REVOLVING CREDIT AGREEMENT
between
X.X. XXXXXX, INC., as the Borrower
and
PNC BANK, NATIONAL ASSOCIATION, as the Bank
Dated September 17, 1996
TABLE OF CONTENTS
Page
1. DEFINITIONS 1
2. LOANS 15
2.1 Extension of Credit 15
2.2 Manner of Borrowing and Disbursement Under Revolving Loan 15
2.3 Interest on Revolving Loan 16
2.4 Unused Fee on Revolving Loan 16
2.5 Termination of Revolving Loan Commitment 16
2.6 Note and Loan Account 17
2.7 Repayment of Loans 17
2.8 Manner of Payment 17
2.9 Application of Payments 18
2.10 Additions and Deletions of Guarantors 18
3. INVENTORY AND FUNDING AVAILABILITY 19
3.1 Loan Funding Availability 19
4. LOAN DISBURSEMENTS 21
4.1 Prior to the First Disbursement 21
4.2 Subsequent Disbursement 22
5. BORROWER'S COVENANTS, AGREEMENTS, REPRESENTATIONS AND
WARRANTIES 23
5.1 Payment 23
5.2 Performance 23
5.3 Additional Information 23
5.4 Quarterly Financial Statements and Other Information 23
5.5 Compliance Certificates 24
5.6 Annual Financial Statements and Information Certificate
of Default 24
5.7 Financial and Inventory Covenants 24
5.8 Other Financial Documentation 25
5.9 Relating to Multibank Loan Agreement 25
5.10 Payment of Contractors 26
5.11 Inspection and Appraisal 26
5.12 Fees and Expenses 26
5.13 Hazardous Substances 26
5.14 Insurance 27
5.15 Litigation 28
5.16 Reportable Event 28
5.17 Secured Indebtedness 28
6. DEFAULT AND REMEDIES 28
6.1 Defaults 28
6.2 Remedies 31
6.3 Waivers 31
6.4 Cross-Default 32
6.5 No Liability of the Bank 32
7. REGARDING THE MULTIBANK LOAN AGREEMENT 32
7.1 Subsequent Amendment of Multibank Loan Agreement 32
7.2 Notice of Amendment 33
7.3 Bank's Right to Subsequent Amendment 33
8. GENERAL CONDITIONS 33
8.1 Benefit 33
8.2 Assignment 33
8.3 Amendment and Waiver 34
8.4 Additional Obligations and Amendments 34
8.5 [Reserved] 34
8.6 Terms 34
8.7 Governing Law and Jurisdiction 34
8.8 [Reserved] 35
8.9 Attorney's Fees 35
8.10 Mandatory Arbitration 35
8.11 Invalidation of Provisions 36
8.12 Execution in Counterparts 36
8.13 Captions 36
8.14 Notices 36
8.15 Final Agreement 37
Exhibits
Exhibit A - Form of Inventory Quarterly Report
Exhibit B - Form of Inventory Summary Report
Exhibit C - Form of Request for Advance
Exhibit D - Form of Quarterly Compliance Certificate
Schedule
Schedule 1.70 - Subsidiaries of the Borrower
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT ("Agreement") dated as of September 17,
1996 is by and between X. X. XXXXXX, INC., a Delaware corporation (the
"Borrower") and PNC BANK, NATIONAL ASSOCIATION ("the Bank").
IN CONSIDERATION of the sum of TEN AND NO/100 DOLLARS ($l0.00) in hand
paid by each party to the other and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by each of the
undersigned, the undersigned hereby covenant and agree as follows:
1.DEFINITIONS
For the purposes of this Agreement, the words and phrases set forth
below shall have the following meanings:
1.1 Acquisition Cost.
If the subject Developed Lot or Land Parcel was purchased
individually, the Acquisition Cost for such Developed Lot or Land Parcel shall
be the actual purchase price and closing costs approved by the Bank and paid by
the Borrower or its Restricted Subsidiaries for the acquisition of such
individual Developed Lot or Land Parcel excluding Administrative Costs, together
with all applicable Development Costs. If the subject Developed Lot or Land
Parcel was part of a larger group of Developed Lots or Land Parcels, the
Acquisition Cost for such Developed Lot or Land Parcel shall be the pro rata
portion of the overall actual purchase price and closing costs approved by the
Bank and paid by the Borrower and its Restricted Subsidiaries for the
acquisition of such larger group of Developed Lots or Land Parcels allocable to
the subject Developed Lot or Land Parcel excluding Administrative Costs,
together with a pro rata portion of all applicable Development Costs.
1.2 Administrative Costs.
Costs and expenses incurred by the Borrower or its Restricted
Subsidiaries in connection with (a) the marketing and selling of Inventory which
is part of the Loan Inventory and (b) the administration, management and
operation of the Borrower's and its Restricted Subsidiaries' businesses
(excluding without limitation Interest Expense and fees payable hereunder).
1.3 Advance or Advances.
Amounts advanced by the Bank to the Borrower pursuant to
Article 2 hereof on the occasion of any borrowing.
1.4 Affiliate.
Any Person (other than a Person whose sole relationship with
the Borrower is as an employee) directly or indirectly controlling, controlled
by, or under common control with the Borrower. For purposes of this definition,
"control" when used with respect to any Person means the direct or indirect
beneficial ownership of more than twenty percent (20%) of the voting securities
or voting equity or partnership interests of such Person or the power to direct
or cause the direction of the management and policies of such Person, whether by
control or otherwise.
1.5 Agreement.
This Revolving Credit Agreement.
1.6 Agreement Date.
The date as of which the Borrower and the Bank execute this
Agreement.
1.7 Applicable Law.
In respect of any Person, all provisions of constitutions,
statutes, rules, regulations and orders of governmental bodies or regulatory
agencies applicable to such Person, including without limitation all orders and
decrees of all courts and arbitrators in proceedings or actions to which the
Person in question is a party or by which it is bound.
1.8 Authorized Signatory.
With respect to the Borrower, such personnel of the Borrower
as set forth in an incumbency certificate of the Borrower delivered to the Bank
on the Agreement Date (or any duly executed incumbency certificate delivered
after the Agreement Date) and certified therein as being duly authorized by the
Borrower to execute documents, agreements and instruments on behalf of the
Borrower.
1.9 Available Revolving Loan Commitment.
As of any date of determination, an amount equal to the lesser
of (a) the Revolving Loan Commitment or (b)(i) the Loan Funding Availability
less (ii) the sum of (A) the principal amount of the Revolving Loan then
outstanding and (B) the outstanding principal balances of all unsecured
Indebtedness for Money Borrowed (excluding capitalized lease obligations, notes
payable for insurance premiums, non-recourse promissory notes for seller
financing and promissory notes issued as xxxxxxx money for contracts).
1.10 Bank.
PNC Bank, National Association.
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1.11 Borrower.
X. X. Xxxxxx, Inc., a Delaware corporation.
1.12 Business Day.
A day on which the Bank is not authorized or required to be
closed and foreign exchange markets are open for the transaction of business
required for this Agreement in New Jersey.
1.13 Change of Control.
Either (i) any sale, lease or other transfer (in one
transaction or a series of transactions) of all or substantially all of the
consolidated assets of the Borrower and its Restricted Subsidiaries to any
Person (other than a Restricted Subsidiary of the Borrower), provided that a
transaction where the holders of all classes of Common Equity of the Borrower
immediately prior to such transaction own, directly or indirectly, 50% or more
of all classes of Common Equity of such Person immediately after such
transaction shall not be a Change of Control; (ii) a "person" or "group" within
the meaning of Section 13(d) of the Exchange Act (other than the Borrower or
Xxxxxx X. Xxxxxx, his wife, children or grandchildren, or Xxxxxxx X. Xxxxxx, or
any trust or other entity formed or controlled by Xxxxxx X. Xxxxxx, his wife,
children or grandchildren, or Xxxxxxx X. Xxxxxx) becomes the "beneficial owner"
(as defined in Rule 13d-8 under the Exchange Act) of Common Equity of the
Borrower representing more than 50% of the voting power of the Common Equity of
the Borrower; (iii) Continuing Directors cease to constitute at least a majority
of the Board of Directors of the Borrower; or (iv) the stockholders of the
Borrower approve any plan or proposal for the liquidation or dissolution of the
Borrower, provided that a liquidation or dissolution of the Borrower which is
part of a transaction that does not constitute a Change of Control under the
proviso contained in clause (i) above shall not constitute a Change of Control.
1.14 Change of Management.
Xxxxxx X. Xxxxxx shall cease to serve either as Chairman of
the Board of Directors of the Borrower or as President of the Borrower.
1.15 Code.
Internal Revenue Code of 1986, as amended.
1.16 Common Equity.
With respect to any Person, capital stock of such Person that
is generally entitled to (i) vote in the election of directors of such Person,
or (ii) if such Person is not a corporation, vote or otherwise participate in
the selection of the governing body, partners, managers or others that will
control the management or policies of such Person.
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1.17 Construction Costs.
All costs accepted by the Bank actually incurred by the
Borrower or its Restricted Subsidiaries with respect to the construction of a
Dwelling as of the date of determination by the Bank excluding (a) projected
costs and costs for materials or labor not yet delivered to provided to or
incorporated into such Dwelling and (b) Administrative Costs.
1.18 Continuing Director.
A director who either was a member of the board of directors
of the Borrower on the Agreement Date or who became a director of the Borrower
subsequent to such date and whose election, or nomination for election by the
Borrower's stockholders, was duly approved by a majority of the Continuing
Directors on the board of directors of the Borrower at the time of such
approval, either by a specific vote or by approval of the proxy statement issued
by the Borrower on behalf of the entire board of directors of the Borrower in
which such individual is named as nominee for a director.
1.19 Default.
Any of the events specified in Section 6.1 hereof, provided
that any requirement for notice or lapse of time, or both, has been satisfied.
1.20 Default Rate.
A simple per annum interest rate equal to the sum of (a) the
Revolving Loan Rate, as the case may be, plus (b) two hundred basis points (2%).
1.21 Developed Lots.
Subdivision lots owned by the Borrower or its Restricted
Subsidiaries, subject to a recorded plat, which the Borrower has designated and
the Bank has accepted to be included and are included as "Developed Lots" in the
calculation of the Loan Funding Availability (exclusive of any Dwelling Lot). An
individual Developed Lot is sometimes referred to herein as a "Developed Lot."
1.22 Development Costs.
All costs accepted by the Bank actually incurred by the
Borrower and its Restricted Subsidiaries with respect to the development of a
Land Parcel into a Developed Lot or Developed Lots as of the date of
determination by the Bank excluding (a) projected costs and costs for materials
or labor not yet delivered to, provided to or incorporated into such parcel of
land and (b) Administrative Costs.
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1.23 Dwelling.
A house which the Borrower or any Restricted Subsidiary has
constructed or is constructing on a Developed Lot which has been designated as a
Dwelling Lot.
