.
(d) TAX TREATMENT. If any interest in any Loan Document is
transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any state thereof, the
transferor Lender shall cause such Transferee, concurrently with the
effectiveness of such transfer, to comply with the provisions of Section
2.19.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.01. NOTICE.
(a) Except as otherwise permitted by Section 2.14 with respect to
borrowing notices, all notices and other communications provided to any
party hereto under this Agreement or any other Loan Document shall be in
writing or by telex or by facsimile and addressed or delivered to such
party at its address set forth below its signature hereto or at such other
address as may be designated by such party in a notice to the other
parties. Any notice, if mailed and properly addressed with postage prepaid,
shall be deemed given when received (or when delivery is refused); any
notice, if transmitted by telex or facsimile, shall be deemed given when
transmitted (answerback confirmed in the case of telexes).
(b) The Borrower, the 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.
SECTION 13.02. SURVIVAL OF REPRESENTATIONS. All covenants,
agreements, representations and warranties made herein and in the
certificates delivered pursuant hereto shall survive the making by the
Lenders of any Loans herein contemplated and the execution and delivery to
the Lenders of the Notes evidencing the Commitments, and shall continue in
full force and effect until all of the Obligations have been paid in full
and the Aggregate Commitment has been terminated.
SECTION 13.03. EXPENSES. The Borrower shall pay (i) all expenses,
including attorneys' fees and disbursements (which attorneys may be
employees of the Agent or any Lender), incurred by the Agent and any Lender
in connection with the adminis-
72
tration of this Agreement and the other Loan Documents, any amendments,
modifications or waivers with respect to any of the provisions thereof
and the enforcement and protection of the rights of the Lenders and the
Agent under this Agreement or any of the other Loan Documents, including
all recording and filing fees, documentary stamp, intangibles and similar
taxes, title insurance premiums, appraisal fees and other costs and
disbursements incurred in connection with the taking of collateral and
the perfection and preservation of the Lenders' security therein, and
(ii) the reasonable fees and the disbursements of Agent's attorneys
(which attorneys may be employees of the Agent) in connection
with the preparation, negotiation, execution, delivery and review of this
Agreement, the Notes and the other Loan Documents (whether or not the
transactions contemplated by this Agreement shall be consummated) and the
closing of the transactions contemplated hereby. Expenses being reimbursed
by the Borrower under this Section include, without limitation, the cost
and expense of obtaining an appraisal of each parcel of real property or
interest in real property which serves or is proposed as Collateral, which
appraisals shall be in conformity with the applicable requirements of any
law or any governmental rule, regulation, policy, guideline or directive
(whether or not having the force of law), or any interpretation thereof,
including, without limitation, the provisions of Title XI of the Financial
Institutions Reform, Recovery and Enforcement Act of 1989, as amended,
reformed or otherwise modified from time to time, and any rules promulgated
to implement such provisions.
SECTION 13.04. INDEMNIFICATION OF THE LENDERS AND THE AGENT. The
Borrower shall indemnify and hold harmless the Agent and each Lender, and
their respective directors, officers and employees against all losses,
claims, damages, penalties, judgments, liabilities and expenses (including,
without limitation, all expenses of litigation or preparation therefor
whether or not the Agent or any Lender is a party thereto) which any of
them may pay or incur arising out of or relating to, directly or
indirectly, this Agreement, the other Loan Documents, the transactions
contemplated hereby or the direct or indirect application or proposed
application of the proceeds of any Loan hereunder; PROVIDED, HOWEVER, that
in no event shall the Agent or a Lender have the right to be indemnified
hereunder for its own gross negligence or willful misconduct nor shall the
Agent be indemnified against any liabilities which arise as a result of any
claims made or actions, suits or proceedings commenced or maintained
against any Lender (including the Agent, in its capacity as such) (i) by
that Lender's shareholders or any governmental regulatory body or authority
asserting that such Lender or any of its directors, officers, employees or
agents violated any banking or securities law or regulation or any duty to
its own shareholders, customers (excluding the Borrower) or creditors in
any manner whatsoever in entering into or performing any of its obligations
contemplated by this Agreement or (ii) by any other Lender. The obligations
of the Borrower under this Section shall survive the termination of this
Agreement.
