<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
Commission File Number 1-5899
U.S. HOME CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 21-0718930
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1800 West Loop South, Houston, Texas 77027
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 877-2311
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES X NO
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court. YES X NO
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at July 31, 1997
Common stock, $.01 par value 11,582,656 shares
<PAGE> 2
U.S. HOME CORPORATION
---------------------
INDEX
-----
Page
Number
------
Part I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheets--
June 30, 1997 and December 31, 1996 3
Consolidated Condensed Statements of
Operations--Three and Six Months Ended
June 30, 1997 and 1996 5
Consolidated Condensed Statements of
Cash Flows--Six Months Ended
June 30, 1997 and 1996 6
Notes to Consolidated Condensed Financial
Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 11
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 5. Other Information 17
Item 6. Exhibits and Reports on Form 8-K 18
<PAGE> 3
PART I. FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
--------------------
U.S. HOME CORPORATION AND SUBSIDIARIES
--------------------------------------
CONSOLIDATED CONDENSED BALANCE SHEETS
-------------------------------------
(Dollars in Thousands, Except Per Share Data)
ASSETS
------
June 30, December 31,
1997 1996
---------- -------------
(Unaudited)
HOUSING:
Cash (including restricted funds) ......... $ 17,282 $ 8,786
Receivables, net .......................... 62,874 28,028
Single-Family Housing Inventories ......... 732,892 709,344
Option Deposits on Real Estate ............ 80,093 70,688
Other Assets .............................. 52,742 49,036
---------- ----------
945,883 865,882
---------- ----------
FINANCIAL SERVICES:
Cash (including restricted funds) ......... 5,299 4,463
Residential Mortgage Loans ................ 70,001 63,656
Other Assets .............................. 7,888 13,410
---------- ----------
83,188 81,529
---------- ----------
$1,029,071 $ 947,411
========== ==========
The accompanying notes are an integral part of these balance sheets.
<PAGE> 4
U.S. HOME CORPORATION AND SUBSIDIARIES
--------------------------------------
CONSOLIDATED CONDENSED BALANCE SHEETS
-------------------------------------
(Dollars in Thousands, Except Per Share Data)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
June 30, December 31,
1997 1996
----------- ------------
HOUSING: (Unaudited)
Accounts Payable $ 102,211 $ 96,594
Accrued Expenses and Other Current
Liabilities 57,138 50,972
Revolving Credit Facility 40,000 -
Senior and Convertible Subordinated Debt
and Notes Payable 373,851 362,887
---------- --------
573,200 510,453
---------- --------
FINANCIAL SERVICES:
Accrued Expenses and Other Current
Liabilities 32,177 20,854
Revolving Credit Facility 32,158 42,414
---------- --------
64,335 63,268
---------- --------
Total Liabilities 637,535 573,721
---------- --------
STOCKHOLDERS' EQUITY:
Convertible Preferred Stock,
$25 per share redemption value,
authorized 84,343 shares at
June 30, 1997 and 202,206
shares at December 31, 1996,
none outstanding at June 30, 1997
and 117,863 shares at
December 31, 1996 - 2,947
Common Stock, $.01 par value, authorized
50,000,000 shares, outstanding
11,582,346 shares at June 30, 1997 and
11,452,290 shares at December 31, 1996 116 114
Capital In Excess of Par Value 356,919 353,830
Retained Earnings 39,997 18,821
Unearned Compensation on Restricted
Stock (1,917) (2,022)
---------- --------
395,115 373,690
Less Treasury Stock, at cost, 136,283
shares of common stock at June 30, 1997 (3,579) -
---------- ------
Total Stockholders' Equity 391,536 373,690
---------- --------
$1,029,071 $947,411
========== ========
The accompanying notes are an integral part of these balance sheets.
<PAGE> 5
U.S. HOME CORPORATION AND SUBSIDIARIES
--------------------------------------
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
-----------------------------------------------
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- ---------------------
1997 1996 1997 1996
-------- -------- -------- ---------
HOUSING:
<S> <C> <C> <C> <C>
Operating Revenues ....................... $334,011 $288,428 $644,659 $556,335
-------- -------- -------- --------
Operating Costs and Expenses -
Cost of products sold .................. 275,641 235,563 531,221 453,913
Selling, general and administrative .... 31,203 28,090 60,890 54,742
Interest ............................... 8,902 7,427 16,782 14,056
-------- -------- -------- --------
315,746 271,080 608,893 522,711
-------- -------- -------- --------
Housing Operating Income ................. 18,265 17,348 35,766 33,624
-------- -------- -------- --------
FINANCIAL SERVICES:
Operating Revenues ....................... 6,530 4,808 11,915 9,663
General, Administrative and Other Expenses 4,190 3,337 8,065 7,038
-------- -------- -------- --------
Financial Services Operating Income ...... 2,340 1,471 3,850 2,625
-------- -------- -------- --------
CORPORATE GENERAL AND ADMINISTRATIVE ....... 3,092 2,993 6,003 5,747
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES ................. 17,513 15,826 33,613 30,502
PROVISION FOR INCOME TAXES ................. 6,480 5,776 12,437 11,133
-------- -------- -------- --------
NET INCOME ................................. $ 11,033 $ 10,050 $ 21,176 $ 19,369
======== ======== ======== ========
INCOME PER COMMON AND COMMON
EQUIVALENT SHARE:
Primary ................................ $ .92 $ .84 $ 1.75 $ 1.61
======== ======== ======== ========
Fully diluted .......................... $ .81 $ .75 $ 1.56 $ 1.44
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 6
U.S. HOME CORPORATION AND SUBSIDIARIES
--------------------------------------
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(Dollars in Thousands)
(Unaudited)
Six Months Ended
June 30,
-----------------------
1997 1996
--------- ---------
Net Cash Used by Operating Activities ...... $(18,685) $(39,188)
-------- --------
Net Cash Flows From Investing Activities:
Increase in restricted cash .............. (11,337) (474)
Proceeds from investments in mortgages ... 5,046 1,055
Purchase of property, plant and equipment,
net of disposals ....................... (1,506) (985)
Other .................................... 51 (414)
-------- --------
Net cash used by investing activities .... (7,746) (818)
-------- --------
Net Cash Flows From Financing Activities:
Proceeds from revolving credit facilities,
net of repayments ...................... 29,744 (22,083)
Net proceeds from sale of 7.95% senior
notes .................................. -- 73,406
Repayment of notes and mortgage notes
payables ............................... (2,587) (8,583)
Repurchase of common stock and
Class B warrants ....................... (2,529) --
Redemption of convertible preferred stock (203) --
-------- --------
Net cash provided by financing activities 24,425 42,740
-------- --------
Net Increase (Decrease) in Cash ............ (2,006) 2,734
Cash At Beginning of Period ................ 8,138 6,228
-------- --------
Cash At End of Period ...................... $ 6,132 $ 8,962
======== ========
Supplemental Disclosure:
Interest paid, before amount capitalized -
Housing ................................ $ 17,073 $ 14,339
Financial Services ..................... 666 802
-------- --------
$ 17,739 $ 15,141
======== ========
Income taxes paid ........................ $ 15,023 $ 5,179
======== ========
The accompanying notes are an integral part of these statements.
<PAGE> 7
U.S. HOME CORPORATION AND SUBSIDIARIES
--------------------------------------
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
----------------------------------------------------
June 30, 1997
-------------
(Dollars in Thousands)
(Unaudited)
(1) PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
The accompanying consolidated condensed balance sheet as of
December 31, 1996, which has been derived from audited financial
statements, and the accompanying unaudited consolidated condensed
financial statements have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and note disclosures normally included in annual
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to
those rules and regulations. Although the Company believes that the
disclosures made are adequate to ensure that the information
presented is not misleading, it is suggested that these
consolidated condensed financial statements should be read in
conjunction with the financial statements and notes thereto
included in the Company's latest Annual Report on Form 10-K.
The preparation of consolidated condensed financial statements
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
any contingent assets and liabilities at the date of the financial
statements and revenues and expenses during the reporting period.
Management's estimates and assumptions are reflective of, among
other things, prevailing market conditions, expected market
conditions based on published economic forecasts, current operating
strategies and the availability of capital, which are all subject
to change. Changes to the aforementioned or other conditions could
in turn cause changes to such estimates and assumptions and, as a
result, actual results could differ from the original estimates.
In the opinion of the Company, the accompanying consolidated
condensed financial statements contain all adjustments (all of
which were normal and recurring adjustments) necessary to present
fairly the Company's financial position as of June 30, 1997 and
December 31, 1996 and its results of operations for the three and
six month periods ended June 30, 1997 and 1996 and cash flows for
the six month periods ended June 30, 1997 and 1996.
Because of the seasonal nature of the Company's business, the
results of operations for the three and six month periods ended
June 30, 1997 and 1996 are not necessarily indicative of the
results for the full year.
<PAGE> 8
(2) INVENTORIES
The components of single-family housing inventories are as follows:
June 30, December 31,
1997 1996
-------- ------------
Housing completed and under construction $278,594 $280,390
Models ................................. 82,135 74,167
Finished lots .......................... 147,311 147,893
Land under development ................. 65,739 59,840
Land held for development or sale ...... 159,113 147,054
-------- --------
$732,892 $709,344
======== ========
(3) REVOLVING CREDIT FACILITIES, SENIOR AND CONVERTIBLE SUBORDINATED DEBT
AND NOTES PAYABLE
Housing -
Revolving credit facility, senior and convertible subordinated debt
and notes payable consist of the following:
June 30, December 31,
1997 1996
---------- -------------
Revolving credit facility ...... $ 40,000 $ -
-------- --------
7.95% Senior notes due 2001 .... 75,000 75,000
9.75% Senior notes due 2003 .... 200,000 200,000
4.875% Convertible subordinated
debentures due 2005 .......... 80,000 80,000
Notes and mortgage notes payable 18,851 7,887
-------- --------
373,851 362,887
-------- --------
$413,851 $362,887
======== ========
The Company has an unsecured revolving credit facility (the "Credit
Facility"), which was amended and restated on May 28, 1997, with a
group of banks. The Credit Facility provides for borrowings up to
$130,000, of which up to $20,000 may be used for letter of credit
obligations, subject to a borrowing base limitation. Upon approval
of the agent bank, the borrowings under the Credit Facility may be
increased, in multiples of $10,000, to a maximum of $180,000,
either by having additional banks (which have been approved by the
Company) become lenders or by having one or more of the existing
banks, with the approval of the Company, increase the amount of
their commitment. The amount available for borrowing under the
Credit Facility is based on housing inventories, land, finished
<PAGE> 9
lots and closing proceeds receivable less the outstanding senior
debt borrowings (as defined), including amounts outstanding under
the Credit Facility; as the amount invested in these categories
changes, the amount of available borrowings will increase or
decrease. At June 30, 1997, $84,185 of the Credit Facility
commitment was available for borrowing. Borrowings bear interest at
a premium over the London Interbank Offered Rate or the rate
announced by the agent bank. The Credit Facility expires on May 31,
2001, but may be extended annually beginning in 1999 for successive
one-year periods with the consent of the banks, and contains
numerous real estate and financial covenants, including
restrictions on incurring additional debt, creation of liens and
levels of land and housing inventories maintained by the Company
and a prohibition on the payment of dividends, other than stock
dividends.
During 1997, the Company purchased land in one transaction for
approximately $15,654, of which $13,151 was financed by the seller.
The financed portion of this purchase was treated as a non-cash
transaction for purposes of the consolidated condensed statements
of cash flows.
Financial Services -
The Company's mortgage banking subsidiary, U.S. Home Mortgage
Corporation ("Mortgage"), may borrow up to $65,000 under a revolving
line of credit, as amended, (the "Mortgage Credit Facility") secured
by residential mortgage loans and mortgage notes receivable. The
Mortgage Credit Facility is not guaranteed by the Company, matures
on August 31, 1997 and bears interest at a premium over the London
Interbank Offered Rate. The Mortgage Credit Facility has been in
place since 1992 and has been renewed on various terms and conditions
on an annual basis and the Company expects it to be extended or
replaced by a credit facility similar to its present terms and
conditions. However, there can be no assurance that the Mortgage
Credit Facility will be extended or replaced.
<PAGE> 10
(4) INTEREST
A summary of housing interest for the three and six month periods
ended June 30, 1997 and 1996 follows:
Three Month Period
------------------
1997 1996
--------- --------
Capitalized at beginning of period ........ $ 59,239 $ 61,184
Capitalized ............................... 8,980 8,388
Previously capitalized interest included in
interest expense ........................ (8,902) (7,427)
Other ..................................... 79 20
-------- --------
Capitalized at end of period .............. $ 59,396 $ 62,165
======== ========
Six Month Period
----------------
1997 1996
--------- --------
Capitalized at beginning of period ........ $ 58,566 $ 59,898
Capitalized ............................... 17,555 16,327
Previously capitalized interest included in
interest expense ........................ (16,782) (14,056)
Other ..................................... 57 (4)
-------- --------
Capitalized at end of period .............. $ 59,396 $ 62,165
======== ========
Interest expense relating to financial services for the three and
six month periods ended June 30, 1997 and 1996, which is included in
"general, administrative and other expenses" in the accompanying
consolidated condensed statements of operations, follows:
1997 1996
-------- -------
Three month period $ 354 $ 364
Six month period 663 825
(5) INCOME PER SHARE
The following weighted average number of common and common
equivalent shares was used to compute income per share for the
three and six month periods ended June 30, 1997 and 1996:
Three Month Period Six Month Period
------------------- ------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
Primary 12,057,084 12,009,926 12,098,394 12,067,432
Fully diluted 14,368,092 14,263,447 14,384,546 14,320,953
<PAGE> 11
The weighted average number of common and common equivalent shares
outstanding for primary income per share includes the dilutive
effect of the convertible redeemable preferred stock (all of which
had been converted to common stock or redeemed as of March 18,
1997) and Class B warrants and the assumed exercise of stock
options. Fully diluted income per share includes the assumed
conversion of the convertible subordinated debentures.
During April 1997, the Company's Board of Directors authorized the
repurchase of up to 750,000 shares of outstanding common stock or
Class B warrants, in the aggregate, from time to time in the open
market and/or in private transactions as market conditions permit.
The program is being initiated as a systematic and rational approach
to avoid the future dilutive impact from the exercise of the
outstanding Class B warrants that expire on June 21, 1998. In
addition to the open market repurchase of common stock and Class B
warrants, the Board of Directors authorized an odd lot repurchase
program for holders of less than 100 shares of the Company's common
stock. Through June 30, 1997, the Company had repurchased 136,283
shares of common stock (including 48,283 odd lot shares) and 8,100
Class B warrants for aggregate purchase prices of $3,579 and $60,
respectively. The cost of the repurchased shares has been included
in "Treasury Stock" and the cost of the repurchased warrants has
been deducted from "Capital in Excess of Par Value" in the
accompanying consolidated condensed balance sheets.
(6) NEW PRONOUNCEMENT
In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 130, Reporting
Comprehensive Income ("SFAS No. 130"). For the Company, SFAS
No. 130 will be effective for the year beginning January 1, 1998.
SFAS No. 130 establishes standards for the reporting of comprehensive
income in a company's financial statements. Comprehensive income
includes all changes in a company's equity during the period that
result from transactions and other economic events other than
transactions with its stockholders.
The Company has not completed its analysis of the impact of this new
pronouncement; however, based on its preliminary review, the Company
believes the implementation of the provisions of SFAS No. 130 will
not affect its current financial reporting because the Company has
not had any comprehensive income other than net income.
<PAGE> 12
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations
---------------------
Results of Operations
- ---------------------
Housing
-------
The following table sets forth certain financial information for the
periods indicated (dollars in thousands, except average sales price):
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
1997 1996 1997 1996
-------- -------- -------- --------
Revenues -
Single-family homes .......... $329,697 $285,833 $638,510 $550,558
Land and other ............... 4,314 2,595 6,149 5,777
-------- -------- -------- --------
Total ...................... $334,011 $288,428 $644,659 $556,335
======== ======== ======== ========
Single-family homes -
Gross margin amount .......... $ 58,154 $ 52,362 $112,979 $101,259
Gross margin percentage ...... 17.6% 18.3% 17.7% 18.4%
Units delivered .............. 1,930 1,722 3,799 3,365
Average sales price .......... $170,800 $166,000 $168,100 $163,600
New orders taken ............. 1,923 1,779 4,663 4,478
Backlog at end of period ..... 3,902 3,844
Selling, general and
administrative expenses as a
percentage of housing revenues 9.3% 9.7% 9.4% 9.8%
Interest -
Paid or accrued .............. $ 8,980 $ 8,388 $ 17,555 $ 16,327
Percentage capitalized ....... 100.0% 100.0% 100.0% 100.0%
Previously capitalized
interest included in
interest expense ........... $ 8,902 $ 7,427 $ 16,782 $ 14,056
Percentage of housing revenues 2.7% 2.6% 2.6% 2.5%
<PAGE> 13
Revenues and Sales -
- --------------------
Revenues from sales of single-family homes for the three and six month
periods ended June 30, 1997 increased 15% and 16% compared to the three and
six month periods ended June 30, 1996. The increases resulted from 12% and
13% increases in the number of housing units delivered and 3% increases in
the average sales price for both periods.
New orders taken for the three and six month periods ended June 30, 1997
increased 8% and 4% compared to the same periods in 1996. See Part II,
"Item 5 - Other Information" on page 17 for a table of unit activity by
market for the three and six month periods ended June 30, 1997 and 1996.
Gross Margins -
- ---------------
The decreases in the gross margin percentages for the three and six month
periods ended June 30, 1997 from the same periods in 1996 were primarily
attributable to increased use of sales price incentives caused by a more
competitive housing environment.
In June 1997, the Company decided to withdraw from the Indianapolis housing
market because an acceptable level of operations had not been achieved and
recorded a $1.0 million provision for the write-down of certain
Indianapolis housing, land and marketing assets to their fair value. The
gross margins for the three and six month periods ended June 30, 1997 in
the table on page 11 exclude the effect of the provision provided for this
market withdrawal. Gross margin percentages including the provision were
17.4% and 17.6% for the three and six month periods ended June 30, 1997.
While gross margins remained under pressure in the first six months of
1997, margins on housing units delivered during the second quarter showed
improvement. The Company expects that the operating margins in the third
and fourth quarters of 1997 will exceed those in the first half of the
year. However, there can be no assurance margins will continue to improve
because they may be adversely affected by future events, including a
change in the competitive housing environment and increases in construction
labor and material costs.
Selling, General and Administrative Expenses -
- ----------------------------------------------
As a percentage of housing revenues, selling, general and administrative
expenses for the three and six month periods ended June 30, 1997 decreased
when compared to the same periods in 1996. Actual selling, general and
administrative expenses for the three and six month periods ended June 30,
1997 increased $3.1 million and $6.1 million when compared to the same
periods in 1996. These increases were attributable to increases in
volume-related expenses resulting from the increases in deliveries in 1997
when compared to 1996 and increases in other selling, general and
administrative expenses resulting from increased activities.
<PAGE> 14
Interest -
- ----------
Interest paid or accrued for the three and six month periods ended June 30,
1997 increased approximately 7% and 8% compared to the same periods in
1996. The increase in the three month period ended June 30, 1997 was
primarily due to increased borrowings under the Company's unsecured
revolving credit facility ("Credit Facility"), while the increase in the
six month period ended June 30, 1997 was primarily due to increased
borrowings under the Credit Facility and the sale of the Company's 7.95%
senior notes in February 1996.
The Company capitalizes interest cost into housing inventories and charges
the previously capitalized interest to interest expense when the related
inventories are delivered. The amount of interest capitalized and
previously capitalized interest expensed in any period is a function of the
amount of housing assets, land sales and the number of housing units
delivered, average outstanding debt levels and average interest rates.
Capitalized interest amounts charged to interest expense in the three and
six month periods ended June 30, 1997 were greater than the same periods in
1996 primarily due to the increases in the number of housing units
delivered and higher average debt levels, offset in part by increases in
the amount of housing assets qualifying for interest capitalization.
Financial Services
------------------
Revenues -
- ----------
Revenues for the financial services segment for the periods indicated were
as follows (dollars in thousands):
Three Months Six Months
Ended Ended
June 30, June 30,
------------------ ------------------
1997 1996 1997 1996
-------- ------- ------- --------
U.S. Home Mortgage Corporation and
Subsidiary $ 5,569 $ 3,993 $ 9,956 $ 7,827
Other financial services operations 961 815 1,959 1,836
------- ------- ------- -------
$ 6,530 $ 4,808 $11,915 $ 9,663
======= ======= ======= =======
Approximately 82% and 81% of the housing units delivered by the Company in
the three and six month periods ended June 30, 1997 and 84% delivered by
the Company in both the three and six month periods ended June 30, 1996
were purchased using mortgage financing. Of the total housing units
financed, 77% and 72% were financed by U.S. Home Mortgage Corporation
("Mortgage") for the three and six month periods ended June 30, 1997
compared to 60% and 61% for the three and six month periods ended June 30,
1996.
<PAGE> 15
The increases in Mortgage's revenues for the three and six month periods
ended June 30, 1997 when compared to the three and six month periods ended
June 30, 1996 were primarily due to the increase in mortgage loan
originations and income from the sale of mortgage loans and servicing
rights.
Other
-----
Corporate General and Administrative -
- --------------------------------------
Corporate general and administrative includes the operations of the
Company's corporate office. As a percentage of total revenues, such
expenses were .9% for both the three and six month periods ended June 30,
1997 and were 1.0% for both the three and six month periods ended June 30,
1996. Actual corporate general and administrative expenses for the three
and six month periods ended June 30, 1997 were $3.1 million and $6.0
million, compared to $3.0 million and $5.7 million for the three and six
month periods ended June 30, 1996. The increases in 1997 over 1996 were
primarily due to increased payroll costs.
Financial Condition and Liquidity
- ---------------------------------
Housing
-------
The Company's most significant needs for capital resources are land and
finished lot purchases, land development and housing construction. The
Company's ability to generate cash adequate to meet these needs is
principally achieved from the sale of homes and the margins thereon, the
utilization of Company-owned lots and borrowings under its financing
facilities, including the Credit Facility.
Access to quality land and lot locations is an integral part of the
Company's success. Typically, in order to secure the rights to quality
locations and provide sufficient lead time for development, the Company
must acquire land rights well in advance of when orders for housing units
are expected to occur. The Company attempts to minimize its exposure to the
cyclical nature of the housing market and its use of working capital by
employing rolling lot options, primarily in its affordable and move-up home
communities, which enable the Company to initially pay a small portion of
the total lot cost and then purchase the lots on a scheduled basis. The
increase in land inventories in 1997 from 1996 was primarily the result of
increased activities, including the increased activities in the Company's
retirement and active-adult communities.
The Company has financed, and expects to continue to finance, its working
capital needs from operations and borrowings, including those made under
the Credit Facility. The Credit Facility (and previous credit facilities)
have enabled the Company to meet peak operating needs. See Note 3 of Notes
to Consolidated Condensed Financial Statements.
<PAGE> 16
The net cash provided or used by the operating, investing and financing
activities of the housing operations for the six month periods ended June
30, 1997 and 1996 is summarized below (dollars in thousands):
1997 1996
--------- ---------
Net cash provided (used) by:
Operating activities ........ $(28,194) $(39,655)
Investing activities ........ (12,417) (1,956)
Financing activities ........ 34,681 48,823
-------- --------
Net increase (decrease) in cash $ (5,930) $ 7,212
======== ========
Housing operating activities are, at any time, affected by a number of
factors, including the number of housing units under construction and
housing units delivered. Cash flows from housing operating activities for
1997 used less cash than 1996 primarily due to increased profitability and
a decrease in construction and land asset activities, offset in part by the
timing of payments related to these activities and an increase in housing
proceeds receivables.
Cash flow from investing activities for 1997 used more cash than 1996
primarily due to an increase of $11.3 million in restricted cash, of which
$11.0 million was an escrow deposit for the purchase of land for a
retirement and active-adult community which closed in July 1997.
Cash flow from housing financing activities for 1997 provided cash
primarily from net borrowings under the Credit Facility while 1996 provided
cash reflecting the sale of the Company's 7.95% senior notes, offset
primarily by the repayment of the outstanding amount under the Credit
Facility.
The Company believes that cash flow from operations and amounts available
under the Credit Facility will be sufficient to meet its working capital
obligations and other needs. However, should the Company require capital in
excess of that which is currently available, there can be no assurance that
it will be available.
Financial Services
------------------
Mortgage's activities represent a substantial portion of the financial
services segment's activities. As loan originations by Mortgage are
primarily from housing units delivered by the Company's home building
operations, Mortgage's financial condition and liquidity are to a
significant extent dependent upon the financial condition of the Company.
<PAGE> 17
Financial services operating activities are affected primarily by
Mortgage's loan originations which result in the sale of mortgage loans and
related servicing rights to third party investors. Cash flows from
financial services operating activities are also affected by the timing of
the sales of loans and servicing rights which generally are sold to
investors within 30 days after homes are delivered. In this regard, cash
flows from financial services operating activities for 1997 provided more
cash compared to 1996 primarily due to increased profitability and the
timing of payments related to Mortgage's origination activities.
The Company finances its financial services operations primarily from
internally generated funds, such as from the origination and sale of
residential mortgage loans and related servicing rights, and short-term
debt. As more fully discussed in Note 3 of Notes to Consolidated Condensed
Financial Statements, the short-term debt consists of a $65 million secured
revolving line of credit (the "Mortgage Credit Facility") which matures on
August 31, 1997. While the Mortgage Credit Facility contains numerous
convenants, including a debt to tangible net worth ratio and a minimum
tangible net worth requirement, these convenants are not anticipated to
significantly limit Mortgage's operations.
The Company has no obligation to provide funding to its financial services
operations, nor does it guarantee any of its financial services
subsidiaries' debt. The Company believes that the internally generated
funds and the Mortgage Credit Facility will be sufficient to provide for
Mortgage's working capital needs.
<PAGE> 18
Part II. OTHER INFORMATION
-----------------
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
The annual meeting of stockholders of the Company was held on
April 23, 1997. The following persons were re-elected to the
Company's Board of Directors to hold office until the annual
meeting of stockholders in 1998 and until their respective
successors are duly elected and qualified:
Director In Favor Withheld
---------------------- ---------- ---------
Glen Adams 8,650,716 63,302
Steven G. Gerard 8,677,385 36,633
Kenneth J. Hanau, Jr. 8,676,279 37,739
Isaac Heimbinder 8,677,173 36,845
Malcolm T. Hopkins 8,676,859 37,159
Jack L. McDonald 8,677,097 36,921
Charles A. McKee 7,633,154 1,080,864
George A. Poole, Jr. 8,658,528 55,490
Herve Repault 8,677,275 36,743
James W. Sight 8,676,936 37,082
Robert J. Strudler 8,676,729 37,289
Additional items voted upon by the Company's stockholders at the
meeting were:
(a) the Company's 1997 Employees' Stock Option Plan; and
(b) the ratification of the appointment of Arthur Andersen LLP,
independent public accountants, to examine the Company's
financial statements for 1997.
The votes of the Company's stockholders on these items were as
follows:
Broker
Item In Favor Opposed Abstained Non-Vote
---- --------- ------- ---------- ---------
(a) 8,365,060 332,536 16,422 -
(b) 8,678,648 28,185 7,185 -
<PAGE> 19
Item 5. Other Information
-----------------
Additional Operating Data -
The following table provides information (expressed in number of
housing units) with respect to new orders taken, deliveries to
purchasers of single-family homes and backlog by state for the
three and six month periods ended June 30, 1997 and 1996:
States New Orders Deliveries
-------------------- -------------- --------------
1997 1996 1997 1996
---- ---- ---- ----
Three Month Period -
Arizona ......... 225 224 193 243
California ...... 150 157 167 119
Colorado ........ 215 207 395 294
Florida ......... 603 481 578 493
Indiana/Ohio .... 34 48 40 28
Maryland/Virginia 99 129 87 80
Minnesota ....... 136 88 75 81
Nevada .......... 70 103 97 109
New Jersey ...... 120 100 85 111
Texas ........... 271 242 213 164
----- ----- ----- -----
1,923 1,779 1,930 1,722
===== ===== ===== =====
<TABLE>
<CAPTION>
States New Orders Deliveries Backlog
------------------ --------------- --------------- ---------------
1997 1996 1997 1996 1997 1996
---- ---- ---- ---- ---- ----
Six Month Period -
<S> <C> <C> <C> <C> <C> <C>
Arizona ....... 476 494 400 516 345 363
California .... 347 317 281 231 215 197
Colorado ...... 753 817 739 556 655 723
Florida ....... 1,554 1,328 1,199 1,062 1,388 1,252
Indiana/Ohio .. 78 125 85 60 77 127
Maryland/Virginia 215 237 162 153 153 197
Minnesota ..... 239 191 122 145 224 165
Nevada ........ 178 238 192 187 120 170
New Jersey .... 251 271 203 171 227 283
Texas ......... 572 460 416 284 498 367
----- ----- ----- ----- ----- -----
4,663 4,478 3,799 3,365 3,902 3,844
===== ===== ===== ===== ===== =====
</TABLE>
<PAGE> 20
Cautionary Disclosure Regarding Forward-Looking Statements -
Certain statements in the Company's press releases, oral
communications and filings with the Securities and Exchange
Commission that are not historical facts are, or may be considered
to be, forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such matters involve
risks and uncertainties, including general economic conditions,
fluctuations in interest rates, the impact of competitive products
and prices, the supply of raw materials and prices, levels of
consumer confidence and other risks referred to under the caption
"Management's Discussion and Analysis of Financial Condition and
Results of Operations, Other -- Cautionary Disclosure Regarding
Forward-Looking Statements" in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1996.
<PAGE> 21
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
Exhibit 10.1 - Amended and Restated Credit Agreement, dated
as of May 28, 1997, between U.S. Home
Corporation and The First National Bank of
Chicago, as Agent
Exhibit 10.2 - Fourth Amendment to First Amended and Restated
Warehousing Credit and Security Agreement (single
family mortgage loans), dated as of June 25, 1997
between U.S. Home Mortgage Corporation and
Residential Funding Corporation
Exhibit 11 - Computation of Income Per Common Share
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
No Current Report on Form 8-K was filed by the Company during
April, May or June 1997.
<PAGE> 22
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
U.S. HOME CORPORATION
Date: August 4, 1997 /s/ Isaac Heimbinder
--------------------
Isaac Heimbinder
President, Co-Chief Executive
Officer and Chief Operating
Officer
Date: August 4, 1997 /s/ Chester P. Sadowski
-----------------------
Chester P. Sadowski
Vice President, Controller
and Chief Accounting Officer
<PAGE> 23
INDEX OF EXHIBITS
Sequential
Exhibit Numbered
Number Page
- ------ -----------
10.1 Amended and Restated Credit Agreement, dated as of
May 28, 1997, between U.S. Home Corporation and
The First National Bank of Chicago, as Agent 24
10.2 Fourth Amendment to First Amended and Restated
Warehousing Credit and Security Agreement (single
family mortgage loans), dated as of June 25, 1997
between U.S. Home Mortgage Corporation and
Residential Funding Corporation 158
11 Computation of Income Per Common Share 164
27 Financial Data Schedule 166
<PAGE> 24
EXHIBIT 10.1
--------------------------------------
AMENDED AND RESTATED
CREDIT AGREEMENT
--------------------------------------
Dated as of May 28, 1997
--------------------------------------
U.S. HOME CORPORATION,
The Lenders Parties Thereto,
and
The First National Bank of Chicago,
as Agent
--------------------------------------
<PAGE> 25
TABLE OF CONTENTS
ARTICLE I DEFINITIONS.................................................. 1
ARTICLE II THE CREDITS................................................. 20
2.1. Commitment............................................... 20
2.2. Required Payments ....................................... 20
2.3. Ratable Loans............................................ 21
2.4. Types of Advances.................................... ... 21
2.5. Commitment Fee; Changes in Aggregate Commitment.......... 21
2.6. Minimum Amount of Each Advance........................... 24
2.7. Optional Principal Payments.............................. 24
2.8. Method of Selecting Types and Interest Periods
for New Advances............................................ 24
2.9. Conversion and Continuation of Outstanding Advances...... 25
2.10. Changes in Interest Rate, etc............................ 26
2.11. Determination of Applicable Margins and Applicable
Commitment Rate............................................. 26
2.12. Rates Applicable After Default........................... 27
2.13. Method of Payment ................................ 27
2.14. Notes; Telephonic Notices................................ 28
2.15. Interest Payment Dates; Interest and Fee Basis........... 28
2.16. Notification of Advances, Interest Rates, Prepayments
and Commitment Reductions and Increases..................... 28
2.17. Lending Installations.................................... 28
2.18. Non-Receipt of Funds by the Agent........................ 29
2.19. Withholding Tax Exemption................................ 29
2.20. Extension of Facility Termination Date................... 30
2.21. Replacement of Certain Lenders........................... 31
2.22. Swing Line............................................... 32
ARTICLE III CHANGE IN CIRCUMSTANCES..................................... 33
3.1. Yield Protection......................................... 33
3.2. Changes in Capital Adequacy Regulations.................. 34
3.3. Availability of Types of Advances........................ 35
3.4. Funding Indemnification.................................. 35
3.5. Lender Statements; Survival of Indemnity................. 35
ARTICLE IV THE LETTER OF CREDIT FACILITY............................... 36
4.1. Facility Letters of Credit............................... 36
4.2. Limitations.............................................. 36
4.3. Conditions............................................... 37
4.4. Procedure for Issuance of Facility Letters of Credit..... 37
4.5. Duties of Issuing Bank................................... 39
4.6. Participation............................................ 39
4.7. Compensation for Facility Letters of Credit.............. 41
4.8. Issuing Bank Reporting Requirements...................... 41
4.9. Indemnification; Nature of Issuing Bank's Duties......... 42
4.10. Designation of Issuing Bank.............................. 43
4.11. Obligations............................................. 43
<PAGE> 26
ARTICLE V CONDITIONS PRECEDENT......................................... 43
5.1. Effective Date........................................... 43
5.2. Each Advance............................................. 44
ARTICLE VI REPRESENTATIONS AND WARRANTIES.............................. 46
6.1. Existence and Standing................................... 46
6.2. Authorization and Validity............................... 46
6.3. No Conflict; Government Consent.......................... 46
6.4. Financial Statements..................................... 47
6.5. Material Adverse Change.................................. 47
6.6. Taxes.................................................... 47
6.7. Litigation and Contingent Obligations.................... 48
6.8. Subsidiaries............................................. 48
6.9. ERISA.................................................... 48
6.l0. Accuracy of Information.................................. 48
6.11. Regulation U............................................. 48
6.12. Material Agreements...................................... 49
6.13. Labor Disputes and Acts of God........................... 49
6.14. Ownership and Liens...................................... 49
6.15. Operation of Business.................................... 49
6.16. Laws; Environment........................................ 49
6.17. Investment Company Act................................... 50
6.18. Public Utility Holding Company Act...................... 50
6.19 Subordinated Indebtedness................................ 51
ARTICLE VII COVENANTS.................................................. 51
7.1. Financial Reporting...................................... 51
7.2. Use of Proceeds.......................................... 54
7.3. Notice of Default........................................ 55
7.4. Conduct of Business...................................... 55
7.5. Taxes.................................................... 55
7.6. Insurance................................................ 56
7.7. Compliance with Laws..................................... 56
7.8. Maintenance of Properties................................ 56
7.9. Inspection............................................... 56
7.10. Environment.............................................. 56
7.11. New Subsidiary........................................... 57
7.12. Change in Schedules...................................... 57
ARTICLE VIII NEGATIVE COVENANTS........................................ 57
8.1. Dividends................................................ 57
8.2. Indebtedness............................................. 58
8.3. Merger 58
8.4 Sale of Assets........................................... 59
8.5. Sale and Leaseback....................................... 59
8.6 Investments and Acquisitions............................. 59
8.7 Contingent Obligations................................... 61
8.8 Liens.................................................... 61
8.9. Redemption............................................... 62
8.10. Affiliates............................................... 62
8.11. Subordinated Indebtedness................................ 63
8.12. Amendments............................................... 63
8..13. Financial Undertakings................................... 63
<PAGE> 27
ARTICLE IX FINANCIAL COVENANTS......................................... 63
9.1. Minimum Consolidated Tangible Net Worth.................. 63
9.2. Permitted Indebtedness Ratio ............................ 64
9.3. Land Owned............................................... 65
9.4. Housing Inventory........................................ 65
9.5. Rate Protection.......................................... 65
ARTICLE X DEFAULTS..................................................... 65
ARTICLE XI ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES.............. 68
11.1. Acceleration............................................. 68
11.2. Amendments............................................... 68
11.3. Preservation of Rights................................... 69
ARTICLE XII GENERAL PROVISIONS........................................ 69
12.1. Survival of Representations ............................. 69
12.2. Governmental Regulation.................................. 69
12.3. Taxes.................................................... 70
12.4. Headings................................................. 70
12.5. Entire Agreement......................................... 70
12.6. Nature of Obligations; Benefits of this Agreement........ 70
12.7. Expenses; Indemnification................................ 70
12.8. Numbers of Documents..................................... 71
12.9. Accounting............................................... 71
12.l0. Severability of Provisions.............................. 71
12.11. Nonliability of Lenders and Issuing Bank................ 71
12.12. Choice of Law........................................... 71
112.13. Consent to Jurisdiction................................ 72
12.14. Waiver of Jury Trial.................................... 72
12.15. Confidentiality......................................... 72
ARTICLE XIII THE AGENT.................................................. 73
13.1. Appointment.............................................. 73
13.2. Powers 73
13.3. General Immunity......................................... 73
13.4. No Responsibility for Loans, Recitals, etc............... 73
13.5. Action on Instructions of Lenders........................ 74
13.6. Employment of Agents and Counsel......................... 74
13.7. Reliance on Documents; Counsel........................... 74
13.8. Agent's Reimbursement and Indemnification................ 74
13.9. Rights as a Lender or Issuing Bank....................... 75
13.l0. Lender Credit Decision.................................. 75
13.11. Successor Agent......................................... 75
13.12. Agent's Fee............................................. 76
<PAGE> 28
ARTICLE XIV SET OFF; RATABLE PAYMENTS.................................. 76
14.1. Setoff................................................... 76
14.2. Ratable Payments......................................... 77
ARTICLE XV BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS........... 77
15.1. Successors and Assigns................................... 77
15.2. Participations........................................... 78
15.2.1 Permitted Participants; Effect........... 78
15.2.2. Voting Rights............................ 78
15.2.3. Benefit of Setoff....................... 78
15.3. Assignments.............................................. 79
15.3.1. Permitted Assignments......................... 79
15.3.2. Effect; Effective Date.................. 79
15.4 Dissemination of Information............................. 80
15.5 Tax Treatment............................................ 80
ARTICLE XVI NOTICES.................................................... 80
16.1. Giving Notice............................................ 80
16.2. Change of Address........................................ 81
ARTICLE XVII COUNTERPARTS.............................................. 81
<PAGE> 29
EXHIBITS
EXHIBIT "A" FORM OF GUARANTY............................................
