FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 12, 1997
CALTON, INC.
(Exact name of registrant as specified in its charter)
New Jersey 1-8846 22-2433361
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification Number)
500 Craig Road
Manalapan, New Jersey 07726
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (732) 780-1800
Item 5. Other Events
On June 12, 1997, Calton, Inc. ("Calton" or the "Company") announced that it
had obtained a new $45 million secured revolving credit facility (the "New
Facility") from BankBoston, N.A. ("the Lender"). The New Facility replaces, and
was used to repay, all amounts outstanding under the Company's prior revolving
credit facility with a group of financial institutions. The initial term of the
New Facility expires in June 2000, unless extended pursuant to the terms of the
agreement.
Borrowings under the New Facility bear interest, at the Company's option, at
either (i) the Lender's prime rate plus 1% or (ii) a Eurodollar rate (based
upon LIBOR) plus 3.5%. Subject to "borrowing base" limitations, the Company may
borrow up to $45 million during the term of the New Facility. The Lender's
commitment includes an agreement to issue, at the Company's request, up to $5
million of letters of credit (which will be applied against borrowing
availability). The New Facility permits up to $10 million of non-recourse
purchase money financing from other sources.
The New Facility contains certain financial and operating covenants including,
among others, covenants that require the Company to maintain a specified level
of tangible net worth and certain debt service and interest coverage ratios.
The Company will be required to obtain the consent of the Lender for purchases
of land having a single takedown price in excess of $3,000,000, except
purchases pursuant to existing contracts and option arrangements. In addition,
the New Facility limits the amount of land inventory which may be held by the
Company and the Company's ability to incur certain additional indebtedness,
make certain investments, acquire certain assets, dispose of assets and enter
into merger and acquisition transactions without Lender approval.
Calton's primary operating subsidiaries, Calton Homes, Inc. and Calton Homes of
Florida, Inc. (collectively, the "Borrowers"), are the primary obligors under
the New Facility. Calton and certain of its subsidiaries have guaranteed the
obligations of the Borrowers under the New Facility. Borrowings under the New
Facility are secured by a lien upon substantially all of the assets of the
Borrowers and a pledge of the Borrowers' outstanding stock and the stock of
certain of their subsidiaries.
As a component of the consideration to enter into the New Facility, Calton
issued the Lender a warrant (the "Warrant") to purchase 1,000,000 shares of
Calton Common Stock at a price of $.50 per share. The Warrant, which is
exercisable only in whole, becomes exercisable in January 1999 and expires in
June 2004. If the Lender provides notice that it wishes to exercise the
Warrant, Calton may, at its option, repurchase the Warrant at a price based
upon the difference between the then current market price of Calton's Common
Stock and the exercise price of the Warrant. The Lender is entitled to certain
rights to have the shares issuable upon exercise of the Warrant registered for
public sale. The Warrant contains provisions providing for an adjustment in the
exercise price and number of shares issuable upon the exercise of the Warrant
upon the occurrence of certain events, including sales of Calton Common Stock
(other than pursuant to employee stock options) at prices below the exercise
price of the Warrant or the then current market price of Calton's Common Stock.
In addition, certain terms of the Warrant are subject to adjustment if the
Company issues convertible securities, options or other warrants having terms
more favorable to the holder than the Warrant.
Item 7. Financial Statements and Exhibits
The following have been filed as exhibits to this Report on Form 8-K:
(a) Senior Secured Credit Agreement dated as of June 12, 1997 among Calton
Homes, Inc., Calton Homes of Florida, Inc. and BankBoston, N.A.
(b) Warrant to Purchase Common Stock of Calton, Inc. issued to BankBoston,
N.A. dated June 12, 1997.
(c) Registration Rights Agreement dated as of June 12, 1997 between Calton,
Inc. and BankBoston, N.A.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has fully caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Calton, Inc.
(Registration)
By: /s/ Bradley A. Little
Bradley A. Little
Senior Vice President-Finance
of Calton, Inc.
Date: July 1, 1997
SENIOR SECURED
CREDIT AGREEMENT
among
CALTON HOMES, INC. and
CALTON HOMES OF FLORIDA, INC.
and
BANKBOSTON, N.A.
and
OTHER LENDERS WHICH MAY BECOME
PARTIES TO THIS AGREEMENT
and
BANKBOSTON, N.A.
AS AGENT
dated as of
June 12, 1997
TABLE OF CONTENTS
Page
Section 1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Rules of Interpretation. . . . . . . . . . . . 15
Section 2. Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.1. Commitment to Lend and Borrower's Promise
to Pay . . . . . . . . . . . . . . . . . . . . 16
Section 2.2. Termination of Commitment. . . . . . . . . . . 16
Section 2.3. The Revolving Credit Note(s) . . . . . . . . . 17
Section 2.4. Certain Prepayments. . . . . . . . . . . . . . 17
Section 2.5. Advances; Interest Rates . . . . . . . . . . . 17
Section 2.6. Interest . . . . . . . . . . . . . . . . . . . 23
Section 2.7. Interest on Overdue Amounts. . . . . . . . . . 23
Section 2.8. Funds for Loans. . . . . . . . . . . . . . . . 23
Section 2.9. Letters of Credit. . . . . . . . . . . . . . . 24
Section 2.10. Conversion Date and Extensions . . . . . . . . 25
Section 3. FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 3.1. Origination Fee and Additional Fees. . . . . . 25
Section 3.2. Letter of Credit Fees. . . . . . . . . . . . . 25
Section 3.3. Unused Commitment Fee. . . . . . . . . . . . . 26
Section 3.4. Additional Amounts Payable on Account
of Credit Facilities . . . . . . . . . . . . . 26
Section 3.5. Additional Costs and Expenses;
Reserve Requirements . . . . . . . . . . . . . 27
Section 3.6. Yield Maintenance. . . . . . . . . . . . . . . 28
Section 4. PAYMENTS; COMPUTATIONS; AND INTEREST LIMITATION. . . . . . . . 29
Section 4.1. Payments . . . . . . . . . . . . . . . . . . . 29
Section 4.2. Computations . . . . . . . . . . . . . . . . . 29
Section 4.3. Interest Limitation. . . . . . . . . . . . . . 29
Section 5. SECURITY AND DEPOSITORY ACCOUNT. . . . . . . . . . . . . . . . 29
Section 5.1 Blanket Security Interest. . . . . . . . . . . 29
Section 5.2 Pro Rata Security. . . . . . . . . . . . . . . 30
Section 5.3 Depository Account . . . . . . . . . . . . . . 30
Section 6. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 32
Section 6.1. Existence, etc.. . . . . . . . . . . . . . . . 32
Section 6.2. Business Activity; Capitalization. . . . . . . 33
Section 6.3. Authority, etc.. . . . . . . . . . . . . . . . 33
Section 6.4. Binding Effect of Documents, etc.. . . . . . . 33
Section 6.5. No Events of Default, etc. . . . . . . . . . . 33
Section 6.6. Chief Executive Office . . . . . . . . . . . . 34
Section 6.7. Financial Statements; Solvency . . . . . . . . 34
Section 6.8. Changes; None Adverse. . . . . . . . . . . . . 34
Section 6.9. Ownership. . . . . . . . . . . . . . . . . . . 34
Section 6.10. Mortgages and Liens. . . . . . . . . . . . . . 35
Section 6.11. Intellectual Property. . . . . . . . . . . . . 35
Section 6.12. Indebtedness . . . . . . . . . . . . . . . . . 35
Section 6.13. Litigation . . . . . . . . . . . . . . . . . . 35
Section 6.14. No Default . . . . . . . . . . . . . . . . . . 35
Section 6.15. Taxes. . . . . . . . . . . . . . . . . . . . . 35
Section 6.16. Compliance of Properties with Law. . . . . . . 36
Section 6.17. ERISA Compliance; Severance Obligations. . . . 36
Section 6.18. Other Representations. . . . . . . . . . . . . 37
Section 6.19. Disclosure . . . . . . . . . . . . . . . . . . 37
Section 6.20. Loans as Senior Indebtedness . . . . . . . . . 37
Section 6.21. Holding Company and Investment Company Acts. . 37
Section 6.22. Regulations U and X. . . . . . . . . . . . . . 37
Section 6.23. Fiscal Year. . . . . . . . . . . . . . . . . . 38
Section 6.24. Compliance With Certain Environmental Laws
and Laws Pertaining to Land Sales. . . . . . . 38
Section 6.25. Insurance. . . . . . . . . . . . . . . . . . . 39
Section 6.26. Collateral . . . . . . . . . . . . . . . . . . 40
Section 6.27. Existing Options . . . . . . . . . . . . . . . 40
Section 7. CONDITIONS and EFFECTIVENESS . . . . . . . . . . . . . . . . . 40
Section 7.1. Loan Documents, etc. . . . . . . . . . . . . . 40
Section 7.2. Legality of Transactions . . . . . . . . . . . 40
Section 7.3. Representations and Warranties . . . . . . . . 41
Section 7.4. Performance, etc.. . . . . . . . . . . . . . . 41
Section 7.5. Certified Copies of Certain Documents. . . . . 41
Section 7.6. Proof of Action by Borrower. . . . . . . . . . 41
Section 7.7. Incumbency Certificate . . . . . . . . . . . . 41
Section 7.8. Proceedings and Documents. . . . . . . . . . . 41
Section 7.9. Fees . . . . . . . . . . . . . . . . . . . . . 42
Section 7.10. Legal Opinions . . . . . . . . . . . . . . . . 42
Section 7.11. Borrowing Base Report. . . . . . . . . . . . . 42
Section 7.12. Evidence of Insurance. . . . . . . . . . . . . 42
Section 7.13. Environmental Reports. . . . . . . . . . . . . 42
Section 7.14. Mortgages. . . . . . . . . . . . . . . . . . . 42
Section 7.15. Loan Documents . . . . . . . . . . . . . . . . 43
Section 7.16. Title Insurance. . . . . . . . . . . . . . . . 43
Section 7.17 Interest Rate Protection . . . . . . . . . . . 43
Section 7.18. Existing Senior Indebtedness Documents . . . . 43
Section 7.19 Warrant. . . . . . . . . . . . . . . . . . . . 43
Section 8. CONDITIONS TO SUBSEQUENT LOAN ADVANCES . . . . . . . . . . . . 43
Section 8.1. Legality of Transactions . . . . . . . . . . . 43
Section 8.2. Representations and Warranties . . . . . . . . 44
Section 8.3. Performance, etc.. . . . . . . . . . . . . . . 44
Section 8.4. Proceedings and Documents. . . . . . . . . . . 44
Section 8.5 Payment of Fees. . . . . . . . . . . . . . . . 44
Section 9. AFFIRMATIVE COVENANTS OF THE BORROWER. . . . . . . . . . . . . 44
Section 9.1. Punctual Payment . . . . . . . . . . . . . . . 44
Section 9.2. Legal Existence, Etc.. . . . . . . . . . . . . 45
Section 9.3. Reserves . . . . . . . . . . . . . . . . . . . 45
Section 9.4. Change of Corporate Name . . . . . . . . . . . 45
Section 9.5. Financial Statements and Other Reports . . . . 45
Section 9.6. Use of Loan Proceeds . . . . . . . . . . . . . 47
Section 9.7. Maintenance and Alterations. . . . . . . . . . 47
Section 9.8. Certain Environmental Matters. . . . . . . . . 48
Section 9.9. Notice of Litigation and Judgment. . . . . . . 48
Section 9.10. Notice of Defaults . . . . . . . . . . . . . . 48
Section 9.11. Books and Records. . . . . . . . . . . . . . . 48
Section 9.12. Insurance. . . . . . . . . . . . . . . . . . . 48
Section 9.13. Taxes and Mechanic's Liens . . . . . . . . . . 49
Section 9.14. Conduct of Business. . . . . . . . . . . . . . 50
Section 9.15. Compliance with Law. . . . . . . . . . . . . . 50
Section 9.16. Access . . . . . . . . . . . . . . . . . . . . 50
Section 9.17. Further Assurances . . . . . . . . . . . . . . 50
Section 9.18. Material Adverse Changes . . . . . . . . . . . 50
Section 9.19. Guaranty from Future Subsidiaries. . . . . . . 50
Section 10. NEGATIVE COVENANTS OF THE BORROWER . . . . . . . . . . . . . . 51
Section 10.1. Investments. . . . . . . . . . . . . . . . . . 51
Section 10.2. Security Interests and Liens . . . . . . . . . 51
Section 10.3. Indebtedness . . . . . . . . . . . . . . . . . 52
Section 10.4. Distributions. . . . . . . . . . . . . . . . . 53
Section 10.5. Maximum Commitment Amount. . . . . . . . . . . 53
Section 10.6. Consolidation and Dissolution. . . . . . . . . 53
Section 10.7. Acquisition of Assets. . . . . . . . . . . . . 53
Section 10.8. Real Estate Acquisitions . . . . . . . . . . . 53
Section 10.9. Disposition of Assets. . . . . . . . . . . . . 54
Section 10.10. Sale and Leaseback . . . . . . . . . . . . . . 54
Section 10.11. Transactions with Affiliated Persons . . . . . 55
Section 10.12. ERISA Compliance . . . . . . . . . . . . . . . 55
Section 10.13. Existing Options and New Options . . . . . . . 55
Section 10.14. Interest Rate Protection . . . . . . . . . . . 55
Section 10.15. Limitations on Borrowing . . . . . . . . . . . 55
Section 11. FINANCIAL COVENANTS OF THE BORROWER. . . . . . . . . . . . . . 55
Section 11.1. Minimum Tangible Net Worth . . . . . . . . . . 55
Section 11.2. Total Liabilities to Tangible
Net Worth Ratio. . . . . . . . . . . . . . . . 56
Section 11.3. Debt Service Coverage. . . . . . . . . . . . . 56
Section 11.4. Appraised Value. . . . . . . . . . . . . . . . 56
Section 11.5. Inventory. . . . . . . . . . . . . . . . . . . 56
Section 11.6 Interest Coverage. . . . . . . . . . . . . . . 57
Section 12. EVENTS OF DEFAULT; ACCELERATION; REMEDIES. . . . . . . . . . . 57
Section 12.1. Events of Default; Acceleration. . . . . . . . 57
Section 12.2. Remedies . . . . . . . . . . . . . . . . . . . 59
Section 12.3. Advances . . . . . . . . . . . . . . . . . . . 59
Section 12.4. Environmental Audit. . . . . . . . . . . . . . 59
Section 12.5. Proceeds . . . . . . . . . . . . . . . . . . . 60
Section 13. SETOFF . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 14. EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 15. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . 61
Section 16. SURVIVAL OF COVENANTS ETC. . . . . . . . . . . . . . . . . . . 62
Section 17. THE AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 17.1. Authorization. . . . . . . . . . . . . . . . . 62
Section 17.2. Employees and Agents . . . . . . . . . . . . . 62
Section 17.3 No Liability . . . . . . . . . . . . . . . . . 63
Section 17.4. No Representations . . . . . . . . . . . . . . 63
Section 17.5. Payments . . . . . . . . . . . . . . . . . . . 63
Section 17.6. Holders of Notes . . . . . . . . . . . . . . . 64
Section 17.7. Indemnity. . . . . . . . . . . . . . . . . . . 64
Section 17.8. Agent as Lender. . . . . . . . . . . . . . . . 64
Section 17.9. Resignation. . . . . . . . . . . . . . . . . . 64
Section 17.10. Notification of Waivers, Amendments,
Defaults and Events of Default,
Litigation and Judgment. . . . . . . . . . . . 65
Section 17.11. Duties in the Case of Enforcement. . . . . . . 65
Section 17.12. Bankruptcy Proceedings . . . . . . . . . . . . 65
Section 17.13. Notices, Information and Exercise of
Rights of Inspection . . . . . . . . . . . . . 66
Section 18. ASSIGNMENT AND PARTICIPATION . . . . . . . . . . . . . . . . . 66
Section 18.1. Conditions to Assignment by Lenders. . . . . . 66
Section 18.2. Certain Representations and Warranties;
Limitations; Covenants . . . . . . . . . . . . 66
Section 18.3. Register . . . . . . . . . . . . . . . . . . . 67
Section 18.4. New Notes. . . . . . . . . . . . . . . . . . . 67
Section 18.5. Pledge by Lender . . . . . . . . . . . . . . . 68
Section 18.6. No Assignment by Borrower. . . . . . . . . . . 68
Section 18.7. Disclosure . . . . . . . . . . . . . . . . . . 68
Section 18.8. Withholding Tax. . . . . . . . . . . . . . . . 68
Section 19. NOTICES, ETC.. . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 20. CERTAIN RIGHTS OF AGENT. . . . . . . . . . . . . . . . . . . . 70
Section 20.1. Right to Retain the Construction Inspector . . 70
Section 20.2. Right to Obtain Appraisals . . . . . . . . . . 70
Section 21. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 22. ENTIRE AGREEMENT, ETC. . . . . . . . . . . . . . . . . . . . . 71
Section 23. CONSENTS, AMENDMENTS, WAIVERS, ETC.. . . . . . . . . . . . . . 71
Section 24. RELEASE OF SECURITY. . . . . . . . . . . . . . . . . . . . . . 72
Section 25. CONSENT TO SERVICE . . . . . . . . . . . . . . . . . . . . . . 72
Section 26. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 27. WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 28. RIGHTS OF THIRD PARTIES. . . . . . . . . . . . . . . . . . . . 73
Section 29. RELATIONSHIP . . . . . . . . . . . . . . . . . . . . . . . . . 73
SENIOR SECURED CREDIT AGREEMENT
This SENIOR SECURED CREDIT AGREEMENT is made as of the 12th day of
June, 1997, by and among (i) CALTON HOMES, INC., a New Jersey corporation, and
CALTON HOMES OF FLORIDA, INC., a Florida corporation (collectively, "Borrower),
(ii) BANKBOSTON, N.A., a national banking association having its principal
place of business at 100 Federal Street, Boston, Massachusetts 02110, (iii) the
other lending institutions which are listed on Schedule 1 and other lending
institutions which may become parties hereto pursuant to Section 18 (BankBoston
and such lending institutions are collectively referred to herein as the
"Lenders") and (iv) BANKBOSTON, N.A., as Agent for itself and the other Lenders
(the "Agent").
R E C I T A L S
A. The Agent and the Lenders are committing to advance credit
to the Borrower of an amount up to $45,000,000.00 pursuant to the terms of this
Agreement, which advance of credit is evidenced by that certain revolving
credit promissory note in the amount of $45,000,000.00 (the "Revolving Credit
Note").
B. BankBoston may in the future enter into certain agreements
with other banking institutions whereby BankBoston will assign to such other
banking institutions certain portions of the Loan (as hereinafter defined) made
hereunder.
Section 1. DEFINITIONS. The following terms shall have the
meanings set forth in this Section 1 or elsewhere in the provisions of this
Agreement referred to below:
Accounts Payable. With respect to any Person, all obligations of
such Person for the payment of goods sold or leased or for services rendered to
such Person (including, without limitation, all accounts payable of such
Person), as determined in accordance with Generally Accepted Accounting
Principles.
Advance. Any disbursement of the proceeds of the Loan made or to
be made by the Lenders pursuant to the terms of this Agreement.
Agent. BankBoston, N.A. acting as agent for the Lenders.
Agent's Head Office. The Agent's head office located at 100
Federal Street, Boston, Massachusetts 02110, or at such other location as the
Agent may designate from time to time.
Agreement. This Senior Secured Credit Agreement, including the
Schedules and Exhibits hereto, as originally executed, or if this Agreement is
amended, varied or supplemented from time to time, as so amended, varied or
supplemented.
Assignment and Acceptance. See Section 18.
Balance Sheet Date. See Section 6.7(a).
BankBoston. BankBoston, N.A., a national banking association, in
its individual capacity.
Base Rate. The higher of (a) the annual rate of interest announced
from time to time by BankBoston at its head office in Boston, Massachusetts as
its "base rate" and (b) one-half of one percent (0.5 %) plus the overnight
federal funds effective rate, as published by the Board of Governors of the
Federal Reserve System, as in effect from time to time.
Base Rate Loan. All or any portion of the Loan bearing interest
calculated by reference to the Base Rate.
Base Rate Margin. See Section 2.6(a).
Base Rate Revolving Credit Advance. An Advance which the Borrower
requests to be made as a Base Rate Revolving Credit Advance or which is
reborrowed as a Base Rate Revolving Credit Advance, in accordance with the
provisions of Section 2.5(c).
Borrower. Calton Homes, Inc., a New Jersey corporation, and Calton
Homes of Florida, Inc., a Florida corporation, jointly and severally,
singularly and collectively.
Borrower Subsidiary. The Subsidiaries of the Borrower being more
particularly set forth on Schedule 1.2.
Borrower Subsidiary Security Documents. Collectively, certain of
the Loan Documents executed by the Borrower Subsidiaries in favor of the Agent
to secure the Obligations.
Borrowing Base. At any time of determination, the sum of:
1. Cash. One hundred percent (100%) of Unrestricted
Cash and Cash Equivalents.
2. Developed Lots. Seventy percent (70%) of Lot Book
Value. There shall be excluded from this subparagraph 2 Developed Lots that
are included within the Borrowing Base under any other category set forth
below; plus
3. Sold Units. With respect to Units completed or under
construction on Developed Lots for which the Borrower has entered into a
Housing Purchase Contract, ninety-five percent (95%) of the difference between
(x) Unit Costs incurred by the Borrower with respect thereto and (y) the
aggregate amount of all deposits, down payments or earnest money held pursuant
to each such Housing Purchase Contract and available to the Borrower; plus
4. Unsold Units. With respect to Units completed or
under construction on Developed Lots that are not covered by a Housing Purchase
Contract, eighty-five percent (85%) of the Unit Costs incurred by the Borrower
with respect thereto.
Unsold Units shall be: (i) deemed "under
construction" and included for computation in the Borrowing Base under this
subparagraph 4 (subject to other limitations set forth in this Agreement on
inclusion of items in the Borrowing Base) at such time the Borrower has
commenced construction of the foundation of such Unit; and (ii) excluded from
computation in the Borrowing Base under this subparagraph 4 on and after that
date which is nine (9) months from the date of the completion of the Unsold
Unit (as evidenced by a certificate of occupancy or other evidence of
substantial completion of the Unit) except with respect to model homes
permitted pursuant to Section 11.5 hereof; plus
5. Land Work in Process. With respect to Land Work in
Process, seventy percent (70%) of the: (i) Lot Development Costs of
improvements made by the Borrower to such Developable Land and (ii) the cost of
the Developable Land subject to such improvements; plus
6. Entitled Land. With respect to Commercial Property
and Developable Land not currently under development, forty percent (40%) of
the acquisition cost of such Developable Land and forty percent (40%) of the
book value of such Commercial Property.
Provided, however, that:
a. the cost basis of any Borrowing Base asset
shall be reduced by the amount by which capitalized interest attributable to
such asset included in the Borrowing Base exceeds four percent (4%) of such
cost basis;
b. the cost basis for any Borrowing Base asset
shall not exceed its Net Realizable Value determined in accordance with
Generally Accepted Accounting Principles;
c. Other capitalized costs (other than on-site
project supervision and related on-site costs) such as fixed corporate general
and administrative costs, shall be excluded; and
d. the amount of the Borrowing Base shall be
reduced by the amount that Accounts Payable and accrued inventory costs for
Sold Units and Unsold Units under construction and Land Work in Process exceed
the sum of Unrestricted Cash and Cash Equivalents.
The Borrower shall receive no credit for any amounts under this Borrowing Base
for any of the following:
(1) Real Estate which is subject to any monetary
encumbrance of any nature other than real property taxes not yet due and
payable;
(2) The value of any amenities located on any Real
Estate and which have not been capitalized into Lot Development Costs for
Developed Lots;
(3) The value of any Receivables held by the
Borrower with respect to the sale of any Real Estate; and
(4) Any Unsold Unit in the Project known as
Renaissance in excess of twenty; provided, however, that seventy percent (70%)
of the Lot Book Value attributable to any such Unsold Unit shall be included in
the amount of the Borrowing Base.
Borrowing Base Report. A report with respect to the Borrowing Base
in the form attached hereto as Exhibit "A".
Bulk Sales. Any sale of Developable Land, Developed Lots and/or
Units in a single or related transaction with an aggregate purchase price in
excess of $5,000,000.00.
Business Day. Any day on which banking institutions in Boston,
Massachusetts are open for the transaction of banking business.
Caldarone. Anthony J. Caldarone, an individual resident of the
State of Florida.
CERCLA. The Comprehensive Environmental Response, Compensation and
Liability Act of 1980.
Change of Control. Any action resulting in either (i) Caldarone
and Joyce Caldarone, collectively, holding less than 4,275,618 shares of the
outstanding voting stock of Calton, Inc., provided, however, that
notwithstanding the foregoing, Caldarone and Joyce Caldarone, collectively, may
hold less than 4,275,618 shares if (a) such shares have been transferred to the
children of Caldarone and Joyce Caldarone and (b) Caldarone and Joyce Caldarone
at all times retain voting power of such shares; or (ii) Caldarone failing to
serve as the Chairman of the Board of Directors of Calton, Inc. in
substantially the same capacity and having substantially the same
responsibilities as exist on the date hereof.
Code. The Internal Revenue Code of 1986, as amended and in effect
from time to time. To the extent that reference is made to any particular
Section of the Code, such reference shall be, where the context so admits, to
any corresponding provisions of any succeeding law.
Collateral. See Section 5.1.
Collateral Documents. All installment sales contracts, the
Protected Interest Rate Agreement, contracts for deeds, promissory notes,
mortgages, deeds of trust and other documents, instruments or agreements
(including mortgagee title insurance issued for the benefit of the Borrower or
the Borrower Subsidiaries) and, stock pledge agreements evidencing or securing
the payment of any Receivables together with instruments of assignment and such
other documents as shall from time to time be necessary, in the Agent's
opinion, to fully perfect and enforce the Lenders' rights to Collateral
hereunder.
Commercial Property. That certain real property identified on
Exhibit "D" attached hereto and incorporated herein by this reference.
Commitment. With respect to each Lender, the amount set forth on
Schedule 1 hereto as the amount of such Lender's Commitment to make Advances to
the Borrower, as the same may be reduced from time to time.
Commitment Amount. The sum of the commitments for the Loan by the
Lenders in an amount not to exceed $45,000,000.00.
Commitment Percentage. With respect to each Lender, the percentage
set forth on Schedule 1 hereto as such Lender's percentage of the aggregate
Commitments of all of the Lenders.
Construction Inspector. At the Agent's option, either an officer
or employee of the Agent or a consulting architect, engineer or inspector
appointed by the Agent from time to time.
Conversion Date. The date which is one (1) year prior to the
Maturity Date.
Coopers. Coopers & Lybrand, LLP.
Date of Closing. June 12, 1997.
Default. Any event which but for the giving of notice or the lapse
of time or both would constitute an Event of Default under this Agreement or
under the instrument or agreement of reference.
Designated Accounting Firm. An accounting Firm selected by
Borrower to replace Coopers, which Firm is approved by Agent, or, in the
absence of such approval, designated by the Agent.
Depository Account. The cash collateral account established by the
Borrower at the office of Agent in Boston, Massachusetts, in the name of Calton
Homes, Inc., with Agent, as secured party, into which all cash received by the
Borrower and any Borrower Subsidiary from any source is deposited on a daily
basis.
Developable Land. All land owned by the Borrower or a Borrower
Subsidiary on which Units may be constructed under applicable laws and
regulations and described as "Land for Development" and which is currently
zoned to permit development of Units with all necessary approvals, specifically
excluding, however, (a) Developed Lots, (b) Sold Units, (c) Unsold Units, (d)
Land Work in Process, (e) Commercial Property and (f) any land on which the
Agent determines that development is restricted under federal or state wetlands
protection or other environmental statutes.
Developed Lots. Each of the plotted subdivided lots having
Horizontal Improvements for such lots constructed thereon owned by the Borrower
or a Borrower Subsidiary which, under applicable laws and regulations and
taking into account other factors affecting the possible use of such property,
may be utilized as the site for a Unit, including specifically those lots that
are ready for construction of a Unit and for which a building permit would then
be issued to the Borrower if applied for but excluding (a) Unsold Units, (b)
Sold Units, and (c) Land Work in Process.
Distribution. Any of the following: (a) the payment by any Person
of any distributions or other payments to its shareholders or partners as such;
(b) the declaration or payment of any dividend on or in respect of shares of
any class of capital stock of, or partnership interest in, any Person; (c) the
purchase or other retirement of any shares of any class of capital stock of, or
partnership interest in, any Person, directly or indirectly through a
Subsidiary or otherwise; (d) the return of capital by any Person to its
shareholders or partners as such; (e) any other distribution on or in respect
of any shares of any class of capital stock of, or partnership interest in, any
Person; (f) the purchase of the Warrants pursuant to the terms thereof; or (g)
intercompany distributions from Borrower Subsidiaries to Borrower or between
either of the entities comprising Borrower.
Drawdown Date. The date on which any Advance is made available to
the Borrower pursuant to the provisions hereof.
EBITDA. For any period, on a consolidated basis for the Borrower
and its Subsidiaries, the sum of the amounts for such period of (i) net income,
plus (ii) charges against income for federal, state and local taxes, plus (iii)
Interest Expense, plus (iv) depreciation, plus (v) amortization of deferred
debt expenses and amortization of previously capitalized interest, plus (vi)
unusual or nonrecurring losses (calculated consistently in accordance with past
reporting practices), minus (vii) unusual or nonrecurring gains (calculated
consistently in accordance with past reporting practices).
Eligible Assignee. Any of (a) a commercial bank organized under
the laws of the United States, or any State thereof or the District of
Columbia, and having total assets in excess of $1,000,000,000.00; (b) a savings
and loan association or savings bank organized under the laws of the United
States, or any State thereof or the District of Columbia, and having a net
worth of at least $100,000,000.00, calculated in accordance with Generally
Accepted Accounting Principles; (c) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any
such country, and having total assets in excess of $1,000,000,000.00, provided
that such bank has a branch or agency in the United States and is acting
through a branch or agency located in the country in which it is organized or
another country which is also a member of the OECD; and (d) the central bank of
any country which is a member of the OECD.
Environmental Laws. See Section 6.24(a).
ERISA. The Employee Retirement Income Security Act of 1974, as
amended from time to time.
Eurodollar Advance. An Advance which the Borrower requests to be
made as a Eurodollar Advance or which is reborrowed as a Eurodollar Advance, in
accordance with the provisions of Section 2.5(d) hereof.
Eurodollar Advance Period. For each Eurodollar Advance, each one,
two, or three month period, as selected by the Borrower pursuant to Section
2.5(d) hereof, during which the applicable Eurodollar Rate shall remain
unchanged. Notwithstanding the foregoing, however: (i) any applicable
Eurodollar Advance Period which would otherwise end on a day which is not a
Business Day shall be extended to the next succeeding Business Day, unless such
Business Day falls in another calendar month, in which case such Eurodollar
Advance Period shall end on the preceding Business Day; (ii) any applicable
Eurodollar Advance Period which begins on a day for which there is no
numerically corresponding day in the calendar month during which such
Eurodollar Advance Period is to end shall (subject to clause (i) above) end on
the last day of such calendar month; and (iii) no Eurodollar Advance Period
shall extend beyond the Maturity Date or such earlier date as would interfere
with the repayment obligations of the Borrower under Section 2.1 hereof.
Interest shall be due and payable with respect to any Eurodollar Advance as
provided in Section 2.6(b) hereof.
Eurodollar Basis. A simple per annum interest rate equal to the
quotient of (i) the Eurodollar Rate divided by (ii) one minus the Eurodollar
Reserve Percentage, if any, stated as a decimal. The Eurodollar Basis shall be
rounded upward to the nearest one sixteenth of one percent (1/16%) and, once
determined, shall remain unchanged during the applicable Eurodollar Advance
Period, except for changes to reflect adjustments in the Eurodollar Reserve
Percentage.
Eurodollar Rate. For any Eurodollar Advance Period, the average
(rounded upward to the nearest one sixteenth of one percent (1/16%)) of the
interest rates per annum at which deposits in United States dollars for such
Eurodollar Advance Period are offered to prime banks in the London interbank
market as reported on Telerate Screen page 3750 at approximately 11:00 a.m.
(Boston time) two (2) Business Days before the first day of such Eurodollar
Advance Period, in an amount approximately equal to the principal amount of,
and for a length of time approximately equal to the Eurodollar Advance Period
for, the Eurodollar Advance sought by the Borrower. If such rate is not so
reported, then such rate as reported by any other internationally recognized
reporting service shall be selected by the Agent or, if no such other service
is available, such rate shall be determined by the Agent based on rate
information furnished to it by two or more banks selected by it which
participate in the market for such deposits.
Eurodollar Reserve Percentage. The percentage which is in effect
from time to time under Regulation D of the Board of Governors of the Federal
Reserve System, as such regulation may be amended from time to time, as the
maximum reserve requirement applicable with respect to Eurocurrency Liabilities
(as that term is defined in Regulation D), whether or not any Lender has any
Eurocurrency Liabilities subject to such reserve requirement at that time. The
Eurodollar Basis for any Eurodollar Advance shall be adjusted as of the
effective date by the same effective basis point change of any change in the
Eurodollar Reserve Percentage.
Event of Default. See Section 12.1.
Existing Credit Agreement. That certain Second Amended and
Restated Loan and Security Agreement dated as of April 10, 1997 among Borrower,
certain related entities, The Chase Manhattan Bank, as Agent, and other lenders
named therein.
Existing Options. See Section 6.27.
Existing Senior Indebtedness. The obligations under the Existing
Credit Agreement.
Existing Senior Indebtedness Documents. All instruments and
documents given to secure or evidence the Existing Senior Indebtedness.
Fair Market Value. The price a willing buyer would pay to a
willing seller in an arm's length transaction with neither party being under a
compulsion to act.
Fee and Expense Agreement. See Section 3.1.
Fees. All fees payable under Section 3 hereof.
FIRREA. Title XI of the Financial Institutions Reform, Recovery,
and Enforcement Act of 1989 (12 U.S.C. 3331 et seq.), as amended from time to
time.
