$165,000,000 TERM LOAN FACILITY
CREDIT AGREEMENT
by and among
X. XXXXXXXXX ENTERPRISES, INC.
(as the Borrower)
HOVNANIAN ENTERPRISES, INC.
(as a Guarantor)
and THE BANKS PARTY HERETO
FLEET NATIONAL BANK, as Administrative Agent
BANK OF AMERICA, N.A.,
As Syndication Agent
BANC OF AMERICA SECURITIES, LLC
and FLEET NATIONAL BANK
as Joint Lead Arrangers
and BANC OF AMERICA SECURITIES, LLC
as Sole Joint Book Manager
Dated January 22, 2002
1. CERTAIN DEFINITIONS 1
1.1 Certain Definitions. 1
1.2 Construction. 19
1.2.1. Number; Inclusion. 19
1.2.2. Determination. 19
1.2.3. Agent's Discretion and Consent. 19
1.2.4. Documents Taken as a Whole. 19
1.2.5. Headings. 19
1.2.6. Implied References to this Agreement. 19
1.2.7. Persons. 19
1.2.8. Modifications to Documents. 20
1.2.9. From, To and Through. 20
1.2.10. Shall; Will. 20
1.3 Accounting Principles. 20
2. TERM LOAN 20
2.1 Term Loan Commitments. 20
2.1.1. Term Loans. 20
2.1.2. Voluntary Prepayment. 21
2.1.3. Increase in Commitments After Closing Date. 21
2.2 Nature of Banks' Obligations with Respect to Term Loans 21
2.3 Use of Proceeds. 22
2.4 Renewal and Conversion of Loans. 22
2.5 Designation of Subsidiaries and Release of Guarantors. 22
2.5.1. Release of Guarantors. 22
2.5.2. Designation of Non-Restricted Person. 23
2.5.3. Automatic Designation of Non-Restricted Person. 23
2.5.4. Designation of Restricted Subsidiary. 23
2.5.5. Designations under Revolving Senior Debt
Facility. 24
3. INTEREST RATES 24
3.1 Interest Rate Options. 24
3.1.1. Term Loan Interest Rate Options. 24
3.1.2. Rate Quotations. 24
3.2 Interest Periods. 25
3.3 Interest After Default. 25
3.3.1. Default Rate. 25
3.3.2. Acknowledgment. 25
3.4 LIBO-Rate Unascertainable; Illegality; Increased Costs;
Deposits Not Available. 25
3.4.1. Unascertainable. 25
3.4.2. Illegality; Increased Costs; Deposits Not
Available. 26
3.4.3. Agent's and Bank's Rights. 26
3.5 Selection of Interest Rate Options. 27
4. PAYMENTS 27
4.1 Payments. 27
4.2 Pro Rata Treatment of Banks. 27
4.3 Interest Payment Dates and Maturity Date. 27
4.4 Voluntary Prepayments. 28
4.4.1. Right to Prepay. 28
4.4.2. Replacement of a Bank. 28
4.4.3. Change of Lending Office. 29
4.5 Mandatory Payments. 29
4.6 Additional Compensation in Certain Circumstances. 29
4.6.1. Increased Costs or Reduced Return Resulting from
Taxes, Reserves, Capital Adequacy Requirements,
Expenses, Etc. 29
4.6.2. Indemnity. 30
4.7 Notes. 31
5. REPRESENTATIONS AND WARRANTIES 31
5.1 Representations and Warranties. 31
5.1.1. Organization and Qualification. 31
5.1.2. Subsidiaries. 31
5.1.3. Power and Authority. 32
5.1.4. Validity and Binding Effect. 32
5.1.5. No Conflict. 32
5.1.6. Litigation. 32
5.1.7. Title to Properties. 33
5.1.8. Financial Statements. 33
5.1.9. Use of Proceeds; Margin Stock. 34
5.1.10. Full Disclosure. 34
5.1.11. Taxes. 34
5.1.12. Consents and Approvals. 35
5.1.13. No Event of Default; Compliance with Instruments. 35
5.1.14. Patents, Trademarks, Copyrights, Licenses, Etc. 35
5.1.15. Insurance. 35
5.1.16. Compliance with Laws. 35
5.1.17. Burdensome Restrictions. 35
5.1.18. Investment Companies; Regulated Entities. 36
5.1.19. Plans and Benefit Arrangements. 36
5.1.20. Employment Matters. 37
5.1.21. Environmental Matters. 37
5.1.22. Senior Debt Status. 37
5.2 Continuation of Representations. 37
6. CONDITIONS OF LENDING 38
6.1 Term Loans On the Closing Date. 38
6.1.1. Officer's Certificate. 38
6.1.2. Incumbency Certificate. 38
6.1.3. Delivery of Loan Documents . 39
6.1.4. Opinion of Counsel. 39
6.1.5. Legal Details. 39
6.1.6. Payment of Fees. 39
6.1.7. Consents. 39
6.1.8. Officer's Certificate Regarding MACs. 39
6.1.9. No Actions or Proceedings. 39
6.1.10. Obligations under Revolving Senior Debt. 40
6.1.11. Closing Borrowing Base Certificate. 40
6.2 Each Additional Term Loan. 40
7. COVENANTS 40
7.1 Affirmative Covenants. 40
7.1.1. Preservation of Existence, Etc. 40
7.1.2. Payment of Liabilities, Including Taxes, Etc. 41
7.1.3. Maintenance of Insurance. 41
7.1.4. Maintenance of Properties and Leases. 41
7.1.5. Maintenance of Patents, Trademarks, Etc. 41
7.1.6. Visitation Rights. 41
7.1.7. Keeping of Records and Books of Account. 42
7.1.8. Plans and Benefit Arrangements. 42
7.1.9. Compliance with Laws. 42
7.1.10. Use of Proceeds. 42
7.1.11. Required Dividends of KHL. 43
7.1.12. Payments to and by KHL. 43
7.2 Negative Covenants. 43
7.2.1. Indebtedness. 43
7.2.2. Liens. 43
7.2.3. Loans and Investments. 43
7.2.4. Liquidations, Mergers, Consolidations,
Acquisitions. 44
7.2.5. Dispositions of Assets or Subsidiaries; Sale and
Leaseback. 45
7.2.6. Restricted Payments; Restricted Investments. 45
7.2.7. Subsidiaries, Partnerships and Joint Ventures. 46
7.2.8. Continuation of or Change in Business. 46
7.2.9. Plans and Benefit Arrangements. 46
7.2.10. Borrowing Base. 46
7.2.11. Minimum ATNW. 47
7.2.12. Leverage Ratio. 47
7.2.13. Inventory and Land Purchase Limits. 47
7.2.14. Fiscal Year. 48
7.2.15. Changes in Subordinated Debt Documents. 48
7.3 Reporting Requirements. 48
7.3.1. Quarterly Financial Statements. 48
7.3.2. Annual Financial Statements. 49
7.3.3. Certificates of the Borrower. 49
7.3.4. Notice of Default. 50
7.3.5. Notice of Litigation. 50
7.3.6. Notice of Change in Debt Rating. 50
7.3.7. Budgets, Forecasts, Other Reports and
Information. 50
7.3.8. Notices Regarding Plans and Benefit Arrangements. 51
8. DEFAULT 52
8.1 Events of Default. 52
8.1.1. Payments Under Loan Documents. 52
8.1.2. Breach of Warranty. 52
8.1.3. Breach of Certain Negative Covenants. 52
8.1.4. Breach of Other Covenants. 52
8.1.5. Defaults in Other Agreements or Indebtedness. 53
8.1.6. Final Judgments or Orders. 53
8.1.7. Loan Document Unenforceable. 53
8.1.8. Uninsured Losses; Proceedings Against Assets. 53
8.1.9. Notice of Lien or Assessment. 53
8.1.10. Insolvency. 54
8.1.11. Events Relating to Plans and Benefit
Arrangements. 54
8.1.12. Cessation of Business. 54
8.1.13. Change of Control. 55
8.1.14. Involuntary Proceedings. 55
8.1.15. Voluntary Proceedings. 55
8.2 Consequences of Event of Default. 55
8.2.1. Events of Default Other Than Bankruptcy,
Insolvency or Reorganization Proceedings. 55
8.2.2. Bankruptcy, Insolvency or Reorganization
Proceedings. 56
8.2.3. Set-off. 56
8.2.4. Suits, Actions, Proceedings. 56
8.2.5. Application of Proceeds. 57
8.2.6. Other Rights and Remedies. 57
9. THE AGENT 57
9.1 Appointment. 57
9.2 Delegation of Duties. 57
9.3 Nature of Duties; Independent Credit Investigation. 58
9.4 Actions in Discretion of Agent; Instructions From the
Banks. 58
9.5 Reimbursement and Indemnification of Agent by the
Borrower. 59
9.6 Exculpatory Provisions; Limitation of Liability. 59
9.7 Reimbursement and Indemnification of Agent by Banks. 60
9.8 Reliance by Agent. 60
9.9 Notice of Default. 61
9.10 Notices. 61
9.11 Banks in Their Individual Capacities; Agents in its
Individual Capacity. 61
9.12 Holders of Notes. 61
9.13 Equalization of Banks. 62
9.14 Successor Agent. 62
9.15 Agent's Fee. 63
9.16 Availability of Funds. 63
9.17 Calculations. 63
9.18 Beneficiaries. 63
10. MISCELLANEOUS 64
10.1 Modifications, Amendments or Waivers. 64
10.1.1. Increase of Commitment. 64
10.1.2. Extension of Payment; Reduction of Principal,
Interest or Fees; Modification of Terms of
Payment. 64
10.1.3. Miscellaneous 64
10.2 No Implied Waivers; Cumulative Remedies; Writing Required. 64
10.3 Reimbursement and Indemnification of Banks by the
Borrower; Taxes. 65
10.4 Holidays. 66
10.5 Funding by Branch, Subsidiary or Affiliate. 66
10.5.1. Notional Funding. 66
10.5.2. Actual Funding. 66
10.6 Notices. 67
10.7 Severability. 67
10.8 Governing Law. 68
10.9 Prior Understanding. 68
10.10 Duration; Survival. 68
10.11 Successors and Assigns. 68
10.12 Confidentiality. 70
10.12.1. General. 70
10.12.2. Sharing Information With Affiliates of the Banks. 71
10.13 Counterparts. 71
10.14 Agent's or Bank's Consent. 71
10.15 Exceptions. 71
10.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL. 72
10.17 Tax Withholding Clause. 72
10.18 Joinder of Guarantors. 73
10.19 Concerning Agent Terms. 73
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
SCHEDULE 1.1(A) - COMMITMENTS OF BANKS AND ADDRESSES FOR
NOTICES
SCHEDULE 1.1(B) - LISTING OF RESTRICTED SUBSIDIARIES, JOINT
VENTURES, MORTGAGE SUBSIDIARIES AND NON-
RESTRICTED PERSONS
SCHEDULE 1.1(E) - INCOME PRODUCING PROPERTIES
SCHEDULE 1.1(P) - PERMITTED LIENS
SCHEDULE 5.1.2 - SUBSIDIARIES
SCHEDULE 5.1.12 - CONSENTS AND APPROVALS
SCHEDULE 7.2.1 - PERMITTED INDEBTEDNESS
EXHIBITS
EXHIBIT 1.1(A) - ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT 1.1 (B) - BANK JOINDER AND ASSUMPTION AGREEMENT
EXHIBIT 1.1(G) - GUARANTOR JOINDER
EXHIBIT 1.1(T) - FORM OF TERM NOTE
EXHIBIT 2.4 - FORM OF TERM LOAN REQUEST
EXHIBIT 7.3.3.1 - QUARTERLY COMPLIANCE CERTIFICATE
EXHIBIT 7.3.3.2 - BORROWING BASE CERTIFICATE
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated January 22, 2002 and is made by
and among X. XXXXXXXXX ENTERPRISES, INC., a New Jersey corporation
(the "Borrower"), HOVNANIAN ENTERPRISES, INC., a Delaware corporation
("Hovnanian" and a "Guarantor"), the BANKS (as hereinafter defined),
and FLEET NATIONAL BANK, in its capacity as administrative agent for
the Banks under this Agreement (hereinafter referred to in such
capacity as the "Agent").
WITNESSETH:
WHEREAS, the Borrower has requested the Banks to provide a term
loan facility to the Borrower in an aggregate principal amount not to
exceed on the Closing Date $165,000,000;
WHEREAS, the Term Loans shall be used to provide funds for the
refinancing of the acquisition of substantially all of the assets of
The Forecast Group, L.P. in January, 2002 and for other acquisitions
not prohibited hereunder and for other corporate purpose; and
WHEREAS, the Banks are willing to provide such credit upon the
terms and conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto, in consideration of their
mutual covenants and agreements hereinafter set forth and intending to
be legally bound hereby, covenant and agree as follows:
1. CERTAIN DEFINITIONS
1.1 Certain Definitions.
In addition to words and terms defined elsewhere in this
Agreement, the following words and terms shall have the following
meanings, respectively, unless the context hereof clearly requires
otherwise:
Actual Leverage shall mean the ratio of (x)(i) Homebuilding
Indebtedness minus (ii) Excess Cash to (y) Adjusted Tangible Net
Worth.
Additional Bank shall have the meaning assigned to that term in
Section 10.11(b) (Successors and Assigns).
Adjusted Operating Income shall mean for any period the sum of
(x) consolidated net income of Hovnanian for such period, (y) to the
extent deducted in arriving at such net income, consolidated income
taxes, consolidated interest expense, fees in respect of letters of
credit under the Revolving Senior Debt Facility, depreciation,
amortization, non-cash valuation charges or adjustments and (z) cash
distributions received by any Loan Party from Non-Restricted Persons
during such period. Adjusted Operating Income shall exclude net
income or loss of Non-Restricted Persons.
Adjusted Tangible Net Worth (or ATNW) shall mean (x)
consolidated shareholders equity of Hovnanian minus, without
duplication (y) (i) Intangibles, (ii) the Dollar amount of Restricted
Investments and (iii) equity (comprising "cost" according to GAAP
minus the amount of debt secured by applicable mortgages) in
residential inventory properties with Purchase Money Mortgages, all as
calculated and consolidated in accordance with GAAP.
Affiliate as to any Person shall mean any other Person (i)which
directly or indirectly controls, is controlled by, or is under common
control with such Person, (ii)which beneficially owns or holds 10% or
more of any class of the voting or other equity interests of such
Person, or (iii)10% or more of any class of voting interests or other
equity interests of which is beneficially owned or held, directly or
indirectly, by such Person. Control, as used in this definition,
shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by
contract or otherwise, including the power to elect a majority of the
directors or trustees of a corporation or trust, as the case may be.
Agent shall mean Fleet National Bank as Administrative Agent.
Agent's Fee shall have the meaning assigned to that term in
Section 9.15 (Agent's Fee).
Agent's Letter shall have the meaning assigned to that term in
Section 9.15 (Agent's Fee).
Agreement shall mean this Credit Agreement, as the same may be
supplemented or amended from time to time, including all schedules and
exhibits.
Annual Statements shall have the meaning assigned to that term
in Section 5.1.8((i) (Historical Statements)).
Applicable Margin shall mean, as applicable:
(A) the annual rate of one hundred twenty five basis points
(1.25%) to be added to Base Rate under the Base Rate Option,"
(B) the annual rate of two hundred fifty basis points (2.50%)
to be added to LIBO-Rate under the LIBO Rate Option.
Approved Fund means with respect to any Bank that is a fund that
invests in bank loans, any other fund that invests in commercial loans
and is managed or advised by the same investment advisor as such Bank
or by an Affiliate of such investment advisor.
Assignment and Assumption Agreement shall mean an Assignment and
Assumption Agreement by and among a Purchasing Bank, a Transferor Bank
and the Agent, as Agent and on behalf of the remaining Banks,
substantially in the form of Exhibit 1.1(A).
Authorized Officer shall mean those individuals, designated by
written notice to the Agent from the Borrower, authorized to execute
notices, reports and other documents on behalf of the Loan Parties
required hereunder. The Borrower may amend such list of individuals
from time to time by giving written notice of such amendment to the
Agent.
Banks shall mean the financial institutions named on Schedule
1.1(A) and their respective successors and assigns as permitted
hereunder, each of which is referred to herein as a Bank.
Base Rate shall mean the greater of (i) the variable per annum
rate of interest designated from time to time by Fleet as its "prime
rate" (which prime rate is a reference rate and does not necessarily
represent the lowest or best rate being charged to any customer) or
(ii)the Federal Funds Effective Rate plus 1/2% per annum.
Base Rate Option shall mean the option of the Borrower to have
Term Loans bear interest at the rate and under the terms and
conditions set forth in Section 3.1.1(i).
Benefit Arrangement shall mean at any time an
"employee benefit plan," within the meaning of Section 3(3) of ERISA,
which is neither a Plan nor a Multiemployer Plan and which is
maintained, sponsored or otherwise contributed to by the Borrower.
Borrower shall mean X. Xxxxxxxxx Enterprises, Inc., a
corporation organized and existing under the laws of the State of New
Jersey and wholly-owned by Hovnanian.
Borrowing Base shall mean at any time, the Dollar amount equal
to the sum of the following items, each owned free and clear of all
Liens (except Permitted Liens of the type described in items (i),
(ii), (iii), (iv), (v) and (vi) of the definition of "Permitted
Liens") by the Borrower, Hovnanian or a Restricted Subsidiary:
(i) 100% of Excess Cash;
(ii) 95% of Sold Homes;
(iii) 70% of Unsold Homes; and
(iv) 55% of Finished Lots and Land Under Development;
provided however that the Borrowing Base shall exclude in all events
the Dollar amount of
(i) property located outside of the
United States of America in excess
of $10,000,000;
(ii) Unimproved Land;
(iii) any residential or commercial
property owned by Hovnanian or any
Subsidiary which is leased or held
for purposes of leasing primarily
to unaffiliated third parties; and
(iv) properties subject to any Purchase
Money Mortgage.
The determination of the Agent in respect of the Borrowing Base shall
be conclusive absent manifest error.
Borrowing Base Certificate shall mean the Borrowing Base
Certificate in the form of Exhibit 7.3.3.2 duly completed and
delivered by the Borrower pursuant to Section 7.3.3.2 (Borrowing Base
Certificate).
Borrowing Date shall mean, with respect to any Term Loan, the
date for the making thereof or the renewal or conversion thereof at or
to the same or a different Interest Rate Option, which shall be a
Business Day.
Borrowing Tranche shall mean specified portions of Term Loans
outstanding as follows: (i)any Term Loans to which a LIBO-Rate Option
applies and which have the same Interest Period shall constitute one
Borrowing Tranche, and (ii)all Term Loans to which a Base Rate Option
applies shall constitute one Borrowing Tranche.
Business Day shall mean any day other than a Saturday or Sunday
or a legal holiday on which commercial banks are authorized or
required to be closed for business at the Principal Office and if the
applicable Business Day relates to any Term Loan to which the LIBO-
Rate Option applies, such day must also be a day on which dealings are
carried on in the London interbank market.
Capital Stock Retirement shall mean any repurchase, redemption,
acquisition or retirement of any capital stock or other ownership
interest of Hovnanian or of any warrants, options or other rights to
purchase such capital stock or other ownership interest; provided that
"Capital Stock Retirement" shall not include the conversion or
exchange of any of the foregoing into shares of capital stock of
Hovnanian.
Cash Flow shall mean Adjusted Operating Income plus any decrease
in any Sold Homes, Unsold Homes, Unimproved Land or Finished Lots and
Land Under Development which is not the result of a valuation charge
or adjustment (or minus any increase in any of the foregoing
categories).
Cash Flow Coverage Ratio shall mean the ratio, as of any date of
determination, of (x) Cash Flow for the prior twelve (12) months to
(y) four (4) multiplied by Fixed Charges for the most-recently ended
fiscal quarter.
Closing Date shall mean the date hereof. The closing shall take
place at 11:00 a.m., Eastern time, on the Closing Date at Xxxxxxxx
Ingersoll Professional Corporation in New York, New York, or at such
other time and place as the parties agree.
Compliance Certificate shall have the meaning assigned to such
term in Section 7.3.3.1 (Certificates of the Borrower).
Contamination shall mean the presence or release or threat of
release of Regulated Substances in, on, under or emanating to or from
any of the Property, which pursuant to Environmental Laws requires
notification or reporting to an Official Body, or which pursuant to
Environmental Laws requires the investigation, cleanup, removal,
remediation, containment, abatement of or other response action or
which otherwise constitutes a violation of Environmental Laws.
Debt Rating shall mean the rating of Hovnanian's senior
unsecured long-term debt by each of Standard & Poor's and Xxxxx'x.
Default Rate shall have the meaning assigned to that term in
Section 3.3.1 (Default Rate).
Dividends shall mean any dividend or distribution by a Person in
respect of its capital stock or ownership interests, whether in cash,
property or securities.
Dollar, Dollars, U.S. Dollars and the symbol $ shall mean lawful
money of the United States of America.
Dwelling Unit shall mean a residential housing unit held for
sale by a Loan Party.
Environmental Complaint shall mean any written complaint by any
Person or Official Body setting forth a cause of action for personal
injury or property damage, natural resource damage, contribution or
indemnity for response costs, civil or administrative penalties,
criminal fines or penalties, or declaratory or equitable relief
arising under any Environmental Laws or under any order, notice of
violation, citation, subpoena, request for information or other
written notice or demand of any type issued by an Official Body
pursuant to any Environmental Laws.
Environmental Laws shall mean all federal, state, local and
foreign Laws and any consent decrees, settlement agreements,
judgments, orders, directives, policies or programs issued by or
entered into with an Official Body pertaining or relating to:
(i)pollution or pollution control; (ii)protection of human health or
the environment; (iii)employee safety in the workplace; (iv)the
presence, use, management, generation, manufacture, processing,
extraction, treatment, recycling, refining, reclamation, labeling,
transport, storage, collection, distribution, disposal or release or
threat of release of Regulated Substances; (v)the presence of
Contamination; (vi)the protection of endangered or threatened species;
and (vii)the protection of Environmentally Sensitive Areas.
Environmentally Sensitive Area shall mean (i) any wetland as
defined by applicable Environmental Laws; (ii) any area designated as
a coastal zone pursuant to applicable Laws, including Environmental
Laws; (iii) any area of historic or archeological significance or
scenic area as defined or designated by applicable Laws, including
Environmental Laws; (iv) habitats of endangered species or threatened
species as designated by applicable Laws, including Environmental
Laws; or (v) a floodplain or other flood hazard area as defined
pursuant to any applicable Laws.
ERISA shall mean the Employee Retirement Income Security Act of
1974, as the same may be amended or supplemented from time to time,
and any successor statute of similar import, and the rules and
regulations thereunder, as from time to time in effect.
ERISA Group shall mean, at any time, the Borrower and any entity
(whether or not incorporated) that is under common control with the
Borrower within the meaning of Section 4001 of ERISA, or the Borrower
and all other entities which, together with the Borrower, are treated
as a single employer under Sections 414 (b) or (c) of the Internal
Revenue Code.
Event of Default shall mean any of the events described in
Section 8.1 (Events of Default) and referred to therein as an "Event
of Default."
Excess Cash shall mean cash that would appear on a consolidated
balance sheet of Hovnanian (to the extent not pledged or encumbered in
any way) in excess of $10,000,000.
Existing Related Business shall mean any mortgage services,
income property management and title insurance businesses as such
businesses are operated as of the Closing Date.
Federal Funds Effective Rate for any day shall mean the rate per
annum (based on a year of 360 days and actual days elapsed and rounded
upward to the nearest 1/100 of 1%) announced by the Federal Reserve
Bank of New York (or any successor) on such day as being the weighted
average of the rates on overnight federal funds transactions arranged
by federal funds brokers on the previous trading day, as computed and
announced by such Federal Reserve Bank (or any successor) in
substantially the same manner as such Federal Reserve Bank computes
and announces the weighted average it refers to as the "Federal Funds
Effective Rate" as of the date of this Agreement; provided, if such
Federal Reserve Bank (or its successor) does not announce such rate on
any day, the "Federal Funds Effective Rate" for such day shall be the
Federal Funds Effective Rate for the last day on which such rate was
announced.
Financial Projections shall have the meaning assigned to that
term in Section 5.1.8(ii) (Financial Projections).