EXHIBIT "B" FORM OF NOTE................................................
EXHIBIT "C" FORM OF OPINION - KAYE, SCHOLER, FIERMAN,
HAYS AND HANDLER, LLP.......................................
EXHIBIT "D" INTENTIONALLY DELETED.......................................
EXHIBIT "E" FORM OF OPINION - LORD BISSELL & BROOK......................
EXHIBIT "F" INTENTIONALLY DELETED.......................................
EXHIBIT "G" FORM OF CONTRIBUTION AGREEMENT..............................
EXHIBIT "H" FORM OF SUBORDINATION AGREEMENT.............................
EXHIBIT "I" BORROWING CERTIFICATE.......................................
EXHIBIT "J" QUARTERLY COMPLIANCE CERTIFICATE............................
SCHEDULE "I" TO COMPLIANCE CERTIFICATE............................
EXHIBIT "K" ASSIGNMENT AGREEMENT........................................
EXHIBIT "I" TO ASSIGNMENT AGREEMENT
NOTICE OF ASSIGNMENT...................................
EXHIBIT "L" COMMITMENT AND ACCEPTANCE...................................
SCHEDULES
SCHEDULE "1-A" - GUARANTORS...........................................
SCHEDULE "1-B" - NON-BORROWING SUBSIDIARIES...........................
SCHEDULE "2.20" - EXTENSION FEES.......................................
SCHEDULE "6.3" - REQUIRED CONSENTS....................................
SCHEDULE "6.7" - LITIGATION...........................................
SCHEDULE "6.8" - SUBSIDIARIES.........................................
SCHEDULE "6.16" - EXCEPTIONS TO ENVIRONMENTAL REPRESENTATIONS..........
SCHEDULE "8.2" - INDEBTEDNESS.........................................
SCHEDULE "8.6" - EXISTING INVESTMENTS.................................
<PAGE> 30
AMENDED AND RESTATED CREDIT AGREEMENT
This Amended and Restated Credit Agreement, dated as of May 28,
1997, is among U.S. Home Corporation, a Delaware corporation, the Lenders
listed on the signature pages of this Agreement, and The First National
Bank of Chicago, as Agent.
WHEREAS, the parties hereto have entered into that certain Credit
Agreement dated as of September 29, 1995, as amended by that certain
Consent and First Amendment to Credit Agreement dated as of February 9,
1996, as further amended by that certain Second Amendment to Credit
Agreement dated as of September 25, 1996, and as further amended by that
certain Third Amendment to Credit Agreement dated as of November 4, 1996
(as so amended, the "Original Agreement"); and
WHEREAS, the parties hereto now desire to amend and restate the
Original Agreement in its entirety.
NOW THEREFORE, in consideration of the premises, the mutual
covenants contained herein and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties
hereto agree that, effective as of the Effective Date (as hereinafter
defined), the Original Agreement is hereby amended and restated in its
entirety as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which
the Borrower or any of its Subsidiaries (excluding the Non-Borrowing
Subsidiaries) (i) acquires any going concern or all or substantially all of
the assets of any firm, corporation or division thereof, whether through
purchase of assets, merger or otherwise or (ii) directly or indirectly
acquires (in one transaction or as the most recent transaction in a series
of transactions) at least a majority (in number of votes) of the securities
of a corporation which have ordinary voting power for the election of
directors (other than securities having such power only by reason of the
happening of a contingency) or a majority (by percentage or voting power)
of the outstanding partnership or other ownership interests of a
partnership, joint venture, limited liability company or other similar
business organization.
"Additional Lenders" is defined in Section 2.5(b).
<PAGE> 31
"Advance" means a borrowing hereunder consisting of either (i) the
aggregate amount of the several Loans (excluding Swing Line Loans) made by
the Lenders to the Borrower of the same Type and, in the case of a
Eurodollar Advance, for the same Interest Period or (ii) a Swing Line Loan
made by the Swing Line Bank to the Borrower.
"Affected Lender" is defined in Section 2.21.
"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by or under common control with such
Person. A Person shall be deemed to control another Person if the
controlling Person beneficially owns (within the meaning of Rule 13d-3 of
the Securities Exchange Act of 1934, as amended) 20% or more of any class
of voting securities (or other ownership interests) of the controlled
Person or possesses, directly or indirectly, the power to direct or cause
the direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.
"Agent" means The First National Bank of Chicago in its capacity
as agent for the Lenders pursuant to Article XIII, and not in its
individual capacity as a Lender, and any successor Agent appointed pursuant
to Article XIII.
"Aggregate Available Credit" means the aggregate of the Available
Credits of all of the Lenders.
"Aggregate Commitment" means the aggregate of the Commitments of
all the Lenders, as increased or reduced from time to time pursuant to the
terms hereof. As of the date of this Agreement, the Aggregate Commitment is
$130,000,000.
"Agreement" means this amended and restated credit agreement, as
it may be amended or modified (including by execution and delivery of a
Commitment and Acceptance in accordance with the provisions of Section
2.5(b)) and in effect from time to time.
"Agreement Accounting Principles" is defined in Section 12.9.
"Alternate Base Rate" means, for any day, a rate of interest per
annum equal to the higher of (i) the Corporate Base Rate for such day and
(ii) the sum of (a) the Federal Funds Effective Rate for such day plus (b)
1/2 of 1% per annum.
"Applicable Commitment Rate" means, as at any date of
determination, the rate per annum indicated in Section 2.11 as then
applicable in the determination of the commitment fee under Section 2.5.
"Applicable Eurodollar Margin" means, as at any date of
determination, the margin indicated in Section 2.11 as then applicable in
the determination of Eurodollar Rates and the Applicable Letter of Credit
Rate.
<PAGE> 32
"Applicable Floating Rate Margin" means, as at any date of
determination, the margin indicated in Section 2.11 as then applicable in
the determination of the Floating Rate applicable to Floating Rate Advances
and Swing Line Loans, provided, however, that, with respect to the first
$25,000,000 of Floating Rate Advances (excluding Swing Line Loans)
outstanding at any time, the Applicable Floating Rate Margin shall be zero
(0).
"Applicable Letter of Credit Rate" means, as at any date of
determination, a rate per annum equal to (i) the Applicable Eurodollar
Margin as at such date, less (ii) 0.25 percent.
"Applicable Margin(s)" means the Applicable Eurodollar Margin
and/or the Applicable Floating Rate Margin, as the case may be.
"Article" means an article of this Agreement unless another
document is specifically referenced.
"Authorized Officer" means any of the Chairman, President, Senior
Vice President or any Vice President of the Borrower, acting singly.
"Available Credit" means, at any date with respect to any Lender,
the amount (if any) by which such Lender's Commitment exceeds the sum of
(i) the outstanding principal balance of such Lender's Loans as of such
date (including, in the case of the Swing Line Bank, Swing Line Loans),
plus (ii) such Lender's ratable share (determined in accordance with
Section 4.6) of the Facility Letter of Credit Obligations as of such date.
"Borrower" means U.S. Home Corporation, a Delaware corporation,
and its successors and assigns.
"Borrowing Base" means, with respect to an Inventory Valuation
Date for which it is to be determined, an amount equal to the sum of the
following assets of the Borrower and the Guarantors: (i) the Receivables,
multiplied by ninety percent (90%), (ii) the book value of Housing Units
Under Contract, multiplied by eighty percent (80%), (iii) the book value of
Inventory Housing Units, multiplied by seventy percent (70%), but not
exceeding thirty percent (30%) of Total Senior Loan Commitments, and (iv)
the sum (but not exceeding thirty-three and one third percent (33 1/3%) of
Total Senior Loan Commitments) of (A) the book value of Finished Lots,
multiplied by fifty percent (50%) and (B) the book value of Owned Land,
multiplied by twenty-five percent (25%).
"Borrowing Base Certificate" means a written certificate in a form
acceptable to the Required Lenders setting forth the amount of the
Borrowing Base with respect to the calendar month most recently completed,
certified as true and correct by an Authorized Officer of the Borrower.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Borrowing Notice" is defined in Section 2.8.
<PAGE> 33
"Business Day" means (i) with respect to any borrowing, payment or
rate selection of Eurodollar Advances, a day (other than a Saturday or
Sunday) on which banks generally are open in Chicago and New York for the
conduct of substantially all of their commercial lending activities and on
which dealings in United States dollars are carried on in the London
interbank market and (ii) for all other purposes, a day (other than a
Saturday or Sunday) on which banks generally are open in Chicago for the
conduct of substantially all of their commercial lending activities.
"Capitalized Lease" of a Person means any lease of Property by
such Person as lessee which would be capitalized on a balance sheet of such
Person prepared in accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount of
the obligations of such Person under Capitalized Leases which would be
shown as a liability on a balance sheet of such Person prepared in
accordance with Agreement Accounting Principles.
"Change in Control" means the acquisition by any Person, or two or
more Persons acting in concert, of beneficial ownership (within the meaning
of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934) of 50% or more of the outstanding shares
of voting stock of the Borrower.
"Code" means the Internal Revenue Code of 1986, as amended,
reformed or otherwise modified from time to time.
"Commitment" means, for each Lender, the obligation of such Lender
to make Loans (other than Swing Line Loans), and to participate in the
Facility Letters of Credit in accordance with Section 4.6(a), not exceeding
the amount set forth opposite its signature below or as set forth in any
Notice of Assignment relating to any assignment that has become effective
pursuant to Section 15.3.2 or as set forth in any Commitment and Acceptance
in accordance with Section 2.5(b), as such amount may be modified from time
to time pursuant to the terms hereof.
"Commitment and Acceptance" is defined in Section 2.5(b).
"Consolidated Funded Indebtedness" means, at any date, the
outstanding amount of all Indebtedness of the Borrower and the Guarantors,
excluding accrued expenses incurred in the ordinary course of business and
guarantees of performance or completion and performance bonds (but not
excluding guarantees of payment), all determined on a consolidated basis
for the Borrower and the Guarantors in conformity with Agreement Accounting
Principles.
<PAGE> 34
"Consolidated Interest Expense" means for any period, without
duplication, the aggregate amount of interest which, in conformity with
Agreement Accounting Principles, would be set opposite the caption
"interest expense" or any like caption on an income statement for the
Borrower and the Guarantors (including, without limitation, imputed
interest included on Capitalized Lease Obligations, all commissions,
discounts and other fees and charges owed with respect to Letters of Credit
and bankers' acceptance financing, the net costs associated with Rate
Hedging Obligations, amortization of other financing fees and expenses, the
interest portion of any deferred payment obligation, amortization of
discount or premiums, if any, and all other noncash interest expense other
than interest and other charges amortized to cost of sales) and includes,
with respect to the Borrower and the Guarantors, without duplication, all
interest included as a component of cost of sales for such period.
"Consolidated Interest Incurred" means for any period, without
duplication, the aggregate amount of interest which, in conformity with
Agreement Accounting Principles, would be set opposite the caption
"interest expense" or any like caption on an income statement for the
Borrower and the Guarantors (including, without limitation, imputed
interest included on Capitalized Lease Obligations, all commissions,
discounts and other fees and charges owed with respect to Letters of Credit
and bankers' acceptance financing, the net costs associated with Rate
Hedging Obligations, amortization of other financing fees and expenses, the
interest portion of any deferred payment obligation, amortization of
discount or premiums, if any, and all other noncash interest expense other
than interest and other charges amortized to cost of sales) and includes,
with respect to the Borrower and the Guarantors, without duplication, all
capitalized interest for such period, all interest attributable to
discontinued operations for such period to the extent not set forth on the
income statement under the caption "interest expense" or any like caption,
and all interest actually paid by the Borrower or a Guarantor under any
Contingent Obligation during such period.
"Consolidated Net Income" means, for any period, the net income
(or loss) of the Borrower and the Guarantors on a consolidated basis for
such period taken as a single accounting period, determined in conformity
with Agreement Accounting Principles; provided that there shall be excluded
from Consolidated Net Income (i) the income (or loss) of any Person that is
not the Borrower or a Guarantor, except to the extent of the amount of
dividends or other distributions actually paid to the Borrower or a
Guarantor by such Person during such period, and (ii) the income (or loss)
of any Person accrued prior to the date it becomes a Subsidiary of the
Borrower or is merged into or consolidated with the Borrower or any of its
Subsidiaries or that Person's assets are acquired by the Borrower or any of
its Subsidiaries.
<PAGE> 35
"Consolidated Senior Debt Borrowings" means, at any date, with
respect to the Borrower and the Guarantors, on a consolidated basis, the
outstanding balance of all obligations described in clauses (i), (iv) or
(viii) of the definition of "Indebtedness" (including the Obligations)
calculated in accordance with Agreement Accounting Principles but excluding
(i) Indebtedness of the Borrower to a Guarantor, a Guarantor to the
Borrower or a Guarantor to another Guarantor, and (ii) the Convertible
Subordinated Notes and any other Subordinated Indebtedness.
"Consolidated Tangible Net Worth" means, at any date, the
consolidated stockholders' equity of the Borrower determined in conformity
with Agreement Accounting Principles, less its consolidated Intangible
Assets, all determined as of such date. For purposes of this definition
"Intangible Assets" means the amount (to the extent reflected in
determining such consolidated stockholders' equity) of (i) all write-ups
(other than write-ups resulting from foreign currency translations and
write-ups of assets of a going concern business made within twelve months
after the acquisition of such business) subsequent to March 31, 1995 in the
book value of any asset owned by the Borrower, (ii) all investments in
Non-Borrowing Subsidiaries and (iii) all unamortized debt discount,
goodwill, patents, trademarks, service marks, trade names, copyrights,
organization or developmental expenses and other intangible items.
"Contingent Obligation" of a Person means, without duplication,
any agreement, undertaking or arrangement by which such Person assumes,
guarantees (other than a Guaranty), endorses (other than endorsements in
the ordinary course of business or negotiable instruments for deposit or
collection), contingently agrees to purchase or provide funds for the
payment of, or otherwise becomes or is contingently liable upon, the
obligation or liability of any other Person, or agrees to maintain the net
worth or working capital or other financial condition of any other Person,
or otherwise assures any creditor of such other Person against loss,
including, without limitation, any comfort letter, operating agreement,
take-or-pay contract, or application or other contingent obligation with
respect to a Letter of Credit, but excluding guarantees of performance or
completion and performance bonds, or setoff rights of a lender. "Contingent
Obligation" does not include the obligation to make capital contributions
to a joint venture.
"Contribution Agreement" is defined in Section 5.1(vi).
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated)
under common control which, together with the Borrower or any of its
Subsidiaries, are treated as a single employer under Section 414 of the
Code.
"Conversion/Continuation Notice" is defined in Section 2.9.
"Convertible Subordinated Notes" means the 4.875% Convertible
Subordinated Debentures due 2005 of the Borrower issued in the original
principal amount of $80,000,000.
<PAGE> 36
"Corporate Base Rate" means a rate per annum equal to the
corporate base rate of interest announced by First Chicago from time to
time, changing when and as said corporate base rate changes.
"Coverage Test" is defined in Section 9.2(b).
"Default" means an event described in Article X after the
expiration of any applicable cure or notice period.
"EBITDA" means, for any period, without duplication, (i) the sum
of the amounts for such period of (a) Consolidated Net Income, (b)
Consolidated Interest Expense, (c) charges against income for all federal,
state and local taxes, (d) depreciation expense, (e) amortization expense,
(f) other non-cash charges and expenses, and (g) any losses arising outside
of the ordinary course of business which have been included in the
determination of Consolidated Net Income, less (ii) any gains arising
outside of the ordinary course of business which have been included in the
determination of Consolidated Net Income, all as determined on a
consolidated basis for the Borrower and the Guarantors in conformity with
Agreement Accounting Principles.
"Effective Date" means the later of (a) the date on which this
Agreement has been fully executed and delivered by the Lenders, the Agent,
the Issuing Bank and the Borrower and (b) the date on which the conditions
set forth in Section 5.1 have been satisfied.
"Equity Security" has the meaning set forth in Rule 3a11-1 under
the Securities Exchange Act of 1934, as amended; provided, however, that
the Convertible Subordinated Notes shall not constitute "Equity
Securities."
"ERISA" means the Employee Retirement Income Security Act of l974,
as amended from time to time, and any rule or regulation issued thereunder.
"Eurodollar Advance" means an Advance which bears interest at a
Eurodollar Rate.
"Eurodollar Base Rate" means, with respect to a Eurodollar Advance
for the relevant Interest Period, the rate determined by the Agent to be
the rate at which deposits in U.S. dollars are offered by First Chicago to
first-class banks in the London interbank market at approximately 11 a.m.
(London time) two Business Days prior to the first day of such Interest
Period, in the approximate amount of First Chicago's relevant Eurodollar
Loan and having a maturity approximately equal to such Eurodollar Interest
Period.
"Eurodollar Loan" means a Loan which bears interest at a Eurodollar
Rate.
<PAGE> 37
"Eurodollar Rate" means, with respect to a Eurodollar Advance for
the relevant Interest Period, the sum of (i) the quotient of (a) the
Eurodollar Base Rate applicable to such Interest Period, divided by (b) one
minus the Reserve Requirement (expressed as a decimal) applicable to such
Interest Period, plus (ii) the Applicable Eurodollar Margin. The Eurodollar
Rate shall be rounded to the next higher multiple of 1/16 of 1% if the rate
is not such a multiple.
"Excluded Taxes" is defined in Section 3.1.
"Extension Request" is defined in Section 2.20(a).
"Facility Increase Notice" is defined in Section 2.5(c).
"Facility Letter of Credit" means a Letter of Credit issued by the
Issuing Bank for the account of the Borrower or a Guarantor in accordance
with Article IV.
"Facility Letter of Credit Fee" means a fee, payable with respect
to each Facility Letter of Credit issued by the Issuing Bank, in an amount
per annum equal to the product of (i) the Applicable Letter of Credit Rate
(determined as of the date on which the monthly installment of such fee is
due) and (ii) the greater of (A) $50,000 or (B) the face amount of such
Facility Letter of Credit.
"Facility Letter of Credit Obligations" means, at any date, the
sum of (i) the aggregate undrawn face amount of all outstanding Facility
Letters of Credit, and (ii) the aggregate amount paid by an Issuing Bank on
any Facility Letters of Credit to the extent (if any) not reimbursed by the
Borrower or by the Lenders under Section 4.4.
"Facility Termination Date" means May 31, 2001, as the same may be
extended as provided in Section 2.20.
"FCCM" means First Chicago Capital Markets, Inc.
"Federal Funds Effective Rate" means, for any day, an interest
rate per annum equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published for such day
(or, if such day is not a Business Day, for the immediately preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is
not so published for any day which is a Business Day, the average of the
quotations at approximately 10 a.m. (Chicago time) on such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by the Agent in its sole discretion.
<PAGE> 38
"Financial Undertaking" of a Person means (i) any repurchase
obligation or liability of such Person or any of its Subsidiaries with
respect to accounts or notes receivable sold by such Person or any of its
Subsidiaries, (ii) any sale and leaseback transactions which do not create
a liability on the consolidated balance sheet of such Person and its
Subsidiaries, (iii) any other transaction which is the functional
equivalent of or takes the place of borrowing but which does not constitute
a liability on the consolidated balance sheets of such Person and its
Subsidiaries, or (iv) any Rate Hedging Obligations.
"Finished Lots" means parcels of land owned by the Borrower or any
Guarantor which are duly recorded and platted for use as Housing Units and
zoned for such use, with respect to which all requisite governmental
consents and approvals have been obtained and on which (i) all development
activity, other than the application of the seal or finishing coat on
improved roadways and other minor repairs required to dedicate such
roadways, has been completed and (ii) water and sewer connections have been
brought to the lot shown on the plat covering such parcel and are available
for hook-up to a Housing Unit; provided, however, that the term "Finished
Lots" shall not include any real property upon which the construction of a
Housing Unit has commenced.
"First Chicago" means The First National Bank of Chicago in its
individual capacity, and its successors.
"First Indenture" means that certain Indenture, dated as of June
21, 1993, between the Borrower and IBJ Schroder Bank & Trust Company
pursuant to which the Senior Notes were issued.
"Fixed Rate Debt" means any obligation described in clauses (i),
(iv) or (viii) of the definition of "Indebtedness" (i) that bears interest
at a rate that is fixed until maturity of such Indebtedness and that does
not fluctuate or vary, whether on the basis of rates established from time
to time by the obligee, indices, market conditions or otherwise or (ii)
having an average weighted maturity equal to or exceeding the then
remaining term of this Agreement and with respect to which the Borrower has
arranged Rate Hedging Obligations that protect the Borrower from
fluctuations of interest rates, which Rate Hedging Obligations are
acceptable to the Required Lenders in all respects, including without
limitation the Person or Persons that are parties thereto, the fixed
interest rates thereunder and the other terms and conditions thereof.
"Floating Rate" means, for any day, a rate per annum equal to (i)
the Alternate Base Rate for such day, plus (ii) the Applicable Floating
Rate Margin, in each case changing when and as the Alternate Base Rate
changes.
"Floating Rate Advance" means an Advance which bears interest at
the Floating Rate.
"Floating Rate Loan" means a Loan which bears interest at the
Floating Rate.
<PAGE> 39
"GAAP" means generally accepted accounting principles in effect
from time to time, consistently applied.
"Guarantors" means the Subsidiaries of the Borrower listed on
Schedule "1-A" hereto and any Subsidiary of Borrower that shall hereafter
execute a Guaranty in accordance with Section 7.11 hereof, and any
successors and assigns of any of the foregoing.
"Guaranty" means a Guaranty, in substantially the form of Exhibit
"A", duly executed (whether prior to, on or after the date hereof) by one
or more of the Guarantors, as the same may be amended or modified and in
effect from time to time.
"Housing Unit" means a single-family dwelling, whether detached or
attached (including condominiums but excluding mobile homes), including the
parcel of land on which such dwelling is located, that is (or, upon
completion of construction thereof, will be) available for sale; the term
"Housing Unit" includes an Inventory Housing Unit.
"Housing Unit Closing" means a closing of the sale of a Housing
Unit by the Borrower or a Guarantor to a bona fide purchaser for value that
is not an Affiliate.
"Housing Unit Under Contract" means a Housing Unit owned by the
Borrower or a Guarantor as to which the Borrower or such Guarantor has a
bona fide contract of sale, in a form customarily employed by the Borrower
or such Guarantor, entered into not more than 15 months prior to the date
of determination with a Person who is not an Affiliate, under which
contract no defaults then exist and not less than $1,000.00 toward the
purchase price has been paid; provided, however, that in the case of any
Housing Unit the purchase of which is to be financed in whole or in part by
a loan insured by the Federal Housing Administration or guaranteed by the
Veterans Administration, the required minimum downpayment shall be the
amount (if any) required under the rules of the relevant agency.
"Indebtedness" of a Person means, without duplication, such
Person's (i) obligations for borrowed money, (ii) obligations representing
the deferred purchase price of Property or services (other than (A)
accounts payable arising in the ordinary course of such Person's business
and (B) rights or duties under option agreements to acquire real property),
(iii) obligations, whether or not assumed, secured by Liens (other than
Permitted Encumbrances) or payable out of the proceeds or production from
Property now or hereafter owned or acquired by such Person, (iv)
obligations which are evidenced by notes, debentures, or other similar
instruments, (v) Capitalized Lease Obligations, (vi) net liabilities under
Rate Hedging Obligations, (vii) Contingent Obligations and (viii)
reimbursement obligations for which such Person is obligated with respect
to a Letter of Credit. Indebtedness includes, in the case of the Borrower,
the Obligations.
<PAGE> 40
"Interest Period" means, with respect to a Eurodollar Advance, a
period of one, two, three or six months commencing on a Business Day
selected by the Borrower pursuant to this Agreement. Such Interest Period
shall end on (but exclude) the day which corresponds numerically to such
date one, two, three or six months thereafter, provided, however, that if
there is no such numerically corresponding day in such next, second, third
or sixth succeeding month, such Interest Period shall end on the last
Business Day of such next, second or third or sixth succeeding month. If an
Interest Period would otherwise end on a day which is not a Business Day,
such Interest Period shall end on the next succeeding Business Day,
provided, however, that if said next succeeding Business Day falls in a new
calendar month, such Interest Period shall end on the immediately preceding
Business Day.
"Inventory Housing Unit" means any Housing Unit owned by the
Borrower or any Guarantor that is not a Housing Unit Under Contract.
"Inventory Valuation Date" means the last day of the most recent
calendar month with respect to which the Borrower is required to have
delivered a Borrowing Base Certificate pursuant to Section 7.1(vii) hereof.
"Investment" of a Person means any loan, advance, extension of
credit (other than accounts receivable arising in the ordinary course of
business), deposit account or contribution of capital by such Person to any
other Person or any investment in, or purchase or other acquisition of, the
stock, partnership, joint venture or limited liability company interests,
notes, debentures or other securities of any other Person made by such
Person.
"Issuance Date" means the date on which a Facility Letter of
Credit is issued, amended or extended.
"Issuing Bank" means any Lender that may from time to time be
designated as Issuing Bank in accordance with the provisions of Section
4.10, provided, however, that a Lender may be designated as Issuing Bank
only if, at the time of such designation, it has a rating of not less than
"A" as publicly announced by S&P. As of the date of this Agreement, First
Chicago is the Issuing Bank.
"Lenders" means the lending institutions listed on the signature
pages of this Agreement, and any entity that shall become a party hereto as
a Lender in accordance with the provisions of Section 2.5(b), and their
respective successors and assigns.
"Lending Installation" means, with respect to a Lender or the
Agent, any office, branch, subsidiary or Affiliate of such Lender or the
Agent.
"Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued by a financial institution upon the application
of such Person or upon which such Person is an account party or for which
such Person is in any way liable.
<PAGE> 41
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or other
security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title
retention agreement).
"Loan" means, with respect to a Lender, (i) such Lender's portion
of any Advance, including (unless the context otherwise indicates) any
Advance consisting of a Swing Line Loan, and (ii) in the case of a New
Lender, any payment made by such Lender pursuant to Section 2.5(d).
"Loan Documents" means this Agreement, the Notes, any Guaranties
and any Reimbursement Agreements.
"Material Adverse Effect" means a material adverse effect on (i)
the business, Property, condition (financial or otherwise), or results of
operations of the Borrower and the Guarantors, taken as a whole, (ii) the
ability of the Borrower to perform its obligations under the Loan
Documents, or (iii) the validity or enforceability of any of the Loan
Documents or the rights or remedies of the Agent, the Lenders or any
Issuing Bank thereunder.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a Plan maintained pursuant to a
collective bargaining agreement or any other arrangement to which the
Borrower or any member of the Controlled Group is a party to which more
than one employer is obligated to make contributions.
"New Lender" is defined in Section 2.5(b).
"Non-Borrowing Subsidiaries" means the Subsidiaries of the
Borrower listed on Schedule "1-B" hereto and any Person that (i) hereafter
becomes a Subsidiary of the Borrower and has as its primary business one or
more of the types of businesses currently conducted by the Subsidiaries
listed on Schedule "1-B" or (ii) is or hereafter becomes a Subsidiary of a
Non-Borrowing Subsidiary.
"Non-Recourse Indebtedness" with respect to any Person means
Indebtedness of such Person (i) for which the sole legal recourse for
collection of principal and interest on such Indebtedness is against the
specific property identified in the instruments evidencing or securing such
Indebtedness and such property was acquired with the proceeds of such
Indebtedness or such Indebtedness was incurred within 90 days after the
acquisition of such property and for which no other assets of such Person
may be realized upon in collection of principal or interest on such
Indebtedness or (ii) that refinances Indebtedness described in clause (i)
and for which the recourse is limited to the same extent described in
clause (i).
<PAGE> 42
"Note" means a promissory note, in substantially the form of
Exhibit "B" hereto, duly executed (whether prior to, on or after the date
hereof) by the Borrower and payable to the order of a Lender in the amount
of its Commitment, including any amendment, modification, renewal or
replacement of such promissory note.
"Notice of Assignment" is defined in Section 15.3.2.
"Obligations" means all unpaid principal of and accrued and unpaid
interest on the Notes, the Facility Letter of Credit Obligations, all
accrued and unpaid fees and all expenses, reimbursements, indemnities and
other obligations of the Borrower to the Lenders or to any Lender, the
Agent, the Swing Line Bank any Issuing Bank or any indemnified party
hereunder arising under the Loan Documents.
"Original Agreement" is defined in the recitals of this Agreement.
"Owned Land" means land (other than Finished Lots) owned or held
by the Borrower or any Guarantor for development or sale or land under
development.
"Participants" is defined in Section 15.2.1.
"Payment Date" means the first day of each calendar month.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Permitted Encumbrances" means any of the following:
(i) Liens for taxes, assessments or governmental charges or
levies on a Person's Property if the same shall not at
the time be delinquent or thereafter can be paid without
penalty, or are being contested in good faith and by
appropriate proceedings and for which adequate reserves
shall have been set aside on such Person's books in
accordance with GAAP.
(ii) Liens imposed by law, such as carriers', warehousemen's,
mechanics' and materialmen's Liens and other similar
Liens arising in the ordinary course of business which
secure payment of obligations not more than 90 days past
due or which are being contested in good faith by
appropriate proceedings and for which adequate reserves
shall have been set aside on a Person's books in
accordance with GAAP.
(iii) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age
pensions, or other social security or retirement
benefits, or similar legislation in accordance with GAAP.
<PAGE> 43
(iv) Utility easements, rights of way, zoning restrictions and
such other encumbrances or charges against real property,
or other minor irregularities of title, as are of a
nature generally existing with respect to properties of a
similar character and which do not in any material way
interfere with the use thereof or the sale thereof in the
business of the Borrower or the Guarantors.
(v) Easements, dedications, assessment district or similar
Liens in connection with municipal financing and other
similar encumbrances or charges, in each case reasonably
necessary or appropriate for the development of real
property of the Borrower or a Guarantor, and which are
granted in the ordinary course of the business of such
Borrower or Guarantor, and which in the aggregate do not
materially burden or impair the fair market value or use
of such real property (or the project to which it is
related) for the purposes for which it is or may
reasonably be expected to be held.
"Person" means any natural person, corporation, firm, joint
venture, partnership, limited liability company, association, enterprise,
trust or other entity or organization, or any government or political
subdivision or any agency, department or instrumentality thereof.
"PIR" means, at the date hereof, 1.75, as such amount may
hereafter be adjusted from time to time as provided in Section 9.2.
"Plan" means an employee pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under Section
412 of the Code as to which the Borrower or any member of the Controlled
Group may have any liability.
"Property" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other assets
owned, leased or operated by such Person.
"Purchasers" is defined in Section 15.3.1.
"Rate Hedging Obligations" of a Person means any and all
obligations of such Person, whether absolute or contingent and howsoever
and whensoever created, arising, evidenced or acquired (including all
renewals, extensions and modifications thereof and substitutions therefor),
under (i) any and all agreements, devices or arrangements designed to
protect at least one of the parties thereto from the fluctuations of
interest rates, exchange rates or forward rates applicable to such party's
assets, liabilities or exchange transactions, including, but not limited
to, dollar-denominated or cross-currency interest rate exchange agreements,
forward currency exchange agreements, interest rate cap or collar
protection agreements, forward rate currency or interest rate options, puts
and warrants, and (ii) any and all cancellations, buy backs, reversals,
terminations or assignments of any of the foregoing.
<PAGE> 44
"Receivables" means the net proceeds payable to, but not yet
received by, the Borrower or any Guarantor following a Housing Unit
Closing.
"Refinancing Indebtedness" means Indebtedness that refunds,
refinances or extends any Indebtedness described in Schedule "8.2" hereto
(or that refunds, refinances or extends any refund, refinancing or
extension of such Indebtedness), but only to the extent that (i) the
Refinancing Indebtedness is subordinated to or pari passu with the
Obligations to the same extent as the Indebtedness being refunded,
refinanced or extended, if at all, (ii) the Refinancing Indebtedness is
scheduled to mature no earlier than the then current maturity date of such
Indebtedness being refunded, refinanced or extended, (iii) such Refinancing
Indebtedness is in an aggregate amount that is equal to or less than the
sum of the aggregate amount then outstanding under the Indebtedness being
refunded, refinanced or extended, (iv) the Person or Persons (or Persons
who are Subsidiaries of such Persons or of which such Persons are
Subsidiaries) liable for the payment of such Refinancing Indebtedness are
the same Persons (or Persons who are Subsidiaries of such Persons or of
which such Persons are Subsidiaries) that were liable for the Indebtedness
being refunded, refinanced or extended when such Indebtedness was initially
incurred and (v) such Refinancing Indebtedness is incurred within 120 days
after the Indebtedness being refunded, refinanced or extended is so
refunded, refinanced or extended.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor
thereto or other regulation or official interpretation of said Board of
Governors relating to reserve requirements applicable to member banks of
the Federal Reserve System.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor
thereto or other regulation or official interpretation of said Board of
Governors relating to the extension of credit by banks for the purpose of
purchasing or carrying margin stocks applicable to member banks of the
Federal Reserve System.
"Rejecting Lender" is defined in Section 2.20(b).
"Reimbursement Agreement" means, with respect to a Facility Letter
of Credit, such form of application therefor and form of reimbursement
agreement therefor (whether in a single or several documents, taken
together) as an Issuing Bank may employ in the ordinary course of business
for its own account, with such modifications thereto as may be agreed upon
by such Issuing Bank and the Borrower and as are not materially adverse (in
the reasonable judgment of such Issuing Bank and the Agent) to the
interests of the Lenders; provided, however, in the event of any conflict
between the terms of any Reimbursement Agreement and this Agreement, the
terms of this Agreement shall control.
"Replacement Lender" is defined in Section 2.21.
<PAGE> 45
"Reportable Event" means a reportable event as defined in Section
4043 of ERISA and the regulations issued under such Section, with respect
to a Plan, excluding, however, such events as to which the PBGC by
regulation waived the requirement of Section 4043(a) of ERISA that it be
notified within 30 days of the occurrence of such event, provided, however,
that a failure to meet the minimum funding standard of Section 412 of the
Code and of Section 302 of ERISA shall be a Reportable Event regardless of
the issuance of any such waiver of the notice requirement in accordance
with either Section 4043(a) of ERISA or Section 412(d) of the Code.
"Required Lenders" means Lenders in the aggregate having at least
66-2/3% of the Aggregate Commitment or, if the Aggregate Commitment has
been terminated, Lenders in the aggregate holding at least 66-2/3% of the
aggregate unpaid principal amount of the outstanding Advances.
"Reserve Requirement" means, with respect to an Interest Period,
the maximum aggregate reserve requirement (including all basic,
supplemental, marginal and other reserves) which is imposed under
Regulation D on Eurocurrency liabilities (as defined therein).
"Rights Plan" means that certain rights agreement, dated as of
November 7, 1996, between the Borrower and The First Chicago Trust Company
of New York, as agent, as the same may be modified or amended from time to
time, provided that the redemption price per right to be redeemed
thereunder shall not exceed $0.01.
"S&P" means Standard & Poor's Ratings Services.
"Second Indenture" means that certain Indenture, dated as of
February 16, 1996, between the Borrower and IBJ Schroder Bank & Trust
Company pursuant to which the Senior Debt Securities were issued.
"Section" means a numbered section of this Agreement, unless
another document is specifically referenced.
"Senior Debt" means the Senior Notes and the Senior Debt
Securities, or if either the Senior Notes or the Senior Debt Securities are
refinanced, the Refinancing Indebtedness with respect thereto.
"Senior Debt Rating" means the second highest rating among the
publicly announced ratings by Moody's, S&P, Duff & Phelps Credit Rating Co.
and/or Fitch Investors Service, L.P. on the Borrower's Senior Debt,
provided, however, (i) if neither of the two highest ratings is by Moody's
or S&P, the Senior Debt Rating shall be (x) the rating assigned by either
Moody's or S&P, if only one of Moody's or S&P shall publicly announce a
rating of the Borrower's Senior Debt, or (y) the higher of the two ratings
by Moody's and S&P, if both shall publicly announce a rating of the
Borrower's Senior Debt, and (ii) if neither Moody's nor S&P shall publicly
announce ratings of the Borrower's Senior Debt, no Senior Debt Rating shall
be deemed to exist. The Senior Debt Rating shall change if and when such
rating(s) change, and such change in the Senior Debt Rating shall have the
effect provided for in Section 2.11(b) and elsewhere in this Agreement.
"Senior Debt Securities" means the 7.95% Notes due 2001 of the
<PAGE> 46
Borrower issued in the original principal amount of $75,000,000 pursuant to
the Second Indenture.
"Senior Notes" means the 9-3/4% Senior Notes due 2003 of the
Borrower issued in the original principal amount of $200,000,000 pursuant
to the First Indenture.
"Significant Guarantor" means any Guarantor with assets or
liabilities or annual revenues in excess of $1,000,000.
"Single Employer Plan" means a Plan maintained by the Borrower or
any member of the Controlled Group for employees of the Borrower or any
member of the Controlled Group.
"Subordinated Indebtedness" of a Person means any Indebtedness of
such Person the payment of which is subordinated to payment of the
Obligations to the reasonable satisfaction of the Required Lenders,
including, as to the Borrower, the Convertible Subordinated Notes.
"Subordination Agreement" is defined in Section 5.1(vii).
"Subsidiary" of a Person means (i) any corporation more than 50%
of the outstanding securities having ordinary voting power for the election
of the board of directors of which shall at the time be beneficially owned
(within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934,
as amended) directly or indirectly, by such Person or by one or more of its
Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii)
any partnership, association, joint venture, limited liability company or
similar business organization more than 50% of the ownership interests
having ordinary voting power of which shall at the time be so owned or
controlled. Unless otherwise expressly provided, all references herein to a
"Subsidiary" shall mean a Subsidiary of the Borrower.
"Substantial Portion" means, with respect to the Property of the
Borrower and the Guarantors, taken as a whole, Property which (i)
represents more than 10% of Consolidated Tangible Net Worth, as would be
shown in the consolidated financial statements of the Borrower and its
Subsidiaries as at the beginning of the fiscal quarter in which such
determination is made, or (ii) is responsible for more than 10% of
Consolidated Net Income, as reflected in the financial statements referred
to in clause (i) above.
"Swing Line Bank" means First Chicago or any Purchaser to which
First Chicago assigns the Swing Line Commitment in accordance with Section
15.3.1.
"Swing Line Commitment" means the commitment of the Swing Line
Bank to make Swing Line Loans pursuant to Section 2.22(a). As of the date
of this Agreement, the Swing Line Commitment is in the amount of
$10,000,000.
<PAGE> 47
"Swing Line Loan" has the meaning assigned to such term in
Section 2.22(a).
"Total Senior Loan Commitments" means, at any date, on a
consolidated basis for the Borrower and the Guarantors, (i) the sum of (a)
all outstanding obligations described in clauses (i), (iv) and (viii) of
the definition of "Indebtedness" to Persons that are not the Borrower,
Subsidiaries of the Borrower or Affiliates of the Borrower or of any of its
Subsidiaries, plus (b) all bona fide, binding but unfunded commitments
(including the Commitments) of banks or other financial institutions with
respect to the borrowing by the Borrower or any Guarantor of obligations of
the type referred to in clause (a) above, except to the extent that such
commitments are subject to conditions that have not been satisfied (other
than customary conditions that the Borrower and the Guarantors can
reasonably be expected to satisfy in the ordinary course of business), less
(ii) the sum of the outstanding amounts of the Convertible Subordinated
Notes and all other Subordinated Indebtedness, all as determined in
accordance with Agreement Accounting Principles.