Generally Accepted Accounting Principles. In general, principles
which are (A) consistent with the principles promulgated or adopted by the
Financial Accounting Standards Board and its predecessors (or successor
organizations), and (B) such that certified public accountants would, insofar
as the use of accounting principles is pertinent, be in a position to deliver
an unqualified opinion as to the financial statements in which such principles
have been properly applied; provided that if any changes in Generally Accepted
Accounting Principles with which the independent certified accountants of the
Borrower concur result in a change in the method of calculating of any of the
financial covenants, standards or terms contained in this Agreement, the
Borrower and the Agent agree to amend such provisions to reflect such changes
in Generally Accepted Accounting Principles so that the criteria for evaluating
the financial condition of the Borrower shall be the same after such changes as
if such changes had not been made.
Guarantors. Calton, Inc., a New Jersey corporation, and the
Borrower Subsidiaries.
Guaranty. Those certain Guaranties of Payment and Performance of
even date one by Calton, Inc. and the other by the Borrower Subsidiaries in
favor of the Agent and the Lenders with respect to the Obligations.
Hazardous Substances. See Section 6.24.
Horizontal Improvements. All utilities, including water, sanitary
sewer, storm sewer, storm water management facilities and pump stations located
on real property together with sidewalks, street trees, a dedicated roadway (or
to be dedicated roadway pursuant to recorded plats upon completion of work in
progress) or a private roadway (with all appropriate easements and access
rights of record and sufficient and appropriate for maintenance of such roadway
and access to and from publically dedicated roadways), built in material
compliance with applicable governmental regulations, all over rights-of-way
dedicated to the applicable Governmental Authority (except with respect to
private roadways specified above) and any private roadways otherwise built by
the Borrower in compliance with and permitted under all applicable laws.
Housing Purchase Contract. Any legal, valid, binding and
enforceable written agreement for the sale of individual Units to any bona-fide
unaffiliated purchaser entered into by the Borrower or a Borrower Subsidiary in
the ordinary course of its business with customary terms and conditions and
that provides for a cash down payment of not less than the greater of (i)
$2,000.00 or (ii) that which is customary in the local market.
Indebtedness. All obligations which in accordance with Generally
Accepted Accounting Principles should be classified, upon the obligor's balance
sheet as liabilities or to which reference should be made by the footnotes
thereto (other than contingent liabilities) and, including in any event and
whether or not so classified all of the following: (i) all debt for borrowed
money and similar monetary obligations, whether direct or indirect; (ii) all
liabilities secured by any mortgage, pledge, security interest, lien, charge,
or other encumbrance existing on property owned or acquired subject thereto,
whether or not the liability secured thereby shall have been assumed; and (iii)
all guaranties, endorsements and other contingent obligations whether direct or
indirect in respect of liabilities of any other Person of the type described in
(i) and (ii) hereof, including any obligation to supply funds to or in any
manner to invest in, directly or indirectly, such other Person, to purchase
such liabilities, or to assure the owner of any such liabilities against loss,
through an agreement to purchase goods, supplies, or services for the purpose
of enabling such other Person to make payment of any such liabilities held by
such owner or otherwise, and the obligations to reimburse the issuer of any
letters of credit.
Interest Expense. With respect to any fiscal period, the sum of
(a) all Interest Incurred by Borrower or a Borrower Subsidiary for that fiscal
period to a bona-fide third party lender or seller in connection with borrowed
money or the deferred purchase price of assets that are considered "interest
expense" under Generally Accepted Accounting Principles, plus (b) the portion
of rent paid by Borrower or the Borrower Subsidiaries for that fiscal period
under capital lease obligations that should be treated as interest in
accordance with Financial Accounting Standards Board Statement No. 13, in each
case determined on a consolidated basis in accordance with Generally Accepted
Accounting Principles, consistently applied, net of capitalized interest.
Interest Incurred. For any period, the total interest accrued
(whether paid or not) by Calton, Inc., Borrower and its Subsidiaries (including
the interest component of any capital leases).
Investments. All expenditures made and all liabilities incurred by
any Person (contingently or otherwise) for the acquisition of stock or
Indebtedness of, or for loans, advances, or capital contributions to, or in
respect of any guaranties of Indebtedness (or other commitments as described
under Indebtedness), or obligations in the nature of Indebtedness or securities
of, any other Person.
Land Work in Process. Developable Land not constituting Developed
Lots, Sold Units or Unsold Units for which Horizontal Improvements are
substantially underway (beyond the clearing of land) and consistently pursued
in accordance with good business practices of residential development.
Lenders. BankBoston and the other lending institutions listed on
Schedule 1 hereto and any other Person who becomes an assignee of any rights of
a Lender pursuant to Section 17.
Letter of Credit Fees. See Section 3.2.
Letters of Credit. Any and all letters of credit issued or that
may be issued from time to time by the Agent with respect to certain
undertakings by the Borrower, as further described in Section 2.9 of this
Agreement.
Loan. The loan made or to be made to the Borrower contemplated by
this Agreement.
Loan Documents. Collectively, this Agreement, the Revolving Credit
Note(s), the Guaranty, the Mortgages, the Protected Interest Rate Agreement and
any and all other agreements, instruments or documents now or hereafter
evidencing, securing or relating to the Obligations, as the same may be
modified or amended from time to time.
Lot Book Value. The cost of each Developed Lot, determined in
accordance with Generally Accepted Accounting Principles by allocating the
acquisition cost and Lot Development Costs of the Properties in each Project
among the Properties in the Project regardless of time of ownership.
Lot Development Costs. The amount of actual out-of-pocket costs
incurred by the Borrower or a Borrower Subsidiary in connection with the
development of Developable Land and Developed Lots for which the Borrower, upon
request by the Agent, provides to the Agent invoices, work orders and other
documentation reasonably satisfactory to the Agent and which have otherwise
been properly accounted for by the Borrower in the Borrowing Base Reports
submitted to the Agent in accordance with Section 9.5 hereof, but excluding
therefrom: (i) costs incurred for the construction of Units; and (ii) general
administrative costs of the Borrower and other costs not directly attributable
to design, procurement of necessary permits and approvals, site improvement and
construction of infrastructure on Developable Land and Developed Lots.
Majority Lenders. As of any date, the Lenders holding at least
fifty-one percent (51%) of the Outstanding principal amount of the Notes on
such date; and if no such principal is outstanding, the Lenders whose aggregate
Commitment Percentages total at least fifty-one percent (51%) of the total
aggregate Commitment, in each case including BankBoston in its capacity as a
Lender.
Maturity Date. See Section 2.1.
Maximum Commitment Amount. See Section 10.5.
Maximum Drawing Amount. The maximum aggregate amount from time to
time which the beneficiaries may draw under outstanding Letters of Credit, as
the same may be reduced from time to time pursuant to the terms of the Letters
of Credit.
Maximum Revolver Amount. The Maximum Revolver Amount shall be
equal to the lesser of (i) the Borrowing Base or (ii) the sum of the several
Commitments of the Lenders as shown on Schedule 1 hereto, such sum not to
exceed $45,000,000.00.
Mortgaged Properties. The Properties which are encumbered, in
whole or in part, by the Mortgages.
Mortgages. The deeds of trust and mortgages and security
agreements granted by the Borrower or a Borrower Subsidiary in favor of the
Agent or trustee on behalf of the Agent which secure the Obligations and create
a first in priority security interest on Real Estate in favor of or for the
benefit of the Agent.
Net Income. The net income (or net loss) of the Borrower,
determined in accordance with Generally Accepted Accounting Principles.
Net Worth. The excess of Total Assets over Total Liabilities.
Notes. The Revolving Credit Note(s).
Obligations. All Indebtedness, obligations and liabilities of the
Borrower or a Borrower Subsidiary to any of the Lenders and the Agent,
individually or collectively, existing on the date of this Agreement or arising
hereafter, direct or indirect, joint or several, absolute or contingent,
matured or unmatured, liquidated or unliquidated, secured or unsecured, now or
hereafter owing or incurred, arising under or in connection with this
Agreement, the other Loan Documents or in respect of Loan made or the Letters
of Credit or other instruments at any time evidencing any of the foregoing,
including, without limitation, any obligation to provide any cash collateral
for a Letter of Credit under Section 2.9 hereof, and any obligation to pay
fees, costs, claims and expenses due under Section Section 14 and 15 hereof and
any other fees, costs and expenses due and payable by the Borrower to the
Agent.
Origination Fee. See Section 3.1.
Outstanding. With respect to the Loan, the unpaid principal
thereof as of any date of determination.
Payment Date. The last day of each Eurodollar Advance Period for a
Eurodollar Advance arising with respect to a Eurodollar Advance for a Loan
portion of the Loan.
Pension Plan. See Section 6.17.
Permits. See Section 6.16.
Permitted Indebtedness. See Section 10.3.
Permitted Liens. Mortgages, pledges, security interests and other
liens and encumbrances permitted to exist on the property of the Borrower
pursuant to Section 10.2.
Person. Any individual, corporation, limited liability company,
association, partnership, trust, unincorporated association, business, or other
legal entity, and any government or any governmental agency or political
subdivision thereof.
Pledge Agreement. The Stock Pledge Agreements of even date by the
Borrower and Calton, Inc. in favor of the Agent with respect to all of the
capital stock and other ownership interests of the Borrower and the Borrower
Subsidiaries.
Principal Office of Borrower. 500 Craig Road, Manalapan, New
Jersey 07726-8790.
Proceeds. See Section 5.3.
Project(s). One or more of the residential communities in which
are located Units, Developable Land, Developed Lots or Land Work in Process.
Properties. The land owned by either of the entities comprising
the Borrower or by a Borrower Subsidiary as of even date herewith or during the
term of this Agreement with improvements situated thereon (including, without
limitation, all Developable Land, Developed Lots, Land Work in Process and
Units).
Protected Interest Rate Agreement. See Section 7.17.
RCRA. See Section 6.24.
Real Estate. All real property at any time owned or leased (as
lessee or sub-lessee) by either entity comprising the Borrower or by any
Borrower Subsidiary.
Receivable. Any amount owed to the Borrower or a Borrower
Subsidiary with respect to the sale of Properties or a portion thereof to an
unaffiliated purchaser which is represented by a promissory note, or other debt
instrument in a form approved by the Agent, and is secured by a deed of trust,
mortgage or other security document duly granting a first in priority lien and
security interest in the property sold in a form approved by the Agent.
Reimbursement Agreements. The applications made and agreements
entered into between the Agent and the Borrower, on the Agent's customary form,
relating to the Letters of Credit.
Required Lenders. As of any date, the Lenders holding at least
sixty-six and two-thirds percent (66-2/3%) of the Outstanding on such date; and
if no such principal is outstanding, the Lenders whose aggregate Commitment
Percentages constitute at least sixty-six and two-thirds percent (66-2/3%) of
the total aggregate Commitment, in each case including BankBoston in its
capacity as a Lender.
Revolving Credit Commitment. The obligation of any of the Lenders
to make Advances under the Loan to the Borrower under Section 2.1 of this
Agreement.
Revolving Credit Note(s). The Revolving Credit Note(s) dated of
even date herewith, each made by the Borrower to the order of each of the
Lenders, such notes to be in form set forth on Exhibit "B".
Senior Indebtedness. The indebtedness from time to time
outstanding hereunder (including Letters of Credit issued but undrawn).
Sold Units. Units on Developed Lots for which the Borrower has
entered into a Housing Purchase Contract.
Subsidiary. With respect to any Person, any corporation, limited
liability company, association, trust, or other business entity, a majority (by
number of votes) of the outstanding voting power of which is at the time owned
or controlled directly or indirectly by such Person.
Tangible Net Worth. The consolidated Net Worth of Calton, Inc.
(including the Borrower and the Borrower Subsidiaries) less the net book value
(after deducting reserves applicable thereto) of all of the Borrower's
intangible assets (intangible assets shall be determined in accordance with
Generally Accepted Accounting Principles including (i) goodwill, (ii)
organizational (iii) unamortized debt discount, (iv) patents, trademarks,
tradenames and copyrights, (v) treasury stock, (vi) franchises, licenses and
permits, and (vii) other assets which are deemed intangible assets under
Generally Accepted Accounting Principles).
Title Insurance Company. Chicago Title Insurance Company.
Title Policy. An ALTA standard form title insurance policy(ies)
issued by the Title Insurance Company (with such reinsurance or co-insurance as
the Agent may require, any such reinsurance to be with direct access
endorsements) in a form approved by Agent and in an amount equal to
$45,000,000.00 insuring the priority of the Mortgages and that the Borrower or
the Borrower Subsidiaries, as the case may be, hold marketable fee simple title
to the Mortgaged Property, subject only to the encumbrances permitted by the
Mortgages which shall contain such endorsements and affirmative insurance as
the Agent in its discretion may require, including but not limited to (a)
variable rate of interest endorsement, (b) revolving credit endorsement, (c)
planned unit development endorsement, and (d) environmental lien endorsement.
Total Assets. All assets of the Borrower, Calton, Inc. and the
Borrower Subsidiaries on a consolidated basis.
Total Liabilities. All liabilities of the Borrower, Calton, Inc.
and the Borrower Subsidiaries which are properly accounted for as such in
accordance with Generally Accepted Accounting Principles.
Unit Costs. The Lot Book Value of Developed Lots on which Units
(completed or under construction) are situated plus the amount of actual out of
pocket costs incurred by the Borrower or a Borrower Subsidiary in connection
with the construction of Units for which the Borrower, upon request by the
Agent, provides to the Agent invoices, work orders and other documentation
reasonably satisfactory to the Agent and which have otherwise been properly
accounted for by the Borrower in the Borrowing Base Reports submitted to the
Agent in accordance with Section 9.5 hereof.
Units. The attached and detached single-family residences, whether
completed or under construction, held by the Borrower for sale in the ordinary
course of its business, and in which the rights of ownership and occupancy are
to be sold other than on a time-sharing or periodic basis and which Borrower
has ownership of the Developed Lot.
Unrestricted Cash and Cash Equivalents. Any of the following:
a. Cash money deposited in a bank;
b. Closing proceeds from the sale of a Unit contained in the
closing title company's escrow account or the account of an authorized agent
and to be transferred to the Depository Account pursuant to Section 5.3 hereof;
c. obligations issued or guaranteed as to principal and
interest by the United States of America or its agencies and having a maturity
of not more than one year from the date of acquisition;
d. certificates of deposit, foreign time deposits, bankers
acceptances of bank money market account which have a maturity of not more than
one year from the date of acquisition and are issued by the Agent or any other
bank which is organized under the laws of the United States of America or any
state thereof and has capital and unimpaired surplus of at least
$500,000,000.00 or foreign subsidiaries of such banks;
e. commercial paper or finance company paper which is rated
not less than P-1 or A-1 or their equivalents by Moody's Investor Service, Inc.
or Standard & Poor's Corporation or their successors and has a maturity of not
more than one year from the date of acquisition;
f. repurchase agreements secured by any one or more of the
Investments permitted by paragraphs (c), (d) or (e) above; and
g. mutual funds whose underlying assets consist of bonds
having a rating of not less than AAA or its equivalent by Moody's Investor
Service, Inc. and/or securities of the type (without regard to maturity) listed
in (b), (c), (d) or (e) above, have maturities of less than five (5) years and
which are redeemable with one (1) day's notice.
Unsold Unit. A Unit owned by Borrower and for which a Housing
Purchase Contract has not been entered into.
Vested. As to any permit, license, zoning ordinance or rights
thereunder, grant of rights under an order of development of regional impact,
or any other governmental entitlement, the status wherein such governmental
right has been granted in accordance with all applicable governmental
regulations, and all appeal periods have expired with respect to such grant or
issuance.
Warrant. Collectively, that certain Warrant No. 1 dated the date
hereof for 1,000,000 shares of Borrower Common Stock issued in favor of
BankBoston exercisable through June 12, 2004.
Welfare Plan. See Section 6.17.
Working Capital Accounts. Any one of four (4) accounts established
by Borrower with Agent at Agent's office in Boston, Massachusetts (or at other
banks as permitted by the Agent) in the name of Borrower, into which working
capital for all Projects is deposited from the Depository Account pursuant to
Section 5.3.
Section 1.1. Rules of Interpretation. (a) A reference to any
agreement, budget, document or schedule shall include such agreement, budget,
document or schedule as revised, amended, modified or supplemented from time to
time in accordance with its terms and the terms of this Agreement.
(b) The singular includes the plural and the plural
includes the singular.
(c) A reference to any law includes any amendment
or modification to such law.
(d) A reference to any Person includes its
permitted successors and permitted assigns.
(e) Accounting terms not otherwise defined herein
have the meanings assigned to them by Generally Accepted Accounting Principles
applied on a consistent basis by the accounting entity to which they refer.
(f) The words "include", "includes" and "including"
are not limiting.
(g) The words "approval" and "approved", as the
context so determines, means an approval in writing given to the party seeking
approval after full and fair disclosure to the party giving approval of all
material facts necessary in order to determine whether approval should be
granted.
(h) Reference to a particular "Section " refers to
that section of this Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and
words of like import shall refer to this Agreement as a whole and not to any
particular section or subdivision of this Agreement.
(j) All terms not specifically defined herein which
are defined in the Uniform Commercial Code as in effect in the Commonwealth of
Massachusetts and shall have the same meanings herein as therein.
Section 2. Loan.
Section 2.1. Commitment to Lend and Borrower's Promise to Pay.
The Lenders hereby commit to extend credit in the amount of $45,000,000.00,
provided however, that the Senior Indebtedness at any one time outstanding
(calculated in the manner set forth at Section 9.5) shall not exceed the
Borrowing Base. The Loan has been accomplished by the execution and delivery
on even date of the Revolving Credit Note in the original principal amount of
$45,000,000.00 representing the Maximum Commitment Amount. Subject to the
terms and conditions set forth in this Agreement, each of the Lenders severally
agrees to lend to the Borrower and the Borrower may borrow, repay, and
re-borrow from time to time between the Date of Closing and the Maturity Date,
upon notice to the Agent given in accordance with Section 2.5 hereof, such
amounts as may be requested by the Borrower; provided, however, that the
maximum aggregate principal amount of the Loan (after giving effect to the
amounts requested) shall not at any one time exceed an amount equal to the
Maximum Revolver Amount minus the Maximum Drawing Amount. The Advances with
respect to the Loan shall be made pro rata in accordance with each Lender's
Commitment Percentage. Each request for an Advance hereunder shall constitute
a representation by the Borrower that the applicable conditions set forth in
Section Section 7 and 8 hereof have been satisfied on the date of such request.
The Loan shall mature and become due and payable on the third anniversary
hereof, or on such earlier date on which the maturity thereof is accelerated
pursuant to the provisions of Section 12.1 hereof (the "Maturity Date") and the
Borrower hereby promises to pay on such date all amounts then outstanding
hereunder.
Section 2.2. Termination of Commitment. The Borrower may, at its
option, upon three (3) Business Days advance notice to the Agent, repay all
amounts Outstanding on the Loan and cause to be terminated all Letters of
Credit issued by the Lenders hereunder and concurrently terminate the
Commitments of the Lenders hereunder. Upon the date of any such termination,
the Borrower agrees to pay to the Agent, for the accounts of the Lenders, the
full amount of any Unused Commitment Fee described in Section 3.3 through the
date of repayment.
Section 2.3. The Revolving Credit Note(s). The Loan may be
evidenced by separate promissory notes of the Borrower in substantially the
form of Exhibit "B" hereto (each a "Revolving Credit Note"), dated as of the
Date of Closing. One Revolving Credit Note shall be payable to the order of
each Lender in a principal amount equal to such Lender's Commitment, or, if
less, the outstanding amount of all Advances with respect to the Loan made by
such Lender, plus interest accrued thereon, as set forth below. If in the
event a Revolving Credit Note is lost, destroyed or mutilated at any time prior
to payment in full of the indebtedness evidenced thereby, the Borrower shall
execute a new note substantially in the form of such Revolving Credit Note.
The replacement Revolving Credit Note shall recite the circumstances of the
reissue of the Revolving Credit Note and shall state that it is a replacement
promissory note. If the Revolving Credit Note is lost or otherwise
unavailable, the payee Lender shall also deliver to the Borrower a lost
instruments bond in the face amount of the lost Revolving Credit Note. The
Revolving Credit Note shall not be necessary to establish the indebtedness of
the Borrower to the Lenders on account of the Loan made pursuant to this
Agreement.
Section 2.4. Certain Prepayments. The Borrower shall have the
right at any time to prepay the Loan made to the Borrower hereunder as a whole
or in part, without premium or penalty at any time upon written, telegraphic or
telephonic notice to the Agent prior to 1:00 p.m. local Boston, Massachusetts
time on the day of the proposed prepayment. Subject to the conditions of
Section 2.1 hereof, amounts so prepaid may be re-borrowed.
If at any time the outstanding principal amount of the Loan shall
exceed an amount equal to the Maximum Revolver Amount minus the Maximum Drawing
Amount, whether as a result of reductions in the Maximum Revolver Amount or
otherwise, the Borrower shall immediately pay to the Agent for the account of
the Lenders the amount of such excess.
Section 2.5. Advances; Interest Rates.
(a) Requests for Advances. Whenever the Borrower desires
to receive an Advance, the Borrower shall give notice to the Agent by
telephone, telecopy, telex or cable, in each case confirmed in writing by the
Borrower, delivered to the Agent's head office at 100 Federal Street, Boston,
Massachusetts 02110, Attention: Commercial Loan Services, Mail Stop:
05-02-00-A.
Each such notice delivered by the Borrower shall specify the
aggregate principal amount of the Advance requested. Each such notice shall
obligate the Borrower to accept the Advance requested from the Lenders on the
proposed Drawdown Date therefor. Whenever there is an Obligation due and
payable, the Agent may (but shall not be required to) make an Advance in the
amount of such Obligation and apply the proceeds of the Advance to the payment
of the Obligation, provided that the Agent shall promptly notify the Borrower
of such Advance and the application of proceeds thereof.
(b) Choice of Interest Rate, etc. Any Advance, shall, at
the option of the Borrower, be made either as a Base Rate Revolving Credit
Advance or as a Eurodollar Advance; provided, however, that (i) if the Borrower
fails to give the Agent written notice or by electronic transmission through
systems established by the Agent specifying whether an Advance is to be repaid
or reborrowed on a Payment Date, such Advance shall be repaid and then
reborrowed as a Base Rate Revolving Credit Advance on the Payment Date, and
(ii) the Borrower may not select a Eurodollar Advance (A) with respect to an
Advance, the proceeds of which are to reimburse the Agent pursuant to Section
2.5(a), or (B) if, at the time of such Advance, a Default or Event of Default
has occurred and is continuing. Any notice given to the Agent in connection
with a requested Advance hereunder shall be given to the Agent prior to 11:00
a.m. (Boston time) in order for such Business Day to count toward the minimum
number of Business Days required. The Agent shall, upon reasonable request of
the Borrower from time to time, provide to the Borrower such information with
regard to the Eurodollar Basis as may be so requested.
(c) Base Rate Revolving Credit Advances.
(i) Initial and Subsequent Base Rate Revolving
Credit Advances. The Borrower shall give the Agent in the case of Base Rate
Revolving Credit Advances not later than 11:00 a.m. (Boston time) one Business
Day prior to the date of a proposed Advance, irrevocable prior notice by
telephone or telecopy and shall confirm any such telephone notice with a
written request for an Advance; provided, however, that the failure by the
Borrower to confirm any notice by telephone or telecopy with a request for an
Advance shall not invalidate any notice so given.
(ii) Repayments and Reborrowings. The Borrower may
repay or prepay a Base Rate Revolving Credit Advance, and (a) at any time
reborrow all or a portion of the principal amount thereof as one or more Base
Rate Revolving Credit Advances, (b) upon at least three (3) Business Day's
irrevocable prior written notice to the Agent, reborrow all or a portion of the
principal thereof as one or more Eurodollar Advances, or (c) not reborrow all
or any portion of such Base Rate Revolving Credit Advance. Upon the date
indicated by the Borrower, such Base Rate Revolving Credit Advance shall be so
repaid and, as applicable, reborrowed.
(iii) Limitations as to Base Rate Revolving Credit
Advances. Each Base Rate Revolving Credit Advance shall be in a principal
amount of not less than $500,000.00 and in integral multiples of $50,000.00.
Requests for any Base Rate Revolving Credit Advance may be made daily (but only
once a day), provided the Borrower satisfies all notice requirements as
provided for herein.
(d) Eurodollar Advances.
(i) Initial and Subsequent Eurodollar Advances.
The Borrower shall give the Agent in the case of Eurodollar Advances at least
three (3) Business Days' irrevocable prior notice by telephone or telecopy and
shall immediately confirm any such telephone notice with a written request for
an Advance; provided, however, that the failure by the Borrower to confirm any
notice by telephone or telecopy with a request for an Advance shall not
invalidate any notice so given. The Agent, whose determination shall be
conclusive, shall determine the Eurodollar Basis as of the second (2nd)
Business Day prior to the date of the requested Advance and shall promptly
notify the Borrower of the same and the Borrower shall promptly confirm in
writing receipt of such notification. The Eurodollar Advance Period for each
Eurodollar Advance shall in all events be either thirty, sixty or ninety days.
Upon receipt of such notice from the Borrower, the Agent shall promptly notify
each Lender by telephone or telecopy of the contents thereof.
(ii) Procedures After Repayment of Eurodollar
Advance. At least three (3) Business Days prior to each Payment Date for a
Eurodollar Advance, the Borrower shall give the Agent written notice specifying
whether all or a portion of any Eurodollar Advance outstanding on the Payment
Date (a) is to be repaid and then reborrowed in whole or in part as a new
Eurodollar Advance, in which case such notice shall also specify the Eurodollar
Advance Period which the Borrower shall have selected for such new Eurodollar
Advance, (b) is to be repaid and then reborrowed in whole or in part as a Base
Rate Revolving Credit Advance, or (c) is to be repaid and not reborrowed. Upon
such Payment Date such Eurodollar Advance will, subject to the provisions
hereof, be so repaid and, as applicable, reborrowed.
(iii) Limitations as to Eurodollar Advances. Each
Eurodollar Advance shall be in a principal amount of not less than
$1,000,000.00 and in integral multiples of $100,000.00, and at no time shall
the aggregate number of all Eurodollar Advances then outstanding exceed four
(4). Requests for Eurodollar Advances may be made daily (but only once a day)
provided the Borrower satisfies all notice requirements as provided for herein.
(iv) Reimbursement. Whenever any Lender shall
actually incur any losses or actual expenses in connection with (i) failure by
the Borrower to borrow any Eurodollar Advance after having given notice of its
intention to borrow (whether by reason of the election of the Borrower not to
proceed or the non-fulfillment of any conditions precedent), or (ii) prepayment
of any Eurodollar Advance in whole or in part, for any reason, the Borrower
agrees to pay to such Lender, upon such Lender's demand, an amount sufficient
to compensate such Lender for all such losses and actual expenses excluding
lost profits. Such Lender's good faith determination of the amount of such
losses and actual expenses, absent manifest error, shall be binding and
conclusive. The Lender shall provide a copy of the determination of such
amount to the Borrower showing in reasonable detail the calculation of the
amount thereof.
(e) General Provisions as to Eurodollar Advances.
(i) Unavailability. Notwithstanding anything
contained herein which may be construed to the contrary, if with respect to any
proposed Eurodollar Advances for any Eurodollar Advance Period, the Agent
determines that deposits in dollars (in the applicable amount) are not being
offered to the Agent in the relevant market for such Eurodollar Advance Period,
the Agent shall forthwith give notice thereof to the Borrower and the Lenders,
whereupon until the Agent notifies the Borrower that the circumstances giving
rise to such situation no longer exist, the obligations of the Lenders to make
such types of Eurodollar Advances (including Eurodollar Advances) shall be
suspended.
(ii) Illegality. If any applicable law, rule, or
regulation, or any change therein, or any interpretation or change in
interpretation or administration thereof by any Governmental Authority, central
bank, or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender with any request or directive (whether or
not having the force of law) of any such authority, central bank, or comparable
agency, shall make it unlawful or impossible for any Lender to make, maintain,
or fund its Eurodollar Advances, such Lender shall so notify the Agent, and the
Agent shall forthwith give notice thereof to the other Lenders and the
Borrower. Before giving any notice to the Agent pursuant to this Section
2.5(e), such Lender shall designate a different lending office if such
designation will avoid the need for giving such notice and will not, in the
reasonable judgment of such Lender, be otherwise materially disadvantageous to
such Lender. Upon receipt of such notice, notwithstanding anything contained
in Section 2, the Borrower shall repay in full the then outstanding principal
amount of each affected Eurodollar Advance of such Lender, together with
accrued interest thereon, either (a) on the last day of the then current
Eurodollar Advance Period applicable to such Eurodollar Advance if such Lender
may lawfully continue to maintain and fund such Eurodollar Advance to such day
or (b) immediately if such Lender may not lawfully continue to fund and
maintain such Eurodollar Advance to such day; provided, however, that
notwithstanding any provision contained in this Agreement to the contrary, the
Borrower shall not be required to compensate any Lender for any losses,
including any loss or expenses incurred by reason of the liquidation,
reemployment of deposits or other funds acquired to obtain the Eurodollar
Advance, incurred as a consequence of any required conversion of a Eurodollar
Advance to a Base Rate Loan as hereinafter provided, as a result of the events
described in this Section 2.5. Concurrently with repaying each affected
Eurodollar Advance of such Lender, notwithstanding anything contained in
Section 2, the Borrower shall borrow a Base Rate Loan (or the other type of
Eurodollar Advance, if available) from such Lender, and such Lender shall make
such Loan in an amount such that the outstanding principal amount of the Note
held by such Lender shall equal the outstanding principal amount of such Note
immediately prior to such repayment.
(iii) Increased Costs.
(1) If, after the date hereof, any applicable
law, rule, or regulation, or any change therein, or any interpretation or
change in interpretation or administration thereof by any Governmental
Authority, central bank, or comparable agency charged with the interpretation
or administration thereof or compliance by any Lender with any request or
directive (whether or not having any such authority), shall:
(A) subject any Lender to any tax,
duty, or other charge with respect to its obligation to make Eurodollar
Advances, or its Eurodollar Advances, or shall change the basis of taxation of
payments to any Lender of the principal of or interest on its Eurodollar
Advances or in respect of any other amounts due under this Agreement in respect
of its Eurodollar Advances or its obligation to make Eurodollar Advances
(except for taxes imposed upon or measured by net income or alternative minimum
taxable income or taxable assets in lieu of income imposed by the United States
and the jurisdiction in which such Lender's principal executive office is
located); or
(B) impose, modify, or deem applicable
with respect to the making, funding or maintaining any Advance hereunder, any
reserve (including, without limitation, any imposed by the Board of Governors
of the Federal Reserve System, but excluding any included in an applicable
Eurodollar Reserve Percentage), special deposit, capital adequacy, assessment,
or other requirement or condition against assets of, deposits with or for the
account of, or commitments or credit extended by any Lender, or shall impose on
any Lender or the eurodollar interbank borrowing market any other condition
affecting its obligation to make such Eurodollar Advances or its Eurodollar
Advances;
and the result of any of the foregoing is to increase the cost to such Lender
of making or maintaining any such Eurodollar Advances, or to reduce the amount
of any sum received or receivable by such Lender under this Agreement or under
its Notes with respect thereto, and such increase is not given effect in the
determination of the Eurodollar Rate then, on the earlier of thirty (30) days
after written demand by such Lender or the Maturity Date, the Borrower agrees
to pay to such Lender such additional amount or amounts as such Lender
determines is attributable to making, funding and maintaining its Eurodollar
Advances provided that the Lender provides notice to the Borrower of such
amount within 90 days of the date of the actual knowledge of the Lender of the
occurrence of the event giving rise to such cost. Each Lender will promptly
notify the Borrower and the Agent of any event of which it has knowledge,
occurring after the date hereof, which will entitle such Lender to compensation
pursuant to this Section 2.5 and will designate a different lending office if
such designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the reasonable judgment of such Lender, be
otherwise materially disadvantageous to such Lender.
(2) A certificate of any Lender claiming
compensation under this Section 2.5(e)(iii) and setting forth the additional
amount or amounts to be paid to it hereunder and calculations therefor shall be
conclusive in the absence of manifest error. In determining such amount, such
Lender may use any reasonable averaging and attribution methods and shall
calculate such sums in a fair and reasonable manner. If any Lender demands
compensation under this Section 2.5(e)(iii), the Borrower may at any time, upon
at least five (5) Business Days' prior notice to such Lender, prepay in full
the then outstanding affected Eurodollar Advances of such Lender, together with
accrued interest thereon to the date of prepayment, along with any
reimbursement required under Section 3.6. Concurrently with prepaying such
Eurodolllar Advances the Borrower shall borrow a Base Rate Revolving Credit
Advance, or a Eurodollar Advance not so affected, from such Lender, and such
Lender shall make such Advance in an amount such that the outstanding principal
amount of the Notes held by such Lender shall equal the outstanding principal
amount of such Notes immediately prior to such prepayment.
(iv) Effect On Other Advances. If notice has been
given pursuant to Section 2.5(e)(iii), suspending the obligation of any Lender
to make any type of Eurodollar Advance, or requiring Eurodollar Advances of any
Lender to be repaid or prepaid, then, unless and until such Lender notifies the
Borrower that the circumstances giving rise to such repayment no longer apply,
all Loans which would otherwise be made by such Lender as to the type of
Eurodollar Advances affected shall, at the option of the Borrower, be made
instead as Base Rate Loans.
(f) Notification of Lenders. Upon receipt of a
(i) request for Advance or a telephone or telecopy request for Advance, or (ii)
notice from the Borrower with respect to any outstanding Advance prior to the
Payment Date for such Advance, the Agent shall promptly notify each Lender by
telephone or telecopy of the contents thereof and the amount of each Lender's
portion of any such Advance. Each Lender shall, not later than 2:00 p.m.
(Boston time) on the date specified for such Advance in such notice, make
available to the Agent at the Agent's office, or at such account as the Agent
shall designate, the amount of such Lender's portion of the Advance in
immediately available funds.