Finished Lots and Land Under Development shall mean the Dollar
amount of the lower of (x) actual cost (including land costs and
capitalized expenses relating thereto) or (y) the market value
(determined in accordance with GAAP) of any land that has been granted
Preliminary Approvals until a time which is the earlier of when (x) it
is "Unsold Homes" and (y) it is "Sold Homes".
Fixed Charge Coverage Ratio shall mean the ratio, as of any date
of determination, of (x) Adjusted Operating Income for the prior
twelve (12) months to (y) four (4) multiplied by Fixed Charges for the
most-recently ended fiscal quarter.
Fixed Charges shall mean the sum of (i) interest cost incurred
on all Senior Homebuilding Indebtedness over the past fiscal quarter;
(ii) interest cost incurred on the Subordinated Debt over the past
fiscal quarter; (iii) 50% of the interest cost incurred on all
Purchase Money Mortgages over the past fiscal quarter; (iv) fees
accrued in respect of letters of credit issued under the Revolving
Senior Debt Facility during the prior fiscal quarter; and (v) the
interest component of capitalized leases over the past fiscal quarter.
Fleet shall mean Fleet National Bank, its successors and
assigns.
GAAP shall mean generally accepted accounting principles as are
in effect from time to time, subject to the provisions of Section 1.3
[Accounting Principles], and applied on a consistent basis both as to
classification of items and amounts.
Guarantor shall mean each of the parties to the Guaranty
Agreement (and designated as a "Guarantor" on Schedule 1.1(B)) and
each other Person which joins the Guaranty Agreement as a Guarantor
after the date hereof pursuant to Section 10.18 (Joinder of
Guarantors). As of the Closing Date, KHL shall not be a Guarantor and
Hovnanian shall be a Guarantor and all Restricted Subsidiaries other
than the Borrower and KHL shall be Guarantors.
Guarantor Joinder shall mean a joinder by a Person as a
Guarantor under the Guaranty Agreement in the form of Exhibit 1.1(G).
Guaranty of any Person shall mean any obligation of such Person
guaranteeing or in effect guaranteeing any Indebtedness of any other
Person in any manner, whether directly or indirectly.
Guaranty Agreement shall mean the Guaranty and Suretyship
Agreement executed and delivered by each of the Guarantors to the
Agent for the benefit of the Banks.
Historical Statements shall have the meaning assigned to that
term in Section 5.1.8((i)) (Historical Statements).
Homebuilding Indebtedness shall mean the sum of (x) Senior
Homebuilding Indebtedness and (y) Subordinated Debt.
Hovnanian shall mean Hovnanian Enterprises, Inc., a Delaware
corporation, shares of whose Class A Common Stock are registered
pursuant to the Securities Exchange Act of 1934.
Indebtedness shall mean, as to any Person at any time, any and
all indebtedness, obligations or liabilities (whether matured or
unmatured, liquidated or unliquidated, direct or indirect, absolute or
contingent, or joint or several) of such Person for or in respect of:
(i)borrowed money, (ii)amounts raised under or liabilities in respect
of any note purchase or acceptance credit facility, (iii)reimbursement
obligations (contingent or otherwise) under any letter of credit,
(iv)any other transaction (including forward sale or purchase
agreements, capitalized leases and conditional sales agreements)
having the commercial effect of a borrowing of money entered into by
such Person to finance its operations or capital requirements (but not
including trade payables and accrued expenses incurred in the ordinary
course of business which are not more than ninety (90) days past due
or that are being contested in good faith by appropriate proceedings),
if and to the extent any of any of the foregoing in this item (iv)
would appear as a liability on the balance sheet of such Person
prepared on a consolidated basis in accordance with GAAP, or (v)any
Guaranty of Indebtedness for borrowed money.
Ineligible Security shall mean any security which may not be
underwritten or dealt in by member banks of the Federal Reserve System
under Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24,
Seventh), as amended.
Insolvency Proceeding shall mean, with respect to any Person,
(a)a case, action or proceeding with respect to such Person (i)before
any court or any other Official Body under any bankruptcy, insolvency,
reorganization or other similar Law now or hereafter in effect, or
(ii)for the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator, conservator (or similar official) of
any Loan Party or otherwise relating to the liquidation, dissolution,
winding-up or relief of such Person, or (b)any general assignment for
the benefit of creditors, composition, marshaling of assets for
creditors, or other, similar arrangement in respect of such Person's
creditors generally or any substantial portion of its creditors
undertaken under any Law.
Intangibles shall mean all patents, patent applications,
copyrights, trademarks, tradenames, goodwill, organization expenses
and other like items of Hovnanian and its Subsidiaries which are
treated as intangibles under GAAP.
Interest Period shall mean the period of time selected by the
Borrower in connection with (and to apply to) any election permitted
hereunder by the Borrower to have Term Loans bear interest under the
LIBO-Rate Option. Subject to the last sentence of this definition,
such period shall be one, two, three or six Months if Borrower selects
the LIBO-Rate Option. Such Interest Period shall commence on the
effective date of such Interest Rate Option, which shall be (i) the
Borrowing Date if the Borrower is requesting new Term Loans, or (ii)
the date of renewal of or conversion to the LIBO-Rate Option if the
Borrower is renewing or converting to the LIBO-Rate Option applicable
to outstanding Term Loans. Notwithstanding the second sentence
hereof: (A) any Interest Period which would otherwise end on a date
which is not a Business Day shall be extended to the next succeeding
Business Day unless such Business Day falls in the next calendar
month, in which case such Interest Period shall end on the next
preceding Business Day, and (B) the Borrower shall not select, convert
to or renew an Interest Period for any portion of the Term Loans that
would end after the Maturity Date.
Interest Rate Option shall mean any LIBO-Rate Option or Base
Rate Option.
Interim Statements shall have the meaning assigned to that term
in Section 5.1.8((i)) (Historical Statements).
Internal Revenue Code shall mean the Internal Revenue Code of
1986, as the same may be amended or supplemented from time to time,
and any successor statute of similar import, and the rules and
regulations thereunder, as from time to time in effect.
Investment shall mean any loan or advance to or on behalf of, or
purchase, acquisition or ownership of any stock, bonds, notes or
securities of, or any partnership interest (whether general or
limited) or limited liability company interest in, or any other
similar investment or interest in, or any capital contribution made
to, any other Person, or any agreement to become or remain liable to
do any of the foregoing.
Investment in Related Business shall mean the Investments by any
of Hovnanian and the Restricted Subsidiaries in (i) income-producing
properties other than those listed on Schedule 1.1E; or (ii ) Existing
Related Businesses.
Joint Ventures shall mean any Person in whom a Loan Party has an
ownership interest and which is not a "Subsidiary". Each of the Joint
Ventures as of the Closing Date is listed on Schedule 1.1(B).
KHL shall mean KHL, Inc., a Delaware corporation.
Labor Contracts shall mean all employment agreements, employment
contracts, collective bargaining agreements and other agreements among
any Loan Party or Subsidiary of a Loan Party and its employees.
Law shall mean any law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, opinion, release,
ruling, order, injunction, writ, decree, bond, judgment, authorization
or approval, lien or award of or settlement agreement with any
Official Body.
LIBO-Rate shall mean, with respect to the Term Loans comprising
any Borrowing Tranche to which the LIBO-Rate Option applies for any
Interest Period, the interest rate per annum determined by the Agent
by dividing (i) the rate of interest determined by the Agent in
accordance with its usual procedures (which determination shall be
conclusive absent manifest error) to be the average of the London
interbank offered rates for U.S. Dollars quoted by the British
Bankers' Association as set forth on Dow Xxxxx Markets Service
(formerly known as Telerate) (or appropriate successor or, if the
British Bankers' Association or its successor ceases to provide such
quotes, a comparable replacement determined by the Agent) display page
3750 (or such other display page on the Dow Xxxxx Markets Service
system as may replace display page 3750) two (2) Business Days prior
to the first day of such Interest Period for an amount comparable to
such Borrowing Tranche and having a borrowing date and a maturity
comparable to such Interest Period by (ii) a number equal to 1.00
minus the LIBO-Rate Reserve Percentage. The LIBO-Rate may also be
expressed by the following formula:
LIBO-Rate = Average of London interbank offered rates quoted
by BBA or appropriate successor as shown on Dow
Xxxxx Markets Service display page 3750
1.00 - LIBO-Rate Reserve Percentage
The LIBO-Rate shall be adjusted with respect to any Term Loan to which
the LIBO-Rate Option applies that is outstanding on the effective date
of any change in the LIBO-Rate Reserve Percentage as of such effective
date. The Agent shall give prompt notice to the Borrower of the LIBO-
Rate as determined or adjusted in accordance herewith, which
determination shall be conclusive absent manifest error.
LIBO-Rate Option shall mean the option of the Borrower to have
Term Loans bear interest at the rate and under the terms and
conditions set forth in Section 3.1.1(i).
LIBO-Rate Reserve Percentage shall mean as of any day the
maximum percentage in effect on such day, as prescribed by the Board
of Governors of the Federal Reserve System (or any successor) for
determining the reserve requirements (including supplemental, marginal
and emergency reserve requirements) with respect to eurocurrency
funding (currently referred to as "Eurocurrency Liabilities").
Lien shall mean any mortgage, deed of trust, pledge, lien,
security interest, charge or other encumbrance or security arrangement
of any nature whatsoever, whether voluntarily or involuntarily given,
including any conditional sale or title retention arrangement, and any
assignment, deposit arrangement or lease intended as, or having the
effect of, security.
LLC Interests shall have the meaning given to such term in 5.1.2
(Subsidiaries).
Loan Documents shall mean this Agreement, the Agent's Letter,
the Notes, the Guaranty Agreement, and any other instruments,
certificates or documents delivered or contemplated to be delivered
hereunder or thereunder or in connection herewith or therewith, as the
same may be supplemented or amended from time to time in accordance
herewith or therewith, and Loan Document shall mean any of the Loan
Documents.
Loan Parties shall mean the Borrower, the Guarantors and KHL.
Material Adverse Change shall mean any set of circumstances or
events which (a)has or could reasonably be expected to have any
material adverse effect whatsoever upon the validity or enforceability
of this Agreement or any other Loan Document, (b)is or could
reasonably be expected to be material and adverse to the business,
properties, assets, financial condition, results of operations or
business prospects of the Loan Parties taken as a whole, (c)impairs
materially or could reasonably be expected to impair materially the
ability of the Loan Parties taken as a whole to duly and punctually
pay or perform their material Indebtedness for borrowed money, or
(d)impairs materially or could reasonably be expected to impair
materially the ability of the Agent or any of the Banks, to the extent
permitted, to enforce their legal remedies pursuant to this Agreement
or the Notes or the Guaranty Agreement.
Maturity Date shall mean January 22, 2007.
Month, with respect to an Interest Period under the LIBO-Rate
Option, shall mean the interval between the days in consecutive
calendar months numerically corresponding to the first day of such
Interest Period. If any LIBO-Rate Interest Period begins on a day of
a calendar month for which there is no numerically corresponding day
in the month in which such Interest Period is to end, the final month
of such Interest Period shall be deemed to end on the last Business
Day of such final month.
Moody's shall mean Xxxxx'x Investors Service, Inc. and its
successors.
Mortgage Subsidiary shall mean each Subsidiary which is in the
business of making residential mortgage loans. Each of the Mortgage
Subsidiaries as of the Closing Date is listed on Schedule 1.1(B).
Multiemployer Plan shall mean any employee benefit plan which is
a "multiemployer plan" within the meaning of Section 4001(a)(3) of
ERISA.
Non-Restricted Person shall mean any (i) Joint Venture and (ii)
Subsidiary of Hovnanian which is not a Restricted Subsidiary. Each of
the Non-Restricted Persons as of the Closing Date is listed on
Schedule 1.1(B).
Notes shall mean collectively and Note shall mean separately all
of the Notes of the Borrower in the form of Exhibit 1.1(T) issued by
the Borrower at the request of a Bank pursuant to Section 4.7
evidencing the Term Loans together with all amendments, extensions,
renewals, replacements, refinancings or refunds thereof in whole or in
part.
Notices shall have the meaning assigned to that term in Section
10.6 (Notices).
Obligation shall mean any obligation or liability of any of the
Loan Parties to the Agent or any of the Banks, howsoever created,
arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing, or due or to become due, under
or in connection with this Agreement, any Notes, the Agent's Letter or
any other Loan Document.
Official Body shall mean any national, federal, state, local or
other government or political subdivision or any agency, authority,
board, bureau, central bank, commission, department or instrumentality
of either, or any court, tribunal, grand jury or arbitrator, in each
case whether foreign or domestic.
Partnership Interests shall have the meaning given to such term
in 5.1.2. (Subsidiaries).
PBGC shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA or any
successor.
Permitted Acquisitions shall have the meaning assigned to such
term in Section 7.2.4 (Liquidations, Mergers, Consolidations,
Acquisitions).
Permitted Investments shall mean a Loan Party's Investment in:
(a) (i) cash, marketable direct obligations of the United States
of America or any agency thereof, and certificates of deposit, demand
deposits, time deposits, or repurchase agreements issued by any bank
with a capital and surplus of at least $25,000,000 organized under the
laws of the United States of America or any state thereof, provided
that such obligations, certificates of deposit, demand deposits, time
deposits, and repurchase agreements have a maturity of less than one
year from the date of purchase;
(ii) investment grade commercial paper or debt having a
maturity date of one year or less from the date of purchase; and
(iii) funds holding assets primarily consisting of those
described in clause (i) hereof;
(b) loans or advances to employees of a Loan Party in the
ordinary course of business;
(c) any Person that is or concurrently becomes a Loan Party;
(d) purchase money notes not exceeding $5,000,000 principal
amount in the aggregate received incident to sales of property by a
Restricted Subsidiary;
(e) trade credit extended on usual and customary terms in the
ordinary course of business;
(f) loans to officers and directors to the extent permitted by
Section 7.2.6.2 (Restricted Payment; Restricted Investments);
(g) marketable securities costing at the time of purchase no
more than $3,000,000 in the aggregate of any one or more residential
real estate developers and which are registered under the Securities
Exchange Act of 1934; and
(h) other Investments not in excess of $5,000,000 in the
aggregate.
Permitted Liens shall mean:
(i) Liens for taxes, assessments or other governmental charges
not yet payable or being contested in good faith and as to which
adequate reserves shall have been established in accordance with GAAP;
(ii) Pledges or deposits made in the ordinary course of business
to secure payment of workers' compensation, or to participate in any
fund in connection with workers' compensation, unemployment insurance,
old-age pensions or other social security programs;
(iii) Mechanics', materialmen's, warehousemen's, carriers' or
other like liens arising in the ordinary course of business securing
obligations which are not overdue for a period longer than 30 days or
which are being contested in good faith by appropriate proceedings;
(iv) Good-faith pledges or deposits made in the ordinary course
of business to secure performance of bids, tenders, contracts (other
than for the repayment of borrowed money) or leases, not in excess of
the aggregate amount due thereunder, or to secure statutory
obligations, or surety, appeal, indemnity, performance or other
similar bonds required in the ordinary course of business;
(v) Encumbrances consisting of zoning restrictions, easements or
other restrictions on the use of real property, none of which
materially impairs the use of such property or the value thereof, and
none of which is violated in any material respect by existing or
proposed structures or land use;
(vi) Liens, security interests and mortgages in favor of the
Agent for the benefit of the Banks;
(vii) Liens on property leased by any Loan Party or Subsidiary
of a Loan Party under capital and operating leases not prohibited by
this Agreement securing obligations of such Loan Party or Subsidiary
to the lessor under such leases;
(viii) Any Lien existing on the date of this Agreement and
described on Schedule 1.1(P), provided that the principal amount
secured thereby is not hereafter increased, and no additional assets
become subject to such Lien;
(ix) Purchase Money Mortgages and Purchase Money Security
Interests and Liens on real property owned and occupied by Hovnanian
or any Subsidiary; and
(x) The following, (A)if the validity or amount thereof is being
contested in good faith by appropriate and lawful proceedings
diligently conducted so long as levy and execution thereon have been
stayed and continue to be stayed or (B)if a final judgment is entered
and such judgment is discharged within thirty (30) days of entry, and
they do not in the aggregate materially impair the ability of any Loan
Party to perform its Obligations hereunder or under the other Loan
Documents:
(1) Claims or Liens for taxes, assessments or charges due and
payable and subject to interest or penalty, provided that the
applicable Loan Party maintains such reserves or other appropriate
provisions as shall be required by GAAP and pays all such taxes,
assessments or charges forthwith upon the commencement of proceedings
to foreclose any such Lien;
(2) Claims, Liens or encumbrances upon, and defects of title to,
real or personal property, including any attachment of personal or
real property or other legal process prior to adjudication of a
dispute on the merits;
(3) Claims or Liens of mechanics, materialmen, warehousemen,
carriers, or other statutory nonconsensual Liens; or
(4) Liens resulting from final judgments or orders described in
Section 8.1.6 (Final Judgments or Orders);
(xi) Liens under the Stock Pledge delivered in connection with
the Revolving Senior Debt Facility; and
(xii) Other Liens securing obligations not in excess of
$5,000,000 in the aggregate.
Person shall mean any individual, corporation, partnership,
limited liability company, association, joint-stock company, trust,
unincorporated organization, joint venture, government or political
subdivision or agency thereof, or any other entity.
Plan shall mean at any time an employee pension benefit plan
(other than a Multiemployer Plan) which is covered by Title IV of
ERISA or is subject to the minimum funding standards under Section 412
of the Internal Revenue Code in respect of which the Borrower or any
member of the ERISA Group is an "employer" as defined in Section 3(5)
of ERISA.
Potential Default shall mean any event or condition which with
notice, passage of time or a determination by the Agent or the
Required Banks, or any combination of the foregoing, would constitute
an Event of Default.
Preliminary Approvals shall mean the following: (i) in New
Jersey, as defined in the Municipal Land Use Law (N.J.S.A. 40:55D-1 et
seq.) and (ii) for states other than New Jersey, a point in time
equivalent thereto.
Principal Office shall mean the main banking office of the Agent
in Boston, Massachusetts or such other location so designated by the
Agent.
Prohibited Transaction shall mean any prohibited transaction as
defined in Section 4975 of the Internal Revenue Code or Section 406 of
ERISA for which neither an individual nor a class exemption has been
issued by the United States Department of Labor.
Property shall mean all real property, both owned and leased, of
any Loan Party or Subsidiary of a Loan Party.
Purchase Money Mortgage shall mean any non-recourse mortgages
granted to secure Indebtedness of any Loan Party.
Purchase Money Security Interest shall mean Liens upon tangible
personal property securing loans to any Loan Party or deferred
payments by such Loan Party or Subsidiary for the purchase of such
tangible personal property and excluding Purchase Money Mortgages.
Purchasing Bank shall mean a Bank which becomes a party to this
Agreement by executing an Assignment and Assumption Agreement.
Ratable Share shall mean the proportion that a Bank's Commitment
bears to the Commitments of all of the Banks or, at any time after the
Term Loans have been made, the proportion that a Bank's Term Loan
Outstanding bears to the Term Loan Outstandings of all of the Banks.
Regulated Substances shall mean, without limitation, any
substance, material or waste, regardless of its form or nature,
defined under Environmental Laws as a "hazardous substance,"
"pollutant," "pollution," "contaminant," "hazardous or toxic
substance," "extremely hazardous substance," "toxic chemical," "toxic
substance," "toxic waste," "hazardous waste," "special handling
waste," "industrial waste," "residual waste," "solid waste,"
"municipal waste," "mixed waste," "infectious waste,"
"chemotherapeutic waste," "medical waste," or "regulated substance" or
any other material, substance or waste, regardless of its form or
nature, which otherwise is regulated by Environmental Laws.
Regulation U shall mean Regulation U, T or X as promulgated by
the Board of Governors of the Federal Reserve System, as amended from
time to time.
Reportable Event shall mean a reportable event described in
Section 4043 of ERISA and regulations thereunder with respect to a
Plan other than those events as to which the 30-day notice is waived
under the PBGC regulations.
Required Banks shall mean
(i) if there are no Term Loans outstanding, Banks whose Term
Loan Commitments aggregate at least 66 2/3% of the Term Loan
Commitments of all of the Banks, or
(ii) if there are Term Loans outstanding, any Bank or group of
Banks if the sum of the Term Loans of such Banks then outstanding
aggregates at least 66 2/3% of the total principal amount of all of
the Term Loans then outstanding.
Required Environmental Notices shall mean all notices, reports,
plans, forms or other filings which pursuant to Environmental Laws,
Required Environmental Permits or at the request or direction of an
Official Body either must be submitted to an Official Body or which
otherwise must be maintained.
Required Environmental Permits shall mean all permits, licenses,
bonds, consents, programs, approvals or authorizations required under
Environmental Laws to own, occupy or maintain the Property or which
otherwise are required for the operations and business activities of
the Loan Parties.
Restricted Investment shall mean a Loan Party's Investment that
constitutes a Subsidiary Investment in any Non-Restricted Person or
any Investment in Related Business.
Restricted Payments shall mean
(i) Dividends and Capital Stock Retirement payments after
January 31, 2001 by Hovnanian or otherwise to the shareholders of
Hovnanian; and
(ii) Payments (whether in the form of principal payments, note
repurchases or similar items) to the holder of Subordinated Debt made
on or after January 31, 2001 other than regularly scheduled payments
of principal and interest not otherwise prohibited hereunder;
provided, however, with respect to this item (ii), a refinancing of
the Subordinated Debt to the extent consisting of the repayment of the
Subordinated Debt and the incurring of new "Subordinated Debt" within
60 days of such repayment shall not constitute a "Restricted Payment".
Restricted Subsidiaries shall mean any Subsidiary that has not
been designated a Non-Restricted Person as of the Closing Date or in
accordance with Section 2.5 [Designation of Subsidiaries and Release
of Guarantors]. Each of the Restricted Subsidiaries as of the Closing
Date is listed on Schedule 1.1(B).
Revolving Senior Debt Facility shall mean the revolving credit
facility provided to X. Xxxxxxxxx Enterprises, Inc. under the Credit
Agreement dated August 28, 2001 among such Borrower, Hovnanian, PNC
Bank National Association as Administrative Agent, Bank of America,
N.A. as Syndication Agent, Fleet National Bank as Documentation Agent,
and the "Banks" party thereto, as amended from time to time.
SEC shall mean the Securities and Exchange Commission or any
governmental agencies substituted therefor.
Senior Homebuilding Indebtedness shall mean the sum (without
duplication) of (a) outstanding principal amount of the Obligations,
(b) letters of credit (c) Guaranties by any Loan Party of any
obligation of any Person which is not a Restricted Subsidiary or
Hovnanian, (d) Senior Notes, (e) surety bonds (or similar products)
issued by bonding companies in lieu of cash payments or cash deposits
on contracts for any Loan Party to acquire land inventory in respect
of which a Loan Party is obligated and (f) commencing as of June 1,
2004, the principal amount of the 9 3/4% Subordinated Notes of the
Borrower due June 1, 2005 unless, on or before June 1, 2004, either
(i) the maturity date thereof has been extended by amendment to a date
not earlier than thirty (30) days after the Maturity Date (as
determined as of June 1, 2004) or (ii) such Indebtedness has been
refinanced with subordinated Indebtedness permitted by this Agreement
and having a maturity date not earlier than thirty (30) days after
the Maturity Date (as determined as of June 1, 2004) and (g) other
Indebtedness of Hovnanian or a Restricted Subsidiary which is
permitted under this Agreement; provided however, that "Senior
Homebuilding Indebtedness" shall not include (i) obligations of
Hovnanian under the Keep-Well Guaranty dated July 16, 2001 previously
provided to Bank One, NA, as agent for the benefit of X. Xxxxxxxxx
Mortgage Inc., (ii) debt secured by Purchase Money Security Interests
and Purchase Money Mortgages and (iii) except as provided in item (f)
hereof, Subordinated Debt.
Senior Notes shall mean the (i) $150,000,000 principal amount 10
1/2% Senior Notes of the Borrower and guaranteed by Hovnanian due
October 2007 and (ii) $150,000,000 9 1/8% Senior Notes of the Borrower
and guaranteed by Hovnanian due in April 2009 and (iii) other notes
sold or guaranteed by Hovnanian or the Borrower from time to time
after the Closing Date on terms not materially less favorable to the
Banks (as determined by the Agent) as those described in clauses (i)
and (ii) above
Sold Homes shall mean the Dollar amount of the capitalized
construction costs of any Dwelling Unit upon which a third party
purchaser has paid a cash deposit pursuant to an enforceable agreement
of sale. Such cost shall include the proportional costs of the land
under the Dwelling Unit, site improvements and soft costs incurred to
date.
