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Exhibit 10.20
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (the "Agreement"), dated as
of March 31, 1999, is made and entered into by and among THE PROVIDENT BANK
("Bank"), an Ohio banking corporation whose mailing address is Xxx Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxx 00000, as lender, and Xxxxxx National Corporation, an
Ohio corporation ("Borrower"), whose mailing address is 00000 Xxxxxxx Xxxx
Xxxxx, Xxxxxxxxxx, Xxxx 00000, as borrower.
1. Definitions. As used herein, the following terms, when
initial capital letters are used, shall have the respective meanings set forth
below. In addition, all terms defined in the Ohio Uniform Commercial Code shall
have the meanings given therein unless otherwise defined herein.
1.1 Affiliate shall mean any Person controlling, controlled by
or under common control with, Borrower, whether such common control is direct or
indirect, and all of the officers, directors and shareholders of Borrower or
such Persons.
1.2 AHC Consent shall mean any consent of American Homestar
Corporation required under the Securityholders Agreement to permit the pledge by
Borrower to Bank, pursuant to the Pledge Agreement, of the capital stock of
HomeMax, Inc. owned by Borrower.
1.3 Applicable Rate shall have the meaning set forth in
Section 2.2.
1.4 Audited Financials shall have the meaning set forth in
Section 4.5.
1.5 Borrower Collateral shall mean all right, title and
interest of Borrower in (a) the Four Million Dollar ($4,000,000) 6% Senior
Subordinated Promissory Note from Homemax, Inc. to Borrower dated March 15, 1999
(the "Senior Subordinated Note"); and (b) the Four Million Four Hundred Eleven
Thousand One Hundred Seventy-Seven Dollar ($4,411,177) Promissory Note from
American Homestar Corporation to Borrower dated March 15, 1999 (the "Investor
Note").
1.6 Borrower Financials shall have the meaning set forth in
Section 4.5.
1.7 Business Day shall mean any day other than Saturday or
Sunday on which Bank is open for business in Cincinnati, Ohio and on which
commercial banks in the City of London, England are open for dealings in U.S.
dollar deposits in the London Interbank Market; provided, however, that during
any period of time during which the entire principal balance of the Loan is
bearing interest at the Prime Based Rate in accordance with the provisions of
this Agreement, the term "Business Day" shall mean any day other than Saturday
or Sunday on which Bank is open for business in Cincinnati, Ohio.
1.8 Call shall have the meaning ascribed to such term in the
Securityholders Agreement.
1.9 Closing Date shall mean March 15, 1999.
1.10 Code shall mean the Internal Revenue Code of 1986, as
amended from time
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to time.
1.11 Collateral shall mean the Borrower Collateral.
1.12 Collateral Note Assignment shall mean that certain
Collateral Note Assignment in substantially the form of Exhibit C hereto entered
into between Borrower and Bank to further evidence the pledge of the Borrower
Collateral to Bank.
1.13 Collateral Parties shall mean, collectively, Borrower and
the Guarantor, and Collateral Party shall mean any one of (and each of) the
Collateral Parties.
1.14 Commonly Controlled Entity shall mean any Subsidiary of
Borrower and any entity, whether or not incorporated, which is under common
control with Borrower within the meaning of Section 4001 of ERISA or is part of
a group which includes Borrower and which is treated as a single employer under
Section 414 of the Code.
1.15 Compliance Certificate shall have the meaning set forth
in Section 5.5(b).
1.16 Consolidated Cash Flow From Operations shall mean, for
any period of determination, the following with respect to the Borrower and its
consolidated Subsidiaries for each item for such period determined and
consolidated in accordance with GAAP: (i) the sum of net income, depreciation,
amortization, other noncash charges to net income, interest expense and income
tax expense minus (ii) noncash credits to net income.
1.17 Consolidated Fixed Charges shall mean, for any period of
determination, the sum of interest incurred (capitalized and expensed) and
scheduled principal installments of Indebtedness, in each case of the Borrower
and its Subsidiaries for such period determined and consolidated in accordance
with GAAP.
1.18 Consolidated Tangible Net Worth shall mean, as of any
date of determination, total stockholders' equity minus intangible assets, in
each case of the Borrower and its Subsidiaries as of such date determined and
consolidated in accordance with GAAP.
1.19 Consolidated Total Liabilities shall mean, for any fiscal
quarter for the fiscal quarter than ended, all Indebtedness and, without
duplication, all other liabilities of the Borrower and its Subsidiaries,
determined and consolidated in accordance with GAAP, excluding Indebtedness
secured by Nonrecourse Purchase Money Security Interests not to exceed, in the
aggregate at any time, 15% of Consolidated Tangible Net Worth.
1.20 Default Rate shall have the meaning set forth in Section
2.3.1.
1.21 Environment shall mean the ocean, natural resources
(including flora and fauna), soil, surface water, ground water, any present or
potential drinking water supply, subsurface strata or the ambient air.
1.22 Environmental Laws shall mean all federal, state and
local laws, statutes,
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rules, ordinances, guidances, regulations and polices, and all interpretations
thereof by any Governmental Authority, relating to health, safety, ecology or
the Environment.
1.23 ERISA shall mean the Employee Retirement Income Security
Act of 1974, as amended from time to time.
1.24 Event of Default shall mean any event described in
Section 9.1
1.25 GAAP shall mean generally accepted accounting principles,
as in effect in the United States of America as from time to time in effect in
the United States of America for all other purposes.
1.26 Governmental Authority shall have the meaning set forth
in Section 4.2.
1.27 Guarantor shall mean Xxxxxx Homes, Inc, an Ohio
corporation.
1.28 Guaranty shall mean the Unconditional Guaranty in
substantially the form of Exhibit B hereto executed and delivered to Bank by
Guarantor.
1.29 Hazardous Material shall mean any asbestos,
polychlorinated byphenyls and petroleum products, CFCs, solid wastes,
ureaformaldehyde, discharges of sewer or effluent, paint containing lead and any
other hazardous or toxic material, substance or waste which is defined,
determined or identified by those or similar terms or is regulated as such under
any Environmental Laws or by any Governmental Authority (whether as the result
of any judicial or administrative interpretation of any such statute, law,
ordinance, rule or regulation or otherwise) including, but not limited to, any
material, substance or waste which is a hazardous substance within the meaning
of 33 U.S.C. Section 1251 et seq., as amended, or 42 U.S.C. Section 9601 et
seq., as amended, or is a hazardous waste within the meaning of 42 U.S.C.
Section 6901 et seq., as amended.
1.30 HomeMax Cash Flow shall mean, for any applicable period,
Homemax, Inc.'s consolidated net income determined in accordance with GAAP
applied on a basis consistent with prior periods, plus depreciation and
amortization expense deducted in determining net income for such period.
1.31 Indebtedness shall mean, for any Person at any date, (a)
all obligations of such Person, whether direct or indirect, whether absolute or
contingent, for borrowed money or for the deferred purchase price of property or
services, (b) any other obligations of such Person, whether direct or indirect,
whether absolute or contingent, evidenced by a note, bond, debenture, guarantee
or similar instrument, (c) all obligations of such Person under leases, the
obligations of the lessee in respect of which are required to be capitalized on
a balance sheet of such lessee in accordance with GAAP, (d) all obligations of
such Person in respect of acceptances issued or created for the account of such
Person, (e) all obligations or liabilities secured by any lien or encumbrance
(other than Permitted Liens) on any property owned by such Person even though
such Person has not assumed or otherwise become liable for the payment thereof,
and (f) all obligations and liabilities of such Person required by GAAP to be
set forth on the balance sheet of such Person as a liability or required by GAAP
to be disclosed in the footnotes to such Person's financial statements;
excluding
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from the foregoing, however, current liabilities consisting of trade debt
incurred in the ordinary course of business and payable in accordance with
customary practices within not more than sixty (60) days of the earlier of (i)
the date of invoice requesting payment, or (ii) the date such debt is required
by GAAP to be accrued as a liability.
1.32 Loan shall mean the Term Loan.
1.33 Loan Documents shall mean the collective reference to
this Agreement, the Note, the Guaranty, the Collateral Note Assignment and all
other documents, instruments, certificates and agreements executed by any
Collateral Party in connection with this Agreement, including without
limitation, the Pledge Agreement when hereafter executed and delivered by
Borrower to Bank.
1.34 Multiemployer Plan shall mean a Plan which is a
multiemployer plan as defined in Section 4001(a)(3) of ERISA.
1.35 Net Book Value shall have the meaning ascribed to such
term in the Securities Purchase Agreement.
1.36 Nonrecourse Purchase Money Security Interest shall mean
Liens upon property securing loans to a Collateral Party or deferred payments by
a Collateral Party for the purchase of such property, provided that the recourse
of the creditor for repayment is limited to such property and does not extend to
any Collateral Party or any Subsidiary of Borrower.
1.37 Note shall mean the Term Note.
1.38 Obligations shall mean, without limitation, the Loan and
all other debts, obligations, or liabilities of every kind and description of
any Collateral Party to Bank, now due or to become due, direct or indirect,
absolute or contingent, presently existing or hereafter arising, joint or
several, secured or unsecured, whether for payment or performance, regardless of
how the same arise or by what instrument, agreement or book account they may be
evidenced, or whether evidenced by any instrument, agreement or book account,
including, without limitation, all loans (including any loan by renewal or
extension), all overdrafts, all guarantees, all bankers acceptances, all
agreements, all letters of credit issued by Bank for any Collateral Party and
the applications relating thereto, all Indebtedness of any Collateral Party to
Bank, all undertakings to take or refrain from taking any action and all
Indebtedness, liabilities and obligations owing from any Collateral Party to
others which Bank may obtain by purchase, negotiation, discount, assignment or
otherwise. Obligations shall also include all interest and other charges
chargeable to any Collateral Party or due from any Collateral Party to Bank from
time to time and all costs and expenses referred to in Section 10.5.
1.39 Permitted Liens shall mean the liens and interests in
favor of Bank granted pursuant to the Loan Documents and, to the extent
reflected on Borrower's books and records and not impairing the operations of
any Collateral Party or any performance under the Loan Documents or contemplated
by the Loan Documents:
(i) liens arising by operation of law for taxes not
yet due and payable;
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(ii) statutory liens of mechanics, materialmen,
shippers and warehousemen for
services or materials for which payment is not yet due;
(iii) liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance, social security and other types of payroll taxes for employees of
Collateral Parties;
(iv) liens, if any, specifically permitted by Bank
from time to time in writing;
and
(v) the following if the validity or amount thereof
is being contested in good faith and by appropriate and lawful proceedings
promptly initiated and diligently conducted of which Bank has received prior
written notice and, if requested by Bank, for which appropriate cash reserves
(in Bank's reasonable judgment) have been established at Bank and so long as
levy and execution have been and continue to be stayed: claims and liens for
taxes due and payable and claims of mechanics, materialmen, shippers,
warehousemen, carriers and landlords.
1.40 Person shall mean an individual, a partnership, a
corporation, a business trust, a joint venture, a trust, a limited liability
company, an unincorporated association, a joint stock company or other entity or
Government Authority.
1.41 Plan shall mean at a particular time, any employee
benefit plan which is covered by ERISA and in respect of which Borrower or a
Commonly Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
1.42 Pledge Agreement shall mean that certain Pledge Agreement
in substantially the form of Exhibit D hereto, which is to be entered into
between Borrower and Bank upon receipt of the AHC Consent.
1.43 Positive Cash Flow shall mean, for any applicable period,
HomeMax Cash Flow that is greater than zero.
1.44 Prime Rate shall mean that annual percentage rate of
interest which is established by Bank from time to time as its prime rate,
whether or not such rate is publicly announced, which provides a base to which
loan rates may be referenced. The Prime Rate is not necessarily the lowest
lending rate of Bank.
1.45 Prime TL Rate shall mean, as of any date, the Prime Rate
(as in effect from time to time), plus one percent (1%). The Prime TL Rate shall
change each time and as of the date of change of the Prime Rate.
1.46 Put shall have the meaning ascribed to such term in the
Securityholders Agreement.
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1.47 Put/Call Period shall have the meaning ascribed to such
term in the Securityholders Agreement.
1.48 Put/Call Price shall have the meaning ascribed to such
term in the Securityholders Agreement.
1.49 Reportable Event shall mean any of the events set forth
in Section 4063(a) or Section 4043(c) of ERISA, other than those events as to
which the thirty day notice period is waived under Sections .13, .14, .16, .18,
.19 or .20 of PBGC Reg. Section 2615.
1.50 Securityholders Agreement shall mean that certain
Securityholders Agreement dated as of March 15, 1999 among HomeMax, Inc.,
Borrower and American Homestar Corporation.
1.51 Securities Purchase Agreement shall mean the Amended and
Restated Securities Purchase Agreement dated as of March 15, 1999 by and among
Xxxxxx National Corporation, Homemax, Inc., HomeMax Operating Properties, LLC
and American Homestar Corporation.
1.52 Safe Deposit Box Covenant shall mean the covenant of the
Borrower set forth in Section 5.20 hereof.
1.53 Subsidiary shall mean, as to any Person, a corporation,
partnership or other entity of which shares of stock or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other managers of such corporation, partnership or other entity are
at the time owned, or the management of which is otherwise controlled, directly
or indirectly through one or more intermediaries, or both, by such Person.
1.54 Term Loan shall have the meaning set forth in Section
2.1.
1.55 Term Note shall mean the Term Promissory Note evidencing
the Term Loan pursuant to Section 2.2.
1.56 Total Liabilities shall mean, as of any date of
measurement, the aggregate principal amount of all Indebtedness of Borrower and
its Subsidiaries as of such date of measurement.
1.57 Xxxxxx Homes Credit Agreement shall mean that certain
Amended and Restated Credit Agreement dated as of February 23, 1998 among
Borrower, Guarantor and various Affiliates of Borrower, as borrowers and/or
guarantors, and PNC Bank, National Association, as agent, Nationsbank, N.A. and
The First National Bank of Chicago, as co-agents, and various other banks
referred to therein, as the same may hereafter be amended, modified,
supplemented or restated from time to time.
2. Loan and Interest
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2.1 Term Loan. Bank proposes to make a term loan (the "Term
Loan") to Borrower in an aggregate amount not to exceed $15,000,000. The entire
Term Loan, together with all interest and other charges thereon or due
hereunder, shall be due and payable in full on or before the earlier of (as the
case may be, the "Maturity Date") (a) the thirty nine (39) month anniversary of
the Closing Date or (b) ninety (90) days following the exercise of the Put or
the Call pursuant to the Securityholders Agreement, or the earlier date upon
which the proceeds of the Put or Call transaction are received by Borrower.
2.1.1 Term Loan Scheduled Payments. Borrower shall
make three mandatory annual payments of the principal amount of the Note, each
of which payments shall be in the amount of $1,470,392 and shall be due and
payable on or before each of March 15, 2000, March 15, 2001 and March 15, 2002.
2.1.2 Term Loan Cash Flow Payments. In addition to
the scheduled payments required by Section 2.1.1, in the event there is Positive
Cash Flow for any two consecutive full calendar quarters, within 45 days after
the end of the second of such two calendar quarters Borrower shall make a
principal payment to Bank in an amount equal to the aggregate Positive Cash Flow
for such two calendar quarters, and thereafter Borrower shall make principal
payments to Bank within 45 days after the end of each calendar quarter in an
amount equal to the cumulative Positive Cash Flow (if any) for the most recently
ended calendar quarter (the "Positive Cash Flow Payments") until the aggregate
amount of Positive Cash Flow Payments made by Borrower to Bank equals or exceeds
Four Million Dollars ($4,000,000.00); provided, however, that if the HomeMax
Cash Flow for any quarter after the first two consecutive quarters of Positive
Cash Flow is less than zero (the "Negative Quarter"), no Positive Cash Flow
Payments shall be required until the end of the next succeeding quarter during
which the cumulative HomeMax Cash Flow since the beginning of the Negative
Quarter is greater than zero.
2.1.3 Term Loan Proceeds Payments. The proceeds
realized from the exercise of the Put or the Call pursuant to the
Securityholders Agreement shall be paid to Bank to the extent necessary to
result in the payment in full of the Term Loan.
2.2 Term Note. The Term Loan shall be evidenced by a Term
Promissory Note (the "Term Note") in the form attached hereto as Exhibit A.
2.3 Term Loan Interest. The Term Loan shall bear interest on
the daily outstanding balance thereof at the Prime TL Rates per annum, until
maturity, and such interest shall be payable monthly, in arrears, on or before
the first day of each calendar month commencing May 1, 1999. The interest rate
borne by the Term Loan shall change each time and as of the date that the Prime
TL Rate changes. The interest rate applicable to the entire outstanding
principal balance of the Term Loan shall be the Prime TL Rate.
2.3.1 Default Rate. Upon the occurrence of an Event
of Default, the Loan shall bear interest at a rate of 4% per annum greater than
the rate otherwise applicable to the Loan (the "Default Rate").
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2.3.2 Interest Calculation. Interest on the Loan will
be calculated on the basis of the actual number of days elapsed over an assumed
year consisting of 360 days.
2.4 Change in Law. In case of any change in law or
governmental rules, regulations, guidelines or orders (or any interpretations
thereof) or the introduction of new laws, regulations or guidelines, which
increase the costs to Bank of maintaining or funding the Loan or require Bank to
reserve for unfunded credit commitments, Bank may charge Borrower an additional
fee which will compensate Bank for the costs of compliance with such
requirements. Any amount or amounts payable by Borrower to Bank pursuant to this
Section 2.4 shall be paid within ten (10) days of receipt by Borrower from Bank
of a statement setting forth the amount or amounts due and the basis for the
determination from time to time of such amount or amounts, which statement shall
be conclusive and binding upon Borrower absent demonstrable error. Failure on
the part of Bank to demand compensation for any increased costs in any period
shall not constitute a waiver of Bank's right to demand compensation for any
increased costs incurred during any such period or in any other subsequent or
prior period.
2.5 Prepayments. The loan may be prepaid in whole or in part
at any time prior to the Maturity Date, provided, however, that there shall be a
three percent (3%) prepayment fee for any prepayment in whole or in part from
funds generated outside of the terms of the Securities Purchase Agreement, and
provided further that the payment to the Bank caused by the exercise of the Put
or the Call will survive the prepayment of the Loan. Upon the exercise of either
of the Put or the Call pursuant to the Securityholders Agreement, Borrower will
pay a fee to Bank equal to the greater of (i) one percent (1%) of the principal
amount of the Loan then outstanding before application of proceeds of the Put or
Call to the Loan, or (ii) ten percent (10%) of the amount by which the Put/Call
Price exceeds the then outstanding principal balance of the Loan. The foregoing
notwithstanding, the ten percent provision referred to in the preceding sentence
will be reduced by one-quarter of one percent for each full calendar month
between the date of receipt by Borrower of the Put/Call Price and the third
annual anniversary of the date of the Securityholders Agreement.
2.6 Payments. All payments of interest, principal and all
other amounts owing hereunder or under the Note shall be made by Borrower to
Bank in immediately available funds at its principal office in Cincinnati, Ohio
or at such other place as Bank may designate in writing, at such times as shall
be set forth herein or in the Note or if not so set forth, such amounts shall be
payable on demand. Borrower hereby authorizes Bank, at Bank's option, to charge
any account or charge or increase any Loan balance of Borrower at Bank for the
payment or repayment of any interest or principal of the Loan, or any fees,
charges or other amounts due to Bank hereunder or under the Note or the other
Loan Documents, as and when the same become due and payable hereunder, or under
the Note or the other Loan Documents.
2.7 Use of Proceeds. Borrower shall use the proceeds of the
Loan only for the purpose of refinancing outstanding Indebtedness with Bank of
America and Firstar Bank, N.A.
3. Collateral and Documents.
3.1 Borrower Collateral. To secure the full and timely payment
and performance
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of all of the Obligations, Borrower hereby pledges, assigns and grants to Bank a
continuing security interest in all of the Borrower Collateral. Prior to the
making of the Loan, Borrower shall execute and deliver to Bank the Collateral
Note Assignment in the form of Exhibit C hereto. Upon receipt of the AHC
Consent, Borrower shall execute and deliver to Bank the Pledge Agreement in the
form of Exhibit D hereto.