(g) Disbursement. Prior to 3:00 p.m. (Boston time) on
the date of an Advance hereunder, the Agent shall, subject to the satisfaction
of the conditions set forth in Section 2.5(f), disburse the amounts made
available to the Agent by the Lenders in like funds by transferring the amounts
so made available by deposit into the Borrower's account maintained with
BankBoston or by wire transfer pursuant to the Borrower's instructions. Unless
the Agent shall have received notice from a Lender prior to 11:00 a.m. (Boston
time) on the date of any Advance that such Lender will not make available to
the Agent such Lender's ratable portion of such Advance, the Agent may assume
that such Lender has made or will make such portion available to the Agent on
the date of such Advance and the Agent may, in its sole discretion and in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent such Lender shall not have so made
such ratable portion available to the Agent, such Lender agrees to repay to the
Agent forthwith on demand such corresponding amount together with interest
thereon, for each day from the date such amount is made available to the
Borrower until the date such amount is repaid to the Agent, (x) for the first
two Business Days, at the rate on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day by the Federal Reserve Lender of New York, and (y)
thereafter, at the Base Rate. If such Lender shall repay to the Agent such
corresponding amount, such amount so repaid shall constitute such Lender's
portion of the applicable Advance for purposes of this Agreement and if both
such Lender and the Borrower shall pay and repay such corresponding amount, the
Agent shall promptly relend to the Borrower such corresponding amount. If such
Lender does not repay such corresponding amount immediately upon the Agent's
demand therefor, the Agent shall notify the Borrower and the Borrower shall
immediately pay such corresponding amount to the Agent. The failure of any
Lender to fund its portion of any Advance shall not relieve any other Lender of
its obligation, if any, hereunder to fund its respective portion of the Advance
on the date of such borrowing, but no Lender shall be responsible for any such
failure of any other Lender. In the event that a Lender for any reason fails
or refuses to fund its portion of an Advance in violation of this Agreement,
then, until such time as such Lender has funded its portion of such Advance, or
all other Lenders have received payment in full (whether by repayment or
prepayment) of the principal and interest due in respect of such Advance, such
non-funding Lender shall (i) have no right to vote regarding any issue on which
voting is required or advisable under this Agreement or any other Loan
Document, and (ii) shall not be entitled to receive any payments of principal,
interest or fees from the Agent (or the other Lenders) in respect of its Loans,
which amounts may be applied by the Agent for the benefit of the Agent and the
other Lenders in accordance with the provisions of Section 12.5 and thereafter
in a manner determined by the Agent in its sole discretion.
Section 2.6. Interest. Except as otherwise provided in Section
2.7, interest on the principal amount of all Advances outstanding from time to
time shall bear interest, and shall be payable as follows:
(a) On Base Rate Revolving Credit Advances. Interest on
each Base Rate Revolving Credit Advance shall be computed for the actual number
of days elapsed on the basis of a hypothetical year of 360 days and shall be
payable in arrears on the first day of each calendar month, commencing on the
first day of the month for the month following the Closing Date. Interest on
Base Rate Revolving Credit Advances then outstanding shall also be due and
payable on the Revolving Credit Maturity Date. Interest shall accrue and be
payable on each Base Rate Revolving Credit Advance made with respect to the
Loans at the simple per annum interest rate equal to the sum of (A) the Base
Rate, plus (B) one percent (1%) ("Base Rate Margin").
(b) On Eurodollar Advances. Interest on each Eurodollar
Advance shall be computed for the actual number of days elapsed on the basis of
a hypothetical year of 360 days and shall be payable in arrears on the first
day of each calendar month, commencing on the first day of the month for the
month following the Closing Date. Interest on Eurodollar Advances then
outstanding shall also be due and payable on the Revolving Credit Maturity
Date. Interest shall accrue and be payable on each Eurodollar Advance made
with respect to the Loans at a rate per annum equal to (A) the Eurodollar Basis
applicable to such Eurodollar Advance, plus (B) three and one-half percent
(3.5%) ("Eurodollar Margin").
Section 2.7. Interest on Overdue Amounts. Overdue principal and
(to the extent permitted by applicable law) interest on the Loan and all other
overdue amounts payable hereunder shall bear interest at a rate per annum equal
to four percent (4%) plus the Base Rate, compounded daily and payable on
demand, to accrue from and after ten (10) days from the due date thereof until
the obligation of the Borrower with respect to the payment thereof shall be
discharged, whether before or after judgment.
Section 2.8. Funds for Loans.
(a) Not later than 3:00 p.m. (Boston time) on the
proposed Drawdown Date of any Advances under the Loan, each of the Lenders will
make available to the Agent, at its Head Office, in immediately available
funds, the amount of such Lender's Commitment Percentage of the amount of the
requested Advances under the Loan. Upon receipt from each Lender of such
amount, and upon receipt of the documents required by Section Section 7 and 8
and the satisfaction of the other conditions set forth therein, to the extent
applicable, the Agent will make available to the Borrower the aggregate amount
of such Advances under the Loan made available to the Agent by the Lenders.
The failure or refusal of any Lender to make available to the Agent at the
aforesaid time and place on any Drawdown Date the amount of its Commitment
Percentage of the requested Advances under the Loan shall not relieve any other
Lender from its several obligation hereunder to make available to the Agent the
amount of such other Lender's Commitment Percentage of any requested Advances
under the Loan.
(b) The Agent may, unless notified to the contrary by any
Lender prior to a Drawdown Date, assume that such Lender has made available to
the Agent on such Drawdown Date the amount of such Lender's Commitment
Percentage of the Advances under the Loan to be made on such Drawdown Date, and
the Agent may (but it shall not be required to), in reliance upon such
assumption, make available to the Borrower a corresponding amount. If any
Lender makes available to the Agent such amount on a date after such Drawdown
Date, such Lender shall pay to the Agent on demand an amount equal to the
product of (i) the average computed for the period referred to in clause (iii)
below, of the weighted average interest rate paid by the Agent for federal
funds acquired by the Agent during each day included in such period, times (ii)
the amount of such Lender's Commitment Percentage of such Advances under the
Loan, times (iii) a fraction, the numerator of which is the number of days that
elapse from and including such Drawdown Date to the date on which the amount of
such Lender's Commitment Percentage of such Advances under the Loan shall
become immediately available to the Agent, and the denominator of which is 360.
A statement of the Agent submitted to such Lender with respect to any amounts
owing under this paragraph shall be prima facie evidence of the amount due and
owing to the Agent by such Lender. If the amount of such Lender's Commitment
Percentage of such Advances under the Loan is not made available to the Agent
by such Lender within three (3) Business Days following such Drawdown Date, the
Agent shall be entitled to recover such amount from the Borrower on demand,
with interest thereon at the rate per annum applicable to the Advances under
the Loan made on such Drawdown Date.
Section 2.9. Letters of Credit.
(a) Issuance of Letters of Credit. Subject to the terms
and conditions set forth in this Agreement and the applicable Reimbursement
Agreement, upon the written request of the Borrower to the Agent and the
execution and delivery of a Reimbursement Agreement by the Borrower to the
Agent, the Agent, on behalf of the Lenders agrees to issue with pro rata
participation by the Lenders, on the Date of Closing or on any Business Day
thereafter but prior to the Maturity Date, one or more irrevocable stand-by
Letters of Credit in such form as may be agreed upon by the Borrower and the
Agent; provided, however, that (i) the aggregate Maximum Drawing Amount of all
Letters of Credit shall not exceed $5,000,000.00 at any one time outstanding
and (ii) the sum of (x) the Maximum Drawing Amount and (y) Outstanding Advances
under the Loan shall not at any time exceed the Maximum Revolver Amount. Each
written request for the issuance of a Letter of Credit hereunder shall be
received by the Agent at least three Business Days prior to the proposed date
of issuance. The expiration dates, amounts and beneficiaries of the Letters of
Credit will be as agreed by the Borrower and the Agent, and each Letter of
Credit shall be in a form acceptable to the Agent. No Letter of Credit shall
have an expiration date later than the earlier of (i) the date one year after
the date of issuance of such Letter of Credit (which may be subject to renewal
for a single renewal period ending not later than the date one year after the
original expiration date) or (ii) five (5) Business Days prior to the Maturity
Date. Each Letter of Credit shall be issued pursuant to a Reimbursement
Agreement to be entered into between the Borrower and the Agent (for the
accounts of the Lenders); provided, however, that to the extent that the terms
and conditions of any Reimbursement Agreement are in conflict with or are
inconsistent with the terms and conditions of this Agreement, the obligations
of the Lenders and the Borrower with respect to Letters of Credit shall be
governed by the terms and conditions of this Agreement.
(b) Non-Renewal; Cash Collateral. The Agent may, at its
option, elect not to renew any Letter of Credit by giving written notice of
non-renewal to the Borrower at least 30 days prior to the expiration date of
such Letter of Credit. The Agent may, in its discretion at any time and from
time to time while there exists any Default or Event of Default hereunder, make
an Advance under the Loan in an amount equal to all or any portion of the
Maximum Drawing Amount of any outstanding Letters of Credit hereunder, and hold
the proceeds thereof in an interest bearing account as collateral security for
such Obligations (and such account shall be subject to the Agent's right to set
off against such amounts under Section 13 hereof), provided that the Agent
shall promptly notify the Borrower of such Advance and application of the
proceeds thereof and further provided that all interest earned on proceeds so
held shall be applied as and when available to reduce any Obligations
outstanding hereunder or, if there are no Obligations outstanding, shall be
paid over to the Borrower. The Maximum Revolver Amount shall be reduced by any
Letters of Credit that are not secured by cash collateral.
(c) Effects of Drawings. Upon each drawing under a
Letter of Credit and each termination of a Letter of Credit pursuant to its
terms, the un-reimbursed amount of the drawing shall automatically be converted
into an Advance under the Loan, made on the date of such drawing or such
termination. The liability of the Borrower under this Agreement to repay the
Lenders in respect of drawings under Letters of Credit shall be Obligations and
such shall rank pari passu with the obligations of the Borrower to repay all
other Advances under the Loan hereunder.
Section 2.10. Conversion Date and Extensions. Upon the occurrence
of the Conversion Date, the Borrower shall not be entitled to make any
acquisitions of Real Estate (except pursuant to existing options or contracts
within Projects within which Borrower then owns Developed Lots, Land Work in
Process or Units) or obtain any additional Letter of Credit.
The Borrower shall have the right to notify the Agent of its desire
to extend the term of the Loan for an additional one year and to extend the
Conversion Date on or before sixty (60) days prior to the Conversion Date. The
Agent (subject to the provisions of Section 23) shall determine in its sole
discretion if any extension of the term of the Loan is appropriate.
Section 3. FEES.
Section 3.1. Origination Fee and Additional Fees. The Borrower
agrees and is obligated as of the date hereof to pay to BankBoston the fees in
accordance with the separate Fee and Expense Agreement ("Fee and Expense
Agreement") between BankBoston and the Borrower dated June 12, 1997.
Section 3.2. Letter of Credit Fees. The Borrower shall pay to the
Agent an annual fee (the "Letter of Credit Fee") for each Letter of Credit
issued pursuant to this Agreement to be calculated at the rate of one and one-
half percent (1.5%) per annum on the Maximum Drawing Amount attributable to
such Letter of Credit, plus the Agent's customary issuance fee, payable in
accordance with the Agent's standard fee schedule. The Letter of Credit Fee
shall be payable in advance on the date of issuance for the stated term of such
Letter of Credit and upon the date of renewal for the renewal term of any
Letter of Credit. Upon receipt of such Letter of Credit Fee (but not such
issuance fee), the Agent shall remit to each Lender a portion of such fee in
the amount of 1 1/4% of its portion of the Letter of Credit. Upon the
cancellation of a Letter of Credit in accordance with its terms or any
reduction of the Maximum Drawing Amount attributable to a Letter of Credit
during any quarter, the Agent shall reimburse the Borrower for the pro rata
portion of the Letter of Credit Fee attributable to such Letter of Credit for
the balance of the stated term thereof, and the Lenders that received part of
such Letter of Credit Fee shall refund, pro rata, an identical portion of such
amount so received to the Agent.
Section 3.3. Unused Commitment Fee. On the first day of each
fiscal quarter, the Borrower shall pay to the Agent on behalf of the Lenders in
arrears the amount equal to .25% of the difference between: (i) $45,000,000.00;
and (ii) the average outstanding principal balance of the indebtedness created
hereby plus the average of Letters of Credit issued and outstanding during the
preceding quarter based on the number of days outstanding.
Section 3.4. Additional Amounts Payable on Account of Credit
Facilities. If any Lender or the Agent shall have determined that any present
or future applicable law enacted by the United States, any federal agency, any
state or political subdivision thereof, which expression, as used herein,
includes any rule, regulation, guideline, directive or request (whether or not
having force of law) regarding capital requirements for banks or bank holding
companies or subsidiaries of bank holding companies, or any change therein or
in the interpretation or administration thereof by any governmental authority,
central bank or comparable agency in the United States charged with the
interpretation or administration thereof, or compliance by the Lenders or the
Agent with any of the foregoing, imposes or increases a requirement by any
Lender or the Agent to allocate capital resources to the commitment of such
Lender to make or issue, or to the maintenance by such Lender or the Agent of,
Loans or Letters of Credit hereunder, which such Lender or Agent has determined
in good faith would have the effect of reducing the return on the capital of
such Lender or the Agent to a level below that which such Lender or the Agent
could have achieved (taking into consideration the then existing policies of
such Lender or the Agent with respect to capital adequacy and assuming full
utilization of the capital of such Lender or the Agent) but for such
applicability, change, interpretation, administration or compliance, by any
amount deemed in good faith by such Lender or the Agent to be material, and
which is not reflected in an increase in the Base Rate, such Lender or the
Agent shall promptly after its determination of such occurrence give written
notice thereof to the Borrower. The Borrower and such Lender or as the case
may be, the Agent shall thereafter attempt to negotiate in good faith an
adjustment to the compensation payable hereunder which will adequately
compensate such Lender or the Agent for such reduction. If the Borrower and
such Lender or the Agent are unable to agree to such adjustment within thirty
(30) days of the day on which the Borrower shall receive such written notice,
then commencing on the date of such notice (but not earlier than the effective
date of any such applicability, change, interpretation, administration or
compliance), the fees payable hereunder shall increase by an amount which will,
in the reasonable determination of such Lender or the Agent, as the case may
be, compensate such Lender or the Agent for such reduction. In determining
such amount, such Lender or the Agent may use any reasonable and equitable
methods of averaging, allocating or attributing such reduction among its
customers.
A certificate demonstrating the calculation of the amount of such
increased fees shall be submitted to the Borrower by such Lender or the Agent.
The Borrower shall be required to pay such amount within thirty (30) days after
its receipt of such certificate.
Section 3.5. Additional Costs and Expenses; Reserve Requirements.
In addition to any amounts payable under Section 3.4 hereof and the Fee and
Expense Agreement, if any present or future applicable law enacted by the
United States, any federal agency, any state, or political subdivision thereof,
which expression, as used herein, includes statutes, rules and regulations
thereunder and interpretations thereof by any court of competent jurisdiction
or by any governmental or other regulatory body or official charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon
or otherwise issued to any Lender or the Agent by any central bank or other
fiscal, monetary or other authority in the United States (whether or not having
the force of law), shall:
(a) subject any Lender or the Agent to any tax, levy,
impost, duty, charge, fee, deduction or withholding of any nature with respect
to the Loan or Letters of Credit or deposits obtained to fund Loans; or
(b) materially change the basis of taxation of payments
to any Lender of the principal of or the interest on the Loan or Letters of
Credit or any other amounts payable to any Lender hereunder (other than changes
relating to taxes based on the net income of such Lender or the Agent), or
(c) impose or render applicable any special deposit or
reserve or similar requirement (whether or not having the force of law) against
the Loan, the Letters of Credit or loans of the type contemplated hereby made
by the Lenders or Letter of Credit of the type contemplated hereby issued by
the Lenders; or
(d) impose on any Lender or the Agent any other
conditions or requirements with respect to the Loan or any class of loans of
which the Loan form a part or the Letters of Credit, and the result of any of
the foregoing is to increase the cost to any Lender of making Loans, Advances
or issuing Letters of Credit, or to reduce the amount of principal, interest,
Letters of Credit, Fees or other amount payable to such Lender or the Agent
hereunder, or to require such Lender or the Agent to make any payment or to
forego any interest or other sum payable hereunder, and which is not reflected
in an increase in the Base Rate, the amount of which payment or foregone
interest or other sum is calculated by reference to the gross amount of any sum
receivable or deemed received by such Lender or the Agent from the Borrower
hereunder, then, such Lender or the Agent will notify the Borrower of such
event, and the Borrower and such Lender or the Agent shall thereafter attempt
to negotiate in good faith an adjustment to the compensation payable hereunder
which will adequately compensate such Lender or the Agent for such reduction or
payment. If the Lender (or the Agent) and the Borrower are unable to agree to
such adjustment within thirty (30) days of the date of such notice, the
Borrower will, upon written demand made by such Lender or (as the case may be)
the Agent at any time and from time to time thereafter, pay to such Lender or
the Agent such additional amounts as will be sufficient in the good faith
opinion of such Lender or the Agent to compensate the Lender or the Agent for
such additional cost, reduction, payment or foregone interest or other sum. In
determining the amount of such compensation, such Lender or the Agent may use
any reasonable and equitable methods of averaging, allocating or attributing
such amounts to its customers.
A certificate demonstrating the calculation of the amount of such
increased payment shall be submitted to the Borrower by such Lender. The
Borrower shall be required to pay such amount within thirty (30) days after its
receipt of such certificate.
Section 3.6. Yield Maintenance. If, due to prepayments made by
Borrower or due to acceleration of the maturity of any Eurodollar Advances
pursuant to the terms of this Agreement or due to any other reason, including
without limitation the events specified above, but subject to the provisions of
Section 2.5 (e) (ii) the Agent receives payments of principal other than on a
required principal payments due date under this Agreement, the Borrower shall,
upon demand by the Agent, pay to the Agent any amounts required to compensate
any Lender for any losses, costs or expenses which such Lender may reasonably
incur as a result of such payment, including without limitation, any loss,
costs or expenses incurred by reason of liquidation or reemployment of deposits
or other funds acquired by such Lender to fund or maintain its portion of the
Eurodollar Advances. Such compensation and the compensation provided for
elsewhere in this Agreement shall include, without limitation, an amount
calculated as follows:
(a) First, the Agent shall determine the amount by which
(i) the total amount of interest which would have otherwise accrued hereunder
on each installment of principal so paid, during the period beginning on the
date of such payment and ending on the date such installment would have been
due (the "Reemployment Period"), exceeds (ii) the total amount of interest
which would accrue during the Reemployment Period, on a deposit in the
interbank Eurodollar borrowing market in an amount equal (as nearly as may be)
to the amount of principal so paid and to have a maturity comparable to the
Reemployment Period. Each such amount is hereafter referred to as an
"Installment Amount".
(b) Second, each Installment Amount shall be treated as
payable as of the date on which the related principal installment would have
been payable by the Borrower had such principal installment not been prepaid.
(c) Third, the amount to be paid on each such date shall
be the present value of the Installment Amount determined by discounting the
amount thereof from the date on which such Installment Amount is to be treated
as payable, at the same annual interest rate as that payable upon the interbank
Eurodollar deposit designated as aforesaid by the Agent.
(d) Fourth, no portion of the principal installments
required pursuant to Section 5.3 or Section 2.5(e)(ii) shall be considered
prepayments of the principal of the Eurodollar Advances. The application by
the Agent to the Eurodollar Advances principal of any proceeds of insurance or
awards from condemnation or other taking by eminent domain shall be not
considered a prepayment of the principal of the Eurodollars Advances pursuant
to this Section 3.6.
Section 4. PAYMENTS; COMPUTATIONS; AND INTEREST LIMITATION.
Section 4.1. Payments. All payments of principal and interest on
the Loan and the Fees, and any other amounts due hereunder shall be made by the
Borrower to the Agent, for the respective accounts of the Lenders and the
Agent, in immediately available funds at the Agent's Head Office. Upon receipt
by the Agent of any such payment of principal, interest or fees (other than
fees or expenses to be retained by Agent pursuant to the terms thereof), the
Agent shall remit to each other Lender, its applicable pro rata share of such
payment.
Section 4.2. Computations. All computations of interest on the
Loans, the Fees, and any other amount due hereunder shall be based on a 360-day
year and paid for the actual number of days elapsed. Whenever a payment
hereunder becomes due on a day which is not a Business Day, the due date for
such payment shall be extended to the next succeeding Business Day, and
interest shall accrue during such extension.
Section 4.3. Interest Limitation. Notwithstanding any other term
of this Agreement or any other document referred to herein or therein, the
maximum amount of interest which may be charged to or collected from any person
liable hereunder by the Agent shall be absolutely limited to, and shall in no
event exceed, the maximum amount of interest which could lawfully be charged or
collected under applicable law, so that the maximum of all amounts constituting
interest under applicable law, howsoever computed, shall never exceed as to any
person liable therefor such lawful maximum, and any term of this Agreement or
any other document referred to herein or therein which could be construed as
providing for interest in excess of such lawful maximum shall be and hereby is
made expressly subject to and modified by the provisions of this paragraph.
Section 5. SECURITY AND DEPOSITORY ACCOUNT.
Section 5.1 Blanket Security Interest. The Obligations shall be
and are hereby secured by a blanket perfected first in priority security
interest (subject only to Permitted Liens) in favor of the Agent for the
benefit of each of the Lenders on all of the assets of Calton, Inc. and each
entity comprising the Borrower and each Borrower Subsidiary including, without
limitation, the Mortgaged Properties, all Receivables and other rights of the
Borrower and any Borrower Subsidiary to receive payments and proceeds with
respect to any part of the Mortgaged Properties, all cash of the Borrower, the
Borrower Subsidiaries including that received from the operation of their
businesses and properties (but subject to the rights of a creditor pursuant to
a Permitted Lien under Section 10.2), all rights of the Borrower and the
Borrower Subsidiaries under any mortgage, deed of trust or other security
documents executed in connection with the sale of any assets subject to the
Mortgages or other Loan Documents, all trademarks and other intangible rights
(including, without limitation, the rights of the Borrower or the Borrower
Subsidiaries to the names Calton, Calton, Inc. and Calton Homes, Inc. and any
other tradename owned or used by the Borrower or the Borrower Subsidiaries,
trademark or service mark derived therefrom) and all representations,
warranties, covenants and indemnities in favor of Borrower and the Borrower
Subsidiaries pursuant to the terms of the Security and Pledge Agreements, the
Guaranty, those certain Collateral Assignments of Leases and Rents executed by
the Borrower and the Borrower Subsidiaries in favor of the Agent, dated as of
the Closing Date, those certain Collateral Assignments of Agreements, executed
by the Borrower and the Borrower Subsidiaries, in favor of the Agent, dated as
of the Closing Date ("Assignments of Agreements"), Indemnity Agreement as to
Hazardous Materials by the Borrower and the Borrower Subsidiaries in favor of
the Agent, Collateral Assignment of Loan Documents, and, with respect to all
Real Estate, pursuant to the terms of the Mortgages. The Obligations shall
also be secured by (i) a perfected first priority security interest in the
shares of the capital stock of the two entities comprising the Borrower and the
Borrower Subsidiaries pursuant to the terms of the Pledge Agreement and the
Calton Pledge Agreement and (ii) the Guaranties. All of the property, rights
and interests that are or intended to be subject to the security interests and
mortgage liens created by the Loan Documents are collectively referred to
therein as the "Collateral". Calton, Inc. and the Borrower Subsidiaries have
executed this Agreement, among other reasons, to evidence their agreement to
the foregoing pledges and granting of security interests and to enter into and
deliver the Guaranties, the Pledge Agreements, the Warrants referred to in
Section 7.19 and the Borrower Subsidiary Security Documents at Closing, to
acknowledge and agree to the remaining terms and conditions of this Agreement
and to ratify and agree to the representations, covenants and warranties
contained herein.
Section 5.2 Pro Rata Security. All amounts owing with respect to
the Obligations shall be secured pro rata by the Collateral without distinction
as to whether some Obligations are then due and payable and other Obligations
are not then due and payable, provided that all costs and expenses as provided
in Section 14 shall first be paid before any proceeds are applied to any other
Obligations.
Section 5.3 Depository Account. The Borrower agrees to deposit
into the Depository Account prior to the close of business on each Business Day
that the Borrower has immediately available funds (or on the next Business Day
if the Borrower receives such funds after 1:00 p.m. on any Business Day) (a)
the gross sales proceeds (less ordinary and customary closing costs, any
Receivable meeting the requirements of Section 10.9 below and any payments for
Permitted Liens with respect to the Properties sold) (collectively, "Net Sales
Proceeds") from the sale of any Properties, (b) to the extent not otherwise
prohibited by any applicable law, rule, or regulation, or to the extent not
required by the applicable Housing Purchase Contract to be deposited into a
third party escrow account, all customer deposits paid by prospective
purchasers to the Borrower in connection with the purchase of any Properties,
and (c) cash from all other sources (except for proceeds from Investment
maturities or redemptions, but only to the extent that no Loans are Outstanding
at the time of the Borrower's receipt of such proceeds), including, without
limitation, the Net Sales Proceeds from the sale, transfer or other disposition
of, any other proceeds of, Collateral. To implement the procedures set forth
in clauses (a) and (b), the Borrower shall notify and cause all sales pursuant
to any Housing Purchase Contract and for any other sales of Properties to be
consummated through the Title Company or other settlement agents or closing
attorneys approved by Agent in order that each settlement agent or closing
attorney for the sale of any Properties to deposit or otherwise cause to be
credited all Net Sales Proceeds received by each Borrower into the Depository
Account. The Borrower shall notify each such settlement agent or closing
attorney that the lien of each Mortgage will not be released unless such Net
Sales Proceeds have been credited to, or are sent by check or wire transfer of
immediately available funds directly to the Agent for deposit into, the
Depository Account. Borrower may, with the consent of Agent (and subject to
the provisions of Section 13 hereof), transfer immediately available funds into
the Working Capital Accounts but only to the extent that the aggregate balance
in the Working Capital Accounts does not exceed $2,000,000.00; provided,
however, that such $2,000,000.00 limitation may, from time to time with respect
to any specific transfer request by Borrower, be temporarily waived by Agent.
Additionally, Borrower may direct that any funds remaining in the Depository
Account at the end of any Business Day shall be credited against the Revolving
Credit Note. Agent shall have the right, but not the obligation, at any time
to apply any funds remaining in the Depository Account against the Revolving
Credit Note. The amounts on deposit at any time in the Depository Account and
the Working Capital Accounts shall serve as collateral security for the
Obligations (and such accounts shall be subject to the Lenders' right of setoff
against such amounts under Section 13 without notice).
The Borrower also shall have the right to establish at one
banking institution in New Jersey and at one banking institution in Florida,
each selected by Borrower and approved by the Agent a special deposit account
in the name of Borrower and for the benefit of the Agent so long as no more
than Fifty Thousand and No/100 Dollars ($50,000.00) is maintained in each such
account. Funds in such accounts shall be used only for payment of expenses
incurred in the ordinary course of the Borrower's business in connection with
the Projects. The Agent may, following written notice to the Borrower, revoke
the designation of any such accounts or designate substitute or additional
accounts.
Borrower shall cause all payments due to the Borrower and
Borrower Subsidiaries from all sources to be deposited into the Depository
Account, the Borrower shall hold and shall cause the Borrower Subsidiaries to
hold all proceeds of collection received by it at any time as trustee for the
Lenders and shall turn the same over to the Agent, or deposit the same in the
Depository Account, immediately upon receipt in the identical form received.
The Borrower shall, following the occurrence of a Default or Event of Default,
if requested to do so by the Agent, notify the obligors under the Collateral
Documents of the security interest of the Agent therein and that payments due
thereunder are to be made directly to the Agent. At any time after making such
a request of the Borrower, the Agent may itself, without further notice to or
demand upon the Borrower, so notify the obligors under the Collateral
Documents. The collection of payments directly by the Agent in any manner
permitted hereunder shall in no respect affect the duties of the Borrower (i)
to continue to render all reasonable assistance to the Agent in the collection
of amounts due under the Collateral Documents and (ii) to fulfill its
obligations as trustee for the Lenders described above with respect to proceeds
of collection of amounts under any Collateral Documents and other payments
received by the Borrower and the Borrower Subsidiaries.
To the extent any funds are received by Agent or Borrower
which are not deposited in the Depository Account pursuant to the preceding
paragraphs, such funds shall be immediately paid by Borrower or credited by
Agent to reduce the Obligations.
Section 6. REPRESENTATIONS AND WARRANTIES. Each entity
comprising the Borrower hereby jointly and severally represent and warrant to
the Lenders and the Agent, as follows:
Section 6.1. Existence, etc.
(a) Calton Homes, Inc. is a corporation duly organized,
existing and in good standing under the laws of the State of New Jersey and
Calton Homes of Florida, Inc. is a corporation duly organized, existing and in
good standing under the laws of the State of Florida, each is qualified to do
business and in good standing under the laws of all states where it is doing
business. The Borrower has taken all actions which, by reason of its ownership
of property or carrying on of business, are required to be taken by it under
the laws of any jurisdiction wherein either entity comprising Borrower owns
property or carries on business and which the failure to do so would have a
material adverse affect on its business.
(b) Each entity comprising the Borrower has all requisite
power and authority and has full legal right to enter into each of the Loan
Documents to which it is or is to become a party, to perform, observe and
comply with all of its agreements and obligations under each of such documents.
The Borrower has all requisite power and authority and full legal right to make
all of the borrowing and obtain the extensions of credit contemplated by this
Agreement.
(c) Schedule 6.1 attached hereto correctly sets forth
with respect to each Borrower Subsidiary existing on the date hereof (i) its
full and correct legal name, (ii) its jurisdiction of incorporation or
formation, as the case may be, and (iii) the percentage of its voting stock or
partnership interests, as the case may be, owned, respectively, by the Borrower
or by another Subsidiary. Each of the entities comprising the Borrower and its
Subsidiaries has good and marketable title to all of the shares of stock of or
partnership interests in, as the case may be, Subsidiaries or Properties it
purports to own, subject to Permitted Liens. All such shares have been duly
issued and are fully paid and non-assessable. No Person other than the
Borrower or a Subsidiary holds or otherwise possesses any warrant, right or
option to purchase or otherwise acquire stock or other securities convertible
into stock of its Subsidiaries.
(d) The Borrower Subsidiaries are corporations duly
organized, existing and in good standing under the laws of the State of each of
their incorporation and are qualified to do business and in good standing under
the laws of each of the States where each of them are doing business. The
Borrower Subsidiaries have taken all actions which, by reason of their
ownership of property or carrying on of business, are required to be taken by
them under the laws of any jurisdiction wherein they own property or carry on
business and which the failure to do so would have a material adverse affect on
its business.
(e) The Borrower Subsidiaries have all requisite power
and authority and have full legal right to enter into each of the Loan
Documents to which they are or are to become a party, to perform, observe and
comply with all of their agreements and obligations under each of such
documents.
Section 6.2. Business Activity; Capitalization.
(a) Since the Balance Sheet Date, the Borrower has
conducted its business in the ordinary course.
(b) The Borrower does not own or hold of record and/or
beneficially (whether directly or indirectly) any shares of any class in the
capital of any corporations nor any legal and/or beneficial interests in any
partnership, limited liability company, business trust or joint venture or in
any other unincorporated trade or business enterprise, except for the
Borrower's Subsidiaries and partnership interests listed in Schedule 6.1
annexed hereto.
Section 6.3. Authority, etc. The execution and delivery by the
Borrower of each of the Loan Documents, the performance by Borrower of all of
its agreements and obligations under each of such documents, and the making by
the Borrower of all of the borrowing contemplated by this Agreement, are within
the corporate authority of the Borrower, has been duly authorized by all
necessary corporate action and does not and will not, with respect to the
Borrower, (i) contravene any provisions of any certificate of incorporation (or
other charter documents), by-laws or any stock provisions, or any amendment
thereof, or (ii) conflict with, or result in a breach of any material term,
condition or provision of, or constitute a default under or result in the
creation of any mortgage, lien, pledge, charge, security interest or other
encumbrance upon any of its properties under any agreement, trust deed,
indenture, mortgage or other instrument to which either entity comprising
Borrower is a party or by which such entities' properties are bound or
affected, or (iii) violate or contravene any provision of any law, regulation,
order, ruling or interpretation thereunder or any decree, order or judgment of
any court or governmental or regulatory authority, agency or official or (iv)
require any waiver, consent or approval by any of the creditors or stockholders
of the Borrower which has not been obtained or (v) require any approval,
consent, order, authorization or license by, or giving notice to, or taking any
other action with respect to, any governmental or regulatory authority or
agency under any provision of any law applicable to the Borrower.
Section 6.4. Binding Effect of Documents, etc. The Borrower has
duly executed and delivered each of the Loan Documents and each of such
documents is in full force and effect. The agreements and obligations of the
Borrower contained in each of the Loan Documents constitute legal, valid and
binding obligations of the Borrower, enforceable against the Borrower in
accordance with their respective terms except as enforceability is limited by
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting generally the enforcement of creditors' rights and by general
principles of equity regardless of whether enforcement of such obligations is
sought in a proceeding in equity or at law.
Section 6.5. No Events of Default, etc.
(a) No Default or Event of Default has occurred and is
continuing.
(b) The Borrower is not in default under any provision of
its charter, by-laws, stock provisions or under any indenture or agreement by
which it is bound, or in violation of any applicable law, order, regulation,
ruling or requirement of any court or public body or authority by which the
Borrower or its properties are bound, which default or violation would have a
material adverse affect on its business, assets, operations or financial
condition.
Section 6.6. Chief Executive Office. The chief executive office
of each entity comprising the Borrower is located at the address set forth in
Schedule 6.6 annexed hereto. Neither entity comprising the Borrower shall
change the location of its chief executive office without prior written notice
to the Agent. All records are and shall be kept, only at the addresses set
forth in Schedule 6.6. The Borrower hereby agrees to afford to the Agent at
all reasonable times and upon reasonable notice, access to each of the
locations where such records are kept for the purpose of examining all records.