73
SECTION 13.05. MAXIMUM INTEREST RATE. It is the intention of the
Lenders and the Borrower that the interest (as defined under applicable
law) on the Indebtedness evidenced by the Notes which may be charged to, or
collected or received from the Borrower shall not exceed the maximum rate
permissible under applicable law. Accordingly, anything herein or in any of
the Notes to the contrary notwithstanding, should any interest (as so
defined) be charged to, or collected or received from the Borrower by the
Lenders pursuant hereto or thereto in excess of the maximum legal rate,
then the excess payment shall be applied to the reduction of the aggregate
outstanding principal balance of the Obligations, and any portion of the
excess payment remaining after payment in full thereof shall be returned by
the Lenders to the Borrower.
SECTION 13.06. MODIFICATION OF AGREEMENT. No modification, amendment
or waiver of any provision of this Agreement or the Notes, nor any consent
to any departure by the Borrower therefrom, in any event shall be effective
unless the same shall be in writing and signed by the Borrower (or by the
Company on their behalf) and by the Required Lenders (or by the Agent on
their behalf), and then the waiver or consent shall be effective only in
the specific instance and for the purpose for which given; PROVIDED,
HOWEVER, that no such modification, amendment or waiver shall, without the
consent of each Lender affected thereby:
(i) extend the maturity of any Loan or Note or reduce
or forgive the principal amount thereof, or reduce the rate or
extend the time of payment of interest or fees thereon;
(ii) reduce the percentage specified in the definition of
Required Lenders;
(iii) extend the Termination Date otherwise than pursuant
to Section 2.07, or reduce the amount or extend the payment date
for, the mandatory payments required under Section 2.04, or
increase the amount of the Commitment of any Lender hereunder, or
permit the Borrower to assign its rights under this Agreement;
(iv) modify or amend the provisions of Sections 2.07; or
(v) mend this Section 13.06.
No amendment of any provision of this Agreement relating to the Agent shall
be effective without the written consent of the Agent. No notice to or
demand of the Borrower in any case shall entitle the Borrower to any other
or further notice or demand in the same, similar or other circumstances.
74
SECTION 13.07. PRESERVATION OF RIGHTS. No delay or omission of the
Lenders or the Agent to exercise any right under the Loan Documents shall
impair such right or be construed to be a waiver of any Event of Default or
an acquiescence therein, and the making of a Loan notwithstanding the
existence of an Event of Default or Unmatured Default, or the inability of
the Borrower to satisfy the conditions precedent to such Loan shall not
constitute any waiver or acquiescence. Any single or partial exercise of
any such right shall not preclude other or further exercise thereof or the
exercise of any other right, and no waiver, amendment or other variation of
the terms, conditions or provisions of the Loan Documents whatsoever shall
be valid unless in writing signed by the Lenders required pursuant to
Section 13.06, and then only to the extent in such writing specifically set
forth. All remedies contained in the Loan Documents or by law afforded
shall be cumulative and all shall be available to the Agent and the Lenders
until the Obligations have been paid in full.
SECTION 13.08. JOINT AND SEVERAL OBLIGATIONS OF BORROWER;
SEVERAL OBLIGATIONS OF LENDERS.
All obligations, representations and warranties hereunder and under any of
the Loan Documents, unless otherwise expressly stated, shall be the joint
and several liability of all of the entities comprising the Borrower. The
respective obligations of the Lenders hereunder are several and not joint
and no Lender shall be the partner or agent of any other (except to the
extent to which the Agent is authorized to act as such). The failure of any
Lender to perform any of its obligations hereunder shall not relieve any
other Lender from any of its obligations hereunder. This Agreement shall
not be construed so as to confer any right or benefit upon any Person other
than the parties to this Agreement and their respective successors and
assigns.
SECTION 13.09. SEVERABILITY. If any one or more of the provisions
contained in this Agreement or the Notes is held invalid, illegal or
unenforceable in any respect, the validity, legality or enforceability of
the remaining provisions contained herein and therein shall not in any way
be affected or impaired thereby.