"Transferee" is defined in Section 15.4.
"Type" means, with respect to any Advance, its nature as a
Floating Rate Advance or Eurodollar Advance.
"Unfunded Liabilities" means the amount (if any) by which the
present value of all vested nonforfeitable benefits under all Single
Employer Plans exceeds the fair market value of the assets of such Plans
allocable to such benefits, all determined as of the then most recent
valuation date for such Plans, using the actuarial methods and assumptions
utilized in the actuarial report for each such Plan as of such date.
"Unmatured Default" means an event which but for the lapse of time
or the giving of notice, or both, would constitute a Default.
"Unused Commitment" means, at any date with respect to any Lender,
the amount (if any) by which such Lender's Commitment exceeds the sum of
(i) the outstanding principal balance of such Lender's Loans (including, in
the case of the Swing Line Bank, Swing Line Loans) as of such date and (ii)
such Lender's ratable share (determined in accordance with Section 4.6) of
the outstanding amount of the Facility Letters of Credit.
"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all
of the outstanding voting securities (or the election of the board of
directors) of which shall at the time be beneficially owned (within the
meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended)
directly or indirectly, by such Person or one or more Wholly-Owned
Subsidiaries of such Person, or by such Person and one or more Wholly-Owned
Subsidiaries of such Person, or (ii) any partnership, association, joint
venture, limited liability company or similar business organization 100% of
the ownership interests having ordinary voting power of which shall at the
time be so owned or controlled.
<PAGE> 48
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
ARTICLE II
THE CREDITS
2.1. Commitment From and including the date of the Original
Agreement and prior to the Facility Termination Date, each Lender
severally agrees, on the terms and conditions set forth in this
Agreement, to make Loans (other than Swing Line Loans) to the Borrower from
time to time in amounts not to exceed in the aggregate at any one time
outstanding the amount of its Commitment; provided, however, that a Lender
shall not be required to make any Loan or Loans in excess of the amount of
such Lender's then Available Credit. Subject to the terms of this
Agreement, the Borrower may borrow, repay and reborrow at any time prior to
the Facility Termination Date. The Commitments to lend hereunder shall
expire on the Facility Termination Date.
2.2. Required Payments. (a) Any outstanding Advances and
all other unpaid Obligations shall be paid in full by the Borrower on the
Facility Termination Date.
(b) If at any time Consolidated Senior Debt Borrowings exceed the
Borrowing Base, the Borrower shall pay to the Agent, as a payment of the
Advances, an amount (not to exceed the sum of the outstanding Advances)
equal to the amount by which the Consolidated Senior Debt Borrowings exceed
the Borrowing Base.
2.3. Ratable Loans. Each Advance (other than a Swing Line Loan)
hereunder shall consist of Loans (other than Swing Line Loans) made from
the several Lenders ratably in proportion to the ratio that their
respective Commitments bear to the Aggregate Commitment.
2.4. Types of Advances. Advances consisting of Swing Line Loans
shall be Floating Rate Advances, and other Advances may be Floating Rate
Advances or Eurodollar Advances, or a combination thereof, selected by the
Borrower in accordance with Sections 2.8 and 2.9.
2.5. Commitment Fee; Changes in Aggregate Commitment
(a) The Borrower agrees to pay to the Agent for the account of each Lender
a commitment fee, at a rate per annum equal to the Applicable Commitment
Rate, on the daily average of such Lender's Unused Commitment from the
date hereof to and including the Facility Termination Date, payable in
arrears on the first day of each January, April, July and October hereafter
and on the Facility Termination Date. The Borrower may permanently reduce
the Aggregate Commitment in whole, or in part ratably among the Lenders in
integral multiples of $5,000,000 at any time or from time to time, upon
at least three (3) Business Days' written notice to the Agent, which notice
<PAGE> 49
shall specify the amount of any such reduction, provided, however,
that the amount of the Aggregate Commitment may not be reduced below the
sum of (i) the aggregate principal amount of the outstanding Advances
and (ii) the Facility Letter of Credit Obligations. All accrued commitment
fees shall be payable on the effective date of any termination of the
obligations of the Lenders to make Loans hereunder.
(b) The Borrower may, at any time and from time to time, request,
by notice to the Agent, the Agent's approval of an increase of the
Aggregate Commitment within the limitations hereafter described, which
request shall set forth the amount of such requested increase. Within
twenty (20) days of such request, the Agent shall advise the Borrower of
its approval or disapproval of such request; failure to so advise the
Borrower shall constitute disapproval. Upon approval of the Agent, the
Aggregate Commitment may be so increased either by having additional
financial institutions approved by the Borrower and the Agent ("Additional
Lenders") become Lenders and/or by having any one or more of the then
existing Lenders (at their respective election in their sole discretion)
that have been approved by the Borrower and the Agent, increase the amount
of its Commitment (any such Lender that elects to increase its Commitment
and any Additional Lender being hereinafter referred to as a "New Lender"),
provided that (i) the Commitment of any Additional Lender shall not be less
than $10,000,000 and the sum of the Commitments of the Additional Lenders
and the increases in the Commitments of the other New Lenders shall be in
an aggregate amount of not less than $10,000,000 (and, if in excess
thereof, in integral multiples of $10,000,000); (ii) the Aggregate
Commitment shall not exceed $180,000,000; (iii) the Borrower and each New
Lender shall have executed and delivered a commitment and acceptance (the
"Commitment and Acceptance") substantially in the form of Exhibit "L"
hereto, and the Agent shall have accepted and executed the same; (iv) the
Borrower shall have executed and delivered to the Agent a Note or Notes
payable to the order of each New Lender, each such Note to be in the amount
of such New Lender's Commitment or increase in its Commitment (as
applicable); (v) the Borrower shall have delivered to the Agent opinions of
counsel (substantially similar to the forms of opinions attached hereto as
Exhibits "C" and "E," modified to apply to the increase in the Aggregate
Commitment and each Note and Commitment and Acceptance executed and
delivered in connection therewith); (vi) the Guarantors shall have
consented in writing to the new Commitments or increases in Commitments (as
applicable) and shall have agreed that their Guaranties continue in full
force and effect; (vii) the Borrower and each New Lender shall otherwise
have executed and delivered such other instruments and documents as the
Agent shall have reasonably requested in connection with such new
Commitment or increase in the Commitment (as applicable); and (viii) if the
Aggregate Commitment shall at any time have been reduced, any subsequent
increase of the Aggregate Commitment shall be subject to the provisions of
Section 2.5(c). The form and substance of the documents required under
clauses (iii) through (vii) above shall be fully acceptable to the Agent.
The Agent shall provide written notice to all of the Lenders hereunder of
the admission of any Additional Lender or the increase in the Commitment of
any other New Lender hereunder and shall furnish to each of the Lenders
copies of the documents required under clauses (iii), (v), (vi) and (vii)
above.
<PAGE> 50
(c) Notwithstanding the provisions of Section 2.5(b), in
the event that the Aggregate Commitment shall at any time have been
reduced, the Aggregate Commitment shall not thereafter be increased unless
and until each of the then existing Lenders shall have been given the right
(at its election) to increase its Commitment by an amount equal to the
lesser of (i) such Lender's ratable portion (based upon the ratio
(determined as of the date of the Borrower's request for the Agent's
approval of such increase) of its then existing Commitment to the then
existing Aggregate Commitment) of the aggregate amount of all prior
decreases (net of prior increases) in the Aggregate Commitment or (ii) such
Lender's ratable portion (based upon the ratio (determined as of the date
of the Borrower's request for the Agent's approval of such increase) of its
then existing Commitment to the then existing Aggregate Commitment) of the
proposed increase in the Aggregate Commitment. If, at any time after the
Aggregate Commitment has been reduced, the Agent shall approve the
Borrower's request for an increase in the Aggregate Commitment, the Agent
shall promptly, but not later than ten (10) days after its receipt of the
Borrower's request, deliver to the then existing Lenders a notice (the
"Facility Increase Notice") setting forth the amount of the increase so
requested by the Borrower, and the Lenders' rights hereunder to increase
their Commitments shall be exercisable within, but not later than, thirty
(30) days following the date of delivery of the Facility Increase Notice.
If a Lender elects to exercise such right by notice given to the Agent
within such 30-day period, then such Lender shall (in accordance with and
subject to the provisions of Section 2.5(b)) increase its Commitment by an
amount determined in accordance with the first sentence of this Section
2.5(c). If such Lender does not so elect by notice given to the Agent
within such 30-day period, the Borrower and the Agent may proceed with the
increase of the Aggregate Commitment as set forth in the Facility Increase
Notice, subject to and in accordance with Section 2.5(b). Nothing contained
herein shall preclude any Lender, at its election and with the approval of
the Borrower and the Agent as provided in and otherwise in accordance with
Section 2.5(b), from increasing its Commitment to an amount in excess of
the amount provided for in this Section 2.5(c).
(d) Upon the effective date of any increase in the
Aggregate Commitment pursuant to the provisions hereof, which effective
date shall be mutually agreed upon by the Borrower, each New Lender and the
Agent, each New Lender shall make a payment to the Agent in an amount
sufficient, upon the application of such payments by all New Lenders to the
reduction of the outstanding Advances held by the Lenders, to cause the
principal amount outstanding under the Loans made by each Lender (including
any New Lender) to be in the proportion to the ratio that such Lender's
Commitment (upon the effective date of such increase) bears to the
Aggregate Commitment as so increased. The Borrower hereby irrevocably
authorizes each New Lender to fund to the Agent the payment required to be
made pursuant to the immediately preceding sentence for application to the
reduction of the outstanding Loans held by the other Lenders, and each such
payment shall constitute a Loan hereunder. If, as a result of the repayment
of the Advances provided for in this Section 2.5(d) any payment of a
Eurodollar Advance occurs on a day which is not the last day of the
applicable Interest Period, the Borrower will pay to the Agent for the
benefit of any of the Lenders holding a Eurodollar Loan any loss or cost
<PAGE> 51
incurred by such Lender resulting therefrom in accordance with Section 3.4.
Upon the effective date of such increase in the Aggregate Commitment, all
Loans outstanding hereunder (including any Loans made by the New Lenders on
such date) shall be Floating Rate Loans, subject to the Borrower's right to
convert the same to Eurodollar Loans on or after such date in accordance
with the provisions of Section 2.9.
(e) Upon the effective date of any increase in the
Aggregate Commitment and the making of the Loans by the New Lenders in
accordance with the provisions of Section 2.5(c), each New Lender shall
also be deemed to have irrevocably and unconditionally purchased and
received, without recourse or warranty, from the Lenders party to this
Agreement immediately prior to the effective date of such increase, an
undivided interest and participation in any Facility Letter of Credit then
outstanding, ratably, such that each Lender (including each New Lender)
holds a participation interest in each such Facility Letter of Credit in
proportion to the ratio that such Lender's Commitment (upon the effective
date of such increase in the Aggregate Commitment) bears to the Aggregate
Commitment as so increased.
(f) Nothing contained herein shall constitute, or
otherwise be deemed to be, a commitment or agreement on the part of any
Lender to increase its Commitment hereunder at any time or (except as
provided in Section 2.5(c)) a commitment or agreement on the part of the
Borrower or the Agent to give or grant any Lender the right to increase its
Commitment hereunder at any time.
2.6. Minimum Amount of Each Advance. Each Advance (other than
an Advance consisting of a Swing Line Loan) shall be in the minimum amount
of $2,000,000 (and in multiples of $1,000,000 if in excess thereof).
2.7. Optional Principal Payments. The Borrower may at any time or
from time to time pay, without penalty or premium, all outstanding Floating
Rate Advances, or, in a minimum aggregate amount of $2,000,000 or any
integral multiple of $1,000,000 in excess thereof, any portion of the
outstanding Floating Rate Advances upon one Business Day's prior notice to
the Agent. The Borrower may, upon three Business Days' prior notice to the
Agent, (a) pay, without penalty or premium, any Eurodollar Advance in full
on the last day of the Interest Period for such Eurodollar Advance, and (b)
prepay any Eurodollar Advance in full prior to the last day of the Interest
Period for such Eurodollar Advance, provided that the Borrower shall also
pay at the time of such prepayment all amounts payable with respect thereto
pursuant to Section 3.4 hereof. The provisions of this Section 2.7 shall
not apply to Swing Line Loans.
2.8. Method of Selecting Types and Interest Periods for New
Advances. The Borrower shall select the Type of Advance and, in the case of
each Eurodollar Advance, the Interest Period applicable to each Advance
from time to time. The Borrower shall give the Agent irrevocable notice (a
"Borrowing Notice") not later than 10:00 a.m. (Chicago time) on the
Borrowing Date of each Floating Rate Advance and three Business Days before
the Borrowing Date of each Eurodollar Advance, specifying:
<PAGE> 52
(i) the Borrowing Date, which shall be a Business Day, of such
Advance,
(ii) the aggregate amount of such Advance,
(iii) the Type of Advance selected, and
(iv) in the case of each Eurodollar Advance, the Interest Period
applicable thereto.
Not later than noon (Chicago time) on each Borrowing Date, each Lender
shall make available its Loan or Loans, in funds immediately available in
Chicago to the Agent at its address specified pursuant to Article XVI. The
Agent will make the funds so received from the Lenders available to the
Borrower at the Agent's aforesaid address. The provisions of this Section
2.8 shall not apply to Swing Line Loans.
2.9. Conversion and Continuation of Outstanding Advances.
Floating Rate Advances shall continue as Floating Rate Advances unless and
until such Floating Rate Advances are converted into Eurodollar Advances.
Each Eurodollar Advance shall continue as a Eurodollar Advance until the
end of the then applicable Interest Period therefor, at which time
such Eurodollar Advance shall be automatically converted into a Floating
Rate Advance unless the Borrower shall have given the Agent a
Conversion/Continuation Notice requesting that, at the end of such Interest
Period, such Eurodollar Advance either continue as a Eurodollar Advance
for the same or another Interest Period or be repaid. Subject to the terms
of Section 2.6, the Borrower may elect from time to time to convert all or
any part of an Advance of any Type into any other Type or Types of Advances;
provided that any conversion of any Eurodollar Advance may be made on,
and only on, the last day of the Interest Period applicable thereto.
The Borrower shall give the Agent irrevocable notice (a "Conversion/
Continuation Notice") of each conversion of an Advance or continuation of
a Eurodollar Advance not later than 10:00 a.m. (Chicago time) at least one
Business Day, in the case of a conversion into a Floating Rate Advance,
or three Business Days, in the case of a conversion into or continuation
of a Eurodollar Advance, prior to the date of the requested conversion or
continuation, specifying:
(i) the requested date which shall be a Business Day, of such
conversion or continuation;
(ii) the aggregate amount and Type of the Advance which is to be
converted or continued; and
(iii) the amount and Type(s) of Advance(s) into which such
Advance is to be converted or continued and, in the case
of a conversion into or continuation of a Eurodollar
Advance, the duration of the Interest Period applicable
thereto.
<PAGE> 53
2.10. Changes in Interest Rate, etc. Each Floating Rate Advance
shall bear interest on the outstanding principal amount thereof, for each
day from and including the date such Advance is made or is converted from
a Eurodollar Advance into a Floating Rate Advance pursuant to Section
2.9 to but excluding the date it becomes due or is converted into a
Eurodollar Advance pursuant to Section 2.9 hereof, at a rate per annum
equal to the Floating Rate for such day. Changes in the rate of interest
on that portion of any Advance maintained as a Floating Rate Advance will
take effect simultaneously with each change in the Alternate Base Rate or
in the Applicable Floating Rate Margin. Each Eurodollar Advance shall bear
interest from and including the first day of the Interest Period applicable
thereto to (but not including) the last day of such Interest Period at the
interest rate determined as applicable to such Eurodollar Advance. No
Interest Period may end after the Facility Termination Date.
2.11. Determination of Applicable Margins and Applicable
Commitment Rate. (a) The Applicable Margins and the Applicable Commitment
Rate shall be determined by reference to the Senior Debt Rating in accordance
with the following table:
Applicable Applicable
Senior Debt Eurodollar Floating Rate Applicable
Rating Margin (%) Margin (%) Commitment Rate (%)
- ----------- ---------- ------------ -------------------
BBB-/Baa3 or 0.75 0 0.200
higher
BB+/Ba1 0.95 0 0.250
BB/Ba2 1.15 0 0.300
BB-/Ba3 1.35 0.10 0.350
Lower or no 1.55 0.30 0.400
Senior Debt
Rating
(b) The Applicable Floating Rate Margin and the
Applicable Commitment Rate shall be adjusted, as applicable from time to
time, effective on the first Business Day after any change in the Senior
Debt Rating to the extent that such change in the Senior Debt Rating
requires a corresponding change in the Applicable Floating Rate Margin. The
Applicable Eurodollar Margin in respect of any Eurodollar Advance shall be
adjusted, as applicable from time to time, effective on the first day of
the Interest Period for any Eurodollar Advance after any change in the
Senior Debt Rating to the extent that such change in the Senior Debt Rating
requires a corresponding change in the Applicable Eurodollar Margin.
2.12. Rates Applicable After Default. Notwithstanding anything
to the contrary contained in Section 2.8, 2.9 or 2.10, during the
continuance of a Default the Required Lenders may, at their option,
by notice to the Borrower (which notice may be revoked at the option of
the Required Lenders notwithstanding any provision of Section 11.2
Requiring unanimous consent of the Lenders to changes in interest rates),
declare that no Advance may be made as, converted into or continued as a
<PAGE> 54
Eurodollar Advance. Notwithstanding anything to the contrary contained in
Section 2.8, 2.9 or 2.10, during the continuance of an Unmatured Default
the Required Lenders may, at their option, by notice to the Borrower
(which notice may be revoked at the option of the Required Lenders
notwithstanding any provision of Section 11.2 requiring unanimous consent
of the Lenders to changes in interest rates), declare that no Advance may
be made as or converted into a Eurodollar Advance. During the continuance
of a Default, the Required Lenders may, at their option, by notice to
the Borrower (which notice may be revoked at the option of the Required
Lenders notwithstanding any provision of Section 11.2 requiring unanimous
consent of the Lenders to changes in interest rates), declare that (i)
each Eurodollar Advance shall bear interest for the remainder of the
applicable Interest Period at the rate otherwise applicable to such
Interest Period plus 2% per annum and (ii) each Floating Rate Advance
shall bear interest at a rate per annum equal to the Floating Rate
otherwise applicable to the Floating Rate Advance plus 2% per annum.
2.13. Method of Payment. All payments of the Obligations hereunder
shall be made, without setoff, deduction, or counterclaim, in immediately
available funds to the Agent at the Agent's address specified pursuant to
Article XVI, or at any other Lending Installation of the Agent specified
in writing by the Agent to the Borrower, by noon (local time at the place
of receipt) on the date when due, and shall be applied ratably by the Agent
among the Lenders, except that payments of Swing Line Loans shall be made
solely to the Swing Line Bank. Each payment delivered to the Agent for
the account of any Lender shall be delivered promptly by the Agent to such
Lender in the same type of funds that the Agent received at its address
specified pursuant to Article XVI or at any Lending Installation specified
in a notice received by the Agent from such Lender. If the Agent receives,
for the account of a Lender, a payment from the Borrower and fails to remit
such payment to the Lender on the Business Day such payment is received
(if received by noon by the Agent) or on the next Business Day (if received
after noon by the Agent), the Agent shall pay to such Lender interest on
such payment at a rate per annum equal to the Federal Funds Effective Rate
for each day for which such payment is so delayed. The Agent is hereby
authorized to charge the account of the Borrower maintained with First
Chicago for each payment of principal, interest and fees as it becomes
due hereunder.
2.14. Notes; Telephonic Notices. Each Lender is hereby authorized
to record the principal amount of each of its Loans and each repayment on
the schedule attached to its Note, provided, however, that the failure to
so record shall not affect the Borrower's obligations under such Note. The
Borrower hereby authorizes the Lenders and the Agent to extend, convert or
continue Advances, effect selections of Types of Advances and to transfer
funds based on telephonic notices made by any person or persons the Agent
or any Lender in good faith believes to be acting on behalf of the
Borrower. The Borrower agrees to deliver promptly to the Agent a written
confirmation, if such confirmation is requested by the Agent or any Lender,
of each telephonic notice signed by an Authorized Officer. If the written
confirmation differs in any material respect from the action taken by the
Agent and the Lenders, the records of the Agent and the Lenders shall
govern absent manifest error.
<PAGE> 55
2.15. Interest Payment Dates; Interest and Fee Basis. Interest
accrued on each Advance shall be payable on each Payment Date, commencing
with the first such date to occur after the date hereof, and on any date
on which the Advance is prepaid, whether due to acceleration or otherwise.
Interest and commitment fees shall be calculated for actual days elapsed on
the basis of a 360-day year. Interest shall be payable for the day an
Advance is made but not for the day of any payment on the amount paid if
payment is received prior to noon (local time at the place of receipt).
If any payment of principal of or interest on an Advance shall become due
on a day which is not a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall be included
in computing interest in connection with such payment.
2.16. Notification of Advances, Interest Rates, Prepayments and
Commitment Reductions and Increases. Promptly after receipt thereof,
the Agent will notify each Lender of the contents of each Aggregate
Commitment reduction notice, Borrowing Notice, Conversion/Continuation
Notice, Facility Increase Notice and repayment notice received by it
hereunder. The Agent will notify each Lender of the interest rate applicable
to each Eurodollar Advance promptly upon determination of such interest
rate and will give each Lender prompt notice of each change in the Alternate
Base Rate.
2.17. Lending Installations. Each Lender may book its Loans at
any Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to
any such Lending Installation and the Notes shall be deemed held by each
Lender for the benefit of such Lending Installation. Each Lender may, by
written or telex notice to the Agent and the Borrower, designate a Lending
Installation through which Loans will be made by it and for whose account
Loan payments are to be made.
2.18. Non-Receipt of Funds by the Agent. Unless the Borrower or a
Lender, as the case may be, notifies the Agent prior to the date on which
it is scheduled to make payment to the Agent of (i) in the case of a
Lender, the proceeds of a Loan or (ii) in the case of the Borrower, a
payment of principal, interest or fees to the Agent for the account of the
Lenders, that it does not intend to make such payment, the Agent may assume
that such payment has been made. The Agent may, but shall not be obligated
to, make the amount of such payment available to the intended recipient in
reliance upon such assumption. If the Borrower or such Lender, as the case
may be, has not in fact made such payment to the Agent, the recipient of
such payment shall, on demand by the Agent, repay to the Agent the amount
so made available together with interest thereon in respect of each day
during the period commencing on the date such amount was so made available
by the Agent until the date the Agent recovers such amount at a rate per
annum equal to (a) in the case of payment by a Lender, the Federal Funds
Effective Rate for such day or (b) in the case of payment by the Borrower,
the interest rate applicable to the relevant Advance.
<PAGE> 56
2.19. Withholding Tax Exemption. At least five Business Days
prior to the first date on which interest or fees are payable hereunder
for the account of any Lender, each Lender (if any) that is not incorporated
under the laws of the United States of America, or a state thereof, agrees
that it will deliver to each of the Borrower and the Agent two duly completed
copies of United States Internal Revenue Service Form 1001 or 4224,
certifying in either case that such Lender is entitled to receive payments
under this Agreement and the Notes without deduction or withholding of any
United States federal taxes and an Internal Revenue Service Form W-8 or W-9
entitling such Lender to receive a complete exemption from United States
tax backup withholding. Each Lender which so delivers a Form 1001 or 4224
further undertakes to deliver to each of the Borrower and the Agent two
additional copies of such form (or a successor form) on or before the date
that such form expires (currently, three successive calendar years for Form
1001 and one calendar year for Form 4224) or becomes obsolete or after the
occurrence of any event requiring a change in the most recent forms so
delivered by it, and such amendments thereto or extensions or renewals
thereof as may be reasonably requested by the Borrower or the Agent, in
each case certifying that such Lender is entitled to receive payments under
this Agreement and the Notes without deduction or withholding of any United
States federal taxes, unless an event (including without limitation any
change in treaty, law or regulation) has occurred prior to the date on
which any such delivery would otherwise be required which renders all such
forms inapplicable or which would prevent such Lender from duly completing
and delivering any such form with respect to it and such Lender advises the
Borrower and the Agent that it is not capable of receiving payments without
any deduction or withholding of United States federal tax. If a Lender does
not provide duly executed forms to the Borrower and the Agent within the
time periods set forth in the preceding paragraph, the Borrower or the
Agent shall withhold taxes from payments to such Lender at the applicable
statutory rates and the Borrower shall not be required to pay any
additional amounts as a result of such withholding. Upon the reasonable
request of the Borrower or the Agent, each Lender that has not provided the
forms or other documents, as provided above, on the basis of being a
"United States person," shall submit to Borrower and the Agent a
certificate or other evidence to the effect that it is such a "United
States person."
2.20. Extension of Facility Termination Date. (a) The
Borrower may request a one-year extension of the Facility Termination Date
by submitting a request for an extension to the Agent (an "Extension
Request") no more than 27 months nor less than 25 months prior to the then
scheduled Facility Termination Date. Promptly upon (but not later than five
Business Days after) receipt of the Extension Request, the Agent shall
notify each Lender of the contents thereof and shall request each Lender to
approve the Extension Request. Each Lender approving the Extension Request
shall deliver its written approval no later than 30 days later than the
date of the Extension Request. If the approval of each of the Lenders is
received by the Agent within 30 days of the date of the Extension Request
(or as otherwise provided in Section 2.20(b)), the Agent shall promptly so
notify the Borrower, each Lender and the Issuing Bank, and the Facility
Termination Date shall be extended by one year, and in such event the
<PAGE> 57
Borrower may thereafter request further extension(s) of the then scheduled
Facility Termination Date in accordance with this Section 2.20. If any of
the Lenders does not deliver to the Agent such Lender's written approval to
any Extension Request within the 30 days of the date of such Extension
Request, the Facility Termination Date shall not be extended, except as
otherwise provided in Section 2.20(b).
(b) If (i) any Lenders whose pro rata shares of the
Aggregate Commitment do not exceed (in the aggregate) 20% of the Aggregate
Commitment ("Rejecting Lenders") shall not approve an Extension Request,
(ii) all rights and obligations of such Rejecting Lenders under this
Agreement and under the other Loan Documents (including, without
limitation, their Commitment and all Loans owing to them) shall have been
assigned, within 90 days following such Extension Request, in accordance
with Section 2.21, to one or more Replacement Lenders who shall have
approved in writing such Extension Request at the time of such assignment,
and (iii) no other Lender shall have given written notice to the Agent of
such Lender's withdrawal of its approval of the Extension Request, the
Agent shall promptly so notify the Borrower, each Lender and the Issuing
Bank and the Facility Termination Date shall be extended by one year, and
in such event the Borrower may thereafter request further extension(s) as
provided in Section 2.20(a).
(c) Within ten days of the Agent's notice to the Borrower
that all of the Lenders have approved an Extension Request (whether
pursuant to Section 2.20(a) or 2.20(b)), the Borrower shall pay to the
Agent for the account of each Lender an extension fee equal to the product
of (i) such Lender's Commitment and (ii)(A) the fee set forth in Schedule
2.20 hereto with respect to such Lender (or such Lender's
predecessor-in-interest if such Lender acquires its interest by assignment)
or (B) if such Lender is an Additional Lender, the fee agreed to by the
Borrower and such Additional Lender.
2.21. Replacement of Certain Lenders. In the event a Lender (the
"Affected Lender") shall have requested compensation from the Borrower
under Sections 3.1 or 3.2 to cover additional costs incurred by such Lender
that are not being incurred generally by the other Lenders or shall have
delivered a notice pursuant to Section 3.3 that such Affected Lender is
unable to extend Eurodollar Loans for reasons not generally applicable to
the other Lenders or such Affected Lender is a Rejecting Lender pursuant to
Section 2.20, then, in any such case, the Borrower or the Agent may make
written demands on such Affected Lender (with a copy to the Agent in the
case of a demand by the Borrower and a copy to the Borrower in the case of
a demand by the Agent) for the Affected Lender to assign, and such Affected
Lender shall use its best efforts to assign, pursuant to one or more duly
executed assignment agreements in substantially the form provided for in
Section 15.3.1, within five Business Days after the date of such demand, to
one or more financial institutions that comply with the provisions of
Section 15.3, and if selected by the Borrower, that are reasonably
acceptable to the Agent, that the Borrower or the Agent, as the case may
be, shall have engaged for such purpose (the "Replacement Lender"), all of
such Affected Lender's rights and obligations under this Agreement and the
<PAGE> 58
other Loan Documents (including, without limitation, its Commitment and all
Loans owing to it) in accordance with Section 15.3. The Agent agrees, upon
the occurrence of such events with respect to an Affected Lender and upon
written request of the Borrower, to use its reasonable efforts to obtain
the commitments from one or more financial institutions to act as a
Replacement Lender. Further, with respect to such assignment, the Affected
Lender shall have concurrently received, in cash, all amounts due and owing
to the Affected Lender hereunder or under any other Loan Document,
including without limitation the aggregate outstanding principal amount of
the Loans owed to such Lender, together with accrued interest thereon
through the date of such assignment, amounts payable under Sections 3.1 and
3.2 with respect to such Affected Lender and all fees payable to such
Affected Lender hereunder; provided that, upon such Affected Lender's
replacement, such Affected Lender shall cease to be a party hereto but
shall continue to be entitled to the benefits of Article III and Section
12.7, as well as to any fees accrued hereunder and not yet paid, and shall
continue to be obligated under Section 13.8 with respect to obligations and
liabilities accruing prior to the replacement of such Affected Lender.
2.22. Swing Line. (a) The Swing Line Bank agrees, on the terms and
conditions hereinafter set forth, to make loans ("Swing Line Loans") to the
Borrower from time to time during the period from the date of this
Agreement, up to but not including the fifth (5th) day prior to the
Facility Termination Date, in an aggregate principal amount not to exceed
at any time outstanding the lesser of (i) the Swing Line Commitment or (ii)
the Swing Line Bank's Available Credit.
(b) Each Swing Line Loan shall be in an amount not less
than One Million Dollars ($1,000,000) and, if in excess thereof, in
integral multiples of One Million Dollars ($1,000,000). Within the limits
of the Swing Line Commitment, the Borrower may borrow, repay and reborrow
under this Section 2.22.
(c) The Borrower shall give the Swing Line Bank (and if
the Swing Line Bank is not also the Agent, the Agent) a Borrowing Notice
requesting a Swing Line Loan not later than 1:00 p.m. (Chicago time) on the
Business Day of such Swing Line Loan, specifying the amount of such
requested Swing Line Loan. Each such Borrowing Notice shall be accompanied
by a Borrowing Base Certificate dated as of the date of such Borrowing
Notice (and by the Borrowing Notice provided for in Section 2.22(d)). All
Borrowing Notices given by the Borrower under this Section 2.22(c) shall be
irrevocable. Upon satisfaction of the applicable conditions set forth in
Section 5.2, the Swing Line Bank will make the Swing Line Loan available to
the Borrower in immediately available funds by crediting the amount thereof
to the Borrower's account with the Swing Line Bank. If the Swing Line Bank
is not also the Agent, the Swing Line Bank shall not advance the Swing Line
Loan unless and until the Agent shall have confirmed (by telephonic notice)
that such applicable conditions have been satisfied.
<PAGE> 59
(d) Each Swing Line Loan shall be paid in full on or
before the third Business Day following the making of such Swing Line Loan
and, if not so paid by the Borrower, shall be paid in full from the
proceeds of an Advance made pursuant to Section 2.1 on the third Business
Day following the making of such Swing Line Loan. Each Borrowing Notice
given by the Borrower under Section 2.22(c) shall include, or if it does
not include, shall be deemed to include an irrevocable Borrowing Notice
under Section 2.8 requesting the Lenders to make an Advance, on or before
the third Business Day following the making of such Swing Line Loan, of the
full amount of such Swing Line Loan, unless such Swing Line Loan is sooner
paid in full by the Borrower.
(e) Provided that the applicable conditions set forth in
Section 5.2 shall have been satisfied at the time of the making of such
Swing Line Loan, the Lenders irrevocably agree to make the Advance provided
for in Section 2.22(d), notwithstanding any subsequent failure to satisfy
such conditions or any other facts or circumstances including (without
limitation) the existence of a Default.
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1. Yield Protection. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive
(whether or not having the force of law), or any interpretation thereof,
or the compliance of any Lender therewith,
(i) subjects any Lender or any applicable Lending
Installation to any tax, duty, charge or withholding on
or from payments due from the Borrower (excluding any
taxes imposed on, or based on, or determined by reference
to the net income of any Lender or applicable Lending
Installation, including, without limitation, franchise
taxes, alternative minimum taxes and any branch profits
tax (collectively, "Excluded Taxes")), any taxes imposed
on, or based on, or determined by reference to or changes
the basis of taxation of payments to any Lender in
respect of its Loans or other amounts due it hereunder
(except for Excluded Taxes),
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar
requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender or any
applicable Lending Installation (other than reserves and
assessments taken into account in determining the
interest rate applicable to Eurodollar Rates), or
<PAGE> 60
(iii) imposes any other condition the result of which is to
increase the cost to any Lender or any applicable Lending
Installation of making, funding or maintaining loans or
reduces any amount receivable by any Lender or any
applicable Lending Installation in connection with loans,
or requires any Lender or any applicable Lending
Installation to make any payment calculated by reference
to the amount of loans held or interest received by it,
by an amount deemed material by such Lender,
then, within 15 days of demand by such Lender, the Borrower shall pay such
Lender that portion of such increased expense incurred or reduction in an
amount received which such Lender determines is attributable to making,
funding and maintaining its Loans and its Commitment; provided, however,
that the Borrower shall not be required to increase any such amounts
payable to any Lender (i) if such Lender fails to comply with the
requirements of Section 2.19 hereof or (2) to the extent that such Lender
determines, in its sole reasonable discretion, that it can, after notice
from the Borrower, through reasonable efforts, eliminate or reduce the
amount of tax liabilities payable (without additional costs or expenses
unless the Borrower agrees to bear such costs or expenses) or other
disadvantages or risks (economic or otherwise) to such Lender or the Agent.
If any Lender receives a refund in respect of any tax for which such Lender
has received payment from the Borrower hereunder, such Lender shall
promptly notify the Borrower of such refund and such Lender shall repay the
amount of such refund to the Borrower, provided that the Borrower, upon the
request of such Lender, agrees to return such refund (plus any penalties,
interest or other charges) to such Lender in the event such Lender is
required to repay such refund. The determination as to whether any Lender
has received a refund shall be made by such Lender and such determination
shall be conclusive absent manifest error.
3.2. Changes in Capital Adequacy Regulations. If a Lender or
Issuing Bank determines the amount of capital required or expected to be
maintained by such Lender, any Lending Installation of such Lender or
Issuing Bank or any corporation controlling such Lender or Issuing Bank is
increased as a result of a Change, then, within 15 days of demand by such
Lender or Issuing Bank, the Borrower shall pay such Lender or Issuing Bank
the amount necessary to compensate for any shortfall in the rate of return
on the portion of such increased capital which such Lender or Issuing Bank
determines is attributable to this Agreement, its Loans or its obligation
to make Loans hereunder, or its issuance or maintenance of or participation
in, or commitment to issue, to maintain or to participate in, the Facility
Letters of Credit hereunder (after taking into account such Lender's or
Issuing Bank's policies as to capital adequacy). "Change" means (i) any
change after the date of this Agreement in the Risk-Based Capital Guidelines
or (ii) any adoption of or change in any other law, governmental or
quasi-governmental rule, regulation, policy, guideline, interpretation,
or directive (whether or not having the force of law) after the date of this
Agreement which affects the amount of capital required or expected to be
maintained by any Lender, Issuing Bank, Lending Installation or any
corporation controlling any Lender or Issuing Bank. "Risk-Based Capital
Guidelines" means (i) the risk-based capital guidelines in effect in the
<PAGE> 61
United States on the date of this Agreement, including transition rules,
and (ii) the corresponding capital regulations promulgated by regulatory
authorities outside the United States implementing the July 1988 report of
the Basle Committee on Banking Regulation and Supervisory Practices
Entitled "International Convergence of Capital Measurements and Capital
Standards," including transition rules, and any amendments to such
regulations adopted prior to the date of this Agreement.
3.3. Availability of Types of Advances. If any Lender determines
and notifies the Agent that maintenance of any of such Lender's Eurodollar
Loans at a suitable Lending Installation would violate any applicable law,
rule, regulation or directive, whether or not having the force of law, the
Agent shall suspend the availability of the affected Type of Advance and
require any Eurodollar Advances of the affected Type to be repaid; or if
the Required Lenders determine and notify the Agent that (i) deposits of a
type or maturity appropriate to match fund Eurodollar Advances are not
available, the Agent shall suspend the availability of the affected Type of
Advance with respect to any Eurodollar Advances made after the date of any
such determination, or (ii) an interest rate applicable to a Type of
Advance does not accurately reflect the cost of making a Eurodollar Advance
of such Type, then, if for any reason whatsoever the provisions of Section
3.1 are inapplicable, the Agent shall suspend the availability of the
affected Type of Advance with respect to any Eurodollar Advance made after
the date of any such determination.
3.4. Funding Indemnification. If any payment of a Eurodollar
Advance occurs on a date which is not the last day of the applicable Interest
Period, whether because of acceleration, prepayment or otherwise, or a
Eurodollar Advance is not made on the date specified by the Borrower for any
reason other than default by the Lenders, the Borrower will indemnify
each Lender for any loss or cost incurred by it resulting therefrom,
including, without limitation, any loss or cost in liquidating or employing
deposits acquired to fund or maintain the Eurodollar Advance.
3.5. Lender Statements; Survival of Indemnity. To the extent reasonably
possible, each Lender shall designate an alternate Lending Installation
with respect to its Eurodollar Advances to reduce any liability of the
Borrower to such Lender under Sections 3.1 and 3.2 or to avoid the
unavailability of a Type of Advance under Section 3.3, so long as such
designation is not disadvantageous to such Lender. Each Lender or Issuing
Bank shall deliver a written statement of such Lender or Issuing Bank as to
the amount due, if any, under Sections 3.1, 3.2 or 3.4. Such written
statement shall set forth in reasonable detail the calculations upon which
such Lender or Issuing Bank determined such amount and shall be final,
conclusive and binding on the Borrower in the absence of manifest error.
Determination of amounts payable under such Sections in connection with a
Eurodollar Advance shall be calculated as though each Lender funded its
Eurodollar Advance through the purchase of a deposit of the type and
maturity corresponding to the deposit used as a reference in determining
the Eurodollar Advance applicable to such Loan, whether in fact that is the
case or not. Unless otherwise provided herein, the amount specified in the
written statement shall be payable on demand after receipt by the Borrower
of the written statement. The obligations of the Borrower under Sections
3.1, 3.2 and 3.4 shall survive payment of the Obligations and termination
of this Agreement.