Standard & Poor's shall mean Standard & Poor's Ratings Services,
a division of The XxXxxx-Xxxx Companies, Inc., and its successors.
Subordinated Debt shall mean (i) the $100,000,000 principal
amount 9 3/4% Subordinated Notes of the Borrower due June 1, 2005, and
(ii) any other unsecured indebtedness of the Borrower, Hovnanian, or
any other Loan Party which is subordinated by its terms to the prior
payment in full of the Obligations evidenced by this Agreement and the
Notes, as may be outstanding from time to time, in a manner no less
favorable to the Banks than the terms of the Subordinated Debt
described in clause (i) above and which contain covenants that are not
materially less favorable to Hovnanian, the Borrower or any other Loan
Party than those contained in the Subordinated Debt described in
clause (i) above.
Subsidiary of any Person at any time, shall mean a corporation,
partnership, limited liability company or other entity (x) whose
assets and liabilities are consolidated with Hovnanian in accordance
with GAAP and (y) of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the happening
of a contingency) to elect a majority of the board of directors or
other managers of such corporation, partnership or other entity are at
the time owned, or the management of which is otherwise controlled,
directly or indirectly through one or more intermediaries, or both, by
such Person. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a
Subsidiary or Subsidiaries of Hovnanian.
Subsidiary Investment shall mean with respect to any Subsidiary
or Joint Venture the sum of (x) loans to such Person by Hovnanian or a
Restricted Subsidiary and (y) Hovnanian's or a Restricted Subsidiary's
share of equity in such Person.
Subsidiary Shares shall have the meaning assigned to that term
in Section 5.1.2 (Subsidiaries).
Term Loan shall have the meaning given to such term in Section
2.1.1; Term Loans shall mean collectively all of the Term Loans.
Term Loan Commitment or Commitment shall mean, as to any Bank at
any time, the amount initially set forth opposite its name on Schedule
1.1(A) in the column labeled "Amount of Commitment for Term Loans,"
and thereafter on Schedule I to the most recent Assignment and
Assumption Agreement or on any amended Schedule 1.1(A) prepared
pursuant to Section 2.1.3 (Increase in Commitments after Closing Date)
and Term Loan Commitments or Commitments shall mean the aggregate Term
Loan Commitments of all of the Banks.
Term Loan Outstandings shall mean the principal amount of
outstanding Term Loans plus the principal amount of any other
obligation to pay money hereunder.
Term Loan Request shall have the meaning assigned to that term
in Section 2.4 (Renewal and Conversion of Loans).
Total Debt Multiplier shall mean 2.40, subject to adjustment as
described in this definition.
(a) Total Debt Multiplier shall not at any time be greater
than 2.40 and shall decrease (under circumstances described below) to
2.05 and then 1.95 and so forth in increments of 10 basis points;
similarly, at any time Total Debt Multiplier shall increase (under
circumstances described below) it shall increase in 10 basis point
increments up to 2.05 and then from 2.05 to 2.40. Such decreases and
increases shall occur as follows, with reference to the Fixed Charge
Coverage Ratio, but only when Actual Leverage is less than or equal to
2.2-to-1.0.
(b) If the Fixed Charge Coverage Ratio is less than 1.25-to-
1.0 for two (2) consecutive quarters (for purposes hereof the
"reference quarters"):
(i) then for the second of such quarters Total Debt Multiplier
shall reduce to 2.05; and
(ii) for the next such quarter after the reference quarters,
and each subsequent consecutive quarter in which the Fixed Charge
Coverage Ratio is less than 1.25-to-1.0, Total Debt Multiplier shall
reduce for each such quarter in the increments described in subsection
(a) of this definition.
(c) If the Fixed Charge Ratio equals or exceeds 1.25-to-1.0
for any quarter after the two (2) reference quarters, then Total Debt
Multiplier shall increase for such quarters in the increments
described in subsection (a) of this definition.
Transferor Bank shall mean the selling Bank pursuant to an
Assignment and Assumption Agreement.
Unimproved Land shall mean the Dollar value of land which has
not been granted Preliminary Approvals, calculated at the lower of (x)
the actual cost (including land costs and capital expenses relating
thereto) or (y) the market value (as determined in accordance with
GAAP) thereof.
Unsold Dwelling Units shall mean the number of Dwelling Units
comprising from time to time "Unsold Homes".
Unsold Homes shall mean the Dollar amount of capitalized
construction costs of any Dwelling Unit being built for which the
construction of slab (or foundation) has been completed and upon which
no cash deposit has been paid pursuant to an enforceable agreement of
sale. Such Dollar amount shall include the proportional costs of the
land under the Dwelling Unit, site improvements and soft costs
actually incurred to date.
1.2 Construction.
Unless the context of this Agreement otherwise clearly requires,
the following rules of construction shall apply to this Agreement and
each of the other Loan Documents:
1.2.1. Number; Inclusion.
references to the plural include the singular, the plural, the
part and the whole; "or" has the inclusive meaning represented by the
phrase "and/or," and "including" has the meaning represented by the
phrase "including without limitation";
1.2.2. Determination.
references to "determination" of or by the Agent or the Banks
shall be deemed to include good-faith estimates by the Agent or the
Banks (in the case of quantitative determinations) and good-faith
beliefs by the Agent or the Banks (in the case of qualitative
determinations) and such determination shall be conclusive absent
manifest error;
1.2.3. Agent's Discretion and Consent.
whenever the Agent or the Banks are granted the right herein to
act in its or their sole discretion or to grant or withhold consent
such right shall be exercised in good faith;
1.2.4. Documents Taken as a Whole.
the words "hereof," "herein," "hereunder," "hereto" and similar
terms in this Agreement or any other Loan Document refer to this
Agreement or such other Loan Document as a whole and not to any
particular provision of this Agreement or such other Loan Document;
1.2.5. Headings.
the section and other headings contained in this Agreement or
such other Loan Document and the Table of Contents (if any) preceding
this Agreement or such other Loan Document are for reference purposes
only and shall not control or affect the construction of this
Agreement or such other Loan Document or the interpretation thereof in
any respect;
1.2.6. Implied References to this Agreement.
article, section, subsection, clause, schedule and exhibit
references are to this Agreement or other Loan Document, as the case
may be, unless otherwise specified;
1.2.7. Persons.
reference to any Person includes such Person's successors and
assigns but, if applicable, only if such successors and assigns are
permitted by this Agreement or such other Loan Document, as the case
may be, and reference to a Person in a particular capacity excludes
such Person in any other capacity;
1.2.8. Modifications to Documents.
reference to any agreement (including this Agreement and any
other Loan Document together with the schedules and exhibits hereto or
thereto), document or instrument means such agreement, document or
instrument as amended, modified, replaced, substituted for, superseded
or restated;
1.2.9. From, To and Through.
relative to the determination of any period of time, "from"
means "from and including," "to" means "to but excluding," and
"through" means "through and including"; and
1.2.10. Shall; Will.
references to "shall" and "will" are intended to have the same
meaning.
1.3 Accounting Principles.
Except as otherwise provided in this Agreement, all computations
and determinations as to accounting or financial matters and all
financial statements to be delivered pursuant to this Agreement shall
be made and prepared in accordance with GAAP (including principles of
consolidation where appropriate), and all accounting or financial
terms shall have the meanings ascribed to such terms by GAAP;
provided, however, that all accounting terms used in Section 7.2
(Negative Covenants) (and all defined terms used in the definition of
any accounting term used in Section 7.2 (Negative Covenants) shall
have the meaning given to such terms (and defined terms) under GAAP as
in effect on the date hereof applied on a basis consistent with those
used in preparing the Annual Statements referred to in Section
5.1.8((i)) (Historical Statements). In the event of any change after
the date hereof in GAAP, and if such change would result in the
inability to determine compliance with the financial covenants set
forth in Section 7.2 (Negative Covenants) based upon the Loan Parties'
regularly prepared financial statements by reason of the preceding
sentence, then the parties hereto agree to endeavor, in good faith, to
agree upon an amendment to this Agreement that would adjust such
financial covenants in a manner that would not affect the substance
thereof, but would allow compliance therewith to be determined in
accordance with the Loan Parties' financial statements at that time.
2. TERM LOAN
2.1 Term Loan Commitments.
2.1.1. Term Loans.
Subject to the terms and conditions hereof and relying upon the
representations and warranties herein set forth, each Bank severally
agrees to make Term Loans to the Borrower on the Closing Date provided
that after giving effect to each such Term Loan the aggregate amount
of Term Loan Outstandings owed to such Bank shall not exceed such
Bank's Term Loan Commitment. As of the Closing Date, the aggregate
Term Loan Commitments are $165,000,000. Thereafter, at any time and
from time to time until May 22, 2002, the aggregate Term Loan
Commitments may, unless there exists an Event of Default or Potential
Default, be increased without the approval of the Banks pursuant to
Section 2.1.3 to an amount not in excess of $175,000,000. No Term
Loans shall be made after the Closing Date except pursuant to such an
increase in the Term Loan Commitments.
2.1.2. Voluntary Prepayment.
The Borrower shall have the right at any time after the Closing
Date (i) upon five (5) days' prior written notice to the Agent to
repay the Term Loans and permanently reduce the Term Loan Commitments,
in a minimum amount equal to (i) $500,000 and in increments of
$100,000 for any Term Loan to which the Base Rate Option applies or
(ii) $2,500,000 and in increments of $500,000 for any Term Loan to
which the LIBO-Rate Option applies or (ii) at any time upon prepayment
in full of the Obligations, terminate completely the Commitments,
without penalty or premium except as hereinafter set forth, provided
that any such reduction or termination shall be accompanied by
prepayment of the Notes, and the full amount of interest accrued on
the principal sum to be prepaid (and all amounts referred to in
Section 4.6.2(Indemnity) hereof), to the extent that the aggregate
amount thereof then outstanding exceeds the Commitments as so reduced
or terminated. Any notice to repay the Term Loans and permanently
reduce the Term Loan Commitments under this Section 2.1.2 shall be
irrevocable and amounts prepaid hereunder may not be re-borrowed.
2.1.3. Increase in Commitments After Closing Date.
Borrower may request at any time after the Closing Date, subject
to the time restrictions in Section 2.1.1 (Term Loans) and the
requirements of Section 6.2 (Each Additional Term Loan), that a new
lender join this Agreement as a "Bank" in order to provide additional
Term Loan Commitments or that an existing Bank increase its Term Loan
Commitment. (Any existing Bank may decline to increase its Term Loan
Commitment in its sole discretion.) In connection with any such
increase, Schedule 1.1(A) shall be amended and restated to reflect
such increase. The selection of any new Bank shall be subject to the
Borrower's and Agent's consent, which shall not be unreasonably
withheld. Any new Bank shall join this Agreement as a Bank pursuant
to the procedures contained in Section 10.11(b) (Additional Bank).
The Term Loan Commitments as increased in accordance herewith shall
not exceed the Dollar limits described in Section 2.1.1 Term Loans.
2.2 Nature of Banks' Obligations with Respect to Term Loans
Each Bank shall be obligated to participate in each request for
Term Loans in accordance with its Ratable Share. The aggregate of
each Bank's Term Loans outstanding hereunder to the Borrower at any
time shall never exceed its Term Loan Commitment. The obligations of
each Bank hereunder are several. The failure of any Bank to perform
its obligations hereunder shall not affect the Obligations of the
Borrower to any other party nor shall any other party be liable for
the failure of such Bank to perform its obligations hereunder. The
Banks shall have no obligation to make Term Loans hereunder on or
after the Maturity Date.
2.3 Use of Proceeds.
The proceeds of the Term Loans shall be used in accordance with
Section 7.1.10 (Use of Proceeds).
2.4 Renewal and Conversion of Loans.
Except as otherwise provided herein, the Borrower may from time
to time prior to the Expiration Date request the Banks to renew or
convert the Interest Rate Option applicable to existing Term Loans
pursuant to Section 3.2 (Interest Periods), by delivering to the
Agent, not later than 10:00 a.m., Eastern time, (i)three (3) Business
Days prior to the date of conversion to or the renewal of the LIBO-
Rate Option for any Term Loans; and (ii)the last day of the preceding
Term Loan with respect to the conversion to the Base Rate Option for
any Term Loan, of a duly completed "Term Loan Request" therefor
substantially in the form of Exhibit 2.4 or a Term Loan Request by
telephone immediately confirmed in writing by letter, facsimile in the
form of such Exhibit 2.4, it being understood that the Agent may rely
on the authority of any individual making such a telephonic request
without the necessity of receipt of such written confirmation. Each
Term Loan Request shall be irrevocable and shall specify (i)the
proposed Borrowing Date; (ii)the aggregate amount of the proposed Term
Loans comprising each Borrowing Tranche, the amount of which shall be
in integral multiples of $500,000 and not less than $2,500,000 for
each Borrowing Tranche to which the LIBO-Rate Option applies and not
less than the lesser of $500,000 or the maximum amount available for
Borrowing Tranches to which the Base Rate Option applies; (iii)whether
Term Loan LIBO-Rate Option or Base Rate Option shall apply to the
proposed Term Loans comprising the applicable Borrowing Tranche; and
(iv)in the case of a Borrowing Tranche to which the Term Loan LIBO-
Rate Option applies, an appropriate Interest Period for the Term Loans
comprising such Borrowing Tranche. In addition, except as otherwise
provided herein, the Borrower may, from time to time during the period
described in Section 2.1.1 (Term Loans) and in accordance with Section
2.1.3 (Increase in Commitments after the Closing Date) and Section
10.11(b) (Additional Bank) (if applicable), request one or more new or
existing Banks to make Term Loans in respect of an increase in the
aggregate Term Loan Commitments described in such Sections 2.1.1 and
2.1.3. Each such request shall be made pursuant to a completed Term
Loan Request and shall otherwise be subject to the provisions of this
Section 2.4 and Section 6.2 (Each Additional Term Loan).
2.5 Designation of Subsidiaries and Release of Guarantors.
2.5.1. Release of Guarantors.
At any time when the Borrower wishes to cause the Banks to
release a Guarantor from its obligations under the Guaranty Agreement
(whether directly or in connection with the designation of a
Restricted Subsidiary as a Non-Restricted Person), the consent of the
Banks shall be required as described below and shall be subject to the
other provisions of this Section 2.5.
(a) For the release of any Guarantor (i)
whose assets are principally comprised of residential or commercial
property which is leased or held for the purposes of leasing to
unaffiliated third parties or (ii) in which any Loan Party (or Loan
Parties in the aggregate) has, at the time of such release, a
Subsidiary Investment less than $1,000,000, no consent of the Banks
shall be required and such request of the Borrower shall be granted
absent an Event of Default or Potential Default, effective on the date
specified by the Borrower which shall not be earlier than five (5)
Business Days after the receipt by the Agent of such request;
(b) For the release of Hovnanian or any
Guarantor (not described in item (a)(i) hereof) in which any Loan
Party (or Loan Parties in the aggregate) has, at the time of such
release, a Subsidiary Investment greater than or equal to $1,000,000,
the consent of 100% of the Banks shall be required; and
(c) The designation of a Person as a Non-
Restricted Person for any reason shall not itself constitute a release
of any Guarantor.
2.5.2. Designation of Non-Restricted Person.
The Borrower may, by written notice delivered to the Agent,
designate as a Non-Restricted Person a Subsidiary formerly designated
a Restricted Subsidiary or a newly formed or acquired Subsidiary,
subject to: (i) the provisions of subsection 2.5.1 hereof in relation
to Guaranties, (ii) the requirements of Section 7 (Covenants) and in
particular Section 7.2.10 (Borrowing Base); and (iii) the requirement
that such designation not cause an Event of Default or Potential
Default. Such designation shall be effective on the date specified by
the Borrower which shall not be earlier than five (5) Business Days
after the receipt by the Agent of such notice.
2.5.3. Automatic Designation of Non-Restricted Person.
Upon the occurrence of any event described in Section 8.1.10
(Insolvency), Section 8.1.14 (Involuntary Proceedings), Section 8.1.15
(Voluntary Proceedings), or the winding-up or termination of business,
with respect to any Restricted Subsidiary, such Subsidiary shall
automatically become a Non-Restricted Person. Such designation as a
Non-Restricted Person shall, with respect to such Person's obligations
under the Guaranty Agreement, if any, be subject to the requirements
of Section 2.5.1. The release of any Subsidiary which is a Guarantor
from its obligations under the Guaranty Agreement pursuant to Section
2.5.1 shall automatically cause such Subsidiary to be a Non-Restricted
Person.
2.5.4. Designation of Restricted Subsidiary.
The Borrower may by written notice delivered to the Agent
designate as a Restricted Subsidiary a Subsidiary formerly designated
a Non-Restricted Person or a newly formed or acquired Subsidiary.
Such designation is subject to (i) compliance with Section 10.18
(Joinder of Guarantors); (ii) the requirements of Section 7
(Covenants) and in particular Section 7.2.10 (Borrowing Base); and
(iii) the requirement that such designation not cause an Event of
Default or Potential Default. Such designation shall be effective on
the date specified by the Borrower which shall not be earlier than
five (5) Business Days after the receipt by the Agent of such notice.
2.5.5. Designations under Revolving Senior Debt Facility.
(i) Neither the release of any "Guarantor" nor the designation
of a Person as a "Non-Restricted Person" under the Revolving Senior
Debt Facility shall itself constitute any such release or designation
under this Agreement; and (ii) the Borrower agrees that it shall
designate (under the terms of this Section 2.5) a Person as a
Restricted Subsidiary or a Non-Restricted Subsidiary under this
Agreement contemporaneously with any such a designation under the
Revolving Senior Debt Facility.
3. INTEREST RATES
3.1 Interest Rate Options.
The Borrower shall pay interest in respect of the outstanding
unpaid principal amount of the Term Loans as selected by it from the
Base Rate Option or LIBO-Rate Option set forth below applicable to the
Term Loans, it being understood that, subject to the provisions of
this Agreement, the Borrower may select different Interest Rate
Options and different Interest Periods to apply simultaneously to the
Term Loans comprising different Borrowing Tranches and may convert to
or renew one or more Interest Rate Options with respect to all or any
portion of the Term Loans comprising any Borrowing Tranche, provided
that there shall not be at any one time outstanding more than five (5)
Borrowing Tranches in the aggregate among all of the Term Loans. If
at any time the designated rate applicable to any Term Loan made by
any Bank exceeds such Bank's highest lawful rate, the rate of interest
on such Bank's Term Loan shall be limited to such Bank's highest
lawful rate.
3.1.1. Term Loan Interest Rate Options.
The Borrower shall have the right to select from the following
Interest Rate Options applicable to the Term Loans:
(i) Base Rate Option: A variable rate
per annum (computed on the basis of a year of 365 or 366 days, as the
case may be, and actual days elapsed) equal to the Base Rate plus the
Applicable Margin, such interest rate to change automatically from
time to time effective as of the effective date of each change in the
Base Rate; or
(ii) LIBO-Rate Option: A rate per
annum (computed on the basis of a year of 360 days and actual days
elapsed) equal to the LIBO-Rate plus the Applicable Margin.
3.1.2. Rate Quotations.
The Borrower may call the Agent on or before the date on which a
Term Loan Request is to be delivered to receive an indication of the
rates then in effect, but it is acknowledged that such projection
shall not be binding on the Agent or the Banks nor affect the rate of
interest which thereafter is actually in effect when the election is
made.
3.2 Interest Periods.
At any time when the Borrower shall select, convert to or renew
a LIBO-Rate Option, the Borrower shall notify the Agent thereof at
least three (3) Business Days prior to the effective date of such
LIBO-Rate Option by delivering a Term Loan Request. The notice shall
specify an Interest Period during which such Interest Rate Option
shall apply. Notwithstanding the preceding sentence, in the case of
the renewal of a LIBO-Rate Option at the end of an Interest Period,
the first day of the new Interest Period shall be the last day of the
preceding Interest Period, without duplication in payment of interest
for such day.
3.3 Interest After Default.
3.3.1. Default Rate.
To the extent permitted by Law, upon the occurrence of an Event
of Default under Section 8.1.1 (Payment Under Loan Documents, Section
8.1.10 (Insolvency), Section 8.1.14 (Involuntary Proceedings), Section
8.1.15 (Voluntary Proceedings) or the Obligations are accelerated
under this Agreement and until such time such Event of Default shall
have been cured or waived, each Obligation hereunder shall bear
interest at a rate per annum equal to the sum of the rate of interest
applicable under the Base Rate Option plus an additional 3.0% per
annum from the time such Obligation becomes due and payable and until
it is paid in full (the "Default Rate").
3.3.2. Acknowledgment.
The Borrower acknowledges that the increase in rate referred to
in Section 3.3.1 (Default Rate) reflects, among other things, the fact
that such Term Loans or other amounts have become a substantially
greater risk given their default status and that the Banks are
entitled to additional compensation for such risk; and all such
interest shall be payable by Borrower upon demand by Agent.
3.4 LIBO-Rate Unascertainable; Illegality; Increased Costs;
Deposits Not Available.
3.4.1. Unascertainable.
If on any date on which a LIBO-Rate would otherwise be
determined, the Agent shall have determined that:
(i) adequate and reasonable means do
not exist for ascertaining such LIBO-Rate, or
(ii) a contingency has occurred which
materially and adversely affects the London interbank eurodollar
market relating to the LIBO-Rate, the Agent shall have the rights
specified in Section 3.4.3 (Agent's and Bank's Rights).
3.4.2. Illegality; Increased Costs; Deposits Not Available.
If at any time any Bank shall have determined that:
(i) the making, maintenance or funding
of any Term Loan to which a LIBO-Rate Option applies has been made
impracticable or unlawful by compliance by such Bank in good faith
with any Law or any interpretation or application thereof by any
Official Body or with any request or directive of any such Official
Body (whether or not having the force of Law), or
(ii) such LIBO-Rate Option will not
adequately and fairly reflect the cost to such Bank of the
establishment or maintenance of any such Term Loan, or
(iii) after making all reasonable
efforts, deposits of the relevant amount in Dollars for the relevant
Interest Period for a Term Loan, or to banks generally, to which a
LIBO-Rate Option applies, respectively, are not available to such Bank
with respect to such Term Loan, or to banks generally, in the
interbank eurodollar market,
then the Agent shall have the rights specified in Section 3.4.3
(Agent's and Bank's Rights).
3.4.3. Agent's and Bank's Rights.
In the case of any event specified in Section 3.4.1
(Unascertainable) above, the Agent shall promptly so notify the Banks
and the Borrower thereof, and in the case of an event specified in
Section 3.4.2 (Illegality; Increased Costs; Deposits Not Available)
above, such Bank shall promptly so notify the Agent and endorse a
certificate to such notice as to the specific circumstances of such
notice, and the Agent shall promptly send copies of such notice and
certificate to the other Banks and the Borrower. Upon such date as
shall be specified in such notice (which shall not be earlier than the
date such notice is given), the obligation of (A)the Banks, in the
case of such notice given by the Agent, or (B)such Bank, in the case
of such notice given by such Bank, to allow the Borrower to select,
convert to or renew a LIBO-Rate Option shall be suspended until the
Agent shall have later notified the Borrower, or such Bank shall have
later notified the Agent, of the Agent's or such Bank's, as the case
may be, determination that the circumstances giving rise to such
previous determination no longer exist. If at any time the Agent
makes a determination under Section 3.4.1 (Unascertainable) and the
Borrower has previously notified the Agent of its selection of,
conversion to or renewal of a LIBO-Rate Option and such Interest Rate
Option has not yet gone into effect, such notification shall be deemed
to provide for selection of, conversion to or renewal of the Base Rate
Option otherwise available with respect to such Term Loans. If any
Bank notifies the Agent of a determination under Section 3.4.2
(Illegality; Increased Costs; Deposits Not Available), the Borrower
shall, subject to the Borrower's indemnification Obligations under
Section 4.6.2 [Indemnity], as to any Term Loan of the Bank to which a
LIBO-Rate Option applies, on the date specified in such notice either
convert such Term Loan to the Base Rate Option otherwise available
with respect to such Term Loan or prepay such Term Loan in accordance
with Section 4.4 [Voluntary Prepayments]. Absent due notice from the
Borrower of conversion or prepayment, such Term Loan shall
automatically be converted to the Base Rate Option otherwise available
with respect to such Term Loan upon such specified date.