3.2 Guarantor Documents. To secure the full and timely payment
and performance of all of the Obligations, prior to the making of the Loan,
Borrower shall cause Guarantor to execute and deliver to Bank, as additional
security for the Obligations the Guaranty of the Guarantor in the form of
Exhibit B hereto.
4. Representations and Warranties. Borrower hereby represents
and warrants to Bank, on the date hereof and on each subsequent date of
disbursement of any proceeds of the Loan, that:
4.1 Each Collateral Party is a Person duly organized, validly
existing and in good standing under the laws of its state of incorporation and
has the power and authority to conduct its business as now conducted and as
proposed to be conducted while this Agreement is in effect. The execution and
delivery of this Agreement, the Note and all other Loan Documents by each
Collateral Party that is a party to, or intended to be bound by, any such Loan
Documents and the performance of the transactions contemplated hereby and
thereby are within the power and authority of each Collateral Party and have
been duly authorized by all proper and necessary action. The execution and
delivery of this Agreement, the Note and all other Loan Documents by each
Collateral Party that is a party to, or intended to be bound by, any such Loan
Documents and the performance of the transactions contemplated hereby and
thereby will not violate or contravene any provisions of applicable law or the
charter documents of any Collateral Party, or result in a breach or default in
respect of the terms of any other agreement to which any Collateral Party is a
party or by which any Collateral (or any Collateral Party's assets) is bound.
Each Collateral Party is duly qualified as a foreign corporation and is in good
standing and duly authorized to do business in every jurisdiction where the
nature of its properties or the conduct of its business requires such
qualification and authorization. Schedule 4.1 hereto contains the proper name of
each Collateral party, the jurisdiction of formation of each Collateral party,
the type of entity of each Collateral Party and the jurisdictions in which each
Collateral Party is qualified to do business.
4.2 No consent or authorization of, filing with or other act
by or in respect of, any government, governmental department, commission, board,
bureau, agency, authority, instrumentality or court (each a "Governmental
Authority") or any other Person (including the stockholders or other equity
owners of any Collateral Party or any of their respective Subsidiaries) is
necessary to, or required in connection with (i) the borrowings hereunder, (ii)
the execution, delivery, or performance by any Collateral Party of any Loan
Documents, or (iii) the validity or enforceability of this Agreement, the Note,
or any other Loan Documents; excepting only such routine filings as are
necessary under the applicable state's version of the Uniform Commercial Code to
perfect the liens and security interests created hereby and by the Guarantor
Security Agreement.
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4.3 Each Loan Document to which any Collateral Party is a
party is a legal, valid and binding obligation of each such Collateral Party
enforceable in accordance with its respective terms.
4.4 Borrower has no Subsidiaries other than those Persons
listed on Schedule 4.4 hereto.
4.5 Borrower has delivered to Bank its audited consolidated
and consolidating financial statements as of and for the year ending December
31, 1998 (the "Audited Financials") are true and correct in all material
respects, are in accordance with the respective books of account and records of
Borrower and its consolidated Subsidiaries, have been prepared in accordance
with GAAP applied on a basis consistent with prior periods, and fairly and
accurately present the financial condition of Borrower and its assets,
liabilities and results of operations as at the respective dates thereof.
4.6 Since the ending date of the Audited Financials, there has
been no change in the assets, liabilities, financial condition or operation of
Borrower, other than changes in the ordinary course of business, the effect of
which have not, individually or in the aggregate, been materially adverse to
Borrower's business.
4.7 Except to the extent set forth on Schedule 4.7 hereto or
reflected in the Audited Financials, Borrower, as of the date of this Agreement,
does not know or have reasonable grounds to know of any basis for the assertion
against Borrower, of any liabilities or obligations of any nature, direct or
indirect, accrued, absolute or contingent, including, without limitation,
liabilities for taxes due or to become due whether incurred in respect of or
measured by income for any period prior to the date of this Agreement or arising
out of transactions entered into, or any state of facts existing, prior hereto,
other than liabilities and obligations incurred since the date of the Audited
Financials in the ordinary course of business which are not, individually or in
the aggregate, material to Borrower.
4.8 Each of the Collateral Parties has filed all federal,
state, local and other tax returns and reports required to be filed by it and
such returns and reports are true and correct in all material respects. Each of
the Collateral Parties has paid all taxes, assessments and other governmental
charges lawfully levied or imposed on or against it or its properties, other
than those presently payable without penalty or interest.
4.9 Except as described on Schedule 4.9 hereto, there is no
litigation or proceeding or governmental investigation pending or, to the best
of Borrower's knowledge following diligent inquiry, threatened against or
relating to any one or more of the Collateral Parties, or their respective
properties or business which is not reflected and described in the Audited
Financials.
4.10 None of the Collateral Parties is or was in violation of
or default under any statute, regulation, license, permit, order, writ,
injunction or decree of any Governmental Authority, which violation or default
could have a material adverse effect on the business, properties or condition,
financial or otherwise, of any Collateral Party.
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4.11 Except for a default in the Indebtedness described in
Section 2.7 of this Agreement, none of the Collateral Parties is or was in
default (i) under a order, writ, judgment, injunction, decree, indenture,
agreement, lease or other instrument or contract, which default would have a
material adverse effect on the business, properties or condition, financial or
otherwise, of any Collateral Party, or (ii) the performance of any covenants or
conditions respecting any of the Indebtedness of any Collateral Party. Except
for a default in the Indebtedness described in Section 2.7 of this Agreement, no
holder of any Indebtedness of any of the Collateral Parties has given notice of
any asserted default thereunder, and no liquidation or dissolution of any
Collateral Party and no receivership, insolvency, bankruptcy, reorganization or
other similar proceedings relative to any of the Collateral Parties or their
respective properties is pending or, to the best of Borrower's knowledge
following diligent inquiry, threatened.
4.12 Collateral Parties maintain places of business only at
the locations set forth on Schedule 4.12. The chief executive office and
principal place of business of each Collateral Party is located at the address
set forth on Schedule 4.12 and identified by an asterisk.
4.13 With respect to the Borrower Collateral, at the time the
Borrower Collateral becomes subject to Bank's security interest, Borrower has
full right and power to grant Bank a security interest in the Borrower
Collateral, and the Borrower Collateral is free from all liens, encumbrances and
security interests in favor of any Person other than Bank (except Permitted
Liens). All information furnished to Bank concerning the Borrower Collateral is
and will be complete, accurate and correct in all material respects when
furnished.
4.14 No proceeds of any Loan or advance made by Bank to
Borrower hereunder will be used to acquire any security in any transaction which
is subject to Section 13 or 14 of the Securities Exchange Act of 1934, as
amended.
4.15 No part of the proceeds of any Loan will be used for
"purchasing" or "carrying" any "margin stock" within the respective meanings of
each of the quoted terms under Regulation U issued by the Board of Governors of
the Federal Reserve System (as now and from time to time hereafter in effect) or
for any purpose which violates the provisions of the Regulations of such Board
of Governors. At Bank's request from time to time, Borrower will furnish to Bank
a statement to the foregoing effect in conformity with the requirements of FR
Form U-1 referred to in said Regulation U.
4.16 No Reportable Event or "accumulated funding deficiency"
(within the meaning of Section 302 of ERISA) whether or not waived has occurred
during the immediately preceding six-year period prior to the date on which this
representation is made or deemed made with respect to any Plan which could
reasonably be expected to have a material adverse effect on the financial
condition or results of operations of Collateral Parties (or any one of them),
and each Plan has complied and has been administered in accordance with the
applicable provisions of ERISA and the Code. The present value of all accrued
benefits under each Plan (based on those assumptions used to fund the Plans as
determined pursuant to Section 302(c)(3)(A) of ERISA) did not, as of the last
annual valuation date prior to the date on which this representation is made or
deemed made, exceed the value of the assets of such Plan allocable to such
accrued benefits. No Collateral Party or any Commonly Controlled Entity has
during the immediately preceding six-year period had a
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complete or partial withdrawal from any Multiemployer Plan, and no Collateral
Party or any Commonly Controlled Entity is a party to or participant in any
Multiemployer Plan. No Collateral Party or any Commonly Controlled Entity
provides post retirement benefits to their current and former employees under
Plans which are welfare benefit plans (as defined in Section 3(1) of ERISA).
4.17 None of the Collateral Parties is an "investment
company", or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended. None of the
Collateral Parties is subject to regulation under any federal or state statute
or other requirement of law which restricts its ability to incur Indebtedness.
4.18 Except as described in Section 4.4, none of the
Collateral Parties has an equity or other ownership interest in any Person.
4.19 None of the Collateral Parties is subject to any
collective bargaining agreement with respect to any employees, nor does any of
the Collateral Parties have any duty to bargain with any collective bargaining
unit with respect to any employees. There are no strikes pending or threatened
against any Collateral Party, and the hours worked and payments made to
employees of each of the Collateral Parties are not in violation of the Fair
Labor Standards Act or any other applicable requirement of law. All material
payments due from any Collateral Party, or for which any claim may be made
against any Collateral Party, on account of wages and employee health and
welfare insurance and other benefits have been paid or accrued as a liability on
the books of Collateral Parties and are reflected in the Audited Financials.
4.20 None of the Collateral Parties is in violation of any
applicable Environmental Law and no Hazardous Material is located on any real
property owned, leased or operated by any Collateral Party in violation of
applicable Environmental Law or has been discharged from or to, or penetrated
into, any real property (or surface or subsurface rivers or streams crossing or
adjoining any real property) owned, leased or operated by any Collateral Party
or the aquifer underlying any real property owned, leased or operated by any
Collateral Party, which in any case could result in any liability to Collateral
Parties (or any one or more of them) or any Environmental Claim against
Collateral Parties (or any one or more of them).
4.21 Each of the Collateral Parties possesses adequate
licenses, patents, patent applications, copyrights, service marks, trademarks
and trade names to conduct its operations and business as heretofore conducted
and as intended to be hereafter conducted and all such items are, and will
continue to be, owned by Collateral Parties free and clear of conflicting claims
or uses of any other Person. Schedule 4.21 attached hereto sets forth a true and
complete list of all registered or filed licenses, patents, patent applications,
copyrights, service marks, trademarks, trade names and other intellectual
property, identifying with respect to each such item (i) the date of grant or
filing (as applicable), (ii) the date of expiration, (iii) the owner, (iv) the
filing or registration number, and (v) the jurisdiction where filed or
registered.
4.22 On and as of the date of this Agreement and at all times
thereafter, each of the Collateral Parties will have capital sufficient to carry
on its business and transactions and all businesses and transactions in which it
is about to engage and will be solvent and able to pay its
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debts as they mature, and each of the Collateral Parties will own property, the
fair saleable value of which is greater than the amount required to pay each
such Collateral Party's Indebtedness and other liabilities as they mature.
4.23 No factual information contained herein, in any of the
other Loan Documents or in any report, financial statement or schedule prepared
by or furnished in writing by or on behalf of Collateral Parties (or any one or
more of them) to Bank contained, contains or will on the date of delivery
contain any material misstatement of fact, or omitted, omits or will on the date
of delivery omit to state any material fact necessary to make the statements
therein not misleading. All projections, budgets, plans, forecasts or other
prospective information prepared or to be prepared by or on behalf of Borrower
for Bank have been or will be prepared on the basis of assumptions believed by
Borrower in good faith to be reasonable as of the date of preparation of such
projections, budgets, plans, forecasts and other prospective information.
4.24 Except for an existing default in the Indebtedness
described in Section 2.7 of this Agreement, the execution and delivery of this
agreement and the performance of the Borrower's obligations hereunder will not
cause an event of default under the Xxxxxx Homes Credit Agreement or any other
agreements between the Borrower and any other party.
4.25 The foregoing representations and warranties are made by
Borrower with the knowledge and intention that Bank will rely thereon, and shall
survive the execution and delivery of this Agreement and the making of all Loan
hereunder, and shall be deemed to be made on the date hereof and at the time of
each advance of Loan proceeds hereunder.
4.26 All significant date-sensitive hardware, software,
processes, procedures, interfaces and operating systems and core business
functions (jointly referred to as the "Systems") used within each of the
Collateral Party's operations contain acceptable design and performance
specifications so that such Systems will not abruptly end or provide invalid or
incorrect results with respect to the period on or after January 1, 2000 or
during the operation of its business on or after January 1, 2000. All such
significant Systems have been designed to ensure Year 2000 compatibility,
including but not limited to data century recognition, calculations that
accommodate same century and multi-century formulas and date values, and date
data interface values that reflect the century and which include Year 2000 leap
year calculations.
4.27 Each of the Collateral Parties has used reasonable
efforts to confirm with its material suppliers that all significant
date-sensitive hardware, software, processes, procedures, interfaces and
operating systems used within the supplier's operations contain acceptable
design and performance specification so that such systems will not abruptly end
or provide invalid or incorrect results with respect to the period on or after
January 1, 2000 or during the operation of any Collateral Party's business on or
after January 1, 2000 and that all such systems have been designed to ensure
Year 2000 compatibility, including but not limited to: date data century
recognition, calculations that accommodate same century and multi-century
formulas and date values, and date data interface values that reflect the
century and which include Year 2000 leap year calculations.
5. Affirmative Covenants. Borrower covenants and agrees that
until all of the Obligations have been paid in full and this Agreement has been
terminated, unless Bank shall
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otherwise consent in writing, it shall, and shall cause each of the other
Collateral Parties to:
5.1 Maintain complete and accurate books of account and
records pertaining to the Collateral and the operations of Collateral Parties,
and all such books of account and records shall be kept and maintained at the
places of business specified in Section 4.12. Collateral Parties shall not move
such books of account and records or change chief executive offices or principal
places of business or the location of Collateral Parties' other offices or the
location of any Collateral without giving Bank at least 30 days prior written
notice. Prior to moving any of such books of account and records or changing the
location of offices or any Collateral, Collateral Parties shall execute and
deliver to Bank financing statements reasonably satisfactory to Bank. All such
books of account and records and all financial statements and reports furnished
to Bank shall be maintained and prepared in accordance with GAAP applied on a
basis consistent with prior periods.
5.2 Grant Bank, and its representatives, full and complete
access to the Collateral to all books of account, records, correspondence and
other papers relating to the Collateral, during normal business hours and the
right to inspect, examine, verify and make abstracts from the copies of such
books of account, records, correspondence and other papers, and to investigate
such other records, activities and business of Collateral Parties as they may
reasonably deem necessary or appropriate at the time.
5.3 From time to time as Bank may require, deliver to Bank
copies of debtor's invoices, franchise agreements, license agreements,
management agreements and such other schedules and information as Bank may
reasonably request. The items to be provided under this Section 5.3 are to be
prepared and delivered to Bank from time to time solely for Bank's convenience
in maintaining records of the Collateral and Collateral Parties' failure to give
any of such items to Bank shall not affect, terminate, modify or otherwise limit
Bank's security interest.
5.4 Deliver to Bank:
(a) As soon as available, but in any event not more
than 90 days after the close of each fiscal year of Borrower, or within such
further time as Bank may permit, audited financial statements for Borrower,
Xxxxxx Homes, Xxxxxx Financial Services, Homemax, Inc. and other related
entities, including consolidated and consolidating balance sheets and related
profit and loss statements, prepared in accordance with GAAP and audited by an
independent certified public accountants reasonably acceptable to Bank, who
shall give their unqualified opinion with respect thereto; and
(b) As soon as available, but in any event not more
than 30 days after the end of each calendar month and each calendar quarter, or
within such further time as bank may permit, consolidated and consolidating
financial statements for Borrower, Xxxxxx Homes, Xxxxxx Financial Services,
Homemax, Inc. and other related entities, including the consolidated financial
statements of Borrower, prepared in accordance with GAAP.
5.5 Deliver to Bank:
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(a) Concurrently with the delivery of the financial
statements referred to in Section 5.4(a), a certificate of the independent
certified public accountants reporting on such financial statements stating that
in making the examination necessary therefor, no knowledge was obtained of any
Event of Default, except as specified in such certificate;
(b) Concurrently with the delivery of the financial
statements referred to in Sections 5.4(a) and (b), a Compliance Certificate in
the form of Exhibit E hereto, duly completed and executed by the Chief Financial
Officer of Borrower (a "Compliance Certificate"); and
5.6 Furnish to Bank such other financial and business
information and reports in form and substance satisfactory to Bank promptly upon
Bank's request therefor.
5.7 (a) Maintain its existence in good standing; (b) Make no
change in the nature or character of its business or engage in any business
which is, in Bank's reasonable judgement, materially different than the business
in which it is engaged on the date of this Agreement; (c) Maintain and keep in
full force and effect all licenses and permits necessary to the proper conduct
of its business, and (d) At the request of Bank, qualify as a foreign Person and
obtain all requisite licenses and permits in each state (other than the state of
its formation) where it does business.
5.8 Give prompt notice in writing to Bank of any Event of
Default hereunder, or of any condition which with the passage of time or the
giving of notice or both could give rise to an Event of Default, and of any
development, financial or otherwise, which could materially adversely affect the
business, properties or affairs of any Collateral Party to perform its
obligations under any of the Loan Documents.
5.9 Pay all taxes, assessments or governmental charges
lawfully levied or imposed on or against it and its properties prior to the date
when such taxes, assessments or charges shall become delinquent, unless the
validity thereof is being contested in good faith through proper proceedings,
Bank has received prior written notice of such contest, and, if requested by
Bank, a bond or other security or cash reserve in an amount required by Bank, in
Bank's reasonable discretion, is maintained against the payment thereof.
5.10 Immediately upon learning thereof, report to Bank any
material claim or dispute asserted against any Collateral Party by any debtor or
other Person, and any other matters affecting the value and enforceability or
collectibility of any of the Borrower Collateral. In addition, Borrower shall,
and shall cause all Collateral Parties to, at their sole cost and expense
(including attorney's fees), settle any and all such claims and disputes and
indemnity and protect Bank against any liability, loss or expense arising
therefrom.
5.11 Defend the Borrower Collateral against all claims and
demands of all Persons at any time claiming the same or any interest therein and
pay all costs and expenses (including attorneys' fees) incurred in connection
with such defense.
5.12 At the reasonable request of Bank, execute and deliver
such financing statements, documents and instruments, and perform all other acts
as Bank deems necessary or
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desirable, to carry out and perform the intent and purpose of this Agreement,
and pay, upon demand, all expenses (including attorneys' fees) incurred by Bank
in connection therewith. A photocopy of this Agreement shall be sufficient as a
financing statement and may be filed in any appropriate office in lieu thereof.
5.13 Maintain a ratio of Consolidated Cash Flow From
Operations to Consolidated Fixed Charges of not less than the minimum ratio of
such items established and in effect for the period ending December 31, 1999
under the Xxxxxx Homes Credit Agreement, measured annually at December 31 of
each year on an annual basis.
5.14 Comply in all material respects with all applicable laws,
rules, regulations and orders, non-compliance with which may materially
adversely affect (i) the financial condition or operations of any Collateral
Party, or (ii) the ability of Collateral Party to perform its obligations under
any of the Loan Documents.
5.15 Maintain a minimum Consolidated Tangible Net Worth of
Forty Million Dollars ($40,000,000.00) plus an amount not less than zero equal
to one hundred percent (100%) of aggregate cumulative net earnings (determined
in accordance with GAAP) of Borrower and its consolidated Subsidiaries after
December 31, 1998, measured quarterly; provided, however, that First Cincinnati
Land LLC and First Cincinnati Leasing LLC shall be excluded from the calculation
of the covenants set forth in this Section 5.16.
5.16 Provide Bank with its Annual Business Plan/Cash Flow
Projection on both a consolidated and consolidating basis for the one-year
period commencing on each January 1 prior to the commencement of the period
covered thereby.
5.17 Deposit in a safety deposit box at the Bank all capital
stock of Homemax, Inc. owned by Borrower, with control of access to such safety
deposit box to be retained by the Bank.
5.18 Cause Homemax, Inc. to make payments of principal and
interest on the Senior Subordinated Note directly to Bank, and cause American
Homestar Corporation to make payments on the Investor Note directly to Bank.
5.19 Obtain the AHC Consent within 60 days after the date of
this Agreement.
5.20 Exercise the Put prior to the end of the Put/Call Period.
5.21 Pay to Bank the $75,000 balance of the $150,000 closing
fee on or before the first annual anniversary of the date of this Agreement.