Section 6.7. Financial Statements; Solvency.
(a) There has been furnished to the Lenders the audited
consolidated balance sheet of the Calton, Inc. (which includes the Borrower and
the Borrower Subsidiaries) as of November 30, 1996 (the "Balance Sheet Date"),
and the statements of income, retained earnings and cash flows of Calton, Inc.
and the Borrower for the year then ended, certified by Coopers. Such financial
statements have been prepared in accordance with Generally Accepted Accounting
Principles and fairly present the financial condition of Calton, Inc. as of the
Balance Sheet Date and the results of operations for the fiscal year then
ended. There are no contingent liabilities of the Borrower as of the Balance
Sheet Date which were required to be disclosed in accordance with Generally
Accepted Accounting Principles and which were not disclosed in such balance
sheets and the notes related thereto.
(b) The Borrower on a consolidated basis (after giving
effect to the transactions contemplated hereby), is solvent, has assets having
a fair value in excess of the amount required to pay its probable liabilities
on its existing debts as they become absolute and matured, and has, and will
have, access to adequate capital for the conduct of its business and the
ability to pay its debts from time to time incurred in connection therewith as
such debts mature.
Section 6.8. Changes; None Adverse. Since the Balance Sheet Date,
there has not been any materially adverse change in the financial condition,
assets, or results of operations of the Borrower, Calton, Inc. or any Borrower
Subsidiaries. Since the Balance Sheet Date, neither the Borrower nor any
Borrower Subsidiaries has made any Distribution. The Borrower is not a party
to any contract or agreement that could reasonably be expected to have a
material adverse affect on its business and which is not shown on the balance
sheets of the Borrower delivered to the Lenders pursuant to Section 6.7(a).
Section 6.9. Ownership. Each entity comprising Borrower and each
Borrower Subsidiary have title to all of their respective properties and
assets, real and personal, including the properties and assets reflected on the
financial statements referred to in Section 6.7 (other than any properties or
assets leased or disposed of in the ordinary course of business). The Borrower
is or shall become the owner of each Developed Lot and Unit the value of which
is to be included in the Borrowing Base and shall neither create nor suffer to
exist any lien or encumbrance thereon or security interest therein (other than
Permitted Liens), nor sell, assign, transfer or create or suffer to exist any
lien or encumbrance on or security interest (other than Permitted Liens), in
Housing Purchase Contracts or other right constituting proceeds thereof to or
in favor of any other Person, other than the Agent on behalf of the Lenders.
Section 6.10. Mortgages and Liens. None of the property, assets,
income or revenues of any character of the Borrower is subject to any mortgage,
lien, pledge, charge, security interest, defect or other encumbrance of any
kind, other than Permitted Liens.
Section 6.11. Intellectual Property. The Borrower and each
Borrower Subsidiary owns, or is licensed to use, all trademarks, tradenames,
copyrights, technology, know-how and processes necessary for the conduct of its
business as currently conducted (the "Intellectual Property"). No claim has
been asserted or is pending by any Person challenging or questioning the use of
any such Intellectual Property or the validity or effectiveness of any such
Intellectual Property. To the best knowledge and belief of the Borrower and
its Subsidiaries, the use of such Intellectual Property by the Borrower and its
Subsidiaries does not infringe on the rights of any Person.
Section 6.12. Indebtedness. Neither the Borrower nor a Borrower
Subsidiary is party to or is obligated under any Indebtedness other than
Permitted Indebtedness. Other than as identified on Schedule 6.12 attached
hereto, there exists no Indebtedness between the Borrower and Calton, Inc. or
between the Borrower and the Borrower's Subsidiaries other than amounts
advanced in the ordinary course of business. Neither the Borrower nor any
Borrower Subsidiary is party to or is obligated under any purchase money
indebtedness except as disclosed on Schedule 6.12(a).
Section 6.13. Litigation. Except as disclosed on Schedule 6.13 and
except for claims, actions and proceedings fully covered by insurance or which
do not exceed $50,000.00 for any single claim or an aggregate of $500,000.00,
there is no pending or, to the best of Borrower's knowledge, threatened action,
suit, or proceeding before any court, governmental or regulatory authority,
agency, commission, or board of arbitration against the Borrower, Calton, Inc.
or any Borrower Subsidiary.
Section 6.14. No Default. Neither the Borrower nor any Borrower
Subsidiary is in default in any respect under any contract, agreement or
instrument to which it is a party or by which it or any of its property is
bound, the consequence of which default could materially and adversely affect
the Borrower's financial condition, assets, business or operations.
Section 6.15. Taxes. Each of the Borrower and the Borrower
Subsidiaries has filed all federal, state and local tax returns required to be
filed by it and has paid, or has made reasonable provision for payment of, all
taxes (if any) which have or are reasonably likely to become due and payable
pursuant to any of the said returns or pursuant to any matters raised by audits
or for other reasons known to it, except for taxes the amount, applicability,
or validity of which are currently being contested by it in good faith by
appropriate proceedings and with respect to which it has set aside on its books
adequate reserves.
Section 6.16. Compliance of Properties with Law. The location,
construction, occupancy, development, operation and use of the Properties
comply in all material respects with the terms of all of the following: all
applicable regional impact plans and reports, all applicable restrictive
covenants and deed restrictions, zoning and subdivision ordinances and building
codes, health and Environmental Laws (as hereinafter defined), and other
applicable laws, statutes, ordinances, rules, regulations, orders or
determinations of any Governmental Authority. Borrower and the Borrower
Subsidiaries have obtained all necessary certificates, licenses,
authorizations, registrations, permits and/or approvals necessary for the use
and operation of the Properties or any part thereof (the "Permits") as
currently developed in accordance with all applicable laws. Without limiting
the foregoing, the Borrower hereby warrants and represents to the Agent and the
Lenders as follows:
(a) Borrower and the Borrower Subsidiaries shall take all
actions necessary to cause the Properties to comply with all applicable zoning
for such Properties. No action is pending to change or modify any zoning
applicable to any of the Properties except as set forth on Schedule 6.16(c) and
the zoning rights are Vested.
(b) All governmental permits required to operate and
develop the Properties contained in the Borrowing Base (except for such
Commercial Properties identified in Schedule 6.16(b)) as they are currently
operated are Vested and either run with and benefit the land or are freely
assignable to the Agent and the Lenders except as set forth on Schedule 6.16(d)
and the Borrower and the Borrower Subsidiaries have taken all required actions
necessary to perfect a first in priority security interest in such permits so
that upon the succession to ownership of the Properties by the Agent and the
Lenders (or their designee), the Agent and the Lenders (or their designee)
shall have full ownership and right to use such permits without payment of
additional fees, charges, or impositions other than currently required to be
paid by the Borrower or the Borrower Subsidiaries.
Section 6.17. ERISA Compliance; Severance Obligations.
(a) Each pension plan (as defined in section 3(2) of
ERISA) established or assumed or maintained, or to which contributions are made
by the Borrower or any Person which is a member of the same controlled group,
or under common control (within the meaning of section 414(b) or (c) of the
Code or Section 4001(b) (l) of ERISA), with Borrower is referred to herein as a
"Pension Plan". No such Pension Plan is a multi-employer plan (as defined in
Section 4001(a)(3) of ERISA) and each Pension Plan is, and has at all times
been, in compliance in all material respects with the applicable provisions of
ERISA and the Code, including without limitation any minimum funding
requirements applicable with respect to such Pension Plan. Each Pension Plan
is a defined contribution plan and not a "defined benefit plan" (as defined in
Section 3(35) of ERISA). There have been no reportable events within the
meaning of Section 4043 of ERISA and the regulations promulgated thereunder
with respect to any Pension Plan.
(b) Each welfare plan (as defined in section 3(1) of
ERISA) established or assumed or maintained, or to which contributions are
made, by the Borrower is referred to herein as a "Welfare Plan." No such
Welfare Plan is a multi-employer plan and each Welfare Plan is, and has at all
times been, in compliance in all material respects with the applicable
provisions of ERISA and the Code. The Borrower has no liability for
post-retirement benefits provided or to be provided to employees under any
Welfare Plan, except to make available continuous coverage as and to the extent
required by the provisions regarding employee benefit plans set forth in the
Consolidated Omnibus Budget Reconciliation Act of 1986.
(c) Except for the Pension Plans and the Welfare Plans,
the Borrower has not established or assumed or maintained or made contributions
to any employee benefit plan (as defined in section 3(3) of ERISA). There is
no unfulfilled obligation on the part of the Borrower to make any contribution
with respect to either the Pension Plans or the Welfare Plans.
(d) The execution and delivery of the Loan Documents and
the consummation of the transactions contemplated thereby will not involve any
prohibited transaction within the meaning of ERISA.
(e) Except as disclosed in writing to the Agent prior to
the Date of Closing, the Borrower has no Obligation to make severance payments
or provide post-employment benefits pursuant to any contract or other
arrangement with any of its employees, officers or directors (excluding the
Pension Plans and Welfare Plans).
Section 6.18. Other Representations. Each of the representations
and warranties made by the Borrower in any of the Loan Documents to which the
Borrower is a party was true and correct in all material respects when made and
continues to be true and correct in all material respects on the Date of
Closing, except to the extent that any of such representations and warranties
have been affected by the consummation of the transactions contemplated and
permitted or required by the Loan Documents and except that the foregoing shall
not apply to warranties and representations of any financial projections or
forward looking statements.
Section 6.19. Disclosure. No representation or warranty made by
the Borrower in this Agreement or in any agreement, instrument, document,
certificate, statement or letter furnished to the Agent or the Lenders by or on
behalf of the Borrower in connection with any of the transactions contemplated
by any of the Loan Documents contains any untrue statement of a material fact.
Section 6.20. Loans as Senior Indebtedness. All Obligations of the
Borrower to the Lenders will constitute "Senior Indebtedness" and will be
secured by first priority liens on all Properties, subject, however, to
Permitted Liens.
Section 6.21. Holding Company and Investment Company Acts. The
Borrower is neither a "holding company", nor a "subsidiary company" of a
"holding company", nor an "affiliate" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935; nor is it a
"registered investment company", nor an "affiliated company" nor a "principal
underwriter" of a ''registered investment company", as such terms are defined
in the Investment Company Act of 1940, as amended.
Section 6.22. Regulations U and X. The proceeds of the Loans shall
be used by the Borrower solely for the purposes specified herein. No portion
of any Loan is to be used for the purpose of purchasing or carrying any "margin
security" or "margin stock" as such terms are used in Regulations U and X of
the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and
224.
Section 6.23. Fiscal Year. Calton, Inc., the Borrower and all
Borrower Subsidiaries have a fiscal year ending November 30 of each year.
Section 6.24. Compliance With Certain Environmental Laws and Laws
Pertaining to Land Sales.
(a) Neither Calton, Inc. the Borrower nor any Borrower
Subsidiary nor any operator of the Real Estate or any operations thereon is in
violation, or, to the best of Borrower's knowledge, alleged violation, of any
judgment, decree, order, law, license, rule or regulation pertaining to
environmental matters, including without limitation, those arising under the
Resource Conservation and Recovery Act ("RCRA"), the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), as
amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"),
the Federal Clean Water Act, the Toxic Substances Control Act, the Federal
Clean Air Act, the Safe Drinking Water Act, the Flood Disaster Protection Act
of 1973, or any state or local statute, regulation, ordinance, order or decree
relating to health, safety or the environment (collectively, hereinafter
"Environmental Laws").
(b) Neither the Borrower nor a Borrower Subsidiary has
received notice from any third party including, without limitation, any
federal, state or local governmental authority: (i) that it has been identified
by the United States Environmental Protection Agency as a potentially
responsible party under CERCLA with respect to a site listed on the National
Priorities List, 40 C.F.R. Pan 300 Appendix B (1986); (ii) that any hazardous
waste, as defined by 42 U.S.C. Section 9601(5), any hazardous substances, as
defined by 42 U.S.C. Section 9601(14), any pollutant or contaminant, as defined
by 42 U.S.C. Section 9601(33), or any toxic substances, oil or hazardous
materials or other chemicals or substances regulated by any Environmental Law
("Hazardous Substances") which the Borrower or a Borrower Subsidiary has
generated, transported or disposed of has been found at any site at which a
federal, state or local agency or other third party has conducted or has
ordered that the Borrower or a Borrower Subsidiary conduct a remedial
investigation, removal or other response action pursuant to any Environmental
Law; or (iii) that the Borrower or a Borrower Subsidiary is or shall be a named
party to any claim, action, cause of action, complaint, or legal or
administrative proceeding (in each case, contingent or otherwise) arising out
of any third party's incurrence of costs, expenses, losses or damages of any
kind whatsoever in connection with the release of Hazardous Substances.
(c) (i) During the period of Borrower's ownership and, to
the best of Borrower's knowledge prior to Borrower's ownership, no portion of
the Real Estate has been used for the handling, processing, storage or disposal
of Hazardous Substances except in accordance with applicable Environmental
Laws; and no underground tank or other underground storage receptacle for
Hazardous Substances is located on any portion of the Real Estate; (ii) in the
course of any activities conducted by the Borrower, or operators of its
properties, no Hazardous Substances have been generated or are being used on
the Real Estate except in accordance with applicable Environmental Laws; (iii)
to the best of Borrower's knowledge, there have been no releases (i.e. any past
or present releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, disposing or dumping) or threatened releases
of Hazardous Substances on, upon, into or from any Real Estate, which releases
would have a material adverse affect on the value of any of the Real Estate or
adjacent properties or the environment; (iv) to the best of Borrower's
knowledge, there have been no releases on, upon, from or into any real property
in the vicinity of any of the Real Estate which, through soil or groundwater
contamination, may have come to be located on, and which would have a material
adverse affect on the value of, the Real Estate; and (v) in addition, any
Hazardous Substances that have been generated on any of the Real Estate have
been transported offsite only by carriers having an identification number
issued by the EPA, treated or disposed of only by treatment or disposal
facilities maintaining valid permits as required under applicable Environmental
Laws, which transporters and facilities have been and are operating in
compliance with such permits and applicable Environmental Laws.
(d) None of the Real Estate is or shall be subject to any
applicable environmental clean-up responsibility law or environmental
restrictive transfer law or regulation, by virtue of the transactions set forth
herein and contemplated hereby.
(e) Neither Borrower nor any Borrower Subsidiary is now,
nor at any time in the past has been given notice that it was, in violation of
the Interstate Land Sales Full Disclosure Act (the "Interstate Land Sales
Act"), the Florida Land Sales Practices Law (the "Florida Land Sales Law") or
similar laws pertaining to land sales (including, without limitation, any laws
pertaining to the sale of interests in timeshare units) in any state in which
the Borrower or any Borrower Subsidiary sells, transfers, manages, operates,
develops or otherwise disposes of property, which violation could have a
materially adverse affect on the assets, business, operations, or financial
condition of the Borrower.
(f) Neither Borrower, Calton, Inc. nor any Borrower
Subsidiary is now, nor at any time in the past has been given notice that it
was, in violation of (i) any federal or state securities laws, (ii) the federal
Truth in Lending Act (including regulations written under such Act by the Board
of Governors of the Federal Reserve System) or any similar state statute, (iii)
the federal Equal Credit Opportunity Act (including regulations written under
such Act by the Board of Governors of the Federal Reserve System) or any
similar state statute, or (iv) any judgment, decree, order, law, license, rule
or regulation arising under such statutes or with respect to the matters
covered thereby, which violation could materially adversely affect the assets,
business, operations, or financial condition of the Borrower.
Section 6.25. Insurance. The policies of insurance or certificates
of insurance furnished to the Agent with respect to the business and properties
of the Borrower and the Borrower Subsidiaries are in full force and effect and
no notice of cancellation or non-renewal has been received with respect
thereto.
Section 6.26. Collateral.
(a) All of the Obligations of the Borrower to the Agent
and the Lenders under or in respect of the Loan Documents are secured by and
entitled to the benefits of each of the Loan Documents.
(b) Other than for the leasing of office equipment and
furniture, trailers (e.g. construction trailers and sales trailers) and model
home furniture, no financing statement which names the Borrower or Borrower
Subsidiary has been filed in any jurisdiction in the United States or any State
thereof pursuant to Article 9 of the Uniform Commercial Code of any State, and
neither Borrower nor any Borrower Subsidiary has signed any financing statement
or any security agreement authorizing any secured party thereunder to file any
such financing statement in any such jurisdiction, other than those financing
statements or security agreements with respect to liens, security interests and
other encumbrances designated as Permitted Liens.
(c) No mortgages, chattel mortgages, assignments,
statements of assignment, security agreements or deeds of trust have been filed
by any person or persons with respect to any part of the Properties except for
the Permitted Liens.
(d) All of the assets of each entity comprising the
Borrower and the Borrower Subsidiaries are subject to perfected first in
priority security interests in favor of the Agent provided that certain of the
foregoing security interests are subject to the Permitted Liens.
Section 6.27. Existing Options. The Borrower and the Borrower
Subsidiaries are party to only those Options or purchase contracts more
particularly described on Schedule 6.27 (collectively "Existing Options") and
no default or event of default exists thereunder. Borrower has provided to
Agent true and exact copies of all documents and instruments executed in
connection with the Existing Options.
Section 7. CONDITIONS and EFFECTIVENESS. This Agreement shall
become effective when each of the following conditions precedent has been
fulfilled, except to the extent waived by the Agent.
Section 7.1. Loan Documents, etc. Each of the Loan Documents
shall have been duly and properly authorized, executed and delivered by the
respective party or parties thereto and shall be in full force and effect and
executed original counterparts of each of the Loan Documents shall have been
furnished to the Agent.
Section 7.2. Legality of Transactions. No change in applicable
law shall have occurred as a consequence of which it shall have become and
continue to be unlawful (a) for any of the Lenders or the Agent to perform any
of its agreements or obligations under any of the Loan Documents to which any
of them is a party on the Date of Closing or (b) for any Person (other than the
Agent or the Lenders) to perform any of their respective agreements or
obligations under any of the Loan Documents.
Section 7.3. Representations and Warranties. Each of the
representations and warranties made by or on behalf of the Borrower to the
Lenders and the Agent in this Agreement or the other Loan Documents shall be
true and correct in all material respects when made, shall, for all purposes of
this Agreement, be deemed to be repeated on and as of the Date of Closing, and
shall be true and correct in all material respects on and as of such date,
except, in each case, as necessarily affected by the consummation of the
transactions contemplated by the Loan Documents.
Section 7.4. Performance, etc. The Borrower and each Borrower
Subsidiary shall have duly and properly performed, complied with and observed
each of its covenants, agreements and obligations contained in any of the Loan
Documents to which it is a party or by which it is bound which are required to
be performed on or prior to the Date of Closing. No event shall have occurred
and be continuing on the Date of Closing, and no condition shall exist on the
Date of Closing, which constitutes an Event of Default or which would, with
notice or the lapse of time, or both, constitute an Event of Default or a
Default.
Section 7.5. Certified Copies of Certain Documents. The Agent
shall have received from the Borrower copies, certified by the corporate
secretary of each entity comprising the Borrower to be true and complete on the
Date of Closing, of the Certificate of Incorporation and By-laws of each entity
comprising the Borrower and each of its Subsidiaries.
Section 7.6. Proof of Action by Borrower. The Agent shall have
received copies, certified by the corporate secretary of each entity comprising
the Borrower, Calton, Inc. and each of Borrower's Subsidiaries to be true and
complete on the Date of Closing, of the records of all actions taken by each of
their directors and shareholders as may be required to authorize (a) its
execution and delivery of each of the Loan Documents to which any of them are a
party, (b) performance of all of its agreements and obligations under each of
such documents, and (c) the borrowings and other transactions contemplated by
this Agreement.
Section 7.7. Incumbency Certificate. The Agent shall have
received from each entity comprising the Borrower an incumbency certificate,
dated the Date of Closing, signed by its corporate secretary and the corporate
secretary of each Subsidiary and giving the name and bearing a specimen
signature of each individual who shall be authorized: (i) to sign on its
behalf each of the Loan Documents to which it is or is to become a party; (ii)
in the case of the Borrower only, to make application for the Loans; and (iii)
to give notices and to take any other action on its behalf under the Loan
Documents.
Section 7.8. Proceedings and Documents. All corporate,
governmental and other proceedings in connection with the transactions
contemplated by the Loan Documents and all instruments and documents incidental
thereto, shall be in form and substance reasonably satisfactory to the Agent
and the Agent shall have received all such counterpart originals or certified
or other copies of all such instruments and documents as the Agent shall have
reasonably requested. With respect to Letters of Credit issued on the Date of
Closing, if any, the Borrower shall have duly authorized, executed and
delivered to the Agent a Reimbursement Agreement.
Section 7.9. Fees. The Borrower shall have complied with its
obligation to pay the Fees, and the fees and costs of the Agent incurred in
closing upon the Loan evidenced by this Agreement.
Section 7.10. Legal Opinions. The Agent shall have received a
favorable written opinion, in form and substance satisfactory to the Agent in
its discretion, addressed to the Agent and the Lenders, dated the Effective
Date from each of:
(a) Counsel to the Borrower and the Borrower
Subsidiaries, as to the matters set forth in Section 8.1 and such other matters
as the Agent may reasonably request; and
(b) Local counsel admitted to practice and currently
practicing in the States of Florida, California, Massachusetts and New Jersey
with respect to certain matters arising under Florida, California,
Massachusetts and New Jersey law, including the recording and filing of
Mortgages and financing statements, the payment of documentary stamp tax and
intangible tax due, the enforceability of all Loan Documents under Florida,
California, Massachusetts and New Jersey law as the case may be, the
transferability and assignability to the Agent and the Lenders of permits and
licenses required for the development of the Properties as residential
communities, the comprehensive nature of such permits and licenses to permit
the current development of the Properties and such other matters as the Agent
may reasonably request.
Section 7.11. Borrowing Base Report. The Agent shall have received
from the Borrower prior to the Date of Closing, a Borrowing Base Report dated
as of the most recent month then ended; provided, however, that the Borrower
shall notify the Agent in writing on the Date of Closing of any material
deviation from the values reflected on the Borrowing Base Report and shall
provide the Agent with such supplementary documentation as the Agent may
reasonably request.
Section 7.12. Evidence of Insurance. The Borrower shall have
delivered to the Agent certificates of casualty, liability, flood and builders
risk insurance or other evidence of its insurance coverage on the Properties
satisfactory to the Agent.
Section 7.13. Environmental Reports. The Agent shall have
received from the Borrower, at the Borrower's expense, such favorable reports
and certificates, in form and substance satisfactory to the Agent in its sole
discretion, as the Agent shall deem necessary or desirable of qualified
engineers approved by the Agent as to environmental matters affecting the value
or use of the Properties, including, but not limited to the absence of any
Hazardous Substances on the Properties and compliance with Environmental Laws.
Section 7.14. Mortgages. The Borrower and the Borrower
Subsidiaries shall have executed and delivered to the Agent the Mortgages (or
amendments, restatements and ratifications thereof), granting the Agent, on
behalf of the Lenders, a mortgage lien and security interest in and to the
Properties.
Section 7.15. Loan Documents. The Loan Documents (including,
without limitation, the Revolving Credit Notes, and the Mortgages, in form and
substance satisfactory to the Agent) and the appropriate financing statements
and other documents in respect thereto and necessary to enable the Agent to
perfect its security interests thereunder, shall have been duly executed, where
appropriate, by the Borrower, and the Borrower Subsidiaries, delivered and
filed or recorded in all appropriate filing offices or other locations
necessary for the perfection of such interests, and all other actions necessary
for the perfection of such security interests shall have been duly taken.
Section 7.16. Title Insurance. The Agent shall have received the
Title Policy(ies) or commitment(s) to issue such policy(ies) from the Title
Insurance Company on terms reasonably satisfactory to the Agent, together with
a copy of the re-insurance treaties with a nationally recognized title
insurance company approved by Agent providing re-insurance on the Title
Policy(ies) in an amount reasonably determined by Agent together with receipts
evidencing the full payment of the premiums for such Title Policy(ies) and re-
insurance, insuring the Agent's interest on behalf of the Lenders, as first
mortgagee of all of the Mortgaged Properties, free and clear of any liens or
other encumbrances, except as disclosed on Schedule B thereto and without
containing any exception to title based on the absence of surveys or other
exceptions to title not approved by the Agent.
Section 7.17 Interest Rate Protection. The Borrower shall have
executed and delivered to the Agent an assignment in form and substance
satisfactory to the Agent, pursuant to which the Borrower shall assign all of
the Borrower's rights and benefits under the Protected Interest Rate Agreement
("Protected Interest Rate Agreement") upon the execution and delivery of such
Agreement.
Section 7.18. Existing Senior Indebtedness Documents. The Existing
Senior Indebtedness Documents and the Existing Senior Indebtedness shall be
cancelled and terminated or the Title Company shall issue its Title Policy to
Lenders without exception for the Existing Senior Indebtedness Documents.
Section 7.19 Warrant. Borrower shall grant to BankBoston the
Warrant pursuant to such documentation as BankBoston may determine to be
acceptable. Borrower shall issue to BankBoston the Warrant, together with the
related Registration Rights Agreement, each to be dated the date hereof and in
form and substance satisfactory to BankBoston.
Section 8. CONDITIONS TO SUBSEQUENT LOAN ADVANCES. The
obligation of each Lender to make any Advances under the Loan subsequent to the
Date of Closing and to issue any Letter of Credit to be issued subsequent to
the Date of Closing pursuant to Section 2.9 shall be subject to the
satisfaction of the following conditions precedent:
Section 8.1. Legality of Transactions. It shall not be unlawful
(a) for the Agent or any Lender to perform any of its agreements or obligations
under any of the Loan Documents to which the Agent or such Lender is a party on
the Drawdown Date of such Advance or the date of issuance of such Letter of
Credit, or (b) for any Person other than the Agent and the Lenders to perform
any of their respective agreements or obligations under any of the Loan
Documents to which any of them is a party on such date.
Section 8.2. Representations and Warranties. Each of the
representations and warranties made by or on behalf of the Borrower to the
Agent and the Lenders in this Agreement or any other Loan Documents shall be
true and correct in all material respects when made and shall, for all purposes
of this Agreement, be deemed to be repeated on and as of the date of the
Borrower's notice of borrowing for such Advance or request for the issuance of
such Letter of Credit and on and as of the Drawdown Date of such Advance or the
date of the issuance of such Letter of Credit, and shall be true and correct in
all material respects on and as of each of such dates, except, in each case, as
affected by the consummation of the transactions contemplated by the Loan
Documents.
Section 8.3. Performance, etc. The Borrower shall have duly and
properly performed, complied with and observed in all material respects each of
its covenants, agreements and obligations contained in Section Section 6, 7,
and 8 hereof, and shall have duly and properly performed, complied with and
observed in all material respects its covenants, agreements, and obligations in
all other articles of this Agreement and any of the other Loan Documents to
which it is a party or by which it is bound on the Drawdown Date of such
Advance or the date of the issuance of such Letter of Credit. No event shall
have occurred on or prior to such date and be continuing, and no condition
shall exist on such date, which constitutes an Event of Default or which would,
with notice or the lapse of time or both, constitute an Event of Default or a
Default.
Section 8.4. Proceedings and Documents. Any corporate,
governmental and other proceedings which are undertaken in connection with the
transactions contemplated by such Advance or Letter of Credit and any
instruments and documents incidental to such Advance or Letter of Credit shall
be in form and substance reasonably satisfactory to the Agent, and the Agent
shall have received all such counterpart originals or certified or other copies
of all such instruments and documents as the Agent shall have reasonably
requested. With respect to each Letter of Credit, the Borrower shall have duly
authorized, executed and delivered to the Agent a Reimbursement Agreement.
Section 8.5 Payment of Fees. The Borrower shall have complied
with its obligations under Section 3 to pay the Fees and all other fees,
amounts and expenses arising hereunder at any time subsequent to the Date of
Closing and becoming due and payable on or before the Drawdown Date of such
Advance.
Section 9. AFFIRMATIVE COVENANTS OF THE BORROWER. The Borrower
covenants and agrees that, so long as the Loan or Letter of Credit is
outstanding or the Lenders have any obligation to make Advances or issue
Letters of Credit hereunder, unless the Agent otherwise agrees in writing:
Section 9.1. Punctual Payment. Notwithstanding the Lenders' right
to make Advances under the Loan in the amount of any Obligation due hereunder,
the Borrower will duly and punctually pay or cause to be paid the principal and
interest on the Loans, and Letter of Credit Fees, and all other fees and other
amounts due and payable hereunder, all in accordance with the terms of this
Agreement and any applicable Loan Document.
Section 9.2. Legal Existence, Etc. The Borrower and Guarantors
will maintain their respective legal existence and good standing under the laws
of the state of its incorporation, will maintain its qualification to do
business in the states where each conducts business and in each other state in
which the failure to do so would have a material adverse effect on Borrower's
condition, financial or otherwise, and will maintain all of its rights and
franchises, except where the failure to maintain such right or franchise would
not have a material adverse effect on the conduct of Borrower's business.
Section 9.3. Reserves. The Borrower will maintain appropriate
reserves for depreciation, taxes and any other expenses or liabilities in
accordance with Generally Accepted Accounting Principles.
Section 9.4. Change of Corporate Name. Each entity comprising the
Borrower shall notify the Agent within five (5) days of any change in its
corporate name or any other name under which it conducts its business.
Section 9.5. Financial Statements and Other Reports. The Borrower
will furnish or cause to be furnished financial statements on a consolidated
basis and other monthly, quarterly or other periodic reports to the Agent and
each of the Lenders as follows:
(a) within ninety (90) days after the close of each
fiscal year:
(1) As to Borrower, Calton, Inc. and the Borrower
Subsidiaries, the audited consolidated balance sheets and audited consolidated
statements of income, retained earnings and cash flows (the "financial
statements") for such year and the year-end Borrowing Base Report, in
reasonable detail, and, setting forth in comparative form the corresponding
figures for the preceding year (except with respect to the year-end Borrowing
Base Report), prepared in accordance with Generally Accepted Accounting
Principles consistently applied, accompanied by a report and unqualified
opinion of Coopers or a Designated Accountant;
(2) comprehensive inventory breakdown of the
Borrower and Borrower Subsidiaries delineating the inventory on the same terms
as set forth on the Borrowing Base by Project and on both a dollar and Unit
basis; and
(3) a sales report and profit margin analysis by
Project; and
(4) a one year budget, including proposed capital
expenditures and land acquisitions, income statement and balance sheet and two
year projection for revenue and income for the Borrower and the Borrower
Subsidiaries on a consolidated basis; and
(5) a certificate addressed to the Agent prepared
by Coopers or a Designated Accounting Firm, certifying compliance by the
Borrower and the Borrower Subsidiaries with the covenants set forth at Section
Section 11.1, 11.2, 11.3, 11.5, 11.6 and 10.15.
(b) within forty five (45) days of the end of the first
three fiscal quarters and within ninety (90) of the end of the last fiscal
quarter (provided, however, an interim report shall be delivered with respect
to the last fiscal quarter within forty five (45) days of the end of such
fiscal quarter), a certificate by the Chief Financial Officer of the Borrower
certifying that the Borrower and the Borrower Subsidiaries are in compliance
with all terms and conditions of this Agreement including all covenants set
forth in Section Section 10.1, 10.2, 10.3, 10.4, 10.7, 10.8, 11.1, 11.2, 11.3,
11.5 and 11.6, and after a review of the terms hereof, that no Default exits
hereunder or otherwise specify the Default in detail;
(c) within forty five (45) days after the end of each
fiscal quarter, a report by Coopers or a Designated Accountant reporting on the
quarter end Borrowing Base Report based upon procedures agreed upon between
Agent and the Borrower;
(d) within thirty (30) days after the end of each
calendar month (which is not the end of a fiscal quarter) of each fiscal year:
(1) the unaudited balance sheet and income
statement similar to those required by clause (a) above (but without a
requirement as to comparison with the prior year) as of the end of such month
and for such month then ended and for the month from the beginning of the
current fiscal year to the end of such month prepared in accordance with
Generally Accepted Accounting Principles consistently applied and certified as
to preparation in accordance with Generally Accepted Accounting Principles and
that such statements fairly present the financial condition of the Borrower at
the dates thereof and for the periods then ended, on behalf of the Borrower by
its chief financial officer, subject only to changes resulting from audit and
normal year-end adjustments. The foregoing monthly reports shall be reported
on a division and cumulative basis.
(2) a schedule of land purchases during that month
and a schedule of all projected and contracted for land purchases pending for
each entity comprising the Borrower or any Borrower Subsidiaries;
(3) a sales report on a Project basis setting forth
the sales and prices for the Units and other Property sold in the Project
during the preceding month;
(4) a Certificate by the Chief Financial Officer of
each entity comprising the Borrower certifying that the Borrowing Base and all
Borrowing Base Reports submitted during the preceding month are true, correct
and complete in all respects and do not contain an omission of a material fact
or condition; and
(5) a compliance certificate in the form of Exhibit
"C."