1.24 Dwelling Lots.
Developed Lots with Dwellings which the Borrower or any
Restricted Subsidiary has designated and the Bank has accepted to be included
and are included as "Dwelling Lots" in the calculation of the Loan Funding
Availability. The term "Dwelling Lot" includes the Dwelling located thereon. An
individual Dwelling Lot is sometimes referred to herein as a "Dwelling Lot."
1.25 EBITDA.
With respect to the Borrower and all Restricted Subsidiaries,
earnings for the preceding twelve (12) months (including without limitation
dividends from Unrestricted Subsidiaries, including without limitation net
income (or loss) of any Person that accrued prior to the date that such Person
becomes a Restricted Subsidiary or is merged with or into or consolidated with
the Borrower or any of its Restricted Subsidiaries) before interest incurred,
state and federal income taxes paid, franchise taxes paid and depreciation and
amortization, all in accordance with GAAP.
1.26 ERISA.
The Employee Retirement Income Security Act of 1974, as in
effect on the Agreement Date and as such Act may be amended thereafter from time
to time.
1.27 ERISA Affiliate.
(a) Any corporation which is a member of the same controlled
group of corporations (within the meaning of Code Section 414(b)) as is the
Borrower, (b) any other trade or business (whether or not incorporated) under
common control (within the meaning of Code Section 414(c)) with the Borrower,
(c) any other corporation, partnership or other organization which is a member
of an affiliated service group (within the meaning of Code Section 414(m)) with
the Borrower, or (d) any other entity required to be aggregated with the
Borrower pursuant to regulations under Code Section 414(o).
1.28 Event of Default.
Any event specified in Section 6.1 hereof and any other event
which with any passage of time or giving of notice (or both) would constitute
such Event of Default.
1.29 Exchange Act.
The Securities Exchange Act of 1934, as amended.
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1.30 Federal Funds Effective Rate.
As of any date, the "Federal Funds Effective Rate" for each
relevant month as published in the Federal Reserve Statistical Release H.15
(519), as published by the Board of Governors of the Federal Reserve System, or
any successor publication published by the Board of Governors of the Federal
Reserve System.
1.31 Financial Covenant Carve Out.
Any acquisition of Inventory, which the Borrower has elected
to exclude from the calculation of the covenants set forth in Sections 5.7(a),
(b), (g), (h) and (i) hereof; provided, however, that no acquisition may qualify
as a "Financial Covenant Carve Out" if (a) the Borrower has elected to have an
acquisition designated as a "Financial Covenant Carve Out" in the preceding
twelve (12) calendar month period; (b) such acquisition has already been
designated as a "Financial Covenant Carve Out" on the last day of each of the
two (2) fiscal quarter ends immediately following the date of such acquisition;
(c) contemporaneously with delivery by the Borrower of the notice of designation
of an acquisition as a "Financial Covenant Carve Out," the Borrower fails to
deliver to the Bank a plan of action reflecting that the Borrower will be in
compliance (after giving effect to such acquisition) with the covenants in
Sections 5.7(a), (b), (g), (h) and (i) hereof on or prior to the last day of the
third fiscal quarter following the date of such acquisition; and (d) the
acquisition in question would, if it were included in the compliance
calculations, cause (1) the ratio of Notes Payable to Tangible Net Worth to
exceed (A) as of the last day of each fiscal quarter of the Borrower in 1996,
1.9 to 1 and (B) as of the last day of each fiscal quarter of the Borrower in
1997 prior to the Revolving Loan Maturity Date, 2.1 to 1 or (2) the ratio of
Total Liabilities to Tangible Net Worth to exceed (A) as of the last day of each
fiscal quarter of the Borrower in 1996, 2.25 to 1 and (B) as of the last day of
each fiscal quarter of the Borrower in 1997 prior to the Revolving Loan Maturity
Date, 2.5 to 1.
1.32 Fixed Charges.
The aggregate consolidated interest incurred of the Borrower
and its Restricted Subsidiaries for the most recently completed four (4) fiscal
quarters for which results have been reported to the Bank.
1.33 Fixed Charges Coverage Ratio.
The ratio of the Borrower's EBITDA to Fixed Charges.
1.34 Force Majeure Delay.
A delay to the development of a Lot Under Development or a
delay to the construction of a Dwelling which is caused by fire, earthquake or
other acts of God, strike, lockout, acts of public enemy, riot, insurrection or
governmental regulation of the sale or transportation of materials, supplies or
labor, provided that the Borrower furnishes the Bank with written notice of any
such delay within ten (10) days from the commencement of any such delay and
provided that the period of the Force Majeure shall not exceed the period of
delay caused by such event.
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1.35 Funding Period.
A period commencing on the day immediately following the date
that the Loan Funding Availability is established pursuant to Section 3.1(c)
hereof by the Bank and ending on the date that the Loan Funding Availability
next is established pursuant to Section 3.1(c) hereof by the Bank.
1.36 GAAP.
As in effect as of the Agreement Date, generally accepted
accounting principles consistently applied.
1.37 Governmental Authority.
Any nation or government, any state or other political
subdivision thereof and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
1.38 Guarantors.
DRH Construction, Inc., a Delaware corporation
X.X. Xxxxxx, Inc. - Albuquerque, a Delaware corporation
X.X. Xxxxxx, Inc. - Minnesota, a Delaware corporation
X.X. Xxxxxx Los Angeles Holding Company, Inc., a California corporation
X.X. Xxxxxx Los Angeles Management Company, Inc., a California corp.
X.X. Xxxxxx Los Angeles No. 9, Inc., a California corporation
X.X. Xxxxxx Los Angeles No. 10, Inc., a California corporation
X.X. Xxxxxx Los Angeles No. 11, Inc., a California corporation
X.X. Xxxxxx, Inc. - Birmingham, a Delaware corporation
X.X. Xxxxxx, Inc. - Greensboro, a Delaware corporation
X.X. Xxxxxx San Diego Holding Company, Inc., a California corporation
X.X. Xxxxxx San Diego Management Company, Inc., a California corporation
X.X. Xxxxxx San Diego No. 9, Inc., a California corporation
X.X. Xxxxxx San Diego No. 10, Inc., a California corporation
X.X. Xxxxxx San Diego No. 11, Inc., a California corporation
X.X. Xxxxxx San Diego No. 12, Inc., a California corporation
X.X. Xxxxxx San Diego No. 13, Inc., a California corporation
X.X. Xxxxxx San Diego No. 14, Inc., a California corporation
X.X. Xxxxxx San Diego No. 15, Inc., a California corporation
X.X. Xxxxxx San Diego No. 16, Inc., a California corporation
X.X. Xxxxxx San Diego No. 17, Inc., a California corporation
X. X. Xxxxxx - Texas, Ltd., a Texas limited partnership
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together with each additional Restricted Subsidiary of Borrower as may from time
to time deliver a Guaranty of the Revolving Loan (if such Guaranty is accepted
by the Bank) and excluding such parties, if any, who as are released from their
Guaranty obligations to the Bank, all pursuant to Section 2.10.
1.39 Guaranty or Guaranteed.
As applied to an obligation (each a "primary obligation"),
shall mean and include (a) any guaranty, direct or indirect, in any manner, of
any part or all of such primary obligation, and (b) any agreement, direct or
indirect, contingent or otherwise, the practical effect of which is to assure in
any way the payment or performance (or payment of damages in the event of
non-performance) of any part or all of such primary obligation, including,
without limiting the foregoing, any reimbursement obligations as to amounts
drawn down by beneficiaries of outstanding letters of credit and any obligation
of such Person (the "primary obligor"), whether or not contingent, (i) to
purchase any such primary obligation or any property or asset constituting
direct or indirect security therefor, (ii) to advance or supply funds (1) for
the purchase or payment of such primary obligation or (2) to maintain working
capital, equity capital or the net worth, cash flow, solvency or other balance
sheet or income statement condition of any other Person, (iii) to purchase
property, assets, securities or services primarily for the purpose of assuring
the owner or holder of any primary obligation of the ability of the primary
obligor with respect to such primary obligation to make payment thereof, or (iv)
otherwise to assure or hold harmless the owner or holder of such primary
obligation against loss in respect thereof.
1.40 Indebtedness.
With respect to any specified Person, (a) all items, except
items of (i) shareholders' and partners' equity, (ii) capital stock, (iii)
surplus, (iv) general contingency or deferred tax reserves, (v) liabilities for
deposits and (vi) deferred income, which in accordance with GAAP would be
included in determining total liabilities as shown on the liability side of a
balance sheet of such Person, (b) all direct or indirect obligations secured by
any Lien to which any property or asset owned by such Person is subject, whether
or not the obligation secured thereby shall have been assumed and (c) all
reimbursement obligations with respect to issued letters of credit.
1.41 Indebtedness for Money Borrowed.
With respect to any specified Person, all money borrowed by
such Person and Indebtedness represented by notes payable by such Person and
drafts accepted representing extensions of credit to such Person, all
obligations of such Person evidenced by bonds, debentures, notes, or other
similar instruments, all Indebtedness of such Person upon which interest charges
are customarily paid, and all Indebtedness of such Person issued or assumed as
full or partial payment for property or services, whether or not any such notes,
drafts, obligations or Indebtedness represent Indebtedness for money borrowed.
For purposes of this definition, interest which is accrued but not paid on the
original due date or within any applicable cure or grace period as provided by
the underlying contract for such interest shall be deemed Indebtedness for Money
Borrowed.
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1.42 Interest Expense.
In respect of any period, an amount equal to the sum of the
interest incurred during such period based on a stated interest rate with
respect to Indebtedness for Money Borrowed of the Borrower and its Restricted
Subsidiaries on a consolidated basis.
1.43 Inventory.
All real and personal property, improvements and fixtures
owned by the Borrower or the Restricted Subsidiaries, including but not limited
to all Land Parcels, Lots Under Development, Development Lots and Dwelling Lots.
1.44 Inventory Quarterly Report.
The detailed quarterly written report with respect to the Loan
Inventory, in substantially the form of Exhibit A attached hereto, to be
prepared by the Borrower and submitted to the Bank in accordance with Section
3.1(c) hereof.
1.45 Inventory Summary Report.
The monthly written summary of the Loan Inventory, in
substantially the form of Exhibit B attached hereto, to be prepared by the
Borrower and submitted to the Bank in accordance with Section 3.1(c) hereof.
1.46 Land Parcels.
Parcels of land owned by the Borrower or any of its Restricted
Subsidiaries which are, as of the date of determination, not scheduled for
commencement of development into Developed Lots during the twelve (12) calendar
months immediately following such date of determination and which the Borrower
has designated as "Land Parcels." An individual Land Parcel is sometimes
referred to as a "Land Parcel."
1.47 Lien.
With respect to any property, any mortgage, lien, pledge,
assignment, charge, security interest, title retention agreement, levy,
execution, seizure, attachment, garnishment, or other encumbrance of any kind in
the nature of any of the foregoing in respect of such property, whether or not
xxxxxx, vested or perfected.