6. Negative Covenants. Borrower covenants and agrees that
until the Obligations have been paid in full and this Agreement has been
terminated, unless Bank shall consent in advance in writing, it shall not and
shall not permit any of the other Collateral Parties to:
6.1 Discontinue its business, sell, transfer, assign or
otherwise dispose of, or
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transfer, whether by sale, merger, consolidation, liquidation, dissolution or
otherwise, any of the Borrower Collateral; provided, however, that it may sell
in the ordinary course of business and for a full consideration in money or
money's worth, any product, merchandise or service produced, marketed or
furnished by it.
6.2 Except as permitted in Section 3.1, pledge, grant or
suffer to exist a security interest, lien, mortgage or other encumbrance on any
of the Borrower Collateral to any Person other than Bank, or permit any lien,
encumbrance or security interest to attach to any of the Borrower Collateral,
except in favor of Bank and except Permitted Liens.
6.3 Endorse, guarantee or become surety for the obligations of
any Person (except obligations payable to Bank), except for the Obligations and
except that Collateral Parties may endorse checks and negotiable instruments for
collection or deposit in the ordinary course of business.
6.4 Make any loans, investments, dividends or extensions of
credit or other such uses of funds to any Person, other than the extension of
credit in the ordinary course of business, except that each Collateral Party
shall be permitted to make unsecured loans and extensions of credit to other
Collateral Parties and their Affiliates so long as any note or other document
evidencing such loans or extensions of credit are pledged and delivered to Bank
(together with any endorsements requested by Bank) to secure the Obligations.
6.5 Amend, modify, supplement, waive any rights under or
otherwise change the Securities Purchase Agreement, the Securityholders
Agreement or any note or other instrument evidencing or securing the Borrower
Collateral, including but not limited to terms and conditions of the Senior
Subordinated Note and Investor Note.
6.6 Permit the ratio of Consolidated Total Liabilities to
Consolidated Tangible Net Worth to exceed 2.75 to 1.0, measured quarterly;
provided, however, that First Cincinnati Land LLC and First Cincinnati Leasing
LLC shall be excluded from the calculation of the covenants set forth in this
Section 6.6.
6.7 Permit the Net Book Value to be less than $14,000,000,
measured quarterly.
7. Conditions Precedent. The agreement of Bank to make the
Loan is subject to the satisfaction, prior to or concurrently with the making of
such Loan, of each of the following conditions precedent.
7.1 Bank shall have received the following, each of which
shall be acceptable in form and substance to Bank:
7.1.1 The Note, executed and delivered to Bank by
a duly authorized officer of Borrower;
7.1.2 The Guaranty, executed and delivered to Bank
by a duly authorized
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officer of Guarantor;
7.1.3 The Collateral Note Assignment, duly
executed and delivered to Bank by Borrower,
together with (i) evidence satisfactory to
Bank that all action necessary to perfect
the pledge and security interests granted by
thereby shall have been taken, and (ii) the
original Pledged Notes, duly endorsed to
Bank or accompanied by an assignment
separate from the notes duly executed and
delivered to Bank by a duly authorized
officer of Borrower;
7.1.4 The executed legal opinion of Frost & Xxxxxx
LLP, counsel to Collateral Parties,
substantially in the form of Exhibit F;
7.1.5 A copy of the resolutions, in form and
substance satisfactory to Bank, of the Board
of Directors of each Collateral Party
authorizing (i) the execution, delivery and
performance of the Loan Documents to which
it is a party, (ii) the Indebtedness
contemplated by such Loan Documents and
(iii) the granting by such Collateral Party
of the security interests pursuant to such
Loan Documents, certified, in each case, by
the Secretary or other custodian of the
official records of such Collateral Party as
of the date hereof which certificate shall
state that the resolutions thereby certified
have not been amended, modified, revoked or
rescinded and shall be in form and substance
satisfactory to Bank;
7.1.6 A certificate of the Secretary of each
Collateral Party dated the date hereof as to
the incumbency and signature of the
respective officers executing each Loan
Document together with satisfactory evidence
of the incumbency of each such Secretary;
7.1.7 Correct and complete copies of (i) the
Certificate/Articles of Incorporation or
other formation document of each Collateral
Party certified as correct and complete by
the Secretary or other custodian of the
official records of such Collateral Party
and the Secretary of State of the State of
its incorporation and (ii) the
Bylaws/Regulations or other charter
documents of each Collateral Party certified
as correct and complete by the Secretary or
other custodian of the official records of
each such Collateral Party;
7.1.8 A Certificate of Good Standing of each
Collateral Party from the secretary of State
of its state of organization and from all
other jurisdictions in which it owns or
leases property or conducts business, each
of which shall be dated as of a recent date;
7.1.9 A $75,000 installment of the $150,000
closing fee; and
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7.1.10 Payment and/or reimbursement of Bank's
out-of-pocket expenses and expenses incurred
by Bank in connection with the financing of
the transaction set forth in this agreement,
the reasonable fees and expenses of Bank's
counsel, and all UCC search, filing,
recording costs and other costs connected
with the perfection of the Bank's security
interest granted herein.
7.2 Bank shall have received satisfactory lien and judgment
searches with respect to each of the Collateral Parties showing only such
matters as are acceptable to Bank, in its sole discretion.
7.3 Collateral Parties shall have provided such documents,
instruments and information, executed such agreements and certificates and
generally taken such actions as Bank, in its sole discretion, may reasonably
request.
8. One General Obligation.
8.1 Cross Collateral. All Loan and advances by Bank to
Borrower under this Agreement, the other Loan Documents and all other agreements
constitute one loan, and all Indebtedness and Obligations of Borrower to Bank
under this Agreement, the other Loan Documents and all other agreements, present
and future, constitute one general obligation secured by the Collateral, and
other security held and to be held by Bank hereunder and by virtue of all other
assignments and security agreements between Borrower and Bank now and hereafter
existing. It is expressly understood and agreed that all of the rights of Bank
contained in this Agreement shall likewise apply insofar as applicable to any
modification of or supplement to this Agreement, any of the other Loan Documents
and to any other agreements, present and future, between Bank and Borrower.
8.2 Collateral Party Agreements.
8.2.1 Obligations Unconditional. The obligations of
each Collateral Party under the Loan Documents shall be
unconditional, irrespective of (i) the validity or
enforceability against Collateral Parties (or any one or more
of them) of any of the Loan Documents, (ii) the absence of any
attempt to collect from any of the other Collateral Parties or
other action to enforce the same, (iii) the waiver or consent
by Bank with respect to any provision of any Loan Document or
any other agreement now or hereafter executed by any of the
other Collateral Parties and delivered to Bank, (iv) failure
by Bank to take any steps to perfect and maintain its security
interest in, or to preserve its rights to, any security or
Collateral for the Obligations, (v) Bank's election, in any
proceeding instituted under the Bankruptcy Code, of the
application of Section 1111(b)(2) of the Bankruptcy Code, (vi)
any borrowing or grant of a security interest by any of the
other Collateral Parties (or any one or more of them), as
debtor-in-possession, under Section 364 of the Bankruptcy
Code, (vii) the disallowance of all or any portion of Bank's
claim(s) for repayment under
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Section 502 of the Bankruptcy Code, or (viii) any other
circumstance which might otherwise constitute a legal or
equitable discharge or defense.
8.2.2 Diligence, Presentment, Etc. Borrower hereby
waives diligence, presentment, demand of payment, filing of
claims with a court in the event of receivership or bankruptcy
of any of the other Collateral Parties, protest or notice with
respect to any amounts due hereunder and all demands
whatsoever, and covenants that Borrower will not be
discharged, except by complete performance and payment of all
amounts due hereunder and under all other Loan Documents. Upon
any Event of Default, Bank may, at its sole election, proceed
directly and at once, without notice, against Borrower or any
of the other Collateral Parties to collect and recover the
full amount of the Obligations or any portion thereof, without
first proceeding against any security or Collateral. Bank
shall have the exclusive right to determine the application of
payments and credits, if any, from Collateral Parties (or any
one of them), or from any other Person on account of any
amounts due hereunder or of any other liability of Collateral
Parties (or any one of them) to Bank.
8.2.3 Amendments. Bank is hereby authorized, without
notice or demand and without affecting the liability of
Borrower hereunder, to, from time to time, (i) renew, extend,
accelerate or otherwise change the time for payment of, or
other terms relating to, the Obligations (or any portion
thereof), or otherwise modify, amend or change the terms of
the Note, any other Loan Document, or any promissory note or
other agreement, document or instrument now or hereafter
executed by any Collateral Parties (or any one or more of
them) and delivered to Bank; (ii) accept partial payments on
the Obligations; (iii) take and hold security or Collateral
for the Obligations of Borrower hereunder, or any other
Obligations or other liabilities of Collateral Parties (or any
one or more of them) to Bank and exchange, enforce, waive and
release any such security or Collateral; (iv) apply such
security or Collateral and direct the order or manner of sale
thereof as in its sole discretion it may determine; and (v)
settle, release, compromise, collect or otherwise liquidate
the Obligations and any security or Collateral therefor in any
manner, in each case without affecting or impairing the
obligations of Borrower hereunder or under any other Loan
Document.
8.2.4 Offset. At any time after maturity of the
Obligations, Bank may, in its sole discretion, without notice
to Borrower and regardless of the acceptance of any security
or Collateral for the payment hereof, appropriate and apply
toward the payment of the Obligations (i) any Indebtedness due
or to become due from Bank to Borrower, and (ii) any moneys,
credits, deposits, account balances or other property
belonging to Borrower, now existing or at any time held by or
coming into the possession of Bank or any affiliate of Bank.
8.2.5 Assumption of Risk. Borrower hereby assumes
responsibility for keeping itself informed of the financial
condition of all other Collateral Parties, and any and all
indorsers and/or other guarantors of any instrument or
document evidencing all or any part of the Obligations and of
all other circumstances bearing upon the risk of nonpayment or
performance of the Obligations or any part thereof
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that diligent inquiry would reveal, and Borrower hereby agrees
that Bank shall have no duty to advise Borrower of information
known to Bank regarding such condition or any such
circumstances. In the event Bank, in its sole discretion,
undertakes at any time or from time to time to provide any
such information to Borrower, Bank shall be under no
obligation (i) to undertake any investigation not a part of
its regular business routine, (ii) to disclose any information
which, pursuant to accepted or reasonable commercial finance
practices, Bank wishes to maintain confidential, or (iii) to
make any other or future disclosures of such information or
any other information to Borrower.
8.2.6 Marshalling and Reinstatements. Borrower
consents and agrees that Bank shall be under no obligation to
xxxxxxxx any assets in favor of any Collateral Party or
against or in payment of any or all of the Obligations.
Borrower further agrees that, to the extent that any
Collateral Party makes a payment or payments to Bank, or Bank
receives any proceeds of Collateral, which payment or payments
or any part thereof are subsequently invalidated, declared to
be fraudulent or preferential, set aside and/or required to be
repaid to any Collateral Party, its estate, trustee, receiver
or any other party under the Bankruptcy Code or any bankruptcy
law, state or federal law, common law or equitable cause, then
to the extent of such payment or repayment, the Obligations or
part thereof which has been paid, reduced or satisfied by such
amount shall be reinstated and continued in full force and
effect as of the date such initial payment, reduction or
satisfaction occurred.
8.2.7 Waiver of Subrogation. Except for the limited
purposes described in Section 8.2.8 below, until the
Obligations are fully and finally paid and satisfied, Borrower
will not attempt to exercise in any way, and hereby
subordinates any (i) rights which it might otherwise have had
or acquired against Bank or any other Collateral Party or any
other party by way of subrogation or otherwise because of any
payment made by any Borrower hereunder or otherwise, (ii)
right to enforce any remedy which Bank now has or may
hereafter have against any other Collateral Party, any
indorser or any guarantor of all or any part of the
Obligations, and (iii) any benefit of, and any right to
participate in, any security or Collateral given to Bank to
secure payment of the Obligations or any other liability of
Collateral Parties to Bank; Borrower further agrees that any
and all claims Borrower against any other Collateral Party,
any indorser or any other guarantor of all or any part of the
Obligations, or against any of their respective properties,
whether arising by reason of any payment by any Borrower to
Bank pursuant to the provisions hereof, or otherwise, shall be
subordinate and subject in right of payment to the prior
payment, in full, of all principal and interest, all
reasonable costs of collection (including, but not by way of
limitation, attorneys' fees) and any other liabilities or
obligations owing to Bank which constitute the Obligations or
may arise either with respect to or on any Loan Document.
Borrower also waives all setoffs and counterclaims and all
presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of
dishonor, and notices of acceptance hereof. Borrower further
waives all notices of the existence, creation or incurring of
new or additional Indebtedness, arising either from additional
loans extended to any Collateral Party or otherwise,
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and also waive all notices that the principal amount, or any
portion thereof, and/or any interest on any instrument or
document evidencing all or any part of the Obligations is due,
notices of any and all proceedings to collect from any
Collateral Party or other indorser or any guarantor of all or
any part of the Obligations, or from anyone else, and, to the
extent permitted by law, notices of exchange, sale, surrender
or other handling of any Collateral or other security given to
Bank to secure payment of the Obligations.
8.2.8 Prevention of Insolvency. It is the intent of
Borrower that the obligations of each Collateral Party under
the Loan Documents not be subject to challenge on any basis.
Accordingly, as of the date hereof, the liability of Borrower
hereunder and under all other Loan Documents, together with
all of its other liabilities, debts, claims and Indebtedness
to all persons as of the date hereof and as of any other date
on which a transfer is deemed to occur by virtue of the Loan
Documents, whether fixed or contingent (collectively the
"Dated Liabilities") is, and is to be, less than the present
fair salable value of all of its assets, and, if different,
the fair valuation of all of its assets, as of such
corresponding date (as the case may be "Dated Assets"), and
Borrower has, and shall have, on the date hereof and on any
other date on which a transfer is deemed to have occurred by
virtue of the Loan Documents, Dated Assets in an amount
sufficient to pay its Dated Liabilities as they become
absolute and matured. To this end, Borrower grants to and
recognizes in each other Collateral Party rights of
subrogation and contribution in the amount, if any, necessary
to cause the statements in the preceding sentence to be and
remain true. In determining the value of the Dated Assets and
the Dated Liabilities, it is understood that Borrower will
take into consideration its respective rights to subrogation
and contribution against the other Collateral Parties. It is a
material objective of this Section 8.2.8 that Borrower
recognize rights of subrogation and contribution rather than
be deemed to be insolvent (or in contemplation thereof).
Notwithstanding anything in this Section 8.2.8 to the
contrary, the agreements in this Section 8.2.8 are to
establish the relative rights of contribution of the
Collateral Parties and shall not modify the joint and several
and primary nature of the obligations of Borrower owed to the
Bank or impair the right of the Bank to hold Borrower liable
for payment of the full amount of the Obligations.
8.2.9 Joint and Several Obligations. The obligations
and undertakings of Borrower shall be joint, several, and
primary and shall be binding upon their respective successors
and assigns, and shall inure to the benefit of Bank and its
successors and assigns. Borrower shall be or be deemed to be
an accommodation party with respect to the Obligations. All
references herein to Borrower shall be deemed to include
Borrower and its successors and assigns, including, without
limitation, a receiver, trustee or debtor in possession of or
for Borrower. All references to the singular shall be deemed
to include the plural where the context so requires.
8.2.10 Agent for Collateral Parties. For purposes of
making extensions of credit, rendering statements, receiving
requests from, or otherwise communicating
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23
with Collateral Parties, or in the Bank's administration of
this loan transaction, Collateral Parties have appointed
Borrower as their agent and have authorized Bank to deal with
Borrower exclusively, and any act done or omitted or any
document, certificate, or instrument executed or delivered by
Borrower for Collateral Parties, or any one of them, will be
binding upon each Collateral Party. Borrower hereby accepts
such appointment and agrees to act and serve as agent for the
Collateral Parties as contemplated herein.
8.2.11 Dependency and Benefits. To induce Bank to
make the Loan to Borrower in the manner set forth herein,
Borrower hereby represents, warrants, covenants and states to
Bank that: (i) Collateral Parties are dependent on each other
for their strategic management, operations, financing, and
general administrative services; (ii) Collateral Parties
desire to utilize their borrowing potential on a consolidated
basis, to the extent(s) possible as if they were merged into a
single corporate entity and, consistent with realizing such
potential, to make available to Bank security commensurate
with the amount and nature of their aggregate borrowings;
(iii) Collateral Parties (and each of them) have determined
that they will benefit specifically and materially from the
advances of credit contemplated hereby; and (iv) Collateral
Parties have requested and bargained for the structure and
terms of and security for the advances contemplated hereby.
9. Events of Default and Remedies.
9.1 The following shall constitute Events of Default under
this Agreement, it being agreed that time is of the essence hereof: (a) failure
of Collateral Parties (or any one or more of them) to pay when due any of the
Obligations; (b) failure of Xxxxxx Homes, Inc., Xxxxxx Financial Services LLC,
Cincinnati Land Co. and any other related entity of Borrower to pay when due any
obligation which exists or shall exist to Bank; (c) failure of American Homestar
Corporation or HomeMax, Inc. to pay when due any principal or interest under the
promissory notes to Borrower which constitute the Borrower Collateral; (d) any
default under the Floor Plan Facility dated February 19, 1998 between HomeMax,
Inc. and Nationsbank, N.A.; (e) failure of Collateral Parties (or any one or
more of them) to observe or perform any covenant contained in any of the other
Loan Documents or in any agreement between Collateral Parties (or any one or
more of them) and Bank; (f) discovery that any representation or warranty at any
time made by Collateral Parties (or any one or more of them) to Bank in any of
the Loan Documents or in any other agreement between Collateral Parties (or any
one or more of them) and Bank, or in any document or instrument delivered to
Bank pursuant to any such Loan Document or agreement is, or becomes, untrue or
misleading in any material respect; (g) acceleration of the maturity of any of
the Obligations; (h) any misrepresentation by Collateral Parties (or any one or
more of them), orally or in writing, to Bank for the purpose of obtaining credit
or an extension of credit; (i) failure of any Collateral Party, after request by
Bank, to furnish financial information or to permit the inspection of its books
of account and records; (j) suspension by any Collateral Party of the operation
of its present business, or the insolvency of any Collateral Party or the
inability of any Collateral Party to meet its debts as they mature, or its
admission in writing to such effect, or its calling any meeting of all or any of
its creditors or committing any act of bankruptcy, or the filing by or against
any Collateral Party of any petition under any provision of Bankruptcy Act, as
amended, or the entry of any judgment or
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24
judgements in an amount of in excess of $50,000 (in the aggregate for all such
judgments) against Collateral Parties (or any one or more of them); (k) loss,
theft, damage, destruction or encumbrance of any of the Collateral, or any
encumbrance, levy, seizure or attachment of any of the Collateral; (l) (i) any
Person or entity shall engage in any nonexempt "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the code) involving any Plan,
(ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Single Employer Plan,
(iii) a Reportable Event shall occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee shall be appointed, to
administer or to terminate, any Single Employer Plan, which Reportable Event or
commencement of proceedings or appointment of a trustee is, in the reasonable
opinion of Bank, likely to result in the termination of such Single Employer
Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) any Collateral Party or any
Commonly Controlled Entity shall, or in the opinion of Bank is likely to, incur
any liability in connection with a withdrawal from, or the insolvency or
reorganization of, a Multiemployer Plan or (vi) any other event or condition
shall occur or exist, with respect to a Plan; and in each case in clauses (i)
through (vi) above, such event or condition, together with all other such events
or conditions, if any, could be reasonably expected to have a material adverse
effect on the assets, liabilities, business, condition (financial or otherwise)
or prospects of any Collateral Party; and (m) any Collateral Party denies its
obligation with respect to all or any portion of the Obligations or attempts to
limit or terminate its obligation with respect to all or any portion of the
Obligations, including future Loan advances. If an Event of Default occurs under
paragraphs (a), (b), (c), (d) or (e) of this Section 9.1, the Borrower shall
have ten (10) business days in which to cure such Event of Default.