3.5 Selection of Interest Rate Options.
If the Borrower fails to select a new Interest Period to apply
to any Borrowing Tranche of Term Loans under the LIBO-Rate Option at
the expiration of an existing Interest Period applicable to such
Borrowing Tranche in accordance with the provisions of
Section 3.2[Interest Periods], the Borrower shall be deemed to have
converted such Borrowing Tranche to the Base Rate Option, commencing
upon the last day of the existing Interest Period.
4. PAYMENTS
4.1 Payments.
All payments and prepayments to be made in respect of principal,
interest, Agent's Fee or other fees or amounts due from the Borrower
hereunder shall be payable prior to eleven o'clock (11:00) a.m.,
Eastern time, on the date when due without presentment, demand,
protest or notice of any kind, all of which are hereby expressly
waived by the Borrower, and without set-off, counterclaim or other
deduction of any nature, and an action therefor shall immediately
accrue. Such payments shall be made to the Agent at the Principal
Office for the ratable accounts of the Banks with respect to the Term
Loans in Dollars and in immediately available funds, and the Agent
shall promptly distribute such amounts to the Banks in immediately
available funds, provided that in the event payments are received by
eleven o'clock (11:00) a.m., Eastern time, by the Agent with respect
to the Term Loans and such payments are not distributed to the Banks
on the same day received by the Agent, the Agent shall pay the Banks
the Federal Funds Effective Rate with respect to the amount of such
payments for each day held by the Agent and not distributed to the
Banks. The Agent's and each Bank's statement of account, ledger or
other relevant record shall, in the absence of manifest error, be
conclusive as the statement of the amount of principal of and interest
on the Term Loans and other amounts owing under this Agreement and
shall be deemed an "account stated."
4.2 Pro Rata Treatment of Banks.
Each borrowing shall be allocated to each Bank according to its
Ratable Share, and each selection of, conversion to or renewal of any
Interest Rate Option and each payment or prepayment by the Borrower
with respect to principal, interest, or other fees (except for the
Agent's Fee) or amounts due from the Borrower hereunder to the Banks
with respect to the Term Loans, shall (except as provided in Section
3.4.3 (Agent's and Bank's Rights) in the case of an event specified in
Sections 3.4 (LIBO-Rate Unascertainable; Illegality, Increased Costs,
Deposits Not Available), 4.4.2 (Replacement of a Bank) or 4.6
(Additional Compensation in Certain Circumstances)) be made in
proportion to the Ratable Share of each Bank.
4.3 Interest Payment Dates and Maturity Date.
Interest on Term Loans to which the Base Rate Option applies
shall be due and payable in arrears on the first Business Day of each
calendar month after the date hereof and on the Maturity Date or upon
acceleration of the Term Loan. Interest on Term Loans to which the
LIBO-Rate Option applies shall be due and payable on the last day of
each Interest Period for those Term Loans and, if such Interest Period
is longer than three (3) Months, also on the 90th day of such Interest
Period. Interest on mandatory prepayments of principal under Section
4.5 (Mandatory Payments) shall be due on the date such mandatory
prepayment is due. Interest on the principal amount of each Term Loan
or other monetary Obligation shall be due and payable on demand after
such principal amount or other monetary Obligation becomes due and
payable (whether on the stated maturity date, upon acceleration or
otherwise). All outstanding principal of and accrued and unpaid
interest on the Term Loans shall be due and payable on the Maturity
Date, unless accelerated under the terms of this Agreement, and the
Borrower agrees promptly to make all such payments of principal and
interest when due hereunder.
4.4 Voluntary Prepayments.
4.4.1. Right to Prepay.
The Borrower shall have the right at its option at any time and
from time to time to prepay the Term Loans in whole or part without
premium or penalty (except as provided in Section 4.4.2 (Replacement
of a Bank) below or in Section 4.6 (Additional Compensation in Certain
Circumstances)) in accordance with Section 2.1.2 (Voluntary
Prepayments). All prepayment notices shall be irrevocable and amounts
prepaid may not be re-borrowed. The principal amount of the Term
Loans for which a prepayment notice is given, together with interest
on such principal amount except with respect to Term Loans to which
the Base Rate Option applies, shall be due and payable on the date
specified in such prepayment notice as the date on which the proposed
prepayment is to be made. Except as provided in Section 3.4.3
(Agent's and Bank's Rights), if the Borrower prepays a Term Loan but
fails to specify the applicable Borrowing Tranche which the Borrower
is prepaying, the prepayment shall be applied first to Term Loans to
which the Base Rate Option applies, and then to Term Loans to which
the LIBO-Rate Option applies. Any prepayment hereunder shall be
subject to the Borrower's Obligation to indemnify the Banks under
Section 4.6.2 (Indemnity).
4.4.2. Replacement of a Bank.
In the event any Bank (i)gives notice under Section 3.4 (LIBO-
Rate Unascertainable; Illegality; Increased Costs; Deposits Not
Available) or Section 4.6.1 (Increased Costs or Reduced Return
Resulting from Taxes, Reserves, Capital Adequacy Requirements,
Expenses, Etc.), (ii)does not fund Term Loans because the making of
such Term Loans would contravene any Law applicable to such Bank, or
(iii)becomes subject to the control of an Official Body (other than
normal and customary supervision), then the Borrower shall have the
right at its option, with the consent of the Agent, which shall not be
unreasonably withheld, to prepay the Term Loans of such Bank in whole,
together with all interest accrued thereon, within ninety (90) days
after (x)receipt of such Bank's notice under Section 3.4 (LIBO-Rate
Unascertainable; Illegality; Increased Costs; Deposits Not Available)
or 4.6.1 (Increased Costs or Reduced Return Resulting from Taxes,
Reserves, Capital Adequacy Requirements, Expenses, Etc.), (y)the date
such Bank has failed to fund Term Loans because the making of such
Term Loans would contravene Law applicable to such Bank, or (z)the
date such Bank became subject to the control of an Official Body, as
applicable; provided that the Borrower shall also pay to such Bank at
the time of such prepayment any amounts required under Section 4.6
(Additional Compensation in Certain Circumstances) and any accrued
interest due on such amount and any related fees. Notwithstanding the
foregoing, the Agent may only be replaced subject to the requirements
of Section 9.14 (Successor Agent).
4.4.3. Change of Lending Office.
Each Bank agrees that upon the occurrence of any event giving
rise to increased costs or other special payments under Section 3.4.2
(Illegality; Increased Costs; Deposits Not Available) or 4.6.1
(Increased Costs or Reduced Return Resulting from Taxes, Reserves,
Capital Adequacy Requirements, Expenses, Etc.) with respect to such
Bank, it will if requested by the Borrower, use reasonable efforts
(subject to overall policy considerations of such Bank) to designate
another lending office for any Term Loans affected by such event,
provided that such designation is made on such terms that such Bank
and its lending office suffer no economic, legal or regulatory
disadvantage, with the object of avoiding the consequence of the event
giving rise to the operation of such Section. Nothing in this Section
4.4.3 (Change of Lending Office) shall affect or postpone any of the
Obligations of the Borrower or any other Loan Party or the rights of
the Agent or any Bank provided in this Agreement.
4.5 Mandatory Payments.
The Borrower shall make mandatory payments of principal
(together with accrued interest thereon) to the Agent to the extent by
which Term Loan Outstandings exceeds at any time the Commitments (as
they may be reduced pursuant to Section 2.1.2 (Voluntary Prepayment)
or otherwise) within three (3) Business Days after such excess is
calculated. The Borrower shall also make payments as and when
required under Section 7.2.10 (Borrowing Base).
4.6 Additional Compensation in Certain Circumstances.
4.6.1. Increased Costs or Reduced Return Resulting from
Taxes, Reserves, Capital Adequacy Requirements,
Expenses, Etc.
If any Law, guideline or interpretation or any change in any
Law, guideline or interpretation or application thereof by any
Official Body charged with the interpretation or administration
thereof or compliance with any request or directive (whether or not
having the force of Law) of any central bank or other Official Body:
(i) subjects any Bank to any tax or
changes the basis of taxation with respect to this Agreement, the
Notes, the Term Loans or payments by the Borrower of principal,
interest, or other amounts due from the Borrower hereunder (except for
taxes on the overall net income of such Bank),
(ii) imposes, modifies or deems
applicable any reserve, special deposit or similar requirement against
credits or commitments to extend credit extended by, or assets (funded
or contingent) of, deposits with or for the account of, or other
acquisitions of funds by, any Bank, or
(iii) imposes, modifies or deems
applicable any capital adequacy or similar requirement (A)against
assets (funded or contingent) of, or other credits or commitments to
extend credit extended by, any Bank, or (B)otherwise applicable to the
obligations of any Bank under this Agreement,
and the result of any of the foregoing is to increase the cost to,
reduce the income receivable by, or impose any expense upon any Bank
with respect to this Agreement, or the making, maintenance or funding
of any part of the Term Loans (or, in the case of any capital adequacy
or similar requirement, to have the effect of reducing the rate of
return on any Bank's capital, taking into consideration such Bank's
customary policies with respect to capital adequacy) by an amount
which such Bank in its sole discretion deems to be material, such Bank
shall from time to time notify the Borrower and the Agent of the
amount determined in good faith (using any averaging and attribution
methods employed in good faith) by such Bank to be necessary to
compensate such Bank for such increase in cost, reduction of income,
additional expense or reduced rate of return. Such notice shall set
forth in reasonable detail the basis for such determination. Such
amount shall be due and payable by the Borrower to such Bank ten (10)
Business Days after such notice is given.
4.6.2. Indemnity.
In addition to the compensation required by Section 4.6.1
(Increased Costs or Reduced Return Resulting from Taxes, Reserves,
Capital Adequacy Requirements, Expenses, Etc.), the Borrower shall
indemnify each Bank against all liabilities, losses or expenses
(including actual loss of margin, any loss or expense incurred in
liquidating or employing deposits from third parties and any loss or
expense incurred in connection with funds acquired by a Bank to fund
or maintain Term Loans subject to a LIBO-Rate Option) which such Bank
sustains or incurs as a consequence of any:
(i) payment, prepayment, conversion or
renewal of any Term Loan to which a LIBO-Rate Option applies on a day
other than the last day of the corresponding Interest Period (whether
or not such payment or prepayment is mandatory, voluntary or automatic
and whether or not such payment or prepayment is then due),
(ii) attempt by the Borrower to revoke
(expressly, by later inconsistent notices or otherwise) in whole or
part any Term Loan Requests under Section 3.2 (Interest Periods) or
notice relating to prepayments under Section 4.4 (Voluntary
Prepayments), or
(iii) default by the Borrower in the
performance or observance of any covenant or condition contained in
this Agreement or any other Loan Document, including any failure of
the Borrower to pay when due (by acceleration or otherwise) any
principal, interest, or any other amount due hereunder.
If any Bank sustains or incurs any such loss or expense, it
shall from time to time notify the Borrower of the amount determined
in good faith by such Bank (which determination may include such
assumptions, allocations of costs and expenses and averaging or
attribution methods as such Bank shall deem reasonable) to be
necessary to indemnify such Bank for such loss or expense. Such
notice shall set forth in reasonable detail the basis for such
determination. Such amount shall be due and payable by the Borrower
to such Bank ten (10) Business Days after such notice is given.
4.7 Notes.
The Term Loans made by each Bank shall, if requested by such
Bank, be evidenced by a Note.
5. REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties.
The Borrower and Hovnanian, jointly and severally, represent and
warrant to the Agent and to each of the Banks as follows:
5.1.1. Organization and Qualification.
Each of the Borrower, KHL and Hovnanian is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and each other Loan Party is a
corporation, partnership or limited liability company duly organized,
validly existing and in good standing under the laws of its
jurisdiction of organization except to the extent the failure to do so
could not, individually or in the aggregate, reasonably be expected to
cause a Material Adverse Change. Each Loan Party has the lawful power
to own or lease its properties and to engage in the business it
presently conducts or proposes to conduct. Each Loan Party is duly
licensed or qualified and in good standing in each jurisdiction where
the failure to obtain them could, individually or in the aggregate,
reasonably be expected to cause a Material Adverse Change.
5.1.2. Subsidiaries.
As of the Closing Date, Schedule 5.1.2 states the name of each
of Hovnanian's Subsidiaries and its jurisdiction of incorporation.
Hovnanian and each Loan Party has good and marketable title to all of
the Subsidiary Shares, Partnership Interests and LLC Interests it
purports to own, free and clear in each case of any Lien. All
Subsidiary Shares, Partnership Interests and LLC Interests have been
validly issued, and all Subsidiary Shares are fully paid and
nonassessable. All capital contributions and other consideration
required to be made or paid in connection with the issuance of the
Partnership Interests and LLC Interests have been made or paid, as the
case may be. Such Schedule 5.1.2 includes, among other things, as to
each of Hovnanian's Subsidiaries, the percentage ownership of each
owner of: the issued and outstanding shares (referred to herein as
the "Subsidiary Shares") if such Subsidiary is a corporation, its
outstanding partnership interests (the "Partnership Interests") if
such Subsidiary is a partnership and its outstanding limited liability
company interests (the "LLC Interests") if such Subsidiary is a
limited liability company. Schedule 5.1.2 shall also footnote the
controlling interests of each Subsidiary if such controlling interest
is held by a Person other than Hovnanian or a Subsidiary of Hovnanian.
5.1.3. Power and Authority.
Each Loan Party has full power to enter into, execute, deliver
and carry out this Agreement and the other Loan Documents to which it
is a party, to incur the Indebtedness contemplated by the Loan
Documents and to perform its Obligations under the Loan Documents to
which it is a party, and all such actions have been duly authorized by
all necessary proceedings on its part.
5.1.4. Validity and Binding Effect.
This Agreement has been duly and validly executed and delivered
by each Loan Party, and each other Loan Document which any Loan Party
is required to execute and deliver on or after the date hereof will
have been duly executed and delivered by such Loan Party on the
required date of delivery of such Loan Document. This Agreement and
each other Loan Document constitutes, or will constitute, legal, valid
and binding obligations of each Loan Party which is or will be a party
thereto on and after its date of delivery thereof, enforceable against
such Loan Party in accordance with its terms, except to the extent
that enforceability of any of such Loan Document may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforceability of creditors' rights generally or
limiting the right of specific performance.
5.1.5. No Conflict.
Neither the execution and delivery of this Agreement or the
other Loan Documents by any Loan Party nor the consummation of the
transactions herein or therein contemplated or compliance with the
terms and provisions hereof or thereof by any of them will conflict
with, constitute a default under or result in any breach of (i)the
terms and conditions of the certificate of incorporation, bylaws,
certificate of limited partnership, partnership agreement, certificate
of formation, limited liability company agreement or other
organizational documents of any Loan Party or (ii)any Law or any
material agreement or instrument or order, writ, judgment, injunction
or decree to which any Loan Party is a party or by which it is bound
or to which it is subject, or result in the creation or enforcement of
any Lien, charge or encumbrance whatsoever upon any property (now or
hereafter acquired) of any Loan Party (other than Liens granted under
the Loan Documents) which could, individually or in the aggregate,
reasonably be expected to cause a Material Adverse Change.
5.1.6. Litigation.
There are no actions, suits, proceedings or investigations
pending or, to the knowledge of any Loan Party, threatened against
such Loan Party at law or equity before any Official Body which
individually or in the aggregate may result in any Material Adverse
Change. None of the Loan Parties is in violation of any order, writ,
injunction or any decree of any Official Body which may result in any
Material Adverse Change.
5.1.7. Title to Properties.
Each Loan Party has good and marketable title to or a valid
leasehold interest in all properties, assets and other rights which it
purports to own or lease or which are reflected as owned or leased on
its books and records, free and clear of all Liens and encumbrances,
except Permitted Liens, and subject to the terms and conditions of the
applicable leases. All leases of property are in full force and
effect without the necessity for any consent which has not previously
been obtained upon consummation of the transactions contemplated
hereby.
5.1.8. Financial Statements.
(i) Historical Statements. The
Borrower has delivered to the Agent copies of Hovnanian's audited
consolidated year-end financial statements for and as of the end of
the fiscal year ended October 31, 2001 (the "Annual Statements"). In
addition, the Borrower has delivered to the Agent copies of
Hovnanian's unaudited consolidated interim financial statements for
the fiscal year to date and as of the end of the fiscal quarter ended
July 31, 2001 (the "Interim Statements") (the Annual and Interim
Statements being collectively referred to as the "Historical
Statements"). The Historical Statements were compiled from the books
and records maintained by Hovnanian's management, are correct and
complete and fairly represent the consolidated financial condition of
Hovnanian and its Subsidiaries as of their dates and the results of
operations for the fiscal periods then ended and have been prepared in
accordance with GAAP consistently applied, subject (in the case of the
Interim Statements) to normal year-end audit adjustments.
(ii) Financial Projections. The
Borrower has delivered to the Agent and the Banks financial
projections of Hovnanian and its Subsidiaries for each of the fiscal
years ending October 31, 2002, 2003, 2004 and 2005, each derived from
various assumptions of Hovnanian's management (the "Financial
Projections"). The Financial Projections represent a reasonable range
of possible results in light of the history of the business, present
and foreseeable conditions and the intentions of Hovnanian's
management (it being understood that actual results may vary
materially from the Financial Projections). The Financial Projections
accurately reflect the liabilities of Hovnanian and its Subsidiaries
upon consummation of the transactions contemplated hereby as of the
Closing Date.
(iii) Accuracy of Financial Statements.
As of the Closing Date, neither Hovnanian nor any Subsidiary of
Hovnanian has any liabilities, contingent or otherwise, or forward or
long-term commitments that are required by GAAP to be, but are not,
disclosed in the Historical Statements or in the notes thereto, and
except as disclosed therein there are no unrealized or anticipated
losses from any commitments of Hovnanian or any Subsidiary of
Hovnanian which may cause a Material Adverse Change. Since October
31, 2001, no Material Adverse Change has occurred.
5.1.9. Use of Proceeds; Margin Stock.
5.1.9.1. General.
The Loan Parties intend to use the proceeds of the Term Loans in
accordance with Sections 2.3 (Use of Proceeds) and 7.1.10 (Use of
Proceeds).
5.1.9.2. Margin Stock.
None of the Loan Parties engages or intends to engage
principally, or as one of its important activities, in the business of
extending credit for the purpose, immediately, incidentally or
ultimately, of purchasing or carrying margin stock (within the meaning
of Regulation U). No part of the proceeds of any Term Loan has been
or will be used, immediately, incidentally or ultimately, to purchase
or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock or to refund
Indebtedness originally incurred for such purpose, or for any purpose
which entails a violation of or which is inconsistent with the
provisions of the regulations of the Board of Governors of the Federal
Reserve System. None of the Loan Parties holds or intends to hold
margin stock in such amounts that more than 25% of the reasonable
value of the assets of such Loan Party are or will be represented by
margin stock.
5.1.10. Full Disclosure.
Neither this Agreement nor any other Loan Document, nor any
certificate, statement, agreement or other documents furnished to the
Agent or any Bank in connection herewith or therewith, contains any
untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein and
therein, in light of the circumstances under which they were made, not
misleading. There is no fact known to any Loan Party which materially
adversely affects the business, property, assets, financial condition,
results of operations or business prospects of the Loan Parties taken
as a whole which has not been set forth in this Agreement or in the
certificates, statements, agreements or other documents furnished in
writing to the Agent and the Banks prior to or at the date hereof in
connection with the transactions contemplated hereby.
5.1.11. Taxes.
All federal, state, local and other tax returns required to have
been filed with respect to the Loan Parties have been filed, and
payment or adequate provision has been made for the payment of all
taxes, fees, assessments and other governmental charges which have or
may become due pursuant to said returns or to assessments received,
except to the extent that such taxes, fees, assessments and other
charges are not material or are being contested in good faith by
appropriate proceedings diligently conducted and for which such
reserves or other appropriate provisions, if any, as shall be required
by GAAP shall have been made. There are no agreements or waivers
extending the statutory period of limitations applicable to any
federal income tax return of any Loan Party for any period.
5.1.12. Consents and Approvals.
No consent, approval, exemption, order or authorization of, or a
registration or filing with, any Official Body or any other Person is
required by any Law or any agreement in connection with the execution,
delivery and carrying out of this Agreement and the other Loan
Documents by any Loan Party, except as listed on Schedule 5.1.12, all
of which shall have been obtained or made on or prior to the Closing
Date except as otherwise indicated on Schedule 5.1.12.
5.1.13. No Event of Default; Compliance with Instruments.
No event has occurred and is continuing and no condition exists
or will exist after giving effect to the borrowings or other
extensions of credit to be made on the Closing Date under or pursuant
to the Loan Documents which constitutes an Event of Default or
Potential Default. None of the Loan Parties is in violation of (i)any
term of its certificate of incorporation, bylaws, certificate of
limited partnership, partnership agreement, certificate of formation,
limited liability company agreement or other organizational documents
or (ii)any material agreement or instrument to which it is a party or
by which it or any of its properties may be subject or bound where
such violation would constitute a Material Adverse Change.
5.1.14. Patents, Trademarks, Copyrights, Licenses, Etc.
Each Loan Party owns or possesses all the material patents,
trademarks, service marks, trade names, copyrights, licenses,
registrations, franchises, permits and rights necessary to own and
operate its properties and to carry on its business as presently
conducted and planned to be conducted by such Loan Party, without
known possible, alleged or actual material conflict with the rights of
others.
5.1.15. Insurance.
No notice has been given or claim made and no grounds exist to
cancel or avoid any of insurance policies of the type described in
Section 7.1.3 (Maintenance of Insurance) or to reduce the coverage
provided thereby.
5.1.16. Compliance with Laws.
The Loan Parties are in compliance in all material respects with
all applicable Laws (other than Environmental Laws which are
specifically addressed in Section 5.1.21 (Environmental Matters)) in
all jurisdictions in which any Loan Party is presently or will be
doing business except where the failure to do so would not constitute
a Material Adverse Change.
5.1.17. Burdensome Restrictions.
None of the Loan Parties is bound by any contractual obligation,
or subject to any restriction in any organization document, or any
requirement of Law which could reasonably be expected to constitute a
Material Adverse Change.
5.1.18. Investment Companies; Regulated Entities.
None of the Loan Parties is an "investment company" registered
or required to be registered under the Investment Company Act of 1940
or under the "control" of an "investment company" as such terms are
defined in the Investment Company Act of 1940 and shall not become
such an "investment company" or under such "control." None of the
Loan Parties is subject to any other Federal or state statute or
regulation limiting its ability to incur Indebtedness for borrowed
money (other than Regulation X of the Board of Governors of the
Federal Reserve System).
5.1.19. Plans and Benefit Arrangements.
(i) Except where the liability that
could reasonably be expected to result therefrom would not,
individually or in the aggregate, result in a Material Adverse Change,
(a) the Loan Parties and each other member of the ERISA Group are in
compliance in all material respects with any applicable provisions of
ERISA with respect to all Plans and, as to the Borrower, Benefit
Arrangements; (b) there has been no Prohibited Transaction with
respect to any such Benefit Arrangement or any Plan which could result
in any material liability of the Loan Parties or any other member of
the ERISA Group; (c) the Loan Parties and all other members of the
ERISA Group have made when due any and all payments required to be
made under any agreement relating to a Multiemployer Plan or any Law
pertaining thereto; (d) with respect to each Plan the Loan Parties and
each other member of the ERISA Group (i)have fulfilled in all respects
their obligations under the minimum funding standards of ERISA,
(ii)have not incurred any liability to the PBGC, except for premiums
in the ordinary course which are not overdue and (iii)have not had
asserted against them any penalty for failure to fulfill the minimum
funding requirements of Section 302 of ERISA; and (e)all Plans and
Benefit Arrangements have been administered in material compliance
with their terms and applicable Law.
(ii) Except where the liability that
could reasonably be expected to result therefrom would not,
individually or in the aggregate, result in a Material Adverse Change,
no event requiring notice to the PBGC under Section 302(f)(4)(A) of
ERISA has occurred or is reasonably expected to occur with respect to
any Plan, and no amendment with respect to which security is required
under Section 307 of ERISA has been made or is reasonably expected to
be made to any Plan.