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1.48 Loan Documents.
This Agreement, the Revolving Loan Note and any and all other
documents evidencing the Revolving Loan Note as the same may be amended,
substituted, replaced, extended or renewed from time to time.
1.49 Loan Funding Availability.
The amount available for advancement under the Revolving Loan
Note to the Borrower established pursuant to Section 3.1 hereof, at any
applicable time, by the Bank based on the Loan Inventory.
1.50 Loan Inventory
Lots Under Development, Developed Lots and Dwelling Lots which
are not encumbered by a Lien or Liens (other than any Permitted Encumbrance) and
which have been designated by the Borrower and accepted by the Bank as "Loan
Inventory" to be utilized for the purpose of calculating the Loan Funding
Availability.
1.51 Lots Under Development.
Land Parcels which are, as of the date of determination, being
developed into Developed Lots or which are scheduled for the commencement of
development into Developed Lots within twelve (12) calendar months after the
date of determination, and which the Borrower has designated and the Bank has
accepted to be included and are included as "Lots Under Development" in the
calculation of the Loan Funding Availability. An individual Lot Under
Development is sometimes referred to as a "Lot Under Development."
1.52 Models.
A Dwelling Lot containing a dwelling unit which is designated
by the Borrower as a model unit for use in marketing and promoting the sale of
Dwelling Lots.
1.53 Multibank Loan Agreement.
The Master Loan and Inter-Creditor Agreement among the
Borrower, NationsBank, N.A. (South) as Administrative Agent and the "Banks"
party thereto dated April 16, 1996, as amended, pursuant to which such "Banks"
agreed to provide to the Borrower unsecured credit facilities aggregating up to
$260,000,000.
1.54 [RESERVED]
1.55 Notes Payable.
With respect to the Borrower and all Restricted Subsidiaries,
all Indebtedness for Money Borrowed other than promissory notes issued as
xxxxxxx money for contracts, non-recourse promissory notes for seller financing
and notes payable for insurance premiums and capitalized lease obligations.
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1.56 Obligations.
(a) All payment and performance obligations of the Borrower
and all other obligors to the Bank under this Agreement and the other Loan
Documents, as they may be amended from time to time, or as a result of making
the Revolving Loan, and (b) the obligation to pay an amount equal to the amount
of any and all damages which the Borrower is obligated to pay pursuant to the
Loan Documents to, or on behalf of, the Bank which it may suffer by reason of a
breach by any of the Borrower or any other obligor of any obligation, covenant
or undertaking with respect to this Agreement or any other Loan Document.
1.57 Permitted Encumbrances.
Liens, encumbrances, easements and other matters which (a) are
on real estate for real estate taxes not yet delinquent, (b) are for taxes,
assessments, judgments, governmental charges or levies or claims, the
non-payment of which is being diligently contested in good faith by appropriate
proceedings and for which adequate reserves have been set aside on the
Borrower's books (but only so long as no foreclosure, distraint sale or similar
proceedings have been commenced with respect thereto and remain unstayed for a
period of thirty (30) days after their commencement), (c) are in favor of
carriers, warehousemen, mechanics, laborers and materialmen incurred in the
ordinary course of business for sums not yet past due or being diligently
contested in good faith (if adequate reserves are being maintained by the
Borrower with respect thereto), (d) are incurred in the ordinary course of
business in connection with workers' compensation and unemployment insurance, or
(e) are easements, rights-of-way, restrictions or similar encumbrances on the
use of real property which does not interfere with the ordinary conduct of
business of the Borrower or materially detract from the value of such real
property.
1.58 Person.
An individual, corporation, partnership, limited liability
company, trust or unincorporated organization, or a government or any agency or
political subdivision thereof.
1.59 Plan.
An employee benefit plan within the meaning of Section 3(3) of
ERISA maintained by or contributed to by the Borrower or any ERISA Affiliate.
1.60 Reconciliation Date.
Two (2) Business Days after the Borrower's receipt of notice
from the Bank pursuant to Section 3.1(d) hereof that the outstanding principal
balance of the Revolving Loan exceeds the Available Revolving Loan Commitment.
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1.61 Reportable Event.
Shall have the meaning set forth in Section 4043(b) of ERISA.
1.62 Request for Advance.
Any certificate signed by an Authorized Signatory of the
Borrower requesting an Advance hereunder which will increase the amount of the
Revolving Loan outstanding, which certificate shall be denominated a "Request
for Advance," and shall be in substantially the form of Exhibit C attached
hereto. Each Request for Advance shall, among other things, (a) specify the date
of the Advance, which shall be a Business Day, (b) specify the amount of the
Advance, (c) state that there shall not exist, on the date of the requested
Advance and after giving effect thereto, a Default or an Event of Default, and
(d) state that all conditions precedent to the making of the Advance have been
satisfied.
1.63 Restricted Subsidiary.
Any Subsidiary of the Borrower which has been designated as a
Restricted Subsidiary by the Borrower and from which the Bank is required to
receive a duly executed Subsidiary Guaranty, including without limitation the
Guarantors.
1.64 Revolving Loan.
The revolving line of credit to be advanced by the Bank
pursuant to the terms of this Agreement and evidenced by the Revolving Loan
Note.
1.6 Revolving Loan Commitment.
The obligation of the Bank to advance funds in the maximum sum
of $20,000,000 to the Borrower pursuant to the terms hereof as such obligations
may be reduced from time to time pursuant to the terms hereof.
1.66 Revolving Loan Maturity Date.
September 16, 1997, or such earlier date as payment of the
Revolving Loan shall be due (whether by acceleration or otherwise).
1.67 Revolving Loan Note.
The promissory note by the Borrower in favor of the Bank
evidencing the Revolving Loan, as well as any promissory note or notes issued by
the Borrower in substitution, replacement, extension, amendment or renewal of
such promissory note.
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1.68 Revolving Loan Rate.
At any time, the annual rate of interest, to be calculated
daily, based on the Three-Month LIBOR as announced on each such day plus one
hundred fifty basis points (1.5%).
1.69 Speculative Lot.
Any Dwelling Lots having a fully or partially constructed
dwelling unit thereon which Dwelling Lot is not subject to a bona fide contract
for the sale of such Dwelling Lot to a third party, excluding Developed Lots
containing Dwellings used as Models.
1.70 Subsidiary.
As applied to any Person, (a) any corporation of which fifty percent
(50%) or more of the outstanding stock (other than directors' qualifying shares)
having ordinary voting power to elect a majority of its board of directors,
regardless of the existence at the time of a right of the holders of any class
or classes of securities of such corporation to exercise such voting power by
reason of the happening of any contingency, or any partnership of which fifty
percent (50%) or more of the outstanding partnership interests, is at the time
owned by such Person, or by one or more Subsidiaries of such Person, or by such
Person and one or more Subsidiaries of such Person, and (b) any other entity
which is controlled or susceptible to being controlled by such Person, or by one
or more Subsidiaries of such Person, or by such Person and one or more
Subsidiaries of such Person; provided, however, that for purposes of this
Agreement and the other Loan Documents the term "Subsidiary" shall not include
DRH Mortgage Company, Ltd., a Texas limited partnership. Unless the context
otherwise requires, "Subsidiaries" as used herein shall mean the Subsidiaries of
the Borrower. The Subsidiaries of the Borrower as of the Closing Date are set
forth on Schedule 1.70 attached hereto.
1.71 Subsidiary Guaranty.
A guaranty agreement in form and substance satisfactory to the
Bank whereunder a Restricted Subsidiary guarantees the full and faithful payment
and performance of all of the Obligations of the Borrower hereunder and under
the other Loan Documents.
1.72 Tangible Assets.
The difference between total assets of the Borrower and its
Restricted Subsidiaries and all intangible assets of the Borrower and its
Restricted Subsidiaries, all as determined in accordance with GAAP.
1.73 Tangible Net Worth.
With respect to the Borrower and its Restricted Subsidiaries,
(A) stockholders' equity on a consolidated basis less (B) (i) all "intangible
assets" as defined under GAAP plus (ii) amounts invested in Unrestricted
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Subsidiaries of such Person plus (iii) Guaranties of or in respect of the
Indebtedness of Unrestricted Subsidiaries.
1.74 Third-Party Notes Payable.
With respect to the Borrower and its Restricted Subsidiaries,
all Indebtedness for Money Borrowed other than (a) publicly issued Indebtedness
for Money Borrowed which is pari passu with the Obligations, (b) non-recourse
Indebtedness, (c) Indebtedness owed to the seller of any Inventory acquired by
the Borrower or its Restricted Subsidiaries, (d) Indebtedness which is
structurally subordinate to the Obligations or which is convertible into equity
at the option of the Borrowers, (e) Indebtedness for xxxxxxx money, (f) notes
payable for insurance premiums and capitalized lease obligations and (g) the
Borrower's obligations under the Multibank Loan Agreement.
1.75 Three-Month LIBOR.
As of any date of determination, a rate of interest per annum
equal to the three (3) month London Interbank Offered Rate for deposits in
United States dollars (rounded to two decimal places) in amounts comparable to
the outstanding principal amount of the Revolving Loan then outstanding, which
interest rate is set forth in The Wall Street Journal (Eastern Edition) on the
next Business Day; provided, however, if more than one such offered rate appears
in The Wall Street Journal (Eastern Edition), the applicable rate shall be the
average thereof.
1.76 Total Capital.
The sum of the Tangible Net Worth of the Borrower and its
Restricted Subsidiaries plus Notes Payable of the Borrower and its Restricted
Subsidiaries.
1.77 Total Liabilities.
All items required by GAAP to be set forth as "liabilities" on
the Borrower's and its Restricted Subsidiaries' consolidated balance sheet.
1.78 Unrestricted Subsidiaries.
Subsidiaries of the Borrower which are not Restricted
Subsidiaries.
1.79 Working Capital.
The total of the Borrower's and its Restricted Subsidiaries'
assets minus the sum of the Borrower's and Restricted Subsidiaries' fixed
assets, intangible assets, xxxxxxx monies for lot and land option contracts
represented by promissory notes payable by the Borrower and Restricted
Subsidiaries and the total of the Borrower's and Restricted Subsidiaries'
liabilities. [Total Assets - (Fixed Assets + Intangible Assets + Xxxxxxx Monies
Represented by Promissory Notes + Total Liabilities).]
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Except where the context otherwise requires, definitions
imparting the singular shall include the plural and vice versa. Except where
otherwise specifically restricted, reference to a party to a Loan Document
includes that party and its successors and assigns. All terms used herein which
are defined in Article 9 of the Uniform Commercial Code in effect in the State
of New Jersey on the date hereof and which are not otherwise defined herein
shall have the same meanings herein as set forth therein.
All accounting terms used herein without definition shall be
used as defined under GAAP as of the Agreement Date.