9.2 Upon the occurrence of an Event of Default described in
Section 9.1, or at any time in the sole discretion of Bank if the Loan is due on
demand, Bank at its option may: (a) declare the Obligations immediately due and
payable, without presentment, notice, protest or demand of any kind for the
payment of all or any part of the Obligations (all of which are expressly waived
by Borrower) and exercise all of its rights and remedies against Borrower and
any Collateral provided herein, in any other Loan Document or in any other
agreement between Collateral Parties (or any one or more of them) and Bank and
(b) exercise all rights granted to a secured party under the Ohio Uniform
Commercial Code or otherwise.
9.3 Bank shall have the right to apply the proceeds of any
disposition of the Collateral to the payment of the Obligations in such order of
application as Bank may, in its sole discretion, elect.
9.4 The rights, options and remedies of Bank shall be
cumulative and no failure or delay by Bank in exercising any right, option or
remedy shall be deemed a waiver thereof or of any other right, option or remedy,
or waiver of any Event of Default hereunder, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy hereunder.
Bank shall not be deemed to have waived any of Bank's rights hereunder or under
any other agreement, instrument or paper signed by Borrower unless such waiver
be in writing and signed by Bank.
10. Miscellaneous
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25
10.1 Governing Law; Jurisdiction and Venue. The provisions of
this Agreement shall be governed by and interpreted in accordance with the laws
of the State of Ohio. Bank and Borrower hereby designate all courts of record
sitting in Cincinnati, Ohio, both state and federal, as the exclusive forums
where any action, suit or proceeding in respect of or arising out of this
Agreement or the transactions contemplated by this Agreement may be prosecuted
as to all parties, their successors and assigns, and by the foregoing
designation Bank and Borrower consent to the jurisdiction and venue of such
courts.
10.2 WAIVER OF JURY TRIAL. AS A SPECIFICALLY BARGAINED
INDUCEMENT FOR BANK TO EXTEND CREDIT TO BORROWER, AND AFTER HAVING THE
OPPORTUNITY TO CONSULT COUNSEL, BORROWER HEREBY EXPRESSLY WAIVES THE RIGHT TO
TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO THIS AGREEMENT OR ARISING
IN ANY WAY FROM THE OBLIGATIONS.
10.3 Other Waivers. Borrower waives notice of nonpayment,
demand, notice of demand, presentment, protest and notice of protest with
respect to the Obligations, or notice of acceptance hereof, notice of Loan made,
credit extended, Collateral received or delivered, or any other action taken in
reliance hereon, and all other demands and notices of any description, except
such as are expressly provided for herein.
10.4 Collection Costs. All reasonable costs and expenses
incurred by Bank to obtain, enforce or preserve the security interests granted
by this Agreement and to collect the Obligations, including, without limitation,
stationery and postage, telephone and telegraph, secretarial and clerical
expenses, the fees or salaries of any collection agents utilized, all costs to
maintain and preserve the Collateral and all attorneys' fees and legal expenses
incurred in obtaining or enforcing payment of any of the Obligations or
foreclosing Bank's security interest in any of the Collateral, whether through
judicial proceedings or otherwise, or in enforcing or protecting its rights and
interests under this Agreement, under any Loan Document or under any other
instrument or document delivered pursuant hereto, or in protecting the rights of
any holder or holders with respect thereto, or in defending or prosecuting any
actions or proceedings arising out of or relating to Bank's transactions with
Borrower, shall be paid by Borrower to Bank, upon demand, or, at Bank's
election, charged to Borrower's account and added to the Obligations, and Bank
may take judgment against Borrower for all such costs, expense and fees in
addition to all other amounts due from Borrower hereunder.
10.5 Expenses. Borrower shall reimburse Bank for all
reasonable out-of-pocket costs and expenses incurred by Bank in connection with
the preparation, negotiation, closing, enforcement and amendment of this
Agreement and all other Loan Documents and the making of the Loan hereunder,
including the reasonable fees and expenses of Bank's counsel, and for all UCC
search, filing, recording and other costs connected with the perfection of
Bank's security interest in the Collateral.
10.6 Notices. All notices, requests, directions, demands,
waivers and other communications provided for herein shall be in writing and
shall be deemed to have been given or
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26
made when delivered personally or sent by registered or certified mail, postage
prepaid and return receipt requested, addressed to Borrower or Bank, as the case
may be, at their respective addresses set forth at the beginning of this
Agreement. Notices of changes of address shall be given in the same manner.
10.7 Severability. Any provision of this Agreement which is
prohibited and unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
10.8 Entire Agreement, Modification, Benefit. This Agreement
shall constitute the entire agreement of the parties and no provision of this
Agreement, including the provisions of this Section 10.8, may be modified,
deleted or amended in any manner except by agreement in writing executed by the
parties. All terms of this Agreement shall be binding upon, inure to the benefit
of and be enforceable by the parties hereto and their respective successors and
assigns, provided, however, that Borrower shall not assign or transfer its
rights hereunder.
10.9 Construction. All references in this Agreement to the
single number and neuter gender shall be deemed to mean and include the plural
number and all genders, and vice versa, unless the context shall otherwise
require.
10.10 Headings. The underlined headings contained herein are
for convenience only and shall not affect the interpretation of this Agreement.
10.11 Counterparts. This Agreement may be executed in more
than one counterpart, each of which shall be deemed an original.
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27
IN WITNESS WHEREOF, Borrower, by its duly authorized officer,
and the Bank, by its duly authorized officer, have executed this Agreement in
the City of Cincinnati, County of Xxxxxxxx, State of Ohio, as of the date and
year first above written.
THE PROVIDENT BANK XXXXXX NATIONAL CORPORATION
By:_________________________ By:_________________________
Name:_______________________ Name:_______________________
Title:______________________ Title:______________________
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28
EXHIBIT A
TERM PROMISSORY NOTE
Cincinnati, Ohio
$15,000,000.00 March 31, 1999
The undersigned, for value received, hereby promises to pay to
the order of THE PROVIDENT BANK, its successors or assigns (the "Bank"), the sum
of FIFTEEN MILLION DOLLARS ($15,000,000.00), which amount was loaned to the
undersigned pursuant to the provisions of the Loan and Security Agreement
between the undersigned and the Bank dated March 31, 1999 (as the same may
hereafter be amended and modified from time to time, the "Loan Agreement"),
together with interest thereon at the Prime TL Rate (as hereinafter defined) per
annum until maturity. Upon the occurrence of any Event of Default (as defined in
the Loan Agreement) and for so long thereafter as such Event of Default
continues, this Note shall bear interest at a rate 4% per annum greater than the
Prime TL Rate (the "Default Rate"). Interest on this Note will be calculated on
the basis of the actual number of days elapsed over an assumed year consisting
of 360 days.
For purposes of this Note, the following capitalized terms,
when used herein, shall have the indicated meanings:
Prime TL Rate shall mean, as of any date, the Prime
Rate (as in effect from time to time), plus one percent (1%).
The Prime TL Rate shall change each time and as of the date of
change of the Prime Rate.
Prime Rate shall mean that annual percentage rate of
interest which is established by Bank from time to time as its
prime rate, whether or not such rate is publicly announced,
which provides a base to which loan rates may be referenced.
The Prime Rate is not necessarily the lowest lending rate of
Bank.
Capitalized terms used in this Note and not otherwise defined
shall have the meanings ascribed thereto in the Loan Agreement.
Interest on this Note shall be due and payable monthly in
arrears commencing on May 1, 1999 and on or before the first day of each
calendar month thereafter, and on the date this Note is due (whether by
maturity, acceleration or otherwise).
The entire outstanding principal and all remaining accrued
interest on this Note and all other charges payable pursuant to the Loan
Agreement shall be due and payable in full on or before the earlier of (as the
case may be, the "Maturity Date") (a) the thirty nine (39) month anniversary of
the Closing Date or (b) ninety (90) days following the exercise of the Put or
the Call pursuant to the Securityholders Agreement, or the earlier date upon
which the proceeds of the Put or Call transaction are received by Borrower.
Except as set forth in the proviso to this sentence, the
principal amount of this Note may be prepaid in whole or in part, at any time
and from time to time, provided, however, that there shall be a three percent
(3%) prepayment fee for any prepayment in whole or in part
29
from funds generated outside of the terms of the Securities Purchase Agreement.
In addition to the payments required by the next two sentences
of this paragraph, the undersigned shall make three mandatory annual payments of
the principal amount of this Note, each of which payments shall be in the amount
of $1,470,392 and shall be due and payable on or before each of March 15, 2000,
March 15, 2001 and March 15, 2002. In addition to the payments required by the
immediately preceding sentence or by the last sentence of this paragraph, in the
event there is Positive Cash Flow for any two consecutive full calendar
quarters, within 45 days after the end of the second of such two calendar
quarters the undersigned shall make a principal payment to Bank in an amount
equal to the aggregate Positive Cash Flow for such two calendar quarters, and
thereafter the undersigned shall make principal payments to Bank within 45 days
after the end of each calendar quarter in an amount equal to the cumulative
Positive Cash Flow (if any) for the most recently ended calendar quarter (the
"Positive Cash Flow Payments") until the aggregate amount of Positive Cash Flow
Payments made by the undersigned to Bank equals or exceeds Four Million Dollars
($4,000,000.00); provided, however, that if the HomeMax Cash Flow for any
quarter after the first two consecutive quarters of Positive Cash Flow is less
than zero (the "Negative Quarter"), no Positive Cash Flow Payments shall be
required until the end of the next succeeding quarter during which the
cumulative HomeMax Cash Flow since the beginning of the Negative Quarter is
greater than zero. In addition to the payments required by the first two
sentences of this paragraph, the undersigned shall make further payments to Bank
of the proceeds realized from the exercise of the Put or the Call pursuant to
the Securityholders Agreement to the extent necessary to result in the payment
in full of the principal and all remaining accrued interest on this Note and all
other charges payable pursuant to the Loan Agreement.
If any payment of principal or interest is not paid on the
date due, or if the undersigned shall otherwise be in default in the performance
of any obligations hereunder, under the Loan Agreement or under any of the other
Loan Documents, the Bank, at its option, may charge and collect, or add to the
unpaid principal balance hereof, a late charge of up to $250.00 for each such
delinquency to cover the extra expense incident to handling delinquent accounts,
and/or increase the interest rate on the unpaid principal and interest hereof to
the Default Rate.
If any payment of principal or interest is not paid on the
date due, or if any other Event of Default as described in the Loan Agreement
shall occur, this Note shall, at the option of the Bank, become immediately due
and payable, without demand or notice, and the Bank may exercise all rights and
remedies provided herein, in the Loan Agreement or in the other Loan Documents
or otherwise available at law or in equity; provided, however, that upon the
occurrence of an Event of Default as described in Section 9.1(j) of the Loan
Agreement, this Note shall, without demand or notice, become automatically and
immediately due and payable in full.
This Note is secured by all of the Borrower Collateral. The
undersigned also hereby authorizes Bank, at Bank's option to charge any account
or charge or increase any Loan balance of the undersigned at Bank for the
payment or repayment of any interest or principal of the Loan, or any fees,
charges or other amounts due to Bank hereunder or under the other Loan
Documents, as and when the same become due and payable hereunder, or under the
other Loan Documents.
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30
The undersigned hereby agrees that all of its obligations
hereunder (including, without limitation, its obligations to pay principal and
interest hereunder, collectively hereinafter referred to as the "Note
Obligations") shall be unconditional, irrespective of (i) the validity or
enforceability against the undersigned or any Collateral Party of the Note
Obligations or of this Note or any other promissory note or other Loan Document
evidencing or securing all or any part of the Note Obligations, (ii) the absence
of any attempt to collect the Note Obligations from the undersigned or any
Collateral Party or other action to enforce the same, (iii) the waiver or
consent by Bank with respect to any provision of this Note or any other Loan
Document evidencing the Note Obligations, or any part thereof, or any other
agreement now or hereafter executed by the undersigned or any Collateral Party
and delivered to Bank, (iv) failure by Bank to take any steps to perfect and
maintain its security interest in, or to preserve its rights to, any security or
Collateral for the Note Obligations, (v) Bank's election, in any proceeding
instituted under the Bankruptcy Code, of the application of Section 1111(b)(2)
of the Bankruptcy Code, (vi) any borrowing or grant of a security interest by
the undersigned or any Collateral Party as debtor-in-possession, under Section
364 of the Bankruptcy Code, (vii) the disallowance of all or any portion of
Bank's claim(s) for repayment of the Note Obligations under Section 502 of the
Bankruptcy Code, or (viii) any other circumstance which might otherwise
constitute a legal or equitable discharge or defense.
The undersigned hereby waives diligence, presentment, demand
of payment, filing of claims with a court in the event of receivership or
bankruptcy of the other undersigned, protest or notice with respect to the Note
Obligations and all demands whatsoever, and covenants that the undersigned will
not be discharged, except by complete performance and payment of the Note
Obligations. Upon any Event of Default, Bank may, at its sole election, proceed
directly and at once, without notice, against the undersigned to collect and
recover the full amount or any portion of the Note Obligations, without first
proceeding against any security or Collateral for the Note Obligations. Bank
shall have the exclusive right to determine the application of payments and
credits, if any, from the undersigned, or from any other Person on account of
the Note Obligations or of any other liability of the undersigned to Bank.
At any time after maturity of the Note Obligations, Bank may,
in its sole discretion, without notice to the undersigned and regardless of the
acceptance of any security or collateral for the payment hereof, appropriate and
apply toward the payment of the Note Obligations (i) any indebtedness due or to
become due from Bank to the undersigned, and (ii) any moneys, credits, deposits,
account balances or other property belonging to the undersigned, now existing or
at any time held by or coming into the possession of Bank or any affiliate of
Bank.
No delay on the part of Bank in the exercise of any right or
remedy shall operate as a waiver thereof, and no single or partial exercise by
Bank of any right or remedy shall preclude any further exercise thereof, nor
shall any modification or waiver of any of the provisions hereof be binding upon
Bank, except as expressly set forth in a writing duly signed and delivered on
Bank's behalf by an authorized officer or agent of Bank. Bank's failure at any
time or times hereafter to require strict performance by the undersigned of any
of the provisions, warranties, terms and conditions contained in this Note or
any other Loan Document shall not waive, affect or diminish any right of Bank at
any time or times hereafter to demand strict performance thereof and such right
shall not be deemed to have been waived by any act or knowledge of Bank, its
agents, officers or employees, unless such waiver is contained in an instrument
in writing signed by an officer or agent of Bank and directed to the undersigned
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31
specifying such waiver. No waiver by Bank of any Event of Default shall operate
as a waiver of any other Event of Default or the same Event of Default on a
future occasion, and no action by Bank permitted hereunder shall in any way
affect or impair Bank's rights or the obligations of the undersigned hereunder.
Any determination by a court of competent jurisdiction of the amount of any
principal and/or interest owing by the undersigned to Bank on the Note
Obligations shall be conclusive and binding on the undersigned irrespective of
whether the undersigned was not a party to the suit or action in which such
determination was made. The undersigned agrees, consents to and confirms that
any extension of any statute of limitations resulting from any payment of the
obligations by the undersigned, any guarantor or any other Person and affecting
enforcement or collection of the obligations of the undersigned, or of the
liabilities of the undersigned hereunder shall to the same degree also extend
any statute of limitations affecting enforcement and collection of the Note
Obligations hereunder.
The undersigned hereby represents that the purpose of the loan
evidenced by this Note is to refinance outstanding indebtedness, and that no
portion of the proceeds of this Note will constitute "purpose credit" as such
term is defined in Regulation U, 12 CFR 221.1 et. seq.
The provisions of this Note shall be governed by and
interpreted in accordance with the laws of the State of Ohio.
AS A SPECIFICALLY BARGAINED INDUCEMENT FOR THE BANK TO EXTEND
CREDIT TO THE UNDERSIGNED, AND AFTER HAVING THE OPPORTUNITY TO CONSULT COUNSEL,
THE UNDERSIGNED AND ALL INDORSERS HEREBY EXPRESSLY WAIVE THE RIGHT TO TRIAL BY
JURY IN ANY LAWSUIT OR PROCEEDING RELATED TO THIS NOTE OR ARISING IN ANY WAY
FROM ANY INDEBTEDNESS OR OTHER TRANSACTIONS INVOLVING THE BANK AND THE
UNDERSIGNED.
The undersigned hereby designates all courts of record sitting
in Cincinnati, Ohio and having jurisdiction over the subject matter, state and
federal, as the exclusive forums where any action, suit or proceeding in respect
of or arising from or out of this Note, its making, validity or performance,
shall be prosecuted as to all parties, their successors and assigns, and by the
foregoing designation the undersigned consents to the jurisdiction and venue of
such courts.
IN WITNESS WHEREOF, the undersigned, by its duly authorized
officer, has executed this Note in the City of Cincinnati, County of Xxxxxxxx,
State of Ohio, as of the date and year first above written.
XXXXXX NATIONAL CORPORATION
By:_________________________
Name:_______________________
Title:______________________
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32
EXHIBIT B
THE PROVIDENT BANK UNCONDITIONAL GUARANTY
WHEREAS, the undersigned is a wholly owned subsidiary of
Xxxxxx National Corporation ("Borrower"); and
WHEREAS, Borrower and The Provident Bank ("Provident") will
enter into, or have entered into, that certain Loan and Security Agreement date
March 31, 1999 (the "Loan Agreement") pursuant to which Provident will make
loans and other financial accommodations to Borrower for the benefit of all
Collateral Parties (as defined in the Loan Agreement); and
WHEREAS, the undersigned has received a copy of the Loan
Agreement and such other information regarding the financing contemplated by the
Loan Agreement as the undersigned deems necessary and the undersigned has
determined that it will receive direct and material benefits from the financing
contemplated by the Loan Agreement and the other Loan Documents (as defined in
the Loan Agreement); and
WHEREAS, the execution and delivery of this Unconditional
Guaranty to Provident by the undersigned is a condition precedent to Provident's
obligation and willingness to make the loans and other financial accommodations
contemplated by the Loan Agreement;
NOW, THEREFORE, in consideration of the premises and to induce
Provident to make and continue to make loans and other financial accommodations
to Borrower, whether to Borrower alone or to Borrower and others, and in
consideration of the extension of such credit, the undersigned hereby absolutely
and unconditionally guarantees the full and timely payment and performance of
all of the Obligations (as defined in the Loan Agreement) and of any and all
existing and future indebtedness or liability of every kind, nature or character
(including, without limitation, principal, interest, all costs of collection,
and attorneys' fees) owing to Provident by Borrower, all whether direct or
indirect, absolute or contingent and whether incurred as primary debtor,
co-maker or guarantor (together with the Obligations, the foregoing is
hereinafter referred to as the "Indebtedness"). The undersigned further
absolutely and unconditionally guarantees the prompt performance when due of all
terms, covenants, and conditions of the Loan Documents and any other agreement
between any Collateral Party (as defined in the Loan Agreement) and Provident
that relates to the Indebtedness. The undersigned undertakes this continuing,
absolute, and unconditional guaranty of the aforementioned payment and
performance notwithstanding that any portion of the Indebtedness shall be void
or voidable as between the Borrower and any of its creditors, including, without
limitation, any bankruptcy trustee of the Borrower. NOTWITHSTANDING ANYTHING
HEREIN TO THE CONTRARY, THE LIABILITY OF THE UNDERSIGNED TO PROVIDENT HEREUNDER
IS LIMITED TO AN AMOUNT NOT GREATER THAN THE PRINCIPAL CAP (AS HEREINAFTER
DEFINED) PLUS ALL EXPENSE OF ANY NATURE WHATSOEVER, INCLUDING WITHOUT LIMITATION
ATTORNEYS' FEES, INCURRED OR PAID BY PROVIDENT IN EXERCISING ANY RIGHT, POWER OR
REMEDY HEREUNDER. FOR PURPOSES OF THIS GUARANTY, THE TERM "PRINCIPAL CAP" SHALL
INITIALLY MEAN $10,000,000, BUT SHALL BE SUBJECT TO REDUCTION SO LONG AS NO
EVENT OF
33
DEFAULT (AS DEFINED IN THE LOAN AGREEMENT) HAS OCCURRED IN AN AMOUNT EQUAL TO
THE PRINCIPAL PAYMENTS INDEFEASIBLY RECEIVED BY PROVIDENT AND APPLIED TO
PERMANENTLY REDUCE THE PRINCIPAL BALANCE OF THE NOTE (AS DEFINED IN THE LOAN
AGREEMENT) AFTER THE PRINCIPAL BALANCE OUTSTANDING ON THE NOTE IS INDEFEASIBLY
REDUCED TO $10,000,000 OR LESS.