(iii) Except where the liability that
could reasonably be expected to result therefrom would not,
individually or in the aggregate, result in a Material Adverse Change,
neither the Loan Parties nor any other member of the ERISA Group has
incurred or reasonably expects to incur any material withdrawal
liability under Section 4201 of ERISA to any Multiemployer Plan or
under Section 4063 or 4064 of ERISA to any Plan. Neither the Loan
Parties nor any other member of the ERISA Group has been notified by
any Multiemployer Plan or Plan that such Multiemployer Plan or Plan
has been terminated within the meaning of Sections 4041 A or 4064,
respectively, of ERISA and, to the best knowledge of the Borrower, no
Multiemployer Plan is reasonably expected to be reorganized or
terminated, within the meaning of Title IV of ERISA.
(iv) To the best knowledge of Borrower,
neither the Borrower nor any other member of the ERISA Group has,
within the preceding five years, entered into a transaction to which
either Section 4069 or Section 4212(c) of ERISA could apply so as to
subject Borrower or other member of the ERISA Group to a liability,
except where the liability that could reasonably be expected to result
therefrom would not result in a Material Adverse Change.
5.1.20. Employment Matters.
Each of the Loan Parties is in compliance with the Labor
Contracts and all applicable Federal, state and local labor and
employment Laws including those related to equal employment
opportunity and affirmative action, labor relations, minimum wage,
overtime, child labor, medical insurance continuation, worker
adjustment and relocation notices, immigration controls and worker and
unemployment compensation, where such failure to comply would
constitute a Material Adverse Change. There are no outstanding
grievances, arbitration awards or appeals therefrom arising out of the
Labor Contracts or current or threatened strikes, picketing,
handbilling or other work stoppages or slowdowns at facilities of any
of the Loan Parties which in any case would constitute a Material
Adverse Change.
5.1.21. Environmental Matters.
None of the Loan Parties has received any Environmental
Complaint, including but not limited to those from any Official Body
or private Person alleging that such Loan Party or any prior owner,
operator or occupant of any of the Property is a potentially
responsible party under the Comprehensive Environmental Response,
Cleanup and Liability Act, 42 U.S.C. 9601, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. 6901, et seq. or any
analogous state or local Law, which could reasonably be expected to
constitute a Material Adverse Change and none of the Loan Parties has
any reason to believe that such an Environmental Complaint might be
received. There are no pending or, to any Loan Party's knowledge,
threatened Environmental Complaints relating to any Loan Party or, to
any Loan Party's knowledge, any prior owner, operator or occupant of
any of the Properties pertaining to, or arising out of, any
Contamination or violations of Environmental Laws or Required
Environmental Permits which could reasonably be expected to constitute
a Material Adverse Change.
5.1.22. Senior Debt Status.
The Obligations of each Loan Party under this Agreement, the
Guaranty Agreement and each of the other Loan Documents to which it is
a party do rank and will rank at least pari passu in priority of
payment with all other Indebtedness of such Loan Party except
Indebtedness of such Loan Party to the extent secured by Permitted
Liens. There is no Lien upon or with respect to any of the properties
or income of any Loan Party which secures Indebtedness or other
obligations of any Person except for Permitted Liens.
5.2 Continuation of Representations.
The Borrower and Hovnanian make the representations and
warranties in this Section 5 on the Closing Date.
6. CONDITIONS OF LENDING
The obligation of each Bank to make Term Loans and of the Agent
hereunder is subject to the performance by each of the Loan Parties of
its Obligations to be performed hereunder at or prior to the making of
any such Term Loans and to the satisfaction of the following further
conditions:
6.1 Term Loans On the Closing Date.
6.1.1. Officer's Certificate.
The representations and warranties of each of the Loan Parties
contained in Section 5 (Representation and Warranties) and in each of
the other Loan Documents shall be true and correct on and as of the
Closing Date with the same effect as though such representations and
warranties had been made on and as of such date (except
representations and warranties which relate solely to an earlier date
or time, which representations and warranties shall be true and
correct on and as of the specific dates or times referred to therein),
and each of the Loan Parties shall have performed and complied with
all covenants and conditions hereof and thereof, no Event of Default
or Potential Default shall have occurred and be continuing or shall
exist; and there shall be delivered to the Agent for the benefit of
each Bank a certificate of each of the Loan Parties, dated the Closing
Date and signed by the Chief Executive Officer, President, Chief
Financial Officer or Vice-President-Finance and Treasurer of each of
the Loan Parties, to each such effect.
6.1.2. Incumbency Certificate.
There shall be delivered to the Agent for the benefit of each
Bank a certificate dated the Closing Date and signed by the Secretary
or an Assistant Secretary or the managing member (or equivalent), as
the case may be, of each of the Loan Parties, certifying as
appropriate as to:
(i) all action taken by each Loan
Party in connection with this Agreement and the other Loan Documents;
(ii) the names of the officer or
officers authorized to sign this Agreement and the other Loan
Documents and the true signatures of such officer or officers and
specifying the Authorized Officers permitted to act on behalf of each
Loan Party for purposes of this Agreement and the true signatures of
such officers, on which the Agent and each Bank may conclusively rely;
and
(iii) as to Hovnanian and the Borrower
only, copies of its organizational documents, including its
certificate of incorporation, bylaws, certificate of limited
partnership, partnership agreement, certificate of formation, and
limited liability company agreement as in effect on the Closing Date
certified by the appropriate state official where such documents are
filed in a state office together with certificates from the
appropriate state officials as to the continued existence and good
standing of such Loan Party in each state where organized, all as
acceptable to the Agent.
6.1.3. Delivery of Loan Documents .
The Guaranty Agreement, the Notes, and the other Loan Documents
shall have been duly executed and delivered by Hovnanian to the Agent
for the benefit of the Banks.
6.1.4. Opinion of Counsel.
There shall be delivered to the Agent for the benefit of each
Bank a written opinion of Xxxxx Xxxxxxxx, Esquire, in-house counsel
for the Loan Parties, dated the Closing Date and in form and substance
satisfactory to the Agent and its counsel.
6.1.5. Legal Details.
All legal details and proceedings in connection with the
transactions contemplated by this Agreement and the other Loan
Documents shall be in form and substance satisfactory to the Agent and
counsel for the Agent, and the Agent shall have received all such
other counterpart originals or certified or other copies of such
documents and proceedings in connection with such transactions, in
form and substance satisfactory to the Agent and said counsel, as the
Agent or said counsel may reasonably request.
6.1.6. Payment of Fees.
The Borrower shall have paid or caused to be paid to the Agent
for itself and for the account of the Banks to the extent not
previously paid, all fees accrued through the Closing Date and the
costs and expenses for which the Agent and the Banks are entitled to
be reimbursed.
6.1.7. Consents.
All material consents required to effectuate the transactions
contemplated hereby as set forth on Schedule 5.1.12 shall have been
obtained.
6.1.8. Officer's Certificate Regarding MACs.
Since October 31, 2001, no Material Adverse Change shall have
occurred, and there shall have been delivered to the Agent for the
benefit of each Bank a certificate dated the Closing Date and signed
by the Chief Executive Officer, President, Chief Financial Officer or
Vice-President-Finance and Treasurer of each Loan Party to each such
effect.
6.1.9. No Actions or Proceedings.
No action, proceeding, investigation, regulation or legislation
shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or
prohibit, or to obtain damages in respect of, this Agreement, the
other Loan Documents or the consummation of the transactions
contemplated hereby or thereby.
6.1.10. Obligations under Revolving Senior Debt.
The Borrower shall have established to the satisfaction of the
Agent that the transactions contemplated hereby do not conflict with
the terms of the Revolving Senior Debt Facility.
6.1.11. Closing Borrowing Base Certificate.
The Borrower shall have delivered a duly completed Borrowing
Base Certificate respect of the period ended November 30, 2001.
6.2 Each Additional Term Loan.
At the time of making any Loans after the Closing Date incident
to an increase in the aggregate Term Loan Commitments pursuant to
Section 2.1.3 (Increase in Commitments After Closing Date) and after
giving effect to the proposed extensions of credit: the
representations and warranties of the Loan Parties contained in
Section 5 (Representations and Warranties) and in the other Loan
Documents shall be true and correct in all material respects on and as
of the date of such additional Term Loan with the same effect as
though such representations and warranties had been made on and as of
such date (except representations and warranties which expressly
relate solely to an earlier date or time, which representations and
warranties shall be true and correct in all material respects on and
as of the specific dates or times referred to therein); no Event of
Default or Potential Default shall have occurred and be continuing or
shall exist; and the Borrower shall have delivered to the Agent a duly
executed and completed Term Loan Request.
7. COVENANTS
7.1 Affirmative Covenants.
The Borrower and Hovnanian, jointly and severally, covenant and
agree that until payment in full of the Term Loans, and interest
thereon, satisfaction of all of the Loan Parties' other Obligations
under the Loan Documents and termination of all Term Loan Commitments,
they shall, and shall cause the other Loan Parties to, comply at all
times with the following affirmative covenants:
7.1.1. Preservation of Existence, Etc.
Each Loan Party shall maintain its legal existence as a
corporation, limited partnership or limited liability company and its
license or qualification and good standing in each jurisdiction in
which its ownership or lease of property or the nature of its business
makes such license or qualification necessary, except as otherwise
expressly permitted in Section 7.2.4 (Liquidations, Mergers,
Consolidations, Acquisitions) and except where failure to do so could
not reasonably be expected to constitute a Material Adverse Change
with respect to the Borrower or Hovnanian or with respect to the Loan
Parties taken as a whole.
7.1.2. Payment of Liabilities, Including Taxes, Etc.
Each Loan Party shall duly pay and discharge all material
liabilities to which it is subject or which are asserted against it,
promptly as and when the same shall become due and payable, including
all material taxes, assessments and governmental charges upon it or
any of its properties, assets, income or profits, prior to the date on
which penalties attach thereto, except to the extent that such
liabilities, including taxes, assessments or charges, are being
contested in good faith and by appropriate and lawful proceedings
diligently conducted and for which such reserve or other appropriate
provisions, if any, as shall be required by GAAP shall have been made,
or to the extent that failure to discharge any such liabilities would
not result in any additional liability which would adversely affect to
a material extent the financial condition of the Borrower or Hovnanian
or of the Loan Parties taken as a whole, provided that the Loan
Parties will pay all such liabilities forthwith upon the commencement
of proceedings to foreclose any Lien which may have attached as
security therefor.
7.1.3. Maintenance of Insurance.
Each Loan Party shall insure its properties and assets against
loss or damage by fire and such other insurable hazards as such assets
are commonly insured (including fire, extended coverage, property
damage, workers' compensation, public liability, flood and business
interruption insurance) and against other risks (including errors and
omissions) in such amounts as similar properties and assets are
insured by prudent companies in similar circumstances carrying on
similar businesses, and with reputable and financially sound insurers,
including self-insurance to the extent customary.
7.1.4. Maintenance of Properties and Leases.
Each Loan Party shall maintain in good repair, working order and
condition (ordinary wear and tear excepted) in accordance with the
general practice of other businesses of similar character and size,
all of those properties necessary to its business, and from time to
time, such Loan Party will make or cause to be made all appropriate
repairs, renewals or replacements thereof.
7.1.5. Maintenance of Patents, Trademarks, Etc.
Each Loan Party shall maintain in full force and effect all
patents, trademarks, service marks, trade names, copyrights, licenses,
franchises, permits and other authorizations necessary for the
ownership and operation of its properties and business if the failure
so to maintain the same would constitute a Material Adverse Change.
7.1.6. Visitation Rights.
Each Loan Party shall permit any of the officers or authorized
employees or representatives of the Agent or (at the expense of such
Bank) any of the Banks to visit and inspect any of its properties and
to examine and make excerpts from its books and records and discuss
its business affairs, finances and accounts with its officers, all in
such detail and at such times and as often as any of the Banks may
reasonably request, provided that each Bank shall provide the Borrower
and the Agent with reasonable notice prior to any visit or inspection.
In the event any Bank desires to conduct an audit of any Loan Party,
such Bank shall make a reasonable effort to conduct such audit
contemporaneously with any audit to be performed by the Agent.
7.1.7. Keeping of Records and Books of Account.
The Loan Parties shall maintain and keep proper books of record
and account which enable Hovnanian and its Subsidiaries to issue
financial statements in accordance with GAAP and as otherwise required
by applicable Laws of any Official Body having jurisdiction over
Hovnanian or any Subsidiary of Hovnanian, and in which full, true and
correct entries shall be made in all material respects of all its
dealings and business and financial affairs.
7.1.8. Plans and Benefit Arrangements.
The Loan Parties shall, and shall cause each member of the ERISA
Group that is a Subsidiary to, and shall use its reasonable best
efforts to cause each other member of the ERISA Group to, comply with
ERISA, the Internal Revenue Code and other applicable Laws applicable
to Plans and, as to the Borrower, Benefit Arrangements, except where
such failure, alone or in conjunction with any other failure, would
not result in a Material Adverse Change. Without limiting the
generality of the foregoing, the Loan Parties shall cause all of
their Plans and shall use reasonable best efforts to cause all Plans
maintained by any member of the ERISA Group, to be funded in
accordance with the minimum funding requirements of ERISA and shall
make, and cause each Subsidiary to, and shall use its reasonable best
efforts to cause each member of the ERISA Group to make, in a timely
manner, all contributions due to Plans and Multiemployer Plans except
where such failure, alone or in conjunction with any other failure,
would not result in a Material Adverse Change.
7.1.9. Compliance with Laws.
Each Loan Party shall comply with all applicable Laws, including
all Environmental Laws, in all respects, provided that it shall not be
deemed to be a violation of this Section 7.1.9 if any failure to
comply with any Law would not result in fines, penalties, remediation
costs, other similar liabilities or injunctive relief which in the
aggregate would constitute a Material Adverse Change.
7.1.10. Use of Proceeds.
The Loan Parties will use the proceeds of the Term Loans only to
refinance the purchase of substantially all of the assets of The
Forecast Group, L.P. effected prior to the Closing Date in January
2002 by X. Xxxxxxxxx Forecast Homes, Inc., a wholly-owned Subsidiary
of Hovnanian Developments of California, Inc., a wholly-owned
Subsidiary of Hovnanian, each a Guarantor hereunder, to finance
Permitted Acquisitions and for ongoing corporate purposes.
7.1.11. Required Dividends of KHL.
The Loan Parties shall cause KHL to pay to Hovnanian, at least
annually, all net income of KHL.
7.1.12. Payments to and by KHL.
At any time that there exists any Event of Default or Potential
Default, no Loan Party shall make any payments to KHL and at any time
that there exists any Event of Default, the Loan Parties shall cause
KHL to pay to Hovnanian all monies theretofore paid by any Loan Party
to KHL during the fiscal year in which such Event of Default exists to
the extent such monies have not already been repaid or advanced to a
Loan Party.
7.2 Negative Covenants.
The Borrower and Hovnanian, jointly and severally, covenant and
agree that until payment in full of the Term Loans and interest
thereon, satisfaction of all of the Loan Parties' other Obligations
hereunder, and termination of all Term Loan Commitments, they shall,
and shall cause the other Loan Parties to, comply with the following
negative covenants:
7.2.1. Indebtedness.
7.2.1.1. Each of the Loan Parties shall not at any
time create, incur, assume or suffer to exist any secured
indebtedness, except Indebtedness secured by Permitted Liens.
7.2.1.2. KHL shall not incur Indebtedness of any
kind or suffer to exist any Lien on its property or provide any
Guaranty in respect of the Indebtedness or other obligations of any
Person, or become obligated to do so, and no Loan Party shall allow
any of the foregoing to occur.
7.2.1.3. The Loan Parties shall not permit any
Mortgage Subsidiary to incur or suffer to exist any Indebtedness if,
after giving effect thereto, the ratio of (x) debt to (y) equity plus
the amount of any loans or Guaranties provided by Hovnanian of such
Mortgage Subsidiary exceeds 12.0-to-1.0.
7.2.2. Liens.
Each of the Loan Parties shall not at any time create, incur,
assume or suffer to exist any Lien on any of its property or assets,
tangible or intangible, now owned or hereafter acquired, or agree or
become liable to do so, except Permitted Liens.
7.2.3. Loans and Investments.
Each of the Loan Parties shall not, at any time, make or suffer
to remain outstanding any Investment except Permitted Investments and,
to the extent permitted by Section 7.2.6 (Restricted Payments;
Restricted Investments), Restricted Investments.
7.2.4. Liquidations, Mergers, Consolidations, Acquisitions.
Each of the Loan Parties shall not dissolve, liquidate or wind-
up its affairs, or become a party to any merger or consolidation, or
acquire by purchase, lease or otherwise all or substantially all of
the assets or capital stock of any other Person, provided that
(1) any Loan Party other than the Borrower or Hovnanian may
consolidate or merge into another Loan Party (or any Person that
concurrently becomes a Loan Party) which is wholly-owned by one or
more of the other Loan Parties, and
(2) any Loan Party may consolidate or merge with a Person who
is not a Loan Party if the common stockholders of Hovnanian prior to
such transaction maintain at least 50% of the voting control (direct
or indirect) of the combined entity after consummation of the
transaction, and
(3) any Loan Party may acquire, whether by purchase or by
merger, (A)all or substantially all of the ownership interests of
another Person or (B)all or substantially all of assets of another
Person or of a business or division of another Person (each, a
"Permitted Acquisition"), provided that each of the following
requirements is met:
(i) if the Loan Parties are acquiring
the ownership interests in such Person, and such Person is, or
concurrently will be, designated a Restricted Subsidiary, such Person
shall execute a Guarantor Joinder and join this Agreement as a
Guarantor pursuant to Section 10.18 (Joinder of Guarantors) and the
Borrower shall have otherwise complied with Section 2.5.4 (Designation
of Restricted Subsidiary) on or before the date of such Permitted
Acquisition;
(ii) if such Person's shares are
registered as "public" shares under applicable law, the board of
directors or other equivalent governing body of such Person shall have
approved such Permitted Acquisition;
(iii) the business acquired, or the
business conducted by the Person whose ownership interests are being
acquired, as applicable, shall comply with Section 7.2.8 (Continuation
of or Change in Business); and
(iv) no Potential Default or Event of
Default shall exist immediately prior to and after giving effect to
such Permitted Acquisition.
(4) the Loan Parties may make, whether by purchase
or merger or otherwise, Permitted Investments and, to the extent
permitted by Section 7.2.6 (Restricted Investments and Restricted
Payments), Restricted Investments and Restricted Payments;
(5) the Loan Parties may liquidate or wind-up
Restricted Subsidiaries of Hovnanian which are not individually
material to Hovnanian, the Borrower or to the Loan Parties taken as a
whole; provided that the Loan Parties shall satisfy the requirements
of Section 2.5 [Designation of Subsidiaries and Release of
Guarantors], to the extent applicable;
(6) the Loan Parties may effectuate any sale
permitted by Section 7.2.5 as a merger or consolidation; and
(7) for the avoidance of doubt, any Loan Party may
effect or allow the liquidation or winding-up of any Non-Restricted
Person.
7.2.5. Dispositions of Assets or Subsidiaries; Sale and
Leaseback.
7.2.5.1. Each of the Loan Parties shall not sell,
convey, assign, lease, abandon or otherwise transfer or dispose of,
voluntarily or involuntarily, any of its properties or assets,
tangible or intangible (including sale, assignment, discount or other
disposition of accounts, contract rights, chattel paper, equipment or
general intangibles with or without recourse or of capital stock,
shares of beneficial interest, partnership interests or limited
liability company interests of a Subsidiary of such Loan Party, but
excluding Investments in Non-Restricted Persons), except:
(i) any sale, transfer or lease of
assets in the ordinary course of business which are no longer
necessary or required in the conduct of such Loan Party's business;
(ii) any sale, transfer or lease of
assets to a Loan Party;
(iii) any sale, transfer or lease of
assets in the ordinary course of business which are replaced by
substitute assets acquired not in violation of this Agreement; or
(iv) any sale and leaseback permitted
by Section 7.2.5.2.
7.2.5.2. The Loan Parties shall not, directly or
indirectly, sell, transfer or otherwise dispose of real and/or
personal property with a view directly or indirectly to the leasing
back of the same or of any similar property except for (i) sales and
leasebacks of sample model homes and their contents; (ii) sales and
leasebacks of any office buildings and their contents, or (iii) sales
and leasebacks in the normal course of business.
7.2.6. Restricted Payments; Restricted Investments.
7.2.6.1. The Loan Parties shall not pay or make
Restricted Payments or Restricted Investments from and after January
31, 2001 which exceed in the aggregate the sum of:
(i) $45,000,000;
(ii) 50% of net income of Hovnanian
(calculated and consolidated in accordance with GAAP) for all fiscal
quarters commencing on February 1, 2001 and thereafter; and
(iii) 50% of the proceeds (less costs of
issuance) of any issuance or sale of equity of Hovnanian to any Person
other than a Loan Party during all fiscal quarters commencing on
February 1, 2001 and thereafter.
7.2.6.2. Each of the Loan Parties shall not enter
into or carry out any transaction with any Affiliate (including
purchasing property or services from or selling property or services
to any Affiliate of any Loan Party or other Person but excluding
transactions between Loan Parties) unless such transaction is not
otherwise prohibited by this Agreement, is entered into in the
ordinary course of business upon fair and reasonable arm's-length
terms and is in accordance with all applicable Law. Without limiting
the foregoing, the aggregate amount of all Indebtedness for owed or
borrowed money owing to any Loan Party by any officer or director, or
relative thereof, shall not exceed $4,000,000 in the aggregate owing
at any one time and all such Indebtedness shall bear interest at a
rate not less than the coupon rate on six month U.S. Treasury bills as
of the date such Indebtedness is incurred.
7.2.6.3. The Loan Parties shall not pay or make (i)
any Restricted Payment in respect of Dividends and Capital Stock
Retirement in excess of $25,000,000 in the aggregate after January 31,
2001 or (ii) any Restricted Payment in respect of the Subordinated
Debt in excess of $25,000,000 in the aggregate after January 31, 2001.
7.2.7. Subsidiaries, Partnerships and Joint Ventures.
Each of the Loan Parties shall not own or create directly or
indirectly any Subsidiaries other than (i) any Subsidiary which has
executed the Guaranty Agreement as Guarantor on the Closing Date,
(ii) KHL, (iii) any Subsidiary formed or acquired after the Closing
Date which joins the Guaranty Agreement as a Guarantor pursuant to
Section 10.18 (Joinder of Guarantors) or (iv) any Non-Restricted
Person.
7.2.8. Continuation of or Change in Business.
Each of the Loan Parties shall not engage in any business other
than the homebuilding business or Existing Related Businesses.
7.2.9. Plans and Benefit Arrangements.
Each of the Loan Parties shall not engage in a Prohibited
Transaction with any Plan, Benefit Arrangement or Multiemployer Plan
which, alone or in conjunction with any other circumstances or set of
circumstances, results in liability under ERISA, except where the
liability that could reasonably be expected to result therefrom would
not result in a Material Adverse Change.
7.2.10. Borrowing Base.
The Loan Parties shall not permit Senior Homebuilding
Indebtedness minus the face amount of outstanding letters of credit
under the Revolving Senior Debt Facility or any other letter of credit
in respect of which a Loan Party is obligated and which is issued to
guaranty or assure the installation of site improvements on (or
appurtenant to) land owned by a Loan Party to exceed at any time the
Borrowing Base. Pursuant thereto, the Borrower shall make (or cause
to be made), on the Business Day following the date on which any such
excess is calculated, payments of principal of Senior Homebuilding
Indebtedness sufficient to reduce to zero ($0) on such date any such
excess.
7.2.11. Minimum ATNW.
The Loan Parties shall not permit Adjusted Tangible Net Worth to
be less than the sum of: (i) $245,600,000 and (ii) 50% of Hovnanian's
consolidated net income (calculated and consolidated in accordance
with GAAP) for each fiscal quarter commencing on August 1, 2001 and
thereafter in which net income was earned (as opposed to a net loss)
and (iii) 50% of the proceeds (less costs of issuance) of any issuance
or sale of equity of Hovnanian to any Person other than a Loan Party
during each fiscal quarter commencing on August 1, 2001 and
thereafter.