References presented in quotation marks in connection with the
Multibank Loan Agreement refer to terms defined in the Multibank Loan Agreement.
0.XXXXX
2.1 Extension of Credit.
(a)Revolving Loan. Subject to the terms and conditions of, and in
reliance upon the representations and warranties made in this Agreement and the
other Loan Documents and upon the terms and subject to the conditions of this
Agreement, the Bank agrees to lend and relend to the Borrower, prior to the
Revolving Loan Maturity Date, amounts which in the aggregate at any one time
outstanding do not exceed the Available Revolving Loan Commitment. Advances
under the Revolving Loan Commitment may be repaid and reborrowed from time to
time on a revolving basis as set forth herein.
(b)Use of Loan Proceeds. The Bank and the Borrower agree that the
proceeds of the Revolving Loan shall be used for general corporate purposes,
including without limitation working capital support, home construction, lot
acquisition, lot development, land acquisition, asset acquisitions and stock
acquisitions.
2.2 Manner of Borrowing and Disbursement Under Revolving Loan.
(a)Advances. The Borrower shall give the Bank irrevocable written
notice for Advances under the Revolving Loan not later than 12:00 noon (Eastern
time) on the day immediately preceding the date of the requested Advance in the
form of a Request for Advance, or notice by telephone or telecopy followed
immediately by a Request for Advance; provided, however, that the failure by the
Borrower to confirm any notice by telephone or telecopy with a Request for
Advance shall not invalidate any notice so given. Each Advance hereunder shall
be in principal amounts of not less than $100,000 and in integral multiples of
$100,000. Subsequent to the initial Advance(s) of the Revolving Loan made on the
Agreement Date, the Borrower may not request, in the aggregate, more than (i)
two (2) Advances in any calendar month plus (ii) four (4) additional Advances in
any twelve (12) calendar month period. In any event, the Borrower may not
request, in the aggregate, more than twenty-eight (28) Advances in any twelve
(12) calendar month period.
15
(b)Disbursement. Prior to 2:00 p.m. (Eastern time) on the date of an
Advance hereunder, the Bank shall, subject to the satisfaction of the conditions
set forth in this Agreement, disburse funds representing such Advance in
immediately available funds by transferring the amounts so made
available by wire transfer pursuant to the instructions of the Borrower.
2.3 Interest on Revolving Loan.
(a)Revolving Loan. Interest on the Revolving Loan shall be computed on
the basis of a hypothetical year of 360 days for the actual number of days
elapsed during each calendar month and shall be payable at a simple interest
rate equal to the Revolving Loan Rate times the principal balance outstanding
from time to time under the Revolving Loan Note for the number of days such
principal amounts are outstanding during such calendar month. Interest then
outstanding shall be due and payable in arrears as provided in Section 2.7
hereof.
(b)Upon Default. Upon the occurrence and during the continuance of a
Default, the Bank may accelerate the maturity of the Revolving Loan, exercise
any other rights or remedies hereunder in connection with the exercise of this
right) or charge interest on the outstanding principal balance of the Revolving
Loan at the Default Rate from the date of such Default. Such interest shall be
payable on the earliest of demand, the first (1st) Business Day of the next
calendar month or the Revolving Loan Maturity Date and shall accrue until the
earlier of (i) waiver or cure of the applicable Default, (ii) agreement by the
Bank to rescind the charging of interest at the Default Rate, or (iii) payment
in full of the Obligations.
2.4 Unused Fee on Revolving Loan.
The Borrower agrees to pay to the Bank an unused fee for each calendar
year on the difference between (i) the Revolving Loan Commitment and (ii) the
daily sum of the outstanding Revolving Loan for each day during the applicable
period at the rate of 25 basis points (.25%). Subject to Section 2.5, such
unused fee shall be computed on the basis of a hypothetical year of 360 days for
the actual number of days elapsed, shall be due and payable quarterly in arrears
on the eighteenth (18th) day of each October, January, April and July and on the
Revolving Loan Maturity Date for the period beginning on the first day of the
then current calendar quarter through the Revolving Loan Maturity Date,
commencing on October 18, 1996 (for the period from the Agreement Date through
September 30, 1996), and on the Revolving Loan Maturity Date, and shall be fully
earned when due and non-refundable when paid.
2.5 Termination of Revolving Loan Commitment.
The Borrower may terminate the Revolving Loan Commitment in its
entirety (but not in part) upon thirty (30) calendar days' notice to the Bank
stating an intention so to terminate and by paying to the Bank all outstanding
Obligations. Commencing as of the receipt such notice, the fee otherwise payable
pursuant to Section 2.4 shall cease to accrue.
16
2.6 Note and Loan Account.
(a)The Revolving Loan shall be repayable in accordance with the terms
and provisions set forth herein and shall be evidenced by the Revolving Loan
Note. The Revolving Loan Note shall be issued by the Borrower to the Bank and
shall be duly executed and delivered by Authorized Signatories.
(b)The Bank may open and maintain on its books in the name of the
Borrower a loan account with respect to the Revolving Loan Note and interest
thereon. The Bank shall credit such loan account for each payment on account of
principal of or interest on the Revolving Loan. The records of the Bank with
respect to the accounts maintained by it shall be prima facie evidence of the
Revolving Loan and accrued interest thereon, but the failure to maintain such
records shall not impair the obligation of the Borrower to repay Indebtedness
hereunder.
2.7 Repayment of Loans.
(a)Interest. The Borrower shall pay, on the eighteenth (18th) calendar
day of each month, all interest on the Revolving Loan which has accrued as of
the first (1st) calendar day of such month, commencing on the eighteenth (18th)
calendar day of the first (1st) full calendar month following the
Agreement Date.
(b)Reconciliation of Loan Inventory. The Borrower shall repay certain
portions of the outstanding principal of the Revolving Loan and accrued and
unpaid interest thereon upon the reconciliation of the Loan Funding Availability
against the outstanding principal balance under the Revolving Loan Note as
provided in Section 3.1 hereof.
(c)Maturity. In addition to the foregoing, a final payment of all
Obligations then outstanding shall be due and payable by the Borrower on the
Revolving Loan Maturity Date.
2.8 Manner of Payment.
(a)Each payment (including any prepayment) by the Borrower on account
of the principal of or interest on the Revolving Loan, fees and any other amount
owed to the Bank under this Agreement, the Revolving Loan Note or the other Loan
Documents shall be made not later than 3:00 p.m. (Eastern time) on the date
specified for payment under this Agreement or such other Loan Document to the
Bank an account designated by the Bank in lawful money of the United States of
America in immediately available funds. Any payment received by the Bank after
3:00 p.m. (Eastern time) shall be deemed received on the next Business Day for
purposes of interest accrual.
(b)If any payment under this Agreement or the Revolving Loan Note shall
be specified to be made upon a day which is not a Business Day, it shall be made
on the next succeeding day which is a Business Day, and such extension of time
shall in such case be included in computing interest and fees, if any, in
connection with such payment.
17
(c)The Borrower may not make payments, in the aggregate, under this
Agreement (excluding any payments specifically required pursuant to the terms of
this Agreement) more than (i) two (2) times in any calendar month, plus (ii)
four (4) additional times in any twelve (12) calendar month period. In any
event, the Borrower may not make, in the aggregate, more than twenty-eight (28)
payments (excluding any payments specifically required pursuant to the terms of
this Agreement) under this Agreement in any twelve (12) calendar month period.
(d)The Borrower agrees to pay principal, interest, fees, and all other
amounts due hereunder or under the Revolving Loan Note without set-off or
counterclaim or any deduction whatsoever.
2.9 Application of Payments.
Unless otherwise specifically provided in this Agreement or the other
Loan Documents, payments made to the Bank (as voluntary payments, upon the
realization on collateral for the Obligations, or otherwise), shall be applied
(subject to Section 2.2(b) hereof) in the following order to the extent such
Obligations are then due and payable hereunder: First, to the costs and
expenses, if any, incurred by the Bank in the collection of such amounts under
this Agreement or any of the other Loan Documents, including without limitation
any reasonable costs incurred in connection with the sale or disposition of any
collateral for the Obligations; Second, all fees and commissions then due and
payable by the Borrower to the Bank under this Agreement or any Loan Document;
Third, to any due and unpaid interest which may have accrued on the Revolving
Loan; Fourth, to any unpaid principal of the Revolving Loan; Fifth, to any other
Obligations not otherwise referred to this Section 2.9 until all such
Obligations are paid in full; Sixth, to actual damages incurred by the Bank by
reason of any breach hereof or of any other Loan Documents by the Borrower or a
Restricted Subsidiary; and Seventh, upon satisfaction in full of all
Obligations, to the Borrower or as otherwise required by law.
2.10 Additions and Deletions of Guarantors
(a)Addition of Restricted Subsidiary. Whenever the Borrower intends for
a Person to become a Restricted Subsidiary and Guarantor, it shall deliver to
the Bank (i) written notice stating such fact and making reference to this
Agreement and this Section 2.10; (ii) a written description of (A) the stock or
other equity ownership of such Person, (B) the principal business activity of
such Person, (C) whether such Person is party to, or guarantor with respect to,
the Multibank Loan Agreement or is maker of, or guarantor with respect to, a
Third-Party Note Payable and (D) the date (which shall not be fewer than ten
(10) Business Days after the receipt by the Bank of such notice) on which the
Borrower intends such Person to become a Restricted Subsidiary and Guarantor;
18
(iii) a statement that no Default or Event of Default shall exist after such
Person becomes a Restricted Subsidiary and Guarantor, and (iv) a fully executed
Subsidiary Guaranty in the form delivered by the Guarantors on or about the date
hereof (except for name and date changes). Such Person shall become a Restricted
Subsidiary upon the satisfaction of all such conditions, effective on the date
so specified by the Borrower in such notice, but only upon the delivery of the
Bank of its written consent (which shall not be unreasonably withheld).
(b)Deletion of Restricted Subsidiary. Whenever the Borrower intends for
a Person to cease being a Restricted Subsidiary it shall deliver to the Bank (i)
written notice stating such fact and making reference to this Agreement and this
Section 2.10; and (ii) a statement (A) of the intended effective date of such
cessation (which shall not be fewer than ten (10) Business Days after the
receipt by the Bank of such notice) and (B) that no Default or Event of Default
shall exist after such Person ceases to be a Restricted Subsidiary. Such Person
shall cease to be a Restricted Subsidiary and Guarantor on the date specified by
the Borrower in such notice, but only upon the delivery by the Bank of its
written consent to such cessation (which shall not be unreasonably withheld).
3.INVENTORY AND FUNDING AVAILABILITY
3.1 Loan Funding Availability.
At the designated times set forth herein, the Bank shall establish a
Loan Funding Availability for the Loan Inventory.
(a)Calculation of Loan Funding Availability. The Loan Funding
Availability shall be equal to the sum of "A" plus "B" plus "C"; provided, that
at no time may the sum of "A" and "B" exceed thirty percent (30%) of Loan
Funding Availability.