This absolute, continuing, unconditional, and unrestricted
guaranty is a guaranty of payment and not a guaranty of collection. Upon the
failure of Borrower to pay the Indebtedness promptly when due, Provident, at its
sole option, may proceed against the undersigned, to collect the Indebtedness,
with or without proceeding against the Borrower, any co-maker or co-surety or
co-guarantor, any indorser or any collateral held as security for the
Indebtedness. Any and all payments upon the Indebtedness made by the Borrower,
the undersigned, or any other person, and the proceeds of any and all collateral
securing the payment of the Indebtedness and this guaranty, may be applied by
Provident in whatever manner it may determine in its sole discretion. The
undersigned agrees to reimburse Provident for all expenses of any nature
whatsoever including, without limitation. attorneys fees, incurred or paid by
Provident in exercising any right, power, or remedy conferred by this guaranty.
The obligations of the undersigned set forth in this guaranty
shall extend to all amendments, supplements, modifications, renewals,
replacements or extensions of the Indebtedness at any rate of interest. The
liability of the undersigned and the rights of Provident under this guaranty
shall not be impaired or affected in any manner by, and the undersigned hereby
consents in advance to and waives any requirement of notice for, any (1)
disposition, impairment, release, surrender, substitution, or modification of
any collateral securing the Indebtedness or the obligations created by this
guaranty or any failure to perfect a security interest in any collateral; (2)
release (including adjudication or discharge in bankruptcy) or settlement with
any person primarily or secondarily liable for the Indebtedness (including,
without limitation, any maker, indorser, guarantor or surety); (3) delay in
enforcement of payment of the Indebtedness or delay in enforcement of this
guaranty; (4) delay, omission, waiver, or forbearance in exercising any right or
power with respect to the Indebtedness of this guaranty; (5) defense arising
from the enforceability or validity of the Indebtedness or any part thereof or
the genuiness, enforceability or validity of any agreement relating thereto; (6)
defenses or counterclaims that the Borrower may assert on the Indebtedness,
including, but not limited to, failure of consideration, breach of warranty,
fraud, payment, statute of frauds, bankruptcy, infancy, statute of limitations,
lender liability, accord and satisfaction and usury; or (7) other act or
omission which might constitute a legal or equitable discharge of the
undersigned. The undersigned waives presentment, protest, demand for payment,
any right of set-off, notice of dishonor or default, notice of acceptance of
this guaranty, notice of the incurring of any of the Indebtedness and notice of
any other kind in connection with the Indebtedness or this guaranty. The
undersigned also waives any right to require a commercially reasonable
disposition of any collateral securing the Indebtedness.
The undersigned agrees that in the event of (i) the
dissolution or insolvency of Borrower, (ii) the inability of Borrower to pay its
debts as they become due, (iii) an assignment by Borrower for the benefit of its
creditors, or (iv) the institution of any bankruptcy or other proceeding by or
against Borrower alleging insolvency or inability to pay its debts as they
become due, and whether or not such event shall occur at a time when the
Indebtedness is not then due and payable,
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34
the undersigned shall pay the Indebtedness to Provident promptly upon demand as
if the Indebtedness was then due and payable.
The undersigned agrees that this guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of principal, interest or any other amount with respect to the
Indebtedness is rescinded or must otherwise be restored by Provident upon the
bankruptcy or reorganization of Borrower.
In order to secure the payment of the Indebtedness and the
obligations created by this guaranty, the undersigned hereby grants to Provident
a security interest in the accounts, securities, and properties in which the
undersigned has any interest, and that are now, or are at any time hereafter, in
the possession of Provident. Upon any portion of the Indebtedness becoming due
and not being fully paid and satisfied, the total sum then due hereunder may
immediately be charged against any account or accounts maintained by the
undersigned with Provident, without notice to or further consent from the
undersigned. The undersigned shall promptly provide such financial information
as Provident shall reasonably request from time to time.
Provident shall not be compelled to resort first to any
collateral for payment of any of the Indebtedness or the obligations created by
this guaranty, but may at its election require the obligation to be paid by the
undersigned, with or without suit. The provisions of this guaranty shall apply
to any new or additional collateral given by the undersigned to further secure
the Indebtedness and the obligations created by this guaranty.
Except for the limited purposes described in next succeeding
paragraph, until the Indebtedness is fully and finally paid and satisfied, the
undersigned will not attempt to exercise in any way, and hereby subordinates any
(i) rights which it might otherwise have had or acquired against Borrower or any
other party by way of subrogation or otherwise because of any payment made by
the undersigned hereunder or otherwise, (ii) right to enforce any remedy which
Provident now has or may hereafter have against Borrower, any indorser or any
guarantor of all or any part of the Indebtedness, and (iii) any benefit of, and
any right to participate in, any security or collateral given to Provident to
secure payment of the Indebtedness or any other liability of Borrower to Bank;
the undersigned further agrees that any and all claims the undersigned has
against Borrower, any indorser or any other guarantor of all or any part of the
Indebtedness, or against any of their respective properties, whether arising by
reason of any payment by the undersigned to Provident pursuant to the provisions
hereof, or otherwise, shall be subordinate and subject in right of payment to
the prior payment, in full, of all principal and interest, all reasonable costs
of collection (including, but not by way of limitation, attorneys' fees) and any
other liabilities or obligations owing to Provident which constitute the
Indebtedness or may arise either with respect to or on any Loan Document. The
undersigned also waives all setoffs and counterclaims and all presentments,
demands for performance, notices of nonperformance, protests, notices of
protest, notices of dishonor, and notices of acceptance hereof. The undersigned
further waives all notices of the existence, creation or incurring of new or
additional Indebtedness, arising either from additional loans extended to
Borrower or otherwise, and also waives all notices that the principal amount, or
any portion thereof, and/or any interest on any instrument or document
evidencing all or any part of the Indebtedness is due, notices of any and all
proceedings to collect from Borrower or other indorser or any guarantor of all
or any part of the Indebtedness, or from anyone else, and, to the
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35
extent permitted by law, notices of exchange, sale, surrender or other handling
of any collateral or other security given to Provident to secure payment of the
Indebtedness.
It is the intent of the undersigned that the obligations of
each Collateral Party under the Loan Documents not be subject to challenge on
any basis. Accordingly, as of the date hereof, the liability of the undersigned
hereunder and under all other Loan Documents, together with all of its other
liabilities, debts, claims and indebtedness to all persons as of the date hereof
and as of any other date on which a transfer is deemed to occur by virtue of the
Loan Documents, whether fixed or contingent (collectively the "Dated
Liabilities") is, and is to be, less than the present fair salable value of all
of its assets, and, if different, the fair valuation of all of its assets, as of
such corresponding date (as the case may be "Dated Assets"), and the undersigned
has, and shall have, on the date hereof and on any other date on which a
transfer is deemed to have occurred by virtue of the Loan Documents, Dated
Assets in an amount sufficient to pay its Dated Liabilities as they become
absolute and matured. To this end, the undersigned grants to and recognizes in
Borrower rights of subrogation and contribution in the amount, if any, necessary
to cause the statements in the preceding sentence to be and remain true. In
determining the value of the Dated Assets and the Dated Liabilities, it is
understood that the undersigned will take into consideration its respective
rights to subrogation and contribution against the Borrower. It is a material
objective of this paragraph that the undersigned recognize rights of subrogation
and contribution rather than be deemed to be insolvent (or in contemplation
thereof). Notwithstanding anything in this paragraph to the contrary, the
agreements in this paragraph are to establish the relative rights of
contribution of the Collateral Parties and shall not modify the joint and
several and primary nature of the obligations of the undersigned owed to
Provident or impair the right of Provident to hold the undersigned liable for
payment of the full amount of the Indebtedness.
The obligations and undertakings of the undersigned and the
Borrower shall be joint, several, and primary and shall be binding upon their
respective successors and assigns, and shall inure to the benefit of Provident
and its successors and assigns. Neither the undersigned nor Borrower shall be or
be deemed to be an accommodation party with respect to the Indebtedness. All
references herein to the undersigned shall be deemed to include the undersigned
and its successors and assigns, including, without limitation, a receiver,
trustee or debtor in possession of or for the undersigned. All references to the
singular shall be deemed to include the plural where the context so requires.
For purposes of making extensions of credit, rendering
statements, receiving requests from, or otherwise communicating with the
undersigned, or in Provident's administration of this guaranty and the loan
transaction, the undersigned hereby appoints Borrower as its agent and
authorizes Provident to deal with Borrower exclusively, and the undersigned
acknowledges and agrees that any act done or omitted or any document,
certificate, or instrument executed or delivered by Borrower for the undersigned
will be binding upon the undersigned.
To induce Provident to make the loans and other financial
accommodations to Borrower in the manner contemplated by the Loan Agreement, the
undersigned hereby represents, warrants, covenants and states to Provident that:
(i) Collateral Parties are dependent on each other for their strategic
management, operations, financing, and general administrative services; (ii)
Collateral Parties desire to utilize their borrowing potential on a consolidated
basis, to the extent(s)
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36
possible as if they were merged into a single corporate entity and, consistent
with realizing such potential, to make available to Provident security
commensurate with the amount and nature of their aggregate borrowings; (iii)
Collateral Parties (and each of them) have determined that they will benefit
specifically and materially from the advances of credit contemplated the Loan
Agreement; and (iv) Collateral Parties have requested and bargained for the
structure and terms of and security for the advances contemplated the Loan
Agreement.
The undersigned hereby assumes responsibility for keeping
itself informed of the financial condition of Borrower, and any and all
indorsers and/or other guarantors of any instrument or document evidencing all
or any part of the Indebtedness and of all other circumstances bearing upon the
risk of nonpayment or performance of the Indebtedness or any part thereof that
diligent inquiry would reveal, and the undersigned hereby agrees that Provident
shall have no duty to advise the undersigned of information known to Provident
regarding such condition or any such circumstances. In the event Provident, in
its sole discretion, undertakes at any time or from time to time to provide any
such information to the undersigned, Provident shall be under no obligation (i)
to undertake any investigation not a part of its regular business routine, (ii)
to disclose any information which, pursuant to accepted or reasonable commercial
finance practices, Provident wishes to maintain confidential, or (iii) to make
any other or future disclosures of such information or any other information to
the undersigned.
As a specifically bargained inducement for Provident to extend
credit pursuant to the Loan Agreement: (i) THE UNDERSIGNED HEREBY EXPRESSLY
WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATED TO THIS
GUARANTY OR ARISING IN ANY WAY FROM THE INDEBTEDNESS OR TRANSACTIONS INVOLVING
PROVIDENT AND THE BORROWER AND (ii) THE UNDERSIGNED HEREBY DESIGNATE(S) ALL
COURTS OF RECORD SITTING IN CINCINNATI, OHIO AND HAVING JURISDICTION OVER THE
SUBJECT MATTER, STATE AND FEDERAL, AS THE EXCLUSIVE FORUMS WHERE ANY ACTION,
SUIT OR PROCEEDING IN RESPECT OF OR ARISING FROM OR OUT OF THIS GUARANTY, ITS
MAKING, VALIDITY OR PERFORMANCE, MAY BE PROSECUTED AS TO ALL PARTIES, THEIR
SUCCESSORS AND ASSIGNS, AND BY THE FOREGOING DESIGNATION THE UNDERSIGNED
CONSENT(S) TO THE JURISDICTION AND VENUE OF SUCH COURTS.
This guaranty shall inure to the benefit of and bind the
parties hereto, their successors and assigns, and their legal representatives or
heirs. Provident may, at its option, assign this guaranty to any other person
who is or becomes the indorsee or assigned of any part of the Indebtedness or
who is in possession of or the bearer of any part of the Indebtedness that is
payable to the bearer, and the undersigned shall continue to be liable under
this guaranty to such other party to the extent of such indorsed, assigned, or
possessed Indebtedness.
The undersigned that warrants that it has the corporate power
to execute this guaranty, that all the necessary corporate actions have been
taken to permit the undersigned to give this guaranty, and that the person(s)
executing this guaranty is (are) duly empowered to do so on behalf of the
undersigned.
Signed and delivered by the undersigned at Cincinnati, Ohio on
March 31, 1999.
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37
XXXXXX HOMES, INC.
By:_________________________
Name:_______________________
Title:______________________
Address:
____________________________
____________________________
____________________________
____________________________
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38
EXHIBIT C
COLLATERAL NOTE ASSIGNMENT
THIS COLLATERAL NOTE ASSIGNMENT ("Collateral Assignment
Agreement") dated as of March 31, 1999, is made and entered into by and between
XXXXXX NATIONAL CORPORATION, (the "Pledgor"), and THE PROVIDENT BANK ("Bank",
which term shall include its successors and assigns).
This Collateral Assignment Agreement has been executed and
delivered by the Pledgor to Bank pursuant to the Loan Agreement (as defined
below). To induce the Bank to enter into the Loan Agreement and to make loans
and other financial accommodations to the Pledgor, the Pledgor has agreed to
grant to the Bank a security interest in the Pledged Collateral (as defined
below).
NOW, THEREFORE, in consideration of the Bank's loans and other
financial accommodations to the Pledgor, the parties hereby agree as follows:
1. Defined Terms. As used in this Collateral Assignment
Agreement, the following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and the plural forms of the term
defined):
"Loan Agreement" means the Loan and Security
Agreement dated as of the date hereof, between the Bank and Pledgor, as the same
may be amended or modified from time to time.
"Loan Documents" means (i) the Loan Agreement and all
notes, guaranties, mortgages, security agreements, certificates, indemnification
agreements and other documents and agreements executed in connection with, or
evidencing or securing the obligations under the Loan Agreement and (ii) all
notes, guaranties, mortgages, security agreements, certificates, indemnification
agreements and other documents or instruments evidencing or securing any debts,
liabilities and obligations of any one or more of the Obligors to Bank.
"Obligors" means the collective reference to Pledgor
and Xxxxxx Homes, Inc.
"Pledged Collateral" means the loans evidenced by the
Pledged Notes, together with (i) Pledgor's entire rights, title and interest in,
to and under the Pledged Notes and all substitutions therefor and restatements,
renewals, replacements and extensions thereof, proceeds thereof and therefrom
and all interest, principal or other payments in respect thereof as well as all
securities or other property which are issued or delivered pursuant thereto or
in payment thereof, and all collateral and other property securing the payment
or performance thereof, (ii) all stock and other securities or property issued
pursuant to conversion, redemption, exercise of rights, or other act which are
referable to the Pledged Collateral (such stock or other securities are
hereinafter referred
39
to as the "Additional Pledged Securities") and (iii) all distributions, whether
cash or otherwise, in the nature of a partial or complete liquidation,
dissolution or winding up which are referable to the Pledged Collateral (such
distributions are hereinafter referred to as "Liquidating Distributions").
"Pledged Notes" shall mean all right, title and
interest of Pledgor in (a) the Four Million Dollar ($4,000,000) promissory note
from Homemax, Inc. to Pledgor dated March 15, 1999 (the "Senior Subordinated
Note"); and (b) the Four Million Four Hundred Eleven Thousand One Hundred
Seventy-Seven Dollar ($4,411,177) promissory note from American Homestar
Corporation to Pledgor dated March 15, 1999 (the "Investor Note").
All other capitalized terms used herein which are not
otherwise defined shall have the meanings assigned to them in the Loan Agreement
unless the context hereof otherwise requires.
2. Pledge and Grant of Security Interests. Pledgor hereby
pledges, assigns, hypothecates and transfers to Bank all Pledged Collateral,
together with appropriate undated assignments separate from the Pledged Notes
duly executed in blank, and hereby grants to and creates in favor of Bank liens
and security interests in the Pledged Collateral as collateral security for (i)
the due and punctual payment when due (whether at maturity, by acceleration or
otherwise) in full of all amounts due under the Term Promissory Note in the
aggregate amount of Fifteen Million Dollars ($15,000,000.00) executed and
delivered by Borrower to Bank pursuant to the Loan Agreement; (ii) the due and
punctual performance and observance by the Obligors of their respective
agreements, obligations, liabilities and duties under the Loan Documents,
including, without limitation the Loan Agreement and the Guaranty; (iii) the due
and punctual performance and observance by the Pledgor of all of its agreements,
obligations, liabilities and duties under this Collateral Assignment Agreement;
(iv) all debts, obligations or liabilities of every kind and description of any
one or more of the Obligors to Bank, now due or to become due, direct or
indirect, absolute or contingent, presently existing or hereafter arising, joint
or several, secured or unsecured, whether for payment or performance, regardless
of how the same arise or by what instrument, agreement or book account they may
be evidenced, or whether evidenced by any instrument, agreement or book account,
including, without limitation, all loans (including any loan by renewal or
extension), all overdrafts, all guarantees and all other evidences of
indebtedness, howsoever owned, held or acquired by the Bank; and (v) all costs
incurred by Bank to obtain, perfect, preserve and enforce the liens and security
interests granted by this Collateral Assignment Agreement, to collect the
Obligations Secured Hereby (as hereinafter defined) and to maintain and preserve
the Pledged Collateral, with such costs including but not limited to
expenditures made by Bank for reasonable attorneys' fees and other legal
expenses and expenses of collection, possession and sale of the Pledged
Collateral, together with interest on all such costs at the Default Rate (the
foregoing subsections (i), (ii), (iii), (iv), and (v) are collectively referred
to herein as the "Obligations Secured Hereby").
3. Delivery of Pledged Collateral. On the date hereof, the
Pledgor shall place the Pledged Collateral in pledge by delivering the Pledged
Notes to and depositing them with Bank. The Pledgor shall also deliver to Bank
concurrently therewith undated assignments separate from the Pledged Notes duly
executed in blank and all other applicable and appropriate documents and
assignments in form suitable to enable Bank to effect the transfer of all or any
portion of the Pledged Collateral to the extent hereinafter provided.
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40
4. Delivery of Additional Pledged Securities and Liquidating
Distributions; Proceeds, Cash Dividends and Voting. If the Pledgor shall
hereafter become entitled to receive or shall receive any notes, any Additional
Pledged Securities, any Liquidating Distributions, or any other non-cash
payments or collateral on account of the Pledged Collateral, the Pledgor agrees
to accept the same as Bank's agent and to hold the same in trust on behalf of
and for the benefit of Bank and agrees to promptly deliver the same forthwith to
Bank or its agent in the exact form received, with the endorsement of the
Pledgor, when necessary, to be held by Bank or its agent subject to the terms
hereof.
5. Representations and Warranties of the Pledgors. To induce
Bank to enter into this Collateral Assignment Agreement and the Loan Documents,
the Pledgor makes the following representations and warranties to Bank:
(a) The pledge of the Pledged Collateral pursuant to
this Collateral Assignment will, when the Pledged Notes have been delivered to
the possession of Bank, create a valid first lien and first perfected security
interest in such Pledged Collateral without the need of any additional filings
or obtaining any consents of whatsoever nature.
(b) The Pledgor is the legal, record and beneficial
owner of and has good and marketable title to all of the Pledged Collateral.
(c) The Pledgor holds the Pledged Collateral free and
clear of all liens, charges, encumbrances, security interests, options, voting
trusts and restrictions of every kind and nature whatsoever except only the
liens and security interests created by this Collateral Assignment Agreement.
(d) Each of the Pledged Notes has been duly executed
and delivered and is the legal and binding obligation of the maker thereof.
(e) This Collateral Assignment Agreement has been
duly executed and delivered by the Pledgor and constitutes the legal, valid and
binding obligation of the Pledgor enforceable against it in accordance with its
terms, subject to applicable bankruptcy, reorganization, moratorium or other
similar laws affecting generally the enforcement of creditors' rights.
(f) No consent or approval of any governmental body,
regulatory authority or securities exchange or other Person or entity is
required to be obtained by the Pledgor in connection with the execution,
delivery and performance of this Collateral Assignment Agreement.
(g) The execution, delivery and performance of this
Collateral Assignment Agreement will not violate any provision of any applicable
law or regulation or of any writ or decree of any court or governmental
instrumentality or of any indenture, contract, agreement or other undertaking to
which the Pledgor is a party or which purports to be binding upon any the
Pledgor or upon any of its assets and will not result in the creation or
imposition of any lien, charge or encumbrance on or security interest in any of
the assets of such Pledgor except as contemplated by this Collateral Assignment
Agreement.