7.2.12. Leverage Ratio.
(a) The Loan Parties shall not permit Actual
Leverage to exceed 2.20-to-1.0 in any two (2) consecutive fiscal
quarters in which the Fixed Charge Coverage Ratio is less than 1.5-to-
1.0; and
(b) The Loan Parties shall not permit Actual
Leverage to exceed the Total Debt Multiplier.
7.2.13. Inventory and Land Purchase Limits.
7.2.13.1. The Loan Parties shall not permit:
(i) The Dollar value of Unimproved
Land to exceed twenty percent (20%) of the sum of Adjusted Tangible
Net Worth and the principal amount of the Subordinated Debt, as
calculated as of the end of each fiscal quarter;
(ii) The Dollar value of Finished Lots
and Land under Development plus Unimproved Land to exceed the sum of
Adjusted Tangible Net Worth and the principal amount of the
Subordinated Debt, as calculated as of the end of each fiscal quarter;
or
(iii) The number of Unsold Dwelling
Units existing as of the end of any fiscal quarter to exceed 25% of
the number of Dwelling Units conveyed to third party purchasers within
the previous twelve (12) months.
7.2.13.2. If the Fixed Charge Coverage Ratio is
less than 1.0-to-1.0 and the Cash Flow Coverage Ratio is less than
1.1-to-1.0 for two (2) consecutive fiscal quarters (referred to herein
as the "prior two quarters"), then, during the fiscal quarter
following the prior two quarters, the Loan Parties shall not purchase
land (whether Unimproved Land or otherwise) in amounts which exceed in
such quarter the lesser of:
(x) the total land portion of "cost of sales" as reflected in
the financial statements delivered pursuant to Section 7.3 (Reporting
Requirements) for sales by the Loan Parties to third party purchasers
in arm's length transactions during the immediately preceding fiscal
quarter; and
(y) fifty percent (50%) of the total land portion of "cost of
sales" as reflected in the financial statements delivered pursuant to
Section 7.3 (Reporting Requirements) for the average quarterly sales
by the Loan Parties to third party purchasers in arm's length
transactions during the preceding four (4) fiscal quarters.
7.2.14. Fiscal Year.
The Loan Parties shall not change their fiscal year from the
twelve-month period ending October 31.
7.2.15. Changes in Subordinated Debt Documents.
The Loan Parties shall not amend or modify any provisions of the
documents relating to the Subordinated Debt without providing at least
ten (10) calendar days' prior written notice to the Agent and the
Banks, and, if the same would adversely affect the interests of the
Agent and the Banks, obtaining the prior written consent of the
Required Banks. No Loan Party shall directly or indirectly make any
payment on the Subordinated Debt which would violate the provisions of
any applicable subordination agreement or provision. Neither the
Senior Notes nor the Subordinated Debt shall become secured.
7.3 Reporting Requirements.
The Borrower and Hovnanian, jointly and severally, covenant and
agree that until payment in full of the Term Loans and interest
thereon, satisfaction of all of the Loan Parties' other Obligations
hereunder and under the other Loan Documents, and termination of all
Term Loan Commitments they shall, and shall cause the other Loan
Parties to, furnish or cause to be furnished to the Agent and each of
the Banks:
7.3.1. Quarterly Financial Statements.
As soon as available and in any event within fifty-five (55)
calendar days after the end of each of the first three fiscal quarters
in each fiscal year of Hovnanian, financial statements of Hovnanian,
consisting of a consolidated and consolidating balance sheet as of the
end of such fiscal quarter and related consolidated and consolidating
statements of income, stockholders' equity and cash flows for the
fiscal quarter then ended and the fiscal year through that date, all
in reasonable detail and certified (subject to normal year-end audit
adjustments) by the Chief Executive Officer, President, Treasurer or
Chief Financial Officer or principal accounting officer of Hovnanian
as having been prepared in accordance with GAAP, consistently applied,
and setting forth in comparative form the respective financial
statements for the corresponding date and period in the previous
fiscal year. The Loan Parties will be deemed to have complied with
the delivery requirements of this Section 7.3.1 if within fifty-five
(55) days after the end of their fiscal quarter, the Borrower delivers
to the Agent and each of the Banks a copy of Hovnanian's Form 10-Q as
filed with the SEC and the financial statements contained therein
meets the requirements described in this Section 7.3.1.
7.3.2. Annual Financial Statements.
As soon as available and in any event within ninety (90) days
after the end of each fiscal year of Hovnanian, financial statements
of Hovnanian consisting of a consolidated balance sheet as of the end
of such fiscal year, and related consolidated statements of income,
stockholders' equity and cash flows for the fiscal year then ended,
all in reasonable detail and setting forth in comparative form the
financial statements as of the end of and for the preceding fiscal
year, and certified by independent certified public accountants of
nationally recognized standing satisfactory to the Agent. The
certificate or report of accountants shall be free of qualifications
(other than any consistency qualification that may result from a
change in the method used to prepare the financial statements as to
which such accountants concur) and shall not indicate the occurrence
or existence of any event, condition or contingency which would
materially impair the prospect of payment or performance of any
covenant, agreement or duty of any Loan Party under any of the Loan
Documents or cause or constitute an Event of Default. The Loan
Parties will be deemed to have complied with the delivery requirements
of this Section 7.3.2 if within ninety (90) days after the end of
Hovnanian's fiscal year, the Borrower delivers to the Agent and each
of the Banks a copy of Hovnanian's Annual Report and Form 10-K as
filed with the SEC and the financial statements and separately
delivers the above-referenced certification of public accountants.
7.3.3. Certificates of the Borrower.
7.3.3.1. Compliance Certificate. Concurrently with
the financial statements of Hovnanian furnished to the Agent and to
the Banks pursuant to Sections 7.3.1 [Quarterly Financial Statements]
and 7.3.2 [Annual Financial Statements]:
(a) a certificate of the Borrower signed by
the Chief Executive Officer, President, Treasurer or Chief Financial
Officer or principal accounting officer of the Borrower, in the form
of Exhibit 7.3.3.1, to the effect that, except as described pursuant
to Section 7.3.3.2 (Borrowing Base Certificate), (i)the
representations and warranties of the Borrower contained in Section
5.1 (Representations and Warranties) and in the other Loan Documents
are true and correct in all material respects on and as of the date of
such certificate with the same effect as though such representations
and warranties had been made on and as of such date (except
representations and warranties which expressly relate solely to an
earlier date or time), (ii)no Event of Default or Potential Default
exists and is continuing on the date of such certificate and
(iii)containing calculations in sufficient detail to demonstrate
compliance as of the date of such financial statements with all
financial covenants contained in Section 7.2 [Negative Covenants].
(b) summary consolidated and consolidating
financial statements for each of (i) the Mortgage Subsidiaries as a
group; (ii) the Non-Restricted Persons as a group and (iii) the
Borrower, Hovnanian and the Restricted Subsidiaries as a group;
(c) summary financial statements for each
Joint Venture in which any Loan Party has a Subsidiary Investment
greater than an amount equal to 2% of Adjusted Tangible Net Worth as
of the last day of the previous fiscal quarter of Hovnanian; and
(d) to the extent not previously disclosed
in writing to the Agent and the Banks, a report of any changes to
Schedule 1.1(B) including changes arising under Section 2.5
[Designation of Subsidiaries and Release of Guarantors].
7.3.3.2. Borrowing Base Certificate.
As soon as available, but not later than fifty-five (55) days
after the end of each month, a Borrowing Base Certificate as of the
end of such month, appropriately completed, executed and delivered by
an Authorized Officer, together with a certificate of the Borrower
signed by the Chief Executive Officer, President, Treasurer or Chief
Financial Officer or principal accounting officer of the Borrower, in
the form of Exhibit 7.3.3.2, to the effect that, except as described
pursuant to Section 7.3.4 (Notice of Default), no Event of Default or
Potential Default exists and is continuing on the date of such
Borrowing Base Certificate.
7.3.4. Notice of Default.
Promptly after any officer of any Loan Party has learned of the
occurrence of an Event of Default or Potential Default, a certificate
signed by the Chief Executive Officer, President or Chief Financial
Officer or principal accounting officer of such Loan Party setting
forth the details of such Event of Default or Potential Default and
the action which such Loan Party proposes to take with respect
thereto.
7.3.5. Notice of Litigation.
Promptly after the commencement thereof, notice of all actions,
suits, proceedings or investigations before or by any Official Body or
any other Person against any Loan Party that involve a claim or series
of claims in excess of $1,000,000 or which could reasonably be
expected to constitute a Material Adverse Change.
7.3.6. Notice of Change in Debt Rating.
Within two (2) Business Days after Standard & Poor's or Xxxxx'x
announces a change in Hovnanian's Debt Rating, notice of such change.
Hovnanian will deliver together with such notice a copy of any written
notification which Hovnanian received from the applicable rating
agency regarding such change of Debt Rating.
7.3.7. Budgets, Forecasts, Other Reports and Information.
Promptly upon their becoming available to any Loan Party:
(i) any reports, notices or proxy
statements generally distributed by Hovnanian to its stockholders,
(ii) regular or periodic reports,
including Forms 10-K, 10-Q and 8-K, registration statements and
prospectuses, filed by Hovnanian with the SEC, and
(iii) such other reports and information
as any of the Banks may from time to time reasonably request. The
Loan Parties shall also notify the Banks promptly of the enactment or
adoption of any Law which could reasonably be expected to constitute a
Material Adverse Change.
7.3.8. Notices Regarding Plans and Benefit Arrangements.
7.3.8.1. Certain Events.
Promptly after learning of the occurrence thereof, notice
(including the nature of the event and, when known, any action taken
or threatened by the Internal Revenue Service or the PBGC with respect
thereto) of any of the following events, or services of such events,
if, individually or in the aggregate, any liabilities or penalties
resulting from such event(s) could reasonably be expected to result in
a Material Adverse Change:
(i) any Reportable Event with respect
to any Plan,
(ii) any Prohibited Transaction which
could subject any Loan Party or any other member of the ERISA Group to
a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax
imposed by Section 4975 of the Internal Revenue Code in connection
with any Plan, any Benefit Arrangement or any trust created
thereunder,
(iii) any withdrawal from a
Multiemployer Plan by the Borrower or any other member of the ERISA
Group under Title IV of ERISA or assertion by a Multiemployer Plan
that such a withdrawal has occurred
(iv) any cessation of operations (by
any Loan Party or any other member of the ERISA Group) at a facility
in the circumstances described in Section 4062(e) of ERISA,
(v) withdrawal by any Loan Party or
any other member of the ERISA Group from a Plan in the circumstances
described in Section 4063 of ERISA or the termination of such Plan in
the circumstances described in Section 4064 of ERISA,
(vi) a failure to make any required
contribution to a Plan or the creation of any Lien in favor of the
PBGC or a Plan,
(vii) the adoption of an amendment to a
Plan requiring the provision of security to such Plan pursuant to
Section 307 of ERISA, or
(viii) the distress termination of
a Plan, under Title IV of ERISA, which has insufficient assets to pay
all liabilities.
7.3.8.2. Notices of Involuntary Termination and
Annual Reports.
Promptly after receipt thereof, copies of (a)all notices
received by any Loan Party or any other member of the ERISA Group of
the PBGC's intent to terminate any Plan administered or maintained by
the Borrower or any member of the ERISA Group, or to have a trustee
appointed to administer any such Plan; and (b)at the request of the
Agent or any Bank each annual report (IRS Form 5500 series) and all
accompanying schedules, the most recent actuarial reports, the most
recent financial information concerning the financial status of each
Plan administered or maintained by any Loan Party or any other member
of the ERISA Group, and schedules showing the amounts contributed to
each such Plan by or on behalf of the Borrower or any other member of
the ERISA Group in which any of their personnel participate or from
which such personnel may derive a benefit, and each Schedule B
(Actuarial Information) to the annual report filed by any Loan Party
or any other member of the ERISA Group with the Internal Revenue
Service with respect to each such Plan.
7.3.8.3. Notice of Voluntary Termination.
Where a termination of any Plan would result in a Material
Adverse Change, promptly upon the filing thereof, copies of any Form
5310, or any successor or equivalent form to Form 5310, filed with the
PBGC in connection with the termination of any Plan.
8. DEFAULT
8.1 Events of Default.
An Event of Default shall mean the occurrence or existence of
any one or more of the following events or conditions (whatever the
reason therefor and whether voluntary, involuntary or effected by
operation of Law):
8.1.1. Payments Under Loan Documents.
The Borrower shall fail to pay (i)any principal of any Term Loan
(including scheduled installments, mandatory prepayments or the
payment due at maturity) when such principal is due hereunder or
(ii)any interest on any Term Loan or any other amount owing hereunder
or under the other Loan Documents within three (3) Business Days after
such interest or other amount becomes due in accordance with the terms
hereof or thereof;
8.1.2. Breach of Warranty.
Any representation or warranty made at any time by any of the
Loan Parties herein or by any of the Loan Parties in any other Loan
Document, or in any certificate, other instrument or statement
furnished pursuant to the provisions hereof or thereof, shall prove to
have been false or misleading in any material respect as of the time
it was made or furnished;
8.1.3. Breach of Certain Negative Covenants.
Any of the Loan Parties shall default in the observance or
performance of any covenant contained in Sections 7.2.10 (Borrowing
Base), 7.2.11 (Minimum ATNW), 7.2.12 (Leverage Ratio) or 7.2.13
(Inventory and Land Purchase Limits);
8.1.4. Breach of Other Covenants.
Any of the Loan Parties shall default in the observance or
performance of any other covenant, condition or provision hereof or of
any other Loan Document and such default shall continue unremedied for
a period of thirty (30) Business Days after notice to the Borrower
from the Agent;
8.1.5. Defaults in Other Agreements or Indebtedness.
A default or event of default shall occur at any time under the
terms of any other agreement involving borrowed money or the extension
of credit or any other Indebtedness under which any Loan Party may be
obligated as a borrower or guarantor in excess of $1,000,000 in the
aggregate (including in all events the Revolving Senior Debt
Facility), and such breach, default or event of default consists of
the failure to pay (beyond any period of grace permitted with respect
thereto, whether waived or not) any Indebtedness when due (whether at
stated maturity, by acceleration or otherwise) or if such breach or
default permits or causes the acceleration of any Indebtedness
(whether or not such right shall have been waived) or the termination
of any commitment to lend;
8.1.6. Final Judgments or Orders.
Any final judgments or orders for the payment of money in excess
of $1,000,000 in the aggregate shall be entered against any Loan Party
by a court having jurisdiction, which judgment is not discharged,
vacated, bonded or stayed pending appeal within a period of thirty
(30) days from the date of entry;
8.1.7. Loan Document Unenforceable.
Any of the Loan Documents shall cease to be legal, valid and
binding agreements enforceable against the party executing the same or
such party's successors and assigns (as permitted under the Loan
Documents) in accordance with the respective terms thereof or shall in
any way be terminated (except in accordance with its terms or as
permitted under the Loan Documents) or become or be declared
ineffective or inoperative or shall in any way be challenged or
contested or cease to give or provide the respective Liens, security
interests, rights, titles, interests, remedies, powers or privileges
intended to be created thereby;
8.1.8. Uninsured Losses; Proceedings Against Assets.
Any of the Loan Parties' assets are attached, seized, levied
upon or subjected to a writ or distress warrant; or such come within
the possession of any receiver, trustee, custodian or assignee for the
benefit of creditors and the same is not cured within thirty (30) days
thereafter and any of the foregoing could reasonably be expected to
constitute a Material Adverse Change;
8.1.9. Notice of Lien or Assessment.
A notice of Lien or assessment in excess of $1,000,000 which is
not a Permitted Lien is filed of record with respect to all or any
part of any of the Loan Parties' assets by the United States, or any
department, agency or instrumentality thereof, or by any state,
county, municipal or other governmental agency, including the PBGC, or
any taxes or debts owing at any time or times hereafter to any one of
these becomes payable and the same is not paid within thirty (30) days
after the same becomes payable;
8.1.10. Insolvency.
Any of (i) Hovnanian, (ii) the Borrower or (iii) Restricted
Subsidiaries owning as of the date of any event described in this
Section 8.1.10 three percent (3%) or more of the Dollar value of all
of the assets of all of the Subsidiaries of Hovnanian taken as a whole
ceases to be solvent or admits in writing its inability to pay its
debts as they mature;
8.1.11. Events Relating to Plans and Benefit Arrangements.
Any of the following occurs: (i)any Reportable Event with
respect to a Plan, which the Agent reasonably determines in good faith
constitutes grounds for the termination of any Plan by the PBGC or the
appointment of a trustee to administer or liquidate any Plan, shall
have occurred and be continuing; (ii)proceedings shall have been
instituted or other action taken to terminate any Plan, or a
termination notice shall have been filed with respect to any Plan;
(iii)a trustee shall be appointed to administer or liquidate any Plan;
(iv)the PBGC shall give notice of its intent to institute proceedings
to terminate any Plan or Plans or to appoint a trustee to administer
or liquidate any Plan; and, in the case of the occurrence of (i),
(ii), (iii) or (iv) above, the Agent reasonably determines in good
faith that the amount of any Loan Party's liability is likely to
exceed 10% of its Consolidated Tangible Net Worth; (v)any "accumulated
funding deficiency" (as defined in Section 302 of ERISA) shall exist
with respect to any Plan, or any Lien in favor of the PBGC or a Plan
shall arise on the assets of the Borrower or any other member of the
ERISA Group, (vi)any Loan Party or any other member of the ERISA
Group shall make any amendment to a Plan with respect to which
security is required under Section 307 of ERISA; (vii)any Loan Party
or any other member of the ERISA Group shall incur any liability in
connection with a withdrawal from a Multiemployer Plan; (viii)any
Loan Party or any other member of the ERISA Group shall withdraw under
Section 4063 of ERISA (or shall be deemed under Section 4062(e) of
ERISA to withdraw) from a Plan; or (ix)any applicable Law is adopted,
changed or interpreted by any Official Body with respect to or
otherwise affecting one or more Plans, Multiemployer Plans or Benefit
Arrangements and, with respect to any of the events specified in (v),
(vi), (vii), (viii) or (ix), the Agent reasonably determines in good
faith that any such occurrence, together with all other such events,
would be reasonably likely to result in a Material Adverse Change;
8.1.12. Cessation of Business.
Any Loan Party ceases to conduct its business as contemplated,
except as expressly permitted under Section 7.2.4 (Liquidations,
Mergers, Consolidations, Acquisitions) or Section 7.2.5 (Dispositions
of Assets or Subsidiaries; Sale and Leaseback), or any Loan Party is
enjoined, restrained or in any way prevented by court order from
conducting all or any material part of its business and such
injunction, restraint or other preventive order is not dismissed
within thirty (30) days after the entry thereof and any of the
foregoing could reasonably be expected to constitute a Material
Adverse Change;
8.1.13. Change of Control.
(i) Any person or group of persons
(within the meaning of Sections 13(d) or 14(a) of the Securities
Exchange Act of 1934, as amended) shall have acquired beneficial
ownership of (within the meaning of Rule 13d-3 promulgated by the SEC
under said Act) 40% or more of the voting capital stock of Hovnanian;
or (ii)within a period of twelve (12) consecutive calendar months,
individuals who were directors of the Borrower on the first day of
such period, or who were nominated by a majority of such directors,
shall cease to constitute a majority of the board of directors of the
Borrower;
8.1.14. Involuntary Proceedings.
A proceeding shall have been instituted in a court having
jurisdiction seeking a decree or order for relief in respect of any of
(i) Hovnanian, (ii) the Borrower or (iii) Restricted Subsidiaries
owning as of the date of any event described in this Section 8.1.14
three percent (3%) or more of the Dollar value of all of the assets of
all of the Subsidiaries of Hovnanian taken as a whole in an
involuntary case under any applicable bankruptcy, insolvency,
reorganization or other similar law now or hereafter in effect, or for
the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator, conservator (or similar official) of any Loan
Party for any substantial part of its property, or for the winding-up
or liquidation of its affairs, and such proceeding shall remain
undismissed or unstayed and in effect for a period of sixty (60)
consecutive days or such court shall enter a decree or order granting
any of the relief sought in such proceeding; or
8.1.15. Voluntary Proceedings.
Any of (i) Hovnanian, (ii) the Borrower or (iii) Restricted
Subsidiaries owning as of the date of any event described in this
Section 8.1.15 three percent (3%) or more of the Dollar value of all
of the assets of all of the Subsidiaries of Hovnanian taken as a whole
shall commence a voluntary case under any applicable bankruptcy,
insolvency, reorganization or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an
involuntary case under any such law, or shall consent to the
appointment or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator, conservator (or other similar
official) of itself or for any substantial part of its property or
shall make a general assignment for the benefit of creditors, or shall
fail generally to pay its debts as they become due, or shall take any
action in furtherance of any of the foregoing.
8.2 Consequences of Event of Default.
8.2.1. Events of Default Other Than Bankruptcy, Insolvency
or Reorganization Proceedings.
If an Event of Default specified under Sections 8.1.1 (Payments
Under Loan Documents) through 8.1.13 (Change of Control) shall occur
and be continuing, the Banks and the Agent shall be under no further
obligation to make Term Loans and the Agent may, and upon the request
of the Required Banks, shall by written notice to the Borrower,
declare the unpaid principal amount of the Term Loan then outstanding
and all interest accrued thereon, any unpaid fees and all other
Indebtedness of the Borrower to the Banks hereunder and thereunder to
be forthwith due and payable, and the same shall thereupon become and
be immediately due and payable to the Agent for the benefit of each
Bank without presentment, demand, protest or any other notice of any
kind, all of which are hereby expressly waived; and
8.2.2. Bankruptcy, Insolvency or Reorganization
Proceedings.
If an Event of Default specified under Section 8.1.14
(Involuntary Proceedings) or 8.1.15 (Voluntary Proceedings) shall
occur, the Banks shall be under no further obligations to make Term
Loans hereunder and the unpaid principal amount of the Term Loans then
outstanding and all interest accrued thereon, any unpaid fees and all
other Indebtedness of the Borrower to the Banks hereunder and
thereunder shall be immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which are hereby
expressly waived; and
8.2.3. Set-off.
If an Event of Default shall occur and be continuing, any Bank
to whom any Obligation is owed by any Loan Party hereunder or under
any other Loan Document or any participant of such Bank which has
agreed in writing to be bound by the provisions of Section 9.13
(Equalization of Banks) and any branch, Subsidiary or Affiliate of
such Bank or participant anywhere in the world shall have the right,
in addition to all other rights and remedies available to it, without
notice to such Loan Party, to set-off against and apply to the then
unpaid balance of all past-due Term Loans and all other past-due
Obligations of the Borrower and the other Loan Parties hereunder or
under any other Loan Document any debt owing to, and any other funds
held in any manner for the account of, the Borrower or such other Loan
Party by such Bank or participant or by such branch, Subsidiary or
Affiliate, including all funds in all deposit accounts (whether time
or demand, general or special, provisionally credited or finally
credited, or otherwise) now or hereafter maintained by the Borrower or
such other Loan Party for its own account (but not including funds
held in custodian or trust accounts) with such Bank or participant or
such branch, Subsidiary or Affiliate; and
8.2.4. Suits, Actions, Proceedings.
If an Event of Default shall occur and be continuing, and
whether or not the Agent shall have accelerated the maturity of Term
Loans pursuant to any of the foregoing provisions of this Section 8.2
(Consequences of Event of Default), the Agent or any Bank, if owed any
amount with respect to the Term Loans, may proceed to protect and
enforce its rights by suit in equity, action at law and/or other
appropriate proceeding, whether for the specific performance of any
covenant or agreement contained in this Agreement or the other Loan
Documents, including as permitted by applicable Law the obtaining of
the ex parte appointment of a receiver, and, if such amount shall have
become due, by declaration or otherwise, proceed to enforce the
payment thereof or any other legal or equitable right of the Agent or
such Bank; and
8.2.5. Application of Proceeds.
From and after the date on which the Agent has taken any action
pursuant to this Section 8.2 (Consequences of Event of Default) and
until all Obligations of the Loan Parties have been paid in full, any
and all proceeds received by the Agent from the exercise of any remedy
by the Agent, shall be applied as follows:
(i) first, to reimburse the Agent and
the Banks for out-of-pocket costs, expenses and disbursements,
including reasonable attorneys' and paralegals' fees and legal
expenses, incurred by the Agent or the Banks in connection with
collection of any Obligations of any of the Loan Parties under any of
the Loan Documents;
(ii) second, to the repayment of all
Indebtedness then due and unpaid of the Loan Parties to the Banks
incurred under this Agreement or any of the other Loan Documents,
whether of principal, interest, fees, expenses or otherwise, in such
manner as the Agent may determine in its discretion; and
(iii) the balance, if any, as required
by Law.