<PAGE> 62
ARTICLE IV
THE LETTER OF CREDIT FACILITY
4.1. Facility Letters of Credit. The Issuing Bank agrees, on the
terms and conditions set forth in this Agreement, to issue from time to
time for the account of the Borrower, through such offices or branches as
it and the Borrower may jointly agree, one or more Facility Letters of
Credit in accordance with this Article IV, during the period commencing on
the date of the Original Agreement and ending on the Business Day prior to
the Facility Termination Date.
4.2. Limitations. No Issuing Bank shall issue, amend or extend,
at any time, any Facility Letter of Credit:
(i) if the aggregate maximum amount then available for
drawing under Letters of Credit issued by such Issuing Bank, after
giving effect to the Facility Letter of Credit or amendment or
extension thereof requested hereunder, shall exceed any limit
imposed by law or regulation upon such Issuing Bank;
(ii) if, after giving effect to the Facility Letter of Credit
or amendment or extension thereof requested hereunder, the
aggregate principal amount of the Facility Letter of Credit
Obligations would exceed $20,000,000;
(iii) that, in the case of the issuance of a Facility Letter of
Credit, is in, or in the case of an amendment of a Facility Letter
of Credit, increases the face amount thereof by, an amount in
excess of the then Aggregate Available Credit;
(iv) if, after giving effect to the Facility Letter of Credit
or amendment or extension thereof requested hereunder,
Consolidated Senior Debt Borrowings would exceed the Borrowing
Base as of the most recent Inventory Valuation Date;
(v) if such Issuing Bank receives written notice from the
Agent at or before noon (Chicago time) on the proposed Issuance
Date of such Facility Letter of Credit that one or more of the
conditions precedent contained in Sections 5.1 or 5.2, as
applicable, would not on such Issuance Date be satisfied, unless
such conditions are thereafter satisfied and written notice of
such satisfaction is given to such Issuing Bank by the Agent;
(vi) that has an expiration date (taking into account any
automatic renewal provisions thereof) later than the Business Day
preceding the scheduled Facility Termination Date; or
(vii) that is in a currency other than U.S. Dollars.
<PAGE> 63
4.3. Conditions. In addition to being subject to the satisfaction
of the conditions contained in Sections 5.1 and 5.2, as applicable, the
issuance of any Facility Letter of Credit is subject to the satisfaction in
full of the following conditions:
(i) the Borrower shall have delivered to the Issuing Bank
at such times and in such manner as the Issuing Bank may
reasonably prescribe a Reimbursement Agreement and such other
documents and materials as may be reasonably required pursuant to
the terms thereof, and the proposed Facility Letter of Credit
shall be reasonably satisfactory to such Issuing Bank in form and
content; and
(ii) as of the Issuance Date no order, judgment or decree
of any court, arbitrator or governmental authority shall enjoin or
restrain such Issuing Bank from issuing the Facility Letter of
Credit and no law, rule or regulation applicable to such Issuing
Bank and no directive from and governmental authority with
jurisdiction over the Issuing Bank shall prohibit such Issuing
Bank from issuing Letters of Credit generally or from issuing that
Facility Letter or Credit.
4.4. Procedure for Issuance of Facility Letters of Credit. (a) The
Borrower shall give the Issuing Bank and the Agent not less than 15 days'
prior written notice of any requested issuance of a Facility Letter of
Credit under this Agreement. Such notice shall specify (i) the stated
amount of the Facility Letter of Credit requested, (ii) the requested
Issuance Date, which shall be a Business Day, (iii) the date on which such
requested Facility Letter of Credit is to expire, which date shall be in
compliance with the requirements of Section 4.2(vi), (iv) the purpose for
which such Facility Letter of Credit is to be issued, and (v) the Person
for whose benefit the requested Facility Letter of Credit is to be issued.
At the time such request is made, the Borrower shall also provide the Agent
with a copy of the form of the Facility Letter of Credit it is requesting
be issued.
(b) Upon receipt of a request for issuance of a Facility Letter of
Credit in accordance with Section 4.4(a), the Agent shall promptly deliver
a copy of such request to the Lender then designated as Issuing Bank
pursuant to Section 4.10. Within 10 days after receipt of such request,
such Issuing Bank shall approve or disapprove, in its reasonable
discretion, the issuance of such requested Facility Letter of Credit, but
the issuance of such approved Facility Letter of Credit shall continue to
be subject to the provisions of this Article IV. The Issuing Bank shall use
reasonable efforts to notify the Borrower of any changes in the Issuing
Bank's policies or procedures that could reasonably be expected to affect
adversely the Issuing Bank's approval of requested Facility Letters of
Credit.
<PAGE> 64
(c) Not less than three nor more than five Business Days prior to
the issuance of a Facility Letter of Credit approved by the Issuing Bank as
provided in Section 4.4(b), the Borrower shall confirm in writing to the
Agent and to the Issuing Bank the intended Issuance Date and amount of such
Facility Letter of Credit. The Agent shall determine, as of the close of
business on the day it receives such written confirmation from the
Borrower, whether the issuance of such Facility Letter of Credit would be
permitted under the provisions of Sections 4.2(iii) and (iv) and, prior to
the close of business on the second Business Day after the Agent received
such written confirmation from the Borrower under Section 4.4(a), the Agent
shall notify the Issuing Bank and the Borrower (in writing or by telephonic
notice confirmed promptly thereafter in writing) whether issuance of the
requested Facility Letter of Credit would be permitted under the provisions
of Sections 4.2(iii) and (iv). If the Agent notifies the Issuing Bank and
the Borrower that such issuance would be so permitted, then, subject to the
terms and conditions of this Article IV and provided that the applicable
conditions set forth in Sections 5.1 and 5.2 have been satisfied, the
Issuing Bank shall, on the requested Issuance Date, issue the requested
Facility Letter of Credit in accordance with the Issuing Bank's usual and
customary business practices. The Issuing Bank shall give the Agent written
notice, or telephonic notice confirmed promptly thereafter in writing, of
the issuance of a Facility Letter of Credit.
(d) An Issuing Bank shall not extend or amend any Facility Letter
of Credit unless the requirements of this Section 4.4 are met as though a
new Facility Letter of Credit were being requested and issued.
(e) Any Lender may, but shall not be obligated to, issue to the
Borrower or any Subsidiary Letters of Credit (that are not Facility Letters
of Credit) for its own account, and at its own risk. None of the provisions
of this Article IV shall apply to any Letter of Credit that is not a
Facility Letter of Credit.
4.5. Duties of Issuing Bank. Any action taken or omitted to be
taken by an Issuing Bank under or in connection with any Facility Letter of
Credit, if taken or omitted in the absence of willful misconduct or gross
negligence, shall not put such Issuing Bank under any resulting liability
to any Lender or, assuming that such Issuing Bank has complied with the
procedures specified in Section 4.4, relieve any Lender of its obligations
hereunder to such Issuing Bank. In determining whether to pay under any
Facility Letter of Credit, the Issuing Bank shall have no obligation
relative to the Lenders other than to confirm that any documents required
to be delivered under such Facility Letter of Credit appear to have been
delivered in compliance and that they appear to comply on their face with
the requirements of such Facility Letter of Credit.
4.6. Participation. (a) Immediately upon issuance by an Issuing
Bank of any Facility Letter of Credit in accordance with Section 4.4, each
Lender shall be deemed to have irrevocably and unconditionally purchased
and received from such Issuing Bank, without recourse or warranty, an
undivided interest and participation (ratably in proportion to the ratio
<PAGE> 65
that such Lender's Commitment bears to the Aggregate Commitment) in such
Facility Letter of Credit (including, without limitation, all obligations
of the Borrower with respect thereto other than amounts owing to such
Issuing Bank under Section 3.2).
(b) In the event that an Issuing Bank makes any payment under any
Facility Letter of Credit and the Borrower shall not have repaid such
amount to such Issuing Bank on or before the date of such payment by such
Issuing Bank, such Issuing Bank shall promptly so notify the Agent, which
shall promptly so notify each Lender. Upon receipt of such notice, each
Lender shall promptly and unconditionally pay to the Agent for the account
of such Issuing Bank the amount of such Lender's share (ratably in
proportion to the ratio that such Lender's Commitment bears to the
Aggregate Commitment) of such payment in same day funds, and the Agent
shall promptly pay such amount, and any other amounts received by the Agent
for such Issuing Bank's account pursuant to this Section 4.6(b), to such
Issuing Bank. If the Agent so notifies such Lender prior to 10:00 a.m.
(Chicago time) on any Business Day, such Lender shall make available to the
Agent for the account of such Issuing Bank such Lender's share of the
amount of such payment on such Business Day in same day funds. If and to
the extent such Lender shall not have so made its share of the amount of
such payment available to the Agent for the account of such Issuing Bank,
such Lender agrees to pay to the Agent for the account of such Issuing Bank
forthwith on demand such amount, together with interest thereon, for each
day from the date such payment was first due until the date such amount is
paid to the Agent for the account of such Issuing Bank, at the Federal
Funds Effective Rate. The failure of any Lender to make available to the
Agent for the account of such Issuing Bank such Lender's share of any such
payment shall not relieve any other Lender of its obligation hereunder to
make available to the Agent for the account of such Issuing Bank its share
of any payment on the date such payment is to be made.
(c) The payments made by the Lenders to an Issuing Bank in
reimbursement of amounts paid by it under a Facility Letter of Credit shall
constitute, and the Borrower hereby expressly acknowledges and agrees that
such payments shall constitute, Advances hereunder and such payments shall
for all purposes be treated as Advances (notwithstanding that the amounts
thereof may not comply with the provisions of Section 2.6). Such Advances
shall be Floating Rate Advances, subject to the Borrower's rights under
Article II hereof.
(d) Upon the request of the Agent or any Lender, an Issuing Bank
shall furnish to the requesting Agent or Lender copies of any Facility
Letter of Credit or Reimbursement Agreement to which such Issuing Bank is
party and such other documentation as may reasonably be requested by the
Agent or the Lender.
<PAGE> 66
(e) The obligations of the Lenders to make payments to the Agent
for the account of an Issuing Bank with respect to a Facility Letter of
Credit shall be irrevocable, not subject to any qualification or exception
whatsoever and shall be made in accordance with, but not subject to, the
terms and conditions of this Agreement under all circumstances, including
without limitation the following:
(i) any lack of validity or enforceability of this
Agreement or any of the other Loan Documents;
(ii) the existence of any claim, setoff, defense or other
right which the Borrower may have at any time against a
beneficiary named in a Facility Letter of Credit or any transferee
of any Facility Letter of Credit (or any Person for whom any such
transferee may be acting), such Issuing Bank, the Agent, any
Lender, or any other Person, whether in connection with this
Agreement, any Facility Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including any
underlying transactions between the Borrower or any Subsidiary and
the beneficiary named in any Facility Letter of Credit);
(iii) any draft, certificate or any other document presented
under the Facility Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect of any
statement therein being untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents;
(v) any failure by the Agent or the Issuing Bank to make
any reports required pursuant to Section 4.8; or
(vi) the occurrence of any Default or Unmatured Default.
4.7. Compensation for Facility Letters of Credit. (a) The Borrower
agrees to pay to the Agent, in the case of each outstanding Facility Letter
of Credit, the Facility Letter of Credit Fee therefor, payable in monthly
installments in advance on the Issuance Date (which installment shall be a
pro rata portion of the annual Facility Letter of Credit Fee for the period
commencing on the Issuance Date and ending on the day preceding the Payment
Date next following the Issuance Date) and on each Payment Date after the
Issuance Date (which installment shall be a pro rata portion of the annual
Facility Letter of Credit Fee for the month in which such Payment Date
occurs). Facility Letter of Credit Fees shall be calculated, on a pro rata
basis for the period to which such payment applies, for actual days that
will elapse during such period, on the basis of a 360-day year. The Agent
shall promptly remit such Facility Letter of Credit Fees, when paid, to the
Lenders (ratably in the proportion that each Lender's Commitment bears to
the Aggregate Commitment).
<PAGE> 67
(b) An Issuing Bank shall have the right to receive solely for its
own account such amounts as the Borrower may agree, in writing, to pay to
such Issuing Bank with respect to issuance fees and for such Issuing Bank's
out-of-pocket costs of issuing and servicing Facility Letters of Credit.
4.8. Issuing Bank Reporting Requirements. Each Issuing Bank shall,
no later than the tenth day following the last day of each month, provide
to the Agent a schedule of the Facility Letters of Credit issued by it, in
form and substance reasonably satisfactory to the Agent, showing the
Issuance Date, account party, original face amount, amount (if any) paid
thereunder, expiration date and the reference number of each Facility
Letter of Credit outstanding at any time during such month and the
aggregate amount (if any) payable by the Borrower to such Issuing Bank
during the month pursuant to Section 3.2. Copies of such reports shall be
provided promptly to each Lender by the Agent.
4.9. Indemnification; Nature of Issuing Bank's Duties. (a) In
addition to amounts payable as elsewhere provided in this Article IV, the
Borrower hereby agrees to protect, indemnify, pay and save the Agent and
each Lender and Issuing Bank harmless from and against any and all claims,
demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys' fees) arising from the claims of third
parties against the Agent, Issuing Bank or Lender as a consequence, direct
or indirect, of (i) the issuance of any Facility Letter of Credit other
than, in the case of an Issuing Bank, as a result of its willful misconduct
or gross negligence, or (ii) the failure of an Issuing Bank issuing a
Facility Letter of Credit to honor a drawing under such Facility Letter of
Credit as a result of any act or omission, whether rightful or wrongful, of
any present or future de jure or de facto government or governmental
authority.
(b) As among the Borrower, the Lenders, the Agent and the Issuing
Bank, the Borrower assumes all risks of the acts and omissions of, or
misuse of Facility Letters of Credit by, the respective beneficiaries of
such Facility Letters of Credit. In furtherance and not in limitation of
the foregoing, neither the Issuing Bank nor the Agent nor any Lender shall
be responsible: (i) for the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in
connection with the application for and issuance of the Facility Letters of
Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Facility Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason; (iii) for failure of the
beneficiary of a Facility Letter of Credit to comply fully with conditions
required in order to draw upon such Facility Letter of Credit; (iv) for
errors, omissions, interruptions or delays in transmission or delivery of
any messages, by mail, cable, telegraph, telex or otherwise, whether or not
they be in cipher; (v) for errors in interpretation of technical terms;
<PAGE> 68
(vi) for any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under any Facility Letter of Credit or
of the proceeds thereof; (vii) for the misapplication by the beneficiary of
a Facility Letter of Credit of the proceeds of any drawing under such
Facility Letter of Credit; and (viii) for any consequences arising from
causes beyond the control of the Agent, the Issuing Bank and the Lenders
including, without limitation, any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto government or
governmental authority. None of the above shall affect, impair, or prevent
the vesting of any of the Issuing Bank's rights or powers under this
subsection 4.9.
(c) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by
an Issuing Bank under or in connection with the Facility Letters of Credit
or any related certificates, if taken or omitted in good faith, shall not
put such Issuing Bank, the Agent or any Lender under any resulting
liability to the Borrower or relieve the Borrower of any of its obligations
hereunder to any such Person.
(d) Notwithstanding anything to the contrary contained in this
Section 4.9, the Borrower shall have no obligation to indemnify an Issuing
Bank under this Section 4.9 in respect of any liability incurred by such
Issuing Bank arising primarily out of the willful misconduct or gross
negligence of such Issuing Bank, as determined by a court of competent
jurisdiction, or out of the wrongful dishonor by such Issuing Bank of a
proper demand for payment made under the Facility Letters of Credit issued
by such Issuing Bank, unless such dishonor was made at the request of the
Borrower.
4.10. Resignation of Issuing Bank. The Issuing Bank shall continue
to be the Issuing Bank unless and until (i) it shall have given the
Borrower and the Agent notice that it has elected to resign as Issuing Bank
and (ii) a replacement Issuing Bank shall have been designated and approved
in writing by the Agent and the Borrower. The resigning Issuing Bank shall
continue to have the rights and obligations of an Issuing Bank hereunder
solely with respect to Facility Letters of Credit theretofore issued by it
notwithstanding the designation of a replacement Issuing Bank hereunder),
but upon such designation of a replacement Issuing Bank, the resigning
Issuing Bank shall not thereafter issue any Facility Letters of Credit
(unless such Lender shall again thereafter be designated as Issuing Bank in
accordance with the provisions of this Section 4.10).
4.11. Obligations of Issuing Bank and Other Lenders. Except to the
extent that a Lender shall have agreed to be designated as an Issuing Bank,
no Lender shall have any obligation to accept or approve any request for,
or to issue, amend or extend, any Letter of Credit, and the obligations of
the Issuing Bank to issue, amend or extend any Facility Letter of Credit
are expressly limited by and subject to the provisions of this Article IV.
<PAGE> 69
ARTICLE V
CONDITIONS PRECEDENT
5.1. Effective Date. The Effective Date of this Agreement shall not
occur, the Lenders shall not be required to make any additional Advance
hereunder, and the Issuing Bank shall not be required to issue any
additional Facility Letter of Credit hereunder, unless the Borrower has
paid to the Agent the fees set forth in the letter agreement dated April
25, 1997, among the Agent, FCCM and the Borrower, and from which payment
the Agent and FCCM shall have paid to the Lenders the extension fees
provided to be paid to them in accordance with the Agent's letters to the
Lenders dated April 23, 1997, and the Borrower has furnished to the Agent
with sufficient copies for the Lenders:
(i) A copy of the certificate of incorporation of the
Borrower, together with all amendments, and a certificate
of good standing, all certified by the appropriate
governmental officer in the jurisdiction of
incorporation.
(ii) A copy, certified by the Secretary or Assistant Secretary
of the Borrower, of the Borrower's by-laws and of its
Board of Directors' resolutions authorizing the execution
of this Agreement.
(iii) Incumbency certificates, executed by the Secretary or
Assistant Secretary of the Borrower, which shall identify
by name and title and bear the signature of the officers
of the Borrower authorized to sign this Agreement.
(iv) A written opinion of Kaye, Scholer, Fierman, Hays &
Handler, LLP, counsel to the Borrower, addressed to the
Agent and Lenders in substantially the form of Exhibit
"C" hereto.
(v) A written opinion of Lord, Bissell & Brook, Illinois
counsel to the Borrower, addressed to the Agent and the
Lenders in substantially the form of Exhibit "E" hereto.
(vi) An Amended and Restated Contribution Agreement duly
executed by the Guarantors in the form of Exhibit "G"
hereto (the "Contribution Agreement").
(vii) An Amended and Restated Subordination Agreement duly
executed by the Non-Borrowing Subsidiaries in the form of
Exhibit "H" hereto (the "Subordination Agreement").
(viii) Such other documents as any Lender or Issuing Bank or
their respective counsel may have reasonably requested.
<PAGE> 70
5.2. Each Advance. The Lenders shall not be required (except as
otherwise provided in Section 2.22(e) and except for Loans made by the New
Lenders pursuant to Section 2.5(c)) to make any Advance (other than the
conversion of an Advance of one Type to an Advance of another Type that
does not increase the aggregate amount of outstanding Advances) and the
Swing Line Bank shall not be obligated to make a Swing Line Loan, unless on
the applicable Borrowing Date, and an Issuing Bank shall not be required to
issue, amend or extend a Facility Letter of Credit, unless on the
applicable Issuance Date:
(i) There exists no Default or Unmatured Default.
(ii) The representations and warranties contained in Article
VI are true and correct in all material respects as of
such Borrowing Date or Issuance Date except to the extent
any such representation or warranty is stated to relate
solely to an earlier date, in which case such
representation or warranty shall be true and correct in
all material respects on and as of such earlier date and
except to the extent that any such representation or
warranty relates to changes otherwise permitted by this
Agreement.
(iii) After the making of such Advance or issuance of such
Facility Letter of Credit, Consolidated Senior Debt
Borrowings shall not exceed the Borrowing Base
(determined as of the most recent Inventory Valuation
Date).
(iv) The Borrower shall have delivered to the Agent, not more
than three (3) Business Days prior to the applicable
Borrowing Date or Issuance Date or, in the case of a
Swing Line Loan, on the Borrowing Date, a duly completed
certificate in substantially the form of Exhibit "I"
hereto.
(v) All legal matters incident to (A) the making of such
Advance shall be reasonably satisfactory to the Lenders
and their counsel and (B) the issuance of such Facility
Letter of Credit shall be reasonably satisfactory to the
Agent, such Issuing Bank and their respective counsel.
Each Borrowing Notice with respect to each such Advance and each
request for a Facility Letter of Credit shall constitute a representation
and warranty by the Borrower that the conditions contained in Sections
5.2(i) and (ii) have been satisfied.
<PAGE> 71
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
6.1. Existence and Standing. The Borrower is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite authority to conduct its
business in each jurisdiction in which its business is conducted (except to
the extent that a failure to maintain such existence, good standing or
authority would not reasonably be expected to have and does not have a
Material Adverse Effect). Each of the Significant Guarantors is a
corporation duly incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation and has all requisite
authority to conduct its business in each jurisdiction in which its
business is conducted (except to the extent that a failure to maintain such
existence, good standing or authority would not reasonably be expected to
have and does not have a Material Adverse Effect).
6.2. Authorization and Validity. The Borrower has the corporate power
and authority to execute and deliver the Loan Documents and to perform its
obligations hereunder and thereunder. The execution and delivery by the
Borrower of the Loan Documents and the performance of its obligations
thereunder have been duly authorized and the Loan Documents constitute
legal, valid and binding obligations of the Borrower enforceable against
the Borrower in accordance with their terms, subject to bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally and general principles of equity. Each of the Guarantors has the
corporate power and authority to execute and deliver the Guaranty and to
perform its obligations thereunder. The execution and delivery by the
Guarantors of the Guaranty and the performance of their obligations
thereunder have been duly authorized, and the Guaranty constitutes the
legal, valid and binding obligations of the Guarantors enforceable against
the Guarantors in accordance with its terms, subject to bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally and general principles of equity.
6.3. No Conflict; Government Consent. Neither the execution and
delivery by the Borrower of the Loan Documents or by the Significant
Guarantors of the Guaranty, nor the consummation of the transactions herein
contemplated, nor compliance with the provisions hereof or thereof will
violate in any material respect any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on the Borrower or any of the
Significant Guarantors or the Borrower's or any Significant Guarantor's
certificate of incorporation or by-laws or the provisions of any indenture,
instrument or agreement to which the Borrower or any Significant Guarantor
is a party or is subject, or by which it, or its Property, is bound, or
conflict with or constitute a default thereunder, or result in the creation
or imposition of any Lien in, of or on the Property of the Borrower or any
Significant Guarantor pursuant to the terms of any such indenture,
instrument or agreement. Except as set forth on Schedule "6.3" hereto, no
<PAGE> 72
order, consent, approval, license, authorization, or validation of, or
filing, recording or registration with, or exemption by, any governmental
or public body or authority, or any subdivision thereof, is required to
authorize, or is required in connection with the execution, delivery and
performance of, or the legality, validity, binding effect or enforceability
of, any of the Loan Documents or the Guaranty.
6.4. Financial Statements. The March 31, 1997 unaudited condensed
consolidated financial statements of the Borrower and its Subsidiaries
delivered to the Lenders were prepared pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information
and footnotes normally included in annual financial statements prepared in
accordance with GAAP have been condensed or omitted pursuant to those rules
and regulations. Such statements fairly present, in all material respects,
the consolidated financial condition and operations of the Borrower and its
Subsidiaries at such date and the consolidated results of their operations
for the period then ended, subject to normal adjustments and the absence of
footnotes.
6.5. Material Adverse Change. Since the date of the financial
statements (whether quarterly or annual) of the Borrower that have most
recently been delivered by the Borrower to the Agent, there has been no
change in the business, Property, condition (financial or otherwise) or
results of operations of the Borrower and the Significant Guarantors (taken
as a whole) that has had or would reasonably be expected to have a Material
Adverse Effect.
6.6. Taxes. The Borrower and the Significant Guarantors have filed all
United States federal income tax returns and all other material tax returns
which are required to be filed and have paid all taxes due pursuant to said
returns or pursuant to any assessment received by the Borrower or any such
Significant Guarantor, except such taxes, if any, as are being contested in
good faith and as to which adequate reserves have been provided. No tax
Liens have been filed and no claims are being asserted with respect to any
such taxes. The charges, accruals and reserves on the books of the Borrower
and the Significant Guarantors in respect of any taxes or other
governmental charges are adequate in accordance with GAAP.
6.7. Litigation and Contingent Obligations. Except as set forth on
Schedule "6.7" hereto, there is no litigation, arbitration, governmental
investigation, proceeding or inquiry pending or, to the knowledge of any
Authorized Officer, threatened against or affecting the Borrower or any
Significant Guarantor that has had or would reasonably be expected to have
a Material Adverse Effect. Other than any liability incident to such
litigation, arbitration or proceedings, the Borrower and the Significant
Guarantors have no material contingent obligations not provided for or
disclosed in the financial statements (whether quarterly or annual) of the
Borrower that have been most recently delivered by the Borrower to the
Agent that has had or would reasonably be expected to have a Material
Adverse Effect.
<PAGE> 73
6.8. Subsidiaries. Schedule "6.8" hereto contains an accurate list of
all of the Subsidiaries of the Borrower, setting forth their respective
jurisdictions of incorporation or formation and the percentage of their
respective capital stock or partnership interests owned by the Borrower or
its Subsidiaries. All of the issued and outstanding shares of capital stock
of such Subsidiaries that are corporations have been duly authorized and
validly issued and are fully paid and non-assessable.
6.9. ERISA. The Unfunded Liabilities of all Single Employer Plans do
not in the aggregate exceed $5,000,000. Neither the Borrower nor any other
member of the Controlled Group has incurred, or is reasonably expected to
incur, any withdrawal liability to Multiemployer Plans in excess of
$5,000,000 in the aggregate. Each Plan complies in all material respects
with all applicable requirements of law and regulations, no Reportable
Event has occurred with respect to any Plan, neither the Borrower nor any
other member of the Controlled Group has withdrawn from any Multiemployer
Plan or initiated steps to do so, and no steps have been taken to terminate
any Plan.
6.10. Accuracy of Information. All factual information heretofore or
contemporaneously furnished by or on behalf of the Borrower or any
Guarantor to the Agent or any Lender for purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all other
such factual information hereafter furnished by or on behalf of the
Borrower or any Guarantor to the Agent or any Lender will be, true and
accurate (taken as a whole), in all material respects, on the date as of
which such information is dated or certified and not incomplete by omitting
to state any material fact necessary to make such information (taken as a
whole) not misleading at such time.
6.11. Regulation U.11. Margin stock (as defined in Regulation U)
constitutes less than 25% of those assets of the Borrower and its
Subsidiaries which are subject to any limitation on sale, pledge, or other
restriction hereunder.
6.12. Material Agreements. Neither the Borrower nor any Significant
Guarantor is in default, which default has had or would reasonably be
expected to have a Material Adverse Effect, in the performance, observance
or fulfillment of any of the obligations, covenants or conditions contained
in (i) any agreement to which it is a party, or (ii) any agreement or
instrument evidencing or governing Indebtedness.
6.13. Labor Disputes and Acts of God. Neither the business nor the
Property of the Borrower or of any Significant Guarantor is affected by any
fire, explosion, accident, strike, lockout, or other labor dispute,
drought, storm, hail, earthquake, embargo, act of God or of the public
enemy, or other casualty (whether or not covered by insurance), which has
had or would reasonably be expected to have a Material Adverse Effect.
<PAGE> 74
6.14. Ownership and Liens. The Borrower and each of the Significant
Guarantors have title to, or valid leasehold interests in, all of their
respective properties and assets, real and personal, including the
properties and assets and leasehold interests reflected in the financial
statements referred to in Section 6.4 (except to the extent that (i) such
properties or assets have been disposed of in the ordinary course of
business or (ii) the failure to have such title has not had and would not
reasonably be expected to have a Material Adverse Effect) and none of the
properties and assets owned by the Borrower or any Significant Guarantor
and none of their leasehold interests is subject to any Lien, except as may
be permitted pursuant to Section 8.8.
6.15. Operation of Business. The Borrower and each of the Significant
Guarantors possess all licenses, permits, franchises, patents, copyrights,
trademarks, and trade names, or rights thereto, to conduct their respective
businesses substantially as now conducted, and as presently proposed to be
conducted, with such exceptions as have not had and would not reasonably be
expected to have a Material Adverse Effect.
6.16. Laws; Environment. Except as set forth on Schedule "6.16"
hereto, the Borrower and each of the Significant Guarantors have duly
complied, and their businesses, operations and Property are in compliance,
in all material respects, with the provisions of all federal, state, and
local statutes, laws, codes, and ordinances and all rules and regulations
promulgated thereunder (including without limitation those relating to the
environment, health and safety). Except as set forth on Schedule "6.16"
hereto, the Borrower and each of the Significant Guarantors have been
issued all required federal, state, and local permits, licenses,
certificates, and approvals relating to (1) air emissions; (2) discharges
to surface water or groundwater; (3) solid or liquid waste disposal; (4)
the use, generation, storage, transportation, or disposal of toxic or
hazardous substances or hazardous wastes (intended hereby and hereafter to
include any and all such materials listed in any federal, state, or local
law, code, or ordinance and all rules and regulations promulgated
thereunder as hazardous); or (5) other environmental, health or safety
matters. Except in accordance with a valid governmental permit, license,
certificate or approval or as set forth on Schedule "6.16" hereto, to the
best knowledge of the Borrower, there has been no material emission, spill,
release, or discharge into or upon (1) the air; (2) soils, or any
improvements located thereon; (3) surface water or groundwater; or (4) the
sewer, septic system or waste treatment, storage or disposal system
servicing any Property of the Borrower or any Significant Guarantor, of any
toxic or hazardous substances or hazardous wastes at or from such Property.
There has been no written complaint, order, directive, claim, citation, or
notice by any governmental authority or any person or entity with respect
to violations of law or damage by reason of the Borrower's or any
Significant Guarantor's (1) air emissions; (2) spills, releases, or
discharges to soils or improvements located thereon, surface water,
groundwater or the sewer, septic system or waste treatment, storage or
disposal systems servicing any Property; (3) solid or liquid waste
disposal; (4) use, generation, storage, transportation, or disposal of
<PAGE> 75
toxic or hazardous substances or hazardous waste; or (5) other
environmental, health or safety matters affecting the Borrower or any
Significant Guarantor or its business, operation or Property. Except as set
forth on Schedule "6.16" hereto, neither the Borrower nor any Significant
Guarantor has any material Indebtedness, obligation, or liability, absolute
or contingent, matured or not matured, with respect to the storage,
treatment, cleanup, or disposal of any solid wastes, hazardous wastes, or
other toxic or hazardous substances (including without limitation any such
indebtedness, obligation, or liability with respect to any current
regulation, law or statute regarding such storage, treatment, cleanup, or
disposal). A matter will not constitute a breach of this Section 6.16
unless it is reasonably likely to result in costs or liabilities to the
Borrower or a Significant Guarantor in excess of $2,500,000 in the
aggregate. .13. Labor Disputes and Acts of God. Neither the business nor
the Property of the Borrower or of any Significant Guarantor is affected by
any fire, explosion, accident, strike, lockout, or other labor dispute,
drought, storm, hail, earthquake, embargo, act of God or of the public
enemy, or other casualty (whether or not covered by insurance), which has
had or would reasonably be expected to have a Material Adverse Effect.6.14.
Ownership and Liens. The Borrower and each of the Significant Guarantors
have title to, or valid leasehold interests in, all of their respective
properties and assets, real and personal, including the properties and
assets and leasehold interests reflected in the financial statements
referred to in Section 6.4 (except to the extent that (i) such properties
or assets have been disposed of in the ordinary course of business or (ii)
the failure to have such title has not had and would not reasonably be
expected to have a Material Adverse Effect) and none of the properties and
assets owned by the Borrower or any Significant Guarantor and none of their
leasehold interests is subject to any Lien, except as may be permitted
pursuant to Section 8.8.6.15. Operation of Business. The Borrower and each
of the Significant Guarantors possess all licenses, permits, franchises,
patents, copyrights, trademarks, and trade names, or rights thereto, to
conduct their respective businesses substantially as now conducted, and as
presently proposed to be conducted, with such exceptions as have not had
and would not reasonably be expected to have a Material Adverse
Effect.6.16. Laws; Environment. Except as set forth on Schedule 6.16
hereto, the Borrower and each of the Significant Guarantors have duly
complied, and their businesses, operations and Property are in compliance,
in all material respects, with the provisions of all federal, state, and
local statutes, laws, codes, and ordinances and all rules and regulations
promulgated thereunder (including without limitation those relating to the
environment, health and safety). Except as set forth on Schedule 6.16
hereto, the Borrower and each of the Significant Guarantors have been
issued all required federal, state, and local permits, licenses,
certificates, and approvals relating to (1) air emissions; (2) discharges
to surface water or groundwater; (3) solid or liquid waste disposal; (4)
the use, generation, storage, transportation, or disposal of toxic or
hazardous substances or hazardous wastes (intended hereby and hereafter to
include any and all such materials listed in any federal, state, or local
law, code, or ordinance and all rules and regulations promulgated
thereunder as hazardous); or (5) other environmental, health or safety
matters. Except in accordance with a valid governmental permit, license,
<PAGE> 76
certificate or approval or as set forth on Schedule 6.16 hereto, to the
best knowledge of the Borrower, there has been no material emission, spill,
release, or discharge into or upon (1) the air; (2) soils, or any
improvements located thereon; (3) surface water or groundwater; or (4) the
sewer, septic system or waste treatment, storage or disposal system
servicing any Property of the Borrower or any Significant Guarantor, of any
toxic or hazardous substances or hazardous wastes at or from such Property.
There has been no written complaint, order, directive, claim, citation, or
notice by any governmental authority or any person or entity with respect
to violations of law or damage by reason of the Borrower's or any
Significant Guarantor's (1) air emissions; (2) spills, releases, or
discharges to soils or improvements located thereon, surface water,
groundwater or the sewer, septic system or waste treatment, storage or
disposal systems servicing any Property; (3) solid or liquid waste
disposal; (4) use, generation, storage, transportation, or disposal of
toxic or hazardous substances or hazardous waste; or (5) other
environmental, health or safety matters affecting the Borrower or any
Significant Guarantor or its business, operation or Property. Except as set
forth on Schedule 6.16 hereto, neither the Borrower nor any Significant
Guarantor has any material Indebtedness, obligation, or liability, absolute
or contingent, matured or not matured, with respect to the storage,
treatment, cleanup, or disposal of any solid wastes, hazardous wastes, or
other toxic or hazardous substances (including without limitation any such
indebtedness, obligation, or liability with respect to any current
regulation, law or statute regarding such storage, treatment, cleanup, or
disposal). A matter will not constitute a breach of this Section 6.16
unless it is reasonably likely to result in costs or liabilities to the
Borrower or a Significant Guarantor in excess of $2,500,000 in the
aggregate. Labor Disputes and Acts of God. Neither the business nor the
Property of the Borrower or of any Significant Guarantor is affected by any
fire, explosion, accident, strike, lockout, or other labor dispute,
drought, storm, hail, earthquake, embargo, act of God or of the public
enemy, or other casualty (whether or not covered by insurance), which has
had or would reasonably be expected to have a Material Adverse Effect.6.14.
Ownership and Liens. The Borrower and each of the Significant Guarantors
have title to, or valid leasehold interests in, all of their respective
properties and assets, real and personal, including the properties and
assets and leasehold interests reflected in the financial statements
referred to in Section 6.4 (except to the extent that (i) such properties
or assets have been disposed of in the ordinary course of business or (ii)
the failure to have such title has not had and would not reasonably be
expected to have a Material Adverse Effect) and none of the properties and
assets owned by the Borrower or any Significant Guarantor and none of their
leasehold interests is subject to any Lien, except as may be permitted
pursuant to Section 8.8.6.15. Operation of Business. The Borrower and each
of the Significant Guarantors possess all licenses, permits, franchises,
patents, copyrights, trademarks, and trade names, or rights thereto, to
conduct their respective businesses substantially as now conducted, and as
presently proposed to be conducted, with such exceptions as have not had
and would not reasonably be expected to have a Material Adverse
<PAGE> 77
Effect.6.16. Laws; Environment. Except as set forth on Schedule 6.16
hereto, the Borrower and each of the Significant Guarantors have duly
complied, and their businesses, operations and Property are in compliance,
in all material respects, with the provisions of all federal, state, and
local statutes, laws, codes, and ordinances and all rules and regulations
promulgated thereunder (including without limitation those relating to the
environment, health and safety). Except as set forth on Schedule 6.16
hereto, the Borrower and each of the Significant Guarantors have been
issued all required federal, state, and local permits, licenses,
certificates, and approvals relating to (1) air emissions; (2) discharges
to surface water or groundwater; (3) solid or liquid waste disposal; (4)
the use, generation, storage, transportation, or disposal of toxic or
hazardous substances or hazardous wastes (intended hereby and hereafter to
include any and all such materials listed in any federal, state, or local
law, code, or ordinance and all rules and regulations promulgated
thereunder as hazardous); or (5) other environmental, health or safety
matters. Except in accordance with a valid governmental permit, license,
certificate or approval or as set forth on Schedule 6.16 hereto, to the
best knowledge of the Borrower, there has been no material emission, spill,
release, or discharge into or upon (1) the air; (2) soils, or any
improvements located thereon; (3) surface water or groundwater; or (4) the
sewer, septic system or waste treatment, storage or disposal system
servicing any Property of the Borrower or any Significant Guarantor, of any
toxic or hazardous substances or hazardous wastes at or from such Property.
There has been no written complaint, order, directive, claim, citation, or
notice by any governmental authority or any person or entity with respect
to violations of law or damage by reason of the Borrower's or any
Significant Guarantor's (1) air emissions; (2) spills, releases, or
discharges to soils or improvements located thereon, surface water,
groundwater or the sewer, septic system or waste treatment, storage or
disposal systems servicing any Property; (3) solid or liquid waste
disposal; (4) use, generation, storage, transportation, or disposal of
toxic or hazardous substances or hazardous waste; or (5) other
environmental, health or safety matters affecting the Borrower or any
Significant Guarantor or its business, operation or Property. Except as set
forth on Schedule 6.16 hereto, neither the Borrower nor any Significant
Guarantor has any material Indebtedness, obligation, or liability, absolute
or contingent, matured or not matured, with respect to the storage,
treatment, cleanup, or disposal of any solid wastes, hazardous wastes, or
other toxic or hazardous substances (including without limitation any such
indebtedness, obligation, or liability with respect to any current
regulation, law or statute regarding such storage, treatment, cleanup, or
disposal). A matter will not constitute a breach of this Section 6.16
unless it is reasonably likely to result in costs or liabilities to the
Borrower or a Significant Guarantor in excess of $2,500,000 in the
aggregate.
6.17. Investment Company Act. Neither the Borrower nor any Subsidiary
is an "investment company" or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as
amended.