A = seventy-five percent (75%) of the sum of all
Acquisition Costs for all Lots Under Development which are included in the Loan
Inventory. If, after a parcel of land is designated a Lot Under Development,
development of such parcel ceases for thirty (30) calendar days or more (other
than by reason of a Force Majeure Delay), at the discretion of the Bank, the
Loan Funding Availability for such parcel may be reduced to an amount determined
by the Bank (which amount can be zero) until development of such Lot Under
Development is resumed to the satisfaction of the Bank.
B = seventy-five percent (75%) of the sum of all
Acquisition Costs for all Developed Lots included in the Loan Inventory.
C = one hundred percent (100%) of the sum of all
Acquisition Costs and Construction Costs for all Dwelling Lots included in the
Loan Inventory.
(b)Designation of Land Parcels, Lots Under Development, Developed Lots
and Dwelling Lots. On or before the fifteenth (15th) calendar day of each
calendar month (other than a month following the end of a calendar quarter), the
Borrower shall deliver to the Bank an Inventory Summary Report in the form
attached hereto as Exhibit B and incorporated herein. On or before the fifteenth
19
(15th) calendar day of each month following the end of a calendar quarter, the
Borrower shall deliver to the Bank an Inventory Quarterly Report in the form
attached hereto as Exhibit A and incorporated herein which form shall have been
completed and signed by the Borrower. The Inventory Summary Report and Inventory
Quarterly Report shall reflect Inventory that the Borrower desires to have
designated as Loan Inventory. Upon the Bank's receipt of the Inventory Summary
Report or Inventory Quarterly Report, as the case may be, the Bank may conduct
inspections or reviews of the subject Inventory that the Bank deems appropriate,
at the expense of the Bank except as hereinafter expressly provided. Based upon
the information in the Inventory Summary Report or Inventory Quarterly Report,
as the case may be, and the other information compiled by the Bank, the Bank
shall determine, in its discretion, whether a Lot Under Development, Developed
Lot or Dwelling Lot not previously designated as part of the Loan Inventory
shall be designated part of the Loan Inventory and, if so, whether such Lot
Under Development, Developed Lot or Dwelling Lot shall be designated a Lot Under
Development, Developed Lot or Dwelling Lot.
(c)Periodic Establishment of Loan Funding Availability. Within two (2)
business days of the Bank's receipt of an Inventory Summary Report or Inventory
Quarterly Report, as the case may be, the Bank shall establish the Loan Funding
Availability based on the Report delivered to the Bank and information compiled
by the Bank. In the event the Borrower does not submit the Inventory Summary
Report or Inventory Quarterly Report in the time and manner set forth above or
furnish sufficient information to the Bank to enable the Bank to establish a new
Loan Funding Availability, the Bank will establish a Loan Funding Availability
based on some or all of the previous information submitted to the Bank by the
Borrower in the immediately preceding Inventory Summary Report or Inventory
Quarterly Report and the information compiled by the Bank, as required
hereunder, in connection therewith, as the case may be, or other information
available to the Bank.
(d)Reconciliation. In the event that the Loan Funding Availability for
a particular Funding Period is less than the then-outstanding principal amount
under the Revolving Loan, amounts due under the Multibank Loan Agreement and
Third-Party Notes Payable (other than amounts due hereunder) and unpaid draws
and other amounts due in respect of letters of credit issued under the Multibank
Loan Agreement, the Bank shall notify the Borrower thereof. On or before the
Reconciliation Date, the Borrower shall (i) (A) pay to the Bank a principal
payment to be applied to the Revolving Loan and/or (B) provide to the Bank
evidence that the principal amount of the Multibank Loan Agreement or the
Third-Party Notes Payable (other than the Revolving Loan) has been reduced in an
aggregate amount sufficient to eliminate the excess of the outstanding principal
amount of the Revolving Loan, the Multibank Loan Agreement and Third-Party Notes
Payable (other than the Revolving Loan) and unpaid draws and other amounts due
in respect of letters of credit issued under the Multibank Loan Agreement over
the Loan Funding Availability, together with any accrued and unpaid interest on
such excess, or (ii) provide a revised Inventory Summary Report or Inventory
Quarterly Report designating sufficient additional Inventory (which shall be
acceptable to the Bank, in its discretion) as Loan Inventory to cause the Loan
Funding Availability to equal or exceed the outstanding principal of the
20
Revolving Loan, the Multibank Loan Agreement and Third-Party Notes Payable
(other than the Revolving Loan).
(e)Removal/Disapproval of Inventory for Loan Funding Availability. If,
at any time, the Bank determines, in its reasonable discretion, that any part of
the Loan Inventory is not acceptable for inclusion in the calculation of the
Loan Funding Availability as a result of an unforeseen material adverse change
in the condition of such portion of the Loan Inventory or as a result of the
existence of hazardous wastes or materials in or on any Inventory which are in
violation of any warranty, representation or covenant of the Loan Documents
regarding such hazardous wastes or materials, the Bank may exclude such portion
of the Loan Inventory from the calculation of the Loan Funding Availability. If,
after such exclusion, the then-outstanding principal amount under the Revolving
Loan Note would exceed the Loan Funding Availability, the Borrower shall pay to
the Bank on the Reconciliation Date immediately following the exclusion of such
Loan Inventory, a principal payment on the Revolving Loan in an amount
sufficient to eliminate such excess of the aggregate outstanding principal
balance of the Revolving Loan over the Loan Funding Availability, together with
accrued and unpaid interest on such excess.
0.XXXX DISBURSEMENTS
4.1 Prior to the First Disbursement.
Prior to requesting the first disbursement under the Revolving Loan the
Borrower shall deliver all of the following items to the Bank, in form and
substance satisfactory to the Bank. The Bank shall have no obligation to make
the first disbursement hereunder until all of these items have been so executed
and/or delivered to the Bank.
(a)Notes and Guaranties. A Revolving Loan Note by the Borrower payable
to the order of the Bank and a Guaranty from each Guarantor in favor of the
Bank.
(b)Taxpayer Identification Number. The Borrower's federal taxpayer
identification number.
(c)Authority Documents of Borrower. Articles of Incorporation of the
Borrower certified by the office of the Secretary of State in which the Borrower
is incorporated; Bylaws of the Borrower certified by an officer of the Borrower;
Certificate of Existence of the Borrower issued by the state in which the
Borrower is incorporated; Incumbency Certificate of the Borrower reflecting the
Authorized Signatories; Corporate resolutions of the Borrower certified by an
officer of the Borrower and authorizing the Borrower to enter into this
Agreement and execute all related documents and Loan Documents applicable to the
Revolving Loan; and documentation evidencing the Borrower's qualification to do
business for each state in which any part of the Loan Inventory owned by
Borrower is located certified by the office of the Secretary of State of such
state.
21
(d)Attorney's Opinion. The written opinion of the Borrower's and
Guarantors' counsel in form and content acceptable to the Bank and which
addresses the following matters:
(i)Existence, Due Authorization and Execution. The Borrower
and each guarantor is duly organized and existing as a corporation
and is in good standing and qualified to do business under the laws
of Borrower's and each Guarantor's, respectively, state of
incorporation and the states in which Borrower and such Guarantor
owns Loan Inventory and that the Loan Documents evidencing the Loans
have been properly executed by the persons authorized to do so;
(ii)Enforceability. The Loan Documents are enforceable against
the Borrower and Guarantors in accordance with their terms; and
(iii)Miscellaneous. As to such other matters as the Bank may
reasonably request.
Such opinions may be qualified to the extent of the knowledge
of such counsel based upon reasonable investigation.
(e)Inventory Quarterly Report. The Inventory Quarterly Report that the
Borrower is required to deliver pursuant to Section 3.1(b) hereof, for the most
recent calendar quarter.
(f)Request for Advance. The Request for Advance that the Borrower is
required to deliver pursuant to Section 2.2 hereof.
(g)Other Documents. Other documents that the Bank may reasonably
require.
(h)Fees. Payment of all fees and expenses payable on the Agreement Date
to the Bank.
(i)Insurance. Certificate(s) of insurance required pursuant to Section
5.14 hereof.
4.2 Subsequent Disbursements.
Prior to requesting subsequent disbursements under the Revolving Loan
(subsequent to the first disbursement) the Borrower shall execute and deliver to
the Bank all of the following items, in form and substance satisfactory to the
Bank. The Bank shall have no obligation to make further disbursements until all
of these items have been properly executed and delivered to the Bank.
22
(a)Inventory Summary Report. The Inventory Summary Report that the
Borrower is required to deliver pursuant to Section 3.1(b) hereof.
(b)Inventory Quarterly Report. The Inventory Quarterly Report that the
Borrower is required to deliver pursuant to Section 3.1(b) hereof.
(c)Request for Advance. The Request for Advance that the Borrower is
required to deliver pursuant to Section 2.2 hereof.
(d)Other Documents. Such other documents that the Bank may reasonably
require.
5.BORROWER'S COVENANTS, AGREEMENTS, REPRESENTATIONS AND WARRANTIES
The Borrower makes the following covenants, agreements, representations
and warranties with respect to the Loan Documents and the obligations thereunder
to the Bank:
5.1 Payment.
The Borrower shall pay when due all sums owing under this Agreement,
the Revolving Loan Note and the other Loan Documents executed by the Borrower.
5.2 Performance.
The Borrower shall perform all Obligations under this Agreement, the
Revolving Loan Note and the other Loan Documents executed by the Borrower.
5.3Additional Information.
On request of the Bank, the Borrower shall deliver to the Bank any
documents or information with respect to the Inventory that the Bank may
reasonably require, including without limitation surveys and acquisition closing
documentation.
5.4 Quarterly Financial Statements and Other Information.
Within forty-five (45) days after the last day of each quarter in each
fiscal year of the Borrower, except the last quarter in each such fiscal year of
the Borrower, the Borrower shall deliver to the Bank the Form 10-Q of the
Borrower as filed with the Securities and Exchange Commission. Within ten (10)
days from the date of filing, the Borrower shall provide to the Bank a copy of
every other report filed by the Borrower with the Securities and Exchange
Commission under the Exchange Act and a copy of each registration statement
filed by the Borrower with the Securities and Exchange Commission pursuant to
the Securities Act of 1933. Together with information required hereby, the
Borrower shall deliver to the Bank internally prepared consolidated financial
statements of the Borrower and the Restricted Subsidiaries (and excluding
23
financial information relating to the Unrestricted Subsidiaries) for the same
period in form and substance satisfactory to the Bank.
5.5 Compliance Certificates.
Within forty-five (45) days from the end of each fiscal quarter of the
Borrower, the Borrower shall provide to the Bank a certificate signed by an
Authorized Signatory of the Borrower in the form attached hereto as Exhibit D
setting forth such calculations required to establish whether the Borrower was
in compliance with Section 5.7 hereof.