SECTION 13.10. COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which may be executed by one or more of the
parties hereto, but all of which, when taken together, shall constitute a
single agreement binding on all the parties hereto.
SECTION 13.11. REPRESENTATION AND WARRANTY BY THE LENDERS. The
Lenders represent and warrant to the Borrower that the Notes to be acquired
by them hereunder will evidence loans made in the ordinary course of their
respective commercial banking or real estate lending businesses.
75
SECTION 13.12. THE COMPANY AS AGENT FOR EACH OTHER BORROWER. Each of
the entities comprising the Borrower hereby appoints the Company as their
agent and attorney-in-fact to execute and deliver any and all documents for
an on behalf of the Borrower in connection with the transactions
contemplated by this Agreement or any of the other Loan Documents, or in
connection with the amendment, modification or termination of any thereof,
and hereby agree that upon execution of any such documents or instruments
they shall be binding upon each of the Borrower. The Borrower further agree
that the Lenders may rely upon written representations from the Company
that it is acting on behalf of the Borrower in accordance with the
provisions of this Section 13.12 until such time as it receives notice in
writing from the Borrower of the termination of the designation of the
Company as agent an attorney-in-fact for each Borrower.
SECTION 13.13. LOSS, ETC., NOTES. Upon receipt by the Borrower of
reasonably satisfactory evidence of the loss, theft, destruction or
mutilation of any of the Notes, upon reimbursement to the Borrower of all
reasonable expenses incidental thereto and upon surrender and cancellation
of the relevant Note, if mutilated, the Borrower shall make and deliver in
lieu of that Note (the "Prior Note") a new Note of like tenor, except that
no reference need be made in the new Note to any installment or
installments of principal, if any, previously due and paid upon the Prior
Note. Any Note made and delivered in accordance with the provisions of this
Section shall be dated as of the date to which interest has been paid on
the unpaid principal amount of the Prior Note.
SECTION 13.14. GOVERNMENTAL REGULATION. Anything contained in this
Agreement to the contrary notwithstanding, no Lender shall be obligated to
extend credit to the Borrower in violation of any limitation or prohibition
provided by any applicable statute or regulation.
SECTION 13.15. TAXES. Any taxes (excluding federal income taxes on
the overall net income of any Lender) or other similar assessments or
charges payable or ruled payable by any governmental authority in respect
of the Loan Documents shall be paid by the Borrower, together with interest
and penalties, if any.
SECTION 13.16. HEADINGS. Section headings in the Loan Documents are
for convenience of reference only, and shall not govern the interpretation
of any of the provisions of the Loan Documents.
SECTION 13.17. ENTIRE AGREEMENT. This Agreement sets forth the
entire agreement of the parties hereto with respect to the subject matter
hereof; PROVIDED, HOWEVER, that the fees payable by Borrower to First
Chicago in consideration of its agreement to serve as Agent hereunder are
set forth in a separate letter agreement between Borrower and First
Chicago. The parties hereto agree that on the Effective
76
Date the commitments of the Prior Lenders under the Prior Credit
Agreement shall be terminated and of no further force and effect.
SECTION 13.18. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE
CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF
CONFLICTS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS.
SECTION 13.19. CONSENT TO JURISDICTION. THE BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND THE
BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE
VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDINC BROUGHT IN SUCH A COURT OR
THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE
RIGHT OF THE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER
IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE
BORROWER AGAINST THE AGENT OR ANY LENDER OR ANY AFFILIATE OF THE AGENT OR
ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING
OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT
ONLY IN A COURT IN CHICAGO, ILLINOIS.
SECTION 13.20. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND
EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED
WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
[SIGNATURES BEGIN ON NEXT PAGE]
77
IN WITNESS WHEREOF, the Borrower and the Lenders have caused this
Agreement to be duly executed as of the date first above written.
BORROWER:
LENNAR CORPORATION and each of the
Subsidiaries listed on Schedule I
By: /s/ ALLAN J. PEKOR
-----------------------------
Allan J. Pekor as Vice President of each of such
corporations except Bert L. Smokler & Company, Lennar
Financial Services, Inc., Loan Funding, Inc., Unisure
Insurance Agency, Inc. and Universal Title Insurors,
Inc. and as Director of each of Bert L. Smokler &
Company, Lennar Financial Services, Inc., Loan Funding,
Inc., Unisure Insurance Agency, Inc., and Universal
Title Insurors, Inc.