<PAGE> 78
6.18. Public Utility Holding Company Act. Neither the Borrower nor any
Subsidiary is a "holding company" or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
6.19. Subordinated Indebtedness. The Obligations constitute senior
indebtedness which is entitled to the benefits of the subordination
provisions of the Convertible Subordinated Notes and all other outstanding
Subordinated Indebtedness.
ARTICLE VII
AFFIRMATIVE COVENANTS
During the term of this Agreement, unless the Required Lenders
shall otherwise consent in writing:
7.1. Financial Reporting. The Borrower will maintain, for itself and
each Subsidiary, a system of accounting established and administered in
accordance with GAAP, and furnish to the Lenders:
(i) Within 90 days after the close of each fiscal year, an
unqualified audit report certified by nationally recognized
independent certified public accountants, reasonably acceptable
to the Lenders, prepared in accordance with GAAP on a
consolidated basis for the Borrower and its Subsidiaries,
including balance sheets as of the end of such period, related
profit and loss and reconciliation of surplus statements, and a
statement of cash flows, accompanied by (a) any management letter
prepared by said accountants, and (b) a certificate of said
accountants that, in the course of their examination necessary
for their certification of the foregoing, they have obtained no
knowledge of any Default or Unmatured Default, or if, in the
opinion of such accountants, any Default or Unmatured Default shall
exist, stating the nature and status thereof.
(ii) Within 90 days after the close of each fiscal year,
unaudited balance sheets as of the end of such fiscal
year for each of the operating divisions of the Borrower
and a related profit and loss statement for each
Subsidiary, all certified by an Authorized Officer.
(iii) Within 45 days after the close of the first three
quarterly periods of each fiscal year, for the Borrower
and its Subsidiaries, on a consolidated condensed basis,
unaudited balance sheets as at the close of each such
period and a related profit and loss statement for the
period from the beginning of such fiscal year to the end
of such quarter, all certified by an Authorized Officer.
<PAGE> 79
(iv) As soon as available, but in any event not later than 10
days prior to the beginning of each fiscal year, a copy
of the business plan (including a consolidated balance
sheet, income statement and cash flow statement) of the
Borrower and its Subsidiaries for such fiscal year.
(v) Within 45 days of the end of each of the first three quarterly
periods of each fiscal year, a quarterly variance analysis
comparing actual quarterly results versus projected quarterly
results for the fiscal quarter most recently ended (including
consolidated income statements of the Borrower and its
Subsidiaries, an analysis of revenues, Housing Unit Closings and
operating profits on a consolidated basis, unaudited income
statements and balance sheets (by operating division) for such
quarter, and such other items as are reasonably requested by any
of the Lenders), together with a written explanation of material
variances.
(vi) Within 90 days after the end of each fiscal year, a variance
analysis comparing actual annual results versus the business plan
for the fiscal year most recently ended (including consolidated
income statements of the Borrower and its Subsidiaries, an
analysis of revenues, Housing Unit Closings and operating profits
on a consolidated basis, unaudited income statements and balance
sheets (by operating division) for such fiscal year, and such
other items as are reasonably requested by any of the Lenders),
together with a written explanation of material variances.
(vii) Within 10 Business Days after the end of each calendar month, a
Borrowing Base Certificate of an Authorized Officer, with respect
to the Inventory Valuation Date occurring on the last day of such
calendar month.
(viii) Within 45 days after the end of each quarterly period of each
fiscal year, a certificate of an Authorized Officer certifying
the Housing Units as at such date, which lists (by operating
division) the Housing Units, designated in the same categories as
are identified in the Borrower's report dated June 30, 1995; such
summary shall include a delineation of sold or unsold items in
each category.
(ix) Within 45 days after the end of each quarterly period of each
fiscal year, a certificate of an Authorized Officer certifying as
of such date (by operating division) the book values of raw land
held for development or sale, land under development, Finished
Lots, Finished Lots on the books in excess of nine months,
Housing Units, Housing Units Under Contract and Inventory Housing
Units.
<PAGE> 80
(x) Within 45 days after the end of each of the first three quarterly
periods, and within ninety (90) days after the end, of each
fiscal year, a certificate of an Authorized Officer of the
Borrower in the form of Exhibit "J" hereto.
(xi) Within 270 days after the close of each fiscal year, a statement
of the Unfunded Liabilities of each Single Employer Plan,
certified as correct by an actuary enrolled under ERISA (which
requirement may be satisfied by the delivery of the most recent
actuarial valuation of each such Single Employer Plan).
(xii) As soon as possible and in any event within ten days after the
Borrower knows that any Reportable Event has occurred with
respect to any Plan, a statement, signed by an Authorized
Officer, describing said Reportable Event and the action which
the Borrower proposes to take with respect thereto.
(xiii) As soon as possible, and in any event within thirty (30) days
after the Borrower knows or has reason to know that any
circumstances exist that constitute grounds entitling the PBGC to
institute proceedings to terminate a Plan subject to ERISA with
respect to the Borrower or any member of the Controlled Group and
promptly but in any event within two (2) Business Days of receipt
by the Borrower or any member of the Controlled Group of notice
that the PBGC intends to terminate a Plan or appoint a trustee to
administer the same, and promptly but in any event within five
(5) Business Days of the receipt of notice concerning the
imposition of withdrawal liability in excess of $500,000 with
respect to the Borrower or any member of the Controlled Group, a
certificate of an Authorized Officer setting forth all relevant
details of such event and the action which the Borrower proposes
to take with respect thereto.
(xiv) Promptly after the furnishing thereof, copies of any statement,
report, document, notice, certificate, and correspondence
furnished to any other party pursuant to the terms of any
indenture (including the First Indenture and the Second
Indenture), loan, credit, or similar agreement with respect to
any Indebtedness in excess of $1,000,000 or to any rating agency
and not otherwise required to be furnished to the Lenders
pursuant to any other provision of this Section 7.1.
(xv) Promptly after the sending or filing thereof, copies of all proxy
statements, financial statements, and reports which the Borrower
or any Significant Guarantor sends to its stockholders, and
copies of all regular, periodic, and special reports, and all
registration statements which the Borrower or any Significant
Guarantor files with the Securities and Exchange Commission or
any governmental authority which may be substituted therefor, or
with any national securities exchange.
<PAGE> 81
(xvi) Promptly after the commencement thereof, notice of all actions,
suits, and proceedings before any court or governmental
department, commission, board, bureau, agency, or
instrumentality, domestic or foreign, affecting the Borrower or
any Significant Guarantor (a) which, if determined adversely to
the Borrower or such Significant Guarantor, could reasonably be
expected to have a Material Adverse Effect or (b) in which
liability in excess of $2,500,000 (in the aggregate with respect
to any action, suit or proceeding) is asserted against the
Borrower or any Significant Guarantor.
(xvii) As soon as possible and in any event within ten days after
receipt by the Borrower or any Significant Guarantor, a copy of
(a) any written notice or claim to the effect that the Borrower
or any Significant Guarantor is or may be liable to any Person as
a result of the release of any toxic or hazardous waste or
substance into the environment, and (b) any notice alleging any
violation of any federal, state or local environmental, health or
safety law or regulation by the Borrower or any Guarantor which,
in the case of either (a) or (b), could reasonably be expected to
have a Material Adverse Effect or could result in liability to
the Borrower or any Significant Guarantor in excess of $2,500,000
(in the aggregate with respect to any notice or claim).
(xviii) Such other information (including non-financial information)
as the Agent may from time to time reasonably request.
7.2. Use of Proceeds. Subject to the provisions of this Agreement, the
Borrower will use the proceeds of the Advances for general corporate
purposes (including payment of reimbursement obligations with respect to
Facility Letters of Credit), to repay outstanding Swing Line Loans and
other Advances and to engage in the transactions otherwise permitted by
this Agreement. Except as permitted by Sections 8.6, 8.9 and 8.11 and
otherwise permitted by this Agreement, the Borrower will not, nor will it
permit any Subsidiary to, use any of the proceeds of the Advances to
purchase or carry any "margin stock" (as defined in Regulation U) or,
except as otherwise permitted by this Agreement, to purchase any securities
in any transaction that is subject to Sections 13 and 14 of the Securities
Exchange Act of 1934, as amended. The Borrower will not permit any
Non-Borrowing Subsidiaries to receive, whether by loan or other Investment,
or otherwise to use any proceeds of, any Advance if the effect thereof
would be to increase the Investments of the Borrower or any Guarantor in
any Non-Borrowing Subsidiaries to an amount (in the aggregate) in excess of
such Investments as of August 31, 1995; provided that the Borrower and the
Guarantors may (i) make advances or loans to or other Investments in
Non-Borrowing Subsidiaries in an amount not to exceed the aggregate amount
of all advances, loans or other Investments made by the Non-Borrowing
Subsidiaries to the Borrower and the Guarantors after August 31, 1995 which
have not been repaid to such Non-Borrowing Subsidiaries and (ii) make
Investments in the Non-Borrowing Subsidiaries permitted under Section 8.6.
<PAGE> 82
7.3. Notice of Default. The Borrower will, and will cause each
Significant Guarantor to, give prompt notice in writing to the Lenders of
the occurrence of (i) any Default or Unmatured Default and (ii) any other
development, financial or otherwise, that has had or would be reasonably
expected to have a Material Adverse Effect.
7.4. Conduct of Business. Except as otherwise permitted under this
Agreement, the Borrower will, and will cause each Significant Guarantor to,
carry on and conduct business in the same general manner and in
substantially the same fields of enterprise as presently conducted and to
do all things necessary to remain duly incorporated, validly existing and
in good standing as a domestic corporation in their respective
jurisdictions of incorporation (or, in the case of any Guarantors that are
partnerships or other non-corporate entities, duly formed and validly
existing in their respective jurisdictions of formation) and maintain all
requisite authority to conduct business in each jurisdiction in which
business is conducted; provided, however, that nothing contained herein
shall prohibit the dissolution of any Guarantor as long as the Borrower or
another Guarantor succeeds to the assets, liabilities and business of the
dissolved Guarantor.
7.5. Taxes. The Borrower will, and will cause each Significant
Guarantor to, pay when due all taxes, assessments and governmental charges
and levies upon them or their income, profits or Property, except those
that are being contested in good faith by appropriate proceedings and with
respect to which adequate reserves have been set aside in accordance with
GAAP.
7.6. Insurance. The Borrower will, and will cause each Significant
Guarantor to, maintain with financially sound and reputable insurance
companies insurance on all their Property in such amounts and covering such
risks as is consistent with sound business practice, and the Borrower will
furnish to any Lender upon request full information as to the insurance
carried.
7.7. Compliance with Laws. The Borrower will, and will cause each
Significant Guarantor to, comply with all laws, rules, regulations, orders,
writs, judgments, injunctions, decrees or awards to which it may be
subject, except to the extent that the failure to do so would not
reasonably be expected to have and does not have a Material Adverse Effect.
7.8. Maintenance of Properties. The Borrower will, and will cause each
Significant Guarantor to, do all things necessary to maintain, preserve,
protect and keep its Property in good repair, working order and condition,
except to the extent that the failure to do so would not reasonably be
expected to have and does not have a Material Adverse Effect.
<PAGE> 83
7.9. Inspection. The Borrower will, and will cause each Guarantor to,
permit the Lenders, by their respective representatives and agents, to
inspect any of the Property, corporate (or partnership) books and financial
records of the Borrower and the Guarantors to examine and make copies of
the books of accounts and other financial records of the Borrower and the
Guarantors, and to discuss the affairs, finances and accounts of the
Borrower and the Guarantors with, and to be advised as to the same by,
their respective officers at such reasonable times and intervals as the
Lenders may designate.
7.10. Environment. The Borrower will, and will cause the Significant
Guarantors to, (i) comply, in all material respects, with the provisions of
all federal, state, and local environmental, health, and safety laws, codes
and ordinances, and all rules and regulations issued thereunder; (ii)
promptly contain and remove any hazardous discharge from or affecting the
Property of the Borrower or such Significant Guarantor, to the extent
required by and in compliance with all applicable laws; (iii) promptly pay
any fine or penalty assessed in connection therewith or contest the same in
good faith; and (iv) permit the Agent to inspect such Property, to conduct
tests thereon, and to inspect all books, correspondence, and records
pertaining thereto at reasonable hours and places; and (v) at the request
of the Required Lenders, and at the Borrower's expense, provide a report of
a qualified environmental engineer, satisfactory in scope, form, and
content to the Required Lenders, and such other and further assurances
reasonably satisfactory to the Required Lenders that any new condition or
occurrence hereafter identified in any revision of Schedule "6.16"
delivered by the Borrower pursuant to Section 7.12 has been corrected;
provided that a failure to comply with the foregoing provisions of this
Section 7.10 shall not constitute a Default or an Unmatured Default unless
such noncompliance has resulted in or is reasonably likely to result in
costs or liabilities to the Borrower or a Significant Guarantor in excess
of $2,500,000.
7.11. New Subsidiary. In the event that Borrower shall hereafter
create a new Subsidiary or a Person shall hereafter become a Subsidiary of
the Borrower, the Borrower shall (i) cause such Subsidiary to execute and
deliver to the Agent (a) in the case of a Subsidiary that is not a
Non-Borrowing Subsidiary, a Guaranty and an amendment to the Contribution
Agreement pursuant to which such Guarantor shall become a party thereunder
and (b) in the case of a Non-Borrowing Subsidiary, a Subordination
Agreement, and (ii) deliver or cause to be delivered, by and with respect
to such Subsidiary, certificates, opinions and other documents
substantially similar to those required to be delivered under the
provisions of Sections 5.1(i), (ii), (iii), (vi) and (vii) of the Original
Agreement and such other documents as any Lender or Issuing Bank or their
respective counsel may reasonably request; all of the foregoing shall be in
form and substance satisfactory to the Required Lenders.
<PAGE> 84
7.12. Change in Schedules. Promptly following the occurrence of any
event or circumstance as a result of which any of Schedules 6.7, 6.8 or
6.16 ceases to be accurate in all material respects, the Borrower shall
furnish to the Agent the applicable revised Schedule and shall certify that
such revised Schedule is true, correct and complete in all material
respects, and such revised Schedule shall be substituted for the applicable
Schedule hereunder.
ARTICLE VIII
NEGATIVE COVENANTS
During the term of the Agreement, unless the Required Lenders shall
otherwise consent in writing:
8.1. Dividends. The Borrower will not, nor will it permit any
Significant Guarantor to, declare or pay any dividends on its Equity
Securities (other than dividends payable in (a) its own Equity Securities
or (b) rights to acquire its own Equity Securities or the Equity Securities
of another Person), except that any Significant Guarantor may declare and
pay dividends to the Borrower or to a Wholly-Owned Subsidiary.
8.2.Indebtedness. The Borrower will not, nor will it permit any
Significant Guarantor to, create, incur or suffer to exist any
Indebtedness, except:
(i) The Loans and the Guaranties.
(ii) Indebtedness described in Schedule "8.2" hereto and
Refinancing Indebtedness.
(iii) Rate Hedging Obligations related to the Loans or otherwise
required pursuant to Section 9.5 hereof.
(iv) Indebtedness of the Borrower to a Subsidiary or of a
Subsidiary to the Borrower or to another Subsidiary,
provided the same is permitted under Section 7.2.
(v) Trade accounts payable and accruals arising or occurring in
the ordinary course of business.
(vi) Indebtedness with respect to Letters of Credit (including
Facility Letters of Credit) in an aggregate amount
outstanding at any time not to exceed $25,000,000.
(vii) Indebtedness secured by purchase-money Liens permitted under
Section 8.8(ii).
(viii) Subordinated Indebtedness.
<PAGE> 85
(ix) Non-Recourse Indebtedness in an aggregate amount outstanding
at any time not to exceed $50,000,000.
(x) Performance bonds, completion bonds, and guarantees of
performance.
(xi) Indebtedness or other liabilities incurred in transactions
permitted pursuant to Section 8.5.
(xii) Indebtedness of a Person existing as of the time of the
Acquisition of such Person by the Borrower or any
Guarantor, provided that, after giving effect to such
Acquisition, the Borrower is in compliance with the terms
of this Agreement (including without limitation Section
7.11 and Article IX).
(xiii) Indebtedness not otherwise permitted by this Section 8.2 in
an aggregate amount outstanding at any time not to exceed
$25,000,000.
8.3. Merger. The Borrower will not, nor will it permit any Guarantor
to, merge or consolidate with or into any other Person, except (i) that a
Guarantor may merge with any other Guarantor or with the Borrower and (ii)
for transactions permitted under Section 8.4 or Section 8.6(vii).
8.4. Sale of Assets. The Borrower will not, nor will it permit any
Significant Guarantor to, lease, sell or otherwise dispose of its Property,
to any other Person except (i) for sales or leases in the ordinary course
of business, (ii) for leases, sales or other dispositions of its Property
that, together with all other Property of the Borrower and the Significant
Guarantors previously leased, sold or disposed of (other than in the
ordinary course of business) as permitted by this Section during the
twelve-month period ending with the month in which any such lease, sale or
other disposition occurs, do not constitute a Substantial Portion of the
Property of the Borrower and the Significant Guarantors and (iii) as
permitted in Section 8.5.
8.5. Sale and Leaseback. The Borrower will not, nor will it permit any
Significant Guarantor to, sell or transfer any of its Property in order to
concurrently or subsequently lease as lessee such or similar Property,
except for model homes that do not at any time exceed $10,000,000 in book
value, in the aggregate for the Borrower and the Significant Guarantors.
<PAGE> 86
8.6. Investments and Acquisitions. The Borrower will not, nor will it
permit any Significant Guarantor to, make or suffer to exist any
Investments (including without limitation, loans and advances to, and other
Investments in, Subsidiaries), or commitments therefor, or to create any
Subsidiary or to become or remain a partner in any partnership or joint
venture, or to make any Acquisition of any Person, except:
(i) Obligations of, or fully guaranteed by, the United States
of America or any agency thereof, which obligations have
maturities of one year or less.
(ii) Commercial paper rated A-l or better by S&P or P-l or
better by Moody's.
(iii) Demand deposit accounts maintained in the ordinary course
of business.
(iv) Certificates of deposit issued by and time deposits with
commercial banks (whether domestic or foreign) having
capital and surplus in excess of $100,000,000.
(v) Existing Investments in Subsidiaries and other Investments
described in Schedule "8.6" hereto.
(vi) Investments in joint ventures, partnerships, limited
liability companies or other business organizations in
which any Person other than the Borrower or a Significant
Guarantor has an interest, provided that the outstanding
amount of such Investments of the Borrower and the
Significant Guarantors do not at any time exceed
$35,000,000 in the aggregate.
(vii) The Acquisition of a business or entity engaged primarily
in the business of home building, provided that (a) the
Investment (exclusive of the issuance of Equity Securities
of the Borrower or its Subsidiaries in connection therewith)
in any single Acquisition after the date hereof does not
exceed $10,000,000 and in all such Acquisitions after the
date hereof does not exceed $25,000,000 in the aggregate,
(b) immediately upon the consummation of any such
Acquisition the Borrower is in compliance with the terms,
covenants and conditions of this Agreement (including
without limitation Section 7.11 and Article IX) and (c) the
Borrower shall deliver to the Agent a certificate, signed
by an Authorized Officer, certifying that, on the date of,
and taking into account, the consummation of such
Acquisition, no Default or Unmatured Default has occurred
and is continuing.
(viii) Investment of the Borrower in a Guarantor or of a Guarantor
in the Borrower or another Guarantor.
<PAGE> 87
(ix) Investments in Non-Borrowing Subsidiaries to the extent
permitted under the provisions of Section 7.2 and other
loans or advances to Non-Borrowing Subsidiaries that are
neither made nor outstanding at any time at which any
Loans (excluding Facility Letters of Credit) are
outstanding hereunder.
(x) Stock, obligations or securities received in satisfaction
of debts owing to the Borrower or any Guarantor.
(xi) Pledges or deposits in cash by the Borrower or a
Guarantor to support surety bonds, performance bonds or
guarantees of completion in the ordinary course of
business.
(xii) The creation of new (A) Subsidiaries engaged primarily in
the home building business (or the purpose of which is
principally to preserve the use of a name in which such
business is conducted) or (B) Non-Borrowing Subsidiaries.
(xiii) Investments pursuant to the Borrower's or a Significant
Guarantor's employment compensation plans or agreements.
(xiv) Investments, in addition to those enumerated in this
Section 8.6, in an aggregate amount outstanding at any
time not to exceed $5,000,000.
(xv) The purchase, repurchase, repayment, prepayment, redemption
or other acquisition of (i) any of the Borrower's Equity
Securities and Convertible Subordinated Notes involving
cash expenditures (from and after September 29, 1995, not
to exceed, in the aggregate, the sum of $30,000,000,
plus the amount of cash proceeds received by the Borrower
or a Guarantor after the date hereof (A) from the sale of
Equity Securities of the Borrower or any Guarantor and (B)
in connection with the exercise of any convertible security
(including, without limitation, the Borrower's Class B
Warrants) entitling the holder thereof to acquire any
Equity Securities of the Borrower or a Guarantor (provided,
however, the cash expenditures by the Borrower or the
Guarantors from and after September 29, 1995 to purchase,
repurchase, repay, prepay, redeem or acquire the
Convertible Subordinated Notes shall not exceed $30,000,000
in the aggregate), or as otherwise permitted under Sections
8.9 and 8.11 hereof; and (ii) rights issued by the Borrower
under the Rights Plan.
(xvi) Investments permitted under Section 8.9 hereof.
<PAGE> 88
8.7. Contingent Obligations. The Borrower will not, nor will it permit
any Significant Guarantor to, make or suffer to exist any Contingent
Obligation (including, without limitation, any Contingent Obligation with
respect to the obligations of a Subsidiary), except (i) the Guaranty, and
(ii) to the extent permitted by Section 8.2.
8.8. Liens. The Borrower will not, nor will it permit any Significant
Guarantor to, create, incur, or suffer to exist any Lien in, of or on the
Property of the Borrower or any of the Significant Guarantors, except:
(i) Permitted Encumbrances.
(ii) Purchase-money Liens on any Property hereafter acquired
or the assumption of any Lien on Property existing at the
time of such acquisition (and not created in
contemplation of such acquisition), or a Lien incurred in
connection with any conditional sale or other title
retention or a Capitalized Lease; provided that
(a) Any Property subject to any of the foregoing is
acquired by the Borrower or any Significant
Guarantor in the ordinary course of its
respective business and the Lien on any such
Property attaches to such asset concurrently or
within 90 days after the acquisition thereof;
(b) The obligation secured by any Lien so created,
assumed, or existing shall not exceed ninety
percent (90%) of the lesser of the cost or the
fair market value as of the time of acquisition
of the Property covered thereby by the Borrower
or the Significant Guarantor acquiring the same;
and
(c) Each Lien shall attach only to the Property so
acquired.
(iii) Liens existing on the date hereof and described in
Schedule "8.2" hereto and Liens securing Refinancing
Indebtedness with respect thereto.
(iv) Liens incurred in the ordinary course of business not
otherwise permitted by this covenant, provided that the
aggregate amount of Indebtedness secured by such Liens
outstanding at any time shall not exceed $25,000,000.
(v) Judgments and similar Liens arising in connection with
court proceedings; provided the execution or enforcement
thereof is stayed and the claim is being contested in
good faith.
<PAGE> 89
(vi) Liens securing Non-Recourse Indebtedness.
(vii) Liens existing with respect to Indebtedness of a Person
acquired in an Acquisition permitted by this Agreement.
8.9. Redemption. The Borrower will not purchase or redeem any of its
Equity Securities heretofore or hereafter issued, except that the Borrower
may (x) purchase or redeem its Equity Securities (i) to the extent that the
consideration for such redemption or purchase is limited to Equity
Securities of the Borrower or (ii) if the consideration for such purchase
or redemption (A) is other than Equity Securities of the Borrower and (B)
is otherwise permitted under Section 8.6(xv), and (y) purchase or redeem
the rights issued under the Rights Plan.
8.10. Affiliates. The Borrower will not, nor will it permit any
Significant Guarantor to, enter into any transaction (including, without
limitation, the purchase or sale of any Property or service) with, or make
any payment or transfer to, any Affiliate except (i) in the ordinary course
of business and pursuant to the reasonable requirements of the Borrower's
or such Guarantor's business and upon fair and reasonable terms no less
favorable to the Borrower or such Significant Guarantor than the Borrower
or such Significant Guarantor would obtain in a comparable arms-length
transaction, (ii) Investments permitted under Section 8.6 and (iii)
pursuant to employment and director compensation plans and agreements.
8.11. Subordinated Indebtedness. The Borrower will not, nor will it
permit any Significant Guarantor to, make any amendment or modification to
the subordination provisions of any indenture, note or other agreement
evidencing or governing any Subordinated Indebtedness, or directly or
indirectly voluntarily prepay, defease or in substance defease, purchase,
redeem, retire or otherwise acquire, any Subordinated Indebtedness;
provided, however, that the foregoing shall not prohibit (i) the conversion
of the Convertible Subordinated Notes in accordance with the Indenture
dated as of November 3, 1993, between the Borrower and Marine Midland Bank,
N.A., as Trustee, relating to the Convertible Subordinated Notes, or an
amendment thereto permitting such conversion at a lower conversion price
than is therein provided, (ii) the repayment or prepayment of Subordinated
Indebtedness solely from the net proceeds of other Subordinated
Indebtedness or from Equity Securities or (iii) the purchase, repurchase,
repayment, prepayment, redemption or other acquisition of the Borrower's
Equity Securities and Convertible Subordinated Notes to the extent
permitted under Section 8.6(xv) or Section 8.9.
8.12. Amendments. The Borrower will not (i) amend or modify the First
Indenture, the Senior Notes, the Second Indenture or the Senior Debt
Securities, except for amendments or modifications that do not (a) impose
upon the Borrower obligations not contained therein as of the date of this
Agreement, (b) accelerate any of the tax obligations of the Borrower or (c)
otherwise adversely affect the Borrower; or (ii) permit any Guarantor to
amend or modify the Contribution Agreement, except as provided in Section
7.11.
8.13. Financial Undertakings. The Borrower will not, nor will it
permit any Significant Guarantor to, enter into or remain liable upon any
Financial Undertaking, except as permitted under this Agreement.
<PAGE> 90
ARTICLE IX
FINANCIAL COVENANTS
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
9.1. Minimum Consolidated Tangible Net Worth. The Borrower will
maintain at all times a Consolidated Tangible Net Worth of not less than
(i) $250,000,000 plus (ii) fifty percent (50%) of the Consolidated Net
Income earned after March 31, 1995 (excluding any quarter in which there is
a loss) plus (iii) one hundred percent (100%) of the net cash proceeds of
Equity Securities issued by the Borrower after March 31, 1995, minus (iv)
the amount (not to exceed, in the aggregate, the net cash proceeds (if any)
received by the Borrower in connection with the exercise, after the date of
this Agreement, of any of the Borrower's Class B Warrants) expended by the
Borrower after the date of this Agreement to purchase or redeem any of the
Borrower's Equity Securities.
9.2. Permitted Indebtedness Ratio. (a) The Borrower will not at any
time permit Consolidated Funded Indebtedness to exceed the product of (i)
the then applicable PIR and (ii) Consolidated Tangible Net Worth.
(b) If at any time the Borrower shall fail to maintain a
ratio, determined as of the last day of each fiscal quarter for the
four-quarter period ending on such day, of (i) EBITDA to (ii) Consolidated
Interest Incurred, of at least 1.75 to 1.0 (the "Coverage Test"), then the
PIR, effective as of the first day of the fiscal quarter immediately
following the four-quarter period with respect to which the Borrower shall
have so failed the Coverage Test, shall be decreased to the extent herein
provided. Upon the first failure to satisfy the Coverage Test, or any other
failure to satisfy the Coverage Test that occurs on a date on which the PIR
is 1.75, the PIR shall be decreased by 0.25 to 1.50. Upon any failure to
satisfy the Coverage Test that occurs on a date on which the PIR is less
than 1.75, the PIR shall be decreased by 0.10.
(c) If at any time at which the PIR is less than 1.75,
the Borrower shall satisfy the Coverage Test (which for purposes of this
Section 9.2(c) shall be deemed satisfied only if, on the same day on which
the Borrower maintains the ratio set forth in Section 9.2(b), the Borrower
is also in compliance with the covenant set forth in Section 9.2(a)), then
the PIR, effective as of the first day of the fiscal quarter immediately
following the four-quarter period with respect to which the Borrower shall
have so satisfied the Coverage Test, shall be increased to the extent
herein provided. Upon satisfaction of the Coverage Test on a date on which
the PIR is 1.50, the PIR shall be increased to 1.75. Upon satisfaction of
the Coverage Test on a date on which the PIR is less than 1.50, the PIR
shall be increased by 0.10. In no event shall the PIR exceed 1.75.
<PAGE> 91
(d) Any increase or decrease of the PIR provided for in
this Section 9.2 shall be effective as of the first day of a fiscal quarter
as provided in Section 9.2(b) or (c) (as applicable), and the PIR (as
adjusted) shall remain in effect for the entire fiscal quarter and
thereafter unless and until adjusted as of the first day of any subsequent
fiscal quarter as provided in this Section 9.2(b) or (c) (as applicable).
(e) A failure to satisfy the Coverage Test shall not
constitute a Default or an Unmatured Default but a failure at any time to
comply with the covenant set forth in Section 9.2(a) shall constitute a
Default under Section 10.3.
9.3. Land Owned. The Borrower will not at any time permit (a) the sum
of (i) the book value of all raw land owned by the Borrower or any
Guarantor for development or sale, plus (ii) the book value of all land
under development owned by the Borrower or any Guarantor, plus (iii) the
book value of all lots that have been Finished Lots for more than nine
months, to exceed (b) the sum of (i) Consolidated Tangible Net Worth plus
(ii) forty percent (40%) of the outstanding principal amount of the
Convertible Subordinated Notes or Refinancing Indebtedness with respect
thereto.
9.4. Housing Inventory. The Borrower will not at any time permit the
number of Inventory Housing Units to exceed twenty-five percent (25%) of
the number of Housing Unit Closings during the preceding twelve (12)
months.
9.5. Rate Protection. The Borrower will not at any time permit less
than fifty percent (50%) of the obligations of the Borrower and the
Guarantors described in clauses (i), (iv) and (viii) of the definition of
"Indebtedness," on a consolidated basis, to be Fixed Rate Debt.
ARTICLE X
DEFAULTS
The occurrence of any one or more of the following events shall
constitute a Default:
10.1. Any representation or warranty made or deemed made by or on
behalf of the Borrower or any Significant Guarantor to the Lenders, the
Issuing Bank or the Agent under or in connection with this Agreement, any
Loan Document, or any certificate or information delivered in connection
with this Agreement or any other Loan Document shall not be true and
correct in any material respect on the date as of which made.
10.2. Nonpayment of principal of any Note when due, or nonpayment of
interest upon any Note or of any commitment fee or other obligations under
any of the Loan Documents within five days after the same becomes due.
<PAGE> 92
10.3. The breach by the Borrower (other than a breach which
constitutes a Default under Section 10.1 or 10.2) of any of the terms or
provisions of this Agreement which is not remedied within 30 days after the
occurrence of such breach.
10.4. Failure of the Borrower or any Significant Guarantor to pay when
due (after any applicable grace or notice period) any Indebtedness (other
than Non-Recourse Indebtedness) equal to or exceeding $5,000,000 (in the
aggregate); or the default by the Borrower or any Significant Guarantor in
the performance of any term, provision or condition contained in any
agreement under which any Indebtedness (other than Non-Recourse
Indebtedness) equal to or exceeding $5,000,000 (in the aggregate) was
created or is governed, or any other event shall occur or condition exist,
the effect of which is to cause, or to permit the holder or holders of such
Indebtedness to cause, such Indebtedness to become due prior to its stated
maturity; or any Indebtedness (other than Non-Recourse Indebtedness) of the
Borrower or any Significant Guarantor equal to or exceeding $5,000,000 (in
the aggregate) shall be declared to be due and payable or required to be
prepaid (other than by a regularly scheduled payment) prior to the stated
maturity thereof; or the Borrower or any Significant Guarantor shall not
pay, or shall admit in writing its inability to pay, its debts generally as
they become due.
10.5. The Borrower or any Significant Guarantor shall (i) have an
order for relief entered with respect to it under the Federal bankruptcy
laws as now or hereafter in effect, (ii) make an assignment for the benefit
of creditors, (iii) apply for, seek, consent to, or acquiesce in, the
appointment of a receiver, custodian, trustee, examiner, liquidator or
similar official for it or any Substantial Portion of its Property, (iv)
institute any proceeding seeking an order for relief under the Federal
bankruptcy laws as now or hereafter in effect or seeking to adjudicate it a
bankrupt or insolvent, or seeking dissolution, winding up, liquidation,
reorganization, arrangement, adjustment or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors or fail to file, within the applicable time period for
the filing thereof, an answer or other pleading denying the material
allegations of any such proceeding filed against it, (v) take any corporate
action to authorize or effect any of the foregoing actions set forth in
this Section 10.5 or (vi) fail to contest in good faith any appointment or
proceeding described in Section 10.6.
10.6. A receiver, trustee, examiner, liquidator or similar official
shall be appointed for the Borrower or any Significant Guarantor or any
Substantial Portion of its Property without the application, approval or
consent of the Borrower or such Significant Guarantor, or a proceeding
described in Section 10.5(iv) shall be instituted against the Borrower or
any Significant Guarantor and such appointment continues undischarged or
such proceeding continues undismissed or unstayed for a period of 60
consecutive days.
<PAGE> 93
10.7. The Borrower or any Significant Guarantor shall fail within 30
days to pay, bond or otherwise discharge any judgment or order for the
payment of money in excess of $10,000,000 which has not been stayed on
appeal or is not otherwise being appropriately contested in good faith.
10.8. The Unfunded Liabilities of all Single Employer Plans shall
exceed in the aggregate $5,000,000 or any Reportable Event shall occur in
connection with any Plan, which Reportable Event has had or would
reasonably be expected to have a Material Adverse Effect.
10.9. The Borrower or any member of the Controlled Group shall have
been notified by the sponsor of a Multiemployer Plan that it has incurred
withdrawal liability to such Multiemployer Plan in an amount which, when
aggregated with all other amounts required to be paid to Multiemployer
Plans by the Borrower or any other member of the Controlled Group as
withdrawal liability (determined as of the date of such notification),
exceeds $5,000,000 or requires payments exceeding $2,000,000 per annum;
provided, however, that such event shall not constitute a Default as long
as the Borrower or the Controlled Group member, as applicable, is
contesting in good faith the imposition of withdrawal liability.
10.10. The Borrower or any other member of the Controlled Group shall
have been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization, if as a result of such
reorganization the aggregate annual contributions of the Borrower and the
other members of the Controlled Group (taken as a whole) to all
Multiemployer Plans which are then in reorganization have been or will be
increased over the amounts contributed to such Multiemployer Plans for the
respective plan years of each such Multiemployer Plan immediately preceding
the plan year in which the reorganization occurs by an amount exceeding
$5,000,000.
10.11. Any Change in Control shall occur.
10.12. Any Guaranty shall fail to remain in full force or effect with
respect to any one or more of the Significant Guarantors (except by reason
of a merger of a Significant Guarantor with the Borrower or another
Guarantor or the dissolution of a Guarantor permitted hereunder or as a
result of a sale permitted under Section 8.4) or any action shall be taken
by any one or more of the Significant Guarantors to discontinue or to
assert the invalidity or unenforceability of any Guaranty, or any
Significant Guarantor shall fail to comply with any of the terms or
provisions of any Guaranty, or any Significant Guarantor denies that it has
any further liability under any Guaranty or gives notice to such effect
(except by reason of a merger of a Significant Guarantor with the Borrower
or another Guarantor or the dissolution of a Guarantor permitted hereunder
or as a result of a sale permitted under Section 8.4).
<PAGE> 94
ARTICLE XI
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
11.1. Acceleration. If any Default described in Section 10.5 or 10.6
occurs with respect to the Borrower, the obligations of the Lenders to make
Loans (including, in the case of the Swing Line Bank, Swing Line Loans) and
of the Issuing Bank to issue Facility Letters of Credit hereunder shall
automatically terminate and the Obligations shall immediately become due
and payable without any election or action on the part of the Agent, the
Issuing Bank or any Lender. If any other Default occurs, the Required
Lenders may terminate or suspend the obligations of the Lenders to make
Loans (including, in the case of the Swing Line Bank, Swing Line Loans) and
of the Issuing Bank to issue Facility Letters of Credit hereunder, or
declare the Obligations to be due and payable, or both, whereupon the
Obligations shall become immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which the Borrower hereby
expressly waives. If, within five days after acceleration of the maturity
of the Obligations or termination of the obligations of the Lenders to make
Loans (including, in the case of the Swing Line Bank, Swing Line Loans)
hereunder as a result of any Default (other than any Default as described
in Section 10.5 or 10.6 with respect to the Borrower) and before any
judgment or decree for the payment of the Obligations due shall have been
obtained or entered, the Required Lenders (in their sole discretion) shall
so direct, the Agent shall, by notice to the Borrower, rescind and annul
such acceleration and/or termination.
11.2. Amendments. Subject to the provisions of this Article XI, the
Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Borrower may enter into agreements supplemental hereto for
the purpose of adding or modifying any provisions to the Loan Documents or
changing in any manner the rights of the Lenders or the Borrower hereunder
or waiving any Default hereunder; provided, however, that no such
supplemental agreement shall, without the consent of each Lender and
Issuing Bank affected thereby:
(i) Extend the maturity of any Loan or Note or forgive all or
any portion of the principal amount thereof, or reduce
the rate of, or extend the time of payment of, interest
or fees thereon;
(ii) Reduce the percentage specified in the definition of
Required Lenders;
(iii) Increase the amount of the Commitment of any Lender
hereunder (other than as contemplated by Section 2.5(b)
or Section 2.5(c) hereof), or permit the Borrower to
assign its rights under this Agreement; or
(iv) Amend this Section 11.2.
<PAGE> 95
No amendment of any provision of this Agreement relating to the Agent shall
be effective without the written consent of the Agent. The Agent may waive
payment or reduce the amount of the fees referred to in Section 13.12 or
the fee required under Section 15.3.2 without obtaining the consent of any
other party to this Agreement.
11.3. Preservation of Rights. No delay or omission of any Lender or
Issuing Bank or the Agent to exercise any right under the Loan Documents
shall impair such right or be construed to be a waiver of any Default or an
acquiescence therein, and the making of a Loan (including a Swing Line
Loan) or the issuance, amendment or extension of a Facility Letter of
Credit notwithstanding the existence of a Default or the inability of the
Borrower to satisfy the conditions precedent to such Loan or Facility
Letter of Credit shall not constitute any waiver or acquiescence. Any
single or partial exercise of any such right shall not preclude other or
further exercise thereof or the exercise of any other right, and no waiver,
amendment or other variation of the terms, conditions or provisions of the
Loan Documents whatsoever shall be valid unless in writing signed by the
Lenders (and, if applicable, the Agent) required pursuant to Section 11.2,
and then only to the extent in such writing specifically set forth. All
remedies contained in the Loan Documents or by law afforded shall be
cumulative and all shall be available to the Agent, the Issuing Bank and
the Lenders until the Obligations have been paid in full.