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41
(h) The obligations of the makers under the Pledged
Notes are evidenced solely by, or reflected solely in, the Pledged Notes and the
Securities Purchase Agreement.
(i) True and complete copies of the Securities
Purchase Agreement and the original of each of the Pledged Notes, and all
amendments thereto, have been delivered to the Bank.
(j) There is now due and owing on the Pledged Notes,
without offset or defense of any kind, the aggregate principal sum of
$8,000,000, with interest thereon as provided in the Pledged Notes.
(k) Pledgor has not executed or permitted to occur
any waiver, release, discharge, satisfaction, cancellation, sale, transfer or
conveyance of the Pledged Notes (or any amounts due thereunder).
(l) Neither Pledgor nor any of the makers of the
Pledged Notes is in breach or default of any of the Pledged Notes or the
Securities Purchase Agreement.
6. Pledgor's Covenants.
(a) The Pledgor covenants and agrees that it will
defend Bank's lien and security interest in and to the Pledged Collateral
against the claims and demands of all persons whomsoever.
(b) The Pledgor covenants and agrees that it will not
sell, convey or otherwise dispose of any of the Pledged Collateral, or create,
incur or permit to exist any pledge, lien, mortgage, hypothecation, security
interest, charge, option or any other encumbrance or restriction with respect to
any of the Pledged Collateral, or any interest therein, or any proceeds thereof,
except for the liens and security interests created by this Collateral
Assignment Agreement.
(c) Pledgor shall not take any action or permit any
action to be taken which would result in any breach or default by Pledgor of any
of its obligations under the Securities Purchase Agreement.
(d) At any time and from time to time, upon the
written request of the Bank, and at the sole expense of the Pledgor, the Pledgor
covenants and agrees that it will promptly and duly execute and deliver such
further instruments and documents and take such further actions as Bank may
reasonably request for the purposes of obtaining or preserving the full benefits
of this Collateral Assignment Agreement and of the rights and powers herein
granted. If any amount payable under or in connection with any of the Pledged
Collateral shall be or become evidenced by any promissory note, certificate or
other instrument or chattel paper, such note, certificate, instrument or chattel
paper shall be immediately delivered to Bank, duly endorsed in a manner
satisfactory to Bank, to be held as Pledged Collateral pursuant to this
Collateral Assignment Agreement.
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42
(e) The Pledgor covenants and agrees to pay, and to
save the Bank harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or other
taxes which may be payable or determined to be payable with respect to any of
the Pledged Collateral or in connection with any of the transactions
contemplated by this Collateral Assignment Agreement.
(f) Pledgor shall not waive any rights under, or
release, discharge, cancel, sell, transfer or convey the Pledged Notes or the
Securities Purchase Agreement (or any interest therein or amounts due thereunder
or any property and assets covered thereby).
(g) Pledgor shall not amend or modify the Pledged
Notes or the Securities Purchase Agreement or grant its consent to any action or
omission with respect to which Pledgor's consent is required under the Pledged
Notes or the Securities Purchase Agreement.
(h) Pledgor shall immediately notify Bank in writing
of any information which Pledgor has or may receive with respect to the Pledged
Notes or the Securities Purchase Agreement (or the property and assets covered
thereby) which might in any manner materially and adversely affect the value
thereof or the rights of Pledgor or the Bank with respect thereto, and without
limiting the generality of the foregoing, Pledgor shall provide to Bank a copy
of any notice of default or any other notice or communication sent by the
Pledgor to, or received by the Pledgor from, any obligor under the Pledged
Notes.
(i) Pledgor shall, promptly upon receipt by Pledgor
and without demand or notice, deliver to Bank all proceeds, payments, interest,
principal and other distributions made with respect to the Pledged Collateral,
all of which shall thereafter be held by the Bank as additional collateral or,
at Bank's option, applied to reduce the Obligations Secured Hereby.
(j) Pledgor shall provide such assignments, documents
and other instruments as Bank may reasonably request in order to enable Bank to
further evidence, perfect or realize upon Bank's interest in the Pledged
Collateral.
7. Rights and Remedies upon Default. If any default or Event
of Default under this Collateral Assignment Agreement or any of the Loan
Documents shall occur and be continuing, Bank may do any one or more of the
following: (i) declare the Obligations Secured Hereby to be forthwith due and
payable, whereupon such Obligations Secured Hereby shall become immediately due
and payable without presentment, demand, protest or other notice of any kind;
and/or (ii) proceed to protect and enforce its rights under this Collateral
Assignment Agreement or any of the other Loan Documents through other
appropriate proceedings, and Bank shall have, without limitation, all of the
rights and remedies provided by applicable law, including, without limitation,
the rights and remedies of a secured party under the Ohio Uniform Commercial
Code and, in addition thereto, Bank shall be entitled, at Bank's option, to
exercise all voting and corporate rights with respect to the Pledged Collateral
as it may determine, without liability therefor except for gross negligence or
willful misconduct, but Bank shall not have any duty to exercise any voting and
corporate rights in respect of the Pledged Collateral and shall not be
responsible or liable to the Pledgor or any other person for any failure to do
so or delay in so doing.
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43
Without limiting the generality of the foregoing, the Bank
shall have the right to take any one or more of the following actions:
(1) Transfer all or any part of the Pledged
Collateral into the name of the Bank or its
nominee, with or without disclosing that
such Pledged Collateral is subject to the
lien and security interest hereunder;
(2) Notify the parties obligated on any of the
Pledged Collateral to make payment to the
Bank of any amount due or to become due with
respect thereto;
(3) Enforce collection of any of the Pledged
Collateral by suit or otherwise;
(4) Endorse any checks, drafts or other writings
in Pledgor's name to allow collection of the
Collateral;
(5) Take control of any proceeds of the Pledged
Collateral; and
(6) Execute (in the name, place and stead of the
Pledgor) endorsements, assignments and other
instruments of conveyance or transfer with
respect to all or any portion of the Pledged
Collateral.
In furtherance of the exercise by the Bank of the rights and
remedies granted to it hereunder, the Pledgor agrees that, upon request of the
Bank and at the expense of the Pledgor, it will use its best efforts to obtain
all third party and governmental approvals necessary for or incidental to the
exercise of remedies by the Bank with respect to the Pledged Collateral or any
part thereof.
8. Power of Attorney. Pledgor hereby irrevocably appoints Bank
and any officer or employee of Bank as Pledgor's true and lawful attorney in
fact, with full power of substitution, for Pledgor, and in Pledgor's name, place
and stead, upon the occurrence of any Event of Default, and in the event that
Bank elects to exercise any rights granted to it hereunder. As attorney in fact,
Bank may act for Pledgor with respect to the Pledged Collateral as if Bank were
the owner thereof, and may endorse and cash promissory notes, checks and other
instruments, institute legal proceedings, make, adjust, and settle claims, and
do all other acts necessary and incidental to the exercise of its rights
provided hereunder, or otherwise available to it upon the occurrence of an Event
of Default. Neither Bank nor its agents shall be liable for any acts or
omissions or for any error of judgment or mistake of fact or law in its capacity
as such attorney-in-fact.
9. Limitation on Duties Regarding Pledged Collateral. The
Bank's sole duty with respect to the custody, safekeeping and physical
preservation of the Pledged Collateral in its possession, under Section 9-207 of
the Code or otherwise, shall be to deal with it in the same manner as the Bank
deals with similar securities and property for its own account. Neither the Bank
nor any of its directors, officers, employees or agents shall be liable for
failure to demand, collect or realize upon any of the Pledged Collateral or for
any delay in doing so or shall be under any obligation to
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44
see or otherwise dispose of any Pledged Collateral upon the request of the
Pledgor or otherwise.
10. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Pledged Collateral are irrevocable
and powers coupled with an interest.
11. Indemnification. The Pledgor agrees to indemnify and hold
harmless Bank (to the full extent permitted by law) from and against any and all
claims, demands, losses, judgments and liabilities for penalties and excise
taxes of whatever nature, and to reimburse Bank for all costs and expenses,
including reasonable legal fees and disbursements, growing out of or resulting
from the Pledged Collateral, this Collateral Assignment Agreement or the
administration and enforcement of this Collateral Assignment Agreement or
exercise of any right or remedy granted to Bank hereunder except with respect to
such claims, etc. arising solely from the gross negligence or willful misconduct
of Bank, but including without limitation, any tax liability incurred by Bank or
any of its affiliates as a result of the exercise by Bank of any of its rights
hereunder. In no event shall Bank be liable to the Pledgor for any matter or
thing in connection with this Collateral Assignment Agreement other than to
account for proceeds of the Pledged Collateral actually received by Bank.
12. Distribution of Pledged Collateral. Upon enforcement of
this Collateral Assignment Agreement following the occurrence of a default or
Event of Default under any of the Loan Agreements, the proceeds of the Pledged
Collateral shall be applied to the Obligations Secured Hereby in such order and
manner as Bank may determine in its sole discretion.
13. Governing Law. This Collateral Assignment Agreement shall
be governed by, and construed and enforced in accordance with the laws of the
State of Ohio.
14. No Waiver; Cumulative Remedies. Bank shall not by any act,
delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder and no waiver shall be valid unless in writing, signed by
Bank, and then such waiver shall be valid only to the extent therein set forth.
A waiver by Bank of any right or remedy hereunder on any one occasion shall not
be construed as a bar to any right or remedy which Bank would otherwise have on
any future occasion. No failure to exercise or any delay in exercising on the
part of Bank any right, power or privilege hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided are cumulative and not exclusive of any rights and remedies provided by
law.
15. Severability of Provisions. The provisions of this
Collateral Assignment Agreement are severable, and if any clause or provision
hereof shall be held invalid or unenforceable in whole or in part, then such
invalidity or unenforceability shall attach only to such clause or provision or
part thereof and shall not in any manner affect any other clause or provision in
this Collateral Assignment Agreement.
16. Amendments; Binding Effect.
(a) None of the terms or provisions of this
Collateral Assignment Agreement may be altered, modified or amended except by an
instrument in writing, duly executed
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by each of the parties hereto.
(b) This Collateral Assignment Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
17. Notices. All notices, requests, directions, demands,
waivers and other communications provided for herein shall be in writing and
shall be deemed to have been given or made when delivered personally or sent by
registered or certified mail, postage prepaid and return receipt requested,
addressed to the Pledgor or the Bank, as the case may be, at their respective
addresses set forth in the Loan Agreement. Notices of changes of address shall
be given in the same manner.
18. Headings. The descriptive headings hereunder used are for
convenience only and shall not be deemed to limit or otherwise effect the
construction of any provision hereof.
19. Counterpart Execution. This Collateral Assignment
Agreement may be executed in several counterparts each of which shall constitute
an original, but all of which shall together constitute one and the same
agreement.
20. Jurisdiction and Venue. AS SPECIFICALLY BARGAINED
INDUCEMENT FOR BANK TO ACCEPT THIS COLLATERAL ASSIGNMENT AGREEMENT AND TO EXTEND
CREDIT TO THE PLEDGORS, THE PLEDGOR AGREES THAT ANY ACTION, SUIT OR PROCEEDING
IN RESPECT OF OR ARISING OUT OF THIS COLLATERAL ASSIGNMENT AGREEMENT, ITS
VALIDITY OR PERFORMANCE, AT THE SOLE OPTION OF BANK, ITS SUCCESSORS AND ASSIGNS,
SHALL BE INITIATED AND PROSECUTED AS TO ALL PARTIES AND THEIR HEIRS, SUCCESSORS
AND ASSIGNS AT CINCINNATI, OHIO. BANK AND THE PLEDGOR EACH CONSENTS TO AND
SUBMITS TO THE EXERCISE OF JURISDICTION OVER ITS PERSON BY ANY COURT SITUATED AT
CINCINNATI, OHIO HAVING JURISDICTION OVER THE SUBJECT MATTER, WAIVES PERSONAL
SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF
PROCESS MAY BE MADE BY REGISTERED MAIL DIRECTED TO THE PLEDGOR AND BANK AT THEIR
ADDRESSES AS SET FORTH HEREIN AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED FIVE (5) BUSINESS DAYS AFTER SUCH PROCESS SHALL HAVE BEEN DEPOSITED IN
THE U.S. MAIL, POSTAGE PREPAID. THE PLEDGOR WAIVES TRIAL BY JURY, ANY OBJECTION
BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION
INSTITUTED HEREUNDER, AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED APPROPRIATE BY THE COURT.
21. Irrevocable Authorization and Instruction to Issuers. The
Pledgor hereby authorizes and instructs each issuer or maker of Pledged
Collateral to comply with any instruction received by it from Bank in writing
that (a) states that an Event of Default has occurred and (b) is otherwise in
accordance with the terms of this Collateral Assignment Agreement, without any
other or further instructions from the Pledgor, and the Pledgor agrees that the
issuer or maker shall be fully protected in so complying.
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46
IN WITNESS WHEREOF, the parties have caused this Collateral
Assignment Agreement to be duly executed and delivered as of the day and year
first above written.
WITNESSES: PLEDGOR:
XXXXXX NATIONAL CORPORATION
_____________________ By:_________________________
Name:_______________________
_____________________ Title:______________________
BANK:
THE PROVIDENT BANK
_____________________ By:_________________________
Xxxxx X. XxXxxxxxx
_____________________ Senior Vice President
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ACKNOWLEDGEMENT
The undersigned, HOMEMAX, INC., hereby acknowledges receipt of
a copy of this Collateral Assignment Agreement and agrees to (i) note the
restrictions herein on its books, records, ledgers and certificates, (ii) not
make or permit any payments or distributions with respect to its obligations to
Pledgor except as permitted in this Collateral Assignment Agreement, and (iii)
not make or permit any sale, transfer or issuance of any of its obligations to
Pledgor except as permitted in this Collateral Assignment Agreement.
HOMEMAX, INC.
By:_________________________
Name:_______________________
Title:______________________
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48
ACKNOWLEDGEMENT
The undersigned, AMERICAN HOMESTAR CORPORATION, hereby
acknowledges receipt of a copy of this Collateral Assignment Agreement and
agrees to (i) note the restrictions herein on its books, records, ledgers and
certificates, (ii) not make or permit any payments or distributions with respect
to its obligations to Pledgor except as permitted in this Collateral Assignment
Agreement, and (iii) not make or permit any sale, transfer or issuance of any of
its obligations to Pledgor except as permitted in this Collateral Assignment
Agreement.
AMERICAN HOMESTAR CORPORATION
By:__________________________
Name:________________________
Title:_______________________
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49
ASSIGNMENT SEPARATE FROM NOTE
FOR VALUE RECEIVED, Xxxxxx National Corporation, an Ohio
corporation (hereinafter the "Corporation"), hereby sells, assigns and transfers
to The Provident Bank, its successors and assigns (hereinafter referred to as
"Bank"), that certain 6% Senior Subordinated Promissory Note in the original
principal amount of $4,000,000 given by Homemax, Inc. to the Corporation and
dated March 15, 1999 (the "Note"). The Corporation hereby irrevocably
constitutes and appoints the Bank as attorney to transfer the said Note and to
endorse the name of the Corporation thereon, with full power of substitution in
the premises.
XXXXXX NATIONAL CORPORATION
WITNESSES:
_____________________ By:_________________________
Name:_______________________
_____________________ Title:______________________
STATE OF ___________________ )
) SS:
COUNTY OF __________________ )
The foregoing instrument was acknowledged before me this 31st
day of March, 1999, by _________________________, the ________________________
of Xxxxxx National Corporation, an Ohio corporation, on behalf of the
corporation.
_____________________
Notary Public
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ASSIGNMENT SEPARATE FROM NOTE
FOR VALUE RECEIVED, Xxxxxx National Corporation, an Ohio
corporation (hereinafter the "Corporation"), hereby sells, assigns and transfers
to The Provident Bank, its successors and assigns (hereinafter referred to as
"Bank"), that certain Promissory Note in the original principal amount of
$4,411,177 given by American Homestar Corporation to the Corporation and dated
March 15, 1999 (the "Note"). The Corporation hereby irrevocably constitutes and
appoints the Bank as attorney to transfer the said Note and to endorse the name
of the Corporation thereon, with full power of substitution in the premises.
XXXXXX NATIONAL CORPORATION
WITNESSES:
_____________________ By:_________________________
Name:_______________________
_____________________ Title:______________________
STATE OF ___________________ )
) SS:
COUNTY OF __________________ )
The foregoing instrument was acknowledged before me this 31st
day of March, 1999, by _________________________, the ________________________
of Xxxxxx National Corporation, an Ohio corporation, on behalf of the
corporation.
_____________________
Notary Public
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51
EXHIBIT D
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT ("Pledge Agreement") dated as of March
___, 1999, is made and entered into by and between XXXXXX NATIONAL CORPORATION
(the "Pledgor"), and THE PROVIDENT BANK ("Bank", which term shall include its
successors and assigns).
WHEREAS, in connection with loans and other financial
accommodations made by Bank to Pledgor, Bank requires that Pledgor execute and
deliver this Pledge Agreement to Bank; and
WHEREAS, to induce Bank to make loans and financial
accommodations to Pledgor, pursuant to the Loan Agreement (as defined below),
the Pledgor has agreed to grant to the Bank a security interest in the Pledged
Stock (as defined below);
NOW, THEREFORE, in consideration of the Bank's loans and other
financial accommodations to Pledgor and its affiliates, the parties hereby agree
as follows:
1. Defined Terms. As used in this Pledge Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and the plural forms of the term defined):
"Certificates" means any and all notes, warrants, options,
certificates or other documents or instruments now or hereafter received or
receivable by Pledgor and representing Pledgor's interest in the Pledged Stock.
"Loan Agreement" means that certain Loan and Security
Agreement dated March 31, 1999 between Pledgor and Bank, as the same may
hereafter be amended or modified from time to time.
"Loan Documents" means (i) the Loan Agreement and all
notes, guaranties, mortgages, security agreements, certificates, indemnification
agreements and other documents and agreements executed in connection with, or
evidencing or securing the obligations under the Loan Agreement and (ii) all
notes, guaranties, mortgages, security agreements, certificates, indemnification
agreements and other documents or instruments evidencing or securing any debts,
liabilities and obligations of any one or more of the Obligors to Bank.
"Obligors" means the collective reference to Pledgor and
Xxxxxx Homes, Inc.
"Pledged Stock" means the warrants, options and shares of
capital stock described on the attached Exhibit A, together with all
substitutions therefor, proceeds thereof and therefrom and all interest, cash
dividends or other payments in respect thereof as well as all stock and other
securities or property which are issued pursuant to conversion, redemption,
52
exercise of rights, stock split, recapitalization, reorganization, stock
dividends or other corporate act which are referable to the Pledged Stock (such
stock or other securities are hereinafter referred to as the "Additional Pledged
Securities") and all distributions, whether cash or otherwise, in the nature of
a partial or complete liquidation, dissolution or winding up which are referable
to the Pledged Stock (such distributions are hereinafter referred to as
"Liquidating Distributions").
All other capitalized terms used herein have the meanings
assigned to them in the Loan Agreement unless the context hereof otherwise
requires.
2. Pledge and Grant of Security Interests. Pledgor hereby
pledges, assigns, hypothecates and transfers to Bank all Pledged Stock, together
with appropriate undated assignments separate from the Certificates duly
executed in blank, and hereby grants to and creates in favor of Bank liens and
security interests in the Pledged Stock as collateral security for (i) the due
and punctual payment when due (whether at maturity, by acceleration or
otherwise) in full of all amounts due under the Term Promissory Note in the
aggregate amount of Fifteen Million Dollars ($15,000,000.00) executed and
delivered by Borrower to Bank pursuant to the Loan Agreement; (ii) the due and
punctual performance and observance by the Obligors of their respective
agreements, obligations, liabilities and duties under the Loan Documents,
including, without limitation the Loan Agreement and the Guaranty; (iii) the due
and punctual performance and observance by the Pledgor of all of its agreements,
obligations, liabilities and duties under this Collateral Assignment Agreement;
(iv) all debts, obligations or liabilities of every kind and description of any
one or more of the Obligors to Bank, now due or to become due, direct or
indirect, absolute or contingent, presently existing or hereafter arising, joint
or several, secured or unsecured, whether for payment or performance, regardless
of how the same arise or by what instrument, agreement or book account they may
be evidenced, or whether evidenced by any instrument, agreement or book account,
including, without limitation, all loans (including any loan by renewal or
extension), all overdrafts, all guarantees and all other evidences of
indebtedness, howsoever owned, held or acquired by the Bank; and (v) all costs
incurred by Bank to obtain, perfect, preserve and enforce the liens and security
interests granted by this Collateral Assignment Agreement, to collect the
Obligations Secured Hereby (as hereinafter defined) and to maintain and preserve
the Pledged Collateral, with such costs including but not limited to
expenditures made by Bank for reasonable attorneys' fees and other legal
expenses and expenses of collection, possession and sale of the Pledged
Collateral, together with interest on all such costs at the Default Rate (the
foregoing subsections (i), (ii), (iii), (iv), and (v) are collectively referred
to herein as the "Obligations Secured Hereby").