Attest: /s/ MORRIS J. WATSKY
-----------------------------
Morris J. Watsky as Assistant Secretary of each
of such corporations
Address:
Lennar Corporation
700 Northwest 107th Avenue
Miami, Florida 33172
Attention: Leonard Miller, President
[SIGNATURES CONTINUE ON NEXT PAGE]
78
COMMITMENTS LENDERS:
$32,500,000 THE FIRST NATIONAL BANK OF
CHICAGO, Individually and
as Agent
By /s/ F. PATT SCHIEWITZ
-----------------------------
F. Patt Schiewitz, Vice President
Address:
The First National Bank of
Chicago
One First National Plaza
13th Floor
Suite 0318
Chicago, Illinois 60670-0318
Attention: James C. Rozek, Vice President
with a copy to:
The First National Bank of
Chicago
One First National Plaza
Suite 0801
Chicago, Illinois 60670-0801
Attention: Law Department
$27,500,000 THE FIRST NATIONAL BANK OF
BOSTON
By: /s/ PAUL DIVITO
-----------------------------
Address:
400 Perimeter Center Terrace
Suite 745
Atlanta, Georgia 30346
Attention: Linda Carter, Vice President
79
$25,000,000 BANK ONE, TEXAS, N.A.
By: /s/ DALE W. RENNER
-----------------------------
Address:
1717 Main Street, 3rd Floor
Dallas, Texas 75201
Attention: Dale W. Renner,
Vice President
$27,500,000 CREDIT LYONNAIS ATLANTA AGENCY
By: /s/ DAVID M. CAWRSE
-----------------------------
Address:
Suite 1700
235 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attention: Pascal Seris,
Vice President
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH
By: /s/ DAVID M. CAWRSE
-----------------------------
Address:
c/o Credit Lyonnais Atlanta Agency
Suite 1700
235 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attention: Pascal Seris,
Vice President
$5,000,000 INTERCONTINENTAL BANK
By: /s/ KAREN B. GILMORE
-----------------------------
Address:
6th Floor
200 S.E. First Street
Miami, Florida 33131
Attention: Karen B. Gilmore,
Senior Vice President
80
$30,000,000 COMERICA BANK
By: /s/ MICHAEL KRZYSTOWCZYK
-----------------------------
Address:
One Detroit Center
500 Woodward Avenue, 9th Floor
Detroit, Michigan 48267
Attention: Michael Krzystowczyk,
$30,000,000 NATIONSBANK OF FLORIDA, N.A.
By: /s/ VINCENT A. TRIA, JR.
-----------------------------
Address:
150 S.E. Third Avenue, Room 524
Miami, Florida 33131
Attention: Vincent A. Tria, Jr.,
Vice President
$10,000,000 THE FUJI BANK, LIMITED
NEW YORK BRANCH
By: /s/ NORIMASA KURODA
-----------------------------
Norimasa Kuroda,
Joint General Manager
Address:
Two World Trade Center, 79th Floor
New York, New York 10048
Attention: Brian O'Leary,
Vice President
81
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$17,500,000 BARNETT BANK OF SOUTH FLORIDA, N.A.
By: /s/ CLAY F. WILSON
-----------------------------
Address:
701 Brickell Avenue, 6th Floor
Miami, Florida 33131
Attention: Clay F. Wilson,
Vice President
$25,000,000 NBD BANK, N.A.
By: /s/ CAROLANN M. MORYKWAS
Carolann M. Morykwas,
-----------------------------
Vice President
Address:
Financial Services Division
611 Woodward Avenue
Detroit, Michigan 48226-3497
Attention: Pat Power,
Second Vice President
$20,000,000 CONTINENTAL BANK
By: /s/ MARK LARIVIERE
-----------------------------
Address:
231 S. LaSalle, 15th Floor
Chicago, Illinois 60697
Attention: Mark Lariviere,
Vice President
82
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