ARTICLE XII
GENERAL PROVISIONS
12.1. Survival of Representations. All representations and warranties
of the Borrower contained in this Agreement shall survive delivery of the
Notes and the making of the Loans and the issuance, amendment or extension
of any Facility Letter of Credit herein contemplated.
12.2. Governmental Regulation. Anything contained in this Agreement
to the contrary notwithstanding, no Lender or Issuing Bank shall be obligated
to extend credit to the Borrower in violation of any limitation or prohibition
provided by any applicable statute or regulation.
12.3. Taxes. Any recording, intangible, filing or stamp fees or taxes
or other similar assessments or charges made by any governmental or revenue
authority in respect of the Loan Documents shall be paid by the Borrower,
together with interest and penalties, if any.
12.4. Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of
any of the provisions of the Loan Documents.
12.5. Entire Agreement. The Loan Documents embody the entire agreement
and understanding among the Borrower, the Agent and the Lenders and
supersede all prior agreements and understandings among the Borrower and
the Agent, the Lenders relating to the subject matter thereof.
<PAGE> 96
12.6. Nature of Obligations; Benefits of this Agreement. (a) The
respective obligations of the Lenders hereunder are several and not joint
and no Lender shall be the partner or agent of any other (except to the
extent to which the Agent is authorized to act as such). The failure
of any Lender to perform any of its obligations hereunder shall not
relieve any other Lender from any of its obligations hereunder.
(b) This Agreement shall not be construed so as to confer
any right or benefit upon any Person other than the parties to this
Agreement and their respective successors and assigns.
12.7. Expenses; Indemnification. The Borrower shall reimburse the
Agent for any reasonable costs, internal charges and out-of-pocket expenses
(including reasonable attorneys' fees and time charges of attorneys for the
Agent, which attorneys may be employees of the Agent) paid or incurred by
the Agent in connection with the preparation, negotiation, execution,
delivery, review, amendment, modification, and administration of the Loan
Documents. The Borrower also agrees to reimburse the Agent, the Lenders and
each Issuing Bank for any reasonable costs, internal charges and
out-of-pocket expenses (including reasonable attorneys' fees and time
charges of attorneys for the Agent, the Lenders and such Issuing Bank,
which attorneys may be employees of the Agent, the Lenders or such Issuing
Bank) paid or incurred by the Agent, any Lender or such Issuing Bank in
connection with the collection and enforcement of the Loan Documents. The
Borrower further agrees to indemnify the Agent and each Lender or Issuing
Bank, its directors, officers and employees against all losses, claims,
damages, penalties, judgments, liabilities and expenses (including, without
limitation, all expenses of litigation or preparation therefor whether or
not the Agent or any Lender or Issuing Bank is a party thereto) which any
of them may pay or incur arising out of or relating to this Agreement, the
other Loan Documents, the transactions contemplated hereby or the direct or
indirect application or proposed application of the proceeds of any Loan
hereunder (except to the extent arising due to the gross negligence or
willful misconduct of the indemnified Person). The obligations of the
Borrower under this Section shall survive the termination of this
Agreement.
12.8. Numbers of Documents. All statements, notices, closing
documents, and requests hereunder shall be furnished to the Agent with
sufficient counterparts so that the Agent may furnish one to each of the
Lenders.
12.9. Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP applied on a
basis consistent with the audited financial statements of the Borrower as
of December 31, 1996 ("Agreement Accounting Principles"). If any change in
GAAP from the principles used in preparing such statements would have a
material effect upon the results of any calculation required by or
compliance with any provision of this Agreement, then such calculation
shall be made or calculated and compliance with such provision shall be
determined using accounting principles used in preparing the audited
financial statements of the Borrower as of December 31, 1996.
<PAGE> 97
12.10. Severability of Provisions. Any provision in any Loan Document
that is held to be inoperative, unenforceable, or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable,
or invalid without affecting the remaining provisions in that jurisdiction
or the operation, enforceability, or validity of that provision in any
other jurisdiction, and to this end the provisions of all Loan Documents
are declared to be severable.
12.11. Nonliability of Lenders and Issuing Bank. The relationship
between the Borrower and the Lenders and the Agent shall be solely that of
borrower and lender. Neither the Agent nor any Lender or Issuing Bank shall
have any fiduciary responsibilities to the Borrower. Neither the Agent nor
any Lender or Issuing Bank undertakes any responsibility to the Borrower to
review or inform the Borrower of any matter in connection with any phase of
the Borrower's business or operations.
12.12. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING
A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE
STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS.
12.13. CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING
MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY
OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR
ANY LENDER OR ISSUING BANK TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE
COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER
AGAINST THE AGENT OR ANY LENDER OR ISSUING BANK OR ANY AFFILIATE OF THE
AGENT OR ANY LENDER OR ISSUING BANK INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.
12.14. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT, AND EACH LENDER
AND ISSUING BANK HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED
WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
12.15. Confidentiality. Each Lender and the Agent agree to use
commercially reasonable efforts to keep confidential any financial reports
and other information from time to time supplied to them by the Borrower
hereunder to the extent that such information is not and does not become
publicly available through or with the consent or acquiescence of the
Borrower, except for disclosure (i) to the Agent and the other Lenders or
to a Transferee, (ii) to legal counsel, accountants, and other professional
advisors to a Lender, the Agent or a Transferee, (iii) to regulatory
<PAGE> 98
officials, (iv) to any Person as required by law, regulation, or legal
process, (v) to any Person in connection with any legal proceeding to which
that Lender is a party, and (vi) permitted by Section 15.4. Any Lender or
Agent disclosing such information shall use commercially reasonable efforts
to advise the Person to whom such information is disclosed of the foregoing
confidentiality agreement and to direct such Person to comply therewith.
ARTICLE XIII
THE AGENT
13.1. Appointment. The First National Bank of Chicago is hereby
appointed Agent hereunder and under each other Loan Document, and each of
the Lenders irrevocably authorizes the Agent to act as the agent of such
Lender. The Agent agrees to act as such upon the express conditions
contained in this Article XIII. The Agent shall not have a fiduciary
relationship in respect of the Borrower, any Lender or the Issuing Bank by
reason of this Agreement.
13.2. Powers. The Agent shall have and may exercise such powers under
the Loan Documents as are specifically delegated to the Agent by the terms
of each thereof, together with such powers as are reasonably incidental
thereto. The Agent shall have no implied duties to the Lenders, or any
obligation to the Lenders to take any action thereunder except any action
specifically provided by the Loan Documents to be taken by the Agent.
13.3. General Immunity. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Borrower or any Lender
for action taken or omitted to be taken by it or them hereunder or under
any other Loan Document or in connection herewith or therewith except for
its or their own gross negligence or willful misconduct.
13.4. No Responsibility for Loans, Recitals, etc. Neither the Agent
nor any of its directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into, or verify (i)
any statement, warranty or representation made in connection with any Loan
Document or any borrowing or any request for the issuance, amendment or
extension of any Facility Letter of Credit hereunder; (ii) the performance
or observance of any of the covenants or agreements of any obligor under
any Loan Document or Reimbursement Agreement, including, without
limitation, any agreement by an obligor to furnish information directly to
each Lender; (iii) the satisfaction of any condition specified in Article
IV or V, except receipt of items required to be delivered to the Agent; or
(iv) the validity, effectiveness or genuineness of any Loan Document or
Reimbursement Agreement or any other instrument or writing furnished in
<PAGE> 99
connection with any of the foregoing. The Agent shall have no duty to
disclose to the Lenders information that is not required to be furnished by
the Borrower to the Agent at such time, but is voluntarily furnished by the
Borrower to the Agent (either in its capacity as Agent or in its individual
capacity).
13.5. Action on Instructions of Lenders. The Agent shall in all cases
be fully protected in acting, or in refraining from acting, hereunder and
under any other Loan Document in accordance with written instructions
signed by the Required Lenders (except as otherwise provided in Section
11.2), and such instructions and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders and on all holders
of Notes. The Agent shall be fully justified in failing or refusing to take
any action hereunder and under any other Loan Document unless it shall
first be indemnified to its satisfaction by the Lenders pro rata against
any and all liability, cost and expense that it may incur by reason of
taking or continuing to take any such action.
13.6. Employment of Agents and Counsel. The Agent may execute any of
its duties as Agent hereunder and under any other Loan Document by or
through employees, agents, and attorneys-in-fact and shall not be
answerable to the Lenders, except as to money or securities received by it
or its authorized agents, for the default or misconduct of any such agents
or attorneys-in-fact selected by it with reasonable care. The Agent shall
be entitled to advice of counsel concerning all matters pertaining to the
agency hereby created and its duties hereunder and under any other Loan
Document.
13.7. Reliance on Documents; Counsel. The Agent shall be entitled to
rely upon any Note, notice, consent, certificate, affidavit, letter,
telegram, statement, paper or document believed by it to be genuine and
correct and to have been signed or sent by the proper person or persons,
and, in respect to legal matters, upon the opinion of counsel selected by
the Agent, which counsel may be employees of the Agent.
13.8. Agent's Reimbursement and Indemnification. The Lenders agree to
reimburse and indemnify the Agent ratably in proportion to their respective
Commitments (i) for any amounts not reimbursed by the Borrower for which
the Agent is entitled to reimbursement by the Borrower under the Loan
Documents, (ii) for any other expenses incurred by the Agent on behalf of
the Lenders, in connection with the preparation, execution, delivery,
administration and enforcement of the Loan Documents and (iii) for any
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind and nature whatsoever
which may be imposed on, incurred by or asserted against the Agent in any
way relating to or arising out of the Loan Documents or any other document
delivered in connection therewith or the transactions contemplated thereby,
or the enforcement of any of the terms thereof or of any such other
documents, provided that no Lender shall be liable for any of the foregoing
to the extent they arise from the gross negligence or willful misconduct of
the Agent. The obligations of the Lenders under this Section 13.8 shall
survive payment of the Obligations and termination of this Agreement.
<PAGE> 100
13.9. Rights as a Lender or Issuing Bank. In the event the Agent is a
Lender, the Agent shall have the same rights and powers hereunder and under
any other Loan Document as any Lender and may exercise the same as though
it were not the Agent, and the term "Lender" or "Lenders" shall, at any
time when the Agent is a Lender, unless the context otherwise indicates,
include the Agent in its individual capacity. In the event the Agent is an
Issuing Bank, the Agent shall have the rights and powers of the Issuing
Bank hereunder and may exercise the same as though it were not the Agent,
and the term "Issuing Bank" shall, at any time when the Agent is the
Issuing Bank, unless the context otherwise indicates, include and mean the
Agent in its capacity as the Issuing Bank. In the event the Agent is a
Swing Line Bank, the Agent shall have the rights and powers of the Swing
Line Bank hereunder and may exercise the same as though it were not the
Agent, and the term "Swing Line Bank" shall, at any time when the Agent is
the Swing Line Bank, unless the context otherwise indicates, include and
mean the Agent in its capacity as the Swing Line Bank. The Agent may accept
deposits from, lend money to, and generally engage in any kind of trust,
debt, equity or other transaction, in addition to those contemplated by
this Agreement or any other Loan Document, with the Borrower or any of its
Subsidiaries in which the Borrower or such Subsidiary is not restricted
hereby from engaging with any other Person. The Agent, in its individual
capacity, is not obligated to remain a Lender.
13.l0. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and
based on the financial statements prepared by the Borrower and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will, independently and
without reliance upon the Agent or any other Lender and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Agreement and the other Loan Documents.
13.11. Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower, such resignation to
be effective upon the appointment of a successor Agent or, if no successor
Agent has been appointed, 45 days after the retiring Agent gives notice of
its intention to resign. The Agent may be removed at any time with or
without cause by written notice received by the Agent from the Required
Lenders, such removal to be effective on the date specified by the Required
Lenders. Upon any such resignation or removal, the Required Lenders shall
have the right to appoint, on behalf of the Borrower and the Lenders, a
successor Agent. If no successor Agent shall have been so appointed by the
Required Lenders within thirty days after the resigning Agent's giving
notice of its intention to resign, then the resigning Agent may appoint, on
behalf of the Borrower and the Lenders, a successor Agent. If the Agent has
resigned or been removed and no successor Agent has been appointed, the
<PAGE> 101
Lenders may perform all the duties of the Agent hereunder and the Borrower
shall make all payments in respect of the Obligations to the applicable
Lender and for all other purposes shall deal directly with the Lenders. No
successor Agent shall be deemed to be appointed hereunder until such
successor Agent has accepted the appointment. Any such successor Agent
shall be a commercial bank having capital and retained earnings of at least
$50,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the resigning
or removed Agent. Upon the effectiveness of the resignation or removal of
the Agent, the resigning or removed Agent shall be discharged from its
duties and obligations hereunder and under the Loan Documents. After the
effectiveness of the resignation or removal of an Agent, the provisions of
this Article XIII shall continue in effect for the benefit of such Agent in
respect of any actions taken or omitted to be taken by it while it was
acting as the Agent hereunder and under the other Loan Documents.
13.12. Agent's Fee. The Borrower agrees to pay to the Agent and/or
FCCM (as applicable), each for its own account, the fees agreed to by the
Borrower and the Agent in Section 2 of that certain letter agreement dated
July 31, 1995, and that certain letter agreement dated April 25, 1997 or as
otherwise agreed from time to time.
ARTICLE XIV
SETOFF; RATABLE PAYMENTS
14.1. Setoff. In addition to, and without limitation of, any rights of
the Lenders, Swing Line Bank or Issuing Bank under applicable law, if the
Borrower becomes insolvent, however evidenced, or any Default occurs, any
and all deposits (including all account balances, whether provisional or
final and whether or not collected or available) and any other Indebtedness
at any time held or owing by any Lender , Swing Line Bank or Issuing Bank
to or for the credit or account of the Borrower may be offset and applied
toward the payment of the Obligations owing to such Lender, Swing Line Bank
or Issuing Bank, whether or not the Obligations, or any part hereof, shall
then be due.
14.2. Ratable Payments. If any Lender, whether by setoff or otherwise,
has payment made to it upon its Loans (other than payments received
pursuant to Sections 3.1, 3.2 or 3.4 and other than payments received by
the Swing Line Bank with respect to Swing Line Loans) in a greater
proportion than that received by any other Lender, such Lender agrees,
promptly upon demand, to purchase a portion of the Loans (other than the
Swing Line Loans) held by the other Lenders so that after such purchase
each Lender will hold its ratable proportion of Loans (other than Swing
Line Loans). If any Lender, whether in connection with setoff or amounts
which might be subject to setoff or otherwise, receives collateral or other
protection for its Obligations (other than the Swing Line Bank with respect
to the Swing Line Loans) or such amounts which may be subject to setoff,
such Lender agrees, promptly upon demand, to take such action necessary
<PAGE> 102
such that all Lenders share in the benefits of such collateral ratably in
proportion to their Loans (other than Swing Line Loans). In case any such
payment is disturbed by legal process, or otherwise, appropriate further
adjustments shall be made.
ARTICLE XV
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
15.1. Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower,
the Lenders and the Issuing Bank and their respective successors and
assigns, except that (i) the Borrower shall not have the right to assign
its rights or obligations under the Loan Documents, and (ii) any assignment
by any Lender must be made in compliance with Section 15.3. Notwithstanding
clause (ii) of this Section, any Lender may at any time, without the
consent of the Borrower or the Agent, assign all or any portion of its
rights under this Agreement and its Notes to a Federal Reserve Bank;
provided, however, that no such assignment shall release the transferor
Lender from its obligations hereunder. The Agent may treat the payee of any
Note as the owner thereof for all purposes hereof unless and until such
payee complies with Section 15.3 in the case of an assignment thereof or,
in the case of any other transfer, a written notice of the transfer is
filed with the Agent. Any assignee or transferee of a Note agrees by
acceptance thereof to be bound by all the terms and provisions of the Loan
Documents. Any request, authority or consent of any Person, who at the time
of making such request or giving such authority or consent is the holder of
any Note, shall be conclusive and binding on any subsequent holder,
transferee or assignee of such Note or of any Note or Notes issued in
exchange therefor.
15.2. Participations.
15.2.1. Permitted Participants; Effect. Any Lender may,
in the ordinary course of its business and in
accordance with applicable law, at any time sell to one
or more banks or other Persons that are not, and that
are not Affiliates of a Person, in the home building
business ("Participants") participating interests in
any Loan owing to such Lender (which may include, in
the case of the Swing Line Bank, any Swing Line Loan),
any Note held by such Lender, any Commitment of such
Lender (or in the case of the Swing Line Bank, any
Swing Line Commitment) or any other interest of such
Lender under the Loan Documents in an amount of not
less than $5,000,000. In the event of any such sale by
a Lender of participating interests to a Participant,
such Lender's obligations under the Loan Documents
shall remain unchanged, such Lender shall remain solely
responsible to the other parties hereto for the
performance of such obligations, such Lender shall
<PAGE> 103
remain the holder of any such Note for all purposes
under the Loan Documents, all amounts payable by the
Borrower under this Agreement shall be determined as if
such Lender had not sold such participating interests,
and the Borrower, the Agent and the Issuing Bank shall
continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations
under the Loan Documents.
15.2.2. Voting Rights. Each Lender shall retain the sole
right to approve, without the consent of any Participant,
any amendment, modification or waiver of any provision of
the Loan Documents other than any amendment, modification or
waiver with respect to any Loan or Commitment (or any Swing
Line Loan or Swing Line Commitment, if applicable) in which
such Participant has an interest which forgives principal,
interest or fees (other than Agent's fees) or reduces the
interest rate or fees (other than Agent's fees) payable with
respect to any such Loan or Commitment (or any Swing Line
Loan or Swing Line Commitment, if applicable), or postpones
any date fixed for any regularly-scheduled payment of
principal of, or interest or fees (other than Agent's fees)
on, any such Loan or Commitment (or any Swing Line Loan or
Swing Line Commitment, if applicable).
15.2.3. Benefit of Setoff. The Borrower agrees that
each Participant shall be deemed to have the right of
setoff provided in Section 14.1 in respect of its
participating interest in amounts owing under the Loan
Documents to the same extent as if the amount of its
participating interest were owing directly to it as a
Lender under the Loan Documents, provided that each
Lender shall retain the right of setoff provided in
Section 15.1 with respect to the amount of
participating interests sold to each Participant. The
Lenders agree to share with each Participant, and each
Participant, by exercising the right of setoff provided
in Section 14.1, agrees to share with each Lender, any
amount received pursuant to the exercise of its right
of setoff, such amounts to be shared in accordance with
Section 14.2 as if each Participant were a Lender.
15.3. Assignments.
15.3.1. Premitted Assignments. Any Lender may, in the
ordinary course of its business and in accordance with
applicable law, at any time assign to one or more banks
or other Persons that are not, and that are not
Affiliates of a Person, in the home building business
("Purchasers") all or any part of its rights and
obligations under the Loan Documents (which may
include, in the case of a Purchaser of an interest from
<PAGE> 104
the Swing Line Bank, the Swing Line Commitment and
Swing Line Loans) in the amount of not less than
$5,000,000, provided that, immediately following such
assignment, the assigning Lender either (i) shall
retain a Commitment of not less than $10,000,000 or
(ii) shall have assigned all of its Commitment and have
no remaining interest in the Obligations and provided,
further, that First Chicago may not assign the Swing
Line Commitment or Swing Line Loan except to a
Purchaser that is, or at the time of such assignment
becomes, the Agent in accordance with the provisions of
this Agreement. Such assignment shall be substantially
in the form of Exhibit "K" hereto or in such other form
as may be agreed to by the parties thereto. In the case
of an assignment of a Commitment or any portion thereof
(excluding, however, the Swing Line Commitment or any
portion thereof) other than to a Lender or an Affiliate
thereof and in the case of any assignment of the Swing
Line Commitment or any portion thereof, the consent of
the Borrower and the Agent shall be required prior to
such assignment becoming effective; provided, however,
that if a Default has occurred and is continuing, the
consent of the Borrower shall not be required. Such
consents shall not be unreasonably withheld.
15.3.2. Effect; Effective Date. Upon (i) delivery to
the Agent of a notice of assignment, substantially in
the form attached as Exhibit "I" to Exhibit "K" hereto
(a "Notice of Assignment"), together with any consents
required by Section 15.3.1, and (ii) payment by the
Lender of a $4,000 fee to the Agent for processing such
assignment, such assignment shall become effective on
the effective date specified in such Notice of
Assignment. The Notice of Assignment shall contain a
representation by the Purchaser to the effect that none
of the consideration used to make the purchase of the
Commitment and Loans (and if applicable, the Swing Line
Commitment and Swing Line Loans) under the applicable
assignment agreement are "plan assets" as defined under
ERISA and that the rights and interests of the
Purchaser in and under the Loan Documents will not be
"plan assets" under ERISA. On and after the effective
date of such assignment, such Purchaser shall for all
purposes be a Lender party to this Agreement and any
other Loan Document executed by the Lenders and shall
have all the rights and obligations of a Lender under
the Loan Documents, to the same extent as if it were an
original party hereto, and no further consent or action
by the Borrower, the Lenders or the Agent shall be
required to release the transferor Lender with respect
to the percentage of the Aggregate Commitment and Loans
<PAGE> 105
(and any Swing Line Commitment or Swing Line Loan)
assigned to such Purchaser. Upon the consummation of
any assignment to a Purchaser pursuant to this Section
15.3.2, the transferor Lender, the Agent and the
Borrower shall make appropriate arrangements so that
replacement Notes are issued to such transferor Lender
and new Notes or, as appropriate, replacement Notes,
are issued to such Purchaser, in each case in principal
amounts reflecting their Commitment, as adjusted
pursuant to such assignment.
15.4. Dissemination of Information. The Borrower authorizes each
Lender to disclose to any Participant or Purchaser or any other Person
acquiring an interest in the Loan Documents by operation of law (each a
"Transferee") and any prospective Transferee any and all information in
such Lender's possession concerning the creditworthiness of the Borrower
and its Subsidiaries; provided that each Transferee and prospective
Transferee agrees to be bound by Section 12.15 of this Agreement.
15.5. Tax Treatment. If any interest in any Loan Document is
transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the
transferor Lender shall cause such Transferee, concurrently with the
effectiveness of such transfer, to comply with the provisions of Section
2.19.
ARTICLE XVI
NOTICES
16.1. Giving Notice. Except as otherwise permitted by Section 2.14
with respect to borrowing notices, all notices and other communications
provided to any party hereto under this Agreement or any other Loan
Document shall be in writing or by telex or by facsimile and addressed or
delivered to such party at its address set forth below its signature hereto
or at such other address as may be designated by such party in a notice to
the other parties. Any notice, if mailed and properly addressed with
postage prepaid, shall be deemed given when received; any notice, if
transmitted by telex or facsimile, shall be deemed given when transmitted
(answerback confirmed in the case of telexes).
16.2. Change of Address. The Borrower, the Agent, any Lender and the
Issuing Bank may each change the address for service of notice upon it by a
notice in writing to the other parties hereto.
<PAGE> 106
ARTICLE XVII
COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart.
<PAGE> 107
IN WITNESS WHEREOF, the Borrower, the Lenders, and the Agent have
executed this Agreement as of the date first above written.
BORROWER:
U.S. HOME CORPORATION
By: /s/ Thomas A. Napoli
__________________________
Name: Thomas A. Napoli,
Vice President
1800 West Loop South
Houston, TX 77252
Attention: Thomas A. Napoli
LENDERS:
Commitments
$30,000,000 THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Agent
By: /s/ Gregory A. Gilbert
_________________________
Name: Gregory A. Gilbert,
Vice President
One First National Plaza
Chicago, Illinois 60670
Attention: Gregory A. Gilbert
$30,000,000 GUARANTY FEDERAL BANK, F.S.B.
By: /s/ Richard V. Thompson
_______________________
Name: Richard V. Thompson,
Vice President
8333 Douglas Avenue
Dallas, TX 75225
Attention: Richard V. Thompson
$30,000,000 CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Jacques-Yves Mulliez
_________________________
Name: Jacques-Yves Mulliez
Senior Vice President
1301 Avenue of the Americas
New York, New York 10019
Attention: Loan Servicing Dept.
<PAGE> 108
with a copy to:
Lincoln Plaza
2200 Ross Avenue - Suite 4400W
Dallas, Texas 75201
Attention: Blake Wright
$25,000,000 BANK ONE, ARIZONA, NA
By: /s/ Rhonda R. Williams
_______________________
Name: Rhonda R. Williams,
Vice President
201 N. Central
Phoenix, AZ 85004
Attention: Rhonda R. Williams
$15,000,000 COMERICA BANK, a Michigan corporation
By: /s/ David J. Campbell
___________________________
Name: David J. Campbell,
Vice President
500 Woodward Avenue, M/C 3256
Detroit, MI 48226
Attention: David J. Campbell
<PAGE> 109
Exhibit "A"
GUARANTY
This GUARANTY ("Guaranty") is made as of the ___ day of
_____________, _____, by _________________________, a __________
corporation (the "Guarantor"), in favor of the "Lenders" under that certain
Amended and Restated Credit Agreement, dated as of May 28, 1997, by and
among U.S. Home Corporation (the "Borrower"), the financial institutions
from time to time parties thereto (collectively, and including the Issuing
Bank (as defined in the Amended and Restated Credit Agreement) the
"Lenders") and The First National Bank of Chicago, in its capacity as
Agent. Such Amended and Restated Credit Agreement, as it may be amended,
modified or supplemented from time to time, is hereinafter referred to as
the "Credit Agreement". Unless otherwise defined herein, capitalized terms
used herein shall have the meanings ascribed to them in the Credit
Agreement.
1. Guaranty. (i) For value received and in consideration
of any loan, advance or financial accommodation of any kind whatsoever
heretofore, now or hereafter made, given or granted to the Borrower by the
Lenders, the Guarantor unconditionally guarantees for the benefit of each
of the Lenders the full and prompt payment when due, whether at maturity or
earlier, by reason of acceleration or otherwise, and at all times
thereafter, of all of the Obligations (including, without limitation,
interest accruing following the filing of a bankruptcy petition by or
against the Borrower, at the applicable rate specified in the Credit
Agreement, whether or not such interest is allowed as a claim in
bankruptcy).
(ii) At any time after the occurrence of a Default, the
Guarantor shall pay to the Agent, for the benefit of the Lenders, on demand
and in immediately available funds, the full amount of the Obligations. The
Guarantor further agrees to pay to the Agent and reimburse the Agent for,
on demand and in immediately available funds, (a) all fees, costs and
expenses (including, without limitation, all court costs and attorneys' and
paralegals' fees, costs and expenses) paid or incurred by the Agent or any
of the Lenders in: (1) endeavoring to collect all or any part of the
Obligations from, or in prosecuting any action against, the Guarantor
relating to this Guaranty; (2) taking any action with respect to any
security or collateral securing the Guarantor's obligations hereunder; and
(3) preserving, protecting or defending the enforceability of, or
enforcing, this Guaranty or their respective rights hereunder (all such
costs and expenses are hereinafter referred to as the "Expenses"). The
Guarantor hereby agrees that this Guaranty is an absolute guaranty of
payment and is not a guaranty of collection.
2. Obligations Unconditional. Subject to Section 10, the
Guarantor hereby agrees that its obligations under this Guaranty shall be
unconditional, irrespective of: (i) the validity, enforceability,
avoidance, novation or subordination of any of the Obligations or any of
the Loan Documents; (ii) the absence of any attempt by, or on behalf of,
<PAGE> 110
any Lender or the Agent to collect, or to take any other action to enforce,
all or any part of the Obligations whether from or against the Borrower,
any other guarantor of the Obligations or any other Person; (iii) the
election of any remedy by, or on behalf of, any Lender or the Agent with
respect to all or any part of the Obligations; (iv) the waiver, consent,
extension, forbearance or granting of any indulgence by, or on behalf of,
any Lender or the Agent with respect to any provision of any of the Loan
Documents; (v) the election by, or on behalf of, any one or more of the
Lenders, in any proceeding instituted under Chapter 11 of Title 11 of the
United States Code (11 U.S.C. 101 et seq.) (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 Borrower, as
debtor-in-possession, under Section 364 of the Bankruptcy Code; (vii) the
disallowance, under Section 502 of the Bankruptcy Code, of all or any
portion of the claims of any of the Lenders or the Agent for repayment of
all or any part of the Obligations or any Expenses; or (viii) any other
circumstance which might otherwise constitute a legal or equitable
discharge or defense of the Borrower or the Guarantor.
3. Enforcement; Application of Payments. Upon the
occurrence of a Default, the Agent may proceed directly and at once,
without notice, against the Guarantor to obtain performance of and to
collect and recover the full amount, or any portion, of the Obligations,
without first proceeding against the Borrower or any other Person, or
against any security or collateral for the Obligations. Subject only to the
terms and provisions of the Credit Agreement, the Agent shall have the
exclusive right to determine the application of payments and credits, if
any, from the Guarantor, the Borrower or from any other Person on account
of the Obligations or any other liability of the Guarantor to any Lender.
4. Waivers. (a) The Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event
of receivership or bankruptcy of the Borrower, protest or notice with
respect to the Obligations, all setoffs and counterclaims and all
presentments, demands for performance, notices of nonperformance, protests,
notices of protest, notices of dishonor and notices of acceptance of this
Guaranty, the benefits of all statutes of limitation, and all other demands
whatsoever (and shall not require that the same be made on the Borrower as
a condition precedent to the Guarantor's obligations hereunder), and
covenants that this Guaranty will not be discharged, except by complete
payment (in cash) and performance of the Obligations and any other
obligations contained herein. The Guarantor further waives all notices of
the existence, creation or incurring of new or additional indebtedness,
arising either from additional loans extended to the 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 Obligations is due, notices of any and all proceedings
to collect from the maker, any endorser or any other guarantor of all or
any part of the Obligations, or from any other Person, and, to the extent
permitted by law, notices of exchange, sale, surrender or other handling of
any security or collateral given to the Agent to secure payment of all or
any part of the Obligations.
<PAGE> 111
(b) The Guarantor understands that it shall be liable for
the full amount of its liability under this Guaranty, notwithstanding the
occurrence of any event impairing the right of the Guarantor, the Agent or
any of the Lenders to proceed against the Borrower, any other guarantor or
the Borrower's or such guarantor's property. The Guarantor agrees that all
of its obligations under this Guaranty (including its obligation to pay in
full all indebtedness evidenced by or arising under the Credit Agreement)
shall remain in full force and effect without defense, offset or
counterclaim of any kind, notwithstanding that the Guarantor's rights
against the Borrower may be impaired, destroyed or otherwise affected by
reason of any action or inaction on the part of the Agent or any Lender.
(c) The Lenders, either themselves or acting through the
Agent, are hereby authorized, without notice or demand and without
affecting the liability of the Guarantor hereunder, from time to time, (i)
to renew, extend, accelerate or otherwise change the time for payment of,
or other terms relating to, all or any part of the Obligations, or to
otherwise modify, amend or change the terms of any of the Loan Documents;
(ii) to accept partial payments on all or any part of the Obligations;
(iii) to take and hold security or collateral for the payment of all or any
part of the Obligations, this Guaranty, or any other guaranties of all or
any part of the Obligations or other liabilities of the Borrower, (iv) to
exchange, enforce, waive and release any such security or collateral; (v)
to apply such security or collateral and direct the order or manner of sale
thereof as in their discretion they may determine; and (vi) to settle,
release, exchange, enforce, waive, compromise or collect or otherwise
liquidate all or any part of the Obligations, this Guaranty, any other
guaranty of all or any part of the Obligations, and any security or
collateral for the Obligations or for any such guaranty. Any of the
foregoing may be done in any manner, without affecting or impairing the
obligations of the Guarantor hereunder.
5. Setoff. At any time after all or any part of the
Obligations have become due and payable (by acceleration or otherwise)
following the occurrence of a Default, each Lender and the Agent may,
without notice to the Guarantor and regardless of the acceptance of any
security or collateral for the payment hereof, appropriate and apply toward
the payment of all or any part of the Obligations (i) any indebtedness due
or to become due from such Lender or the Agent to the Guarantor, and (ii)
any moneys, credits or other property belonging to the Guarantor, at any
time held by or coming into the possession of such Lender or the Agent or
any of their respective affiliates.
6. Financial Information. The Guarantor hereby assumes
responsibility for keeping itself informed of the financial condition of
the Borrower and any and all endorsers and/or other guarantors of all or
any part of the Obligations, and of all other circumstances bearing upon
the risk of nonpayment of the Obligations, or any part thereof, that
diligent inquiry would reveal, and the Guarantor hereby agrees that none of
the Lenders nor the Agent shall have any duty to advise the Guarantor of
information known to any of them regarding such condition or any such
<PAGE> 112
circumstances. In the event any Lender, in its sole discretion, undertakes
at any time or from time to time to provide any such information to the
Guarantor, such Lender shall be under no obligation (i) to undertake any
investigation not a part of its regular business routine, (ii) to disclose
any information which such Lender, pursuant to accepted or reasonable
commercial finance or banking practices, wishes to maintain confidential or
(iii) to make any other or future disclosures of such information or any
other information to the Guarantor.
7. No Marshalling; Reinstatement. The Guarantor consents
and agrees that none of the Lenders nor the Agent nor any Person acting for
or on behalf of the Lenders or the Agent shall be under any obligation to
marshall any assets in favor of the Guarantor or against or in payment of
any or all of the Obligations. The Guarantor further agrees that, to the
extent that the Borrower, the Guarantor or any other guarantor of all or
any part of the Obligations makes a payment or payments to any Lender or
the Agent, 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 the Borrower, the Guarantor, such other guarantor
or any other Person, or their respective estates, trustees, receivers or
any other party, including, without limitation, the Guarantor, under any
bankruptcy law, state or federal law, common law or equitable cause, then,
to the extent of such payment or repayment, the part of the Obligations
which has been paid, reduced or satisfied by such amount shall be
reinstated and continued in full force and effect as of the time
immediately preceding such initial payment, reduction or satisfaction.
8. Subrogation. Until the Obligations have been paid in
full, the Guarantor (i) shall have no right of subrogation with respect to
such Obligations and (ii) waives any right to enforce any remedy which the
Lenders or the Agent (or any of them) now have or may hereafter have
against the Borrower, any endorser or any guarantor of all or any part of
the Obligations or any other Person, and the Guarantor waives any benefit
of, and any right to participate in, any security or collateral given to
the Lenders and the Agent (or any of them) to secure the payment or
performance of all or any part of the Obligations or any other liability of
the Borrower to the Lenders.
9. Enforcement; Amendments; Waivers. No delay on the part
of any of the Lenders or the Agent in the exercise of any right or remedy
arising under this Guaranty, the Credit Agreement, any of the other Loan
Documents or otherwise with respect to all or any part of the Obligations
or any other guaranty of or security for all or any part of the Obligations
shall operate as a waiver thereof, and no single or partial exercise by any
such Person of any such right or remedy shall preclude any further exercise
thereof. No modification or waiver of any of the provisions of this
Guaranty shall be binding upon the Lenders or the Agent, except as
expressly set forth in a writing duly signed and delivered by the party
making such modification or waiver. Failure by any of the Lenders or the
Agent at any time or times hereafter to require strict performance by the
Borrower, the Guarantor, any other guarantor of all or any part of the
Obligations or any other Person of any of the provisions, warranties, terms
and conditions contained in any of the Loan Documents now or at any time or
<PAGE> 113
times hereafter executed by such Persons and delivered to the Agent or any
Lender shall not waive, affect or diminish any right of the Agent or such
Lender 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 the Agent or any Lender, or their respective agents, officers
or employees, unless such waiver is contained in an instrument in writing,
directed and delivered to the Borrower or the Guarantor, as applicable,
specifying such waiver, and is signed by the party or parties necessary to
give such waiver under the Credit Agreement. No waiver of any Default by
the Agent or any Lender shall operate as a waiver of any other Default or
the same Default on a future occasion, and no action by the Agent or any
Lender permitted hereunder shall in any way affect or impair the Agent's or
any Lender's rights and remedies or the obligations of the Guarantor under
this Guaranty. Any determination by a court of competent jurisdiction of
the amount of any principal and/or interest owing by the Borrower to any of
the Lenders shall be conclusive and binding on the Guarantor irrespective
of whether the Guarantor was a party to the suit or action in which such
determination was made.
10. Effectiveness; Termination. This Guaranty shall
become effective upon its execution by the Guarantor and shall continue in
full force and effect and may not be terminated or otherwise revoked until
the Obligations shall have been fully paid (in cash) and discharged and the
Credit Agreement and all financing arrangements between the Borrower and
the Lenders shall have been terminated. If, notwithstanding the foregoing,
the Guarantor shall have any right under applicable law to terminate or
revoke this Guaranty, the Guarantor agrees that such termination or
revocation shall not be effective until a written notice of such revocation
or termination, specifically referring hereto, signed by the Guarantor, is
actually received by the Agent. Such notice shall not affect the right and
power of any of the Lenders or the Agent to enforce rights arising prior to
receipt thereof by the Agent. If any Lender grants loans or takes other
action after the Guarantor terminates or revokes this Guaranty but before
the Agent receives such written notice, the rights of such Lender with
respect thereto shall be the same as if such termination or revocation had
not occurred.
11. Successors and Assigns. This Guaranty shall be
binding upon the Guarantor and upon its successors and assigns and shall
inure to the benefit of the Lender and the Agent and their respective
successors and assigns; all references herein to the Borrower and to the
Guarantor shall be deemed to include their respective successors and
assigns. The successors and assigns of the Guarantor and the Borrower shall
include, without limitation, their respective receivers, trustees or
debtors-in-possession. All references to the singular shall be deemed to
include the plural where the context so requires.
<PAGE> 114
12. Officer Authority. The Guarantor authorizes its
Chairman, President, and each of its Vice Presidents, respectively, from
time to time, severally and not jointly, on behalf and in the name of the
Guarantor from time to time in the discretion of such officer, to take or
omit to take any and all action and to execute and deliver any and all
documents and instruments which such officer may determine to be necessary
or desirable in relation to, and perform any obligations arising in
connection with, this Guaranty and any of the transactions contemplated
hereby, and, without limiting the generality of the foregoing, hereby gives
to each such officer severally the power and right on behalf of the
Guarantor, without notice to or assent by the Guarantor, to do the
following: (i) to execute and deliver any amendment, waiver, consent,
supplement, other modification or reaffirmation of this Guaranty or any
document relating hereto, and to perform any obligation arising in
connection herewith or therewith; (ii) to sell, transfer, assign, encumber
or otherwise deal in or with any security for this Guaranty or any part
thereof; (iii) to grant liens, security interests or other encumbrances on
or in respect of any property or assets of the Guarantor, whether now owned
or hereafter acquired, in favor of the Lenders and the Agent; (iv) to send
notices, directions, orders and other communications to any Person relating
to this Guaranty, or any security for all or any part of the Obligations;
(v) to take or omit to take any other action contemplated by or referred to
in this Guaranty or any document covering any security for all or any part
of the Obligations; and (vi) to take or omit to take any action with
respect to this Guaranty, any security for all or any part of the
Obligations or any document covering any such security, all as such officer
may determine in his or her sole discretion. The undersigned hereby
certifies that he/she has all necessary authority to grant and execute this
Guaranty on behalf of the Guarantor.