(e) promptly upon receipt thereof, copies of all
management letters which are submitted to Borrower by Coopers or a Designated
Accountant in connection with any annual or interim audit of Borrower's books
made by such accountants;
(f) information with such specificity as the Agent shall
from time to time require in the form of Exhibit "A" hereto (the "Borrowing
Base Report"), or in such other form and substance, and at such times as may be
reasonably requested by the Agent including, on or before the end of each
calendar month for the immediately preceding calendar month, a certificate
signed by the Chief Financial Officer of the Borrower showing a calculation of
the Borrowing Base, the amount of Unit Costs and Lot Development Costs used in
such Borrowing Base calculation (attaching all documentation used in such
calculations) and setting forth the appraised value of Developable Land,
Developed Lots and the list prices of Units not covered by a Housing Purchase
Contract. The Agent shall have the right, to be exercised from time to time,
to have the Borrowing Base Report audited by Coopers or auditors acceptable to
the Agent, at the Borrower's expense;
(g) copies of all financial statements, reports, notices
and proxy statements sent or made available generally by the Borrower to its
stockholders, or by any Subsidiary of the Borrower to its stockholders (other
than the Borrower), of all regular and periodic reports and all registration
statements (excluding exhibits thereto and Registration Statements on Form S-8)
and prospectuses, if any, filed by the Borrower or any of its Subsidiaries with
any securities exchange or with the Securities and Exchange Commission or any
successor or analogous governmental authority; and all of press releases and
other statements made available generally by the Borrower or any of its
Subsidiaries to the public concerning material developments in the business of
the Borrower and any of its Subsidiaries;
(h) the additional reports, budgets and inventories as
may be requested by the Agent; and
(i) such other periodic reports, financial statements,
and other information as the Agent from time to time reasonably requests, on a
monthly, quarterly or other periodic basis, including, without limitation,
periodic reports of financial information, construction progress, inventory,
marketing and sales results, and compliance with financial, environmental or
other covenants. Reports required on an annual basis will be furnished by the
Borrower within ninety (90) days after the end of the applicable reporting
period, reports required on a quarterly or monthly basis will be furnished
within forty five (45) days or thirty (30) days, respectively, after the end of
the applicable reporting period. Annual budgets, marketing plans and other
reports or statements providing projected figures for a fiscal year will be
furnished by the Borrower on or before April 1 of the year for which such
projections are made.
Section 9.6. Use of Loan Proceeds. The Borrower shall use the
proceeds of the Loan solely to provide for the retirement of the Existing
Senior Indebtedness and for working capital needs of the Borrower in a manner
consistent with the provisions of this Agreement, including land acquisition
subject to the terms and conditions hereof; provided, however, the Borrower
shall not use such proceeds to acquire any land that is not zoned, permitted,
platted and ready for development as Developable Land except with the prior
written approval of Agent.
Section 9.7. Maintenance and Alterations. The Borrower shall
preserve and maintain the Properties in good order, repair and condition, free
from damage from casualty, and shall not permit or commit waste on the
Properties and shall cause each and every part of the Properties to comply in
all material respects with all applicable Federal, State and local laws and
governmental regulations, and any lawful private restrictions or other
requirements or provisions relating to the maintenance or use of the
Properties, including, without limitation, the terms and provisions of any
mortgages or other agreements or instruments constituting Permitted Liens.
Section 9.8. Certain Environmental Matters. The Borrower will (i)
comply with all applicable requirements of any Environmental Law; (ii) provide
the Agent with written notice immediately upon obtaining knowledge of any
potential or known release, or threat of release, of any Hazardous Substances
or oil at or from the Properties or upon receiving notice from any federal,
state or other environmental agency or authority in connection with the
foregoing matters, including the assessment, containment or removal of any
Hazardous Substance from any Properties. The Agent may, in its discretion,
from time to time, by or through any of its authorized officers, agents or
professional consultants, visit, inspect and conduct tests, (including a Phase
I environmental audit, and if recommended, further tests) or otherwise examine
the Properties and the records maintained with respect thereto to verify
compliance with such requirements to its satisfaction, all at the cost and
expense of the Borrower.
Section 9.9. Notice of Litigation and Judgment. The Borrower will
give notice in writing, in form and detail satisfactory to the Agent, within
twenty (20) days of becoming aware of any injunctive relief or any litigation
or proceedings in an amount in excess of $250,000.00 threatened in writing or
any pending litigation and proceedings to which Borrower is or becomes a party
involving an uninsured claim against it or any litigation or proceeding against
Persons with which it has a business relationship, which, if adversely
determined could materially and adversely affect Borrower's financial
condition, assets or operations and stating the nature and status of such
litigation or proceedings. The Borrower will give notice, in writing, in form
and detail satisfactory to the Agent, within twenty (20) days of any judgment,
final or otherwise, against it in an amount in excess of $250,000.00.
Section 9.10. Notice of Defaults. The Borrower will give notice in
writing to the Agent immediately upon becoming aware of the occurrence of any
Default or Event of Default under this Agreement.
Section 9.11. Books and Records. The books and records relating to
the financial affairs of Calton, Inc., the Borrower and the Borrower
Subsidiaries shall at all times be maintained in accordance with, and all
financial statements provided for herein, shall be prepared in accordance with
Generally Accepted Accounting Principles consistently applied, subject only to
changes resulting from audit and normal year-end adjustments. Such books and
records shall be kept by the Borrower at the Principal Office of Borrower, or
at such other location as the Borrower shall specify by prior written notice
given to the Agent.
Section 9.12. Insurance. The Borrower and each Borrower Subsidiary
will maintain with financially sound and reputable insurers insurance with
respect to its properties and business against such casualties and
contingencies and as shall be in accordance with the general practices of
businesses engaged in similar activities in the States of Florida and New
Jersey (and, with respect to such other states in which any Real Estate is
located, the general practices of businesses engaged in similar activities in
such states), and in amounts, containing such terms, in such forms and for such
periods as may be reasonable and prudent in accordance with sound business
practices. All such insurance shall be in such amount, such form, for such
periods and written by such companies as may be reasonably satisfactory to the
Agent. All policies of insurance shall provide for a minimum ten (10) days
prior written minimum cancellation notice to the Agent and shall name the Agent
as additional insured party. Certificates of insurance (or, if requested by
the Agent, certified copies of policies) with respect to all renewals or
replacements of such insurance from time to time in force together with
evidence of payment of premiums thereon satisfactory to the Agent shall be
delivered to the Agent at least ten (10) days before the expiration date of
then current insurance. No settlement on account of any loss covered by such
insurance shall be made without the consent of the Agent. In the event of
failure to provide and maintain insurance as herein provided, the Agent may, at
its option, after giving notice to the Borrower, as applicable, provide such
insurance and charge the amount thereof to the Borrower (including, without
limitation, by making an Advance therefor). The Borrower shall furnish to the
Agent certificates or other evidence satisfactory to the Agent of compliance
with the foregoing insurance provision. Without limiting the foregoing, the
Borrower will (i) keep all of its physical property insured against fire and
extended coverage risks in amounts and with deductibles and with endorsements,
all in form and content acceptable to the Agent, (ii) maintain all such
workers' compensation or similar insurance as may be required by law, and (iii)
maintain, in amounts and with deductibles and with endorsements, all in form
and content acceptable to the Agent, general public liability insurance against
claims for bodily injury, death or property damage occurring on, in or about
the Properties and business interruption insurance, and (iv) in the event the
Properties or any portion thereof is located in a flood hazard area identified
by the Secretary of Housing and Urban Development as an area having special
flood hazards and in which flood insurance has been made available under the
National Flood Insurance Act of 1968, as amended by the Flood Disaster Act of
1973 (and any successor Act thereto), maintain a flood insurance policy as
required by the Flood Disaster Act of 1973. The Borrower shall at all times
comply with and conform to all provisions of each such insurance policy and to
all requirements of the insurers thereunder applicable to Borrower, the
Properties or to the use, occupation, possession, operation, maintenance or
repair of all or any portion of the Properties.
Section 9.13. Taxes and Mechanic's Liens. The Borrower will duly
pay and discharge, or cause to be paid and discharged, before the same shall
become overdue, all taxes, assessments and other governmental charges imposed
upon the Real Estate, sales and activities, or any part thereof, or upon the
income or profits therefrom, as well as all claims for labor, materials or
supplies that if unpaid might by law become a lien or charge upon any of its
property; provided that any such tax, assessment, charge, levy or claim need
not be paid if the validity or amount thereof shall currently be contested in
good faith by appropriate proceedings and if the Borrower shall have set aside
on its books adequate reserves with respect thereto; and provided further that
the Borrower will pay all such taxes, assessments, charges, levies or claims
forthwith upon the commencement of proceedings to foreclose any lien that may
have attached as security therefor. There shall be included in each Advance
the sum necessary to pay the State of Florida intangible tax with respect to
each such Advance. The Borrower shall cause such intangible tax to be paid
when due.
Section 9.14. Conduct of Business. The Borrower will continue and
shall cause each Borrower Subsidiary to continue to engage in a business of the
same general type and in the same manner as conducted by it on the Date of
Closing.
Section 9.15. Compliance with Law. The Borrower will and shall
cause each Borrower Subsidiary to (i) comply with all laws, rules, regulations,
orders, writs, judgments, injunctions, decrees or awards, and any lawful
private restrictions and other encumbrances constituting Permitted Liens
whether now existing or hereafter arising, to which Borrower or the Real Estate
may be or become subject, and (ii) promptly obtain, maintain, apply for
renewal, and not allow to lapse, any authorization, consent, approval, license
or order, and accomplish any filing or registration with, any court or
Judicial, administrative or governmental authority which may be or may become
necessary in order that Borrower or Borrower Subsidiary performs all of its
obligations under this Agreement or the other Loan Documents and in order that
the same may be valid and binding and effective in accordance with their terms.
Section 9.16. Access. The Borrower and Borrower Subsidiaries will
permit the Agent, by its representatives and agents, to inspect, during normal
business hours, any of the Real Estate, to examine and make copies of its books
of accounts and other financial records, and to discuss its affairs, finances
and accounts with, and to be advised as to the same by, its officers at such
reasonable times and intervals as the Agent may designate, all at the cost and
expense of the Borrower. The Borrower hereby authorizes the Agent and the
Lenders to disclose information obtained pursuant to this Agreement to any
participant or potential participant in the Loan made hereunder and, whenever
required or requested by governmental or regulatory authorities, to such
authorities. The Borrower will permit a potential purchaser of all or a
portion of the Loan, which purchaser is designated by the Agent, to inspect, in
the presence of an authorized representative of the Borrower, during normal
business hours, any of the Real Estate, to examine and make copies of its
accounts and other financial records, and to discuss its affairs, finances and
accounts with such potential purchaser at such reasonable times and intervals
as the Agent may request without charge to the Agent or such potential
purchaser.
Section 9.17. Further Assurances. The Borrower and each Borrower
Subsidiary shall, at any time and from time to time, execute and deliver such
further instruments and take such further action as may reasonably be requested
by the Agent, in each case further and more perfectly to effect the purposes of
this Agreement and the other Loan Documents.
Section 9.18. Material Adverse Changes. The Borrower shall
disclose in writing to the Agent, immediately upon becoming aware of it, any
fact that materially and adversely affects Borrower's or any of Borrower's
Subsidiaries' financial position on a consolidated basis, business or
operations and, within five Business Days of such time as Borrower provides
such disclosure to the Agent, Borrower shall also deliver to the Agent in
writing its proposal for addressing such material adverse affect.
Section 9.19. Guaranty from Future Subsidiaries. The Borrower will
promptly secure the execution and delivery of the Subsidiary Guaranty to the
Agent from each Subsidiary formed and organized after the Date of Closing.
Section 10. NEGATIVE COVENANTS OF THE BORROWER. The Borrower,
covenants and agrees that so long as any Loan or Letter of Credit is
outstanding or the Lenders have any obligation to make Advances or issue
Letters of Credit hereunder, unless the Agent otherwise agrees in writing:
Section 10.1. Investments. Neither the Borrower nor any Borrower
Subsidiary will make or permit to exist to remain outstanding any Investment
except Investments in:
(a) marketable direct or guaranteed obligations of the
United States of America that mature within one (1) year from the date of
purchase;
(b) demand deposits, certificates of deposit, bankers
acceptances and time deposits of banks organized under the laws of the United
States of America or any state thereof having total assets in excess of
$500,000,000.00;
(c) securities commonly known as "commercial paper"
issued by a corporation organized and existing under the laws of the United
States of America or any state thereof that at the time of purchase have been
rated and the ratings for which are not less that "P-1" if rated by Moody's
Investors Services, Inc., and not less than "A-1" if rated by Standard and
Poor's;
(d) repurchase agreements secured by any one or more of
the Investments permitted under paragraphs (a), (b) or (c) above; and
(e) existing Investments of the kinds described on
Schedule 10.1 hereto.
Section 10.2. Security Interests and Liens. Neither the Borrower
nor any Borrower Subsidiary will create or permit to exist any mortgage,
pledge, security interest, recorded or unrecorded leases or other monetary lien
or monetary encumbrance on any of its Property, except for the following
("Permitted Liens"):
(a) liens and other encumbrances arising from attachments
or similar proceedings, pending litigation, judgments or taxes or assessments
or government charges in any such event whose validity or amount is being
contested in good faith by appropriate proceedings and for which adequate
reserves have been established and are maintained in accordance with Generally
Accepted Accounting Principles, or taxes and assessments which are not due and
delinquent;
(b) liens of carriers, warehousemen, landlords, vendors
(but only on office equipment and furniture, trailers [e.g. construction
trailers and sales trailers], and model home furniture) mechanics and
materialmen and other like liens and liens imposed by law, created in the
ordinary course of business, for amounts not yet due or which are being
contested in good faith by appropriate proceedings and as to which adequate
reserves or other appropriate provisions are being maintained in accordance
with Generally Accepted Accounting Principles;
(c) pledges or deposits made in connection with workmen's
compensation, employee benefit plans, unemployment or other insurance, old age
pensions, or other Social Security benefits; and
(d) security interests on Real Estate, securing
indebtedness issued in accordance with Section 10.3(d).
Section 10.3. Indebtedness. Neither the Borrower nor any Borrower
Subsidiary will incur or permit to exist or remain outstanding any Indebtedness
to any Person, provided, however, that the Borrower may incur or permit to
exist or remain outstanding (the following, exclusive of Section 10.3(d),
herein called "Permitted Indebtedness"):
(a) Indebtedness of the Borrower arising under this
Agreement or the other Loan Documents;
(b) Indebtedness in the respect of taxes, assessments,
governmental charges, and claims for labor, materials or supplies, to the
extent that payment thereof is not yet due or is being contested in good faith
by appropriate proceedings and a adequate reserve has been established therefor
and is maintained in accordance with Generally Accepted Accounting Principles;
(c) Indebtedness arising in the ordinary course of their
respective business not incurred through the borrowing of money or the
obtaining of credit or the leasing of property (except that credit on an open
account basis customarily extended in connection with the purchase of goods and
services shall be permitted) to the extent that payment thereof is not yet due
or is being contested in good faith by appropriate proceedings and an adequate
reserve has been established therefor and is maintained in accordance with
Generally Accepted Accounting Principles;
(d) Non-recourse purchase money indebtedness in the total
maximum outstanding principal amount of $10,000,000.00 secured as provided in
Section 10.2(d) for the purpose of acquiring Real Estate;
(e) Such matters as are set forth on the audited balance
sheet delivered to Lenders pursuant to Section 6.7(a) hereof;
(f) Indebtedness with respect to contingent and unsecured
(except with respect to the portion secured by Letters of Credit) obligations
for infrastructure improvements on the Properties in connection with
performance and surety bonds incurred in the ordinary course of business and
customary indemnification obligations of bonding companies incurred in
connection with the issuance of such bonds; provided that the aggregate face
amount of such performance and surety bonds does not at any time exceed
$30,000,000.00;
(g) Indebtedness with respect to contingent and unsecured
developer obligations to municipalities or other governmental authorities for
infrastructure improvements in connection with subdivision approvals;
(h) Miscellaneous indebtedness not exceeding $500,000 in
the aggregate; and
(i) Indebtedness with respect to leases for office space
at each of the chief executive office locations defined on Schedule 6.6 and for
leases of office equipment and furniture, trailers (e.g. construction trailers
and sales trailers) and model home furniture.
Neither the Borrower nor the Borrower Subsidiaries shall execute
any guaranty of any Indebtedness except as set forth above.
Section 10.4. Distributions. Neither Borrower nor any Borrower
Subsidiary shall make any Distributions.
Section 10.5. Maximum Commitment Amount. The Borrower will not
cause or permit the sum of the (a) Outstanding under the Loan and (b) the
Maximum Drawing Amount, to exceed the Maximum Revolver Amount.
Section 10.6. Consolidation and Dissolution. Neither the Borrower
nor a Borrower Subsidiary will: (1) at any time merge or consolidate with or
into any Person, or (ii) create or consolidate any Subsidiary, except that
Borrower shall dissolve the Subsidiaries listed in Schedule 10.6 on or before
June 30, 1998, and prior to such date, shall not transfer any assets into such
Subsidiaries or acquire any assets in such Subsidiaries; provided, however,
that in the event Borrower fails to dissolve each of the Subsidiaries listed in
Schedule 10.6 prior to June 30, 1998, such Subsidiaries shall become Borrower
Subsidiaries and shall execute such amendments, guaranties and other documents
as may be reasonably required by Agent to reflect such addition.
Section 10.7. Acquisition of Assets. Neither Borrower nor a
Borrower Subsidiary shall acquire or enter into a commitment to acquire any
stock or other ownership interest in or the substantial assets of any other
Person. The Borrower shall not acquire or enter into a commitment to acquire
any land for the development of a Project for the single takedown price in
excess of $3,000,000.00 or within any Project having fifty (50) or more
Developed Lots or Unsold Units, without the prior written approval of the
Required Lenders, except pursuant to the Existing Options and so long as such
acquisition does not result in the violation of any provision of this
Agreement.
Section 10.8. Real Estate Acquisitions. The Borrower and the
Borrower Subsidiaries shall be permitted to acquire additional Properties or
Real Estate provided that following conditions are continuously complied with:
(a) the acquired Property meets the requirements to
constitute Developable Land or Developed Lots;
(b) no Default or Event of Default exists or would occur
upon such acquisition;
(c) if the Loan is not extended pursuant to Section 2.10,
the Borrower shall not make any new acquisitions or acquire additional
Properties or Real Estate except as permitted by Section 2.10; and
(d) Borrower is otherwise in compliance with the
provisions of Section 10.7.
At the time of the acquisition of any Properties or any instrument, document of
title, security, chattel paper or other property (including marketable
securities, inventory, contract rights and accounts) or any proceeds or
products thereof, or any interest therein is created or arises with respect to
any of the Borrower's, the Borrower Subsidiaries' assets, the Borrower or the
Borrower Subsidiaries shall have unrestricted right to pledge, sell, assign or
transfer the same; the Borrower, the Borrower Subsidiaries shall deliver the
same to the Agent and shall pledge and assign to the Agent a fully perfected
first priority security interest to the Agent on behalf of the Lenders in such
Properties or other asset, subject to non-recourse purchase money financing.
The pledge of the asset shall meet all of the other requirements contained in
this Agreement for Collateral including the issuance of an endorsement to the
Title Policy with respect to any acquired Property.
Section 10.9. Disposition of Assets. Neither the Borrower nor a
Borrower Subsidiary will at any time sell or lease or otherwise dispose of any
assets; provided, however, that, so long as there is no Default or Event of
Default in existence at the time or would be created as a result of any such
action, the Borrower may:
(a) sell or dispose of Developed Lots, Developable Land
and Units, in the ordinary course of its business (other than a Bulk Sale) for
which it receives the greater of Fair Market Value or book value in either (i)
cash or (ii) cash (equal to the difference between the actual sales price of
such property and the Receivable) and a Receivable equal to not more than
seventy-five percent (75%) of the actual sales price of such property, provided
that such Receivable is due and payable within two (2) years from the date of
sale and secured by a deed of trust, mortgage or other security document duly
granting a first in priority lien and security interest in the property sold
(which is collaterally assigned to Agent); and
(b) consummate any sale of Commercial Property for which
it receives the greater of Fair Market Value or book value in either (i) cash
or (ii) cash (equal to the difference between the actual sales price of such
property and the Receivable) and a Receivable equal to not more than seventy-
five percent (75%) of the actual sales price of such property, provided that
such Receivable is due and payable within two (2) years from the date of sale
and secured by a deed of trust, mortgage or other security document duly
granting a first in priority lien and security interest in the property sold
(which is collaterally assigned to Agent).
Section 10.10. Sale and Leaseback. Neither the Borrower nor a
Borrower Subsidiary will enter into any sale and leaseback transactions as
seller-lessee, except that the Borrower and Borrower Subsidiaries may enter
into sale and leaseback transactions of Units which are used as model homes for
display to potential purchasers of Units provided that the Borrower has entered
into a bona fide lease of such Units and has no obligation to repurchase such
Units.
Section 10.11. Transactions with Affiliated Persons. Neither
the Borrower nor a Borrower Subsidiary shall pay or enter into any agreement to
pay any fees, wages, salary, bonus, commission, contributions to benefit plans
or any other compensation for goods or services to or for the benefit of any
Person who is a director or officer of the Borrower or a Borrower Subsidiary
who has, or any of whose affiliates has, a beneficial interest in the capital
stock of the Borrower or a Borrower Subsidiary, unless such compensation is not
in excess of the Fair Market Value of such services.
Section 10.12. ERISA Compliance. Except for the Pension Plans
and Welfare Plans in effect on the Date of Closing, neither the Borrower nor a
Borrower Subsidiary will, without giving prior notice to the Agent, establish,
assume, maintain or contribute to any employee benefit plan (as that term is
defined in Section 3(3) of ERISA). The Borrower will not permit any Pension
Plan or Welfare Plan to (i) engage in a "prohibited transaction" as such term
is defined in Section 4975 of the Code; (ii) incur any "accumulated funding
deficiency", as such term is defined in Section 302 of ERISA, whether or not
waived; or (iii) be terminated in a manner which would result in the imposition
of a lien or encumbrance on its assets pursuant to Section 4068 of ERISA.
Section 10.13. Existing Options and New Options. Borrower and
the Borrower Subsidiaries shall not modify any Existing Options or enter into
any new options or contracts (i) to provide for specific performance as a
remedy against the Borrower or any Borrower Subsidiary and (ii) which do not
provide for earnest money or option payment as liquidated damages as the sole
remedy in the event of a purchaser default.
Section 10.14. Interest Rate Protection. The Borrower shall
maintain interest rate protection arrangements in accordance with the terms of
a Protected Interest Rate Agreement to be entered into between BankBoston and
Borrower with a principal amount protected of $35,000,000.00, and with a
Eurodollar Rate no higher than 8% or corresponding Base Rate ("Protected
Interest Rate Agreement"). The Borrower shall not modify, terminate or
transfer such arrangements without the Agent's prior written consent and shall
maintain such arrangements in full force and effect, at all times during the
first thirty-six months of the original term of the Loan.
Section 10.15. Limitations on Borrowing. The amount of the
Senior Indebtedness, including the requested Advance, shall not exceed the
amount of the Borrowing Base.
Section 11. FINANCIAL COVENANTS OF THE BORROWER. For purposes of
this Section 11, all covenants are deemed to be made on a consolidated basis by
Calton, Inc., the Borrower and the Borrower Subsidiaries. The Borrower and
Calton, Inc., jointly and severally, covenant and agree that, so long as any
Loan or Letter of Credit is Outstanding or the Lenders have any obligation to
make Advances or issue Letters of Credit hereunder, unless the Agent otherwise
agrees in writing:
Section 11.1. Minimum Tangible Net Worth. The Borrower shall on
the Date of Closing have a minimum Tangible Net Worth of at least
$24,000,000.00 and shall maintain, on the last day of each fiscal quarter from
and after the Date of Closing, a minimum Tangible Net Worth of at least
$24,000,000.00 plus fifty percent (50%) of the cumulative positive Net Income
of the Borrower and one hundred percent (100%) of equity proceeds of the
Borrower since the Date of Closing determined quarterly, subject to such audit
adjustments as shall be acceptable to the Agent.
Section 11.2. Total Liabilities to Tangible Net Worth Ratio. The
Borrower will not permit the ratio of (a) Total Liabilities to (b) Tangible Net
Worth, determined on the last day of each fiscal quarter to exceed the ratio
set forth below for the amounts and the quarters ending during the periods set
forth below:
Period Permitted Ratio
August 31, 1997 to February 28, 1998 2.50
May 31, 1998 to Maturity Date 1.90
Section 11.3. Debt Service Coverage. The Borrower will not permit
the ratio of (a) EBITDA to (b) the sum of (i) Interest Incurred; (ii) principal
payments required under any Permitted Indebtedness; and (iii) payments under
any sale-leasebacks permitted under Section 10.14, to be no less than 1.0. The
foregoing ratio shall be tested on a rolling four quarter basis on the last day
of each fiscal quarter.
Section 11.4. Appraised Value. As of the Date of Closing, the
Borrower will not permit the outstanding principal balance of the Loan
(including the Maximum Drawing Amount) to exceed seventy-five percent (75%) of
the sum of (i) the Appraised Value of the Mortgaged Properties plus (ii) all
accounts, notes and mortgages receivable.
Section 11.5. Inventory. The Borrower will not permit:
(a) the book value of Developable Land, Commercial
Property, Land Work in Process and Developed Lots to exceed 150% of Tangible
Net Worth at the end of any fiscal quarter;
(b) the number of Developed Lots and Land Work in Process
to exceed two times the number of Units closed and delivered to buyers during
the previous twelve month period calculated on a rolling four quarter basis;
(c) the number of Unsold Units to exceed five per Project
(exclusive of two model homes) with the exception of the Project known as
Renaissance in which the maximum number of Unsold Units shall be thirty-five
(exclusive of six model homes and the design center); and
(d) the number of attached Units not subject to a Housing
Purchase Contract to exceed twelve (inclusive of model homes) per Project at
all times.
Section 11.6 Interest Coverage. The Borrower will not permit
the ratio of (a) EBITDA to Interest Incurred calculated on a rolling four
quarter basis, to fall below the following:
Quarters Ended Maximum
8/31/97 -- 2/28/98 1.25
5/31/98 and thereafter 1.50
All of the foregoing calculations shall be made at and as of the
end of each fiscal quarter.
Section 12. EVENTS OF DEFAULT; ACCELERATION; REMEDIES.
Section 12.1. Events of Default; Acceleration. If any of the
following events (an "Event of Default") shall occur and be continuing:
(a) if the Borrower shall fail to comply with its
covenant under Section 9.1 or shall fail to pay any principal of or interest on
the Loans or fees payable under Section 3 within ten (10) days when the same
shall become due and payable and the receipt by the Borrower of notice of non-
payment, whether at the stated date of maturity or any accelerated date of
maturity or at any other date fixed for payment, provided that the foregoing
ten (10) day grace period (and any required notices) shall automatically
terminate if payments are made on a date other than the due date thereof more
frequently than three times in any year;
(b) if the Borrower shall fail to comply with any of its
covenants contained in Section Section 9.2, 9.6, 9.12, Section Section 10.1
through Section 10.4, Section Section 10.6 through Section 10.11;
(c) if the Borrower shall fail to comply with any of its
covenants contained in Section 9.10 and Section 9.16 and such failure shall
continue for five (5) days after written notice of such failure has been given
to the Borrower by the Agent;
(d) if the Borrower shall fail to comply with any of its
covenants contained in the following Section Section from and after thirty
(30) days after the date of the occurrence of the Default with respect to such
Section : Section 9.3, Section 9.4, Section 9.5, Section 9.7, Section 9.9,
Section 9.11, Section 9.13, Section 9.14, Section 9.15, Section 9.17, Section
9.18, Section 9.19, Section 10.5, Section 10.13, Section 10.14, Section 10.15,
Section 11.1 and Section 11.2;
(e) if the Borrower shall fail to comply with any of its
covenants contained in Section 9.8, Section 10.12, Section 11.3, Section 11.4,
Section 11.5 and Section 11.6 and such failure shall continue for ninety (90)
days after written notice of such failure has been given to the Borrower by the
Agent;
(f) if the Borrower shall fail to perform any term,
covenant or agreement contained herein (other than those specified in
subsections (a) through (e) above) and such failure shall continue for thirty
(30) days after written notice of such failure has been given to the Borrower
by the Agent;
(g) if any representation or warranty of the Borrower in
any Loan Document or in any document or instrument delivered pursuant to or in
connection with this Agreement shall prove to have been false in any material
respect upon the date when made;
(h) if the Borrower shall fail to make payment or
otherwise shall fail to observe or perform when due or within any applicable
period of grace any term, covenant or agreement contained in any recourse
agreement by which the Borrower is bound, evidencing or securing borrowed money
in a principal amount greater than $250,000.00 as would permit the holder or
holders thereof or of any such obligations to accelerate the maturity thereof;
(i) if the Borrower or a Borrower Subsidiary (but only if
the financial difficulties of a Borrower Subsidiary create financial
difficulties for Borrower) shall be involved in financial difficulties as
evidenced:
(i) by its commencement of a voluntary case under
Title 11 of the United States Code as from time to time in effect, or by its
authorizing, by appropriate proceedings of its board of directors, managing
partner or other governing body, the commencement of such a voluntary case;
(ii) by its filing an answer or other pleading
admitting or failing to deny the material allegations of a petition filed
against it commencing an involuntary case under said Title 11, or seeking,
consenting to or acquiescing in the relief therein provided, or by its failing
to controvert timely the material allegations of any such petition;
(iii) by the entry of an order for relief against it
in any involuntary case commenced under said Title 11;
(iv) by its seeking relief as a debtor under any
applicable law, other than said Title 11, of any jurisdiction relating to the
liquidation or reorganization of debtors or to the modification or alteration
of the rights of creditors, or by its consenting to or acquiescing in such
relief:
(v) by entry of an order by a court of competent
jurisdiction (A) finding it to be bankrupt or insolvent or (B) ordering or
approving its liquidation, reorganization or any modification or alteration of
the rights of its creditors which remains undischarged and unstayed for more
than sixty (60) days;
(vi) by the entry of an order by a court of
competent jurisdiction assuming custody for, or appointing a receiver or other
custodian for, all or a substantial part of its property which remains
undischarged and unstayed for more than thirty (30) days; or
(vii) by its making an assignment for the benefit of,
or entering into a composition with, its creditors, or appointing or consenting
to the appointment of a receiver or other custodian for all or a substantial
part of its property;
(j) if there shall remain in force, undischarged,
unsatisfied, unstayed and unbonded, for more than thirty (30) days, whether or
not consecutive, any final judgment against the Borrower which, with other
outstanding final judgments, undischarged, unsatisfied, unstayed and unbonded
for more than thirty (30) days against such Person(s) exceeds $50,000.00; or
(k) there occurs a Change of Control.
Upon the occurrence of an Event of Default, the Agent may
by notice to the Borrower terminate the Commitments under this Agreement and
upon such termination shall have no further obligation to make the Loan or
Advances to the Borrower, and may declare all amounts owing with respect to
this Agreement or any of the other Loan Documents to be, and they shall
thereupon forthwith mature and become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the parties hereto; provided, that in the event of
any Event of Default specified in Section 12(i), the Lenders' Commitments
hereunder shall immediately terminate and all amounts due under the Loan
Documents shall become immediately due and payable automatically and without
any requirement of notice from the Agent.
The cure periods contained herein are subject to the
following terms and conditions:
a. The Agent shall have the right to take all actions it
deems appropriate or necessary, notwithstanding the pendency of the cure
period, if the Agent determines that an emergency condition creating imminent
danger to life or property exists which is not being expeditiously acted upon
by the Borrower;
b. The applicable cure period is conditioned upon the
Borrower ceasing and desisting, to the extent possible from the action creating
the Event of Default and the Borrower's taking all consistent actions necessary
to cure the Event of Default; and
Section 12.2. Remedies. The Agent and the Lenders shall have all
remedies available at law or equity or under the Loan Documents. No remedy
herein conferred upon any Lender or the Agent or the holder of any promissory
note hereunder is intended to be exclusive of any other remedy and each and
every remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or any other provision of law.
Section 12.3. Advances. If the Agent shall elect to advance sums
for any reason permitted or provided by any of the terms of this Agreement
(other than normal loan disbursements for requested borrowings) or any of the
Loan Documents, then such sums shall be payable upon demand of the Agent and
shall bear interest, commencing on the date advanced and continuing until
repaid, at the applicable rate(s) of interest set forth in this Agreement
applicable to a period when a Default exists hereunder.
Section 12.4. Environmental Audit. At any time during the
existence of any Event of Default, the Agent at its option, may obtain at the
sole cost and expense of the Borrower an environmental audit of the Properties
prepared by a geohydrologist, an independent engineer or other qualified
consultant or expert approved by the Agent evaluating and confirming (i)
whether any Hazardous Substances are present in the soil or water at or
adjacent to the Properties, (ii) whether the operations at the Properties
comply with all air quality and other applicable Environmental Laws or (iii) or
identification of preventive maintenance or a compliance review with respect to
any Environmental Laws. In furtherance of the preceding sentence, the Agent
reserves the right, upon reasonable notice, to enter and investigate the
Properties and to take such samples as may be necessary to perform soil, water
or other analyses.
Section 12.5. Proceeds. In the event that, following the
occurrence or during the continuance of any Default or Event of Default, the
Agent or any Lender, as the case may be, receives any monies in connection with
the enforcement of any the Loan Documents, such monies shall be distributed for
application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of the Agent for or in respect of all reasonable costs, expenses,
disbursements and losses which shall have been incurred or sustained by the
Agent in connection with the collection of such monies by the Agent, for the
exercise, protection or enforcement by the Agent of all or any of the rights,
remedies, powers and privileges of the Agent under this Agreement or any of the
other Loan Documents or in support of any provision of adequate indemnity to
the Agent against any taxes or liens which by law shall have, or may have,
priority over the rights of the Agent to such monies;
(b) Second, to all other Obligations in such order or
preference as the Majority Lenders may determine; provided, however, that
distributions in respect of such Obligations shall be made (i) pari passu among
Obligations with respect to the Agent's fee payable pursuant to Section 3 and
all other Obligations and (ii) Obligations owing to the Lenders with respect to
each type of Obligation such as interest, principal, fees and expenses, shall
be made among the Lenders pro rata; and provided, further that the Agent may in
its discretion make proper allowance to take into account any Obligations not
then due and payable; and
(c) Third, the excess, if any, shall be returned to the
Borrower or to such other Persons as are entitled thereto.