5.6 Annual Financial Statements and Information Certificate of No
Default.
Within one hundred (100) days after the end of each fiscal year of the
Borrower, the Borrower shall deliver to the Bank the Form 10-K of the Borrower
as filed with the Securities and Exchange Commission, together with the audited
consolidated financial statements of the Borrower (which shall be prepared by an
independent accounting firm of recognized standing). Together with information
required hereby, the Borrower shall deliver to the Bank internally prepared
consolidated financial statements of the Borrower and the Restricted
Subsidiaries (and excluding financial information relating to the Unrestricted
Subsidiaries) for the same period in form and substance satisfactory to the
Bank.
5.7 Financial and Inventory Covenants.
Until the obligations are repaid in full, the Borrower shall adhere to
the following financial covenants (after giving effect to any Financial Covenant
Carve Out), all on a consolidated basis with the Restricted Subsidiaries and
determined as of the last day of each fiscal quarter of the Borrower:
(a)The Borrower shall maintain at all times a ratio of Notes Payable to
Tangible Net Worth of not greater than 1.75 to 1.0 on a consolidated basis.
(b)The Borrower shall maintain at all times a ratio of Total
Liabilities to Tangible Net Worth of not more than 2.25 to 1.
(c)The Borrower shall maintain at all times a ratio of (i) EBITDA to
(ii) Fixed Charges of not less than 3.0 to
1.0.
(d)The Borrower shall maintain at all times Working Capital of
$100,000,000 on a consolidated basis.
(e)The Borrower shall maintain at all times a minimum Tangible Net
Worth of one hundred ten million and no/100 dollars ($110,000,000.00), plus
fifty percent (50%) of annual net profits for such fiscal year, plus fifty
percent (50%) of any capital paid into the Borrower (other than stock issued in
connection with an employee stock ownership plan, an employee stock option plan,
an employee stock purchase plan or for an acquisition), plus one hundred percent
24
(100%) of net losses with absolute minimum Tangible Net Worth of not less than
one hundred ten million and no/100 dollars ($110,000,000.00), on a consolidated
basis.
(f)The Borrower shall not at any time permit Third-Party Notes Payable
to be greater than thirteen percent (13%) of Tangible Assets on a consolidated
basis.
(g)The total number of Speculative Lots owned by the Borrower and its
Restricted Subsidiaries at any given time shall not exceed sixty percent (60%)
of all Dwelling Lots (completely or partially constructed) then owned by the
Borrower and its Restricted Subsidiaries. Models shall not be considered
"Speculative Lots" for purposes of this Section 5.7(g).
(h)The Borrower shall not permit the total number of Developed Lots and
Lots Under Development, in each case, then owned by the Borrower and all
Restricted Subsidiaries, at any given time to exceed two and one-half (2 1/2)
times the number of Developed Lots containing Dwellings closed by the Borrower
and all Restricted Subsidiaries during the immediately preceding twelve (12)
calendar months. The Borrower shall not permit the aggregate cost of all
Developed Lots and Lots Under Development, in each case, then owned by the
Borrower and all Restricted Subsidiaries, at any given time to exceed forty
percent (40%) of all Tangible Assets of the Borrower on a consolidated basis.
(i)The cost of the land owned by Borrower and all Restricted
Subsidiaries at any given time which has not been developed into Developed Lots
and is not scheduled for commencement of development into Developed Lots within
twelve (12) calendar months from the date of determination shall not exceed ten
percent (10%) of all Tangible Assets of the Borrower and its Restricted
Subsidiaries on a consolidated basis. In the event that the Borrower or any
Restricted Subsidiary classifies certain undeveloped land as being scheduled for
development within twelve (12) calendar months for the purpose of this provision
and, as of the last day of such twelve (12) calendar month period, development
of such land has not commenced, such land shall not be classified as scheduled
for development within twelve (12) calendar months until such development is
commenced.
5.8 Other Financial Documentation.
The Borrower shall provide to the Bank such other financial information
as the Bank may reasonably request from time to time to clarify or amplify the
information required to be furnished to the Bank under this Agreement.
5.9 Relating to Multibank Loan Agreement.
The Borrower represents and warrants to the Bank that:
(a)As of the date hereof, there exists no "Default" or "Event of
Default" under the Multibank Loan Agreement nor any default (or event which with
25
the passage of time or the giving of notice or both would cause or constitute a
default) under any other Third Party Notes Payable; and
(b)The Revolving Loan Note and the Obligations are "Third Party Notes
Payable" under, and are otherwise permitted by, the Multibank Loan Agreement.
5.10 Payment of Contractors.
The Borrower shall pay in a timely manner, and shall cause its
Subsidiaries to pay in a timely manner, any and all contractors and
subcontractors who conduct work in or on the Inventory, subject to the right of
the Borrower to contest any amount in dispute, so long as the contesting of such
amount is pursued diligently and in good faith. The Borrower will advise the
Bank in writing immediately if the Borrower or any of its Subsidiaries receives
any written notice from any contractor(s), subcontractor(s) or material
furnisher(s) to the effect that said contractor(s) or material furnisher(s) have
not been paid for any labor or materials furnished to or in the Inventory and
such outstanding payment or payments are individually or collectively equal to
or greater than two hundred thousand and no/100 dollars ($200,000.00) per
subdivision or seven million and no/100 dollars ($7,000,000.00) in the
aggregate. The Borrower will further make available to the Bank, for inspection
and copying, on demand, any contracts, bills of sale, statements, receipted
vouchers or agreements, under which the Borrower claims title to any materials,
fixtures or articles used in the development of the Loan Inventory or
construction of improvements on the Loan Inventory, including without limitation
the Dwellings.
5.11 Inspection and Appraisal.
The Borrower shall permit the Bank and its authorized agents to enter
upon the Inventory during normal working hours and as often as they desire, for
the purpose of inspecting or appraising the Loan Inventory or the construction
of the Dwellings.
5.12 Fees and Expenses.
The Borrower shall pay when due all commitment and renewal fees and
external legal fees incurred by the Bank in connection with the making of the
Revolving Loan.
5.13 Hazardous Substances.
The Borrower warrants and represents to the Bank that to the best of
its knowledge and belief and based on environmental assessments of the Inventory
commissioned by the Borrower, except to the extent disclosed to the Bank in
environmental assessments or other writings (on which the Bank is fully entitled
to rely) or to the extent that it would not materially and adversely affect the
use and marketability of any Inventory, the Inventory has not been and is not
now being used in violation of any federal, state or local environmental law,
ordinance or regulation, that no proceedings have been commenced, or notice(s)
received, concerning any alleged violation of any such environmental law,
ordinance or regulation, and that the Inventory is free of hazardous or toxic
substances and wastes, contaminants, oil, radioactive or other materials, the
26
removal of which is required or the maintenance of which is restricted,
prohibited or penalized by any federal, state or local agency, authority or
governmental unit except as set forth in the site assessments delivered in
connection with the Multibank Loan Agreement. The Borrower covenants that it
shall neither permit any such materials to be brought on to the Inventory, nor
shall it acquire real property to be added to the Loan Inventory upon which any
such materials exist, except to the extent disclosed to the Bank in
environmental assessments or other writings (on which the Bank is fully entitled
to rely) or to the extent that it would not materially and adversely affect the
use and marketability of any Inventory; and if such materials are so brought or
found located thereon, such materials shall be immediately removed, with proper
disposal, to the extent required by applicable environmental laws, ordinances
and regulations, and all required environmental cleanup procedures shall be
diligently undertaken pursuant to all such laws, ordinances and regulations. The
Borrower further represents and warrants that the Borrower will promptly
transmit to the Bank copies of any citations, orders, notices or other material
governmental or other communications received with respect to any hazardous
materials, substances, wastes or other environmentally regulated substances
affecting the Inventory. Notwithstanding the foregoing, there shall not be a
default of this provision should the Borrower store or use minimal quantities of
the aforesaid materials, provided that: such substances are of a type and are
held only in a quantity normally used in connection with the construction,
occupancy or operation of comparable buildings or residential developments (such
as cleaning fluids and supplies normally used in the day-to-day operation of
residential developments), such substances are being held, stored and used in
complete and strict compliance with all applicable laws, regulations, ordinances
and requirements, and the indemnity set forth below shall always apply to such
substances, and it shall continue to be the responsibility of the Borrower to
take all remedial actions required under and in accordance with this Agreement
in the event of any unlawful release of any such substance.
5.14 Insurance.
The Borrower shall keep the Inventory comprising the Loan Inventory
insured by responsible insurance companies in such amounts and against such
risks as is customary for owners of similar businesses and properties in the
same general areas in which the Borrower and its Restricted Subsidiaries operate
or, to the customary extent (and in a manner approved by the Bank) the Borrower
may be self-insured. All insurance herein provided for shall be in form and with
companies reasonably approved by the Bank. The Borrower shall also maintain
general liability insurance, workmen's compensation insurance, automobile
insurance for all vehicles owned by them and any other insurance reasonably
required by the Bank, to the extent commercially available at a reasonable cost.
On the Agreement Date, the Borrower shall deliver to the Bank a copy of a
certificate of insurance evidencing the insurance required hereunder. In
addition, on the date of delivery of each report required by Section 3.1(b)
hereof, the Borrower shall certify to the Bank that all insurance policies
required to be maintained hereunder remain in full force and effect.
27
5.15 Litigation.
The Borrower warrants and represents to the Bank that as of the
Agreement Date, none of the Borrower nor any Restricted Subsidiary is a party to
any litigation having a reasonable probability of being adversely determined to
the Borrower or any Restricted Subsidiary which, if adversely determined, would
impair the ability of the Borrower to carry on its business substantially as now
conducted or contemplated or would materially adversely affect the financial
condition, business or operations of the Borrower.
5.16 Reportable Event.
Promptly after Borrower receives notice or otherwise becomes aware
thereof, the Borrower shall notify the Bank of the occurrence of any Reportable
Event with respect to any Plan as to which the Pension Benefit Guaranty
Corporation has not by regulation waived the requirement of Section 4043(a) of
ERISA that it be notified with thirty (30) days of the occurrence of such event
(provided that the Borrower shall give the Bank notice of any failure to meet
the minimum funding standards of Section 412 of the Code or Section 302 of
ERISA, regardless of the issuance of any waivers in accordance with Section
412(d) of the Code.
5.17 Secured Indebtedness.
The Borrower shall not, and shall not permit any of its Restricted
Subsidiaries to, incur or permit to exist any Indebtedness which is secured in
whole or in part by any of the Inventory (other than Permitted Encumbrances);
except that the Borrower and its Restricted Subsidiaries may incur Indebtedness
in favor of a seller of Inventory to the Borrower which is secured solely by the
Inventory contemporaneously acquired from such seller and Indebtedness secured
solely by the Borrower's headquarters building located in Arlington, Texas.