13. Governing Law. This Guaranty has been delivered by
the parties hereto in Chicago, Illinois. Any dispute between the Guarantor
and the Lenders or the Agent arising out of or related to the relationship
established between them in connection with this Guaranty, and whether
arising in contract, tort, equity, or otherwise, shall be resolved in
accordance with the internal laws, and not the conflicts of law provisions,
of the State of Illinois.
14. Consent to Jurisdiction; Counterclaims; Forum Non
Conveniens. (a) Exclusive Jurisdiction. Except as provided in subsection
(b) of this Section 14, the Agent, on behalf of itself and the Lenders, and
the Guarantor agree that all disputes between them arising out of or related
to the relationship established between them in connection with this Guaranty,
whether arising in contract, tort, equity, or otherwise, shall be resolved
only by state or federal courts located in Chicago, Illinois, but the parties
acknowledge that any appeals from those courts may have to be heard by a court
located outside of Chicago, Illinois.
<PAGE> 115
(b) Other Jurisdictions. The Lenders and Agent shall have
the right to proceed against the Guarantor or its real or personal property
in a court in any location to enable the Agent or the Lenders to obtain
personal jurisdiction over the Guarantor or to enforce a judgment or other
court order entered in favor of the Agent or the Lenders.
(c) Venue; Forum Non Conveniens. Each of the Guarantor
and the Agent, on behalf of itself and the Lenders, waives any objection
that it may have (including, without limitation, any objection to the
laying of venue or based on forum non conveniens) to the location of the
court in which any proceeding is commenced in accordance with this Section
14.
15. Waiver of Jury Trial. Each of the Guarantor and the
Agent waives any right to trial by jury in any dispute, whether sounding in
contract, tort, or otherwise, between the Guarantor and the Lenders or the
Agent arising out of or related to the transactions contemplated by this
Guaranty or any other instrument, document or agreement executed or
delivered in connection herewith. Either the Guarantor or the Agent may
file an original counterpart or a copy of this Guaranty with any court as
written evidence of the consent of the parties hereto to the waiver of
their right to trial by jury.
16. Waiver of Bond. The Guarantor waives the posting of
any bond otherwise required of the Agent in connection with any judicial
process or proceeding to enforce any judgment or other court order entered
in favor of the Agent, or to enforce by specific performance, temporary
restraining order, or preliminary or permanent injunction, this Guaranty or
any other agreement or document between the Agent and the Guarantor.
17. Advice of Counsel. The Guarantor represents and
warrants that it has consulted with its legal counsel regarding all waivers
under this Guaranty, including without limitation those under Section 4 and
Sections 14 through 17 hereof, that it believes that it fully understands
all rights that it is waiving and the effect of such waivers, that it
assumes the risk of any misunderstanding that it may have regarding any of
the foregoing, and that it intends that such waivers shall be a material
inducement to the Agent and the Lenders to extend the indebtedness
guaranteed hereby.
18. Notices. All notices and other communications
provided to any party hereto shall be in writing or by facsimile and
addressed to such party at its address set forth below or at such other
address as may be designated by such party in a notice to the other party.
Any notice, if mailed and properly addressed with postage prepaid, shall be
deemed given when received; any notice, if transmitted by facsimile, shall
be deemed given when transmitted. The addresses for notices are as follows:
<PAGE> 116
if to the Guarantor, at:
========================
========================
if to the Agent, at
The First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670
Attention: Gregory A. Gilbert
Telecopy: 312/732-1117
19. Severability. Wherever possible, each provision of
this Guaranty shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Guaranty shall be
prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining provisions of
this Guaranty.
20. Merger. This Guaranty represents the final agreement
of the Guarantor with respect to the matters contained herein and may not be
contradicted by evidence of prior or contemporaneous agreements, or subsequent
oral agreements, between the Guarantor and the Agent or any Lender.
21. Execution in Counterparts. This Guaranty may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the
same agreement.
IN WITNESS WHEREOF, this Guaranty has been duly executed
by the Guarantor as of the day and year first set forth above.
-------------------------
By: __________________________
Name: ____________________
Title:
Acknowledged and agreed to as of the ___ day of __________, ____.
THE FIRST NATIONAL BANK OF CHICAGO,
as Agent
By:___________________________
Name: Gregory A. Gilbert
Title: Vice President
<PAGE> 117
EXHIBIT "B"
NOTE
$_________________________ ____________________, l9
The undersigned (the "Borrower") promises to pay to the order of
(the "Lender") the lesser of the principal sum of Dollars or the aggregate
unpaid principal amount of all Loans made by the Lender to the Borrower
pursuant to the Credit Agreement (as the same may be amended or modified,
the "Agreement") hereinafter referred to, in immediately available funds at
the main office of The First National Bank of Chicago in Chicago, Illinois,
as Agent, together with interest on the unpaid principal amount hereof at
the rates and on the dates set forth in the Agreement. The Borrower shall
pay the principal of and accrued and unpaid interest on the Loans in full
on the Facility Termination Date.
The Lender shall, and is hereby authorized to, record on the
schedule attached hereto, or to otherwise record in accordance with its
usual practice, the date and amount of each Loan and the date and amount of
each principal payment hereunder.
This Note is one of the Notes issued pursuant to, and is entitled
to the benefits of, the Amended and Restated Credit Agreement, dated as of
May 28, 1997, among the Borrower, The First National Bank of Chicago,
individually and as Agent, and the lenders named therein, including the
Lender, to which Agreement, as it may be amended from time to time,
reference is hereby made for a statement of the terms and conditions
governing this Note, including the terms and conditions under which this
Note may be prepaid or its maturity date accelerated. Capitalized terms
used herein and not otherwise defined herein are used with the meanings
attributed to them in the Agreement.
U.S. HOME CORPORATION
By:__________________________________
Print Name:__________________________
Title:_______________________________
<PAGE> 118
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
NOTE OF U.S. HOME CORPORATION
DATED ____________, 199_
Principal Maturity Principal
Amount of of Interest Amount Unpaid
Date Loan Period Paid Balance
<PAGE> 119
Exhibit C
KSFH&H Draft 5-19-97
(212)-836-8000
May _____,1997
To each of the lenders party to the
Amended and Restated Credit Agreement
referred to below and The First National Bank
of Chicago, as Agent
c/o The First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670
Ladies and Gentlemen:
We have acted as counsel to U.S. Home Corporation, a Delaware corporation
(the "Borrower"), in connection with the preparation, execution and delivery
of the Amended and Restated Credit Agreement, dated as of May ___, 1997 (the
"Amended and Restated Credit Agreement"), among the Borrower, the lenders
names therein and The First National Bank of Chicago, as Agent.
We have examined such documents, instruments, records and certificates of
public officials and officers of the Borrower, and have reviewed such questions
of law, as we have deemed necessary or appropriate as a basis for the opinions,
we have relied upon such documents, instruments, certificates and records
Based on the foregoing, and subject to the limitations, qualifications
and exceptions set forth herein, we are of the opinion that:
1. The Borrower has the requisite corporate power and authority to
execute and deliver the Amended and Restated Credit Agreement and has taken
all necessary corporate action to authorize the execution and delivery of
the Amended and Restated Credit Agreement.
2. The Borrower has duly executed and delivered the Amended and
Restated Credit Agreement.
The opinions set forth above are subject to the following assumptions and
qualifications:
We have assumed the Borrower is a corporation validly existing and in
good standing under the laws of Delaware. We have also assumed the
genuineness of all signatures, other than those of officers of the Borrower,
the authenticity of all documents submitted to us as originials, and the
conformity with the original documents of all documents submitted to us as
reproduced copies, and the authenticity of all such latter documents.
Our opinions are limited to the General Corporation Law of the State
of Delaware.
Our opinions are rendered solely for your information in connection
with the foregoing, and may not be relied upon by any other persons or for
any other purpose without our prior written consent.
Yours truly,
<PAGE> 120
EXHIBIT "D"
INTENTIONALLY DELETED
<PAGE> 121
EXHIBIT "E"
May _______, 1997
The First National Bank of Chicago, as
Agent for itself and various Lenders
One First National Plaza
Chicago, Illinois 60670
Re: Loan to U.S. Home Corporation by First National Bank
of Chicago and other lenders (collectively "Lenders")
Gentlemen/Ladies:
We have served as special local counsel to U.S. Home Corporation,
a Delaware corporation ("Borrower"), in connection with it entering into an
amended and restated credit agreement with Lenders.
We have examined an executed copy of the Amended and Restated
Credit Agreement with Borrower and Lenders dated as of May _____, 1997
(the "Amended and Restated Credit Agreement").
In rendering this opinion, we have examined no other documents
or instruments other than the Amended and Restated Credit Agreement and
have undertaken no investigation (and disclaim any duty to investigate)
and have relied on the accuracy of the representations and warranties
contained in the Amended and Restated Credit Agreement.
For the Purposes of this opinion we have assumed that:
(a) Borrower has been duly formed and is validly existing in its
state of incorporation.
(b) The execution and delivery of the Amended and Restated
Credit Agreement and the performance by Borrower of its obligations thereunder
and the transactions contemplated therein are within the authority of Borrower
and have been duly authorized by all necessary or appropriate action.
(c) The Amended and Restated Credit Agreement has been duly
executed and delivered by Borrower.
(d) The execution and delivery of the Amended and Restated Credit
Agreement by the Lenders and the performance by the Lenders of their
obligations thereunder, are within the powers of the Lenders, have been
duly authorized by all necessary or appropriate action, and are in compliance
with all laws and regulations to which the Lenders are subject.
(e) Lenders are duly organized, validly existing and are either
(i) in good standing in the State of Illinois, or (ii) are not requited to
be so qualified, in the State of Illinois.
<PAGE> 122
(f) The Amended and Restated Credit Agreement will be governed
by and construed in accordance with the internal laws (as distinguished
from the choices of law rules) of the State of Illinois.
(g) All signatures of the Amended and Restated Credit Agreement
are genuine.
(h) Full and adequate consideration has been extended to Borrower
for the execution, delivery and performance of the Amended and Restated
Credit Agreement.
(i) All material terms and conditions of the relationship
between Lenders and the Borrower are correctly and completely reflected in
the Amended and Restated Credit Agreement.
We understand the foregoing assumptions are acceptable to you
and to the other Lenders. Based upon the foregoing, but subject to the
assumptions, qualifications and limitations set forth herein, we are of the
opinion that the Amended and Restated Credit Agreement is the valid and
binding obligation of Borrower enforceable against Borrower in accordance
with its terms.
Our opinion is qualified as follows:
A. Your ability to enforce the Amended and Restated Credit
Agreement may be limited by applicable bankruptcy, reorganization, insolvency,
moratorium, fraudulent conveyance or transfer and other similar laws now or
hereafter in effect relating to or affecting creditors' rights generally.
B. Enforcement of your rights and remedies may be limited by
general principles of equity, regardless of whether such enforcement is
considered in a proceeding at law or in equity, and in this regard we have
assumed that Lenders at all times will exercise their rights and remedies
under the Amended and Restated Credit Agreement in good faith and in
circumstances and a manner which are commercially reasonable.
C. We do not hereby express an opinion as to the strict
enforceability of each and every remedy and provision of the Amended and
Restated Credit Agreement in accordance with its terms under any or all
facts and circumstances. It is our opinion, however, that the remedies
and provisions contained in the Amended and Restated Credit Agreement
that would be enforceable are sufficient as a whole, subject to the
qualifications and limitations elsewhere herein stated, for the practical
realization of the essential legal benefits intended thereby.
<PAGE> 123
D. If, and to the extent, the Amended and Restated Credit
Agreement is construed to provide or permit the payment of interest on
interest, such provisions may be unenforceable under Bowman v. Neely,
137 Ill. 443 (1891) and other cases to the same effect. While such cases
have not been overruled and it is possible that a court would follow such
precedent, we believe that such cases are unlikely to be held applicable
today in a commercial loan transaction, but we render no opinion with
respect to such issue.
E. We render no opinion whatever as to the adequacy of
consideration extended to Borrower for the execution and delivery of the
Amended and Restated Credit Agreement and the effects thereof, whether under
Illinois common law, or any state or federal fraudulent transfer statutes.
F. We express no opinion as to the rights of the Agent and other
Lenders inter se.
G. We express no opinion as to provisions in the Amended and
Restated Credit Agreement which: (l) waive the right to a jury trial; (2)
purport to establish nonculpability for disbursement on a letter of credit
upon a nonconforming documentary draw; (3) broadly waive any and all
suretyship defenses, including the defense of the statute of limitations;
or (4) attempt to provide for the right of the Lenders to recover lost
profits.
Our opinion is limited to the laws of the United States and the
laws of the State of Illinois in effect on the date hereof as they presently
apply. We shall have no continuing obligations to inform you of changes
in law or fact subsequent to the date hereof or of facts of which we become
aware after the date hereof.
This opinion is limited to the matters set forth herein. No
opinion may be inferred or implied beyond those expressly contained herein.
This opinion is rendered solely for your benefit and that of the other
Lenders. No other person or entity shall be entitled to rely on any
matter set forth herein without the express written consent of the
undersigned.
Very truly yours,
LORD, BISSELL & BROCK
<PAGE> 124
EXHIBIT "F"
INTENTIONALLY DELETED
<PAGE> 125
EXHIBIT "G"
AMENDED AND RESTATED CONTRIBUTION AND INDEMNITY AGREEMENT
THIS AMENDED AND RESTATED CONTRIBUTION AND INDEMNITY
AGREEMENT (the "Agreement") is made as of May 28, 1997, by and among the
undersigned (collectively, the "Guarantors").
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery
hereof, U.S. Home Corporation (the "Borrower") has executed and delivered
that certain Amended and Restated Credit Agreement (as such document may be
modified and amended from time to time, the "Credit Agreement"), dated as
of the date hereof, providing for Loans to be made from time to time by the
Lenders identified in the Credit Agreement to the Borrower in a principal
amount not to exceed $180,000,000 (capitalized terms used herein, but not
defined herein, shall have the meanings provided for such terms in the
Credit Agreement);
WHEREAS, the Guarantors have each executed and delivered
a Guaranty, pursuant to which the Guarantors guaranty the payment of all
Obligations; and
WHEREAS, the Guarantors are parties to that certain
Contribution and Indemnity Agreement dated as of September 29, 1995, as
amended by First Amendment to Contribution and Indemnity Agreement dated as
of September 25, 1996, by Second Amendment to Contribution and Indemnity
Agreement dated as of December 6, 1996 and by Third Amendment to
Contribution and Indemnity Agreement dated as of April 30, 1997 (the
"Original Contribution Agreement"); and
WHEREAS, the Lenders have required as a condition, among
others, to the making of the Loans, that the Guarantors execute and deliver
this Agreement for the purpose of amending and restating the Original
Contribution Agreement in its entirety.
NOW THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Guarantors
hereby covenant and agree that the Original Contribution Agreement is
amended and restated in its entirety as follows:
1. Allocable Amount. As used in this Agreement, the
"Allocable Amount" of any Guarantor, as of any date of determination, shall
be determined to be an amount equal to ninety-five percent (95%) of the
maximum amount which could then be claimed against such Guarantor without
rendering such claim voidable or avoidable under Section 548of Chapter 11
of the United States Federal Bankruptcy Code (11 U.S.C. Sec. 101 et seq.)
or under any applicable state Uniform Fraudulent Transfer Act, Uniform
Fraudulent Conveyance Act or similar statute or common law.
<PAGE> 126
2. Allocable Share. As used in this Agreement, the term
"Allocable Share" means, at the relevant time of calculation with respect
to any Guarantor, a fraction, the numerator of which equals such
Guarantor's Allocable Amount and the denominator of which equals the
Allocable Amounts of all the Guarantors.
3. Contribution and Indemnification. (a) To the extent
that a payment is made on the Obligations by a Guarantor (a "Guarantor
Payment") which, taking into account all other Guarantor Payments then
previously or concurrently made by or attributable to any other Guarantor,
exceeds such Guarantor's Allocable Share of all such Guarantor Payments (as
such share would then be calculated immediately prior to such Guarantor
Payment), then such Guarantor shall be entitled to contribution and
indemnification from, and to be reimbursed by, each of the other Guarantors
for the amount of such excess, pro rata based upon their respective
Allocable Shares as in effect immediately prior to such Guarantor Payment.
(b) Notwithstanding the foregoing, the Guarantors may, as
among themselves, provide for an allocation consistent with the foregoing
which requires the Guarantors that received a direct financial benefit from
the Obligations in respect of which a payment by a Guarantor has been made
and for which contribution is sought to make contribution payments before
the Guarantors that did not receive a direct financial benefit are
obligated to make contribution payments.
(c) The Guarantors acknowledge that the rights of
contribution and indemnification hereunder shall constitute an asset in
favor of any Guarantor to which such contribution and indemnification is
owing.
4. Purpose of Agreement. This Agreement is intended only
to define the relative rights of the Guarantors, and nothing set forth in
this Agreement is intended to or shall impair the obligations of any of the
Guarantors with respect to the Obligations, the Guaranty or any of the other
Loan Documents.
5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois.
<PAGE> 127
IN WITNESS WHEREOF, the Guarantors have executed this
Agreement as of the day and year first above written.
CANTERBURY CORPORATION
COUNTRYPLACE GOLF COURSE, INC.
E.M.J.V. CORP.
HOMECRAFT CORPORATION
IMPERIAL HOMES CORPORATION
LODGE HOLDINGS CORP.
OCEANPOINTE DEVELOPMENT CORPORATION
ORRIN THOMPSON CONSTRUCTION COMPANY
ORRIN THOMPSON HOMES CORP.
PAPARONE CONSTRUCTION COMPANY
PRAIRIE LAKE CORPORATION
RUTTENBERG HOMES, INC. (Florida)
RUTTENBERG HOMES, INC. (Texas)
STONEY CORPORATION
USH CAPITAL CORPORATION
USH EQUITY CORPORATION
USH (WEST LAKE), INC.
U.S. HOME CORPORATION OF NEW YORK
U.S. HOME OF ARIZONA CONSTRUCTION CO.
U.S. HOME OF COLORADO REAL ESTATE, INC.
U.S. HOME REALTY CORPORATION
U.S. HOME REALTY, INC. (Maryland)
U.S. HOME REALTY, INC. (Texas)
U.S. HOME AND DEVELOPMENT CORPORATION
U.S.H. CORPORATION OF NEW YORK
U.S.H. LOS PRADOS, INC.
By: ______________________________
Thomas A. Napoli
Vice President
<PAGE> 128
Exhibit "H"
AMENDED AND RESTATED SUBORDINATION AGREEMENT
This Amended and Restated Subordination Agreement (as the same may
from time to time be amended, modified or restated, the "Agreement")
entered into by and between the parties listed on Schedule I hereto
(together with their successors and assigns, individually, a "Noteholder"
and collectively, the "Noteholders"), and The First National Bank of
Chicago, as agent (the "Agent") for itself and the other "Senior Lenders"
(as defined below).
W I T N E S S E T H:
WHEREAS, the Noteholders are subsidiaries of Borrower, and
Borrower may now or hereafter be indebted to the Noteholders (all such
indebtedness or any notes or other instruments evidencing such indebtedness
being herein referred to as the "Subordinated Notes");
WHEREAS, the Borrower has entered into that certain Amended and
Restated Credit Agreement of even date herewith (as the same may from time
to time be amended, modified, supplemented or restated, in whole or in part
and without limitation as to amount, terms, conditions or covenants, the
"Credit Agreement") with the Agent and the Senior Lenders;
WHEREAS, Borrower is presently indebted to the Senior Lenders as a
result of the advance of monies and other extensions of credit by the
Senior Lenders to Borrower pursuant to the Credit Agreement;
WHEREAS, the Noteholders acknowledge that the loan or advance of
monies or other extensions of any financial accommodation or credit to
Borrower by the Senior Lenders is of value to the Noteholders; and
WHEREAS, the Noteholders have heretofore executed and delivered
that certain Subordination Agreement, dated as of September 29, 1995 (the
"Original Subordination Agreement").
NOW, THEREFORE, for good and valuable consideration, receipt of
which is hereby acknowledged by the Noteholders, and in order to induce the
Senior Lenders, now or from time to time hereafter, to make loans or extend
credit or any other financial accommodation to or for the benefit of
Borrower; or to grant such renewals, increases or extensions thereof as the
Senior Lenders may deem advisable; and to better secure the Senior Lenders
in respect of the foregoing, each of the Noteholders hereby agrees with the
Agent and the Senior Lenders that the Original Subordination Agreement is
hereby amended and restated in its entirety as hereinafter set forth.
<PAGE> 129
1. Certain Defined Terms. In addition to the terms defined above
and elsewhere in this Agreement, the following terms used in this Agreement
shall have the following meanings, applicable both to the singular and the
plural forms of the terms defined:
As used in this Agreement:
"Borrower" shall mean U.S. Home Corporation, a corporation or any
successor or assign, including, without limitation, a receiver, trustee or
debtor-in-possession.
"Senior Debt" shall mean all "Obligations" (as defined in the
Credit Agreement). Senior Debt shall be considered to be outstanding
whenever any Senior Lender has an outstanding commitment therefor.
"Senior Lenders" shall mean each of the financial institutions
from time to time party to the Credit Agreement and each other holder of
the Senior Debt and shall include the "Issuing Bank" under the Credit
Agreement.
"Subordinated Debt" shall mean all (a) all principal of, and
premium, if any, and interest on, the Subordinated Notes and (b) all other
indebtedness, fees, expenses, obligations and liabilities of the Borrower
(or any other person, firm, partnership or corporation for the benefit of
Borrower) to any Noteholders, whether now existing or hereafter incurred or
created, in each case, whether such amounts are due or not due, direct or
indirect, absolute or contingent; provided, however, Subordinated Debt
shall include only such amounts in excess of $10,000,000 at any time
outstanding.
2. Standby; Subordination; Subrogation. The payment and
performance of the Subordinated Debt is hereby subordinated to the Senior
Debt and, except as set forth in Sections 3 and 4 below, none of the
Noteholders will accelerate, ask, demand, sue for, take or receive from
Borrower, by setoff or in any other manner, the whole or any part of the
Subordinated Debt, including, without limitation, the taking of any
negotiable instruments evidencing such amounts, nor any security for any of
the Subordinated Debt, unless and until all of the Senior Debt shall have
been fully and indefeasibly paid and satisfied in cash and all financing
arrangements among Borrower, the Agent and the Senior Lenders have been
terminated. Each of the Noteholders also hereby agrees that, regardless of
whether the Senior Debt is secured or unsecured, the Senior Lenders shall
be subrogated for the Noteholders with respect to the Noteholders' claims
against Borrower and the Noteholders' rights, liens and security interests,
if any, in any of Borrower's assets or any other assets securing the Senior
Debt and the proceeds thereof until all of the Senior Debt has been fully
and indefeasibly paid and satisfied in cash and all financing arrangements
among Borrower, the Agent and the Senior Lenders have been terminated.
<PAGE> 130
3. Permitted Payments. Notwithstanding the provisions of Section 2
of this Agreement, until the occurrence of a "Default" (as defined in the
Credit Agreement), and provided that (i) there shall not then exist any
breach of this Agreement by any of the Noteholders which has not been
waived, in writing, by the Agent, and (ii) the payment described below, if
made, would not give rise to the occurrence of a Default or the Senior
Lenders' making an advance to Borrower in excess of amounts otherwise then
available to Borrower under the terms of the Credit Agreement, Borrower may
pay to the Noteholders, and the Noteholders may accept from Borrower, any
and all payments of the Subordinated Debt ("Permitted Payments"), it being
understood and agreed by the Noteholders that Subordinated Debt may not be
modified or amended in a manner that adversely affects the Senior Lenders
without the prior written consent of the Agent on behalf of the Senior
Lenders.
4. Enforcement Rights. Each of the Noteholders, prior to the
indefeasible payment in full of the Senior Debt and the termination of all
financing arrangements among Borrower and the Senior Lenders, shall have no
right to enforce any claim with respect to the Subordinated Debt,
including, without limitation, any Permitted Payment, or otherwise to take
any action against Borrower or Borrower's property without the Senior
Lenders' prior written consent.
5. Liens; Permitted Transfers; Permitted Change of Control. Each
of the Noteholders hereby represents as of the date hereof that it has not
been granted or obtained any liens or security interests in any assets of
the Borrower or any other assets securing the Senior Debt. Each of the
Noteholders agrees that, without the prior written consent of the Agent and
each of the Senior Lenders, no Noteholder shall take any liens on or
security interests in any assets of the Borrower. The Noteholders
acknowledge and agree that, to the extent the terms and provisions of this
Agreement are inconsistent with the Subordinated Notes, the Subordinated
Notes shall be deemed to be subject to this Agreement. Notwithstanding any
provision contained in the Subordinated Notes accelerating the Subordinated
Debt or requiring a mandatory prepayment or put of all or any part of the
Subordinated Debt upon the occurrence of a default or other event, no such
default or other event shall result in any such acceleration of the
Subordinated Debt, mandatory prepayment with respect to the Subordinated
Debt or put of any portion of the Subordinated Debt, all of which are
hereby waived by the Noteholders, unless and until all of the Senior Debt
shall have been fully and indefeasibly paid and satisfied in cash and all
financing arrangements among Borrower, the Agent and the Senior Lenders
have been terminated.
6. Subordinated Debt Owed Only to the Noteholders. The Noteholders
warrant and represent that (a) the Noteholders have not previously assigned
any interest in the Subordinated Debt or any security interest in
connection therewith, if any; (b) no other party owns an interest in the
Subordinated Debt or security therefor other than the Noteholders (whether
as joint holders of the Subordinated Debt, participants or otherwise); and
(c) the entire Subordinated Debt is owing only to the Noteholders. Each of
the Noteholders covenants that the entire Subordinated Debt shall continue
to be owing only to the Noteholders and all security therefor shall
continue to be held solely for the benefit of the Noteholders unless
assigned in accordance with the terms of this Agreement.
<PAGE> 131
7. Senior Lender Priority. In the event of the occurrence of a
Default (as defined in the Credit Agreement) (i) the Agent and the Senior
Lenders shall be entitled to receive indefeasible payment in full in cash
of any and all of the Senior Debt prior to the payment of all or any part
of the Subordinated Debt, and (ii) any payment or distribution of any kind
or character, whether in cash, securities or other property, which shall be
payable or deliverable upon or with respect to any or all of the
Subordinated Debt shall be paid or delivered directly to Agent for
application on any of the Senior Debt, due or not due, until the Senior
Debt shall have first been fully and indefeasibly paid and satisfied in
cash.
8. Grant of Authority to Agent. In the event of the occurrence of
any event described in Section 7 above, and in order to enable the Agent
and the Senior Lenders to enforce their rights hereunder in any of the
aforesaid actions or proceedings, Agent is hereby irrevocably authorized
and empowered, in the Agent's discretion, to file, make and present for and
on behalf of the Noteholders such proofs of claims against Borrower on
account of the Subordinated Debt or other motions or pleadings as the Agent
may deem expedient or proper and to vote such proofs of claims in any such
proceeding and to receive and collect any and all dividends or other
payments or disbursements made thereon in whatever form the same may be
paid or issued and to apply the same on account of any portion of the
Senior Debt. In voting such proofs of claim in any proceeding, the Agent
may act in a manner consistent with the sole interest of the Senior Lenders
and the Agent shall have no duty to take any action to optimize or maximize
the Noteholders' recovery with respect to its claim. The Noteholders
irrevocably authorize and empower the Agent to demand, sue for, collect and
receive each of the aforesaid payments and distributions described in
Section 7 above and give acquittance therefor and to file claims and take
such other actions, in the Agent's own name or in the name of the
Noteholders or otherwise, as the Agent may deem necessary or advisable for
the enforcement of this Agreement. Each of the Noteholders will execute and
deliver to the Agent such powers of attorney, assignments and other
instruments or documents, including notes and stock certificates (together
with such assignments or endorsements as the Agent shall deem necessary),
as may be requested by the Agent in order to enable the Agent and to
enforce any and all claims of the Agent and the Senior Lenders upon or with
respect to any or all of the Subordinated Debt and to collect and receive
any and all payments and distributions which may be payable or deliverable
at any time upon or with respect to the Subordinated Debt, all for the
Agent's and the Senior Lenders' own benefit.
9. Payments Received by the Noteholders. Except for Permitted
Payments received by the Noteholders prior to the occurrence of a Default
as provided in Section 3 above, should any payment or distribution or
security or instrument or proceeds thereof be received by any Noteholder
upon or with respect to the Subordinated Debt or any other obligations of
Borrower to any Noteholder prior to the indefeasible payment in full in
cash of all of the Senior Debt and termination of all financing
arrangements among Borrower, the Agent and the Senior Lenders, the
Noteholders shall receive and hold the same in trust, as trustee, for the
benefit of the Agent and the Senior Lenders, and shall forthwith deliver
<PAGE> 132
the same to the Agent, in precisely the form received (except for the
endorsement or assignment of the Noteholders where necessary), for
application on any of Senior Debt, due or not due, and, until so delivered,
the same shall be held in trust by such Noteholder as the property of the
Agent and the Senior Lenders. In the event of the failure of any Noteholder
to make any such endorsement or assignment to the Agent, the Agent, or any
of its officers or employees, is hereby irrevocably authorized to make the
same.
10. Continuing Nature of Subordination. This Agreement shall be
effective and may not be terminated or otherwise revoked by any Noteholder
until the Senior Debt shall have been indefeasibly paid in full in cash and
satisfied and all financing arrangements among Borrower, the Agent and the
Senior Lenders have been terminated. In the event the Noteholders shall
have any right under applicable law otherwise to terminate or revoke this
Agreement which right cannot be waived, such termination or revocation
shall not be effective until written notice of such termination or
revocation, signed by any such Noteholder, is actually received by the
Agent's officer responsible for such matters. In the absence of the
circumstances described in the immediately preceding sentence, this is a
continuing agreement of subordination and the Agent and the Senior Lenders
may continue, at any time and without notice to the Noteholders, to extend
credit or other financial accommodations and loan monies to or for the
benefit of Borrower on the faith hereof. Any termination or revocation
described hereinabove shall not affect this Agreement in relation to (a)
any of the Senior Debt which arose or was committed to prior to receipt
thereof or (b) any of the Senior Debt created after receipt thereof, if
such Senior Debt was incurred through readvances by the Senior Lenders
pursuant to the Senior Lenders' financing arrangements with Borrower,
including, without limitation, advances or readvances, in an aggregate
outstanding amount not to exceed the sum of the Aggregate Commitment (as
defined in the Credit Agreement as in effect on the date of receipt of any
such notice and as may be increased pursuant to the provisions of the
Credit Agreement). If, in reliance on this Agreement, any Senior Lender
makes loans or other advances to or for the benefit of Borrower or takes
other action under the Credit Agreement after such aforesaid termination or
revocation by the Noteholder but prior to the receipt by the Agent of said
written notice as set forth above, the rights of the Senior Lenders shall
be the same as if such termination or revocation had not occurred.
11. Additional Agreements between the Agent, the Senior Lenders
and Borrower. The Agent or any Senior Lender, at any time and from time to
time, either before or after any such aforesaid notice of termination or
revocation, may enter into such agreement or agreements with Borrower as
the Agent or any Senior Lender may deem proper, extending the time of
payment of or renewing or otherwise altering the terms, including, without
limitation increasing the principal amount thereof, of all or any portion
of the Senior Debt or obtaining security for any or all of the Senior Debt,
and may exchange, sell, release, surrender or otherwise deal with any such
security, without in any way thereby impairing or affecting this Agreement.
<PAGE> 133
12. Noteholders' Waivers. All of the Senior Debt shall be deemed
to have been made or incurred in reliance upon this Agreement. The
Noteholders expressly waive all notice of the acceptance by the Agent or
any Senior Lender of the subordination and other provisions of this
Agreement and all other notices not specifically required pursuant to the
terms of this Agreement whatsoever, and the Noteholders expressly waive
reliance by the Agent and the Senior Lenders upon the subordination and
other agreements as herein provided. The Noteholders further agree that in
the event Borrower consents or fails to object to a proposed retention of
such assets (or a portion thereof) by the Agent or the Senior Lenders in
satisfaction of the Senior Debt (or a portion thereof), the Noteholders
hereby consent to such proposed retention regardless of whether the
Noteholders are provided with notice of such proposed retention. The
Noteholders agree that the Noteholders will not interfere with or in any
manner oppose a disposition of any assets securing the Senior Debt by the
Agent or any Senior Lender. The Noteholders agree that neither the Agent
nor any Senior Lender has made any warranties or representations with
respect to the due execution, legality, validity, completeness or
enforceability of the Credit Agreement, or the collectibility of the Senior
Debt, that the Agent and the Senior Lenders shall be entitled to manage and
supervise their loans to Borrower in accordance with applicable law and
their usual practices, modified from time to time as deemed appropriate
under the circumstances, without regard to the existence of any rights that
any Noteholder may now or hereafter have in or to any of the assets of
Borrower, and that Agent and the Senior Lenders shall have no liability to
the Noteholders for, and waive any claim which the Noteholders may now or
hereafter have against, the Agent or any Senior Lender arising out of any
and all actions which the Agent or any Senior Lender, in good faith, takes
or omits to take with respect to the Credit Agreement or any other
agreement related thereto or to the collection of the Senior Debt or the
valuation, use, protection or release of any security for the Senior Debt.
13. Invalidated Payments. To the extent that the Senior Lenders
receive payments on, or proceeds of collateral for, the Senior Debt which
are subsequently invalidated, declared to be fraudulent or preferential,
set aside and/or required to be repaid to a trustee, receiver or any other
party under any bankruptcy law, state or federal law, common law, or
equitable cause, then, to the extent of such payment or proceeds received,
the Senior Debt, or part thereof, intended to be satisfied shall be revived
and continue in full force and effect as if such payments or proceeds had
not been received by the Senior Lenders.
14. Bankruptcy Issues. Each of the Noteholders agrees that the
Senior Lenders, or any one of them may consent to the use of cash
collateral or provide financing to the Borrower on such terms and
conditions and in such amounts as the Senior Lenders, in their sole
discretion, may decide and that, in connection with such cash collateral
usage or such financing, the Borrower (or a trustee appointed for the
estate of Borrower) may grant to the Agent or the Senior Lenders liens and
security interests upon all assets of the Borrower, which liens and
<PAGE> 134
security interests (i) shall secure payment of all Senior Debt (whether
such Senior Debt arose prior to the filing of the petition for relief or
arise thereafter); and (ii) shall be superior in priority to the liens and
security interests, if any, held by the Noteholders on the assets of
Borrower. All allocations of payments between the Senior Lenders and the
Noteholders shall, subject to any court order, continue to be made after
the filing of a petition under the Bankruptcy Code on the same basis that
the payments were to be allocated prior to the date of such filing. Each of
the Noteholders agrees that it will not object to or oppose a sale or other
disposition of any assets securing the Senior Debt (or any portion thereof)
free and clear of security interests, liens or other claims of the
Noteholders, if any, under Section 363 of the Bankruptcy Code or any other
provision of the Bankruptcy Code if the Senior Lenders have consented to
such sale or disposition of such assets. In the event that the Noteholders
have or at any time acquire any security for the Subordinated Debt, each of
the Noteholders agrees not to assert any right it may have to "adequate
protection" of its interest in such security in any bankruptcy proceeding
and agrees that it will not seek to have the automatic stay lifted with
respect to such security, without the prior written consent of the Senior
Lenders. Each of the Noteholders waives any claim it may now or hereafter
have arising out of the Senior Lender's election, in any proceeding
instituted under Chapter 11 of the Bankruptcy Code, of the application of
Section 1111(b)(2) of the Bankruptcy Code, and/or any borrowing or grant of
a security interest under Section 364 of the Bankruptcy Code by Borrower,
as debtor in possession. Each of the Noteholders agrees not to initiate or
prosecute or encourage any other person to initiate or prosecute any claim,
action or other proceeding (i) challenging the enforceability of any Senior
Lender's claim, (ii) challenging the enforceability of any liens or
security interests in assets securing the Senior Debt or (iii) asserting
any claims which the Borrower may hold with respect to the Lender.
15. Agent's and Senior Lenders' Waivers. No waiver shall be deemed
to be made by the Agent or any Senior Lender of any of the Agent's or the
Senior Lenders' rights hereunder, unless the same shall be in writing
signed on behalf of the Agent or the Senior Lenders, as applicable, and
each waiver, if any, shall be a waiver only with respect to the specific
instance involved and shall in no way impair the rights of the Agent or any
Senior Lender or the obligations of the Noteholders to the Agent and the
Senior Lenders in any other respect at any other time.
16. Information Concerning Financial Condition of Borrower. The
Noteholders hereby assume responsibility for keeping informed of the
financial condition of Borrower, any and all endorsers and any and all
guarantors of the Senior Debt and of all other circumstances bearing upon
the risk of nonpayment of the Senior Debt and/or Subordinated Debt that
diligent inquiry would reveal, and the Noteholders hereby agree that
neither the Agent nor any Senior Lender shall have any duty to advise the
Noteholders of information known to the Agent or any Senior Lender
regarding such condition or any such circumstances. The Noteholders hereby
agree that all payments received by any Senior Lender may be applied,
reversed, and reapplied, in whole or in part, to any portion of the Senior
Debt, as the Senior Lenders, in their sole discretion, deem appropriate and
<PAGE> 135
assent to any extension or postponement of the time of payment of the
Senior Debt or to any other indulgence with respect thereto, to any
substitution, exchange or release of collateral which may at any time
secure the Senior Debt and to the addition or release of any other party or
person primarily or secondarily liable therefor.
17. CONSENT TO JURISDICTION; WAIVERS. THE NOTEHOLDERS CONSENT TO
THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN COOK COUNTY,
ILLINOIS, AND WAIVE PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT, AND
CONSENT THAT ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL
DIRECTED TO THE NOTEHOLDERS AT THE ADDRESS STATED BELOW AND SERVICE SO MADE
SHALL BE DEEMED TO BE COMPLETED THREE (3) DAYS AFTER THE SAME SHALL HAVE
BEEN POSTED AS AFORESAID. THE NOTEHOLDERS WAIVE ANY OBJECTION BASED UPON
FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED
HEREUNDER. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY RIGHT TO HAVE
A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT,
TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH
THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH. EACH OF THE PARTIES HERETO AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT
TO TRIAL BY JURY. NOTHING IN THIS SECTION 17 SHALL AFFECT THE RIGHT OF THE
AGENT OR ANY SENIOR LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR AFFECT THE RIGHT OF THE AGENT OR ANY SENIOR LENDER TO
BRING ANY ACTION OR PROCEEDING AGAINST THE NOTEHOLDERS OR ITS PROPERTY IN
THE COURTS OF ANY OTHER JURISDICTION.