Section 13. SETOFF. Regardless of the adequacy of any Collateral
or deposits or other sums credited by or due from any of the Lenders to the
Borrower and any securities or other property of the Borrower in the possession
of such Lender may, upon the consent of the Majority Lenders, be applied to or
set off against the payment of Obligations and any and all other liabilities,
direct, or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, of the Borrower to such Lender at any time after the
occurrence and during the continuance of any Event of Default. Each of the
Lenders agrees with each other Lender that (a) if an amount to be set off is to
be applied to Indebtedness of the Borrower to such Lender, other than
Indebtedness evidenced by the Notes held by such Lender, such amount shall be
applied ratably to such other Indebtedness and to the Indebtedness evidenced by
all such Notes held by such Lender, and (b) if such Lender shall receive from
the Borrower, whether by voluntary payment, exercise of the right of setoff,
counterclaim, cross-action, enforcement of the claim evidenced by the Notes
held by such Lender by proceedings against the Borrower at law or in equity or
by proof thereof in bankruptcy, reorganization, liquidation, receivership or
similar proceedings or otherwise, and shall retain and apply to the payment of
the Note or Notes held by such Lender any amount in excess of its ratable
portion of the payments received by all of the Lenders with respect to the
Notes held by all of the Lenders, such Lender will make such disposition and
arrangements with the other Lenders with respect to such excess, either by way
of distribution, pro tanto, assignment of claims, subrogation, or otherwise as
shall result in each Lender receiving in respect of the Notes held by it its
proportionate payment as contemplated by this Agreement; provided that if all
or any part of such excess payment is thereafter recovered from such Lender,
such disposition and arrangements shall be rescinded and the amount restored to
the extent of such recovery, but without interest.
Section 14. EXPENSES. The Borrower agrees to pay (a) the costs
of producing and reproducing this Agreement, the other Loan Documents and the
agreements and instruments mentioned herein and delivered pursuant to the
foregoing, (b) any taxes (including any interest and penalties in respect
thereto) payable by the Agent or any of the Lenders (other than taxes based
upon the Agent's or any Lender's net income) on or with respect to the
transactions contemplated by this Agreement (the Borrower hereby agreeing to
indemnify the Agent and each Lender with respect thereto), (c) the fees,
expenses and disbursements of the Agent and the Agent's legal counsel incurred
in connection with the preparation or interpretation of the Loan Documents and
other instruments mentioned herein and all services provided to Agent connected
with the consummation or servicing of the Loan, and amendments, modifications,
approvals, consents or waivers hereto or hereunder, and the administration of
the Loans, which shall include but shall not be limited to all syndication
costs and the cost to organize, plan, hold and attend periodic meetings of the
Lenders; (d) all expenses (including reasonable attorneys' fees and costs,
which attorneys may be employees of any Lender or the Agent) incurred by any
Lender, or affiliates of Lender, or the Agent in connection with (i) the
enforcement of or preservation of rights under any of the Loan Documents
against the Borrower or the Borrower Subsidiaries or the administration thereof
after the occurrence of a Default or Event of Default and (ii) any litigation,
proceeding or dispute whether arising hereunder or otherwise, in any way
related to the Agent's or any Lender's relationship with the Borrower or the
Borrower Subsidiaries, (e) all reasonable fees, expenses and disbursements of
any Lender or the Agent incurred in connection with Appraisals, the Title
Policy, UCC searches, UCC filings or mortgage recordings, and intangible
property searches, and (f) the fees and expenses of Coopers or the Designated
Accounting Firm. The covenants of this Section 14 shall survive payment or
satisfaction of payment of amounts owing with respect to the Obligations.
Section 15. INDEMNIFICATION. Except for liability arising
exclusively from the gross negligence or willful misconduct of the Agent, the
Borrower agrees to indemnify and hold harmless the Agent and the Lenders from
and against any and all claims, actions and suits whether groundless or
otherwise, and from and against any and all liabilities, losses, damages and
expenses of every nature and character arising out of this Agreement or any of
the other Loan Documents or the transactions contemplated hereby including,
without limitation, (a) any actual or proposed use by the Borrower of the
proceeds of any of the Loans, (b) any actual or alleged infringement of any
patent, copyright, trademark, service mark or similar right of the Borrower,
(c) the Borrower entering into or performing this Agreement or any of the other
Loan Documents, (d) with respect to the Borrower and its properties and assets,
the violation of any Environmental Laws, the presence, disposal, escape,
seepage, leakage, spillage, discharge, emission, release or threatened release
of any Hazardous Substances or any action, suit, proceeding or investigation
brought or threatened with respect to any Hazardous Substances (including, but
not limited to, claims with respect to wrongful death, personal injury or
damage to property), or (e) any claim that any of the Existing Senior
Indebtedness is senior in priority to the Indebtedness, in each case including,
without limitation, the reasonable fees and disbursements of counsel and
allocated costs of internal counsel incurred in connection with any such
investigation, litigation or other proceeding. In litigation, or the
preparation therefor, the Lenders and the Agent shall be entitled to select
their own counsel and, in addition to the foregoing indemnity, the Borrower
agrees to pay promptly the reasonable fees and expenses of such counsel. If,
and to the extent that the obligations of the Borrower under this Section 15
are unenforceable for any reason, the Borrower hereby agrees to make the
maximum contribution to the payment in satisfaction of such obligations which
is permissible under applicable law. There shall be specifically excluded from
the foregoing indemnification any claims, actions, suits, liabilities, losses,
damages and expenses arising from disputes among the Lenders with respect to
the Loan or the Loan Documents. In the event that any such claims, actions,
suits, liabilities, losses, damages and expenses involve both a dispute among
the Lenders and other matters covered by this indemnification provision, the
Agent shall make a reasonable good faith allocation of all losses, damages and
expenses incurred between the Lenders' dispute and the other matters covered by
this indemnification provision, which allocation by the Agent shall be final
and binding upon the parties hereto.
Section 16. SURVIVAL OF COVENANTS ETC. All covenants,
agreements, representations and warranties made herein, in any of the other
Loan Documents or in any documents or other papers delivered by or on behalf of
the Borrower pursuant hereto and thereto shall be deemed to have been relied
upon by the Lenders and the Agent, notwithstanding any investigation heretofore
or hereafter made by any of them, and shall survive the making by the Lenders
of the Loan hereunder and the issuance by the Lenders of the Letters of Credit,
as herein contemplated, and shall continue in full force and effect so long as
any amount due under this Agreement remains outstanding and unpaid or any
Lender has any obligation to make any Advances or issue Letters of Credit
hereunder.
Section 17. THE AGENT.
Section 17.1. Authorization. The Agent is authorized to take such
action on behalf of each of the Lenders and to exercise all such powers as are
hereunder and under any of the other Loan Documents and any related documents
delegated to the Agent, together with such powers as are reasonably incident
thereto, provided that no duties or responsibilities not expressly assumed
herein or therein shall be implied to have been assumed by the Agent. The
relationship between the Agent and the Lenders is and shall be that of agent
and principal only, and nothing contained in this Agreement or any of the other
Loan Documents shall be construed to constitute the Agent as a trustee or
fiduciary for any Lender.
Section 17.2. Employees and Agents. The Agent may exercise its
powers and execute its duties by or through employees or agents and shall be
entitled to take, and to rely on, advice of counsel concerning all matters
pertaining to its rights and duties under this Agreement and the other Loan
Documents. The Agent may utilize the services of such Persons as the Agent in
its sole discretion may reasonably determine, and all reasonable fees and
expenses of any such Persons shall be paid by the Borrower in accordance with
Section 14.
Section 17.3 No Liability. Neither the Agent nor any of its
shareholders, directors, officers or employees nor any other Person assisting
them in their duties nor any agent or employee thereof, shall be liable for any
waiver, consent or approval given or any action taken, or omitted to be taken,
in good faith by it or them hereunder or under any of the other Loan Documents,
or in connection herewith or therewith, or be responsible for the consequences
of any oversight or error of judgment whatsoever, except that the Agent or such
other Person, as the case may be, may be liable for losses due to its willful
misconduct or gross negligence.
Section 17.4. No Representations. The Agent shall not be
responsible for the execution or validity or enforceability of this Agreement,
the Notes, any of the other Loan Documents or any instrument at any time
constituting, or intended to constitute, or for the validity, enforceability or
collectibility of any such amounts owing with respect to the Notes, or for any
recitals or statements, warranties or representations made herein or in any of
the other Loan Documents or in any certificate or instrument hereafter
furnished to it by or on behalf of the Borrower, or be bound to ascertain or
inquire as to the performance or observance of any of the terms, conditions,
covenants or agreements herein. The Agent shall not be bound to ascertain
whether any notice, consent, waiver or request delivered to it by the Borrower
or any holder of any of the Notes shall have been duly authorized or is true,
accurate and complete. The Agent has not made nor does it now make any
representations or warranties, express or implied, nor does it assume any
liability to the Lenders, with respect to the credit worthiness or financial
condition of the Borrower. Each Lender acknowledges that it has, independently
and without reliance upon the Agent or any other Lender, and based upon such
information and documents as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement.
Section 17.5. Payments.
(a) A payment by the Borrower to the Agent hereunder or
any of the other Loan Documents for the account of any Lender shall constitute
a payment to such Lender. The Agent agrees promptly to distribute to each
Lender such Lender's pro rata share of payments received by the Agent for the
account of the Lenders except as otherwise expressly provided herein or in any
of the other Loan Documents
(b) If in the opinion of the Agent the distribution of
any amount received by it in such capacity hereunder, under the Notes or under
any of the other Loan Documents might involve it in liability, it may refrain
from making distribution until its right to make distribution shall have been
adjudicated by a court of competent jurisdiction. If a court of competent
jurisdiction shall adjudge that any amount received and distributed by the
Agent is to be repaid, each Person to whom any such distribution shall have
been made shall either repay to the Agent its proportionate share of the amount
so adjudged to be repaid or shall pay over the same in such manner and to such
Persons as shall be determined by such court.
(c) Notwithstanding anything to the contrary contained in
this Agreement or any of the other Loan Documents, any Lender that fails (i) to
make available to the Agent its pro rata share of any Loan or Advance or (ii)
to comply with the provisions herein with respect to making dispositions and
arrangements with the other Lenders, where such Lender's share of any payment
received, whether by setoff or otherwise, is in excess of its pro rata share of
such payments due and payable to all of the Lenders, in each case as, when and
to the full extent required by the provisions of this Agreement, shall be
deemed delinquent (a "Delinquent Bank") and shall be deemed a Delinquent Bank
until such time as such delinquency is satisfied. A Delinquent Bank shall be
deemed to have assigned any and all payments due to it from the Borrower,
whether on account of outstanding loans, unpaid reimbursement Obligations,
interest, fees or otherwise, to the remaining nondelinquent Lenders for
application to, and reduction of, their respective pro rata shares of all
outstanding Loans. The Delinquent Bank hereby authorizes the Agent to
distribute such payments to the nondelinquent Lenders in proportion to their
respective pro rata shares of all outstanding Loans. A Delinquent Bank shall
be deemed to have satisfied in full a delinquency when and if, as a result of
application of the assigned payments to all outstanding Loans of the
nondelinquent Lenders, the Lenders' respective pro rata shares of all
outstanding Loans have returned to those in effect immediately prior to such
delinquency and without giving effect to the nonpayment causing such
delinquency.
Section 17.6. Holders of Notes. The Agent may deem and treat the
payee of any Note as the absolute owner or purchaser thereof for all purposes
hereof until it shall have been furnished in writing with a different name by
such payee or by a subsequent holder, assignee or transferee.
Section 17.7. Indemnity. The Lenders ratably agree hereby to
indemnify and hold harmless the Agent from and against any and all claims,
actions and suits (whether groundless or otherwise), losses, damages, costs,
expenses (including any expenses for which the Agent has not been reimbursed by
the Borrower as required by Section 14), and liabilities of every nature and
character arising out of or related to this Agreement, the Notes, or any of the
other Loan Documents or the transactions contemplated or evidenced hereby or
thereby, or the Agent's actions taken hereunder or thereunder, except to the
extent that any of the same shall be directly caused by the Agent's willful
misconduct or gross negligence.
Section 17.8. Agent as Lender. In its individual capacity,
BankBoston shall have the same obligations and the same rights, powers and
privileges in respect to its Commitment and the Loan made by it, and as the
holder of any of the Notes as it would have were it not also the Agent.
Section 17.9. Resignation. The Agent may resign at any time by
giving sixty (60) days' prior written notice thereof to the Lenders and the
Borrower. Upon any such resignation, the Majority Lenders shall have the right
to appoint a successor Agent. Provided no Event of Default exists, the
appointment of a successor Agent that is not a Lender shall be subject to the
prior approval of the Borrower which shall not be unreasonably withheld or
delayed. Unless a Default or Event of Default shall have occurred and be
continuing for a period of at least thirty (30) days after written notice
thereof from the Agent to the Borrower, such successor Agent shall be
reasonably acceptable to the Borrower (such notice and time to cure will be
provided by the Agent only in the event of a pending appointment of successor
Agent, and applies only for the purposes of this Section 17.9). If no
successor Agent shall have been so appointed by the Majority Lenders and shall
have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent, which shall be a financial
institution having a rating of not less than A-2 or its equivalent by Standard
& Poor's Corporation. 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
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation, the provisions
of this Agreement and the other Loan Documents shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent.
Section 17.10. Notification of Waivers, Amendments, Defaults
and Events of Default, Litigation and Judgment. Each Lender hereby agrees
that, upon learning of the existence of a Default or an Event of Default, it
shall promptly notify the Agent thereof. The Agent hereby agrees that upon
receipt of any notice under this Section 17.10 it shall promptly notify the
other Lenders of the existence of such Default or Event of Default. The Agent
hereby agrees it shall promptly notify the other Lenders of any waiver or
amendment of any material term of this Agreement approved or granted by Agent.
The Agent shall also provide notice to the Lenders of any pending litigation or
judgments affecting the Borrower or any of its properties of which Agent
receives notice thereof.
Section 17.11. Duties in the Case of Enforcement. In case one
or more Events of Default have occurred and shall be continuing, and whether or
not acceleration of the Obligations shall have occurred, the Agent shall, if
(a) so requested by the Required Lenders and (b) the Lenders have provided to
the Agent such additional indemnities and assurances against expenses and
liabilities as the Agent may reasonably request, proceed to enforce the
provisions of the Loan Documents authorizing the foreclosure of the Mortgages
and the sale or other disposition of all or any part of the Collateral and
exercise all or any such other legal and equitable and other rights or remedies
as it may have in respect of such Collateral. The Required Lenders may direct
the Agent in writing as to the method and the extent of any such sale or other
disposition, the Lenders hereby agreeing to indemnify and hold the Agent
harmless from all liabilities incurred in respect of all actions taken or
omitted in accordance with such directions, provided that the Agent need not
comply with any such direction to the extent that the Agent reasonably believes
the Agent's compliance with such direction to be unlawful or commercially
unreasonable in any applicable jurisdiction. Agent may, in its discretion, but
without obligation, in the absence of direction from the Required Lenders, take
such interim actions as it believes necessary to preserve the Collateral and
the rights of the Lenders therein. Such actions may include, but shall not be
limited to, petitioning a court for injunctive relief, appointment of a
receiver or sequestration of proceeds of the Properties.
Section 17.12. Bankruptcy Proceedings. In the event a
bankruptcy or other insolvency proceeding is commenced by or against either
entity comprising Borrower or Calton, Inc., Agent shall have the sole right to
file and pursue a joint proof of claim on behalf of all the Lenders. Each
Lender irrevocably waives its right to file and pursue a separate proof of
claim in any such proceedings.
Section 17.13. Notices, Information and Exercise of Rights of
Inspection. The Agent shall provide to the Lenders copies of all material
information that the Lenders may from time to time request of the Agent. The
Lenders agree to coordinate the exercise of any inspections rights or requests
for information with the Agent in order to permit the Agent to efficiently
perform its functions hereunder.
Section 18. ASSIGNMENT AND PARTICIPATION.
Section 18.1. Conditions to Assignment by Lenders. Except as
provided herein, each Lender may assign to one or more Eligible Assignees all
or a portion of its interests, rights and obligations under this Agreement
(including all or a portion of its Commitment Percentage and Commitment and the
same portion of the Loans at the time owing to it, and the Notes held by it;
provided that (a) the Agent shall have given its prior written consent to such
assignment, (b) each such assignment shall be of a constant, and not a varying,
percentage of all the assigning Lender's rights and obligations under this
Agreement, (c) each assignment shall be in an amount that is at least
$10,000,000.00 and is a whole multiple of $1,000,000.00, (d) each Lender which
is a Lender on the date hereof shall retain, free of any such assignment, an
amount of its Commitment of not less than $10,000,000.00, provided, however,
the Agent shall have a minimum hold of at least $20,000,000.00, (e) the parties
to such assignment shall execute and deliver to the Agent, for Recording in the
Register (as hereinafter defined), an Assignment and Acceptance, in form and
substance as established by the Agent (an "Assignment and Acceptance"),
together with any Notes subject to such assignment, and (f) as to assignments
to Eligible Assignees that are not Lenders, and provided no Event of Default
exists, then with the prior approval of the Borrower, which approval shall not
be unreasonably withheld or delayed. Upon such execution, delivery, acceptance
and recording, from and after the effective date specified in each Assignment
and Acceptance, which effective date shall be at least five (5) Business Days
after the execution thereof, (i) the assignee thereunder shall be a party
hereto and, to the extent provided in such Assignment and Acceptance, have the
rights and obligations of a Lender hereunder, and (ii) the assigning Lender
shall, to the extent provided in such assignment and upon payment to the Agent
of the registration fee referred to in Section 18.3, be released from its
further obligations under this Agreement to the extent of the interest
assigned.
Section 18.2. Certain Representations and Warranties; Limitations;
Covenants. By executing and delivering an Assignment and Acceptance, the
parties to the assignment thereunder confirm to and agree with each other and
the other parties hereto as follows: (a) other than the representation and
warranty that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim, the assigning Lender
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
this Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement, the other Loan Documents
or any other instrument or document furnished pursuant hereto; (b) the
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or any
other Person primarily or secondarily liable in respect of any of the
Obligations, or the performance or observance by the Borrower or any other
Person primarily or secondarily liable in respect of any of the Obligations or
any of their obligations under this Agreement or any of the other Loan
Documents or any other instrument or document furnished pursuant hereto or
thereto; (c) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements
referred to in Section 6.7 and Section 9.5 and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (d) such assignee will,
independently and without reliance upon the assigning Lender, 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; (e) such assignee represents and
warrants that it is an Eligible Assignee; (f) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement and the other Loan Documents as are delegated
to the Agent by the terms hereof or thereof, together with such powers as are
reasonably incidental thereto; (g) such assignee agrees that it will perform in
accordance with their terms all of the obligations that by the terms of this
Agreement are required to be performed by it as a Lender; and (h) such assignee
represents and warrants that it is legally authorized to enter into such
Assignment and Acceptance.
Section 18.3. Register. The Agent shall maintain a copy of each
Assignment and Acceptance delivered to it and a register or similar list (the
"Register") for the recordation of the names and addresses of the Lenders and
the Commitment Percentages of, and principal amount of the Loans owing to the
Lenders from time to time. The entries in the Register shall constitute a
rebuttable presumption in the absence of manifest error, and the Borrower, the
Agent and the Lenders may treat each Person whose name is recorded in the
Register as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower and the Lenders at
any reasonable time and from time to time upon reasonable prior notice. Upon
each such recordation, (i) the assigning Lender agrees to pay to the Agent a
registration fee in the sum of $5,000.00; and (ii) the Agent will deliver a
copy of the Register to the Borrower.
Section 18.4. New Notes. Upon its receipt of an Assignment and
Acceptance executed by the parties to such assignment, together with each Note
subject to such assignment, the Agent shall (a) record the information
contained therein in the Register, and (b) give prompt notice thereof to the
Borrower and the Lenders (other than the assigning Lender). Within five (5)
Business Days after receipt of such notice, the Borrower, at its own expense,
shall execute and deliver to the Agent, in exchange for each surrendered Note,
a new Note to the order of such Eligible Assignee in an amount equal to the
amount assumed by such Eligible Assignee pursuant to such Assignment and
Acceptance and, if the assigning Lender has maintained some portion of its
obligations hereunder, a new Note to the order of the assigning Lender in an
amount equal to the amount retained by it hereunder. Such new Notes shall
provide that they are replacements for the surrendered Notes, shall be in an
aggregate principal amount equal to the aggregate principal amount of the
surrendered Notes, shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of the Notes
delivered at the time of execution of this Agreement. Within five (5) days of
issuance of any new Notes pursuant to this Section 18.4, the Borrower shall
deliver an opinion of counsel, addressed and acceptable to the Lenders and the
Agent, relating to the due authorization, execution and delivery of such new
Notes and the legality, validity, enforceability and binding effect thereof.
The surrendered Notes shall be cancelled and returned to the Borrower.
Section 18.5. Pledge by Lender. Any Lender may at any time pledge
all or any portion of its interest and rights under this Agreement (including
all or any portion of its Note) to any of the twelve Federal Reserve Banks
organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No
such pledge or the enforcement thereof shall release the pledgor Lender for its
obligations hereunder or under any of the other Loan Documents.
Section 18.6. No Assignment by Borrower. The Borrower shall not
assign or transfer any of its rights or obligations under any of the Loan
Documents without the prior written consent of each of the Lenders.
Section 18.7. Disclosure. Each Lender agrees to take normal and
reasonable precautions and exercise due care to maintain the confidentiality of
all information identified as "confidential" or "secret" by the Borrower and
provided to it by the Borrower, or by the Agent on Borrower's behalf, under
this Agreement or any other Loan Document, and neither it nor any of its
affiliates shall use any such information other than in connection with or in
enforcement of this Agreement and the other Loan Documents; except to the
extent such information (i) was or becomes generally available to the public
other than as a result of disclosure by the Lender, or (ii) was or becomes
available on a non-confidential basis from a source other than the Borrower,
provided that such source is not bound by a confidentiality agreement with the
Borrower known to the Lender; provided, however, that any Lender may disclose
such information (A) at the request or pursuant to any requirement of any
governmental authority to which the Lender is subject or in connection with an
examination of such Lender by any such authority; (B) pursuant to subpoena or
other court process; (C) when required to do so in accordance with the
provisions of any applicable requirement of law; (D) to the extent reasonably
required in connection with any litigation or proceeding to which the Agent,
any Lender or their respective affiliates may be party; (E) to the extent
reasonably required in connection with the exercise of any remedy hereunder or
under any other Loan Document; (F) to such Lender's independent auditors and
other professional advisors; (G) to any participant or assignee, actual or
potential, provided that such Person agrees in writing to keep such information
confidential to the same extent required of the Lenders hereunder, and (H) as
to any Lender, as expressly permitted under the terms of any other document or
agreement regarding confidentiality to which the Borrower is party or is deemed
party with such Lender.
Section 18.8. Withholding Tax.
(a) If any Lender is a "foreign corporation, partnership
or trust" within the meaning of the Code and such Lender claims exemption from,
or a reduction of, U.S. withholding tax under Sections 1441 or 1442 of the
Code, such Lender agrees with and in favor of the Agent, to deliver to the
Agent:
(i) if such Lender claims an exemption from, or a
reduction of, withholding tax under a United States tax treaty, properly
completed IRS Forms 1001 and W-8 before the payment of any interest in the
first calendar year and before the payment of any interest in each succeeding
calendar year during which interest may be paid under this Agreement;
(ii) if such Lender claims that interest paid under
this Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such Lender,
two properly completed and executed copies of IRS Form 4224 before the payment
of any interest is due in the first taxable year of such Lender and in each
succeeding taxable year of such Lender during which interest may be paid under
this Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be required
under the Code or other laws of the United States as a condition to exemption
from, or reduction of, United States withholding tax.
Such Lender agrees to promptly notify the Agent of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001 and
such Lender sells, assigns, grants a participation in, or otherwise transfers
all or part of the Obligations of the Borrower to such Lender, such Lender
agrees to notify the Agent of the percentage amount in which it is no longer
the beneficial owner of Obligations of the Borrower to such Lender. To the
extent of such percentage amount, the Agent will treat such Lender's IRS Form
1001 as no longer valid.
(c) If any Lender claiming exemption from United States
withholding tax by filing IRS Form 4224 with the Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of the
Borrower to such Lender, such Lender agrees to undertake sole responsibility
for complying with the withholding tax requirements imposed by Sections 1441
and 1442 of the Code.
(d) If any Lender is entitled to a reduction in the
applicable withholding tax, the Agent may withhold from any interest payment to
such Lender an amount equivalent to the applicable withholding tax after taking
into account such reduction. If the forms or other documentation required by
subsection (a) of this Section are not delivered to the Agent, then the Agent
may withhold from any interest payment to such Lender not providing such forms
or other documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other governmental authority of the
United States or other jurisdiction asserts a claim that the Agent did not
properly withhold tax from amounts paid to or for the account of any Lender
(because the appropriate form was not delivered, was not properly executed, or
because such Lender failed to notify the Agent of a change in circumstances
which rendered the exemption from, or reduction of, withholding tax
ineffective, or for any other reason) such Lender shall indemnify the Agent
fully for all amounts paid, directly or indirectly, by the Agent as tax or
otherwise, including penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to the Agent under this Section 18.8,
together with all costs and expenses (including reasonable attorney's fees and
legal expenses). The obligation of the Lenders under this subsection shall
survive the payment of all Obligations and the resignation or replacement of
the Agent.
Section 19. NOTICES, ETC. Except as otherwise expressly provided
in this Agreement, all notices and other communications made or required to be
given pursuant to this Agreement or the other Loan Documents shall be in
writing and shall be (i) delivered in hand, (ii) mailed by United States
registered or certified first-class mail, postage prepaid, or (iii) sent by
telegraph or telex and confirmed by letter mailed on the same Business Day, or
(iv) addressed as follows:
(a) if to the Borrower, to Bradley A. Little, Senior Vice
President - Finance, Treasurer and Chief Financial Officer, 500 Craig Road,
Manalapan, New Jersey 07726-8790;
(b) if to the Agent, at 115 Perimeter Center Place, Suite
500, Atlanta, Georgia 30346, Attention: Nicholas Whiting, with a copy to Paul,
Hastings, Janofsky & Walker LLP, 600 Peachtree Street N.E., Suite 2400,
Atlanta, Georgia 30308, Attention: Julian D. Nealy, or such other address for
notice as the Agent shall last have furnished in writing to the person giving
the notice; and
(c) if to any Lender, at such Lender's address set forth
on Schedule 1 hereto, or such other address for notice as such Lender shall
have last furnished in writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or made and
to have become effective (a) if delivered by hand to a responsible officer of
the party to which it is directed, at the time of the receipt thereof by such
officer, (b) if sent by registered or certified first-class mail, postage
prepaid, upon the earlier of the date of receipt or three (3) Business Days
after the posting thereof, (c) if sent by telex or cable, on the Business Day
such telex or cable is dispatched; and (d) if sent by overnight delivery
service, then the next Business Day of such overnight delivery service.
Section 20. CERTAIN RIGHTS OF AGENT.
Section 20.1. Right to Retain the Construction Inspector. The
Agent shall have the right to retain, at the Borrower's cost and expense, a
Construction Inspector to review construction budgets, contracts and schedules,
make periodic inspections of construction of improvements at the Projects and
to advise the Agent regarding all construction matters at the Projects. The
fees of the Construction Inspector shall be paid by the Borrower forthwith upon
billing therefor, and expenses incurred by the Agent on account thereof shall
be reimbursed to the Agent forthwith upon request therefor, but neither the
Agent, the Lenders nor the Construction Inspector shall have any liability to
the Borrower on account of the services performed by the Construction
Inspector. Neither the Agent, the Lenders nor the Construction Inspector
assumes any obligation to the Borrower or any other Person concerning the
quality of construction of any Project improvements or the absence therefrom of
defects.
Section 20.2. Right to Obtain Appraisals. From time to time at
Borrower's expense (but no more frequently than annually at Borrower's
expense), the Agent shall have the right to obtain Appraisals (complying with
all terms and conditions of FIRREA) updating the Appraised Value of any and all
Real Estate as of such date (such updated Appraisals shall be in such form and
content as determined by Agent) or any portion thereof as Agent desires to have
appraised. The costs and expenses incurred by the Agent in obtaining such
Appraisals shall be paid by the Borrower forthwith upon billing or request by
the Agent for reimbursement thereof. The Agent shall also obtain such
appraisals upon the request of the Required Lenders provided that if the
Borrower is not required to pay the costs of such appraisals pursuant to this
section then the costs shall be paid by the Lenders. Agent reserves the right
to adjust the Appraised Value to more accurately reflect the Fair Market Value
at its discretion.
Section 21. MISCELLANEOUS. Except as otherwise required by the
laws of any jurisdiction in which any Properties are located, the Loan
Documents shall be deemed to be contracts under the laws of the Commonwealth of
Massachusetts and shall for all purposes be construed in accordance with and
governed by the internal laws of said Commonwealth, without reference to
principles of conflicts of law. The rights and remedies herein expressed are
cumulative and not exclusive of any other rights which the parties would
otherwise have. The captions in this Agreement are for convenience of reference
only and shall not define or limit the provisions hereof. This Agreement and
any amendment hereof may be executed in several counterparts and by each party
on a separate counterpart, each of which when so executed and delivered shall
be an original, but all of which together shall constitute one instrument. In
proving this Agreement it shall not be necessary to produce or account for more
than one such counterpart signed by the party against whom enforcement is
sought. Time is of the essence of this Agreement.
Section 22. ENTIRE AGREEMENT, ETC. This Agreement, together with
the other Loan Documents and any other documents executed in connection
herewith or therewith, express the entire understanding of the parties with
respect to the transactions contemplated hereby. Neither this Agreement nor
any term hereof may be changed, waived, discharged or terminated orally or in
writing, except as provided in Section 22.
Section 23. CONSENTS, AMENDMENTS, WAIVERS, ETC. The following
may occur with, but only with, the written consent of the Agent and the Lenders
as follows:
(a) Unanimous consent of all Lenders with respect to any
modification in (i) the rate of interest on the Notes, Fees, the payments of
interest or principal required under the Notes, (ii) the Maturity Date, (iii)
the amount of the Commitments of the Lenders hereunder, (iv) the definition of
Majority Lenders or Required Lenders or (v) any change in the requirement with
respect to the Guaranty or guaranty from future Subsidiaries as set forth in
Section 9.19.
(b) Required Lenders consent with respect to the
modification or waiver of the covenants set forth in Section Section 10.1,
10.2, 10.3, 10.4, 10.6, 10.7, 10.8, 10.9, 10.14, 10.15, 11.1, 11.2, 11.3, 11.4,
11.5 and 11.6 and any modification of the categories in the Borrowing Base.
(b) Majority Lenders consent with respect to the
modification or waiver of the covenants set forth in Section Section 9.2
through 9.18 and Section Section 10.10 through 10.13.
The Agent shall have the authority to make all other modifications, amendments
or waivers hereunder. No waiver shall extend to or affect any obligation not
expressly waived or impair any right consequent thereon. No course of dealing
or delay or omission on the part of the Agent or any Lender in exercising any
right shall operate as a waiver thereof or otherwise be prejudicial thereto.
No notice to or demand upon the Borrower shall entitle the Borrower to other or
further notice or demand in similar or other circumstances. Borrower
acknowledges that any requirement for Agent's consent or approval with respect
to any of the sections referenced in items (a), (b) and (c) above, shall be
deemed to require the consent or approval of all Lenders, Required Lenders or
Majority Lenders, respectively.
Section 24. RELEASE OF SECURITY. So long as no Default or Event
of Default exists or would result therefrom, the Agent covenants to cause to be
released from the lien of the Loan Documents, by the Agent itself or by its
duly appointed attorney-in-fact, any Developable Land, Developed Lots,
Receivables or Units which are sold by the Borrower pursuant to the terms of
Section 10.9, promptly following the date upon which (i) all net cash proceeds
of such sale shall have been promptly delivered to the Agent by the closing
official, or such other person as the Agent may from time to time direct,
together with all Receivables, mortgages, deeds of trust or other Collateral
Documents relating thereto, in each case accompanied by instruments of
assignment and recorded collateral assignments in favor of the Agent
satisfactory, in form and substance, to the Agent; and (ii) the purchaser
thereof shall have complied with all the terms and conditions required to be
performed by such purchaser under its agreement with the Borrower prior to the
delivery of a deed for such portion of the Developable Land, or such Developed
Lot or Unit to such purchaser. Except as otherwise set forth in Section 10.9,
the Borrower shall not be entitled to obtain releases for any proposed
transaction where a Receivable will be included in the Proceeds unless the
Borrower obtains the prior consent of the Agent.
Section 25. CONSENT TO SERVICE.
(a) The Borrower hereby irrevocably consents to the
service of the summons and complaint and any other process in any action or
proceeding on behalf of Borrower or its property by the hand delivery or
mailing of copies of such process to Borrower at its address specified in
Section 19 hereof.
(b) Nothing in this Section 25 shall affect the right of
the Agent or the Lenders to serve legal process in any other manner permitted
by law or affect the right of the Agent or any of the Lenders to bring any
action or proceeding against the Borrower or its properties in the courts of
any other jurisdictions.
(c) The Borrower hereby expressly waives, to the fullest
extent not prohibited by law, any right it may have now or hereafter to a jury
trial in any suit, action or proceeding arising out of or relating to this
Agreement or any of the other Loan Documents.
Section 26. SEVERABILITY. In the event any provision of this
Agreement shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not
effect any other term or provision hereof, and this Agreement shall be
interpreted and construed as if such provision to the extent the same shall
have been invalid, illegal or unenforceable had never been contained herein.
The parties hereto agree that they will negotiate in good faith to replace any
provision hereof so held invalid, illegal or unenforceable with a valid
provision which is as similar as possible in substance to the invalid, illegal
or unenforceable provision.
Section 27. WAIVER. The Borrower, the Agent and the Lenders
hereby mutually knowingly, voluntarily, and intentionally waive any right any
of them may have to a trial by jury in respect of any litigation (including,
but not limited to, any claims, cross-claims, or third party claims) arising
out of, under or in connection with this Agreement, the Note, the other Loan
Documents, or the transactions contemplated therein or herein. The Borrower,
the Agent and the Lenders certify to each other party that no representative or
agent of any party hereto nor counsel of any such party has represented,
expressly or otherwise, that such party would not, in the event of such
litigation seek to enforce this waiver of right to jury trial provision.