8.2.6. Other Rights and Remedies.
In addition to all of the rights and remedies contained in this
Agreement or in any of the other Loan Documents, the Agent shall have
all of the rights and remedies under applicable Law, all of which
rights and remedies shall be cumulative and non-exclusive, to the
extent permitted by Law. The Agent may, and upon the request of the
Required Banks shall, exercise all post-default rights granted to the
Agent and the Banks under the Loan Documents or applicable Law.
9. THE AGENT
9.1 Appointment.
Each Bank hereby irrevocably designates, appoints and authorizes
Fleet act as Agent for such Bank under this Agreement and to execute
and deliver or accept on behalf of each of the Banks the other Loan
Documents. Each Bank hereby irrevocably authorizes the Agent to take
such action on its behalf under the provisions of this Agreement and
the other Loan Documents and any other instruments and agreements
referred to herein, and to exercise such powers and to perform such
duties hereunder as are specifically delegated to or required of the
Agent by the terms hereof, together with such powers as are reasonably
incidental thereto. Fleet agrees to act as the Agent on behalf of the
Banks to the extent provided in this Agreement.
9.2 Delegation of Duties.
The Agent may perform any of its duties hereunder by or through
agents or employees (provided such delegation does not constitute a
relinquishment of its duties as Agent) and, subject to Sections 9.5
(Reimbursement and Indemnification of Agent by the Borrower) and 9.6
(Exculpatory Provisions; Limitation of Liability), shall be entitled
to engage and pay for the advice or services of any attorneys,
accountants or other experts concerning all matters pertaining to its
duties hereunder and to rely upon any advice so obtained.
9.3 Nature of Duties; Independent Credit Investigation.
The Agent shall have no duties or responsibilities except those
expressly set forth in this Agreement and no implied covenants,
functions, responsibilities, duties, obligations, or liabilities shall
be read into this Agreement or otherwise exist. In the exercise of
its duties as Agent hereunder, the Agent shall use the same diligence
and standard of care that is customarily used by the Agent with
respect to similar loans held by the Agent solely for its own account.
The duties of the Agent shall be mechanical and administrative in
nature; the Agent shall not have by reason of this Agreement a
fiduciary or trust relationship in respect of any Bank; and nothing in
this Agreement, expressed or implied, is intended to or shall be so
construed as to impose upon the Agent any obligations in respect of
this Agreement except as expressly set forth herein. Without limiting
the generality of the foregoing, the use of the term "agent" in this
Agreement with reference to the Agent is not intended to connote any
fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable Law. Instead, such term is used
merely as a matter of market custom, and is intended to create or
reflect only an administrative relationship between independent
contracting parties. Each Bank expressly acknowledges (i)that the
Agent has not made any representations or warranties to it and that no
act by the Agent hereafter taken, including any review of the affairs
of any of the Loan Parties, shall be deemed to constitute any
representation or warranty by the Agent to any Bank; (ii)that it has
made and will continue to make, without reliance upon the Agent, its
own independent investigation of the financial condition and affairs
and its own appraisal of the creditworthiness of each of the Loan
Parties in connection with this Agreement and the making and
continuance of the Term Loans hereunder; and (iii)except as expressly
provided herein, that the Agent shall have no duty or responsibility,
either initially or on a continuing basis, to provide any Bank with
any credit or other information with respect thereto, whether coming
into its possession before the making of any loan or at any time or
times thereafter.
9.4 Actions in Discretion of Agent; Instructions From the
Banks.
The Agent agrees, upon the written request of the Required
Banks, to take or refrain from taking any action of the type specified
as being within the Agent's rights, powers or discretion herein,
provided that the Agent shall not be required to take any action which
exposes the Agent to personal liability or which is contrary to this
Agreement or any other Loan Document or applicable Law. In the
absence of a request by the Required Banks, the Agent shall have
authority, in its sole discretion, to take or not to take any such
action, unless this Agreement specifically requires the consent of the
Required Banks or all of the Banks. Any action taken or failure to
act pursuant to such instructions or discretion shall be binding on
the Banks, subject to Section 9.6 (Exculpatory Provisions; Limitation
of Liability). Subject to the provisions of Section 9.6 (Exculpatory
Provisions; Limitation of Liability), no Bank shall have any right of
action whatsoever against the Agent as a result of the Agent acting or
refraining from acting hereunder in accordance with the instructions
of the Required Banks, or in the absence of such instructions, in the
absolute discretion of the Agent.
9.5 Reimbursement and Indemnification of Agent by the
Borrower.
The Borrower unconditionally agrees to pay or reimburse the
Agent and hold the Agent harmless against (a)liability for the payment
of all reasonable out-of-pocket costs, expenses and disbursements,
including fees and expenses of counsel (including the allocated costs
of staff counsel), incurred by the Agent (i)in connection with the
development, negotiation, preparation, printing, execution,
administration, syndication, interpretation and performance of this
Agreement and the other Loan Documents, (ii)relating to any requested
amendments, waivers or consents pursuant to the provisions hereof,
(iii)in connection with the enforcement of this Agreement or any other
Loan Document or collection of amounts due hereunder or thereunder or
the proof and allowability of any claim arising under this Agreement
or any other Loan Document, whether in bankruptcy or receivership
proceedings or otherwise, and (iv)in any workout or restructuring or
in connection with the protection, preservation, exercise or
enforcement of any of the terms hereof or of any rights hereunder or
under any other Loan Document or in connection with any foreclosure,
collection or bankruptcy proceedings, and (b)all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by or asserted against the Agent, in
its capacity as such, in any way relating to or arising out of this
Agreement or any other Loan Documents or any action taken or omitted
by the Agent hereunder or thereunder, provided that the Borrower shall
not be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
or disbursements if the same results from the Agent's gross negligence
or willful misconduct, or if the Borrower was not given notice of the
subject claim and the opportunity to participate in the defense
thereof, at its expense (except that the Borrower shall remain liable
to the extent such failure to give notice does not result in a loss to
the Borrower), or if the same results from a compromise or settlement
agreement entered into without the consent of the Borrower, which
shall not be unreasonably withheld. In addition, after the occurrence
and during the continuance of an Event of Default, the Borrower agrees
to reimburse and pay all reasonable out-of-pocket expenses of the
Agent's regular employees and agents engaged periodically to perform
audits of the Loan Parties' books, records and business properties.
9.6 Exculpatory Provisions; Limitation of Liability.
Neither the Agent nor any of its directors, officers, employees,
agents, attorneys or Affiliates shall (a)be liable to any Bank for any
action taken or omitted to be taken by it or them hereunder, or in
connection herewith including pursuant to any Loan Document, unless
caused by its or their own gross negligence or willful misconduct,
(b)be responsible in any manner to any of the Banks for the
effectiveness, enforceability, genuineness, validity or the due
execution of this Agreement or any other Loan Documents or for any
recital, representation, warranty, document, certificate, report or
statement herein or made or furnished under or in connection with this
Agreement or any other Loan Documents, or (c)be under any obligation
to any of the Banks to ascertain or to inquire as to the performance
or observance of any of the terms, covenants or conditions hereof or
thereof on the part of the Loan Parties, or the financial condition of
the Loan Parties, or the existence or possible existence of any Event
of Default or Potential Default. No claim may be made by any of the
Loan Parties, any Bank, the Agent or any of their respective
Subsidiaries against the Agent, any Bank or any of their respective
directors, officers, employees, agents, attorneys or Affiliates, or
any of them, for any special, indirect or consequential damages or, to
the fullest extent permitted by Law, for any punitive damages in
respect of any claim or cause of action (whether based on contract,
tort, statutory liability, or any other ground) based on, arising out
of or related to any Loan Document or the transactions contemplated
hereby or any act, omission or event occurring in connection
therewith, including the negotiation, documentation, administration or
collection of the Term Loans, and each of the Loan Parties (for itself
and on behalf of each of its Subsidiaries), the Agent and each Bank
hereby waive, release and agree never to xxx upon any claim for any
such damages, whether such claim now exists or hereafter arises and
whether or not it is now known or suspected to exist in its favor.
Each Bank agrees that, except for notices, reports and other documents
expressly required to be furnished to the Banks by the Agent hereunder
or given to the Agent for the account of or with copies for the Banks,
the Agent and each of its directors, officers, employees, agents,
attorneys or Affiliates shall not have any duty or responsibility to
provide any Bank with credit or other information concerning the
business, operations, property, condition (financial or otherwise),
prospects or creditworthiness of the Loan Parties which may come into
the possession of the Agent or any of its directors, officers,
employees, agents, attorneys or Affiliates.
9.7 Reimbursement and Indemnification of Agent by Banks.
Each Bank agrees to reimburse and indemnify the Agent (to
the extent not reimbursed by the Borrower and without limiting the
obligation of the Borrower to do so) in proportion to its Ratable
Share from and against all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements, including attorneys' fees and disbursements (including
the allocated costs of staff counsel), and costs of appraisers and
environmental consultants, of any kind or nature whatsoever which may
be imposed on, incurred by or asserted against the Agent, in its
capacity as such, in any way relating to or arising out of this
Agreement or any other Loan Documents or any action taken or omitted
by the Agent hereunder or thereunder, provided that no Bank shall be
liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements (a)if the same results from the Agent's gross negligence
or willful misconduct, or (b)if such Bank was not given notice of the
subject claim and the opportunity to participate in the defense
thereof, at its expense (except that such Bank shall remain liable to
the extent such failure to give notice does not result in a loss to
the Bank), or (c)if the same results from a compromise and settlement
agreement entered into without the consent of such Bank, which shall
not be unreasonably withheld. In addition, each Bank agrees promptly
upon demand to reimburse the Agent (to the extent not reimbursed by
the Borrower and without limiting the obligation of the Borrower to do
so) in proportion to its Ratable Share for all amounts due and payable
by the Borrower to the Agent in connection with the Agent's periodic
audit of the Loan Parties' books, records and business properties.
9.8 Reliance by Agent.
The Agent shall be entitled to rely upon any writing, telegram,
telex or teletype message, electronic mail, resolution, notice,
consent, certificate, letter, cablegram, statement, order or other
document or conversation by telephone or otherwise believed by it to
be genuine and correct and to have been signed, sent or made by the
proper Person or Persons, and upon the advice and opinions of counsel
and other professional advisers selected by the Agent. The Agent
shall be fully justified in failing or refusing to take any action
hereunder unless it shall first be indemnified to its satisfaction by
the Banks against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such
action.
9.9 Notice of Default.
The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Potential Default or Event of Default unless the
Agent has received written notice from a Bank or the Borrower
referring to this Agreement, describing such Potential Default or
Event of Default and stating that such notice is a "notice of
default."
9.10 Notices.
The Agent shall promptly send to each Bank a copy of all notices
received from the Borrower or any Bank pursuant to the provisions of
this Agreement or the other Loan Documents promptly upon receipt
thereof. The Agent shall promptly notify the Borrower and the other
Banks of each change in the Base Rate and the effective date thereof.
9.11 Banks in Their Individual Capacities; Agents in its
Individual Capacity.
With respect to its Term Loan Commitment, the Term Loans made by
it and any other rights and powers given to it as a Bank hereunder or
under any of the other Loan Documents, the Agent shall have the same
rights and powers hereunder as any other Bank and may exercise the
same as though it were not the Agent, and the term "Bank" and "Banks"
shall, unless the context otherwise indicates, include the Agent in
its individual capacity. Fleet and its Affiliates and each of the
Banks and their respective Affiliates may, without liability to
account, except as prohibited herein, make loans to, acquire equity
interests in, accept deposits from, discount drafts for, act as
trustee under indentures of, and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business
with, the Loan Parties and their Affiliates, in the case of the Agent,
as though it were not acting as Agent hereunder and in the case of
each Bank, as though such Bank were not a Bank hereunder, in each case
without notice to or consent of the other Banks. The Banks
acknowledge that, pursuant to such activities, the Agent or its
Affiliates may (i)receive information regarding the Loan Parties or
any of their Subsidiaries or Affiliates (including information that
may be subject to confidentiality obligations in favor of the Loan
Parties or such Subsidiary or Affiliate) and, except as otherwise
specifically required hereby, acknowledge that the Agent shall be
under no obligation to provide such information to them, and
(ii)accept fees and other consideration from the Loan Parties for
services in connection with this Agreement and otherwise without
having to account for the same to the Banks.
9.12 Holders of Notes.
The Agent may deem and treat any payee of any Note as the owner
thereof for all purposes hereof unless and until written notice of the
assignment or transfer thereof shall have been filed with the Agent.
Any request, authority or consent of any Person who at the time of
making such request or giving such authority or consent is the holder
of any Note shall be conclusive and binding on any subsequent holder,
transferee or assignee of such Note or of any Note or Notes issued in
exchange therefor.
9.13 Equalization of Banks.
The Banks and the holders of any participations in any Term
Loans or other rights or obligations of a Bank hereunder agree among
themselves that, with respect to all amounts received by any Bank or
any such holder for application on any Obligation hereunder or under
any such participation, whether received by voluntary payment, by
realization upon security, by the exercise of the right of set-off or
banker's lien, by counterclaim or by any other non-pro rata source,
equitable adjustment will be made in the manner stated in the
following sentence so that, in effect, all such excess amounts will be
shared ratably among the Banks and such holders in proportion to their
interests in payments on the Term Loans, except as otherwise provided
in Section 3.4.3 (Agent's and Bank's Rights), 4.4.2 (Replacement of a
Bank) or 4.6 (Additional Compensation in Certain Circumstances). The
Banks or any such holder receiving any such amount shall purchase for
cash from each of the other Banks an interest in such Bank's Term
Loans in such amount as shall result in a ratable participation by the
Banks and each such holder in the aggregate unpaid amount of the Term
Loans, provided that if all or any portion of such excess amount is
thereafter recovered from the Bank or the holder making such purchase,
such purchase shall be rescinded and the purchase price restored to
the extent of such recovery, together with interest or other amounts,
if any, required by law (including court order) to be paid by the Bank
or the holder making such purchase.
9.14 Successor Agent.
The Agent (i)may resign as Agent or (ii)shall resign if such
resignation is requested by the Required Banks (if the Agent is a
Bank, the Agent's Term Loans shall be considered in determining
whether the Required Banks have requested such resignation) or
required by Section 4.4.2 (Replacement of a Bank), in either case of
(i) or (ii) by giving not less than thirty (30) days' prior written
notice to the Borrower. If the Agent shall resign under this
Agreement, then either (a)the Required Banks shall appoint from among
the Banks a successor agent for the Banks, subject to the consent of
the Borrower, such consent not to be unreasonably withheld, or (b)if a
successor agent shall not be so appointed and approved within the
thirty (30) day period following the Agent's notice to the Banks of
its resignation, then the Agent shall appoint from among the Banks,
with the consent of the Borrower, such consent not to be unreasonably
withheld, a successor agent who shall serve as Agent until such time
as the Required Banks appoint and the Borrower consents to the
appointment of a successor agent. Upon its appointment pursuant to
either clause (a) or (b) above, such successor agent shall succeed to
the rights, powers and duties of the Agent, and the term "Agent" shall
mean such successor agent, effective upon its appointment, and the
former Agent's rights, powers and duties as Agent shall be terminated
without any other or further act or deed on the part of such former
Agent or any of the parties to this Agreement. After the resignation
of any Agent hereunder, the provisions of this Section 9 shall inure
to the benefit of such former Agent and such former Agent shall not by
reason of such resignation be deemed to be released from liability for
any actions taken or not taken by it while it was an Agent under this
Agreement.
9.15 Agent's Fee.
The Borrower shall pay the several nonrefundable fees (together,
the "Agent's Fee") under the terms of a letter dated November 21, 2001
(the "Agent's Letter") between the Borrower and Agent, as amended from
time to time.
9.16 Availability of Funds.
The Agent may assume that each Bank has made or will make the
proceeds of a Term Loan available to the Agent unless the Agent shall
have been notified by such Bank on or before the later of (1)the close
of Business on the Business Day preceding the Borrowing Date with
respect to such Term Loan or two (2) hours before the time on which
the Agent actually funds the proceeds of such Term Loan to the
Borrower (whether using its own funds pursuant to this Section 9.16 or
using proceeds deposited with the Agent by the Banks and whether such
funding occurs before or after the time on which Banks are required to
deposit the proceeds of such Term Loan with the Agent). The Agent
may, in reliance upon such assumption (but shall not be required to),
make available to the Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the Agent by
such Bank, the Agent shall be entitled to recover such amount on
demand from such Bank (or, if such Bank fails to pay such amount
forthwith upon such demand from the Borrower) together with interest
thereon, in respect of each day during the period commencing on the
date such amount was made available to the Borrower and ending on the
date the Agent recovers such amount, at a rate per annum equal to (i)
the Federal Funds Effective Rate during the first three (3) days after
such interest shall begin to accrue and (ii) the applicable interest
rate in respect of such Term Loan after the end of such three-day
period.
9.17 Calculations.
In the absence of gross negligence or willful misconduct, the
Agent shall not be liable for any error in computing the amount
payable to any Bank whether in respect of the Term Loans, fees or any
other amounts due to the Banks under this Agreement. In the event an
error in computing any amount payable to any Bank is made, the Agent,
the Borrower and each affected Bank shall, forthwith upon discovery of
such error, make such adjustments as shall be required to correct such
error, and any compensation therefor will be calculated at the Federal
Funds Effective Rate.
9.18 Beneficiaries.
Except as expressly provided herein, the provisions of this
Section 9 (The Agent) are solely for the benefit of the Agent and the
Banks, and the Loan Parties shall not have any rights to rely on or
enforce any of the provisions hereof. In performing its functions and
duties under this Agreement, the Agent shall act solely as agent of
the Banks and does not assume and shall not be deemed to have assumed
any obligation toward or relationship of agency or trust with or for
any of the Loan Parties.
10. MISCELLANEOUS
10.1 Modifications, Amendments or Waivers.
With the written consent of the Required Banks, the Agent,
acting on behalf of all the Banks, and the Borrower, on behalf of the
Loan Parties, may from time to time enter into written agreements
amending or changing any provision of this Agreement or any other Loan
Document or the rights of the Banks or the Loan Parties hereunder or
thereunder, or may grant written waivers or consents to a departure
from the due performance of the Obligations of the Loan Parties
hereunder or thereunder. Any such agreement, waiver or consent made
with such written consent shall be effective to bind all the Banks and
the Loan Parties; provided, that, without the written consent of all
the Banks, no such agreement, waiver or consent may be made which
will:
10.1.1. Increase of Commitment.
Increase the amount of the aggregate Term Loan Commitments other
than pursuant to Section 2.1.1 (Term Loans);
10.1.2. Extension of Payment; Reduction of Principal,
Interest or Fees; Modification of Terms of Payment.
Whether or not any Term Loans are outstanding, extend the time
for payment of principal or interest of any Term Loan (excluding the
due date of any mandatory prepayment of a Term Loan, or any mandatory
Term Loan Commitment reduction in connection with such a mandatory
prepayment hereunder, except for mandatory reductions of the Term Loan
Commitments on the Maturity Date), or any other fee payable to any
Bank, or reduce the principal amount of or the rate of interest borne
by any Term Loan or any other fee payable to any Bank, or otherwise
directly affect the terms of payment of the principal of or interest
of any Term Loan, or any other fee payable to any Bank;
10.1.3. Miscellaneous
Amend Section 4.2 (Pro Rata Treatment of Banks), 9.6
(Exculpatory Provisions; Limitation of Liability), 9.13 (Equalization
of Banks) or this Section 10.1 (Modifications, Amendments or Waivers)
change the pro rata treatment of the Banks, change the definition of
Required Banks, or change any requirement providing for the Banks or
the Required Banks to authorize the taking of any action hereunder;
provided, that no agreement, waiver or consent which would modify the
interests, rights or obligations of the Agent in its capacity as Agent
shall be effective without the written consent of the Agent.
10.2 No Implied Waivers; Cumulative Remedies; Writing Required.
No course of dealing and no delay or failure of the Agent or any
Bank in exercising any right, power, remedy or privilege under this
Agreement or any other Loan Document shall affect any other or future
exercise thereof or operate as a waiver thereof, nor shall any single
or partial exercise thereof or any abandonment or discontinuance of
steps to enforce such a right, power, remedy or privilege preclude any
further exercise thereof or of any other right, power, remedy or
privilege. The rights and remedies of the Agent and the Banks under
this Agreement and any other Loan Documents are cumulative and not
exclusive of any rights or remedies which they would otherwise have.
Any waiver, permit, consent or approval of any kind or character on
the part of any Bank of any breach or default under this Agreement or
any such waiver of any provision or condition of this Agreement must
be in writing and shall be effective only to the extent specifically
set forth in such writing.
10.3 Reimbursement and Indemnification of Banks by the
Borrower; Taxes.
The Borrower agrees unconditionally upon demand to pay or
reimburse to each Bank (other than the Agent, as to which the
Borrower's Obligations are set forth in Section 9.5 (Reimbursement and
Indemnification of Agent by the Borrower)) and to save such Bank
harmless against (i)liability for the payment of all reasonable out-
of-pocket costs, expenses and disbursements (including fees and
expenses of counsel (including allocated costs of staff counsel) for
the Agent except with respect to (a) and (b) below), incurred by the
Agent (a)in connection with the administration and interpretation of
this Agreement, and other instruments and documents to be delivered
hereunder, (b)relating to any amendments, waivers or consents pursuant
to the provisions hereof, (c)in connection with the enforcement of
this Agreement or any other Loan Document, or collection of amounts
due hereunder or thereunder or the proof and allowability of any claim
arising under this Agreement or any other Loan Document, whether in
bankruptcy or receivership proceedings or otherwise, and (d)in any
workout or restructuring or in connection with the protection,
preservation, exercise or enforcement of any of the terms hereof or of
any rights hereunder or under any other Loan Document or in connection
with any foreclosure, collection or bankruptcy proceedings, or (ii)all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted
against such Bank, in its capacity as such, in any way relating to or
arising out of this Agreement or any other Loan Documents or any
action taken or omitted by such Bank hereunder or thereunder, provided
that the Borrower shall not be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements (A)if the same
results from such Bank's gross negligence or willful misconduct, or
(B)if the Borrower was not given notice of the subject claim and the
opportunity to participate in the defense thereof, at its expense
(except that the Borrower shall remain liable to the extent such
failure to give notice does not result in a loss to the Borrower), or
(C)if the same results from a compromise or settlement agreement
entered into without the consent of the Borrower, which shall not be
unreasonably withheld. The Borrower agrees unconditionally to pay all
stamp, document, transfer, recording or filing taxes or fees and
similar impositions now or hereafter determined by the Agent to be
payable in connection with this Agreement or any other Loan Document,
and the Borrower agrees unconditionally to save the Agent and the
Banks harmless from and against any and all present or future claims,
liabilities or losses with respect to or resulting from any omission
to pay or delay in paying any such taxes, fees or impositions.
10.4 Holidays.
Whenever payment of a Term Loan to be made or taken hereunder
shall be due on a day which is not a Business Day such payment shall
be due on the next Business Day (except as provided in Section 3.3
(Interest Periods) with respect to Interest Periods under the LIBO-
Rate Option) and such extension of time shall be included in computing
interest and fees, except that the Term Loans shall be due on the
Business Day preceding the Maturity Date if the Maturity Date is not a
Business Day. Whenever any payment or action to be made or taken
hereunder (other than payment of the Term Loans) shall be stated to be
due on a day which is not a Business Day, such payment or action shall
be made or taken on the next following Business Day, and such
extension of time shall not be included in computing interest or fees,
if any, in connection with such payment or action.