6.DEFAULT AND REMEDIES
6.1 Defaults.
Each of the following shall constitute a Default, whatever the reason
for such event and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment or order of any court or any
order, rule, or regulation of any governmental or non-governmental body:
(a)Any representation or warranty made under this Agreement shall prove
incorrect or misleading in any material respect when made or deemed to have been
made;
(b)The Borrower shall default in the payment of any principal, interest
or other monetary amounts payable hereunder or under the Revolving Loan Note, or
under the other Loan Documents (other than payments due on the Revolving Loan
Maturity Date, on which date all outstanding Obligations to pay money shall be
paid to the Bank without notice, cure or delay) which payment default is not
28
cured within thirty (30) calendar days of Borrower's receipt of notice from the
Bank;
(c)The Borrower shall default in the performance or observance of any
other agreement or covenant contained in this Agreement not specifically
referred to elsewhere in this Section 6.1, and such Event of Default shall not
be cured to the Bank's satisfaction within a period of ninety (90) days from the
date the Borrower receives notice from the Bank with respect thereto;
(d)There shall occur any Event of Default in the performance or
observance of any agreement or covenant or breach of any representation or
warranty contained in any of the Loan Documents (other than this Agreement or as
otherwise provided in this Section 6.1 of this Agreement) or any Subsidiary
Guaranty, which shall not be cured to the Bank's satisfaction within the
applicable cure period, if any, provided for in such Loan Document or ninety
(90) days from the date the Borrower receives notice from the Bank with respect
thereto if no cure period is provided in such Loan Document;
(e)There shall be entered a decree or order for relief in respect of
the Borrower or any of its Restricted Subsidiaries under Title 11 of the United
States Code, as now constituted or hereafter amended, or any other applicable
federal or state bankruptcy law or other similar law, or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator, or similar official of
the Borrower or any of its Restricted Subsidiaries, or of any substantial part
of their respective properties, or ordering the winding up or liquidation of the
affairs of the Borrower or any of its Restricted Subsidiaries, or an involuntary
petition shall be filed against the Borrower or any of its Restricted
Subsidiaries, and a temporary stay entered, and (i) such petition and stay shall
not be diligently contested, or (ii) any such petition and stay shall continue
undismissed for a period of thirty (30) consecutive days;
(f)The Borrower or any of its Restricted Subsidiaries shall file a
petition, answer, or consent seeking relief under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other applicable federal
or state bankruptcy law or other similar law, or the Borrower or any of its
Restricted Subsidiaries shall consent to the institution of proceedings
thereunder or to the filing of any such petition or to the appointment or taking
of possession of a receiver, liquidator, assignee, trustee, custodian,
sequestrator, or other similar official of the Borrower or any of its Restricted
Subsidiaries, or of any substantial part of their respective properties, or the
Borrower or any of its Restricted Subsidiaries shall fail generally to pay their
respective debts as they become due, or the Borrower or any of its Restricted
Subsidiaries shall take any corporate or partnership action to authorize any
such action;
(g)A final judgment shall be entered by any court against the Borrower
or any of its Restricted Subsidiaries for the payment of money which exceeds
$500,000.00, which judgment is not covered by insurance or a warrant of
attachment or execution or similar process shall be issued or levied against
property of the Borrower or any of its Restricted Subsidiaries which, together
29
with all other such property of the Borrower or any of its Restricted
Subsidiaries subject to other such process, exceeds in value $500,000.00 in the
aggregate, and if, within thirty (30) days after the entry, issue, or levy
thereof, such judgment, warrant, or process shall not have been paid or
discharged or bonded or stayed pending appeal, or if, after the expiration of
any such stay, such judgment, warrant, or process shall not have been paid or
discharged;
(h) (1) There shall be at any time any "accumulated funding
deficiency," as defined in ERISA or in Section 412 of the Code, with respect to
any Plan; or (2) a trustee shall be appointed by a United States District Court
to administer any Plan; or the Pension Benefit Guaranty Corporation shall
institute proceedings to terminate any Plan; or (3) any of the Borrower and its
ERISA Affiliates shall incur any liability to the Pension Benefit Guaranty
Corporation in connection with the termination of any Plan; or (4) any Plan or
trust created under any Plan of any of the Borrower and its ERISA Affiliates
shall engage in a nonexempt "prohibited transaction" (as such term is defined in
Section 406 of ERISA or Section 4975 of the Code) which would subject the
Borrower or any ERISA Affiliate to the tax or penalty on "prohibited
transactions" imposed by Section 502 of ERISA or Section 4975 of the Code; and
by reason of any or all of the events described in clauses (1) through (4), as
applicable, the Borrower shall have waived (and/or is likely to incur) and/or
incurred liability in excess of $1,000,000.00 in the aggregate;
(i)All or any portion of any Loan Document shall at any time and for
any reason be declared by a court of competent jurisdiction in a suit with
respect to such Loan Document to be null and void, or a proceeding shall be
commenced by any governmental authority involving a legitimate dispute or by the
Borrower or any of its Restricted Subsidiaries, having jurisdiction over the
Borrower or any of its Restricted Subsidiaries, seeking to establish the
invalidity or unenforceability thereof (exclusive of questions of interpretation
of any provision thereof), or the Borrower or any of its Restricted Subsidiaries
shall deny that it has any liability or obligation for the payment of principal
or interest purported to be created under any Loan Document;
(j)There shall occur any Change of Control;
(k)Except for conveyances of all or any part of the Loan Inventory
between the Borrower and the Guarantors, there occurs any sale, lease,
conveyance, assignment, pledge, encumbrance, or transfer of all or any part of
the Loan Inventory or any interest therein, voluntarily or involuntarily,
whether by operation of law or otherwise, except (i) in accordance with the
terms of this Agreement, (ii) for execution of contracts with prospective
purchasers, (iii) for Permitted Encumbrances, and (iv) in the ordinary course of
business.
Notwithstanding anything contained herein to the contrary, the
occurrence of any of the foregoing shall not be a Default or an Event of Default
hereunder if: (i) the occurrence pertains only to specific parcel(s) within the
Loan Inventory; and (ii) the affected parcel(s) is (are) removed from the Loan
Inventory on or before ten (10) days in the case of a monetary occurrence and
thirty (30) days in the case of a nonmonetary occurrence after the occurrence
or, if the Borrower is entitled to notice and cure, within the applicable notice
30
and cure period. In the event that any such parcel is a Lot Under Development,
Developed Lot or Dwelling Lot, then the Loan Funding Availability shall be
immediately calculated excluding such parcel. If, as the result of such removal,
the outstanding principal balance under the Revolving Loan would exceed the Loan
Funding Availability, the Borrower shall pay (X) to the Bank on the
Reconciliation Date immediately following the removal of such Inventory from the
Loan Inventory, a principal payment on the Revolving Loan in an amount
sufficient to eliminate such excess of the aggregate outstanding principal
balance of the Revolving Loan over the Loan Funding Availability, together with
any due and unpaid interest on such excess, or (Y) add additional Inventory to
the Loan Inventory (which is acceptable to the Bank) in an amount sufficient to
cause the Loan Funding Availability to equal or exceed the Revolving Loan.
6.2 Remedies.
If a Default shall have occurred and shall be continuing:
(a)With the exception of a Default specified in Sections 6.1(e), (f) or
(g) hereof, the Bank may by notice to the Borrower (i) declare the Revolving
Loan Note, all interest thereon and all other amounts payable under this
Agreement and the other Loan Documents to be forthwith due and payable,
whereupon the Revolving Loan Note, all such interest and all such amounts shall
become and be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by the
Borrower, and (ii) terminate the Revolving Loan Commitment.
(b)Upon the occurrence of a Default under Sections 6.1(e), (f) or (g)
hereof, the Revolving Loan Commitment shall automatically terminate, and such
principal, interest (including without limitation interest which would have
accrued but for the commencement of a case or proceeding under the federal
bankruptcy laws), and other amounts payable under this Agreement or the
Revolving Loan Note shall thereupon and concurrently therewith become due and
payable, all without any action by the Bank.
(c)The Bank may exercise all of the post-default rights granted to it
and to them under the Loan Documents or under Applicable Law.
(d)The rights and remedies of the Bank hereunder shall be cumulative,
and not exclusive.
6.3 Waivers.
Neither a waiver of any Default or Event of Default by the Borrower
hereunder nor any representation by the Bank as to the nonoccurrence or
nonexistence thereof shall be implied from any delay or omission by the Bank to
notify the Borrower thereof or to take action on account of such Default or
Event of Default, and no express waiver shall affect any Default or Event of
Default other than the matter specified in the waiver, and it shall be operative
only for the time and to the extent therein stated. Waivers of any covenants,
terms or conditions contained herein must be in writing and shall not be
construed as a waiver of any subsequent breach of the same covenant, term or
31
condition. No consent or approval to or of any act by the Borrower requiring
further consent or approval shall be deemed to waive or render unnecessary the
consent or approval to or of any subsequent or similar act. Any exercise of any
right or remedy of the Bank hereunder shall not in any way constitute a cure or
waiver of a Default or an Event of Default, or invalidate any act done pursuant
to any notice of the occurrence of a Default or an Event of Default, or
prejudice the Bank in the exercise of any of its rights hereunder or under the
Revolving Loan Note or any other Loan Documents, unless, in the exercise of said
rights, the Bank realizes all amounts owed to it under the Revolving Loan Note
and other Loan Documents.
6.4 Cross-Default.
The Revolving Loan Note and other Loan Documents are "cross-defaulted"
such that (a) the occurrence of an Event of Default under any one of the Loan
Documents shall constitute an Event of Default under this Agreement and all of
the Loan Documents, and (b) the occurrence of a Default under any one of the
Loan Documents shall constitute a Default under this Agreement and all of the
other Loan Documents.
6.5 No Liability of the Bank.
(a)Construction and/or Development. The Bank shall not be liable to any
party for (i) the development of or construction upon any of the Inventory, (ii)
the failure to develop or construct or protect improvements on the Inventory,
(iii) the payment of any expense incurred in connection with the development of
or construction upon the Inventory, (iv) the performance or nonperformance of
any other obligation of the Borrower, or (v) the Bank's exercise of any remedy
available to them. In addition, the Bank shall not be liable to the Borrower or
any third party for the failure of the Bank or its authorized agents to discover
or to reject materials or workmanship during the course of the Bank's
inspections of the Inventory.
(b)Dwelling Lots. In addition to Section 6.5(a) above, the Bank shall
not be liable to any party for (i) the construction or completion of the
Dwellings, (ii) the failure to construct, complete or protect the Dwellings,
(iii) the payment of any expense incurred in connection with the construction of
the Dwellings, (iv) the performance or nonperformance of any other obligation of
the Borrower, or (v) the Bank's exercise of any remedy available to it. In
addition, the Bank shall not be liable to the Borrower or any third party for
the failure of the Bank or its authorized agents to discover or to reject
materials or workmanship during the course of the Bank's inspections of the
Dwelling Lots.