Section 28. RIGHTS OF THIRD PARTIES. All conditions to the
performance of the obligations of the Agent and the Lenders under this
Agreement, including the obligation to make Advances, are imposed solely and
exclusively for the benefit of the Agent and the Lenders and no other Person
shall have standing to require satisfaction of such conditions in accordance
with their terms or be entitled to assume that the Agent and the Lenders will
refuse to make Advances in the absence of strict compliance with any or all
thereof and no other Person shall, under any circumstances, be deemed to be a
beneficiary of such conditions, any and all of which may be freely waived in
whole or in part by the Agent and the Lenders at any time if in their sole
discretion they deem it desirable to do so. In particular, the Agent and the
Lenders make no representations and assume no obligations as to third parties
concerning the quality of the construction by the Borrower of the Projects or
the absence therefrom of defects.
Section 29. RELATIONSHIP. The relationship between the Lenders
and the Borrower is solely that of a lender and borrower, and nothing contained
herein or in any of the other Loan Documents shall in any manner be construed
as making the parties hereto partners, joint venturers or any other
relationship other than lender and borrower.
IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement under seal as of the date first set forth above.
BORROWER
CALTON HOMES, INC.,
a New Jersey corporation
By: /s/ Anthony J. Caldarone
Its: President
[CORPORATE SEAL]
CALTON HOMES OF FLORIDA, INC., a Florida
corporation
By: /s/ Bradley A. Little
Its: Senior Vice President
[CORPORATE SEAL]
BORROWER SUBSIDIARIES
CALTON HOMES OF CALIFORNIA, INC., a
California corporation
By: /s/ Bradley A. Little
Its: Senior Vice President
[CORPORATE SEAL]
CALTON HOMES OF PENNSYLVANIA, INC., a
Pennsylvania corporation
By: /s/ Bradley A. Little
Its: Senior Vice President
[CORPORATE SEAL]
CALTON HOMES OF CHICAGO, INC.,
an Illinois corporation
By: /s/ Bradley A. Little
Its: Senior Vice President
[CORPORATE SEAL]
TALCON TITLE AGENCY, L.P., a New Jersey
limited partnership
By: Calton General, Inc.,
a New Jersey corporation
Its: Sole General Partner
By: /s/ Bradley A. Little
Its: Senior Vice President
[CORPORATE SEAL]
TALPRO 36, L.P., a New Jersey limited
partnership
By: Calcap 36, Inc., a New Jersey corporation
Its: Sole General Partner
By: /s/ Bradley A. Little
Its: Senior Vice President
[CORPORATE SEAL]
CALTON, INC.
CALTON, INC., a New Jersey corporation
By: /s/ Anthony J. Caldarone
Its: President
[CORPORATE SEAL]
AGENT
BANKBOSTON, N.A.,
a national banking association
By: /s/ Nicholas Whiting
Nicholas Whiting, Vice President
LENDERS
BANKBOSTON, N.A.,
a national banking association
By: /s/ Nicholas Whiting
Nicholas Whiting, Vice President
SCHEDULES
Schedule 1: Commitments
Schedule 1.2: Borrower Subsidiaries
Schedule 6.1: Subsidiaries
Schedule 6.6: Chief Executive Offices addresses
Schedule 6.12: Indebtedness
Schedule 6.13: Litigation
Schedule 6.16(b): Governmental Permits
Schedule 6.16(c): Zoning Modification Actions
Schedule 6.16(d): Non-Assignable Permits
Schedule 6.27: Existing Options
Schedule 10.1: Existing Investments
Schedule 10.6: List of Subsidiaries to be Merged
SCHEDULE 1
Commitments
BankBoston, N.A. $45,000,000.00
SCHEDULE 1.2
Borrower Subsidiaries
State of
Borrower Subsidiaries Incorporation/
Formation
Calton
Homes, Inc. Calton Homes of Florida, Inc. Florida
Calton Homes of Pennsylvania, Inc. Pennsylvania
Calton Homes of California, Inc. California
Calton Homes of Chicago, Inc. Illinois
Talcon Title Agency, L.P. New Jersey
Talpro 36, L.P. New Jersey
SCHEDULE 6.1
Subsidiaries
(omitted)
SCHEDULE 6.6
Chief Executive Offices addresses
1. The following corporations and partnerships maintain their chief
executive offices at 500 Craig Road, Manalapan, New Jersey 07726-
8790:
Calton, Inc.; Calton Homes, Inc.; Calton Homes of
Pennsylvania, Inc.; Calton Homes of Chicago, Inc.; Calton
Homes of California, Inc.; Talcon Title Agency, L.P.; and
Talpro 36, L.P.
2. Calton Homes of Florida, Inc. maintains its chief executive offices
at: 380 S. North Lake Boulevard, Suite 1012, Altamonte Springs,
Florida 32701
SCHEDULE 6.12
Indebtedness
As of April 30, 1997 Calton Homes, Inc. was indebted to Calton, Inc. in the
amount of $26,317,232.00.
SCHEDULE 6.13
Litigation
(omitted)
SCHEDULE 6.16(b)
Governmental Permits
(omitted)
SCHEDULE 6.16(c)
Zoning Modification Actions
(omitted)
SCHEDULE 6.16(d)
Non-Assignable Permits
(omitted)
SCHEDULE 6.27
Existing Options
(omitted)
SCHEDULE 10.1
Existing Investments
(omitted)
SCHEDULE 10.6
List of Subsidiaries to be Merged
(omitted)
EXHIBITS
Exhibit "A": Form of Borrowing Base Report
Exhibit "B": Form of Revolving Credit Notes
Exhibit "C": Compliance Certificate
Exhibit "D": Commercial Property
Exhibit "A"
Form of Borrowing Base Report
(omitted)
Exhibit "B"
Form of Revolving Credit Notes
(omitted)
Exhibit "C"
Compliance Certificate
(omitted)
Exhibit "D"
Commercial Property
(omitted)
THIS PAGE MUST BE KEPT AS THE LAST PAGE OF THE DOCUMENT.
===============================================================================
WARRANT
To Purchase Common Stock of
CALTON, INC.
Issued to
BANKBOSTON, N.A.
===============================================================================
June 12, 1997
===============================================================================
Warrant No. 1
1,000,000 Shares
===============================================================================
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED IN
VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS
OF THIS WARRANT.
No. of Shares of Common Stock: 1,000,000 Warrant No. 1
===============================================================================
WARRANT
To Purchase Common Stock of
CALTON, INC.
===============================================================================
THIS IS TO CERTIFY THAT BANKBOSTON, N.A., a national banking association,
or registered assigns, for and in consideration of its paying the Company (as
hereinafter defined) $1.00, is entitled to purchase from CALTON, INC., a New
Jersey corporation ("the Company"), an aggregate number of 1,000,000 shares of
Common Stock (as hereinafter defined and subject to adjustment as provided
herein), in whole or in part, including fractional parts, at a purchase price
of $0.50 per share, all on the terms and conditions hereinafter set forth.
1. DEFINITIONS
As used in this Warrant, the following terms have the respective meanings
set forth below:
1.1 "Additional Shares of Common Stock" shall mean all shares of Common
Stock issued by the Company after the Closing Date, other than Warrant Stock.
1.2 "Appraised Value" shall mean, in respect of any share of Common Stock
on any date herein specified, the fair saleable value of such share of Common
Stock (determined without giving effect to the discount for (i) a minority
interest or (ii) any lack of liquidity of the Common Stock or due to the fact
that the Company may have no class of equity registered under the Exchange Act)
as of the last day of the most recent fiscal month to end within 60 days prior
to such date specified, based on the value of the Company, as determined by an
investment banking firm selected in accordance with the terms of Section 15,
divided by the number of Fully Diluted Outstanding shares of Common Stock.
1.3 "BankBoston" shall mean BankBoston, N.A., a national banking
association.
1.4 "Book Value" shall mean, in respect of any share of Common Stock on
any date herein specified, the consolidated book value of the Company as of the
last day of any month immediately preceding such date, divided by the number of
Fully Diluted Outstanding shares of Common Stock as determined in accordance
with GAAP by Coopers & Lybrand LLP or any other firm of independent certified
public accountants of recognized national standing selected by the Company and
reasonably acceptable to the Majority Holders.
1.5 "Business Day" shall mean any day that is not a Saturday or Sunday or
a day on which banks are required or permitted to be closed in the State of
Massachusetts.
1.6 "Closing Date" shall mean June 12, 1997.
1.7 "Commission" shall mean the Securities and Exchange Commission or any
other federal agency then administering the Securities Act and other federal
securities laws.
1.8 "Common Stock" shall mean (except where the context otherwise
indicates) the Common Stock, $0.01 par value, of the Company as constituted on
the Closing Date, and any capital stock into which such Common Stock may
thereafter be changed, and shall also include (i) capital stock of the Company
of any other class (regardless of how denominated) issued to the holders of
shares of Common Stock upon any reclassification thereof which is also not
preferred as to dividends or assets over any other class of stock of the
Company and which is not subject to redemption and (ii) shares of common stock
of any successor or acquiring corporation (as defined in Section 4.8) received
by or distributed to the holders of Common Stock of the Company in the
circumstances contemplated by Section 4.8.
1.9 "Convertible Securities" shall mean evidences of indebtedness, shares
of stock, warrants, options or other securities which are convertible into or
exchangeable, with or without payment of additional consideration in cash or
property, for Additional Shares of Common Stock, either immediately or upon the
occurrence of a specified date or a specified event.
1.10 "Current Market Price" shall mean, in respect of any share of Common
Stock on any date herein specified, the higher of (a) the Book Value per share
of Common Stock at such date, and (b) the Appraised Value per share of Common
Stock as at such date, or if there shall then be a public market for the Common
Stock, the higher of (x) the Book Value per share of Common Stock at such date,
and (y) the average of the daily market prices for 30 consecutive Business Days
commencing 45 days before such date. The daily market price for each such
Business Day shall be (i) the last sale price on such day on the principal
stock exchange on which such Common Stock is then listed or admitted to
trading, (ii) if no sale takes place on such day on any such exchange, the
average of the last reported closing bid and asked prices on such day as
officially quoted on any such exchange, (iii) if the Common Stock is not then
listed or admitted to trading on any stock exchange, the average of the last
reported closing bid and asked prices on such day in the over-the-counter
market, as furnished by the National Association of Securities Dealers
Automatic Quotation System or the National Quotation Bureau, Inc.; provided,
however, that if neither such corporation at the time is engaged in the
business of reporting such prices, then such prices shall be as furnished by
any similar firm then engaged in such business or, if there is no such firm, as
furnished by any member of the NASD selected mutually by the Majority Holders
and the Company or, if they cannot agree upon such selection, then as selected
by two such members of the NASD, one of which shall be selected by the Majority
Holders and one of which shall be selected by the Company.
1.11 "Current Warrant Price" shall mean, in respect of a share of Common
Stock at any date herein specified, the price at which a share of Common Stock
may be purchased pursuant to this Warrant on such date.
1.12 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
1.13 "Exercise Period" shall mean the period during which this Warrant is
exercisable pursuant to Section 2.1.
1.14 "Expiration Date" shall mean June 12, 2004.
1.15 "Fully Diluted Outstanding" shall mean, when used with reference to
Common Stock, at any date as of which the number of shares thereof is to be
determined, all shares of Common Stock Outstanding at such date and all shares
of Common Stock issuable in respect of this Warrant and other options or
warrants to purchase, or securities convertible into, shares of Common Stock
outstanding on such date which would be deemed outstanding in accordance with
GAAP for purposes of determining Book Value or net income per share.
1.16 "GAAP" shall mean generally accepted accounting principles in the
United States of America as from time to time in effect.
1.17 "Holder" shall mean the Person in whose name the Warrant set forth
herein is registered on the books of the Company maintained for such purpose.
1.18 "NASD" shall mean the National Association of Securities Dealers,
Inc., or any successor corporation thereto.
1.19 "Other Property" shall have the meaning set forth in Section 4.8.
1.20 "Outstanding" shall mean, when used with reference to Common Stock,
at any date as of which the number of shares thereof is to be determined, all
issued shares of Common Stock, except shares then owned or held by or for the
account of the Company or any subsidiary thereof, and shall include all shares
issuable in respect of outstanding scrip or any certificates representing
fractional interests in shares of Common Stock.
1.21 "Permitted Assignee" shall mean BankBoston, N.A., and any Person
directly or indirectly, controlling, controlled by, or under direct or indirect
common control with, BankBoston, N.A.
1.22 "Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, incorporated organization, association, corporation,
institution, public benefit corporation, entity or government (whether federal,
state, county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
1.23 "Registration Rights Agreement" shall have the meaning set forth in
Section 9.
1.24 "Restricted Common Stock" shall mean shares of Common Stock which
are, or which upon their issuance on the exercise of this Warrant would be,
evidenced by a certificate bearing the restrictive legend set forth in Section
9.1(a).
1.25 "Securities Act" shall mean the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
1.26 "Transfer" shall mean any disposition of any Warrant or Warrant Stock
or of any interest in either thereof, which would constitute a sale thereof
within the meaning of the Securities Act.
1.27 "Transfer Notice" shall have the meaning set forth in Section 9.2.
1.28 "Warrants" shall mean this Warrant and all warrants issued upon
transfer of, or in substitution for, any thereof. All Warrants shall at all
times be identical as to terms and conditions and date, except as to the number
of shares of Common Stock for which they may be exercised.
1.29 "Warrant Price" shall mean an amount equal to (i) the number of
shares of Common Stock being purchased upon exercise of this Warrant pursuant
to Section 2.1, multiplied by (ii) the Current Warrant Price as of the date of
such exercise.
1.30 "Warrant Stock" shall mean the shares of Common Stock purchased by
the holders of the Warrants upon the exercise thereof.
2. EXERCISE OF WARRANT
2.1 Exercise Period.
(a) Subject to earlier exercise pursuant to Section 4.8, on and
after January 1, 1999, and until 5:00 P.M., Eastern time, on the
Expiration Date, Holder may exercise this Warrant, on any Business Day,
for all of the number of shares of Common Stock purchasable under this
Warrant.
(b) (i) If at any time Holder shall desire to exercise the Warrant,
then Holder shall deliver written notice of its intention to exercise
the Warrant (a "Notice of Intention") to the Company, setting forth
such Holder's desire to make such exercise.
(ii) Upon receipt of the Notice of Intention, the Company shall
then have the right to purchase the Warrant at a price equal to (i)
the number of shares of Common Stock to be purchased upon exercise of
the Warrant multiplied by the Current Market Price less (ii) the
Warrant Price, both calculated as of the date of the Notice of
Intention. The right of the Company pursuant to this Section 2.1(b)
shall be exercisable by the delivery of a notice to the Holder (the
"Notice of Exercise"), within 20 calendar days from the date of
delivery of the Notice of Intention. The Notice of Exercise shall
state the the purchase price for the Warrant. The rights of the
Company pursuant to this Section 2.1(b) shall terminate if
unexercised 20 calendar days after the date of delivery of the Notice
of Intention.
(iii) In the event that the Company exercises its rights to
purchase the Warrant in accordance with Section 2.1(b), then the
Holder must sell the Warrant to the Company, and the Company shall
purchase the Warrant within 30 calendar days after the date of
delivery of the Notice of Exercise to the Holder.
(iv) Upon the consummation of the purchase and sale of the
Warrant, the Holder shall deliver the Warrant, duly endorsed, or
accompanied by written instruments of transfer in form satisfactory
to the Company, duly executed by the Holder free and clear of any
liens, against delivery by the Company of the purchase price of the
Warrant by certified or bank check.
(c) This Warrant is exercisable pursuant to this Section 2
notwithstanding the repayment of any loans or other indebtedness owed by
the Company to any Holder.
2.2 Manner of Exercise. In order to exercise this Warrant, which must be
exercised in whole and not in part, Holder shall deliver to the Company at its
principal office at 500 Craig Road, Manalapan, New Jersey, 07726-8790 or at the
office or agency designated by the Company pursuant to Section 12, (i) a
written notice of Holder's election to exercise this Warrant, which notice
shall specify the number of shares of Common Stock to be purchased, (ii)
payment of the Warrant Price and (iii) this Warrant. Such notice shall be
substantially in the form of the subscription form appearing at the end of this
Warrant as Exhibit A, duly executed by Holder or its agent or attorney. Upon
receipt thereof, the Company shall, as promptly as practicable, and in any
event within five (5) Business Days thereafter, execute or cause to be executed
and deliver or cause to be delivered to Holder a certificate or certificates
representing the aggregate number of full shares of Common Stock issuable upon
such exercise, together with cash in lieu of any fraction of a share, as
hereinafter provided. The stock certificate or certificates so delivered shall
be, to the extent possible, in such denomination or denominations as such
Holder shall request in the notice and shall be registered in the name of
Holder or, subject to Section 9, such other name as shall be designated in the
notice. This Warrant shall be deemed to have been exercised and such
certificate or certificates shall be deemed to have been issued, and Holder or
any other Person so designated to be named therein shall be deemed to have
become a holder of record of such shares for all purposes, as of the date the
notice, when such notice together with this Warrant and payment therefor as
provided in Section 2.3, is received by the Company as described above and all
taxes required to be paid by Holder, if any, pursuant to Section 2.4 prior to
the issuance of such shares have been paid. Notwithstanding any provision
herein to the contrary, the Company shall not be required to register shares in
the name of any Person who acquired this Warrant (or part hereof) or any
Warrant Stock otherwise than in accordance with this Warrant.
2.3 Payment. (a) Payment of the Warrant Price shall be made at the
option of the Holder by (i) certified or official bank check, (ii) the
cancellation by Holder of indebtedness of the Company to Holder (if any) in an
amount equal to such sum, (iii) as provided in Section 2.3(b) or (iv) a
combination of (i), (ii) and (iii) as Holder may determine.
(b) Notwithstanding any provisions herein to the contrary, if the
fair market value of one share of the Company's Common Stock is greater than
Current Warrant Price (at the date of calculation as set forth below), in lieu
of exercising this Warrant for cash or indebtedness, the Holder may elect to
receive shares equal to the value (as determined below) of this Warrant by
surrender of this Warrant at the principal office of the Company together with
the properly endorsed subscription form and notice of such election, in which
event the Company shall issue to the Holder a number of shares of Common Stock
computed using the following formula:
X=Y (A-B)
A
Where X= the number of shares of Common Stock to be issued to
the Holder
Y= the number of shares of Common Stock purchasable under
the Warrant at the date of such calculation
A= the Current Market Price of one share of the Company's
Common Stock (at the date of such calculation)
B= Current Warrant Price (as adjusted to the date of such
calculation)
2.4 Payment of Taxes. All shares of Common Stock issuable upon the
exercise of this Warrant pursuant to the terms hereof shall be validly issued,
fully paid and nonassessable and without any preemptive rights. The Company
shall pay all expenses in connection with, and all taxes and other governmental
charges that may be imposed with respect to, the issue or delivery thereof,
unless such tax or charge is imposed by law upon Holder, in which case such
taxes or charges shall be paid by Holder. The Company shall not be required,
however, to pay any tax or other charge imposed in connection with any transfer
involved in the issue of any certificate for shares of Common Stock issuable
upon exercise of this Warrant in any name other than that of Holder, and in
such case the Company shall not be required to issue or deliver any stock
certificate until such tax or other charge has been paid or it has been
established to the satisfaction of the Company that no such tax or other charge
is due.
2.5 Fractional Shares. The Company shall not be required to issue a
fractional share of Common Stock upon exercise of the Warrant. As to any
fraction of a share which the Holder of the Warrant would otherwise be entitled
to purchase upon such exercise, the Company shall pay a cash adjustment in
respect of such final fraction in an amount equal to the same fraction of the
Current Market Price per share of Common Stock on the date of exercise.
2.6 Continued Validity. A holder of shares of Common Stock issued upon
the exercise of this Warrant, (other than a holder who acquires such shares
after the same have been publicly sold pursuant to a Registration Statement
under the Securities Act or sold pursuant to Rule 144 thereunder), shall
continue to be entitled with respect to such shares to all rights to which it
would have been entitled as Holder under Sections 9, 10, 13, 14 and 17 of this
Warrant. The Company will, at the time of each exercise of this Warrant, upon
the request of the holder of the shares of Common Stock issued upon such
exercise hereof, acknowledge in writing, in form reasonably satisfactory to
such holder, its continuing obligation to afford to such holder all such
rights; provided, however, that if such holder shall fail to make any such
request, such failure shall not affect the continuing obligation of the Company
to afford to such holder all such rights.
3. TRANSFER, DIVISION AND COMBINATION
3.1 Transfer. Subject to compliance with Section 9 hereof, transfer of
this Warrant and all rights hereunder, shall be registered on the books of the
Company to be maintained for such purpose, upon surrender of this Warrant at
the principal office of the Company referred to in Section 2.2 or the office or
agency designated by the Company pursuant to Section 12, together with a
written assignment of this Warrant substantially in the form of Exhibit B duly
executed by Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall, subject to Section 9,
execute and deliver a new Warrant in the name of the assignee or assignees and
this Warrant shall promptly be cancelled. A Warrant, if properly assigned in
compliance with Section 9, may be exercised by a new Holder for the purchase of
shares of Common Stock without having a new Warrant issued.
3.2 [Reserved].
3.3 Expenses. The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant under this Section 3.
3.4 Maintenance of Books. The Company agrees to maintain, at its
aforesaid office or agency, books for the registration and the registration of
transfer of the Warrant.
4. ADJUSTMENTS
The number of shares of Common Stock for which this Warrant is
exercisable, or the price at which such shares may be purchased upon exercise
of this Warrant, shall be subject to adjustment from time to time as set forth
in this Section 4. The Company shall give each Holder notice of any event
described below which requires an adjustment pursuant to this Section 4 at the
time of such event and as provided in Section 5.2.
4.1 Stock Dividends, Subdivisions and Combinations. If at any time the
Company shall:
(a) take a record of the holders of its Common Stock for the purpose
of entitling them to receive a dividend payable in, or other distribution
of, Additional Shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock,
then (i) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be
adjusted to equal the number of shares of Common Stock which a record holder of
the same number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (ii) the Current Warrant Price
shall be adjusted to equal (A) the Current Warrant Price multiplied by (B) a
ratio, the numerator of which is the number of shares of Common Stock for which
this Warrant is exercisable immediately prior to the adjustment and the
denominator of which is the number of shares for which this Warrant is
exercisable immediately after such adjustment.
4.2 Certain Other Distributions. If at any time the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive any dividend or other distribution of:
(a) cash,
(b) any evidences of its indebtedness, any shares of its stock or
any other securities or property of any nature whatsoever (other than
Convertible Securities or Additional Shares of Common Stock), or
(c) any warrants or other rights to subscribe for or purchase any
evidences of its indebtedness, any shares of its stock or any other
securities or property of any nature whatsoever (other than Convertible
Securities or Additional Shares of Common Stock),
then and in such event (unless and until such dividend or other distribution is
legally abandoned) provision shall be made so that Holder, upon exercise of
this Warrant, shall receive, in addition to the number of shares of Common
Stock receivable thereupon, the amount of such cash, evidences of indebtedness,
shares of stock, other securities or property or warrants or other subscription
or purchase rights so distributable which Holder would have received had Holder
exercised prior to the date of such event and had thereafter, during the period
from the date of such event to and including the exercise date, retained the
same during such period, subject to all other adjustments called for during
such period under this Section 4 with respect to the rights of Holders of the
Warrant. A reclassification of the Common Stock (other than a change in par
value, or from par value to no par value or from no par value to par value)
into shares of Common Stock and shares of any other class of stock shall be
deemed a distribution by the Company to the holders of its Common Stock of such
shares of such other class of stock within the meaning of this Section 4.2 and,
if the outstanding shares of Common Stock shall be changed into a larger or
smaller number of shares of Common Stock as a part of such reclassification,
such change shall be deemed a subdivision or combination, as the case may be,
of the outstanding shares of Common Stock within the meaning of Section 4.1.
4.3 Issuance of Additional Shares of Common Stock.
(a) If the Company shall (except as hereinafter provided) at any
time issue or sell any Additional Shares of Common Stock in exchange for
consideration in an amount per Additional Share of Common Stock less than
the Current Warrant Price at the time the Additional Shares of Common
Stock are issued, then (i) the Current Warrant Price as to the number of
shares for which this Warrant is exercisable prior to such adjustment
shall be reduced to a price determined by dividing (A) an amount equal to
the sum of (x) the number of shares of Common Stock Outstanding
immediately prior to such issue or sale multiplied by the then existing
Current Warrant Price, plus (y) the consideration, if any, received by the
Company upon such issue or sale, by (B) the total number of shares of
Common Stock Outstanding immediately after such issue or sale; and (ii)
the number of shares of Common Stock for which this Warrant is exercisable
shall be adjusted to equal the product obtained by multiplying the Current
Warrant Price in effect immediately prior to such issue or sale by the
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such issue or sale and dividing the product thereof
by the Current Warrant Price resulting from the adjustment made pursuant
to clause (i) above.
(b) If the Company shall (except as hereinafter provided) at any
time issue or sell any Additional Shares of Common Stock, in exchange for
consideration in an amount per Additional Share of Common Stock less than
the Current Market Price at the time the Additional Shares of Common Stock
are issued, then (i) the number of shares of Common Stock for which this
Warrant is exercisable shall be adjusted to equal the product obtained by
multiplying the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such issue or sale by a fraction (A) the
numerator of which shall be the number of shares of Common Stock
Outstanding immediately after such issue or sale, and (B) the denominator
of which shall be the number of shares of Common Stock Outstanding
immediately prior to such issue or sale plus the number of shares which
the aggregate offering price of the total number of such Additional Shares
of Common Stock would purchase at the then Current Market Price; and (ii)
the Current Warrant Price as to the number of shares for which this
Warrant is exercisable prior to such adjustment shall be adjusted by
multiplying such Current Warrant Price by a fraction (X) the numerator of
which shall be the number of shares for which this Warrant is exercisable
immediately prior to such issue or sale; and (Y) the denominator of which
shall be the number of shares of Common Stock purchasable immediately
after such issue or sale.
(c) If at any time the Company (except as hereinafter provided)
shall issue or sell any Additional Shares of Common Stock, in exchange for
consideration in an amount per Additional Shares of Common Stock which is
less than the Current Warrant Price and the Current Market Price at the
time the Additional Shares of Common Stock are issued, the adjustment
required under Section 4.3 shall be made in accordance with the formula in
paragraph (a) or (b) above which results in the lower Current Warrant
Price following such adjustment.
The provisions of paragraphs (a) and (b) of Section 4.3 shall not
apply to any issuance of Additional Shares of Common Stock for which an
adjustment is provided under Section 4.1 or 4.2.
No adjustment of the number of shares of Common Stock for which this
Warrant shall be exercisable shall be made under paragraph (a) or (b) of
Section 4.3 upon the issuance of any Additional Shares of Common Stock
which are issued pursuant to the exercise of any warrants or other
subscription or purchase rights or pursuant to the exercise of any
conversion or exchange rights in any Convertible Securities, if any such
adjustment shall previously have been made upon the issuance of such
warrants or other rights or upon the issuance of such Convertible
Securities (or upon the issuance of any warrant or other rights therefor)
pursuant to Section 4.4 or Section 4.5.
(d) For the purposes of this Section 4.3 only, "Additional Shares of
Common Stock" shall not include (i) any shares of Common Stock issued or
issuable pursuant to the Company's 401(k) Plan or pursuant to the
provisions of or the exercise of any options currently outstanding or
hereafter granted under the Company's Amended and Restated 1993
Non-Qualified Stock Option Plan, 1996 Equity Incentive Plan and up to, but
not exceeding 2,000,000 shares of Common Stock which would be authorized
for issuance pursuant to similar plans to which may be adopted by the
Company; provided that, for the purpose of this paragraph (d)(i), the
number of shares of Common Stock under any such plan which are not
included as "Additional Shares of Common Stock" shall be adjusted to
reflect any subdivisions of Common Stock into a larger number of shares of
Common Stock or a combination of shares of Common Stock into a smaller
number of shares of Common Stock or (ii) the issuance of Additional Shares
of Common Stock in connection with the acquisition of assets in the
ordinary course of the Company's business whether the acquisition is
structured as a purchase of assets or as a merger in which the Company is
the surviving Corporation.
4.4 Issuance of Warrants or Other Rights. If at any time the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which the Company is the surviving
corporation) issue or sell, any warrants or other rights to subscribe for or
purchase any Additional Shares of Common Stock or any Convertible Securities,
whether or not the rights to exchange or convert thereunder are immediately
exercisable, and the price per share for which Common Stock is issuable upon
the exercise of such warrants or other rights or upon conversion or exchange of
such Convertible Securities together with any amount paid in consideration for
such warrants or rights (calculated on a per share basis) shall be less than
the Current Warrant Price or the Current Market Price in effect immediately
prior to the time of such issue or sale, then the number of shares for which
this Warrant is exercisable and the Current Warrant Price shall be adjusted as
provided in Section 4.3 on the basis that the maximum number of Additional
Shares of Common Stock issuable pursuant to all such warrants or other rights
or necessary to effect the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued and outstanding and the Company
shall be deemed to have received all of the consideration payable therefor, if
any, as of the date of the issuance of such warrants or other rights. No
further adjustments of the Current Warrant Price shall be made upon the actual
issue of such Common Stock or of such Convertible Securities upon exercise of
such warrants or other rights or upon the actual issue of such Common Stock
upon such conversion or exchange of such Convertible Securities.
4.5 Issuance of Convertible Securities. If at any time the Company shall
take a record of the holders of its Common Stock for the purpose of entitling
them to receive a distribution of, or shall in any manner (whether directly or
by assumption in a merger in which the Company is the surviving corporation)
issue or sell, any Convertible Securities, whether or not the rights to
exchange or convert thereunder are immediately exercisable, and the price per
share for which Common Stock is issuable upon such conversion or exchange
together with the amount paid per share for such Convertible Securities shall
be less than the Current Warrant Price or Current Market Price in effect
immediately prior to the time of such issue or sale, then the number of Shares
for which this Warrant is exercisable and the Current Warrant Price shall be
adjusted as provided in Section 4.3 on the basis that the maximum number of
Additional Shares of Common Stock necessary to effect the conversion or
exchange of all such Convertible Securities shall be deemed to have been issued
and outstanding and the Company shall be deemed to have received all of the
consideration payable therefor, if any, as of the date of actual issuance of
such Convertible Securities. No adjustment of the number of Shares for which
this Warrant is exercisable and the Current Warrant Price shall be made under
this Section 4.5 upon the issuance of any Convertible Securities which are
issued pursuant to the exercise of any warrants or other subscription or
purchase rights therefor, if any such adjustment shall previously have been
made upon the issuance of such warrants or other rights pursuant to Section
4.4. No further adjustments of the number of Shares for which this Warrant is
exercisable and the Current Warrant Price shall be made upon the actual issue
of such Common Stock upon conversion or exchange of such Convertible Securities
and, if any issue or sale of such Convertible Securities is made upon exercise
of any warrant or other right to subscribe for or to purchase any such
Convertible Securities for which adjustments of the number of Shares for which
this Warrant is exercisable and the Current Warrant Price have been or are to
be made pursuant to other provisions of this Section 4, no further adjustments
of the number of Shares for which this Warrant is exercisable and the Current
Warrant Price shall be made by reason of such issue or sale.
4.6 Superseding Adjustment. If, at any time after any adjustment of the
number of shares of Common Stock for which this Warrant is exercisable and the
Current Warrant Price shall have been made pursuant to Section 4.4 or Section
4.5 as the result of any issuance of warrants, rights or Convertible
Securities,
(a) such warrants or rights, or the right of conversion or exchange
in such other Convertible Securities, shall expire, and all or a portion
of such warrants or rights, or the right of conversion or exchange with
respect to all or a portion of such other Convertible Securities, as the
case may be, shall not have been exercised, or
(b) the consideration per share for which shares of Common Stock are
issuable pursuant to such warrants or rights, or the terms of such other
Convertible Securities, shall be increased solely by virtue of provisions
therein contained for an automatic increase in such consideration per
share upon the occurrence of a specified date or event,
then, with respect to this Warrant, such previous adjustment shall be rescinded
and annulled and the Additional Shares of Common Stock which were deemed to
have been issued by virtue of the computation made in connection with the
adjustment so rescinded and annulled shall no longer be deemed to have been
issued by virtue of such computation. Thereupon, a recomputation shall be made
of the effect of such rights or options or other Convertible Securities on the
basis of
(y) treating the number of Additional Shares of Common Stock or
other property, if any, theretofore actually issued or issuable pursuant
to the previous exercise of any such warrants or rights or any such right
of conversion or exchange, as having been issued on the date or dates of
any such exercise and for the consideration actually received and
receivable therefor, and
(z) treating any such warrants or rights or any such other
Convertible Securities which then remain outstanding as having been
granted or issued immediately after the time of such increase of the
consideration per share for which shares of Common Stock or other property
are issuable under such warrants or rights or other Convertible
Securities; whereupon a new adjustment of the number of shares of Common
Stock for which this Warrant is exercisable and the Current Warrant Price
shall be made, which new adjustment shall supersede the previous
adjustment so rescinded and annulled.