3. Delivery of Pledged Stock. Pledgor shall place the Pledged
Stock in pledge by delivering the Certificates to and depositing them with Bank
or its agent. Pledgor also delivered to Bank or its agent concurrently therewith
undated assignments separate from the Certificates duly executed in blank and
all other applicable and appropriate documents and assignments in form suitable
to enable Bank to effect the transfer of all or any portion of the Pledged Stock
to the extent hereinafter provided.
0.Xxxxxxxx of Additional Pledged Securities and Liquidating
Distributions; Proceeds, Cash Dividends and Voting
(a) If the Pledgor shall hereafter become entitled to
receive or shall receive any interest, cash dividends, cash proceeds, any
Additional Pledged Securities, any
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53
Liquidating Distributions, or any other cash or non-cash payments on account of
the Pledged Stock, the Pledgor agrees to accept the same as Bank's agent and to
hold the same in trust on behalf of and for the benefit of Bank and agrees to
promptly deliver the same or any Certificates therefor forthwith to Bank or its
agent in the exact form received, with the endorsement of the Pledgor, when
necessary, or appropriate undated assignments separate from the Certificates
duly executed in blank, to be held by Bank or its agent subject to the terms
hereof.
(b) Notwithstanding anything contained in this Pledge
Agreement to the contrary, Pledgor shall be entitled to exercise voting rights
with respect to the Pledged Stock, so long as there has not occurred any default
or Event of Default under the Loan Agreement, the Note or any of the other Loan
Documents.
5. Representations and Warranties of the Pledgor. To induce
Bank to enter into this Pledge Agreement and the Loan Agreement, Pledgor makes
the following representations and warranties to Bank:
(a) Pledgor owns that number of shares and percentage of
the issued and outstanding capital stock of Homemax, Inc. set forth on Exhibit
A.
(b) Pledgor is the legal, record and beneficial owner of
and has good and marketable title to all of the Pledged Stock.
(c) Pledgor holds the Pledged Stock free and clear of all
liens, charges, encumbrances, security interests, options, voting trusts and
restrictions of every kind and nature whatsoever except only (i) the liens and
security interests created by this Pledge Agreement, (ii) restrictions imposed
by applicable state and federal securities laws generally, and (iii) the
put/call rights under the Securities Purchase Agreement.
(d) Each security which is a part of the Pledged Stock has
been duly authorized and validly issued and is fully paid and nonassessable.
(e) This Pledge Agreement has been duly executed and
delivered by Pledgor and constitutes the legal, valid and binding obligation of
Pledgor enforceable against it in accordance with its terms, subject to
applicable bankruptcy, reorganization, moratorium or other similar laws
affecting generally the enforcement of creditors' rights.
(f) No consent or approval of any governmental body,
regulatory authority, securities exchange or other Person is required to be
obtained by Pledgor in connection with the execution, delivery and performance
of this Pledge Agreement.
(g) The execution, delivery and performance of this Pledge
Agreement will not violate any provision of any applicable law or regulation or
of any writ or decree of any court or governmental instrumentality or of any
indenture, contract, agreement or other undertaking to which Pledgor is a party
or which purports to be binding upon Pledgor or upon any of its assets and will
not result in the creation or imposition of any lien, charge or encumbrance on
or security interest in any of the assets of Pledgor except as contemplated by
this Pledge Agreement.
(h) The pledge, assignment and delivery of the Pledged
Stock
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54
pursuant to this Pledge Agreement creates a valid first lien and first security
interest in the Pledged Stock, which lien and security interest are perfected
and senior to any pledge, lien, mortgage, hypothecation, security interest,
charge, option or encumbrance affecting or purporting to affect the Pledged
Stock and to any agreement purporting to grant to any third party a security
interest in the property or assets of Pledgor which would include the Pledged
Stock.
6. Pledgor's Covenants.
(a) Pledgor covenants and agrees that it will defend Bank's
lien and security interest in and to the Pledged Stock against the claims and
demands of all persons whomsoever.
(b) Pledgor covenants and agrees that without the prior
written consent of Bank, it will not sell, convey or otherwise dispose of any of
the Pledged Stock, or create, incur or permit to exist any pledge, lien,
mortgage, hypothecation, security interest, charge, option or any other
encumbrance or restriction with respect to any of the Pledged Stock, or any
interest therein, or any proceeds thereof, except for (i) the liens and security
interests created by this Pledge Agreement, (ii) restrictions imposed by
applicable state and federal securities laws generally, and (iii) the put/call
rights under the Securities Purchase Agreement.
(c) Pledgor covenants and agrees that it will not consent
to or permit the issuance of any additional shares of capital stock of any class
by any issuer of the Pledged Stock unless such shares are pledged and the
Certificates therefor delivered to Bank, simultaneously with the issuance
thereof, together with appropriate undated assignments separate from the
Certificates duly executed in blank.
(d) At any time and from time to time, upon the written
request of the Bank, and at the sole expense of the Pledgor, the Pledgor
covenants and agrees that it will promptly and duly execute and deliver such
further instruments and documents and take such further actions as Bank may
reasonably request for the purposes of obtaining or preserving the full benefits
of this Pledge Agreement and of the rights and powers herein granted. If any
amount payable under or in connection with any of the Pledged Stock shall be or
become evidenced by any promissory note, other instrument or chattel paper, such
note, instrument or chattel paper shall be immediately delivered to Bank, duly
endorsed in a manner satisfactory to Bank, to be held as Pledged Stock pursuant
to this Pledge Agreement.
(e) The Pledgor covenants and agrees to pay, and to save
the Bank harmless from, any and all liabilities with respect to, or resulting
from any delay in paying, any and all stamp, excise, sales or other taxes which
may be payable or determined to be payable with respect to any of the Pledged
Stock or in connection with any of the transactions contemplated by this Pledge
Agreement.
7. Rights and Remedies upon Default. If any default or Event
of Default under the Loan Agreement, the Notes, this Pledge Agreement or any of
the other Loan Documents shall occur and be continuing, Bank may do any one or
more of the following: (i) declare the Obligations Secured Hereby to be
forthwith due and payable, whereupon such Obligations Secured Hereby shall
become immediately due and payable without presentment,
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55
demand, protest or other notice of any kind; and/or (ii) proceed to protect and
enforce its rights under this Pledge Agreement, the Loan Agreement, and/or any
of the other Loan Documents, and Bank shall have, without limitation, all of the
rights and remedies provided by applicable law, including, without limitation,
the rights and remedies of a secured party under the Uniform Commercial Code
and, in addition thereto, Bank shall be entitled, at Bank's option, to exercise
all voting and corporate rights with respect to the Pledged Stock as it may
determine, without liability therefor, but Bank shall not have any duty to
exercise any voting and corporate rights in respect of the Pledged Stock and
shall not be responsible or liable to Pledgor or any other Person for any
failure to do so or delay in so doing.
Without limiting the generality of the foregoing, the Bank
shall have the right to sell the Pledged Stock, or any part thereof, at public
or private sale or at any broker's board or on any securities exchange for cash,
upon credit or for future delivery, and at such price or prices as the Bank may
deem best, and the Bank may be the purchaser of any or all of the Pledged Stock
so sold and thereafter the Bank or any other purchaser shall hold the same free
from any right or claim of whatsoever kind. The Bank is authorized, at any such
sale, if it deems it advisable so to do, to restrict the number of prospective
bidders or purchasers and/or further restrict such prospective bidders or
purchasers to persons who will represent and agree that they are purchasing for
their own account, for investment, and not with a view to the distribution or
resale of the Pledged Stock and may otherwise require that such sale be
conducted subject to restrictions as to such other matters as the Bank may deem
necessary in order that such sale may be effected in such manner as to comply
with all applicable state and federal securities laws. Upon any such sale the
Bank shall have the right to deliver, assign and transfer to the purchaser
thereof the Pledged Stock so sold.
Each purchaser at any such sale shall hold the
property sold, absolutely free from any claim or right of whatsoever kind,
including any equity or right of redemption of Pledgor, who hereby specifically
waives all rights of redemption, stay or appraisal which it has or may have
under any rule of law or statute now existing or hereafter adopted. In the event
any notice is required in connection with any such sale, Pledgor agrees that if
the Bank shall give Pledgor not less than ten (10) days' written notice of its
intention to make any such public or private sale at broker's board or on a
securities exchange, such notice shall be reasonable.
Any such public sale shall be held at such time or
times within the ordinary business hours and at such place or places as the Bank
may fix in the notice of such sale. At any sale the Pledged Stock may be sold in
one lot as an entirety or in parts, as the Bank may determine. The Bank shall
not be obligated to make any sale pursuant to any such notice. The Bank may,
without notice or publication, adjourn any sale, and such sale may be made at
any time or place to which the same may be so adjourned. In case of any sale of
all or any part of the Pledged Stock on credit or for future delivery, the
Pledged Stock so sold may be retained by the Bank until the selling price is
paid by the purchaser thereof, but the Bank shall not incur any liability in
case of the failure of such purchaser to take up and pay for the Pledged Stock
so sold and, in case of any such failure, such Pledged Stock may again be sold
upon like notice.
The Bank, instead of exercising the power of sale
herein conferred upon it, may proceed by a suit or suits at law or in equity to
foreclose this Agreement and sell the Pledged Stock, or any portion thereof,
under a judgment or decree of a court or courts of competent jurisdiction.
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56
On any sale of the Pledged Stock, the Bank is hereby
authorized to comply with any limitation or restriction in connection with such
sale that it may be advised by counsel is necessary in order to avoid any
violation of applicable law or in order to obtain any required approval of the
purchaser or purchasers by any third party or any governmental regulatory
authority or officer or court. Compliance with the foregoing procedures shall
result in such sale or disposition being considered or deemed to have been made
in a commercially reasonable manner.
In furtherance of the exercise by the Bank of the rights
and remedies granted to it hereunder, Pledgor agrees that, upon request of the
Bank and at the expense of the Pledgor, it will use its best efforts to obtain
all third party and governmental approvals necessary for or incidental to the
exercise of remedies by the Bank with respect to the Pledged Stock or any part
thereof.
8. Registration Rights; Private Sales. (a) If Bank shall
determine to exercise its right to sell any or all of the Pledged Stock pursuant
to Section 7 hereof, and if in the opinion of Bank it is necessary or advisable
to have the Pledged Stock, or that portion thereof to be sold, registered under
the provisions of the Securities Act of 1933, as amended (the "Securities Act"),
the Pledgor will cause the applicable issuer or issuers of the Pledged
Securities to (i) execute and deliver, and cause the directors and officer of
such issuer or issuers to execute and deliver, all such instruments and
documents, and do or cause to be done all such other acts, as may be, in the
opinion of Bank, necessary or advisable to register the Pledged Stock, or that
portion thereof to be sold, under the provisions of the Securities Act, (ii) use
its best efforts to cause the registration statement relating thereto to become
effective and to remain effective for a period of one year from the date of the
first public offering of the Pledged Stock, or that portion thereof to be sold,
and (iii) make all amendments thereto and/or to the related prospectus which, in
the opinion of the Bank, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. The Pledgor agrees to
cause such issuer or issuers to comply with the provisions of the securities or
"Blue Sky" laws of any and all jurisdictions which Bank shall designate and to
make available to its security holders, as soon as practicable, an earnings
statement (which need not be audited) which will satisfy the provisions of
Section 11(a) of the Securities Act.
(b) Pledgor hereby acknowledges that, notwithstanding that
a higher price might be obtained for the Pledged Stock at a public sale than at
a private sale or sales, the making of a public sale of the Pledged Stock may be
subject to registration requirements and other legal restrictions compliance
with which could require such actions on the part of Pledgor, could entail such
expenses and could subject the Bank and any underwriter through whom the Pledged
Stock may be sold and any controlling Person of any thereof to such liabilities,
as would make the making of a public sale of the Pledged Stock impractical.
Accordingly, Pledgor hereby agrees that private sales made by the Bank in
accordance with the provisions of Section 7 hereof may be at prices and on other
terms less favorable to the seller than if the Pledged Stock were sold at public
sale, and that the Bank shall not have any obligation to take any steps in order
to permit the Pledged Stock to be sold at a public sale complying with the
requirements of federal and state securities and similar laws.
(c) The Pledgor further agrees to use its best efforts to
do or cause to
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57
be done all such other acts as may be necessary to make any sale or sales of all
or any portion of the Pledged Stock pursuant to Section 7 and this Section 8
valid and binding and in compliance with any and all other applicable
requirements of law. The Pledgor further agrees that a breach of any of the
covenants contained in Section 7 and this Section 8 will cause irreparable
injury to the Bank, that the Bank has no adequate remedy at law in respect of
such breach and, as a consequence, that each and every covenant contained in
Section 7 and this Section 8 shall be specifically enforceable against the
Pledgor, and the Pledgor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except for a
defense that no default or event of default has occurred under the Loan
Agreement or any of the other Loan Documents.
9. Limitation on Duties Regarding Pledged Stock. The Bank's
sole duty with respect to the custody, safekeeping and physical preservation of
the Pledged Stock in its possession shall be to deal with it in the same manner
as the Bank deals with similar securities and property for its own account.
Neither the Bank nor any of its directors, officers, employees or agents shall
be liable for failure to demand, collect or realize upon any of the Pledged
Stock or for any delay in doing so or shall be under any obligation to see or
otherwise dispose of any Pledged Stock upon the request of the Pledgor or
otherwise.
10. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Pledged Stock are irrevocable and
powers coupled with an interest.
11. Indemnification. Pledgor agrees to indemnify and hold
harmless Bank (to the full extent permitted by law) from and against any and all
claims, demands, losses, judgments and liabilities for penalties and excise
taxes of whatever nature, and to reimburse Bank for all costs and expenses,
including reasonable legal fees and disbursements, growing out of or resulting
from the Pledged Stock, this Pledge Agreement or the administration and
enforcement of this Pledge Agreement or exercise of any right or remedy granted
to Bank hereunder except with respect to such claims, etc. arising solely from
the gross negligence or willful misconduct of Bank, but including without
limitation, any tax liability incurred by Bank or any of its affiliates as a
result of the exercise by Bank of any of its rights hereunder. In no event shall
Bank be liable to Pledgor for any matter or thing in connection with this Pledge
Agreement other than to account for proceeds of the Pledged Stock actually
received by Bank.
12. Distribution of Pledged Stock. Upon enforcement of this
Pledge Agreement following the occurrence of a default or event of default under
the Loan Agreement or any of the other Loan Documents, the proceeds of the
Pledged Stock shall be applied to the Obligations Secured Hereby in such order
and manner as Bank may determine in its sole discretion. In the event such
monies shall be insufficient to pay all of the Obligations Secured Hereby,
Pledgor shall be liable to Bank for any deficiency therein.
13. Further Assurances. The Pledgor agrees that at any time
and from time to time upon the request of Bank, the Pledgor will execute and
deliver such further documents and do such further acts and things as Bank
reasonably requests in order to effect the purposes of this Pledge Agreement.
14. No Waiver; Cumulative Remedies. Bank shall not by any act,
delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder and
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58
no waiver shall be valid unless in writing, signed by Bank, and then such waiver
shall be valid only to the extent therein set forth. A waiver by Bank of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which Bank would otherwise have on any future occasion. No
failure to exercise or any delay in exercising on the part of Bank any right,
power or privilege hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies herein provided are cumulative and not
exclusive of any rights and remedies provided by law.
15. Severability of Provisions. The provisions of this Pledge
Agreement are severable, and if any clause or provision hereof shall be held
invalid or unenforceable in whole or in part, then such invalidity or
unenforceability shall attach only to such clause or provision or part thereof
and shall not in any manner affect any other clause or provision in this Pledge
Agreement.
16. Amendments; Choice of Law; Binding Effect.
(a) None of the terms or provisions of this Pledge
Agreement may be altered, modified or amended except by an instrument in
writing, duly executed by each of the parties hereto.
(b) This Pledge Agreement shall be governed by and be
construed and interpreted in accordance with the law of the State of Ohio.
(c) This Pledge Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns.
17. Notices. All notices, requests, directions, demands,
waivers and other communications provided for herein shall be in writing and
shall be deemed to have been given or made when delivered personally or sent by
registered or certified mail, postage prepaid and return receipt requested,
addressed to the Pledgor or the Bank, as the case may be, at their respective
addresses set forth at the beginning of this Agreement.
Notices of changes of address shall be given in the same manner.
18. Headings. The descriptive headings hereunder used are for
convenience only and shall not be deemed to limit or otherwise effect the
construction of any provision hereof.
19. Counterpart Execution. This Pledge Agreement may be
executed in several counterparts each of which shall constitute an original, but
all of which shall together constitute one and the same agreement.
20. Jurisdiction, Venue and Waiver of Jury Trial. AS
SPECIFICALLY BARGAINED INDUCEMENT FOR BANK TO ACCEPT THIS PLEDGE AGREEMENT AND
TO EXTEND CREDIT TO THE PLEDGOR, THE PLEDGOR AGREES THAT ANY ACTION, SUIT OR
PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS PLEDGE AGREEMENT, ITS VALIDITY
OR PERFORMANCE, AT THE SOLE OPTION OF BANK, ITS SUCCESSORS AND ASSIGNS, SHALL BE
INITIATED AND PROSECUTED AS TO ALL PARTIES AND THEIR
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59
HEIRS, SUCCESSORS AND ASSIGNS AT CINCINNATI, OHIO. BANK AND THE PLEDGOR EACH
CONSENTS TO AND SUBMITS TO THE EXERCISE OF JURISDICTION OVER HIS PERSON BY ANY
COURT SITUATED AT CINCINNATI, OHIO HAVING JURISDICTION OVER THE SUBJECT MATTER,
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON HIM AND CONSENTS THAT ALL
SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL DIRECTED TO THE PLEDGOR
AND BANK AT THEIR ADDRESSES AS SET FORTH HEREIN AND SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED FIVE (5) BUSINESS DAYS AFTER SUCH PROCESS SHALL HAVE BEEN
DEPOSITED IN THE U.S. MAIL, POSTAGE PREPAID. THE PLEDGOR WAIVES TRIAL BY JURY,
ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY
ACTION INSTITUTED HEREUNDER, AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT.
21. Irrevocable Authorization and Instruction to Issuers. The
Pledgor hereby authorizes and instructs each issuer of Pledged Stock to comply
with any instruction received by it from Bank in writing that (a) states that
any default or Event of Default has occurred under the Loan Agreement, the Notes
or any of the other Loan Documents and (b) is otherwise in accordance with the
terms of this Pledge Agreement, without any other or further instructions from
the Pledgor, and the Pledgor agrees that the issuer shall be fully protected in
so complying.
IN WITNESS WHEREOF, the parties have caused this Pledge
Agreement to be duly executed and delivered as of the day and year first above
written.
PLEDGOR:
XXXXXX NATIONAL CORPORATION
By:_________________________
Name:_______________________
Title:______________________
BANK:
THE PROVIDENT BANK
By:_________________________
Name: Xxxxx X. XxXxxxxxx
Title: Senior Vice President
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ACKNOWLEDGEMENT
The undersigned hereby acknowledges receipt of a copy of this
Pledge Agreement and agrees to (i) note the restrictions herein on its books,
records, ledgers and certificates maintained with respect to its capital stock,
(ii) not make or permit any dividends or distributions with respect to its
capital stock except as permitted in this Pledge Agreement, and (iii) not make
or permit any sale, transfer or issuance of any of its capital stock or of any
rights to acquire its capital stock except as permitted in this Pledge
Agreement.