7.REGARDING THE MULTIBANK LOAN AGREEMENT
7.1 Subsequent Amendment of Multibank Loan Agreement.
No amendment, modification, replacement or termination of the Multibank
Loan Agreement, nor any agreement with respect to Third-Party Notes Payable, nor
32
any repayment, refinancing or forgiveness of the "Obligations" thereunder nor
the termination, cancellation, satisfaction or forgiveness of any Lien or
security interest granted (or purported to be granted) in connection with such
"Obligations" shall act so to affect this Agreement or the Loan Documents or
obligate the Bank to agree to or provide any similar change in or with respect
to this Agreement or the Loan Documents.
7.2 Notice of Amendment.
The Borrower shall deliver to the Bank within ten (10) calendar days of
the execution thereof, copies of any amendments, restatements, waivers,
modifications of, or agreements relating to, the Multibank Loan Agreement or the
"Loan Documents" executed in connection therewith.
7.3 Bank's Right to Subsequent Amendment.
In the event the Borrower is party to any amendment modification or
restatement of the Multibank Loan Agreement, the "Loan Documents" executed in
connection therewith which has the effect of imposing, in the Bank's judgment,
greater or more stringent or frequent obligations on the Borrower, then the Bank
may, in its discretion, require that corresponding amendments, modifications or
restatements be made to this Agreement or the Loan Documents.
8.GENERAL CONDITIONS
8.1 Benefit.
This Agreement is made and entered into for the sole protection and
benefit of the Bank and the Borrower, their successors and assigns, and no other
person or persons other than the Borrower shall have any right of action hereon
or rights to the Revolving Loan proceeds at any time. The Bank shall not (a) owe
any duty whatsoever to any claimant for labor performed or material furnished in
connection with the construction of any Dwelling or improvement on any
Inventory, or (b) owe any duty to apply any undisbursed portion of the Revolving
Loan to the payment of any claim, or (c) owe any duty to exercise any right or
power of the Bank hereunder or arising from any Default by the Borrower.
8.2 Assignment.
The terms hereof shall be binding upon and inure to the benefit of the
heirs, successors, assigns, and personal representatives of the parties hereto;
provided, however, that the Borrower shall not assign this Agreement or any of
its rights, interests, duties or obligations hereunder or any Revolving Loan
proceeds or other monies to be advanced hereunder in whole or in part without
the prior written consent of the Bank and any such assignment (whether voluntary
or by operation of law) without said consent shall be void and render
automatically terminated any obligation of any Bank hereunder to advance any
further monies pursuant to this Agreement or any other Loan Document. The Bank
may assign its rights and obligations under this Agreement, the Revolving Loan
Note and any other Loan Documents, in whole or in part, to any other Person,
provided that all of the provisions hereof shall continue in full force and
effect and, in the event of such assignment, the Bank shall thereafter be
33
relieved of all liability hereunder with respect to actions or omissions of the
Bank occurring thereafter, but only to the extent of the interest so assigned
and any Revolving Loan disbursements made by any assignee(s) shall be deemed
made in pursuance and not in modification hereof and shall be evidenced by the
Revolving Loan Note and any other Loan Documents.
8.3 Amendment and Waiver.
Neither this Agreement nor any term hereof may be amended orally, nor
may any provision hereof be waived orally but only by an instrument in writing
signed by the Bank and, in the case of an amendment, also by the Borrower.
8.4 Additional Obligations and Amendments.
Without limiting the scope of Section 7.1, the Bank shall be under no
obligation to extend any loans to the Borrower other than as specifically set
forth in this Agreement. This Agreement shall not be amended except by a written
instrument signed by all parties hereto which instrument contains a specific
reference to this Agreement.
8.5 [Reserved].
8.6 Terms.
Whenever the context and construction require, all words used in the
singular number herein shall be deemed to have been used in the plural, and vice
versa, and the masculine gender shall include the feminine and neuter, and the
neuter shall include the masculine and feminine.
8.7 Governing Law and Jurisdiction.
This Agreement shall be construed in accordance with the laws of the
State of New Jersey, and such laws shall govern the interpretation, construction
and enforcement hereof. For the purposes of any legal action or proceeding
brought by the Bank with respect to this Agreement or the Loan Documents, the
Borrower hereby irrevocably submits to the jurisdiction and venue of the state
courts of the State of New Jersey. The Borrower also hereby submits to the
nonexclusive jurisdiction and venue of the United States District Court for the
District of New Jersey for any action, suit or proceeding arising out of or
relating to this Agreement or the Loan Documents. The Borrower hereby
irrevocably waives any objection it might now or hereafter be entitled to make
with respect to the venue of any suit, action or proceeding arising out of or
relating to this Agreement and the Loan Documents which is brought in the State
of New Jersey or, at the election of the Bank, in the United States District
Court for the District of New Jersey, and the Borrower hereby irrevocably waives
any right to claim that any such suit, action or proceeding brought in any such
court has been brought in an incorrect forum.
34
8.8 [Reserved.]
8.9 Attorneys' Fees.
The Borrower shall pay on demand all attorneys' fees and other costs
and expenses actually incurred by the Bank in the enforcement of or preservation
of the Bank's rights under this Agreement and the other Loan Documents. To the
full extent permitted by applicable law, the Borrower agrees to pay interest on
any fees, costs or expenses due to the Bank, under this Section 8.9 which are
not paid when due at the Default Rate. In the event that any Loan Document
contains a provision regarding enforcement or preservation of rights which is
different from this Section 8.9, this Section 8.9 shall control.
8.10 Mandatory Arbitration.
Any controversy or claim between or among the parties hereto arising
out of or relating to this Agreement, the Loan Documents or any related
instruments, including any claim based on or arising from an alleged tort, shall
be determined by binding arbitration in accordance with the Federal Arbitration
Act (or, if not applicable, the applicable state law), the Rules of Practice and
Procedure for the Arbitration of Commercial Disputes of Endispute, Inc., doing
business as J.A.M.S./Endispute ("J.A.M.S."), as amended from time to time, and
the "Special Rules" set forth below. In the event of any inconsistency, the
Special Rules shall control. Judgment upon any arbitration award may be entered
in any court having jurisdiction. Any party to this Agreement may bring an
action, including a summary judgment or expedited proceeding, to compel
arbitration of any controversy or claim to which this provision applies in any
court having jurisdiction over such action.
(a)Special Rules. The arbitration shall be conducted in the City of
Trenton, New Jersey and administered by J.A.M.S. who will appoint an arbitrator;
if J.A.M.S. is unable or legally precluded from administering the arbitration,
then the American Arbitration Association will serve. All arbitration hearings
will be commenced within ninety (90) days of the demand for arbitration;
further, the arbitrator shall only, upon a showing of cause, be permitted to
extend the commencement of such hearing for up to an additional sixty (60) days.
(b)Reservation of Rights. Nothing in this Loan Agreement shall be
deemed to (i) limit the applicability of any otherwise applicable statutes of
limitation or repose and any waivers contained in this Loan Agreement; or (ii)
be a waiver by the Bank of the protection afforded to it or them by 12 U.S.C.
Sec. 91 or any substantially equivalent state law; or (iii) limit the right of a
the Bank (A) to exercise self-help remedies such as (but not limited to)
set-off, or (B) to obtain from a court provisional or ancillary remedies such as
injunctive relief or the appointment of a receiver. The Bank may exercise such
self-help remedies (including without limitation remedies under Section 6.2
hereof), or obtain such provisional or ancillary remedies before, during or
after the pendency of any arbitration proceeding brought pursuant to this Loan
Agreement. Neither the exercise of self-help remedies nor the institution or
maintenance of provisional or ancillary remedies shall constitute a waiver of
35
the right of any party, including the claimant in any such action to arbitrate
the merits of the controversy or claim occasioning resort to such remedies.
No provision in this Agreement or any Loan Documents regarding
submission to jurisdiction and/or venue in any court is intended or shall be
construed to be in derogation of the provisions in this Agreement.
8.11 Invalidation of Provisions.
In the event that any one or more of the provisions of this Agreement
is deemed invalid by a court having jurisdiction over this Agreement or other
similar authority, the Bank may, in its sole discretion, terminate this
Agreement in whole or in part.
8.12 Execution in Counterparts.
This Agreement may be executed in multiple counterparts, each of which
shall be deemed to be an original, but all of which shall constitute one and the
same instrument.
8.13 Captions.
The captions herein are inserted only as a matter of convenience and
for reference and in no way define, limit or describe the scope of this
Agreement or the intent of any provision hereof.
8.14 Notices.
All notices, requests, consents, demands and other communications
required or which any party desires to give hereunder or under any other Loan
Document shall, unless other specifically provided in such other Loan Document,
be deemed sufficiently given or furnished if (a) in writing and delivered by
personal delivery, by courier, or by registered or certified United States mail,
postage prepaid, addressed to the party to whom directed at the addresses
specified below (unless changed by similar notice in writing given by the
particular party whose address is to be changed), (b) by facsimile to the
facsimile number specified below with confirmation thereof in writing by sender
pursuant to subsection (a) above, or (c) by oral communication with confirmation
thereof in writing by the notifying party pursuant to subsection (a) above
within three (3) business days after such oral communication. Any such notice or
communication shall be deemed to have been given and to be effective either at
the time of personal delivery or, in the case of courier or mail, as of the date
of first attempted delivery at the address and in the manner provided herein or,
in the case of facsimile, upon receipt or, in the case of oral communication,
upon the effectiveness of written confirmation as hereinabove provided.
Notwithstanding the foregoing, no notice of change of address shall be effective
except upon receipt. This Section shall not be construed in any way to affect or
impair any waiver of notice or demand provided in any Loan Document or to
require giving of notice or demand to or upon any person in any situation or for
any reason.
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BORROWER:
X.X. XXXXXX, INC.
0000 Xxxxxxxxx Xxxxxxxxx,Xxxxx 000
Xxxxxxxxx, Xxxxx 00000
Attn.: Xxxxx X. Xxxxxx and Xxx X. Harbour
Facsimile No.: (000) 000-0000 Telephone No.: (000) 000-0000
THE BANK:
PNC BANK, NATIONAL ASSOCIATION
Real Estate Group - 18th Floor
Suite J2-JTTC-18-6 Xxx Xxxxx Xxxxxx
Xxxx Xxxxxxxxx, XX 00000
Telephone No.: (000)000-0000 Facsimile No.: (000) 000-0000
8.15 Final Agreement.
THE WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES HERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have executed this Agreement as of the date first above written.
ATTEST:X.X. XXXXXX, INC., as the Borrower
By:_/s/ Xxx Harbour_______ By:__/s/ Xxxxx X. Keller______
Title:_Asst. Vice President Title:___CFO______________________
[Corporate Seal]
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PNC BANK, NATIONAL ASSOCIATION,
as the Bank
By:__/s/________________________
Title:_Vice President___________
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