4.7 Other Provisions Applicable to Adjustments under this Section. The
following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock for which this Warrant is exercisable and the
Current Warrant Price provided for in this Section 4:
(a) Computation of Consideration. To the extent that any Additional
Shares of Common Stock or any Convertible Securities or any warrants or
other rights to subscribe for or purchase any Additional Shares of Common
Stock or any Convertible Securities shall be issued for cash
consideration, the consideration received by the Company therefor shall be
the amount of the cash received by the Company therefor, or, if such
Additional Shares of Common Stock or Convertible Securities are offered by
the Company for subscription, the subscription price, or, if such
Additional Shares of Common Stock or Convertible Securities are sold to
underwriters or dealers for public offering without a subscription
offering, the initial public-offering price (in any such case subtracting
any amounts paid or receivable for accrued interest or accrued dividends
and without taking into account any compensation, discounts or expenses
paid or incurred by the Company for and in the underwriting of, or
otherwise in connection with, the issuance thereof). To the extent that
such issuance shall be for a consideration other than cash, then, except
as herein otherwise expressly provided, the amount of such consideration
shall be deemed to be the fair value of such consideration at the time of
such issuance as determined in good faith by the Board of Directors of the
Company. In case any Additional Shares of Common Stock or any Convertible
Securities or any warrants or other rights to subscribe for or purchase
such Additional Shares of Common Stock or Convertible Securities shall be
issued in connection with any merger in which the Company issues any
securities, the amount of consideration therefor shall be deemed to be the
fair value, as determined in good faith by the Board of Directors of the
Company, of such portion of the assets and business of the nonsurviving
corporation as such Board in good faith shall determine to be attributable
to such Additional Shares of Common Stock, Convertible Securities,
warrants or other rights, as the case may be. The consideration for any
Additional Shares of Common Stock issuable pursuant to any warrants or
other rights to subscribe for or purchase the same shall be the
consideration received by the Company for issuing such warrants or other
rights plus the additional consideration payable to the Company upon
exercise of such warrants or other rights. The consideration for any
Additional Shares of Common Stock issuable pursuant to the terms of any
Convertible Securities shall be the consideration received by the Company
for issuing warrants or other rights to subscribe for or purchase such
Convertible Securities, plus the consideration paid or payable to the
Company in respect of the subscription for or purchase of such Convertible
Securities, plus the additional consideration, if any, payable to the
Company upon the exercise of the right of conversion or exchange in such
Convertible Securities. In case of the issuance at any time of any
Additional Shares of Common Stock or Convertible Securities in payment or
satisfaction of any dividends upon any class of stock other than Common
Stock, the Company shall be deemed to have received for such Additional
Shares of Common Stock or Convertible Securities a consideration equal to
the amount of such dividend so paid or satisfied.
(b) When Adjustments to Be Made. The adjustments required by this
Section 4 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any adjustment of the
number of shares of Common Stock for which this Warrant is exercisable
that would otherwise be required may be postponed (except in the case of a
subdivision or combination of shares of the Common Stock, as provided for
in Section 4.1) up to, but not beyond the date of exercise if such
adjustment either by itself or with other adjustments not previously made
adds or subtracts less than 1% of the shares of Common Stock for which
this Warrant is exercisable immediately prior to the making of such
adjustment. Any adjustment representing a change of less than such
minimum amount (except as aforesaid) which is postponed shall be carried
forward and made as soon as such adjustment, together with other
adjustments required by this Section 4 and not previously made, would
result in a minimum adjustment or on the date of exercise. For the
purpose of any adjustment, any specified event shall be deemed to have
occurred at the close of business on the date of its occurrence.
(c) Fractional Interests. In computing adjustments under this
Section 4, fractional interests in Common Stock shall be taken into
account to the nearest 1/10th of a share.
(d) Escrow of Warrant Stock. If after any property becomes
distributable pursuant to this Section 4 by reason of the taking of any
record of the holders of Common Stock, but prior to the occurrence of the
event for which such record is taken, and Holder exercises this Warrant,
any such property or Additional Shares of Common Stock issuable upon
exercise by reason of such adjustment shall be deemed the last shares of
Common Stock for which this Warrant is exercised (notwithstanding any
other provision to the contrary herein) and such shares or other property
shall be held in escrow for Holder by the Company to be issued to Holder
upon and to the extent that the event actually takes place.
Notwithstanding any other provision to the contrary herein, if the event
for which such record was taken fails to occur or is rescinded, then such
escrowed shares shall be cancelled by the Company and escrowed property
returned.
(e) Challenge to Good Faith Determination. Whenever the Board of
Directors of the Company shall be required to make a determination in good
faith of the fair value of any item under this Section 4, such
determination may be challenged in good faith by the Holder, and any
dispute shall be resolved by an investment banking firm of recognized
national standing selected by the Company and acceptable to the Holder.
4.8 Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets. After the Closing Date, and to and through the Exercise
Period (ignoring the January 1, 1999 date in Section 2.1(a)), in case the
Company shall reorganize its capital, reclassify its capital stock, consolidate
or merge with or into another corporation (where the Company is not the
surviving corporation or where there is a change in or distribution with
respect to the Common Stock of the Company), or sell, transfer or otherwise
dispose of all or substantially all its property, assets or business to another
corporation and, pursuant to the terms of such reorganization,
reclassification, merger, consolidation or disposition of assets, shares of
common stock of the successor or acquiring corporation, or any cash, shares of
stock or other securities or property of any nature whatsoever (including
warrants or other subscription or purchase rights) in addition to or in lieu of
common stock of the successor or acquiring corporation ("Other Property"), are
to be received by or distributed to the holders of Common Stock of the Company,
then each Holder shall have the right thereafter to receive, upon exercise of
such Warrant, the number of shares of common stock of the successor or
acquiring corporation or of the Company, if it is the surviving corporation,
and Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined by resolution of the Board of Directors of
the Company) in order to provide for adjustments of shares of the Common Stock
for which this Warrant is exercisable which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 4. For purposes of
this Section 4.8, "common stock of the successor or acquiring corporation"
shall include stock of such corporation of any class which is not preferred as
to dividends or assets over any other class of stock of such corporation and
which is not subject to redemption and shall also include any evidences of
indebtedness, shares of stock or other securities which are convertible into or
exchangeable for any such stock, either immediately or upon the arrival of a
specified date or the happening of a specified event and any warrants or other
rights to subscribe for or purchase any such stock. The foregoing provisions
of this Section 4.8 shall similarly apply to successive reorganizations,
reclassifications, mergers, consolidations or disposition of assets.
4.9 Other Action Affecting Common Stock. In case at any time or from
time to time the Company shall take any action in respect of its Common Stock
other than action described in this Section 4, then, unless such action will
not have a materially adverse effect upon the rights of the Holder, the number
of shares of Common Stock or other stock for which this Warrant is exercisable
and/or the purchase price thereof shall be adjusted in such manner as may be
equitable in the circumstances.
4.10 Certain Limitations. Notwithstanding anything herein to the
contrary, the Company agrees not to enter into any transaction which, by reason
of any adjustment hereunder, would cause the Current Warrant Price to be less
than the par value per share of Common Stock.
5. NOTICES TO WARRANT HOLDER
5.1 Notice of Adjustments. Whenever the number of shares of Common Stock
for which this Warrant is exercisable, or whenever the price at which a share
of such Common Stock may be purchased upon exercise of the Warrants, shall be
adjusted pursuant to Section 4, the Company shall forthwith prepare a
certificate to be executed by the chief financial officer of the Company
setting forth, in reasonable detail, the event requiring the adjustment and the
method by which such adjustment was calculated (including a description of the
basis on which the Board of Directors of the Company determined the fair value
of any evidences of indebtedness, shares of stock, other securities or property
or warrants or other subscription or purchase rights referred to in Section
4.7(a)), specifying the number of shares of Common Stock for which this Warrant
is exercisable and (if such adjustment was made pursuant to Section 4.8 or 4.9)
describing the number and kind of any other shares of stock or Other Property
for which this Warrant is exercisable, and any change in the purchase price or
prices thereof, after giving effect to such adjustment or change. The Company
shall promptly cause a signed copy of such certificate to be delivered to
Holder in accordance with Section 17.2. The Company shall keep at its office
or agency designated pursuant to Section 12 copies of all such certificates and
cause the same to be available for inspection at said office during normal
business hours by Holder or any prospective purchaser of a Warrant designated
by Holder.
5.2 Notice of Corporate Action. If at any time
(a) The Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution, or any right to subscribe for or purchase any evidences of
its indebtedness, any shares of stock of any class or any other securities
or property, or to receive any other right as contemplated by Section 4
hereof, or otherwise, or
(b) there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company
or any consolidation or merger of the Company with, or any sale, transfer
or other disposition of all or substantially all the property, assets or
business of the Company to, another corporation, or
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to Holder (i) at
least 20 days' prior written notice of the date on which a record date shall be
selected for such dividend, distribution or right or for determining rights to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, and (ii) in the case of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, at least 20 days' prior written notice of the date when the same shall take
place. Such notice in accordance with the foregoing clause also shall specify
(i) the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, the date on which the holders of Common Stock
shall be entitled to any such dividend, distribution or right, and the amount
and character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up. Each such written notice shall be sufficiently given if addressed to
Holder at the last address of Holder appearing on the books of the Company and
delivered in accordance with Section 17.2.
6. NO IMPAIRMENT
The Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of
all such actions as may be necessary or appropriate to protect the rights of
Holder against impairment. Without limiting the generality of the foregoing,
the Company will (a) not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the amount payable therefor
upon such exercise immediately prior to such increase in par value, (b) take
all such action as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable shares of Common
Stock upon the exercise of this Warrant, and (c) use its best efforts to obtain
all such authorizations, exemptions or consents from any public regulatory body
having jurisdiction thereof as may be necessary to enable the Company to
perform its obligations under this Warrant.
Upon the request of Holder, the Company will at any time during the period
this Warrant is outstanding acknowledge in writing, in form satisfactory to
Holder, the continuing validity of this Warrant and the obligations of the
Company hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
From and after the Closing Date, the Company shall at all times reserve
and keep available for issue upon the exercise of the Warrant such number of
its authorized but unissued shares of Common Stock as will be sufficient to
permit the exercise in full of the Warrant. All shares of Common Stock which
shall be so issuable, when issued upon exercise of the Warrant and payment
therefor in accordance with the terms of the Warrant, shall be duly and validly
issued and fully paid and nonassessable, and not subject to preemptive rights.
Before taking any action which would cause an adjustment reducing the
Current Warrant Price below the then par value, if any, of the shares of Common
Stock issuable upon exercise of the Warrant, the Company shall take any
corporate action which may be necessary in order that the Company may validly
and legally issue fully paid and non-assessable shares of such Common Stock at
such adjusted Current Warrant Price.
Before taking any action which would result in an adjustment in the number
of shares of Common Stock for which this Warrant is exercisable or in the
Current Warrant Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
If any shares of Common Stock required to be reserved for issuance upon
exercise of Warrants require registration or qualification with any
governmental authority or other governmental approval or filing under any
federal or state law before such shares may be so issued, the Company will in
good faith and as expeditiously as possible and at its expense endeavor to
cause such shares to be duly registered.
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by the Company to the
holders of its Common Stock with respect to which any provision of Section 4
refers to the taking of a record of such holders, the Company will in each such
case take such a record and will take such record as of the close of business
on a Business Day. The Company will not at any time, except upon dissolution,
liquidation or winding up of the Company, close its stock transfer books or
Warrant transfer books so as to result in preventing or delaying the exercise
or transfer of the Warrant.
9. RESTRICTIONS ON TRANSFERABILITY
The Warrant shall not be assigned or transferred to any Person other than
a Permitted Assignee, and the Warrant and the Warrant Stock shall not otherwise
be transferred, hypothecated or assigned before satisfaction of the conditions
specified in this Section 9, which conditions are intended to ensure compliance
with the provisions of the Securities Act with respect to the Transfer of any
Warrant or any Warrant Stock. Holder, by acceptance of this Warrant, agrees to
be bound by the provisions of this Section 9.
9.1 Restrictive Legend.
(a) Except as otherwise provided in this Section 9, each certificate
for Warrant Stock initially issued upon the exercise of this Warrant, and
each certificate for Warrant Stock issued to any subsequent transferee of
any such certificate, shall be stamped or otherwise imprinted with a
legend in substantially the following form:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933, as
amended, and are subject to the conditions specified in a
certain Warrant dated June 12, 1997, originally issued by
CALTON, INC. No transfer of the shares represented by this
certificate shall be valid or effective until such
conditions have been fulfilled. A copy of the form of said
Warrant is on file with the Secretary of CALTON, INC. The
holder of this certificate, by acceptance of this
certificate, agrees to be bound by the provisions of such
Warrant."
(b) Except as otherwise provided in this Section 9, each Warrant
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
"This Warrant and the securities represented hereby
have not been registered under the Securities Act of 1933,
as amended, and may not be transferred in violation of such
Act, the rules and regulations thereunder or the provisions
of this Warrant."
9.2 Notice of Proposed Transfers. Prior to any Transfer or attempted
Transfer of the Warrant or any shares of Restricted Common Stock, the holder of
the Warrant or Restricted Common Stock shall give ten days' prior written
notice (a "Transfer Notice") to the Company of such holder's intention to
effect such Transfer, describing the manner and circumstances of the proposed
Transfer, and obtain from counsel to such holder who shall be reasonably
satisfactory to the Company, an opinion that the proposed Transfer of the
Warrant or such Restricted Common Stock may be effected without registration
under the Securities Act. After receipt of the Transfer Notice and opinion,
the Company shall, within five days thereof, notify the holder of the Warrant
or such Restricted Common Stock as to whether such opinion is reasonably
satisfactory and, if so, such holder shall thereupon be entitled to Transfer
the Warrant or such Restricted Common Stock, in accordance with the terms of
the Transfer Notice. Each certificate, if any, evidencing such shares of
Restricted Common Stock issued upon such Transfer shall bear the restrictive
legend set forth in Section 9.1(a), and each Warrant issued upon such Transfer
shall bear the restrictive legend set forth in Section 9.1(b), unless in the
opinion of such counsel such legend is not required in order to ensure
compliance with the Securities Act. The holder of the Warrant or the
Restricted Common Stock, as the case may be, giving the Transfer Notice shall
not be entitled to Transfer such Warrant or such Restricted Common Stock until
receipt of notice from the Company under this Section 9.2(a) that such opinion
is reasonably satisfactory.
9.3 Registration Rights Agreement. The holders of Warrant and Warrant
Stock shall have the right to request registration of the Warrant Stock
pursuant to the Registration Rights Agreement of even date herewith (the
"Registration Rights Agreement") between the Company and BankBoston.
9.4 Termination of Restrictions. Notwithstanding the foregoing
provisions of Section 9, the restrictions imposed by this Section upon the
transferability of the Warrant, the Warrant Stock and the Restricted Common
Stock (or Common Stock issuable upon the exercise of the Warrant) and the
legend requirements of Section 9.1 shall terminate as to the Warrant or any
share of Warrant Stock or Restricted Common Stock (or Common Stock issuable
upon the exercise of the Warrants) (i) when and so long as such security shall
have been effectively registered under the Securities Act and disposed of
pursuant thereto or (ii) when the Company shall have received an opinion of
counsel reasonably satisfactory to it that such shares may be transferred
without registration thereof under the Securities Act. Whenever the
restrictions imposed by Section 9 shall terminate as to this Warrant, as
hereinabove provided, the Holder hereof shall be entitled to receive from the
Company, at the expense of the Company, a new Warrant bearing the following
legend in place of the restrictive legend set forth hereon:
"THE RESTRICTIONS ON TRANSFERABILITY OF THE WITHIN
WARRANT CONTAINED IN SECTION 9 HEREOF TERMINATED ON
________ __, ____, AND ARE OF NO FURTHER FORCE AND EFFECT."
All Warrants issued upon registration of transfer of, or in substitution for,
any Warrant or Warrants entitled to bear such legend shall have a similar
legend endorsed thereon. Whenever the restrictions imposed by this Section
shall terminate as to any share of Restricted Common Stock, as hereinabove
provided, the holder thereof shall be entitled to receive from the Company, at
the Company's expense, a new certificate representing such Common Stock not
bearing the restrictive legend set forth in Section 9.1(a).
9.5 Listing on Securities Exchange. If the Company shall list, or
continue the listing of, any shares of Common Stock on any securities exchange,
it will, at its expense, list thereon, maintain and, when necessary, increase
such listing of, all shares of Common Stock issued or, to the extent
permissible under the applicable securities exchange rules, issuable upon the
exercise of this Warrant so long as any shares of Common Stock shall be so
listed during any such Exercise Period.
10. SUPPLYING INFORMATION
The Company shall cooperate with each Holder and each holder of Restricted
Common Stock in supplying such information as may be reasonably necessary for
such holder to complete and file any information reporting forms presently or
hereafter required by the Commission as a condition to the availability of an
exemption from the Securities Act for the sale of the Warrant or Restricted
Common Stock.
11. LOSS OR MUTILATION
Upon receipt by the Company from a Holder of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of this Warrant and indemnity reasonably satisfactory to it and in
case of mutilation upon surrender and cancellation hereof, the Company will
execute and deliver in lieu hereof a new Warrant of like tenor to such Holder;
provided, in the case of mutilation, no indemnity shall be required if this
Warrant in identifiable form is surrendered to the Company for cancellation.
12. OFFICE OF THE COMPANY
As long as the Warrant remains outstanding, the Company shall maintain an
office or agency (which may be the Principal executive offices of the Company)
where the Warrants may be presented for exercise or registration of transfer as
provided in this Warrant.
13. FINANCIAL AND BUSINESS INFORMATION
13.1 Quarterly Information. The Company will deliver to the Holder, as
soon as practicable after the end of each of the first three quarters of the
Company, and in any event within 45 days thereafter, one copy of an unaudited
consolidated balance sheet of the Company and its subsidiaries as at the close
of such quarter, and the related unaudited consolidated statements of income
and cash flows of the Company for such quarter and, in the case of the second
and third quarters, for the portion of the fiscal year ending with such
quarter, setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year. Such financial statements
shall be prepared by the Company in accordance with GAAP and accompanied by the
certification of the Company's chief executive officer or chief financial
officer that such financial statements are complete and correct and present
fairly the consolidated financial position, results of operations and cash
flows of the Company and its subsidiaries as at the end of such quarter and for
such year-to-date period, as the case may be.
13.2 Annual Information. The Company will deliver to each Holder as soon
as practicable after the end of each fiscal year of the Company, and in any
event within 90 days thereafter, one copy of:
(i) an audited consolidated balance sheet of the Company and its
subsidiaries as at the end of such year; and
(ii) audited consolidated statements of income, retained earnings and
cash flows of the Company and its subsidiaries for such year;
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all prepared in accordance
with GAAP, and which audited financial statements shall be accompanied by (i)
an opinion thereon of the independent certified public accountants regularly
retained by the Company, or any other firm of independent certified public
accountants of recognized national standing selected by the Company and (ii) a
report of such independent certified public accountants confirming any
adjustment made pursuant to Section 4 during such year.
13.3 Filings. The Company will file on or before the required date all
regular or periodic reports (pursuant to the Exchange Act) with the Commission
and will deliver to Holder promptly upon their becoming available one copy of
each report, notice or proxy statement sent by the Company to its stockholders
generally, and of each regular or periodic report (pursuant to the Exchange
Act) and any Registration Statement, prospectus or written communication (other
than transmittal letters) (pursuant to the Securities Act), filed by the
Company with (i) the Commission or (ii) any securities exchange on which shares
of Common Stock are listed.
14. APPRAISAL
Any determination of the Appraised Value per share of Common Stock
pursuant to the terms hereof shall be made by an investment banking firm of
nationally recognized standing selected by the Company and acceptable to the
Holder. If the investment banking firm selected by the Company is not
acceptable to the Holder and the Company and the Holder cannot agree on a
mutually acceptable investment banking firm, then the Holder and the Company
shall each choose one such investment banking firm and the respective chosen
firms shall agree on another investment banking firm which shall make the
determination. The Company shall retain, at its sole cost, such investment
banking firm as may be necessary for the determination of Appraised Value
required by the terms of this Warrant.
15. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by Holder to
purchase shares of Common Stock, and no enumeration herein of the rights or
privileges of Holder hereof, shall give rise to any liability of such Holder
for the purchase price of any Common Stock or as a stockholder of the Company,
whether such liability is asserted by the Company or by creditors of the
Company.
16. MISCELLANEOUS
16.1 Nonwaiver and Expenses. No course of dealing or any delay or failure
to exercise any right hereunder on the part of Holder shall operate as a waiver
of such right or otherwise prejudice Holder's rights, powers or remedies. If
the Company fails to make, when due, any payments provided for hereunder, or
fails to comply with any other provision of this Warrant, the Company shall pay
to Holder such amounts as shall be sufficient to cover any costs and expenses
including, but not limited to, reasonable attorneys' fees, including those of
appellate proceedings, incurred by Holder in collecting any amounts due
pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
16.2 Notice Generally. Any notice, demand, request, consent, approval,
declaration, delivery or other communication hereunder to be made pursuant to
the provisions of this Warrant shall be sufficiently given or made if in
writing and (a) delivered in person with receipt acknowledged; or (b) sent by
registered, certified or express mail, return receipt requested, postage
prepaid, or (c) by reputable overnight courier service, or (d) by confirmed
facsimile transmission with a copy sent by means of (a), (b) or (c) hereof,
addressed as follows:
(a) If to Holder or holder of Warrant Stock, at its last known
address appearing on the books of the Company maintained for such purpose.
(b) If to the Company at
CALTON, INC.
500 Craig Road
Manalapan, New Jersey 07726-8790
Attention: Bradley A. Little and Robert A. Fourniadis
Facsimile Number: (732) 780-7257
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, acknowledged, transmitted by confirmed facsimile, or three (3)
Business Days after the same shall have been deposited in the United States
mail. Failure or delay in delivering copies of any notice, demand, request,
approval, declaration, delivery or other communication to the person designated
above to receive a copy shall in no way adversely affect the effectiveness of
such notice, demand, request, approval, declaration, delivery or other
communication.
16.3 Indemnification. The Company agrees to indemnify and hold harmless
Holder from and against any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses
and disbursements of any kind which may be imposed upon, incurred by or
asserted against Holder in any manner relating to or arising out of (i)
Holder's exercise of this Warrant and/or ownership of any shares of Warrant
Stock issued in consequence thereof, or (ii) any litigation to which Holder is
made a party in its capacity as a stockholder of the Company; provided,
however, that the Company will not be liable hereunder to the extent that any
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, attorneys' fees, expenses or disbursements are found in a
final non-appealable judgment by a court to have resulted from Holder's gross
negligence, bad faith or willful misconduct in its capacity as a stockholder or
warrantholder of the Company.
16.4 Remedies. Each Holder and each holder of Warrant Stock, in addition
to being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Warrant. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the
provisions of this Warrant and hereby agrees to waive the defense in any action
for specific performance that a remedy at law would be adequate.
16.5 Successors and Assigns. Subject to the provisions of Sections 3.1
and 9, this Warrant and the rights evidenced hereby shall inure to the benefit
of and be binding upon the successors of the Company and the successors and
assigns of Holder. The provisions of this Warrant and the Registration Rights
Agreement are intended to be for the benefit of all Holders from time to time
of this Warrant or holders of Warrant Stock, as the case may be, and shall be
enforceable by any such Holder or holder of Warrant Stock.
16.6 Amendment. This Warrant may be modified or amended or the provisions
hereof waived with the written consent of the Company and the Holder, provided
that the Warrant may not be modified or amended to reduce the number of shares
of Common Stock for which the Warrant is exercisable or to increase the price
at which such shares may be purchased upon exercise of the Warrant (before
giving effect to any adjustment as provided therein) without the prior written
consent of the Holder thereof.
16.7 Severability. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant 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 Warrant.
16.8 Headings. The headings used in this Warrant are for the convenience
of reference only and shall not, for any purpose, be deemed a part of this
Warrant.
16.9 Governing Law. This Warrant shall be governed by the laws of the
State of Massachusetts, without regard to the provisions thereof relating to
conflict of laws.
17. MOST FAVORED WARRANT PROVISIONS
If the Company provides to the holders of Convertible Securities, terms
more favorable to such holders than as set forth herein dealing with: the terms
substantially similar to Sections 2.2-2.6; Sections 3; 4; 5; 6; 7; 8; 9.2, 9,
4, 9, 5; 13; 16.3 and 16.4, then the appropriate terms of this Warrant shall be
equitably adjusted to provide Holder the benefit of such more favorable terms.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed and its corporate seal to be impressed hereon and attested by its
Secretary or an Assistant Secretary.
Dated: June 12, 1997
CALTON, INC., a New Jersey corporation
By: /s/ Anthony J. Caldarone
Name: Anthony J. Caldarone
Title: President
ATTEST:
By: /s/ Robert A. Fourniadis
Name: Robert A. Fourniadis
Title: Secretary<PAGE>
EXHIBIT A
_________
SUBSCRIPTION FORM
To be executed only upon exercise of Warrant
The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for the purchase of _____ Shares of Common Stock of CALTON, INC.
for the Shares set forth in the schedule below and in accordance with the
schedule set forth below, and the undersigned herewith makes payment therefor,
all at the price and on the terms and conditions specified in this Warrant and
requests that certificates for the shares of Common Stock hereby purchased (and
any securities or other property issuable upon such exercise) be issued in the
name of and delivered to _______________________ whose address is
________________.
Total No. of Number of Shares
Shares Covered Purchased
by this Warrant
_______________ __________
_________________________________________________
(Name of Registered Owner)
_________________________________________________
(Signature of Registered Owner or Authorized
Representative of Registered Owner)
_________________________________________________
(Street Address)
_________________________________________________
(City) (State) (Zip Code)
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Permitted Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:
Permitted Assignee Name: ______________________________
Address of Permitted Assignee: ______________________________
______________________________
______________________________
Total No. of Number of Shares
Shares Covered Assigned
by the Warrant
_______________ __________
_______________ __________
_______________ __________
and does hereby irrevocably constitute and appoint ______________
attorney-in-fact to register such transfer on the books of CALTON, INC.
maintained for the purpose, with full power of substitution in the premises.
Dated: ____________ Print Name: ____________________________________________
Signature of Registered
Owner (or Authorized
Representative of
Registered Owner): _________________________________
Witness: _________________________________
TABLE OF CONTENTS
_________________
Page
1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 "Additional Shares of Common Stock" . . . . . . . . . . . . 1
1.2 "Appraised Value" . . . . . . . . . . . . . . . . . . . . . 1
1.3 "BankBoston". . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 "Book Value". . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 "Business Day". . . . . . . . . . . . . . . . . . . . . . . 2
1.6 "Closing Date". . . . . . . . . . . . . . . . . . . . . . . 2
1.7 "Commission". . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 "Common Stock". . . . . . . . . . . . . . . . . . . . . . . 2
1.9 "Convertible Securities". . . . . . . . . . . . . . . . . . 2
1.10 "Current Market Price". . . . . . . . . . . . . . . . . . . 2
1.11 "Current Warrant Price" . . . . . . . . . . . . . . . . . . 3
1.12 "Exchange Act". . . . . . . . . . . . . . . . . . . . . . . 3
1.13 "Exercise Period" . . . . . . . . . . . . . . . . . . . . . 3
1.14 "Expiration Date" . . . . . . . . . . . . . . . . . . . . . 3
1.15 "Fully Diluted Outstanding" . . . . . . . . . . . . . . . . 3
1.16 "GAAP". . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.17 "Holder". . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.18 "NASD". . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.19 "Other Property". . . . . . . . . . . . . . . . . . . . . . 3
1.20 "Outstanding" . . . . . . . . . . . . . . . . . . . . . . . 3
1.21 "Permitted Assignee". . . . . . . . . . . . . . . . . . . . 3
1.22 "Person". . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.23 "Registration Rights Agreement" . . . . . . . . . . . . . . 4
1.24 "Restricted Common Stock" . . . . . . . . . . . . . . . . . 4
1.25 "Securities Act". . . . . . . . . . . . . . . . . . . . . . 4
1.26 "Transfer". . . . . . . . . . . . . . . . . . . . . . . . . 4
1.27 "Transfer Notice" . . . . . . . . . . . . . . . . . . . . . 4
1.28 "Warrants". . . . . . . . . . . . . . . . . . . . . . . . . 4
1.29 "Warrant Price" . . . . . . . . . . . . . . . . . . . . . . 4
1.30 "Warrant Stock" . . . . . . . . . . . . . . . . . . . . . . 4
2. EXERCISE OF WARRANT. . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Exercise Period . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Manner of Exercise. . . . . . . . . . . . . . . . . . . . . 5
2.3 Payment . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.4 Payment of Taxes. . . . . . . . . . . . . . . . . . . . . . 6
2.5 Fractional Shares . . . . . . . . . . . . . . . . . . . . . 7
2.6 Continued Validity. . . . . . . . . . . . . . . . . . . . . 7
3. TRANSFER, DIVISION AND COMBINATION . . . . . . . . . . . . . . . . 7
3.1 Transfer. . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2 [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . 7
3.3 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.4 Maintenance of Books. . . . . . . . . . . . . . . . . . . . 8
4. ADJUSTMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.1 Stock Dividends, Subdivisions and Combinations. . . . . . . 8
4.2 Certain Other Distributions . . . . . . . . . . . . . . . . 8
4.3 Issuance of Additional Shares of Common Stock . . . . . . . 9
4.4 Issuance of Warrants or Other Rights. . . . . . . . . . . . 11
4.5 Issuance of Convertible Securities. . . . . . . . . . . . . 11
4.6 Superseding Adjustment. . . . . . . . . . . . . . . . . . . 12
4.7 Other Provisions Applicable to Adjustments
under this Section. . . . . . . . . . . . . . . . . . . . . 13
4.8 Reorganization, Reclassification, Merger, Consolidation
or Disposition of Assets. . . . . . . . . . . . . . . . . . 14
4.9 Other Action Affecting Common Stock . . . . . . . . . . . . 15
4.10 Certain Limitations . . . . . . . . . . . . . . . . . . . . 15
5. NOTICES TO WARRANT HOLDER. . . . . . . . . . . . . . . . . . . . . 16
5.1 Notice of Adjustments . . . . . . . . . . . . . . . . . . . 16
5.2 Notice of Corporate Action. . . . . . . . . . . . . . . . . 16
6. NO IMPAIRMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK;
REGISTRATION WITH OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY. . . . 17
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS . . . . . . . . 18
9. RESTRICTIONS ON TRANSFERABILITY. . . . . . . . . . . . . . . . . . 18
9.1 Restrictive Legend. . . . . . . . . . . . . . . . . . . . . 18
9.2 Notice of Proposed Transfers. . . . . . . . . . . . . . . . 19
9.3 Registration Rights Agreement . . . . . . . . . . . . . . . 19
9.4 Termination of Restrictions . . . . . . . . . . . . . . . . 20
9.5 Listing on Securities Exchange. . . . . . . . . . . . . . . 20
10. SUPPLYING INFORMATION. . . . . . . . . . . . . . . . . . . . . . . 20
11. LOSS OR MUTILATION . . . . . . . . . . . . . . . . . . . . . . . . 21
12. OFFICE OF THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . 21
13. FINANCIAL AND BUSINESS INFORMATION . . . . . . . . . . . . . . . . 21
13.1 Quarterly Information . . . . . . . . . . . . . . . . . . . 21
13.2 Annual Information. . . . . . . . . . . . . . . . . . . . . 21
13.3 Filings . . . . . . . . . . . . . . . . . . . . . . . . . . 22
14. APPRAISAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
15. LIMITATION OF LIABILITY. . . . . . . . . . . . . . . . . . . . . . 22
16. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
16.1 Nonwaiver and Expenses. . . . . . . . . . . . . . . . . . . 22
16.2 Notice Generally. . . . . . . . . . . . . . . . . . . . . . 23
16.3 Indemnification . . . . . . . . . . . . . . . . . . . . . . 23
16.4 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . 24
16.5 Successors and Assigns. . . . . . . . . . . . . . . . . . . 24
16.6 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 24
16.7 Severability. . . . . . . . . . . . . . . . . . . . . . . . 24
16.8 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . 24
16.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 24
17. MOST FAVORED WARRANT PROVISIONS. . . . . . . . . . . . . . . . . . 24
EXHIBITS
________
Exhibit A - Subscription Form . . . . . . . . . . . . . . . . . . . . . .26
Exhibit B - Assignment Form . . . . . . . . . . . . . . . . . . . . . . .27
CONCORDANCE
___________
Additional Shares of Common Stock . . . . . . . . . . . . . . . 1, 2, 8-14
Appraised Value . . . . . . . . . . . . . . . . . . . . . . . . . 1, 2, 22
BankBoston. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 3, 19
Book Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-3
Business Day. . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 4, 18
Closing Date. . . . . . . . . . . . . . . . . . . . . . . . . 1, 2, 14, 17
Commission. . . . . . . . . . . . . . . . . . . . . . . . . . . 2-4, 20, 22
Common Stock. . . . . . . . . . . . . . . . . . . . . 1-20, 22, 24, 26, 27
Convertible Securities. . . . . . . . . . . . . . . . . . . . . 2, 8-14, 24
Current Market Price. . . . . . . . . . . . . . . . . . . . . 2, 5-7, 9-11
Current Warrant Price . . . . . . . . . . . . . . . . 3, 4, 6, 8-13, 15, 18
Exchange Act. . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 3, 22
Exercise Period . . . . . . . . . . . . . . . . . . . . . . . 3, 4, 14, 20
Expiration Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 4
Fully Diluted Outstanding . . . . . . . . . . . . . . . . . . . . . . . 1-3
GAAP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 3, 21
Holder. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-9, 14-24
NASD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 3
Other Property. . . . . . . . . . . . . . . . . . . . . . 3, 12, 14-17, 26
Outstanding . . . . . . . . . . . . . . . . . . . . . . . 1-3, 8-12, 17, 21
Permitted Assignee. . . . . . . . . . . . . . . . . . . . . . . . 3, 18, 27
Person. . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 4, 6, 18, 23
Registration Rights Agreement . . . . . . . . . . . . . . . . . . 4, 19, 24
Restricted Common Stock . . . . . . . . . . . . . . . . . . . . . 4, 19, 20
Securities Act. . . . . . . . . . . . . . . . . . . . 1, 2, 4, 7, 18-20, 22
Transfer. . . . . . . . . . . . . . . . . . . . . . . 4, 5, 7, 8, 15-21, 27
Transfer Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 19
Warrant Price . . . . . . . . . . . . . . . . . . . . . . 3-6, 8-13, 15, 18
Warrant Stock . . . . . . . . . . . . . . . . . 1, 4, 6, 14, 18-20, 23, 24
Warrants. . . . . . . . . . . . . . . . . . . 2-4, 9-13, 15, 16, 18, 20, 21
THIS PAGE MUST BE KEPT AS THE LAST PAGE OF THE DOCUMENT.