18. Notices. All notices and other communications provided to any
party hereto shall be in writing or by facsimile and addressed or delivered
to such party at its address set forth below or at such other address as
may be designated by such party in a notice to the other party. Any notice,
if mailed and property addressed with postage prepaid, shall be deemed
given when received; any notice, if transmitted by facsimile, shall be
deemed given when transmitted. The addresses are as follows:
(i) If to the Agent or any Senior Lender at:
The First National Bank of Chicago
One First National Plaza
Chicago, IL 60670
Attn: Gregory A. Gilbert
Telecopy: (312) 732-1117
(ii) If to any Noteholder at:
c/o U.S. Home Corporation
1800 West Loop South
Houston, TX 77252
Attn: Thomas A. Napoli
Telecopy: (713) 877-2451
<PAGE> 136
19. Governing Law. This Agreement has been delivered and accepted
at and shall be deemed to have been made at Chicago, Illinois, and shall be
interpreted, and the rights and obligations of the parties hereto
determined, in accordance with the laws and decisions of the State of
Illinois, shall be immediately binding upon the Noteholders and their
successors and assigns, and shall inure to the benefit of the successors
and assigns of the Agent and the Senior Lenders.
20. Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
21. Section Titles. The section titles contained in this Agreement
are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.
22. Authority. The signatories to this Agreement on behalf of the
Noteholders hereby certify that they have all necessary authority to grant
the subordination evidenced hereby and execute this Agreement on behalf of
the Noteholders.
23. Full Agreement. This Agreement constitutes the complete
agreement between the parties with respect to the subject matter hereof.
Any document, instrument or agreement executed by the parties hereto with
respect to the financing which is the subject of this Agreement predating
this Agreement shall be merged with and into and superseded by this
Agreement.
<PAGE> 137
IN WITNESS WHEREOF, this Subordination Agreement has been signed
this 28th day of May, 1997.
NOTEHOLDERS:
U.S. HOME MORTGAGE CORPORATION
C.M. CORP.
USH II CORPORATION
USHAC, INC.
FIDELITY GUARANTY AND ACCEPTANCE
CORPORATION
U.S. HOME ACCEPTANCE CORPORATION
U.S. INSURORS, INC.
SAN FELIPE INDEMNITY CO., LTD.
U.S.H. INDEMNITY CO., LTD.
TEXAS-WIDE GENERAL AGENCY, INC.
By: ___________________________
Name:
Title:
Acknowledged and accepted in
Chicago, Illinois this
28th day of May, 1997
The First National Bank of Chicago,
as Agent
By: ____________________________
Gregory A. Gilbert
Vice President
<PAGE> 138
EXHIBIT "J"
COMPLIANCE CERTIFICATE
To: The Lender parties to the
Agreement Described Below
This Compliance Certificate is furnished pursuant to that certain
Amended and Restated Credit Agreement dated as of May 28, 1997 (as amended,
modified, renewed or extended from time to time, the "Agreement") among
U.S. Home Corporation, and the Lenders party thereto and The First National
Bank of Chicago, as Agent for the Lenders. Unless otherwise defined herein,
capitalized terms used in this Compliance Certificate have the meanings
ascribed thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected of the Borrower;
2. I have reviewed the terms of the Agreement and I have made, or
have caused to be made under my supervision, a detailed review of the
transactions and conditions of the Borrower and its Subsidiaries during the
accounting period covered by the attached financial statements;
3. The examinations described in paragraph 2 did not disclose, and
I have no knowledge of, the existence of any condition or event which
constitutes a Default or Unmatured Default during or at the end of the
accounting period covered by the attached financial statements or as of the
date of this Certificate, except as set forth below; and
4. Schedule I attached hereto sets forth financial data and
computations evidencing compliance with certain covenants of the Agreement,
all of which data and computations are true, complete and correct.
Described below are the exceptions, if any, to paragraph 3 by
listing, in detail, the nature of the condition or event, the period during
which it has existed and the action which the Borrower has taken, is
taking, or proposes to take with respect to each such condition or event:
- --------------------------------------------------------------
- --------------------------------------------------------------
<PAGE> 139
The foregoing certifications, together with the computations set
forth in Schedule I hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this day of , 19 .
<PAGE> 140
[SAMPLE]
SCHEDULE I TO COMPLIANCE CERTIFICATE TO COMPLIANCE CERTIFICATE
Schedule of Compliance as of with
Provisions _________ of and of____________
the Agreement
<PAGE> 141
EXHIBIT "K"
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement") between
_______________________________(the "Assignor") _______________________
and (the "Assignee") is dated___________________________ as of , 19 .
The parties hereto agree as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to an Amended
and Restated Credit Agreement (which, as it may be amended, modified,
renewed or extended from time to time is herein called the "Credit
Agreement") described in Item 1 of Schedule 1 attached hereto ("Schedule
1"). Capitalized terms used herein and not otherwise defined herein shall
have the meanings attributed to them in the Credit Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and
assigns to the Assignee, and the Assignee hereby purchases and assumes from
the Assignor, an interest in and to the Assignor's rights and obligations
under the Credit Agreement such that after giving effect to such assignment
the Assignee shall have purchased pursuant to this Assignment Agreement the
percentage interest specified in Item 3 of Schedule 1 of all outstanding
rights and obligations under the Credit Agreement relating to the
facilities listed in Item 3 of Schedule 1 and the other Loan Documents. The
aggregate Commitment (or Loans, if the applicable Commitment has been
terminated) purchased by the Assignee hereunder is set forth in Item 4 of
Schedule 1.
3. EFFECTIVE DATE. The effective date of this Assignment Agreement
(the "Effective Date") shall be the later of the date specified in Item 5
of Schedule 1 or two Business Days (or such shorter period agreed to by the
Agent) after a Notice of Assignment substantially in the form of Exhibit
"I" attached hereto has been delivered to the Agent. Such Notice of
Assignment must include any consents required to be delivered to the Agent
by Section 15.3.1 of the Credit Agreement. In no event will the Effective
Date occur if the payments required to be made by the Assignee to the
Assignor on the Effective Date under Sections 4 and 5 hereof are not made
on the proposed Effective Date. The Assignor will notify the Assignee of
the proposed Effective Date no later than the Business Day prior to the
proposed Effective Date. As of the Effective Date, (i) the Assignee shall
have the rights and obligations of a Lender under the Loan Documents with
respect to the rights and obligations assigned to the Assignee hereunder
and (ii) the Assignor shall relinquish its rights and be released from its
corresponding obligations under the Loan Documents with respect to the
rights and obligations assigned to the Assignee hereunder.
<PAGE> 142
4. PAYMENTS OBLIGATIONS. On and after the Effective Date, the
Assignee shall be entitled to receive from the Agent all payments of
principal, interest and fees with respect to the interest assigned hereby.
The Assignee shall advance funds directly to the Agent with respect to all
Loans and reimbursement payments made on or after the Effective Date with
respect to the interest assigned hereby. [In consideration for the sale and
assignment of Loans hereunder, (i) the Assignee shall pay the Assignor, on
the Effective Date, an amount equal to the principal amount of the portion
of all Floating Rate Loans assigned to the Assignee hereunder and (ii) with
respect to each Eurodollar Loan made by the Assignor and assigned to the
Assignee hereunder which is outstanding on the Effective Date, (a) on the
last day of the Interest Period therefor or (b) on such earlier date agreed
to by the Assignor and the Assignee or (c) on the date on which any such
Eurodollar Loan becomes due (by acceleration or otherwise) (the date as
described in the foregoing clauses (a), (b) or (c) being hereinafter
referred to as the "Payment Date"), the Assignee shall pay the Assignor an
amount equal to the principal amount of the portion of such Eurodollar Loan
assigned to the Assignee which is outstanding on the Payment Date. If the
Assignor and the Assignee agree that the Payment Date for such Eurodollar
Loan shall be the Effective Date, they shall agree to the interest rate
applicable to the portion of such Loan assigned hereunder for the period
from the Effective Date to the end of the existing Interest Period
applicable to such Eurodollar Loan (the "Agreed Interest Rate") and any
interest received by the Assignee in excess of the Agreed Interest Rate
shall be remitted to the Assignor. In the event interest for the period
from the Effective Date to but not including the Payment Date is not paid
by the Borrower with respect to any Eurodollar Loan sold by the Assignor to
the Assignee hereunder, the Assignee shall pay to the Assignor interest for
such period on the portion of such Eurodollar Loan sold by the Assignor to
the Assignee hereunder at the applicable rate provided by the Credit
Agreement. In the event a prepayment of any Eurodollar Loan which is
existing on the Payment Date and assigned by the Assignor to the Assignee
hereunder occurs after the Payment Date but before the end of the Interest
Period applicable to such Eurodollar Loan, the Assignee shall remit to the
Assignor the excess of the prepayment penalty paid with respect to the
portion of such Eurodollar Loan assigned to the Assignee hereunder over the
amount which would have been paid if such prepayment penalty was calculated
based on the Agreed Interest Rate. The Assignee will also promptly remit to
the Assignor (i) any principal payments received from the Agent with
respect to Eurodollar Loans prior to the Payment Date and (ii) any amounts
of interest on Loans and fees received from the Agent which relate to the
portion of the Loans assigned to the Assignee hereunder for periods prior
to the Effective Date, in the case of Floating Rate Loans or fees, or the
Payment Date, in the case of Eurodollar Loans, and not previously paid by
the Assignee to the Assignor.]* In the event that either party hereto
receives any payment to which the other party hereto is entitled under this
Assignment Agreement, then the party receiving such amount shall promptly
remit it to the other party hereto.
*Each Assignor may insert its standard payment provisions in lieu of the
payment terms included in this Exhibit.
<PAGE> 143
5. FEES PAYABLE BY THE ASSIGNEE. [The Assignee shall pay to the
Assignor a fee on each day on which a payment of interest or [commitment]
fees is made under the Credit Agreement with respect to the amounts
assigned to the Assignee hereunder (other than a payment of interest or
commitment fees for the period prior to the Effective Date or, in the case
of Eurodollar Loans, the Payment Date, which the Assignee is obligated to
deliver to the Assignor pursuant to Section 4 hereof). The amount of such
fee shall be the difference between (i) the interest or fee, as applicable,
paid with respect to the amounts assigned to the Assignee hereunder and
(ii) the interest or fee, as applicable, which would have been paid with
respect to the amounts assigned to the Assignee hereunder if each interest
rate was of 1% less than the interest rate paid by the Borrower or if the
commitment fee was of 1% less than the commitment fee paid by the Borrower,
as applicable. In addition, the Assignee agrees to pay % of the recordation
fee required to be paid to the Agent in connection with this Assignment
Agreement.]**
**The parties may substitute other terms with respect to fees.
6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S
LIABILITY. The Assignor represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any adverse claim created by the
Assignor. It is understood and agreed that the assignment and assumption
hereunder are made without recourse to the Assignor and that the Assignor
makes no other representation or warranty of any kind to the Assignee.
Neither the Assignor nor any of its officers, directors, employees, agents
or attorneys shall be responsible for (i) the due execution, legality,
validity, enforceability, genuineness, sufficiency or collectability of any
Loan Document, including without limitation, documents granting the
Assignor and the other Lenders a security interest in assets of the
Borrower or any Guarantor, (ii) any representation, warranty or statement
made in or in connection with any of the Loan Documents, (iii) the
financial condition or creditworthiness of the Borrower or any Guarantor,
(iv) the performance of or compliance with any of the terms or provisions
of any of the Loan Documents, (v) inspecting any of the Property, books or
records of the Borrower or any Guarantor, (vi) any mistake, error of
judgment, or action taken or omitted to be taken in connection with the
Loans or the Loan Documents.
7. REPRESENTATIONS OF THE ASSIGNEE. The Assignee (i) confirms that
it has received a copy of the Credit Agreement, together with copies of the
financial statements requested by the Assignee and such other documents and
information as it has deemed appropriate to make its own credit analysis
and decision to enter into this Assignment Agreement, (ii) agrees that it
will, independently and without reliance upon the Agent, the Assignor or
any other Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Loan Documents, (iii) appoints and
authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under the Loan Documents as are delegated to the Agent
<PAGE> 144
by the terms thereof, together with such powers as are reasonably
incidental thereto, (iv) agrees that it will perform in accordance with
their terms all of the obligations which by the terms of the Loan Documents
are required to be performed by it as a Lender, (v) agrees that its payment
instructions and notice instructions are as set forth in the attachment to
Schedule 1, (vi) confirms that none of the funds, monies, assets or other
consideration being used to make the purchase and assumption hereunder are
"plan assets" as defined under ERISA and that its rights, benefits and
interests in and under the Loan Documents will not be "plan assets" under
ERISA, [and (vii) attaches the forms prescribed by the Internal Revenue
Service of the United States certifying that the Assignee is entitled to
receive payments under the Loan Documents without deduction or withholding
of any United States federal income taxes].*
*to be inserted if the Assignee is not incorporated under the laws of the
United States, or a state thereof.
8. INDEMNITY. The Assignee agrees to indemnify and hold the
Assignor harmless against any and all losses, costs and expenses
(including, without limitation, reasonable attorneys' fees) and liabilities
incurred by the Assignor in connection with or arising in any manner from
the Assignee's non-performance of the obligations assumed under this
Assignment Agreement.
9. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the Assignee
shall have the right pursuant to Section 14.3.1 of the Credit Agreement to
assign the rights which are assigned to the Assignee hereunder to any
entity or person, provided that (i) any such subsequent assignment does not
violate any of the terms and conditions of the Loan Documents or any law,
rule, regulation, order, writ, judgment, injunction or decree and that any
consent required under the terms of the Loan Documents has been obtained
and (ii) unless the prior written consent of the Assignor is obtained, the
Assignee is not thereby released from its obligations to the Assignor
hereunder, if any remain unsatisfied, including, without limitation, its
obligations under [Sections 4, 5 and 8] hereof.
10. CHANGES IN AGGREGATE COMMITMENT. If any reduction in or
increase of the Aggregate Commitment occurs between the date of this
Assignment Agreement and the Effective Date, the percentage interest
specified in Item 3 of Schedule 1 shall remain the same, but the dollar
amount purchased shall be recalculated based on the reduced or increased
Aggregate Commitment.
11. ENTIRE AGREEMENT. This Assignment Agreement and the attached
Notice of Assignment embody the entire agreement and understanding between
the parties hereto and supersede all prior agreements and understandings
between the parties hereto relating to the subject matter hereof.
<PAGE> 145
12. GOVERNING LAW. This Assignment Agreement shall be governed by
the internal law, and not the law of conflicts, of the State of Illinois.
13. NOTICES. Notices shall be given under this Assignment Agreement
in the manner set forth in the Credit Agreement. For the purpose hereof, the
addresses of the parties hereto (until notice of a change is delivered) shall
be the address set forth in the attachment to Schedule 1.
IN WITNESS WHEREOF, the parties hereto have executed this
Assignment Agreement by their duly authorized officers as of the date first
above written.
[NAME OF ASSIGNOR]
By:
Title:
[NAME OF ASSIGNEE]
By:
Title:
<PAGE> 146
SCHEDULE 1
to Assignment Agreement
1. Description and Date of Credit Agreement:
2. Date of Assignment Agreement: , 19
3. Amounts (As of Date of Item 2 above):
a. Total of Commitment
under Credit
Agreement
b. Assignee's Percentage
purchased under the
Assignment
Agreement*
c. Amount of Assigned Share
purchased under the
the Assignment
Agreement
4. Assignee's Aggregate
Commitment Amount
Purchased Hereunder: $__________
5. Proposed Effective Date: _____________
Accepted and Agreed:
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: By:
Title: Title:
* Percentage taken to 10 decimal places
<PAGE> 147
Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT
Attach Assignor's Administrative Information
Sheet, which must include notice address for
the Assignor and the Assignee
<PAGE> 148
EXHIBIT "I"
to Assignment Agreement
NOTICE
OF ASSIGNMENT
__________________ , 19__
To: [NAME OF BORROWER]*
[NAME OF AGENT]
From: [NAME OF ASSIGNOR] (the "Assignor")
[NAME OF ASSIGNEE] (the "Assignee")
1. We refer to that Credit Agreement (the "Credit
Agreement") described in Item 1 of Schedule 1 attached hereto ("Schedule
1"). Capitalized terms used herein and not otherwise defined herein shall
have the meanings attributed to them in the Credit Agreement.
2. This Notice of Assignment (this "Notice") is given and
delivered to ****[the Borrower and]**** the Agent pursuant to Section
15.3.2 of the Credit Agreement.
3. The Assignor and the Assignee have entered into an
Assignment Agreement, dated as of , 19 (the "Assignment"), pursuant to
which, among other things, the Assignor has sold, assigned, delegated and
transferred to the Assignee, and the Assignee has purchased, accepted and
assumed from the Assignor the percentage interest specified in Item 3 of
Schedule 1 of all outstandings, rights and obligations under the Credit
Agreement relating to the facilities listed in Item 3 of Schedule 1. The
Effective Date of the Assignment shall be the later of the date specified
in Item 5 of Schedule 1 or two Business Days (or such shorter period as
agreed to by the Agent) after this Notice of Assignment and any consents
and fees required by Sections 15.3.1 and 15.3.2 of the Credit Agreement
have been delivered to the Agent, provided that the Effective Date shall
not occur if any condition precedent agreed to by the Assignor and the
Assignee has not been satisfied.
<PAGE> 149
4. The Assignor and the Assignee hereby give to the
Borrower and the Agent notice of the assignment and delegation referred to
herein. The Assignor will confer with the Agent before the date specified
in Item 5 of Schedule 1 to determine if the Assignment Agreement will
become effective on such date pursuant to Section 3 hereof, and will confer
with the Agent to determine the Effective Date pursuant to Section 3 hereof
if it occurs thereafter. The Assignor shall notify the Agent if the
Assignment Agreement does not become effective on any proposed Effective
Date as a result of the failure to satisfy the conditions precedent agreed
to by the Assignor and the Assignee. At the request of the Agent, the
Assignor will give the Agent written confirmation of the satisfaction of
the conditions precedent.
5. The Assignor or the Assignee shall pay to the Agent on
or before the Effective Date the processing fee of $4,000 required by
Section 15.3.2 of the Credit Agreement.
6. If Notes are outstanding on the Effective Date, the
Assignor and the Assignee request and direct that the Agent prepare and
request the Borrower to execute and deliver new Notes or, as appropriate,
replacements notes, to the Assignor and the Assignee. The Assignor and, if
applicable, the Assignee each agree to deliver to the Agent the original
Note received by it from the Borrower upon its receipt of a new Note in the
appropriate amount.
7. The Assignee advises the Agent that notice and payment
instructions are set forth in the attachment to Schedule 1.
8. The Assignee hereby represents and warrants that none of
the funds, monies, assets or other consideration being used to make the
purchase pursuant to the Assignment are "plan assets" as defined under
ERISA and that its rights, benefits, and interests in and under the Loan
Documents will not be "plan assets" under ERISA.
9. The Assignee authorizes the Agent to act as its Agent
under the Loan Documents in accordance with the terms thereof. The Assignee
acknowledges that the Agent has no duty to supply information with respect
to the Borrower or the Loan Documents to the Assignee until the Assignee
becomes a party to the Credit Agreement.*
*May be eliminated if Assignee is a party to the Credit Agreement prior to
the Effective Date.
NAME OF ASSIGNOR NAME OF ASSIGNEE
By: By:
Title: Title:
<PAGE> 150
ACKNOWLEDGED [AND CONSENTED TO] ACKNOWLEDGED [AND CONSENTED TO]
BY [NAME OF AGENT] BY [NAME OF BORROWER]
By: By:
Title: Title:
[Attach photocopy of Schedule 1 to Assignment]
<PAGE> 151
EXHIBIT "L"
COMMITMENT AND ACCEPTANCE
This Commitment and Acceptance (this "Commitment and Acceptance")
dated as of , 19 , is entered into among the parties listed on the
signature pages hereof. Capitalized terms used herein and not otherwise
defined herein shall have the meanings attributed to them in the Credit
Agreement (as defined below).
PRELIMINARY STATEMENTS
Reference is made to that certain Amended and Restated Credit
Agreement dated as of May 28, 1997, by and among U.S. Home Corporation, as
Borrower, The First National Bank of Chicago, as Agent, and the Lenders
that are parties thereto (as the same may from time to time be amended,
modified, supplemented or restated, in whole or in part and without
limitation as to amount, terms, conditions or covenants, the "Credit
Agreement").
Pursuant to Section 2.5(b) of the Credit Agreement, the Borrower
has requested an increase in the Aggregate Commitment from $_______________
to $__________________. Such increase in the Aggregate Commitment is to
become effective on _______________ __, ____ (the "Increase Date") [THIS
DATE IS TO BE MUTUALLY AGREED UPON BY THE BORROWER, THE ACCEPTING LENDER
AND THE AGENT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 2.5(d) OF THE
CREDIT AGREEMENT]. In connection with such requested increase in the
Aggregate Commitment, the Borrower, the Agent and _________________ (the
"Accepting Lender") hereby agree as follows:
1. ACCEPTING LENDER'S COMMITMENT. Effective as of the Increase
Date, [the Accepting Lender shall become a party to the Credit Agreement as
a Lender, shall have all of the rights and obligations of a Lender
thereunder, shall agree to be bound Lender by the terms and provisions
thereof and shall thereupon have a Commitment under and for purposes of the
Credit Agreement in and amount equal to the] [the Commitment of the
Accepting Lender under the Credit Agreement shall be increased from
$___________________ to the] amount set forth opposite the Accepting
Lender's name on the signature pages hereof.
<PAGE> 152
2. REPRESENTATIONS AND AGREEMENTS OF ACCEPTING LENDER. The
Accepting Lender (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements requested by
the Accepting Lender and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter
into this Commitment and Acceptance, (ii) agrees that it will,
independently and without reliance upon the Agent or any Lender and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under the Loan Documents, (iii) appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under the
Loan Documents as are delegated to the Agent by the terms thereof, together
with such powers as are reasonably incidental thereto, (iv) agrees that it
will perform in accordance with their terms all of the obligations which by
the terms of the Loan Documents are required to be performed by it as a
Lender, (v) agrees that its payment instructions and notice instructions
are as set forth in the attachment to Schedule 1, (vi) confirms that none
of the funds, monies, assets or other consideration being used to make the
commitment and acceptance hereunder are "plan assets" as defined under
ERISA and that its rights, benefits and interests in and under the Loan
Documents will not be "plan assets" under ERISA, [and (vii) attaches the
forms prescribed by the Internal Revenue Service of the United States
certifying that the Accepting Lender is entitled to receive payments under
the Loan Documents without deduction or withholding of any United States
federal income taxes].*
*Paragraph 2 to be inserted only if the Accepting Lender
is not already a party to the Credit Agreement prior to the Increase Date,
and subparagraph 2(vii) to be inserted only if such Accepting Lender is not
incorporated under the laws of the United States, or a state thereof.]
3. REPRESENTATION OF BORROWER. The Borrower hereby represents and
warrants that as of the date hereof and as of the Increase Date, no event or
condition shall have occurred and then be continuing which constitutes a
Default or Unmatured Default.
4. GOVERNING LAW. This Commitment and Acceptance shall be governed
by the internal law, and not the law of conflicts, of the State of Illinois.
5. NOTICES. For the purpose of notices to be given under the Credit
Agreement, the address of the Accepting Lender (until notice of a change is
delivered) shall be the address set forth in Schedule 1.
<PAGE> 153
IN WITNESS WHEREOF, the parties hereto have executed this
Assignment Agreement by their duly authorized officers as of the date first
above written.
BORROWER:
U.S. HOME CORPORATION
By:
Name:
Title:
AGENT:
[NAME OF AGENT],
as Agent
By:
Name:
Title:
ACCEPTING LENDER:
[NAME OF ACCEPTING LENDER]
By:
Name:
Title:
<PAGE> 154
SCHEDULE 1
to Commitment and Acceptance
1. Attach Accepting Lender's Administrative Information Sheet,
which must include its payment instructions and notice
address.
<PAGE> 155
SCHEDULE I-A
GUARANTORS
CANTERBURY CORPORATION
COUNTRYPLACE GOLF COURSE, INC.
E.M.J.V. CORP.
HOMECRAFT CORPORATION
IMPERIAL HOMES CORPORATION
LODGE HOLDINGS CORP.
OCEANPOINTE DEVELOPMENT CORPORATION
ORRIN THOMPSON CONSTRUCTION COMPANY
ORRIN THOMPSON HOMES CORP.
PAPARONE CONSTRUCTION COMPANY
PRAIRIE LAKE CORPORATION
RUTTENBERG HOMES, INC. (Florida)
RUTTENBERG HOMES, INC. (Texas)
STONEY CORPORATION
USH CAPITAL CORPORATION
USH EQUITY CORPORATION
USH (WEST LAKE), INC.
U.S. HOME CORPORATION OF NEW YORK
U.S. HOME OF ARIZONA CONSTRUCTION CO.
U.S. HOME OF COLORADO REAL ESTATE, INC.
U.S. HOME REALTY CORPORATION
U.S. HOME REALTY, INC. (Maryland)
U.S. HOME REALTY, INC. (Texas)
U.S. HOME AND DEVELOPMENT CORPORATION
U.S.H. CORPORATION OF NEW YORK
U.S.H. LOS PRADOS, INC.
<PAGE> 156
SCHEDULE I-B
NON-BORROWING SUBSIDIARIES
U.S. HOME MORTGAGE CORPORATION
C.M. CORP.
USH II CORPORATION
USHAC, INC.
FIDELITY GUARANTY AND ACCEPTANCE
CORPORATION
U.S. HOME ACCEPTANCE CORPORATION
U.S. INSURORS, INC.
SAN FELIPE INDEMNITY CO., LTD.
U.S.H. INDEMNITY CO., LTD.
TEXAS-WIDE GENERAL AGENCY, INC.
<PAGE> 157
SCHEDULE 2.20
Fees Payable Pursuant
to Section 2.20(b)
Lender Fee
The First National Bank of Chicago 0.0011667
Credit Lyonnais New York Branch 0.0011667
Guaranty Federal Bank, F.S.B. 0.0011667
Bank One, Arizona, NA 0.0008333
Comerica Bank 0.0005
<PAGE> 158
EXHIBIT 10.2
FOURTH AMENDMENT TO
FIRST AMENDED AND RESTATED WAREHOUSING CREDIT
AND SECURITY AGREEMENT
THIS FOURTH AMENDMENT TO FIRST AMENDED AND RESTATED WAREHOUSING CREDIT
AND SECURITY AGREEMENT (this "Amendment") is entered into as of this 25th
day of June 1997, by and between U.S. HOME MORTGAGE CORPORATION, a Florida
corporation (the "Company") and RESIDENTIAL FUNDING CORPORATION, a Delaware
corporation (the "Lender").
WHEREAS, the Company and the Lender have entered into a single family
revolving warehouse facility with a present Commitment Amount of Forty-Five
Million Dollars ($45,000,000), to finance the origination and acquisition
of Mortgage Loans as evidenced by a Second Amended and Restated Warehousing
Promissory Note in the principal sum of Fifty-Five Million Dollars
($55,000,000), dated as of January 2, 1997, a Second Amended and Restated
Sublimit Promissory Note in the principal sum of Fifty-Five Million Dollars
($55,000,000), dated as of January 2, 1997 (the "Notes"), and by a First
Amended and Restated Warehousing Credit and Security Agreement dated as of
August 31, 1995, as the same may have been amended or supplemented (the
"Agreement"); and
WHEREAS, the Company has requested the Lender to increase the
Commitment Amount, to amend certain terms of the Agreement,and the Lender
has agreed to such increase and amendment subject to the terms and
conditions of this Amendment.
NOW, THEREFORE, for and in consideration of the foregoing and of the
mutual covenants, agreements and conditions hereinafter set forth and for
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
1. All capitalized terms used herein and not otherwise defined shall
have their respective meanings set forth in the Agreement.
2. The effective date ("Effective Date") of this Amendment shall be
6/27/97 the date on which the Company has complied with all the terms and
conditions of this Amendment.
3. Section 1.1 of the Agreement is hereby amended to delete the
definitions of "Commitment Amount" and "Warehousing Promissory Note" in
their entirety and to substitute the following in lieu thereof:
"Commitment Amount" means Sixty-Five Million Dollars
($65,000,000).
<PAGE> 159
"Warehousing Promissory Note" means the promissory note
evidencing the Company's Obligations with respect to all Advances.
4. The definition of "Sublimit Promissory Note" in Section
1.1 of the Agreement shall be deleted in its entirety.
5. Section 2.3 of the Agreement shall be deleted in its
entirety and the following shall be substituted in lieu thereof:
2.3 Note. The Company's Obligations shall be evidenced by the
Third Amended and Restated Warehousing Promissory Note (the "Note") of
the Company substantially in the form of Exhibit A-1. The terms
"Warehousing Promissory Note", "Note" or "Notes" shall include such
Note and all extensions, renewals and modifications of such Note and
all substitutions therefor. All terms and provisions of the Note are
hereby incorporated herein.
6. Exhibit A-1 to the Agreement is deleted in its entirety and Exhibit
A-1 attached to this Amendment is substituted in lieu thereof. The Second
Amended and Restated Warehousing Promissory Note is amended and restated in
its entirety as set forth in the Third Amended and Restated Warehousing
Promissory Note, in the form of Exhibit A-1 attached to this Amendment. All
references in this Amendment and in the Agreement to the Second Amended and
Restated Warehousing Promissory Note shall be deemed to refer to the Third
Amended and Restated Warehousing Promissory Note delivered in connection
with this Amendment.
7. Upon execution and delivery of this Amendment, all Obligations owed
by the Company under the Second Amended and Restated Sublimit Promissory
Note, dated as of January 2, 1997, (including, without limitation, the
unpaid principal thereunder, interest accrued thereon and fees accrued
under the Agreement, whether or not yet due and owing) as of the date
hereof, shall be owed under the Third Amended and Restated Warehousing
Promissory Note which shall be deemed to replace the Second Amended and
Restated Sublimit Promissory Note.
8. The Company shall deliver to the Lender (a) an executed original of
this Amendment; (b) an executed original of the Third Amended and Restated
Warehousing Promissory Note; (c) a Certificate of Secretary with Corporate
Resolutions; and (d) a Two Hundred
Fifty Dollar ($250) document production fee.
9. The Company represents, warrants and agrees that (a) there exists
no Default or Event of Default under the Loan Documents, (b) the Loan
Documents continue to be the legal, valid and binding agreements and
obligations of the Company enforceable in accordance with their terms, as
modified herein, (c) the Lender is not in default under any of the Loan
Documents and the Company has no offset or defense to its performance or
obligations under any of the Loan Documents, (d) the representations
contained in the Loan Documents remain true and accurate in all respects,
and (e) there has been no material adverse change in the financial
condition of the Company from the date of the Agreement to the date of this
Amendment.
<PAGE> 160
10. Except as hereby expressly modified, the Agreement shall otherwise
be unchanged and shall remain in full force and effect, and the Company
ratifies and reaffirms all of its obligations thereunder.
11. This Amendment may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which
when so executed and delivered shall be an original, but all of which shall
together constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and the Lender have caused this
Amendment to be duly executed on their behalf by their duly authorized
officers as of the day and year above written.
U.S. HOME MORTGAGE CORPORATION
By: /s/ Thomas A. Napoli
--------------------------
Thomas A. Napoli
Its: Vice President
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
By: /s/ Donna A. West
-------------------------
Donna A. West
Its: Vice President
STATE OF Texas )
) ss
COUNTY OF Harris)
On June 26 , 1997, before me, a Notary Public, personally appeared
Thomas A Napoli , the Vice President of U.S. HOME MORTGAGE CORPORATION,
a Florida corporation, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person whose name is subscribed
to the within instrument and acknowledged to me that he/she executed the
same in his/her authorized capacity, and that by his/her signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal.
/s/ Brenda Grable
------------------
Brenda Grable
Notary Public
(SEAL) My Commission Expires: 7-1-97
<PAGE> 161
STATE OF Florida )
) ss
COUNTY OF Broward )
On June 26, 1997, before me, a Notary Public, personally appeared
Donna A. West, the Director of RESIDENTIAL FUNDING CORPORATION, a
Delaware corporation, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/she
executed the same in his/her authorized capacity, and that by his/her
signature on the instrument the person, or the entity upon behalf of
which the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ Marsha Grabin
-------------------
Marsha Grabin
Notary Public
(SEAL) My Commission Expires: 9-15-98
<PAGE> 162
EXHIBIT A-1
THIRD AMENDED AND RESTATED WAREHOUSING PROMISSORY NOTE
$65,000,000 Date: June 25, 1997
FOR VALUE RECEIVED, the undersigned, U.S. HOME MORTGAGE CORPORATION, a
Florida corporation, (herein called the "Company"), hereby promises to pay
to the order of RESIDENTIAL FUNDING CORPORATION, a Delaware corporation
(the "Lender" or, together with its successors and assigns, the "Holder")
whose principal place of business is 8400 Normandale Lake Blvd., Suite 600,
Minneapolis, Minnesota 55437, or at such other place as the Holder may
designate from time to time, the principal sum of Sixty-Five Million
Dollars ($65,000,000) or so much thereof as may be outstanding from time to
time pursuant to the First Amended and Restated Warehousing Credit and
Security Agreement described below, and to pay interest on said principal
sum or such part thereof as shall remain unpaid from time to time, from the
date of each Advance until repaid in full, and all other fees and charges
due under the Agreement, at the rate and at the times set forth in the
Agreement. All payments hereunder shall be made in lawful money of the
United States and in immediately available funds.
This Note is given to evidence an actual warehouse facility in the
above amount and is the Warehousing Promissory Note referred to in that
certain First Amended and Restated Warehousing Credit and Security
Agreement (the "Agreement") dated August 31, 1995, between the Company and
the Lender, as the same may be amended or supplemented from time to time,
and is entitled to the benefits thereof. Reference is hereby made to the
Agreement (which is incorporated herein by reference as fully and with the
same effect as if set forth herein at length) for a description of the
Collateral, a statement of the covenants and agreements, a statement of the
rights and remedies and securities afforded thereby and other matters
contained therein. Capitalized terms used herein, unless otherwise defined
herein, shall have the meanings given them in the Agreement.
This Note is given in replacement for, and not in satisfaction of,
that certain Second Amended and Restated Warehousing Promissory Note dated
January 2, 1997, and the Second Amended and Restated Sublimit Promissory
Note dated January 2, 1997, and issued by the Company to evidence its
Obligations under the Agreement (the "Existing Note"). All amounts owed by
the Company under the Existing Note (including, without limitation, the
unpaid principal thereunder, interest accrued thereon and fees accrued
under the Agreement, whether or not yet due and owing) as of the date
hereof, shall be owed hereunder.
This Note may be prepaid in whole or in part at any time without
premium or penalty.
<PAGE> 163
Should this Note be placed in the hands of attorneys for collection,
the Company agrees to pay, in addition to principal and interest, fees and
charges due under the Agreement, any and all costs of collecting this Note,
including reasonable attorneys' fees and expenses.
The Company hereby waives demand, notice, protest and presentment.
This Note shall be construed and enforced in accordance with the laws
of the State of Minnesota, without reference to its principles of conflicts
of law.
IN WITNESS WHEREOF, the Company has executed this Note as of the day
and year first above written.
U.S. HOME MORTGAGE CORPORATION
By: /s/ Thomas A. Napoli
---------------------------
Thomas A. Napoli
Its: Vice President
STATE OF Texas )
) ss
COUNTY OF Harris )
On June 26, 1997, before me, a Notary Public, Thomas A. Napoli
personally appeared, the Vice Presient of U.S. HOME MORTGAGE CORPORATION,
a Florida corporation, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person whose name subscribed
to the within instrument and acknowledged to me that he/she executed
the same in his/her authorized capacity, and that by his/her signature
on the instrument the person, or the entity upon behalf of which the
person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ Brenda Grable
-------------------
Brenda Grable
Notary Public
(SEAL) My Commission Expires: 07-01-97
<PAGE> 164
EXHIBIT 11
(Unaudited)
<TABLE>
<CAPTION>
U.S. HOME CORPORATION AND SUBSIDIARIES
COMPUTATION OF INCOME PER COMMON SHARE
(Dollars in Thousands, Except Per Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ -----------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
Income Per Common And Common
Equivalent Share -
<S> <C> <C> <C> <C>
Net income $ 11,033 $ 10,050 $ 21,176 $ 19,369
=========== =========== ========== ===========
Weighted average common shares
outstanding 11,557,650 11,588,063 11,574,489 11,582,034
Effect of assumed exercise of
dilutive stock options and warrants 499,434 421,863 523,905 485,398
---------- ----------- ---------- -----------
Total common and common equivalent
shares 12,057,084 12,009,926 12,098,394 12,067,432
=========== ========== =========== ===========
Income per common and common
equivalent share $ .92 $ .84 $ 1.75 $ 1.61
=========== =========== =========== ===========
</TABLE>
<PAGE> 165
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- ------------------------
1997 1996 1997 1996
------------ ----------- ------------ -----------
Income Per Common Share, Assuming
Full Dilution -
<S> <C> <C> <C> <C>
Net income $ 11,033 $ 10,050 $ 21,176 $ 19,369
Add interest applicable to 4.875%
convertible subordinated debentures,
net of income tax effect 654 614 1,309 1,227
----------- ----------- ----------- -----------
Income per common share,
assuming full dilution $ 11,687 $ 10,664 $ 22,485 $ 20,596
=========== =========== =========== ===========
Total common and common equivalent
shares 12,057,084 12,009,926 12,098,394 12,067,432
Assumed additional common shares
from exercise of dilutive stock
options and warrants resulting from
use of market price of common stock
at end of period 57,487 - 32,631 -
Assumed conversion of 4.875%
convertible subordinated debentures
at $35.50 per share at date of
issuance 2,253,521 2,253,521 2,253,521 2,253,521
----------- ----------- ----------- -----------
Total common shares, assuming full
dilution 14,368,092 14,263,447 14,384,546 14,320,953
=========== =========== =========== ===========
Income per common share,
assuming full dilution $ .81 $ .75 $ 1.56 $ 1.44
=========== =========== =========== ===========
</TABLE>
Note: See Note 5 of Notes to Consolidated Condensed Financial Statements.
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule Contains Summary Financial Information Extracted From The
Consolidated Condensed Financial Statements As Of June 30, 1997 And For
The Six Months Then Ended And Is Qualified In Its Entirety By Reference
To Such Financial Statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 22,581
<SECURITIES> 0
<RECEIVABLES> 132,875
<ALLOWANCES> 0
<INVENTORY> 732,892
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,029,071
<CURRENT-LIABILITIES> 0
<BONDS> 373,851
116
0
<COMMON> 0
<OTHER-SE> 391,420
<TOTAL-LIABILITY-AND-EQUITY> 1,029,071
<SALES> 0
<TOTAL-REVENUES> 656,574
<CGS> 531,221
<TOTAL-COSTS> 605,516
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,445
<INCOME-PRETAX> 33,613
<INCOME-TAX> 12,437
<INCOME-CONTINUING> 21,176
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,176
<EPS-PRIMARY> 1.75
<EPS-DILUTED> 1.56
</TABLE>