10.5 Funding by Branch, Subsidiary or Affiliate.
10.5.1. Notional Funding.
Each Bank shall have the right from time to time, without notice
to the Borrower, to deem any branch, Subsidiary or Affiliate (which
for the purposes of this Section 10.5 shall mean any corporation or
association which is directly or indirectly controlled by or is under
direct or indirect common control with any corporation or association
which directly or indirectly controls such Bank) of such Bank to have
made, maintained or funded any Term Loan to which the LIBO-Rate Option
applies at any time, provided that immediately following (on the
assumption that a payment were then due from the Borrower to such
other office), and as a result of such change, the Borrower would not
be under any greater financial obligation (including pursuant to
Section 4.6 (Additional Compensation in Certain Circumstances)) than
it would have been in the absence of such change. Notional funding
offices may be selected by each Bank without regard to such Bank's
actual methods of making, maintaining or funding the Term Loans or any
sources of funding actually used by or available to such Bank.
10.5.2. Actual Funding.
Each Bank shall have the right from time to time to make or
maintain any Term Loan by arranging for a branch, Subsidiary or
Affiliate of such Bank to make or maintain such Term Loan subject to
the last sentence of this Section 10.5.2. If any Bank causes a
branch, Subsidiary or Affiliate to make or maintain any part of the
Term Loans hereunder, all terms and conditions of this Agreement
shall, except where the context clearly requires otherwise, be
applicable to such part of the Term Loans to the same extent as if
such Term Loans were made or maintained by such Bank, but in no event
shall any Bank's use of such a branch, Subsidiary or Affiliate to make
or maintain any part of the Term Loans hereunder cause such Bank or
such branch, Subsidiary or Affiliate to incur any cost or expenses
payable by the Borrower hereunder or require the Borrower to pay any
other compensation to any Bank (including any expenses incurred or
payable pursuant to Section 4.6 (Additional Compensation in Certain
Circumstances)) which would otherwise not be incurred.
10.6 Notices.
Any notice, request, demand, direction or other communication
(for purposes of this Section 10.6 only, a "Notice") to be given to or
made upon any party hereto under any provision of this Agreement shall
be given or made by telephone or in writing (which includes means of
electronic transmission (i.e., "e-mail") or facsimile transmission or
by setting forth such Notice on a site on the World Wide Web (a
"Website Posting") if Notice of such Website Posting (including the
information necessary to access such site) has previously been
delivered to the applicable parties hereto by another means set forth
in this Section 10.6 in accordance with this Section 10.6. Any such
Notice must be delivered to the applicable parties hereto at the
addresses and numbers set forth under their respective names on
Schedule 1.1(B) hereof or in accordance with any subsequent unrevoked
Notice from any such party that is given in accordance with this
Section 10.6. Any Notice shall be effective:
(i) In the case of hand-delivery, when
delivered;
(ii) If given by mail, four (4) days
after such Notice is deposited with the United States Postal Service,
with first-class postage prepaid, return receipt requested;
(iii) In the case of a telephonic
Notice, when a party is contacted by telephone, if delivery of such
telephonic Notice is confirmed no later than the next Business Day by
hand delivery, a facsimile or electronic transmission, a Website
Posting or overnight courier delivery of a confirmatory notice
(received at or before noon on such next Business Day);
(iv) In the case of a facsimile
transmission, when sent to the applicable party's facsimile machine's
telephone number if the party sending such Notice receives
confirmation of the delivery thereof from its own facsimile machine;
(v) In the case of electronic
transmission, when actually received;
(vi) In the case of a Website Posting,
upon delivery of a Notice of such posting (including the information
necessary to access such web site) by another means set forth in this
Section 10.6; and
(vii) If given by any other means
(including by overnight courier), when actually received.
Any Bank giving a Notice to a Loan Party shall concurrently send a
copy thereof to the Agent, and the Agent shall promptly notify the
other Banks of its receipt of such Notice.
10.7 Severability.
The provisions of this Agreement are intended to be severable.
If any provision of this Agreement shall be held invalid or
unenforceable in whole or in part in any jurisdiction, such provision
shall, as to such jurisdiction, be ineffective to the extent of such
invalidity or unenforceability without in any manner affecting the
validity or enforceability thereof in any other jurisdiction or the
remaining provisions hereof in any jurisdiction.
10.8 Governing Law.
This Agreement shall be deemed to be a contract under the Laws
of the State of New Jersey and for all purposes shall be governed by
and construed and enforced in accordance with the internal laws of the
State of New Jersey without regard to its conflict of laws principles.
10.9 Prior Understanding.
This Agreement and the other Loan Documents supersede all prior
understandings and agreements, whether written or oral, between the
parties hereto and thereto relating to the transactions provided for
herein and therein, including any prior confidentiality agreements and
commitments.
10.10 Duration; Survival.
All representations and warranties of the Borrower and Hovnanian
contained herein or made in connection herewith shall survive the
making of Term Loans and shall not be waived by the execution and
delivery of this Agreement, any investigation by the Agent or the
Banks, the making of Term Loans or payment in full of the Term Loans.
All covenants and agreements of the Borrower and Hovnanian contained
in Sections 7.1 (Affirmative Covenants), 7.2 (Negative Covenants) and
7.3 (Reporting Requirements) herein shall continue in full force and
effect from and after the date hereof so long as the Borrower may
borrow hereunder and until payment in full of the Term Loans. All
covenants and agreements of the Borrower contained herein relating to
the payment of principal, interest, premiums, additional compensation
or expenses and indemnification, including those set forth in
Section 4 (Payments) and Sections 9.5 (Reimbursement and
Indemnification of Agent by the Borrower), 9.7 (Reimbursement and
Indemnification of Agent by Banks) and 10.3 (Reimbursement and
Indemnification of Banks by Borrower; Taxes), shall survive payment in
full of the Term Loans.
10.11 Successors and Assigns.
(a) (i) This Agreement shall be binding
upon and shall inure to the benefit of the Banks, the Agent, the Loan
Parties a party hereto and their respective successors and assigns,
except that none of the Loan Parties a party hereto may assign or
transfer any of its rights and obligations hereunder or any interest
herein. Each Bank may, at its own cost, make assignments of all or
any part of its Term Loans made by it to one or more banks or other
entities, subject to the consent of the Borrower and the Agent with
respect to any assignee, such consent not to be unreasonably withheld
provided that (1)no consent of the Borrower shall be required (A) if
an Event of Default exists and is continuing, (B) in the case of an
assignment by a Bank to an Affiliate of such Bank or Approved Fund of
any Bank and (2)any assignment by a Bank to a Person other than an
Affiliate of such Bank or Approved Fund of any Bank may not be made in
amounts less than the lesser of $5,000,000, the amount of the
assigning Bank's Term Loan or such lesser amount agreed to by the
Borrower and Agent. In the case of an assignment, upon receipt by the
Agent of the Assignment and Assumption Agreement, the assignee shall
have, to the extent of such assignment (unless otherwise provided
therein), the same rights, benefits and obligations as it would have
if it had been a signatory Bank hereunder, and upon surrender of any
Note subject to such assignment, the Borrower shall execute and
deliver a new Note to the assignee, if such assignee requests such a
Note in an amount equal to the amount of the Term Loan assumed by it
and a new Note to the assigning Bank, if the assigning Bank requests
such a Note, in an amount equal to the Term Loan retained by it
hereunder. Any Bank which assigns any or all of its Term Loans to a
Person other than an Affiliate of such Bank shall pay to the Agent a
service fee in the amount of $3,500 for each assignment and in the
case of assignments on the same day by a Bank to more than one fund
managed or advised by the same investment advisor (which funds are not
then Banks hereunder), only a single $3,500 fee shall be payable for
all such assignments by such Bank to such funds. Any Bank may,
without notice to or the consent of the Borrower or Agent, sell
participations to one or more banks or other entities (a
"Participant") in all or a portion of such Bank's rights and
obligations under this Agreement and the other Loan Documents
(including all or a portion of its Term Loans owing to it); provided
that (i) such Bank's obligations under this Agreement and the other
Loan Documents shall remain unchanged, (ii) such Bank shall remain
solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrower, the Administrative Agent, and
the other Banks shall continue to deal solely and directly with such
Bank in connection with such Bank's rights and obligations under this
Agreement and the other Loan Documents. In the case of a
participation, the participant shall only have the rights specified in
Section 8.2.3 (Set-off) (the participant's rights against such Bank in
respect of such participation to be those set forth in the agreement
executed by such Bank in favor of the participant relating thereto and
not to include any voting rights except with respect to changes of the
type referenced in Sections 10.1.1 Increase of Commitment, Extension
of Maturity Date), or 10.1.2 (Extension of Payment; Reduction of
Principal, Interest or Fees; Modification of Terms of Payment)), all
of such Bank's obligations under this Agreement or any other Loan
Document shall remain unchanged, and all amounts payable by any Loan
Party hereunder or thereunder shall be determined as if such Bank had
not sold such participation.
(i)
(ii) Each Bank or assignee or
participant of a Bank that is not incorporated under the laws of the
United States of America or a state thereof (and, upon the written
request of the Agent, each other Bank or assignee or participant of a
Bank) shall deliver to the Borrower and the Agent a Withholding
Certificate as described in Section 10.17 (Tax Withholding Clause)
relating to federal income tax withholding. Each Bank may furnish any
publicly available information concerning Hovnanian or any Loan Party
and any other information concerning Hovnanian or any Loan Party in
the possession of such Bank from time to time to assignees and
participants (including prospective assignees or participants),
provided that such assignees and participants agree to be bound by the
provisions of Section 10.12 (Confidentiality).
(iii) Notwithstanding any other
provision in this Agreement, any Bank may at any time pledge or grant
a security interest in all or any portion of its rights under this
Agreement, its Note (if any) and the other Loan Documents to any
Federal Reserve Bank in accordance with Regulation A of the FRB or
U.S. Treasury Regulation 31 CFR Section 203.14 without notice to or
consent of the Borrower or the Agent. No such pledge or grant of a
security interest shall release the transferor Bank of its obligations
hereunder or under any other Loan Document.
(iv) In the case of any Bank that is a
fund that invests in bank loans, such Bank may, without the consent of
any Borrower or Agent, assign or pledge all or any portion of its
rights under this Agreement, including the Loans and Notes or any
other instrument evidencing its rights as a Bank under this Agreement,
to any holder of, trustee for, or any other representative of holders
of, obligations owed or securities issued by such fund, as security
for such obligations or securities, provided that any foreclosure or
similar action by such trustee or representative shall be subject to
the provisions of this Section 10.11 concerning assignments.
(b) Additional Bank. A lender which is to
become a party to this Agreement pursuant to Section 2.1.3 (Increase
in Commitments After Closing Date] hereof or otherwise (each an
"Additional Bank") shall execute and deliver to the Agent a Bank
Joinder to this Agreement in substantially the form attached hereto as
Exhibit 1.1(B). Upon execution and delivery of a Bank Joinder, such
Additional Bank shall be a party hereto and a "Bank" under each of the
Loan Documents for all purposes, except that such Additional Bank
shall not participate in any Term Loans to which the LIBO-Rate Option
applies which are outstanding on the effective date of such Bank
Joinder. If Borrower should renew after the effective date of such
Bank Joinder the LIBO-Rate Option with respect Term Loans existing on
such date, Borrower shall be deemed to repay the applicable Term Loans
on the renewal date and then reborrow a similar amount on such date so
that the Additional Bank shall participate in such Term Loans after
such renewal date. Schedule 1.1(A) shall be amended and restated on
the date of such Bank Joinder to read as set forth on the attachment
to such Bank Joinder. Simultaneously with the execution and delivery
of such Bank Joinder, the Borrower shall execute, if requested, a Note
and deliver it to such Additional Bank together with copies of such
other documents described in Section 7.1 (Affirmative Covenants)
hereof as such Additional Bank may reasonably require.
10.12 Confidentiality.
10.12.1. General.
The Agent and the Banks each agree to keep confidential all
information obtained from any Loan Party or its Subsidiaries which is
nonpublic and confidential or proprietary in nature (including any
information the Borrower specifically designates as confidential),
except as provided below, and to use such information only in
connection with their respective capacities under this Agreement and
for the purposes contemplated hereby. The Agent and the Banks shall
be permitted to disclose such information (i)to outside legal counsel,
accountants and other professional advisors who need to know such
information in connection with the administration and enforcement of
this Agreement, subject to agreement of such Persons to maintain the
confidentiality, (ii)to Xxxxx'x, Standard & Poor's and similar rating
agencies, (iii)to assignees and participants as contemplated by
Section 10.11 (Successors and Assigns), and prospective assignees and
participants subject to an agreement of such Persons to maintain the
confidentiality, (iv)to the extent requested by any bank regulatory
authority or, with notice to the Borrower, as otherwise required by
applicable Law or by any subpoena or similar legal process, or in
connection with any investigation or proceeding arising out of the
transactions contemplated by this Agreement, (v)if it becomes publicly
available other than as a result of a breach of this Agreement or
becomes available from a source not known to be subject to
confidentiality restrictions, (vi) to any direct or indirect
contractual counterparty in any swap, hedge or similar agreement (or
to any such contractual counterparty's professional advisor), so long
as such contractual counterparty (or such professional advisor) agrees
to be bound by the provisions of this Section 10.12.1, or (vii)if the
Borrower shall have consented to such disclosure.
10.12.2. Sharing Information With Affiliates of the Banks.
Each Loan Party a party hereto acknowledges that from time to
time financial advisory, investment banking and other services may be
offered or provided to the Borrower or one or more of its Affiliates
(in connection with this Agreement or otherwise) by any Bank or by one
or more Subsidiaries or Affiliates of such Bank and each of the Loan
Parties a party hereto hereby authorizes each Bank to share any
information delivered to such Bank by such Loan Party and its
Subsidiaries pursuant to this Agreement, or in connection with the
decision of such Bank to enter into this Agreement, to any such
Subsidiary or Affiliate of such Bank, it being understood that any
such Subsidiary or Affiliate of any Bank receiving such information
shall be bound by the provisions of Section 10.12 (Confidentiality) as
if it were a Bank hereunder. Such Authorization shall survive the
repayment of the Term Loans and other Obligations.
10.13 Counterparts.
This Agreement may be executed by different parties hereto on
any number of separate counterparts, each of which, when so executed
and delivered, shall be an original, and all such counterparts shall
together constitute one and the same instrument.
10.14 Agent's or Bank's Consent.
Whenever the Agent's or any Bank's consent is required to be
obtained under this Agreement or any of the other Loan Documents as a
condition to any action, inaction, condition or event, unless
specifically otherwise provided herein, the Agent and each Bank shall
be authorized to give or withhold such consent in its sole and
absolute discretion and to condition its consent upon the giving of
additional collateral, the payment of money or any other matter.
10.15 Exceptions.
The representations, warranties and covenants contained herein
shall be independent of each other, and no exception to any
representation, warranty or covenant shall be deemed to be an
exception to any other representation, warranty or covenant contained
herein unless expressly provided, nor shall any such exceptions be
deemed to permit any action or omission that would be in contravention
of applicable Law.
10.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL.
EACH LOAN PARTY A PARTY HERETO HEREBY IRREVOCABLY CONSENTS TO
THE NONEXCLUSIVE JURISDICTION OF THE SUPERIOR COURT OF NEW JERSEY, LAW
DIVISION, MIDDLESEX COUNTY AND THE UNITED STATES DISTRICT COURT FOR
THE DISTRICT OF NEW JERSEY AND WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE
BY CERTIFIED OR REGISTERED MAIL DIRECTED TO SUCH LOAN PARTY AT THE
ADDRESSES PROVIDED FOR IN SECTION 10.6 (NOTICES) AND SERVICE SO MADE
SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. EACH
LOAN PARTY A PARTY HERETO WAIVES ANY OBJECTION TO JURISDICTION AND
VENUE OF ANY ACTION INSTITUTED AGAINST IT AS PROVIDED HEREIN AND
AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR
VENUE. EACH LOAN PARTY A PARTY HERETO, THE AGENT AND THE BANKS HEREBY
WAIVE TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF
ANY KIND ARISING OUT OF OR RELATED TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT OR ANY COLLATERAL TO THE FULL EXTENT PERMITTED BY LAW.
10.17 Tax Withholding Clause.
Each Bank or assignee or participant of a Bank that is not
incorporated under the Laws of the United States of America or a state
thereof (and, upon the written request of the Agent, each other Bank
or assignee or participant of a Bank) agrees that it will deliver to
each of the Borrower and the Agent two (2) duly completed appropriate
valid Withholding Certificates (as defined under 1.1441-1(c)(16) of
the Income Tax Regulations ("Regulations")) certifying its status
(i.e., U.S. or foreign person) and, if appropriate, making a claim of
reduced, or exemption from, U.S. withholding tax on the basis of an
income tax treaty or an exemption provided by the Internal Revenue
Code. Such delivery may be made by electronic transmission as
described in 1.1441-1(e)(4)(iv) of the Regulations if the Agent
establishes an electronic delivery system. The term "Withholding
Certificate" means a Form W-9; a Form W-8BEN; a Form W-8ECI; a Form W-
8IMY and the related statements and certifications as required under
1.1441-1(e)(3) of the Regulations; a statement described in 1.871-
14(c)(2)(v) of the Regulations; or any other certificates under the
Code or Regulations that certify or establish the status of a payee or
beneficial owner as a U.S. or foreign person. Each Bank, assignee or
participant required to deliver to the Borrower and the Agent a valid
Withholding Certificate pursuant to the preceding sentence shall
deliver such valid Withholding Certificate as follows: (A) each Bank
which is a party hereto on the Closing Date shall deliver such valid
Withholding Certificate at least five (5) Business Days prior to the
first date on which any interest or fees are payable by the Borrower
hereunder for the account of such Bank; (B) each assignee or
participant shall deliver such valid Withholding Certificate at least
five (5) Business Days before the effective date of such assignment or
participation (unless the Agent in its sole discretion shall permit
such assignee or participant to deliver such Withholding Certificate
less than five (5) Business Days before such date in which case it
shall be due on the date specified by the Agent). Each Bank, assignee
or participant which so delivers a valid Withholding Certificate
further undertakes to deliver to each of the Borrower and the Agent
two (2) additional copies of such Withholding Certificate (or a
successor form) on or before the date that such Withholding
Certificate expires or becomes obsolete or after the occurrence of any
event requiring a change in the most recent Withholding Certificate so
delivered by it, and such amendments thereto or extensions or renewals
thereof as may be reasonably requested by the Borrower or the Agent.
Notwithstanding the submission of a Withholding Certificate claiming a
reduced rate of, or exemption from, United States withholding tax, the
Agent shall be entitled to withhold United States federal income taxes
at the full 30% withholding rate if in its reasonable judgment it is
required to do so under the due diligence requirements imposed upon a
withholding agent under 1.1441-7(b) of the Regulations. Further, the
Agent is indemnified under 1.1461-1(e) of the Regulations against any
claims and demands of any Bank or assignee or participant of a Bank
for the amount of any tax it deducts and withholds in accordance with
regulations under 1441 of the Internal Revenue Code.
10.18 Joinder of Guarantors.
Any Subsidiary of Hovnanian which is required to join the
Guaranty Agreement as a Guarantor pursuant to Section 7.2.7
(Subsidiaries, Partnerships and Joint Ventures) or which is to become,
a Restricted Subsidiary shall execute and deliver to the Agent (i)a
Guarantor Joinder pursuant to which it shall join as a Guarantor the
Guaranty Agreement; and (ii) at the request of the Agent, documents in
the forms described in Section 6.1 (First Term Loans) modified as
appropriate to relate to such new Guarantor. Hovnanian and Borrower
shall deliver such Guarantor Joinder and any related documents that
the Agent may reasonably request to the Agent after the formation
thereof and its designation as a Restricted Subsidiary; such
Subsidiary shall not be a Restricted Subsidiary until the delivery and
effectiveness of the items required herein.
10.19 Concerning Agent Terms.
Notwithstanding anything contained herein which may be construed
to the contrary, none of the Syndication Agent, and the Joint Lead
Arrangers and Sole Book Manager and similar terms, shall exercise any
of the rights or have any of the responsibilities of the Agent
hereunder, or any other rights or responsibilities other than their
respective rights and responsibilities (if any) as Banks hereunder.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on
the date first written.
X. XXXXXXXXX ENTERPRISES, INC.
By:
Title:
FLEET NATIONAL BANK, as Administrative Agent and as a Bank
By:
Title:
BNP PARIBAS
By:
Title:
and
By:
Title:
IKB CAPITAL CORPORATION
By:
Title:
FIRST AMERICAN BANK, SSB
By:
Title:
SOVEREIGN BANK
By:
Title:
COMPASS BANK
By:
Title:
CALIFORNIA BANK & TRUST
By:
Title:
GUARANTY BANK
By:
Title:
COMERICA BANK
By:
Title:
BANKERS TRUST COMPANY
By:
Title:
REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK
SIGNATURES CONTINUED ON THE FOLLOWING PAGE
BANK OF AMERICA, N.A.,
as a Bank
By:
Title:
ACCEPTED AND AGREED:
HOVNANIAN ENTERPRISES, INC.
as a Guarantor
By:
Title
Bank
Bank Name (also Administrative Agent):
FLEET NATIONAL BANK
Address for Notices:
000 Xxxxxxxxx Xxxxxx Xxxxx XX
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Address of Lending Office:
000 Xxxxxxxxx Xxxxxx Xxxxx XX
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Amount of Commitment for Term Loans $45,000,000
Ratable Share 27.272727272727%
Bank
Bank Name:
BNP PARIBAS
Address for Notices:
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Address of Lending Office:
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Amount of Commitment for Term Loans $15,000,000
Ratable Share 9.090909090909%
Bank Name:
IKB CAPITAL CORPORATION
Address for Notices:
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Address of Lending Office:
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$15,000,000
9.090909090909%
Bank Name:
FIRST AMERICAN BANK, SSB
Address for Notices:
One Lincoln Park, Suite 500
0000 X. Xxxxxxx Xxxxxxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Address of Lending Office:
One Lincoln Park, Suite 500
0000 X. Xxxxxxx Xxxxxxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$15,000,000
9.090909090909%
Bank Name:
SOVEREIGN BANK
Address for Notices:
00 Xxxxx Xxxxxx
XX0-XXX-0000
Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Address of Lending Office:
X.X. Xxx 00000
XX0-XX0-00-00
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$15,000,000
9.090909090909%
Bank Name:
COMPASS BANK
Address for Notices:
00 Xxxxx 00xx Xxxxxx
00xx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Address of Lending Office:
00 Xxxxx 00xx Xxxxxx
00xx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$15,000,000
9.090909090909%
Bank Name:
CALIFORNIA BANK & TRUST
Address for Notices:
0000 X. Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Address of Lending Office:
0000 X. Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$10,000,000
6.060606060606%
Bank Name:
GUARANTY BANK
Address for Notices:
0000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Telephone : (000) 000-0000
Telecopy: (000) 000-0000
Address of Lending Office:
0000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Telephone : (000) 000-0000
Telecopy: (000) 000-0000
10,000,000
6.060606060606%
Bank Name:
COMERICA BANK
Address for Notices:
000 Xxxxxxxx Xxxxxx
XX 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Address of Lending Office:
000 Xxxxxxxx Xxxxxx
XX 0000
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$10,000,000
6.060606060606%
Bank Name:
BANKERS TRUST COMPANY
Address for Notices:
00 Xxxx 00xx Xxxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Address of Lending Office:
00 Xxxxxx Xxxxxx
0xx Xxxxx
Xxxxxx Xxxx, XX 00000
Attention: X.X. Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$10,000,000
6.060606060606%
Bank Name:
Bank of America, N.A.
Address for Notices:
000 X. XxXxxxx Xxxxxx
Mail Code IL1-231-12-18
Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Address of Lending Office:
000 X. XxXxxxx Xxxxxx
Mail Code IL 1-231-12-18
Xxxxxxx, XX 00000
Attention: Xxxxxxxx Xxxxxx-Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
$5,000,000
3.030303030303%
TOTAL
$165,000,000
100%
ADMINISTRATIVE AGENT:
Name: FLEET NATIONAL BANK
Address: 000 Xxxxxxxxx Xxxxxx Xxxxx, X.X.
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
BORROWER:
Name: X. XXXXXXXXX ENTERPRISES, INC.
Address: 00 Xxxxx 00, X.X. Xxx 000
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
GUARANTORS:
Name: name of Guarantor
Address: c/o X. Xxxxxxxxx Enterprises, Inc.
00 Xxxxx 00, X.X. Xxx 000
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
TABLE OF CONTENTS
Section Page
- v -
86
SCHEDULE 1.1(A) - 93