HOMEMAX, INC.
By:_________________________
Name:_______________________
Title:______________________
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EXHIBIT A TO PROVIDENT BANK PLEDGE AGREEMENT
NAME CLASS NUMBER
OF ISSUER OF STOCK OF SHARES PERCENTAGE
--------- -------- --------- ----------
Homemax, Inc. Class A Voting Common 67,500 75% (reducing to 50% upon
conversion of American
Homestar Corporation Note)
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62
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, _________________________ does hereby
sell, assign and transfer unto _______________________, ____________________
(______) Shares of the Common Capital Stock of Homemax, Inc. standing in its
name on the books of such corporation represented by Certificate No. ______ and
does hereby irrevocably constitute and appoint ___________________________
attorney to transfer such stock on the books of the within named Corporation
with full power of substitution in the premises.
Further under penalties of perjury, the undersigned certifies:
1. That the number shown on this form is the
undersigned's correct taxpayer
identification number.
2. That the undersigned is not subject to
backup withholding either because the
undersigned has not been notified that the
undersigned is subject to backup withholding
as a result of a failure to report all
interest or dividends, or the Internal
Revenue Service has notified the undersigned
that the undersigned is no longer subject to
backup withholding.
Taxpayer Identification # _________________________________
Dated:______________________________________________________
XXXXXX NATIONAL CORPORATION
In presence of:
By:_________________________
Name:_______________________
Title:______________________
____________________________
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63
EXHIBIT E
COMPLIANCE CERTIFICATE
The Provident Bank
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attn: Xxxxx X. XxXxxxxxx
Re: Loan and Security Agreement Dated March 31, 1999 (As
Amended and Currently in Effect, the "Loan
Agreement") between The Provident Bank, as lender,
and Xxxxxx National Corporation, as Borrower
-----------------------------------------------------
Gentlemen:
Borrower hereby certifies and warrants that the attached
financial statements of [DESCRIBE ALL FINANCIAL STATEMENTS ATTACHED AS REQUIRED
BY THE LOAN AGREEMENT] as at and for the period ending __________, 19__ (the
"Computation Date") are accurate and complete and fairly present the matters
stated therein and have been prepared in accordance with GAAP on a basis
consistent with such financial statements prepared for prior periods. Borrower
further certifies and warrants as follows:
(a) No Event of Default has occurred.
(b) Borrower has observed and performed all of its
covenants and other agreements and satisfied every
condition contained in the Loan Agreement and each of
the other Loan Documents to be observed, performed or
satisfied by it.
(c) Attached hereto are calculations which show that the
ratio of Consolidated Cash Flow From Operations to
Consolidated Fixed Charges as of the Computation Date
is _____ to 1.0, which [complies] [does not comply]
with the requirement of Section 5.13 of the Loan
Agreement that such ratio not be less than ____ to
1.0;
(d) Attached hereto are calculations which show that the
Consolidated Tangible Net Worth as of the Computation
Date is $_____________, which [complies] [does not
comply] with the requirement of Section 5.15 of the
Loan Agreement that such amount not be less than
$40,000,000 plus an amount not less than zero equal
to the aggregate cumulative net earnings of Borrower
and its Subsidiaries after December 31, 1998, which
net earnings are $________________ as of the
Computation Date;
(e) Attached hereto are calculations which show that the
ratio of Consolidated Total Liabilities to
Consolidated Tangible Net Worth as of the Computation
Date is _____ to 1.0, which [complies] [does not
comply] with the requirement of Section 6.6 of the
Loan
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64
Agreement that such ratio not exceed 2.75 to 1.0; and
(f) Attached hereto are calculations which show that the
Net Book Value as of the Computation Date is
$____________, which [complies] [does not comply]
with the requirement of Section 6.7 of the Loan
Agreement that such amount not be less than
$14,000,000.
All of the computations made herein were made pursuant to and in accordance with
the Loan Agreement. All capitalized terms used in this Compliance Certificate
that are not otherwise specifically defined shall have the meanings ascribed
thereto in the Loan Agreement.
IN WITNESS WHEREOF, the Borrower has caused this Compliance Certificate
to be executed and delivered by its duly authorized officer this _____ day of
__________, 19__.
XXXXXX NATIONAL CORPORATION
By:_________________________
Name:_______________________
Title:______________________
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65
EXHIBIT F
DRAFT OF BORROWER'S COUNSEL'S OPINION LETTER
March __, 1999
The Provident Bank
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attn: Xxxxx X. XxXxxxxxx
Re: Loan and Security Agreement Dated March 31, 1999 (As
Amended and Currently in Effect, the "Loan
Agreement") between The Provident Bank, as lender,
and Xxxxxx National Corporation, as borrower
-----------------------------------------------------
Gentlemen:
We have acted as counsel for Xxxxxx National Corporation, an Ohio
corporation ("Borrower"), in connection with the $15,000,000 principal amount
credit facility in favor of Borrower from the Provident Bank ("Bank") pursuant
to the terms of a Loan and Security Agreement of even date herewith between
Borrower and the Bank (the "Loan Agreement"). We have also acted as counsel for
Xxxxxx Homes, Inc. ("Guarantor") in connection with the Guaranty (as defined in
the Loan Agreement), and we have participated on behalf of Borrower and
Guarantor in connection with the negotiation, execution and delivery of the Loan
Agreement and all other Loan Documents ( as defined in the Loan Agreement). This
Opinion Letter is provided to you at the request of the Borrower pursuant to
Section 7.1 of the Loan Agreement. Except as otherwise indicated, capitalized
terms used herein are defined as set forth in the Loan Agreement.
In so acting, we have considered such matters of law and of fact, and
relied upon such certifications and other information furnished to us, as we
have deemed appropriate as a basis for our opinions set forth below.
The law covered by the opinions expressed herein is limited to the
federal law of the United States and the laws of the State of Ohio.
Based on the foregoing, we are of the opinion that:
1. Borrower is a corporation duly incorporated and validly existing in
good standing under the laws of Ohio and is qualified to do business under the
laws of all other states and jurisdictions where such qualification is required
by such states and jurisdictions.
66
2. Guarantor is a corporation duly incorporated and validly existing in
good standing under the laws of Ohio and is qualified to do business under the
laws of all other states and jurisdictions where such qualification is required
by such states and jurisdictions.
3. Each of the Collateral Parties has full power and authority to carry
on its business as presently conducted by it, to own and operate the properties
used in such business and to enter into and perform its obligations under the
Loan Documents to which it is a party.
4. The Loan Documents have been duly authorized, executed and delivered
on behalf of each of the Collateral Parties that is a party thereto. The Loan
Documents are legal, valid and binding instruments enforceable in accordance
with their respective terms against each of the Collateral Parties that is a
party thereto, except that (i) such enforceability may be subject to and limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other laws
now or hereafter in effect relating to creditors' rights generally; (ii) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought; and (iii) the Loan
Documents are subject to limitations on future rights in the collateral
resulting from the application of 11 U.S.C. Section 364 and 11 U.S.C. Section
552 in insolvency proceedings; provided, however, that notwithstanding the
preceding exceptions, the remedies available pursuant to the Loan Documents are
adequate for the practical realization by Bank of the rights afforded thereby.
5. The execution and delivery of the Loan Documents by each of the
Collateral Parties that is a party thereto and the performance by each of the
Collateral Parties of its respective obligations thereunder will not violate any
provision of its Articles of Incorporation/Certificate of Incorporation,
By-Laws/Regulations or any resolution of its Board of Directors.
6. No governmental or third party approvals, authorizations, licenses
or consents are required to be obtained in connection with the execution and
delivery by any of the Collateral Parties of the Loan Documents, the performance
by each Collateral Party of its obligations in accordance therewith, or the
exercise by Bank of its rights thereunder.
7. The security interests granted to Bank pursuant to the Loan
Documents are valid and have been duly and properly created, attached and
perfected.
8. To the best of our knowledge and belief after due inquiry, the
execution and delivery by the Collateral Parties of the Loan Documents to which
they are a party, and the performance of their respective obligations
thereunder, will not violate or result in the breach of any term or provision
of, constitute a default under, or permit the acceleration of maturity under,
any loan agreement, note, debenture, indenture, mortgage, deed of trust or other
agreement or instrument to which any Collateral Party is a party or by which any
Collateral Party or its assets are bound.
9. To the best of our knowledge and belief after due inquiry, there is
no threatened or pending legal proceeding or governmental proceeding or action
to which any Collateral Party is a party or to which any of its property is
subject, except as set forth on Schedule 1 hereto (which Schedule describes
generally the nature of each such proceeding or action and the amount involved).
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67
10. No taxes or governmental fees or charges are required to be paid in
connection with the execution or delivery, or any recording or filing, of the
Loan Documents, or the performance of the transactions contemplated thereunder,
other than fees which are nominal in amount charged for the filing of UCC
financing statements.
This Opinion Letter may be relied upon by you in connection with the
Loan Agreement and the other Loan Documents and may not be used or relied upon
by you or any other person for any purpose whatsoever, without, in each
instance, our prior written consent, except that this opinion may be delivered
to and relied upon by any banking institution that acquires an interest in the
Loans.
Very truly yours,
[Borrower's Counsel's Name]
By:_________________________
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68
TERM PROMISSORY NOTE
Cincinnati, Ohio
$15,000,000.00 March 31, 1999
The undersigned, for value received, hereby promises to pay to the
order of THE PROVIDENT BANK, its successors or assigns (the "Bank"), the sum of
FIFTEEN MILLION DOLLARS ($15,000,000.00), which amount was loaned to the
undersigned pursuant to the provisions of the Loan and Security Agreement
between the undersigned and the Bank dated March 31, 1999 (as the same may
hereafter be amended and modified from time to time, the "Loan Agreement"),
together with interest thereon at the Prime TL Rate (as hereinafter defined) per
annum until maturity. Upon the occurrence of any Event of Default (as defined in
the Loan Agreement) and for so long thereafter as such Event of Default
continues, this Note shall bear interest at a rate 4% per annum greater than the
Prime TL Rate (the "Default Rate"). Interest on this Note will be calculated on
the basis of the actual number of days elapsed over an assumed year consisting
of 360 days.
For purposes of this Note, the following capitalized terms, when used
herein, shall have the indicated meanings:
Prime TL Rate shall mean, as of any date, the Prime Rate (as
in effect from time to time), plus one percent (1%). The Prime TL Rate
shall change each time and as of the date of change of the Prime Rate.
Prime Rate shall mean that annual percentage rate of interest
which is established by Bank from time to time as its prime rate,
whether or not such rate is publicly announced, which provides a base
to which loan rates may be referenced. The Prime Rate is not
necessarily the lowest lending rate of Bank.
Capitalized terms used in this Note and not otherwise defined shall
have the meanings ascribed thereto in the Loan Agreement.
Interest on this Note shall be due and payable monthly in arrears
commencing on May 1, 1999 and on or before the first day of each calendar month
thereafter, and on the date this Note is due (whether by maturity, acceleration
or otherwise).
The entire outstanding principal and all remaining accrued interest on
this Note and all other charges payable pursuant to the Loan Agreement shall be
due and payable in full on or before the earlier of (as the case may be, the
"Maturity Date") (a) the thirty nine (39) month anniversary of the Closing Date
or (b) ninety (90) days following the exercise of the Put or the Call pursuant
to the Securityholders Agreement, or the earlier date upon which the proceeds of
the Put or Call transaction are received by Borrower.
Except as set forth in the proviso to this sentence, the principal
amount of this Note may be prepaid in whole or in part, at any time and from
time to time, provided, however, that there shall be a three percent (3%)
prepayment fee for any prepayment in whole or in part from funds generated
outside of the terms of the Securities Purchase Agreement.
69
In addition to the payments required by the next two sentences of this
paragraph, the undersigned shall make three mandatory annual payments of the
principal amount of this Note, each of which payments shall be in the amount of
$1,470,392 and shall be due and payable on or before each of March 15, 2000,
March 15, 2001 and March 15, 2002. In addition to the payments required by the
immediately preceding sentence or by the last sentence of this paragraph, in the
event there is Positive Cash Flow for any two consecutive full calendar
quarters, within 45 days after the end of the second of such two calendar
quarters the undersigned shall make a principal payment to Bank in an amount
equal to the aggregate Positive Cash Flow for such two calendar quarters, and
thereafter the undersigned shall make principal payments to Bank within 45 days
after the end of each calendar quarter in an amount equal to the cumulative
Positive Cash Flow (if any) for the most recently ended calendar quarter (the
"Positive Cash Flow Payments") until the aggregate amount of Positive Cash Flow
Payments made by the undersigned to Bank equals or exceeds Four Million Dollars
($4,000,000.00); provided, however, that if the HomeMax Cash Flow for any
quarter after the first two consecutive quarters of Positive Cash Flow is less
than zero (the "Negative Quarter"), no Positive Cash Flow Payments shall be
required until the end of the next succeeding quarter during which the
cumulative HomeMax Cash Flow since the beginning of the Negative Quarter is
greater than zero. In addition to the payments required by the first two
sentences of this paragraph, the undersigned shall make further payments to Bank
of the proceeds realized from the exercise of the Put or the Call pursuant to
the Securityholders Agreement to the extent necessary to result in the payment
in full of the principal and all remaining accrued interest on this Note and all
other charges payable pursuant to the Loan Agreement.
If any payment of principal or interest is not paid on the date due, or
if the undersigned shall otherwise be in default in the performance of any
obligations hereunder, under the Loan Agreement or under any of the other Loan
Documents, the Bank, at its option, may charge and collect, or add to the unpaid
principal balance hereof, a late charge of up to $250.00 for each such
delinquency to cover the extra expense incident to handling delinquent accounts,
and/or increase the interest rate on the unpaid principal and interest hereof to
the Default Rate.
If any payment of principal or interest is not paid on the date due, or
if any other Event of Default as described in the Loan Agreement shall occur,
this Note shall, at the option of the Bank, become immediately due and payable,
without demand or notice, and the Bank may exercise all rights and remedies
provided herein, in the Loan Agreement or in the other Loan Documents or
otherwise available at law or in equity; provided, however, that upon the
occurrence of an Event of Default as described in Section 9.1(j) of the Loan
Agreement, this Note shall, without demand or notice, become automatically and
immediately due and payable in full.
This Note is secured by all of the Borrower Collateral. The undersigned
also hereby authorizes Bank, at Bank's option to charge any account or charge or
increase any Loan balance of the undersigned at Bank for the payment or
repayment of any interest or principal of the Loan, or any fees, charges or
other amounts due to Bank hereunder or under the other Loan Documents, as and
when the same become due and payable hereunder, or under the other Loan
Documents.
The undersigned hereby agrees that all of its obligations hereunder
(including, without limitation, its obligations to pay principal and interest
hereunder, collectively hereinafter referred to as the "Note Obligations") shall
be unconditional, irrespective of (i) the validity or enforceability against the
undersigned or any Collateral Party of the Note Obligations or of this
70
Note or any other promissory note or other Loan Document evidencing or securing
all or any part of the Note Obligations, (ii) the absence of any attempt to
collect the Note Obligations from the undersigned or any Collateral Party or
other action to enforce the same, (iii) the waiver or consent by Bank with
respect to any provision of this Note or any other Loan Document evidencing the
Note Obligations, or any part thereof, or any other agreement now or hereafter
executed by the undersigned or any Collateral Party and delivered to Bank, (iv)
failure by Bank to take any steps to perfect and maintain its security interest
in, or to preserve its rights to, any security or Collateral for the Note
Obligations, (v) Bank's election, in any proceeding instituted under the
Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy
Code, (vi) any borrowing or grant of a security interest by the undersigned or
any Collateral Party as
71
debtor-in-possession, under Section 364 of the Bankruptcy Code, (vii) the
disallowance of all or any portion of Bank's claim(s) for repayment of the Note
Obligations under Section 502 of the Bankruptcy Code, or (viii) any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense.
The undersigned hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of receivership or
bankruptcy of the other undersigned, protest or notice with respect to the Note
Obligations and all demands whatsoever, and covenants that the undersigned will
not be discharged, except by complete performance and payment of the Note
Obligations. Upon any Event of Default, Bank may, at its sole election, proceed
directly and at once, without notice, against the undersigned to collect and
recover the full amount or any portion of the Note Obligations, without first
proceeding against any security or Collateral for the Note Obligations. Bank
shall have the exclusive right to determine the application of payments and
credits, if any, from the undersigned, or from any other Person on account of
the Note Obligations or of any other liability of the undersigned to Bank.
At any time after maturity of the Note Obligations, Bank may, in its
sole discretion, without notice to the undersigned and regardless of the
acceptance of any security or collateral for the payment hereof, appropriate and
apply toward the payment of the Note Obligations (i) any indebtedness due or to
become due from Bank to the undersigned, and (ii) any moneys, credits, deposits,
account balances or other property belonging to the undersigned, now existing or
at any time held by or coming into the possession of Bank or any affiliate of
Bank.
No delay on the part of Bank in the exercise of any right or remedy
shall operate as a waiver thereof, and no single or partial exercise by Bank of
any right or remedy shall preclude any further exercise thereof, nor shall any
modification or waiver of any of the provisions hereof be binding upon Bank,
except as expressly set forth in a writing duly signed and delivered on Bank's
behalf by an authorized officer or agent of Bank. Bank's failure at any time or
times hereafter to require strict performance by the undersigned of any of the
provisions, warranties, terms and conditions contained in this Note or any other
Loan Document shall not waive, affect or diminish any right of Bank at any time
or times hereafter to demand strict performance thereof and such right shall not
be deemed to have been waived by any act or knowledge of Bank, its agents,
officers or employees, unless such waiver is contained in an instrument in
writing signed by an officer or agent of Bank and directed to the undersigned
specifying such waiver. No waiver by Bank of any Event of Default shall operate
as a waiver of any other Event of Default or the same Event of Default on a
future occasion, and no action by Bank permitted hereunder shall in any way
affect or impair Bank's rights or the obligations of the undersigned hereunder.
Any determination by a court of competent jurisdiction of the amount of any
principal and/or interest owing by the undersigned to Bank on the Note
Obligations shall be conclusive and binding on the undersigned irrespective of
whether the undersigned was not a party to the suit or action in which such
determination was made. The undersigned agrees, consents to and confirms that
any extension of any statute of limitations resulting from any payment of the
obligations by the undersigned, any guarantor or any other Person and affecting
enforcement or collection of the obligations of the undersigned, or of the
liabilities of the undersigned hereunder shall to the same degree also extend
any statute of limitations affecting enforcement and collection of the Note
Obligations hereunder.
The undersigned hereby represents that the purpose of the loan
evidenced by this Note is to refinance outstanding indebtedness, and that no
portion of the proceeds of this Note will constitute "purpose credit" as such
term is defined in Regulation U, 12 CFR 221.1 et. seq.
72
The provisions of this Note shall be governed by and interpreted in
accordance with the laws of the State of Ohio.
AS A SPECIFICALLY BARGAINED INDUCEMENT FOR THE BANK TO EXTEND CREDIT TO
THE UNDERSIGNED, AND AFTER HAVING THE OPPORTUNITY TO CONSULT COUNSEL, THE
UNDERSIGNED AND ALL INDORSERS HEREBY EXPRESSLY WAIVE THE RIGHT TO TRIAL BY JURY
IN ANY LAWSUIT OR PROCEEDING RELATED TO THIS NOTE OR ARISING IN ANY WAY FROM ANY
INDEBTEDNESS OR OTHER TRANSACTIONS INVOLVING THE BANK AND THE UNDERSIGNED.
The undersigned hereby designates all courts of record sitting in
Cincinnati, Ohio and having jurisdiction over the subject matter, state and
federal, as the exclusive forums where any action, suit or proceeding in respect
of or arising from or out of this Note, its making, validity or performance,
shall be prosecuted as to all parties, their successors and assigns, and by the
foregoing designation the undersigned consents to the jurisdiction and venue of
such courts.
IN WITNESS WHEREOF, the undersigned, by its duly authorized officer,
has executed this Note in the City of Cincinnati, County of Xxxxxxxx, State of
Ohio, as of the date and year first above written.
XXXXXX NATIONAL CORPORATION
By:______________________________________
Name:____________________________________
Title:___________________________________
